AUDIT REPORT CRAWFORD COUNTY BOARD OF EDUCATION ROBERTA, GEORGIA YEAR ENDED JUNE 30, 1998 CRAWFORn 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 EXHIBITS GENERAL PURPOSE FINANCIAL STATEMENTS COMBINED STATEMENTS - OVERVIEW A COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP 2 B COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES 4 C COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS 6 D NOTES TO TIIE GENERAL PURPOSE FINANCIAL STATEMENTS 7 ADDmONAL FINANCIAL INFORMATION COMBINING STATEMENTS SPECIAL REVENUE FUND E COMBINING BALANCE SHEET 18 F COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 19 SCHEDULES 1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION 20 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 21 3 SCHEDULE OF STATE REVENUE 23 4 SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS 24 ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS 5 OVERALL 25 6 BY PROGRAM 26 CRAWFORD COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS- SECTION II COMPUANCE 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 COMPUANCE WITH REQUIREMENTS APPUCABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 SECTIONm 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 MayS, 1999 Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofEducation and Superintendent and Members of the Crawford County Board ofEducation INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying general purpose financial statements of the Crawford 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 Crawford County Board ofEducation's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our 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 confOIm 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 ofrelated 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 confonn to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed. The aggregate effects on the general purpose financial statements 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 of the Crawford County Board ofEducation as ofJune 30, 1998, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated May S, 1999, on our consideration ofthe Crawford 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 n1n is not a required part of the basic financial statements but is supplementary infonnation required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally ofinquiries of management regarding the methods ofmeasurement and presentation ofthe supplementary infonnation. However we did not audit the infonnation and do not express an opinion on it. In addition, we do not provide assurance that Crawford County Board of Education is or will become year 2000 compliant, that the Board's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Crawford County 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 of the Crawford County Board of Education taken as a whole. The accompanying combining statements (Exhibits E and F) and the financial schedules (Schedules 2 through 6), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-l33, Audits a/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 of the general purpose financial statements and in our opinion, except for the effects of the matters referred to in the third paragraph, such infonnation is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. 98ARL-l3B A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code ofGeorgia Annotated Section 50-6-24. Respectfully submitted, ~4'OQ.W.~ Russell W. Hinton State Auditor RWH:jb 98ARL-13B CRAWFORD COUNTY BOARD OF EDUCATION CRAWFORD COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET ALL FUND TYpES AND ACCOUNT GROUp JUNE30 1998 ~ Cash and Cash Equivalants Inveslments Accounts Raceivable Prepaid Items Inventories Food Donated Commodilles Purchasad Food Amount Available In Dabt Servica' Fund Amount III be Provided in Future Years For Payment of: Bond Dabt Capital Lease Agreements GENERAL FUND GOVERNMENTAL FUND TYPES SPECIAL CAPITAL REVENUE PROJECTS FUND FUND $ 379,902.21 $ 146,091.82 $ 172.42 350,000.00 50,000.00 247,152.47 41,404.51 3,082.00 12,095.96 9,158.17 Total Assets $ 980,136.68 $ 258,750.46 $ 172.42 LlABlLmES AND FUND EQUITY LIABILITIES Accounts Payabla Selaries Payable Notes Payable Capital Lease Agreements General Obligation Bonda Payable Total L1abililles FUNDEQUrry Fund Belancas Reaarved For Continuation of Faderal Programs For Debt Servlca For Continuation of State Programs For Expired Grant BalancasJQuaationed Costs For Invanlllries Food Donated Commoditiaa Purchasad Food Unreserved Undesi9natad Totsl Fund Equity $ 8,457.61 $ 21,195.78 56,789.97 $ 8.457.61 $ 77,985.75 $ 11,407.91 $ 7,029.90 45,317.43 12,095.96 9,158.17 964.549.17 102,785.24 $ $ 971,679.07 $ 180,754.71 $ Total Liabilitiaa and Fund Equity $ 980,138.68 $ The notes III the general purpose financial statements are an integral part of this statement. -2- 258,750.46 $ 172.42 172.42 172.42 EXHIBIT "A" DEBT SERVICE FUND ACCOUNT GROUP GENERAL LONG-TERM DEBT TOTALS !Memorandum Only) JUNE 30, 1998 JUNE 30, 1997 $ 228,048.29 $ 754,214.74 $ 535,256.70 400,000.00 19,555.07 308,112.05 313,574.69 3,082.00 1,258.16 $ 247,603.36 12,095.96 9,158.17 247,603.36 9,086.92 5,281.20 203,969.41 962,396.64 179,421.40 962,396.64 179,421.40 1,016,030.59 319,363.79 $ 247,603.36 $ 1.389,421.40 $ 2,876,084.32 $ 2,403,841.46 $ 29,653.39 $ 43,733.48 56,789.97 52,613.00 235,175.86 $ 179,421.40 179,421.40 319,383.79 1,210,000.00 1,210,000.00 1,220,000.00 $ 1,389,421.40 $ 1,475,884.76 $ 1,870,906.13 $ 247,603.36 0.00 $ 247,603.36 $ 11,407.91 $ 247,603.38 45,317.43 7,029.90 12,095.96 9,158.17 1,067,606.83 $ 1.400,219.56 $ 8,882.06 203,969.41 4,954.06 2,889.42 9,086.92 5,281.20 297,872.26 532,935.33 $ 247,603.36 $ 1,389,421.40 $ 2,876,084.32 $ 2.403,841.46 -3- CRAWFORD COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUNp BALANCES ALL GOVERNMENTAL FUNp