Crawford County Board of Education, Roberta, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2007

CRAWFORD COUNTY BOARD OF EDUCATION
ROBERTA, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

CRAWFORD COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENTOFNETASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

8

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

9

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

23

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

24

3 SCHEDULE OF STATE REVENUE

26

CRAWFORD COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

27

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

29

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133

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

SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

CRAWFORD COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 23, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Crawford County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) ofthe Crawford County Board of Education, as of and for the year ended June 30, 2007, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Crawford County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Crawford County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 opinions.

2007ARL-21

As discussed in Note 2 to the financial statements, management has not segregated the school activity (principal) account maintained at the middle school between the governmental activities, general fund or fiduciary fund (which comprises a material portion ofthe aggregate remaining fund information) as appropriate. Accounting principles generally accepted in the United States of America require that the assets, liabilities, revenues, expense or expenditures, as appropriate, and the respective changes in financial position ofthese accounts be segregated in these financial statements. The aggregate effect on the financial statements of this variance or omission has not been determined, but is believed to be material.
In our opinion, because ofthe matter discussed in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States ofAmerica, the financial position ofthe aggregate remaining fund information of the Crawford County Board of Education, as of June 30, 2007, and the changes in financial position thereof for the year then ended.
In addition, in our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position ofthe governmental activities and each major fund ofthe Crawford County Board of Education, as of June 30, 2007, and the respective changes in financial position thereoffor the year then ended in conformity with accounting principles generally accepted in the United States of America.
The Crawford County Board ofEducation has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not to be part of, the basic financial statements.
In accordance with Government Auditing Standards, we have also issued our report dated June 23, 2008, on our consideration of the Crawford County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 23, is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Crawford County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial
2007ARL-21

statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, except for the effects ofthe matters referred to in the third paragraph, such information, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
~w.4.:k. Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2007ARL-21

CRAWFORD COUNTY BOARD OF EDUCATION

CRAWFORD COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2007
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

1,735,752

3,023,688

206,285 1,255,689
621,749 56,828 56,111

121,073 792,300 18,577,002 2,599,319 -7,837,318

$ ===2=1.,,.,2=0=8,..,47=8=

$

138,159

1,760,250

158,058 252,803

$

2,309,270

$

13,841,515

229,261 6,399
2,582,431 2,239,602

$

18,899,208

$ ===2=1=,2=0=8,.4.7.=8=

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

CRAWFORD COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2007

GOVERNMENTAL ACTIVITIES
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 Operations of Non-Instructional Services Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Railroad Car Taxes Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$

12,379,442 $

660,667 232,213 231,566 601,804 991,953 136,112 1,256,683 1,098,096
33,144

1,209,977 25,094

$

18,856,751 $

110,550 280,274
16,265 6,573
279,959 693,621

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

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

9,023,471

80,872 149,406 177,279 562,368 400,876
5,115 500,926 460,287 $
3,983

943,571

$

12,308,154 $

$ 243,026 243 026 $

-3,245,421
-299,521 -82,807 -38,022 -39,436
-584,504 -130,997 -755,757 -394,783
-29,161
13,553 -25 094
-5,611,950

$

3,338,131

13

4,690

645,458 53,979
1,484,493 238,732 82 815

$

5 848 311

$

236,361

18 662 847

$ ===18=,8=9=9=,2=08=

-3-

CRAWFORD COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2007

EXHIBIT"C"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$

702,106 $ 1,032,720 $

621,458

2,402,230

227,631 1,255,689
621,749 45,072 56 111

105,363 11,756

926 $

1,735,752 3,023,688
332,994 1,255,689
621,749 56,828 56 111

Total Assets

$ 3,529,816 $ 3,552,069 $

926 $ =====7:!=0=8=2=8=11=

LIABILITIES AND FUND BALANCES

LIABILITIES

Accounts Payable

$

Salaries and Benefits Payable

Total Liabilities

$

FUND BALANCES

Reserved for:

Continuation of Federal Programs

$

Debt Service

Inventories

Capital Projects

Unreserved

Designated for Student Activities

Undesignated Reported in:

General Fund

Capital Projects

Total Fund Balances

$

138,159 1,760,250 1,898,409
173,150 $
56,111
111,832 1,290,314
1 631 407 $

5,473 $ 2,582,431
964165 3,552,069 $

$

138,159

1760250

$

1898409

$ 926
926 $

173,150 6,399
56,111 2,582,431
111,832
1,290,314 964165
5 184 402

Total Liabilities and Fund Balances

$ 3,529,816 $ 3,552,069 $

926 $ ===7=-0=8=2=8=11=

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

CRAWFORD COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2007

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable Capital Leases
Total Long-Term Liabilities
Net Assets of Governmental Activities (Exhibit "A")