TYPES YEAR ENpED JUNE 30 1998 ~ Slate Funds Federal Funds Taxes Other Funds Total Revenues EXPENPITURES Current Instruction Support Services Pupil services Improvement of Instructionel services Educetlonel Media services General Admlnistrallon School Admlnlstrallon Business Administration Maintenance and Operation of Plant SbJdent Transportation Services central Support services Other Support Services Food Services Operation Other Operations of Non-lnsbuctlonel services cepitalOuaay Debt service Principal Interest PayIng Agent Fees Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES Refunding Bond Issuance Coat Pnoceeds of Refunding Bonds Par Value Payments to Bond Escrow Agent cepital Lasses Total Other Flnencing Sources Excess of Revenues and Other Financing Sources over (under) Expenditures FUND BALANCE JULY 1 Food Inventory - Net Change in Period Donated Commodities Purchased Food GENERAL FUND SPECIAL REVENUE FUND $ 7,118,083.09 $ 25,025.13 2,385,738.96 87,888.20 422,503.67 880,658.50 269,445.99 $ 9,616,735.38 $ 1,572,608.16 $ 5,574,011.67 $ 370,855.38 192,469.16 173,302.28 227,089.07 485,187.83 50,109.30 977,482.71 489,912.72 54,202.33 20,435.31 88.96 38,349.00 139,962.39 21,379.36 350,973.20 60,539.13 178,418.35 69,572.22 143.87 786.09 917,358.91 $ 6794,795.47 $ 1,577,791.77 $ 821,939.91 $ . -5,183.61 $ 821,939.91 $ -5,183.61 149,739.18 179,062.31 3,009.04 3,876.97 FUND BALANCE JUNE 30 $ 971,879.07 $ 180?64,71 The notes to the general purpose financial statements are an integral part of this statemenl. -4- EXHIBIT'S" CAPITAl. PROJECTS FUND DEBT SERVICE FUND TOTALS (Memorandum Only) YEAR ENDED JUNE 30, 1998 JUNE 30, 1997 $ 7,540,586,76 $ 7,017,672,61 905,683,63 789,602,64 $ 189,n5.73 2,575,514,69 2,460,189.93 $ 7.97 7,464.78 364,808,94 288268,32 $ 7.97 $ 197,240.51 $ 11 ,368,592,02 $ 10.555,713,50 $ 0.00 $ 5,924,964.87 $ 5,900,902.37 431,394.51 370,687.51 173,302.28 296,681.29 465,167.83 50,109.30 9n,482.71 490,056.59 54,202.33 21,221.40 917,425,87 454246,22 311,728,45 186,403,64 208,58928 537,185.81 73,302,72 825,581,92 582,874.93 58,805.74 1,175,53 790,820,47 38,349,00 $ 85,000.00 87,540.00 1.066.56 204,982.39 108,919.38 1,066.56 232,522,49 129,681.18 1.066.58 $ 0.00 $ 153.608.56 $ 10,526.193.80 $ 10,293.087.49 $ 7,97 $ 43.833.95 $ 860.398.22 $ 282,826.01 $ -43,450.00 $ -43,450.00 1,210,000.00 -1,186,550,00 1,210,000,00 -1,166,550.00 $ $ 0.00 $ 0.00 $ 129,740.00 129,740.00 $ 7.97 $ 43,833.95 $ 880,398.22 $ 392,368,01 164.45 203,969.41 532,935,33 149,743.41 3,009.04 3,876.97 -7,354.56 -1,809.53 $ 172.42 $ 247,603.36 $ 1.400,219.56 $ 532,935.33 -5- CBAWfORDCQUNTYBOABDOF EDUCADON COMBINED STATEMENT OF REVENUES EXPENPITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL. (NON-GMP BASIS) GENERAL AND SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30 1998 EXHIBIT"C" ~ Stale Funds Federal Funds TIIXIlS Other Funds Total Revenues EXPENDIJURES Cunent Inll1Juclion Support Services Pupil Services Improvement oIlnslnK:tionsl Services Educational Media SeNices Ganeral Admlnlatnrlion School Admln~on Business Administration Msintenance and Operation 01 Plant Sludanl Transpor1ll1ion Services Contral Support SeNices Othar Support Services Food SeNices Operation Cap!lal Outlay DablSeNice Total ExpendltulllS Excass of Ravanuas ovar (undar) Expendituras FUND BAlANCE JULy 1 1997 Adjuslmanls Food Invantory. Nat Change In Pariod Don_ Commodities Pun:hasad Food GENERAL FUND ACTUAL (BUDGET BUDGET BASIS) $ 6,801,433.88 $ 7,118.083.09 25.025.13 2,181,286.80 2,385.738.96 14,713.20 87,888.20 $ 8,997,433.88 $ 9,816,735.38 SPECIAL REVENUE FUND ACTUAL (BUDGET BUDGET BASIS) $ 388,848.46 $ 422,503.87 809,414.61 880.658.50 240,342.00 269,445.99 $ 1.418,605.07 $ 1.572.608.16 $ 5,867,883.27 $ 5.574.011,87 309,913.85 223,246.07 163,310,84 163,022.04 548,979.17 50,000.00 998,046.72 805,190.66 88,537.86 22,880.00 25,176.00 370.855,38 192.469.16 173,302.28 227.089.07 485,187.63 50.109.30 977.482,71 469,912.72 54.202.33 20.435.31 66.96 38.349.00 161.341.75 $ 9,085,766.28 $ 8.794.795.47 $ -68,332.40 $ 821.839.91 91,396.46 149,739.18 10,889.30 $ 452,235.47 $ 350,973.20 51,490.00 2,000,00 80,539.13 178,418.35 106,500,00 69,572.22 825,200.09 143.87 786.09 917.358.91 $ 1,437,425.56 $ 1.577,791.77 $ -18.820.49 $ -5.183.61 183,946.34 179.062.31 -33.327.35 3.009.04 3,876.97 FUND BAlANCE JUNE 30 1998 $ 33,953.38 $ 9n879.07 $ 131,798.50 $ 180,784.71 The notes to the general purpose financial statements are an integral part of this statement. -6- CRAWFORD COUNTY BOARD OF EDUCATION EXJDBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30.1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The Crawford County Board ofEducation (Board) was established under the laws ofthe State ofGeorgia and operates under the guidance ofa 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 ofaccounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources. General Fixed Assets are recorded as expenditures in the various funds at the time ofpurchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepted accounting principl~, 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 alI 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 follows: GOVERNMENTAL FUND TYPES - are used to account for alI or most ofa Board's educational activities. Governmental Fund Types include: GENERAL FUND - the fund used to account for alI 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. -7 - CRAWFORD COUNTY BOARD OF EDUCAnON EXIllBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS . JUNE 30,1998 Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES CAPITAL PROJECTS FUND - the ftmd used to account for financial resources to be used for the acquisition or construction of major capital facilities. DEBT SERVICE FUND - the ftmd used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees. ACCOUNT GROUP GENERAL WNG-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 ftmd is determined by its measurement focus. All governmenta1 ftmds 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 ftmds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported ftmd balance is considered a measure ofavailable spendable resources. Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental ftmds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group. Governmental ftmds are accounted for using the modified accrual basis of accounting under which: Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are property taxes, intergovernmental grants and investment income. Expenditures are generally recognized when the related ftmd 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 ofthese contracts. During fiscal year 1998, a substantial number of personnel of the 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 ftmd the State's share ofthese contracts were disbursed from the Georgia Department of Education to the Board in the same twelve months. As of June 30, 1998, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 1998, had not -8- CRAWFORD COUNTY BOARD OF EDUCAnON EXlllBIT "D" NOTES TO TIIE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30.1998 Note 1: SUMMARY OF SIGNlFlCANT ACCOUNTING POUCIES been made. Payments for these two months were ~ 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 Crawford 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 of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end. CASH AND CASH EQUIVALENTS COMPOSmON OF DEPOSITS Cash and cash equivalents consist ofdeposits 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 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 Board to -9- CRAWFORD COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (l) 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 ofany corporation of the 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 of the State of Georgia. RECEIVABLES Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables; PROPERTY TAXES The Crawford County Board of Commissioners fixed the propertY tax levy for the 1997 tax year (calendar year) on October 31,1997 (levy date). Taxes were due on December 31,1997. 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 Crawford County Tax Commissioner bills and collects the propertY taxes for the Board of Education, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the Board. Tax millage rates levied for the 1997 tax year (calendar year) for the Crawford County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value): - 10- CRAWFORD COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POUCIES School Operations School Bonds 18.57 mills ...lA!.mills l2..2.B. mills INVENTORIES FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined ';3alance 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 of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets, PREPAID ITEMS Payments made to vendors for services that will benefit periods subsequent to June 30, 1998, are recorded as prepaid items. 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. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount ofthese bonds is recorded in the General Long-Term Debt Account Group. INTERFUND TRANSACTIONS The Board has the following types of interfund transactions: Reimbursements of expenditures initially made from a fund that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed. - 11 - CRAWFORD 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 ofthis data. Note 2: DEPOSITS 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 ofdeposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts. Acceptable security for deposits consists of anyone ofor any combination ofthe following: (1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State ofGeorgia, (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (3) Bonds, bills, notes, certificates ofindebtedness or other direct obligations of the United States or of the State of Georgia, (4) Bonds, bills, notes, certificates ofindebtedness or other obligations ofthe counties or municipalities ofthe 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 ofthe bonds for this purpose, (6) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws ofthe State of Georgia, and (7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home - 12 - CRAWFORD COUNTY BOARD OF EDUCATION EXlllBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30.1998 Note 2: DEPOSITS Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. CATEGORIZATION OF DEPOSITS At June 30, 1998, the bank balances were $1,859,142.39. The amounts of the total bank balances are classified into three categories of credit risk: Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the Board or by the Board's agent in the Board's name. Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Board's name. Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Board's name.) The Board's deposits are classified by risk category at June 30, 1998, as follows: Risk Category Bank Balance 1 $ 428,048.29 2 1,431,094.10 3 0.00 Total S 1859)4239 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 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 ofloss associated with torts, assets and natural disaster. 