$

5,184,402

$

121,073

792,300

18,577,002

2,599,319

-7 837 318

14,252,376

-126,709

$

-270,000

-140 861

-410 861

$ 18,899,208

The notes to the basic financial statements are an integral part of this statement. -5-

CRAWFORD COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2007

EXHIBIT"E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation
Debt Services Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES {USES)
Capital Leases Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 3,572,425 53,979 $
10,777,661 3,258,012
693,621 113,804 82,815
$ 18,552,317 $

$ 645,458
124,927 770,385 $

13 $ 14 $

3,572,438 699,437
10,777,661 3,258,012
693,621 238,732
82,815
19,322,716

$ 11,957,710 $

660,667 232,213 231,566 601,804 991,953 134,498 1,175,839 1,220,899
33,144 1,200,041

106,432 6172

$ 18,552,938 $

$

-621 $

4,636
120,629 $
125,265 $ 645,120 $

$
125,000 18,922
143,922 $ -143,908 $

11,962,346
660,667 232,213 231,566 601,804 991,953 134,498 1,296,468 1,220,899
33,144 1,200,041
231,432 25,094
18,822,125
500,591

$

113,399

$

$ -143,922

$

113,399 $ -143,922 $

$

112,778 $ 501,198 $

1,518,629

3,050,871

$ 143,922
143,922 $ 14 $
912

113,399 143,922 -143,922
113,399
613,990
4,570,412

$ 1,631,407 $ 3,552,069 $

926 $ =====5=1,=8,,.4,=4=02=

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

CRAWFORD COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2007

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.
Some of the Capital Assets acquired this year were financed with capital leases. In Governmental Funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Assets, the lease obligation is reported as a Long-Term Liability.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Bond Principal Retirements Capital Lease Payments
Total Long-Term Debt Repayments
Change in Net Assets of Governmental Activities (Exhibit "B")

$

613,990

$

339,016

-605 074

-266,058 -229,604

-113,399

$

125,000

106 432

231 432

$ ===23=6=3=6=1

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

CRAWFORD COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2007
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT"G"
AGENCY FUNDS
$ =====1,..07=7=
$ ======1=07=7=

The notes to the basic financial statements are an integral part of this statement. -8-

CRAWFORD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Crawford County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Crawford County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement ofActivities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.

-9-

CRAWFORD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments, or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless ofwhen the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized
- 10-

CRAWFORD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
During fiscal year 2007, the School District did not segregate its middle school's activity accounts between governmental and fiduciary activities in accordance with generally accepted accounting principles. This change is not in accordance with generally accepted accounting principles.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone 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 ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
- 11 -

CRAWFORD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(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.

The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration ofcredit risks, interest rate risks or foreign currency risks.

RECEIVABLES

Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

PROPERTY TAXES

The Crawford County Board of Commissioners fixed the property tax levy for the 2006 tax digest year (calendar year) on August 10, 2006 (levy date). Taxes were due on December 20, 2006 (due date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2006 tax digest are reported as revenue in the governmental funds for fiscal year 2007. The Crawford County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2007, for maintenance and operations amounted to $3,567,735 and for school bonds amounted to $13.

The tax millage rate levied for the 2006 tax year (calendar year) for the Crawford County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

15.0 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $645,458 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

- 12 -

CRAWFORD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVENTORIES

FOOD INVENTORIES On the basic financial statements, inventories ofdonated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

CAPITAL ASSETS

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

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

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment

All

NIA

$

5,000 20 to 80 years

$

5,000 10 to 80 years

$

5,000 3 to 20 years

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

GENERAL OBLIGATION BONDS

The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial

- 13 -

CRAWFORD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
statements during the fiscal 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 of these bonds is recorded in the Statement of Net Assets.
NET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,

- 14 -

CRAWFORD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS

(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or ofthe State of Georgia,

(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,

(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,

(6) Industrial revenue bonds and bonds of development authorities created by the laws 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 or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS At June 30, 2007, the bank balances were $4,254,839. The amounts of the total uninsured bank balances are classified into three categories of custodial credit risk:

Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or
by its trust department or agent in the School District's name, Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the School District's name.