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. - 13 - CRAWFORD COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 4: RISK MANAGEMENT The Board has elected to self-insure for errors or omissions, which includes, among other risks, risks for sexual harassment and discrimination. The Board has not experienced any losses related to these risks in the past three years. The Board is self-insured with regard to unemployment compensation c1aims. The Board accounts for claims within the same fund that the employee's salary and benefits were paid. Claims are accounted for with expenditure and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: Beginning o f Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability 1997 $ 0.00 $ 0.00 $ 0.00 $ 0.00 1998 $ 0.00 $ 497.00 $ 497.00 $ 0.00 The Board participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July I, 1992 to develop, implement, and administer a program of workers' compensation self-insurance for its member organizations. The Board 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 United States Fidelity and Guaranty Company to provide coverage for potential losses sustained by the Fund in excess of$350,Ooo.00 loss per occurrence, up to the statutory limit. Also, should losses within the retained limit of $350,000,00 aggregate to more than seventy-five percent (75%) of the standard experience rated premium during the policy term, the policy with the United States Fidelity and Guaranty Company will pay the next $1,000,000.00 ofloss. The Board has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Superintendent Special Programs Director Administrative Personnel $ 250,000.00 $ 250,000.00 $ 15,000.00 - 14 - CRAWFORD COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 NoteS: GENERAL LONG-TERM DEBT CAPITAL LEASES The Crawford County Board ofEducation has entered into various lease agreements as lessee for purchase of buses and portable classrooms. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date oftheir inception. GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: , Purpose General Government - Refunding - Series 1998 Interest Rates 4.74% Amount $ 1 210.00000 The changes in General Long-Term Debt during the fiscal year ended June 30, 1998, were as follows: Balance July I, 1997 Additions Deductions Debt Retired Legal Defeasance Balance June 30,1998 Capital Leases $ 319,383.79 General Obligation Bonds $ 1,220,000.00 1,210,000.00 Total $ 1,539,383.79 1,210,000.00 139,962.39 $ 17942140 65,000.00 1.155,000.00 $ 121000000 204,962.39 1.155.000.00 $ 138942140 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 - 2008 2009 - 2013 Total Principal and Interest Deduct: Imputed Interest Net Present Value ofFuture Minimum Lease Payments Capital Leases $ 105,327.10 70,711.68 21,462.48 $ 197,501.26 18,079.86 General Obligation Bonds $ 142,354.00 143,325.00 144,059.00 144,556.00 144,816.00 715,633.00 146,636.00 $ 158137900 Total Debt $ 247,681.10 214,036.68 165,521.48 144,556.00 144,816.00 715,633.00 146,636.00 $ 1.778 880 26 $ 17942140 - 15 - CRAWFORD COUNTY BOARD OF EDUCAnON EXHIBIT "0" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30.1998 Note 6: ON-BEHALF PAYMENTS The Board has recognized revenues and expenditures in the amount of$155,999.24 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies. Georgia Department of Education Paid to the State Merit System of Personnel Administration For Health Insurance of Non-Certified Personnel In the amount of$114,900.97 Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (IRS) Employer's Cost In the amount of$lO,565.27 Office ofTreasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of$30,533.00 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. The Board is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine Board operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the general purpose financial statements. Note 8: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) 1RS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (1RS), which is a cost-sharing multiple employer defined benefit pension plan. 1RS 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. - 16 - CRAWFORD COUNTY BOARD OF EDUCAnON EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998 Note 8: RETIREMENT PLANS TRS CONlRIBUTIONS REQUIRED AND MADE Employees ofthe Board who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.81% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 1998 1997 1996 100% 100% 100% $ 643,412.18 $ 618,069.11 $ 607,264.65 - 17 - CRAWFORD COUNTY BOARD OF EDUCATION COMBINING BAlANCE SHEET SPEClAb REVENUE FUND JUNE3Q 1998 EXHIBIT"E" ~ Cosh and Cosh EqUivllIentll In__bIe Inveatments Aa:ounIo Food Donated Cormnodities PurohasedFood TDIaI_ SCHOOL FOOD SERVICES FUND n,8n.6fJ 50,000.00 17,870.09 LOTTERY PROGRAMS 45,317.43 FEDERAL PROGRAMS TOTALS JUNE30 1998 JUNE 30 1997 22,896.79 $ 148,091.82 186,995.08 6fJ,OOO.OO 23,534.42 41,404.51 76,954.07 12,085.96 9158.17 12,095.96 9158.17 9,086.92 5281.20 187001.82 $ 45317.43 $ 48431.21 $ 258 750.48 $ 278317.27 LIABILITIES AND FUND EQUITY Ja1lJII& CoshQvenlralt Accounts Payable Solarioll Payable TDlallIabliities -FUNDEOUITY Fund_ For ContInuation o f F _ P"'llRI'IIS a - For ContInuation of ProgI'lm8 For_ Food Donated Comrncdities P_Food UIlIIllIOrWd Undelignated TDIaIFund~ TOlIII LIabIitiesand Fund Equity 13,274.74 29 887.71 42962.45 7,921.04 27102.28 35023.30 21,195.78 58 789.97 n985.75 $ 18,359.94 30,282.02 52813.00 99 254.96 12,095.96 9,158.17 '02 785.24 124 039.37 45,317.43 0.00 45317.43 $ 11,407.91 $ 0.00 11407.91 $ 11,407.91 45,317.43 12,095.96 9,158.17 102.785.24 180764.71 8,882.08 4,954.08 9,088.92 5,281.20 150 858.07 179082.31 187001.82 $ 45317.43 $ 48431.21 $ 258 750.48 $ 278[317.27 See notes to the general purpose financial statements. -18- CRAWFORD COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES SPECIAL REVENUE FUND YEAR ENDED JUNE 30 1998 EXHIBIT"P ~ state Funds Federal Funds Other Funds Total Revenuea EXPENDITURES Currant lns1Jucllon Support 5ervices Pupll5ervices Improvement of lns1Juctlonsl5ervices Gsneral Admlnlstrallon Student TransportoUOn Services Other Support Services Food 5ervices Operation Tolal Expondlluras Excess of Revenuea over (undor) Expondlluras FUND BALANCE JULY 1 Food Inventory - Not Chango In Portod Donated Commodities Purchased Food SCHOOL FOOD SERVICES FUND 51,744.00 548,098.09 269,445.99 $ 889.288.08 917,358.91 917,358.91 -48,072.83 185.226.19 3,009.04 3,876.97 LOTTERY