The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2007, as follows:

Custodial Credit Risk Category

Bank Balance

1

$

0

2

1,445,262

3

2,586.344

Total

$ 4,031,606

- 15 -

CRAWFORD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS
CATEGORIZATION OF INVESTMENTS At June 30, 2007, the carrying value ofthe School District's total investments was $1,487,049, which is materially the same as fair value. This investment consisted entirely offunds invested in the Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy 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. Additional information on the Local Government Investment Pool is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department ofAudits and Accounts at http://www.audits.state.ga.us/internet/searchRpts.html.
The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2007, was 15 days.
Note 4: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories
Note 5: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:

- 16 -

CRAWFORD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 5: CAPITAL ASSETS

Balances July 1, 2006

Increases

Balances Decreases June 30, 2007

Governmental Activities

Capital Assets, Not Being Depreciated:

Land

$ 121,073 $

0 $

0 $ 121,073

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 18,577,002 2,550,811 $ 758,660

305,376 $ 33,640

$ 18,577,002

256,868

2,599,319

792,300

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

5,169,423 1,915,102
404.587

365,788 202,551
36,735

256,868

5,535,211 1,860,785
441,322

Total Capital Assets, Being Depreciated, Net $ 14,397.361 $ -266,058 $

0 $ 14,131,303

Governmental Activity Capital Assets - Net $ 14,518.434 $ -266.058 $

0 $ 14,252.376

Capital assets being acquired under capital leases as of June 30, 2007, are as follows:

Equipment Less: Accumulated Depreciation

Governmental Funds
$ 254,399 51,150

Current year depreciation expense by function is as follows:

Instruction

Support Services

Business Administration

$

Maintenance and Operation of Plant

Student Transportation Services

Food Services

$==2=03-,2==4==9

$
1,614 3,342 160,696

429,486
165,652 9,936

Note 6: RESTRICTED ASSETS

$====6=05-,0==7===4

Special Purpose Local Option Sales Tax (SPLOST) and property tax levied specifically for retirement ofoutstanding bond principal, interest and paying agent's fees (Debt Service Funds) are

- 17 -

CRAWFORD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 6: RESTRICTED ASSETS

restricted assets in the Statement ofNet Assets because their use is limited by applicable statutory provisions. Restricted assets at June 30, 2007, were as follows:

District-wide Capital Projects SPLOST

Debt Service Funds

Restricted Cash and Cash Equivalents: Debt Services Capital Acquisitions
Restricted Investments: Capital Acquisitions

$

5,473 $

926

$

17,685

$ 2,402,230

Note 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2007, consisted of the following:

Transfer to

Transfers From District-wide
Capital Projects

Debt Service Fund

$=====14==3-,9==2==2

Transfers are used to move sales tax revenues collected by the District-wide Capital Projects Fund for payment of bonds.

Note 8: RISK MANAGEMENT

The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.

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

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

- 18 -

CRAWFORD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 8: RISK MANAGEMENT

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated.

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

2006 2007

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

$

0 $

5 270 $

5 270 $

0

$

0 $

4669 $

4669 $

0

The School District participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July 1, 1992, to develop, implement, and administer a program ofworkers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $400,000 loss per occurrence, up to $1,000,000.

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

Position Covered

Amount

All Employees

$ 100,000

Note 9: LONG-TERM DEBT

CAPITAL LEASES The Crawford County Board ofEducation entered into various lease agreements for the purchase of buses. These lease agreements qualify as capital leases for accounting purposes, and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception.

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

Purpose

Interest Rate

Amount

General Government - Refunding - Series 1998

4.74%

$====2==70-,0=0==0

- 19 -

CRAWFORD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 9: LONG-TERM DEBT

The changes in Long-Term Debt during the fiscal year ended June 30, 2007, were as follows:

Governmental Funds

General

Capital

Obligation

Leases

Bonds

Total

Balance July 1, 2006

$ 133,894 $ 395,000 $ 528,894

Additions Capital Leases

113,399

113,399

Deductions Debt Retired

106,432

125,000

231,432

Balance June 30, 2007

$ 140.861 $ 270.000 $ 410,861

Portion of Long-Term Debt Due within One Year

$

28,058 $ 130,000 $ 158,058

At June 30, 2007, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

Canital Leases

Princinal

Interest

2008 2009 2010 2011

$

28,058 $

55,821

27,811

29,171

2,553 5,387 2,786 1427

Total Principal and Interest

$ 140,861 $

12,153

Fiscal Year Ended June 30

General Obligation

Debt

Princinal

Interest

2008 2009

$ 130,000 $ 140,000

12,798 6,636

Total Principal and Interest

$ 270,000 $

19,434

- 20-

CRAWFORD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 10: SIGNIFICANT CONTINGENT LIABILITIES

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

The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.