PROGRAMS FEDERAL PROGRAMS TOTALS YEAR ENDED JUNE 30, 1998 JUNE 30, 1997 370,759.67 $ 370,759.87 332,582.41 422,503.87 880,656.50 269,445.99 332,562.41 $ 1,572,608.16 481,364.88 789,720.84 232,128.27 1,483,211.79 270,584.54 $ 59,667.89 143.87 330,398.30 40,383.37 4,954.06 80,388.88 $ 350,973.20 $ 391,620.53 871.24 178,418.35 89,572.22 766.09 80,539.13 178,418.35 89,572.22 143.87 788.09 917,358.91 78,411.52 141.239.98 66,212.32 74.90 888.85 790,820.47 330,038.56 1,577,791,n 1,489,068.55 2,525.85 -5,183.61 -5,856.76 8;882.06 179,082.31 194,083.16 3,009.04 3,876.97 -7,364.56 -1,809.53 FUND BALANCE JUNE 30 124,039.37 45,317.43 11,407.91 $ 180,784.71 $ 179,082.31 see notes to the general purpose financial statements. -19 - CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE "1" SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION YEAR 2000 DISCLOSURES YEAR ENDED JUNE 30. 1998 At June 30, 1998, the Crawford County Board ofEducation had no outstanding contractual commitments for the purpose ofmaking computer systems and other electronic equipment year 2000 compliant. The year 2000 issue is the result 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 ofidentifying all ofits systems and individual components of the systems to check for compliance. Remediation Stage - When changes are made to systems and equipment. ValidationfTesting 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) is 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 of December 9, 1998. The Georgia Department ofEducation has remediated the GENESIS software and conducted tests at nine pilot sites. The remediated GENESIS software has been provided to all boards ofeducation currently utilizing the GENESIS accounting software. See notes to the general purpose financial statements. - 20- CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30 1998 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT CFDA NUMBER PASSTHROUGH ENTITY 10 NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD 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 . 10.553 . 10.555 Food Distribution Program (1) 10.550 Pass-Through from Office of School Readiness Child and Adutt care Food Program 1998 Contract 10.558 N/A $ 151.000.12 N/A 338,036.30 $ NlA 48,881.13 (2) 888,497.78 (3) 48,881.13 NlA 12.198.54 (2) Total U. S. Department of Agricultura $ 548.096.09 $ 917,358.91 Education. U. S. Department of Pass-Through from Georgia Department of Education Elementary and Secondary Education Act TIlle I Grants to Local Educational Agencies 1998 Grant Tille II Eisenhower Professional Development 1998 Grant TrUe VI Innovative Education Program Strategies 1998 Grant Individuals with Disabilities Education Act Part B Special Education Flow Through 1998 Grant Preschool 1998 Grant Special Projects 1998 Grant Vocational Education - Basic Grants to States High School Program Basic Grant 1998 Grant Tech-Prep Education 1998 Grant 84.010 84.281 84.298 84.027 84.173 84.027 84.048 84.243 NlA $ 214,139.90 $ 215,241.49 (3) NlA 13.754.00 12,954.36 NlA 8,901.97 9.115.28 NlA 80,000.00 77,049.61 NlA 9,364.52 9,273.80 6.402.02 6.402.02 N/A 13,847.00 (4) N/A 5,000.00 (4) Total U. S. Department of Education $ 351.409.41 $ 330,036.56 Federal Emergency Management Agency Pass-Through from Office of the Governor Disaster Assistance 83.544 NlA $ 1,213.25 (4) -21- CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30 1998 SCHEDULE "2" FUNDING AGENCY PROGRAMlGBANT OTHER FEDERAL ASSISTANCE Defense, U. S. Department of Direct Teacher and Teache~s Aide Placement Assistance Program 1998 Grant CFDA NUMBER PASSTHROUGH ENTITY 10 NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD OFA $_.....:!l4,c:::964=,88~ (4) Total Federal Financial Assistance N/A = Not Available $ 90M83.63 $ 1,247,395.47 Notes to !he Schedule of Expendijures 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 lor the Child and AduR Care Food Program and 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, (4) Expenditures on this program were 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 Subrecipienl The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Crawford 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, -22- CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENpED JUNE 30 1998 SCHEDULE "3" AGENCYIFUNPlNG GRANTS Community Affairs, Georgia Department of Local Assistance Grant Education, Georgia Department of Quality Basic Education General end Career Education Programs Spacial Education Programs Remedial Education Program Media Canter Programs Staff Development Programs Indirect Cost Pupil Transportation Regular Bus Replacement Middle School Incentive Program Special Instructional Assistance In-School Suspension Mid-tarm Adjustment Counselors Grades 4 and 5 Technology Training Local Fair Share Educational Equalization Funding Grant Food Services Other State Programs Ad Valorem Tex Adjustment Altemative Program At-Risk Summer School Program Govemofs Emergency Funds (1) Health Insurance Mentor Teacher Program Preschool Handicapped Program PSATExams Remedial Summer School Program Teachers' Retirement Lottery Programs Altemative School Program Instructional Technology Assistive Technology Classroom Technology Office of School Readiness Pre-Kindergartan Program Office of the Governor Disaster Relief Funds Office of Treasury and Fiscal Services Public School Employees Retirement GOVERNMENTAL FUND TYPES SPECIAL GENERAL REVENUE FUND FUND TOTAL $ 6,250.00 $ 6,250.00 3,716,176.00 667,873.00 215,427.00 158,081.00 51,301.00 1,108,819.00 281,810.00 93,779.00 140,760.00 149,581.00 78,691.00 203,082.00 16,497.00 28,842.00 -550,282.00 478,093.00 $ 46,026.00 27,360.00 7,015.53 15,000.00 114,900.97 188.00 20,043.00 132.80 3,169.77 10,565.27 51,744.00 4,132.00 5,195.00 53,000.00 308,432.67 388.75 30,533.00 3,716,176.00 667,873.00 215,427.00 158,081.00 51,301.00 1,108,819.00 281,810.00 93,779.00 140,760.00 149,581.00 78,691.00 203,082.00 16,497.00 28,842.00 -550,282.00 478,093.00 51,744.00 46,026.00 27,360.00 7,015.53 15,000.00 114,900.97 188.00 20,043.00 132.80 3,169.77 10,565.27 4,132.00 5,195.00 53,000.00 308,432.67 388.75 30,533.00 $ 7,118,083.09 $ (1) The purpose of the funds are 10 assist with the construction of a Field House. 422,503.67 $ 7,540,586.76 See notes to the general purpose financial statements. -23- CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES LOmRYPBOGRAMS YEAR ENDED JUNE 30 1998 SCHEDULE "4" EXPENPUURES Cummt InItruction Sl4lPOllseMcos Pupil seMcos Student Transportation seMcos ALTERNATIVE SCHOOL PROGRAM INSTRUCTIONAL TECHNOLOGY ASSIST1VE CLASSROOM TECHNOLOGY TECHNOLOGY PRE-KINDERGARTEN PROGRAM 2.848.22 , 3.7113.00 , 42.7117.40 221.345.92 59,887.80 143.87 TOTAL 270,584.54 59.887.80 143.87 Total ElcpencfltIna ---RECAP: ~_PnlgrBlll Oth_er ElcpencSflCtIhnoaol Pnlgnom _T_ echnTeochlnoolgogyy CIu8roam Technology ~-Pnlg""" 2,648.22 3783.00 '_...:::42l1:.7:,:9::,;7.4O:::., 27e.e85.80 2.848.22 3.7113.00 42.7117.40 4491.88 , 330,398.30 281.157.88 see notes to the general purpose financial statements. 24 CRAWfORD COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENPITURE REQUIREMENTS - OVERALL GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30 1998 SCHEDULE "5" Minimum ExpendRure Requirements (Total Allotment) ExpendRures on Combined Program Basis Salaries Operations Less: ExpendRures for Media Center Programs in Excess of Total Media Allotment ExpendRures per AudR Amount of UnderexpendRure for Total Allotment FOURTEEN WEIGHTED AND MEDIA CENTER PROGRAMS 100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS $ 4,960,629.00 $ 143,283.00 $ 4,908,051.96 453,511.56 $ $ 5,361,563.52 428,367.87 -12,054.61 $ 5,349,508.91 $ 0.00 $ 0.00 See notes to the general purpose financial statements. - 25 - CRAWfORO COUNTY BOARD OF EDUCATION ANAlYSIS OF MINIMUM EXPENDITURE REQUIREMENTS _BY PROGRAM GENERAl. FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30 1998 GENERAL AND CAREER EDUCATION PROGRAMS K1ndergartenrl Grades 1 - 3 rl Sub-TotaI-K-3 G_4-5rl G_8-8rl G_9-12rl High 8chaoI Laboratories (') Vocational Education Laboratories (') Total GenenII and C8nlIIr Education Programs SPECIAL EDUCATION PROGRAMS RegularProgIlll1lll category I rl categoryllrl categorylllrl categoryfVrl Sub-TotaI- Regular category VI (G!fted) rl Total Special Education Programs REMEDIAL EDUCATION PROGRAM M Total Fourteen weighted PIDgnIms MEDIA CENTER PROGRAMS Total Media center PIDgnIms ALLOTMENTS FROM DEPARTMENT OF EDUCATION ORIGiNAl ..JL. REQUIRED ORIGiNAl MI[).TERM $ 401.1165.00 381.498.50 954.484.00 959,017.60 $ 1.356.129.00 90 $ 1,220.518.10 492.458.00 90 443,212.20 843.745.00 90 759.370.50 432.588.00 90 389.329.20 318.999.00 90 287.099.10 272,257.00 90 245.031.30 3.718,178.00 $ 3.344.588.40 0.00 0.00 103,072.00 100.000.00 203.072.00 814.195.00 952.775.50 $ 0.00 $ 814.195.00 90 552.775.50 $ 53,878.00 90 48.310.20 $ 887,873.00 $ 601.095.70 $ $ 215,427.00 90 $ 193,884.30 $ $ 4.589,478.00 $ 4,139.528.40 $ 0.00 0.00 0.00 .203,072.00 $ 127,283.00 90 30.818.00 90 $. _ _1",58",.08=1",.00:::. 114,538.70 27,738.20 142.272.90 $ 0.00 ....!O~.OO~ Total Fourteen Weighted and MedIa center Programs $ 4:757957.00 $ 4,281,801.30 $_...:203='il:0072~.oo:::. STAfF DEVELOPMENT PROGRAMS Cost of Instruetlon Professional Development 14,881.00 36,420.00 14,881.00 0.00 36.420.00 0.00 Total Stall Development Programs rl I_os Fou_n Weighted Programs. see notes to the general purpose financial statements. $ 51,301.00 100 $' _ _.:;5;.:,I,o::30~I:;:.00:::. 0.00 26 - SCHEDULE "6" 14.881.00 36,420.00 51,301.00 37.253.12 15,403.07 37.253.12 15,403.07 52.656.19 0.00 - 27 - SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS RUSSELL W. HINTON STATE AUDITOR (404) 66&2174 DEPARTMENT OF AUDITSAND ACCOUNTS 254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400 May 5, 1999 Honorable Roy E. Barnes, Governor Members of the General Assembly Members ofthe State Board ofEducation and Superintendent and Members of the Crawford County Board of Education REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladies and Gentlemen: We have audited the financial statements ofCrawford County Board ofEducation as ofand for the year ended June 30, 1998, and have issued our report thereon dated May 5, 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 Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether Crawford County Board ofEducation'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 Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered Crawford County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its 98YB-40 operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgement, could adversely affect Crawford County Board of Education's ability to record, process, summarize and report financial data consistent with assertions ofmanagement in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-6391-98-01, FS-6391-98-Q2 and FS-6391-98-0S. A fuaterial 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 inaterial in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, all ofthe reportable conditions noted above are also considered to be material weaknesses. This report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended to limit the distribution ofthis report which is a matter ofpublic record. Respectfully submitted, RWH:jb 98YB-40 Russell W. Hinton State Auditor RUSSELL W. HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street. S.W., Suite 214 Atlanta, Georgia 30334-8400 MayS, 1999 Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofEducation and Superintendent and Members ofthe Crawford County Board ofEducation REPORT ON COMPLIANCE WI11I REOUIREMENTS APPUCABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WI11I OMB CIRCULARA-133 Ladies and Gentlemen: Compliance We have audited the compliance of Crawford County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1998. Crawford County Board ofEducation's major Federal programs are identified in the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Crawford County ~oard of Education's management. Our responsibility is to express an opinion on Crawford 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 Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Crawford 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 Crawford County Board of Education's compliance with those requirements. 98SA-10 In our opinion, the Crawford County Board of Education 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 Crawford County Board ofEducation is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regu1ations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Crawford County Board ofEducation's interna1 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-133. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe interna1 control components does not reduce to a relatively low level ofrisk that noncompliance with applicable requirements of laws, regu1ations, 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, ~_.OQ ~.<1::l~ Russell W. Hinton State Auditor RWH:jb 98SA-1O SECTIONm AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS CRAWFORD COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30. 1998 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS 6391-93-03 6391-93-04 6391-93-05 6391-95-11 6391-96-01 6391-97-01 6391-97-02 6391-97-03 6391-97-04 Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective ActionlResponses Unresolved - See Corrective ActionlResponses Unresolved - See Corrective Action/Responses Unresolved - See Corrective ActionlResponses CORRECTIVE ACI10NIRESPONSES EXPENDITURESILIABll..lTIESIDISBURSEMENTS Failure to Meet Expenditures Requirements Amount: $2,089.07 Finding Control Number: 6391-96-01 The underexpenditure of Quality Basic Education (QBE) funds of $2,089.07 for the Staff Development Program will be returned to the Georgia Depamnent ofEducation through an increase in the Board's local fair share for the QBE programs in a subsequent fiscal period. CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number: FS-6391-97-01 (1) The Crawford County Board of Education made a very conscientious effort to start trying to reconcile past years' bank statements during FY 97. The Board bas now designated a specific person for reconciling bank statements and FY 99 results have yielded an identifiable variance and the reconciliations appear to be mathematically correct. (2) The Crawford County Board of Education will no longer process checks out of numerical sequence. (3) The Crawford County Board of Education will no longer process checks out of numerical sequence trying to save checks. This fmding was due to a mistake in putting the beginning check number in GENESIS (which creates the check register) that did not match the beginning number of the actual checks. - 1- CRAWFORD COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30. 1998 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS CORRECI'IVE ACTIONIRESPONSES CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number: FS-6391-97-01 (4) The Crawford County Board ofEducation has ordered new checks for payroll with a wide gap in the numbering of the checks to ensure payroll check numbers will not run into the same numbering as vendor checks. CASH AND CASH EQUIVALENTS GENERAL LEDGER Inadequate Separation of Duties Finding Control Number: FS-639I-97-02 (1) The Crawford County Board of Education has designed a system in FY 99 that requires the bank statements to be reconciled within 15 working days after receipt of the bank statements. The Superintendent will review and initial the reconciliations. Also, the employee designated to receive cash will not be the same employee that maintains the general ledger. (2) The Crawford County Board of Education has identified the Superintendent as the employee to review and approve alljournal entries. Each month the Superintendent will review all journal entries. This review will be documented by the Superintendent's signature and date. EXPENDITURESlLlABILITIESIDISBURSEMENTS Failure to Meet Expenditures Requirements Amount: $800.35 Finding Control Number: FS-639I-97-03 The underexpenditure of Quality Basic Education (QBE) funds of $800.35 for the Staff Development Program will be returned to the Georgia Department ofEducation through an increase in the Board's local fair share for the QBE programs in a subsequent fiscal period. GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: 6391-97-04 Due to budgetary constraints, the Board had previously decided not to account for fixed assets on the financial statements. The Board has now decided that starting in fiscal year 1999, it will start deriving values on fixed assets to possibly account for them in the future. -2- CRAWFORD COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30. 1998 PRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS 6391-96-03 Previously Reported Corrective Action Implemented -3- SECTION IV FINDINGS AND QUESTIONED COSTS CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30. 1998 SUMMARY OF AUDITOR'S RESULTS 1. Type ofReoort Issued on the Financial Statements The auditots opinion on the Crawford County Board ofEducation's financial statements was qualified for 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 Crawford County Board ofEducation disclosed financial statement reportable conditions related to the following control categories. Cash and Cash Equivalents General Fixed Assets General Ledger All ofthe reportable conditions described above are considered to be material weaknesses. 3. Noncompliance Material to the Financial Statements The audit ofthe Crawford County Board ofEducation disclosed no instances of noncompliance that were deemed to be material to the financial statements. 4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Crawford County Board of Education did not disclose any reportable conditions in internal control over major programs. 5. Type ofReport Issued on Compliance for Major Programs The auditor's opinion on the Crawford County Board of Education's report on compliance with requirements applicable to major programs was unqualified. 6. Audit Findings Required to be Reported by Section .510(a) ofOMB Circular A-l33 The Crawford County Board of Education's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-l33. 7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00. 9. Low Risk Auditee The Crawford County Board ofEducation was audited as a low risk auditee based oli a waiver granted by the U. S. Department of Education. -I - CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30. 1998 n FINANCIAL STAlEMENT FINDINGS AND OUESTIONED COSTS CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Reportable Condition - Material Weakness Repeated from Prior Year Finding Control Number: FS-6391-98-o1 The Crawford County Board ofEducation's accounting procedures were insufficient to provide for adequate internal control over the bank reconciliation process. The monthly bank statements for all accounts (except for the school food service account), were not reconciled to the general ledger. Alternative procedures were utilized to verify the Board's financial statement's cash balance. An estimated cash balance was determined by tracing the checks written and deposits made on the accounting records to the subsequent period's bank statements. An unlocated variance in the general operating account of $396.78 remained between the reported book balance for cash and the estimated cash balance. No adjustment was made to the accounting records for this unlocated variance. The above deficiency was a result of management's failure to implement proper internal control procedures over cash and bank reconciliations that are necessary to adequately safeguard assets and record the cash operations of the Board. Appropriate controls should be immediately implemented to safeguard the cash operations ofthe Board. CASH AND CASH EQUIVALENTS GENERAL LEDGER Inadequate Separation ofDuties Reportable Condition - Material Weakness Repeated from Prior Year Finding Control Number: FS-6391-98-02 An examination of the internal control procedures revealed that the Board did not provide for adequate separation ofduties in the performance ofthe following accounting functions and related procedures: I) Bank reconciliations for the School Food Services Fund were not reviewed by an individual independent ofcash operations. 2) The cash receipts function of the School Food Services Fund was not separated from the maintenance of the general ledger. 3) Journal Entries were not approved by someone outside of the record keeping function. -2- CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30. 1998 IT FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS CASH AND CASH EQUIVALENTS GENERAL LEDGER Inadequate Separation of Duties Reportable Condition - Material Weakness Repeated from Prior Year Finding Control Number: FS-6391-98-02 These conditions were a result of management's decision to limit the number of administrative staff made responsible for accounting functions. The Board should review the accounting procedures in place, design procedures which would enhance segregation ofduties relative to the above control categories and implement those procedures to strengthen the internal control over the accounting functions. EXPENDITURESlLlABILITIES/DISBURSEMENTS Failure to Meet Expenditures Requirements Nonmaterial Noncompliance Amount: $4,140.48 Finding Control Number: FS -6391-98-03 The Crawford County Board of Education had an underexpenditure of Quality Basic Education (QBE) funds of $1,547.97 for the Category VI - Gifted, Special Education Program and $2,592.51for the Media Center Program. These underexpenditures occurred because the Board expended less than the minimum expenditure requirement for these QBE programs. These funds should be returned to the Georgia Department of Education through an increase in the Board's local fair share for the QBE programs in a subsequent fiscal period. ' GENERAL LEDGER Detailed Listing of Salaries and Travel Not Reconciled Financial Statements Nonmaterial Noncompliance Finding Control Number: FS-6391-98-04 The detailed listing of salary and travel payments made to employees as submitted by the Board to the Georgia Department of Audits was not reconciled with the general ledger as presented for audit. These unlocated differences totaling $7,930.58 are reflected in Supplementary Information Summary and Schedule of Salaries and Travel, which is issued under separate cover. This condition occurred because management did not ensure that amounts submitted to the Georgia Department of Audits were reconciled to the Board's general ledger. Procedures should be established by the Board to ensure that the detailed listing of salary and travel is reconciled to the accounting records. -3- CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 1998 IT FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated from Prior Year Finding Control Number: FS-6391-98-0S The Crawford County Board ofEducation failed to maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general purpose financial statements of the Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Board to establish accounting controls and procedures to provide for maintenance ofa General Fixed Assets Account Group. These subsidiary records should include an inventory ofland, 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. ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. -4-