Note 11: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2007 2006 2005

100% 100% 100%

$ 840,906 $ 808,152 $ 763,936

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CRAWFORD COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2007

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil 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
Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Other Sources
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

$

3,261,335 $

3,261,335 $

3,572,425

53,979

9,536,487

9,995,694

10,777,661

3,289,645

3,258,012

312,988

693,621

6,476

113,804

82 815

$

12,797,822 $

16,866,138 $

18,552,317

$

8,822,993 $

10,818,377 $

11,957,710

250,013 224,020 207,422 257,122 986,037
86,039 1,113,728
892,764 35,000

290,430 445,869 207,422 417,072 1,044,113
86,039 1,138,328 1,179,718
52,743 1,118,205

660,667 232,213 231,566 601,804 991,953 134,498 1,175,839 1,220,899
33,144 1,200,041
112 604

$

12,875,138 $

16,798,316 $

18,552,938

$

-77,316 $

67,822 $

-621

113 399

$

-77,316 $

67,822 $

112,778

1,539,924

1,539,924

1,518,629

60441

9400

Fund Balances - Ending

$

1,523,049 $

1617146 $ _ _~1~6~3~1.40~7-

Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 23 -

CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2007

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U.S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1)
Total U.S. Department of Agriculture
Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Enhancing Education Through Technology Program Improving Teacher Quality State Grants Migrant Education Reading First State Grants Safe and Drug-Free Schools and Communities - State Grants State Grants for Innovative Programs Title I Grants to Local Educational Agencies Twenty-First Century Community Learning Centers Vocational Education - Basic Grants to States
Total U. S. Department of Education
Defense, U.S. Department of Direct Department of the Army R.O.T.C. Program
Total Federal Financial Assistance
N/A = Not Available

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

NIA NIA $
$

(2) 1,060,916
1,060,916

10.550

NIA
$

74634 1,135,550

* 84.027 * 84.173

NIA $ NIA
$

359,890 19 571
379,461

84.318 84.367 84.011 * 84.357 84.186 84.298 * 84.010 * 84.287 84.048

NIA NIA NIA NIA
NIA
NIA NIA NIA NIA
$

31,837 115,944
2,923 239,630
5,129 6,051 694,788 849,123 35 542
2,360,428

$

43 588

$===3='=53=9,!,.,5=6=6

- 24 -

CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2007

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($229,818) were not maintained separately and are included in the 2007 National School Lunch Program.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Crawford County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 25 -

CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2007

AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Gifted Student - Category VI Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Principal Supplements Vocational Supervisors Mid-term Adjustment Hold-Harmless Education Equalization Funding Grant Food Services Amended Formula Adjustment Other State Programs Agriculture Construction Related Equipment Ctae - Ag Extended Day Ctae - Ag Extended Year CTE Apprenticeship Health Insurance High School Graduation Coaches K-8 Statewide Reading and Math Middle School Summer Remedial Preschool Handicapped Program Pupil Transportation - State Bonds Vocational Construction Related Equipment Teachers' Retirement
Office of Treasury and Fiscal Services Public School Employees Retirement

See notes to the basic financial statements.

- 26-

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

387,254

428,783 83,770
1,107,149 161,255 576,732 97,913
1,195,551 1,038,802
347,313
1,238,432 63,661 98,204
178,423 57,112 36,780
348,713 392,686 491,867
349,906 43,026 20,000 50,904 6,263 9,429
266,969 1,101,929
61,482 -171,972
-5,487 28,519 15,821 19,649 282,222 40,075 29,149
4,489 29,464 200,000 50,000 13,000
2424
$ ===1=0=,7==7=7,.6.6. =1=

CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2007

SCHEDULE "4"

PROJECT
Acquiring new land for future schools; acquiring, constructing and equipping of a new elementary school; adding to renovating, repairing, improving, furnishing and equipping existing school buildings and other buildings and facilities useful or desirable in connection therewith included but not limited to, athletic/physical education facilities; system-wide technology improvements, acquiring any property necessary or desirable therefore, both real and personal.
Payment of a portion of principal and interest on the School District's General Refunding Bonds, Series 1998.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

$ 2,637,731 $ 2,637,731 $

125,265 $

257,004 Ongoing

862,269

862,269

143,922

425,242 Ongoing

$ 3,500,000 $ 3,500,000 $

269,187 $ ====68=2=,2=4=6

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.
(3) The voters of Crawford County approved the imposition of a 1% sales tax to fund the above projects. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

See notes to the basic financial statements.

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CRAWFORD COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2007

SCHEDULE "5"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES OPERATIONS

TOTAL

$

483,628 $

542,109 $

10,225 $

552,334

103,854

145,751

145,751

1,240,486

1,337,549

21,655

1,359,204

182,663

380,738

1,914

382,652

659,813

1,005,647

32,667

1,038,314

110,395 1,354,826 1,168,324
399,006 1,418,145
82,241 110 726

11,021 1,465,523 1,539,239
558,981
13,657 163
912,424 420,744
128,124
63,423

500 34,337 25,261 59,701
51,538 10,194 15,112
3,055 2,001
410 170 281

11,521 1,499,860 1,564,500
618,682
65,195 10,357 927,536 423,799
2,001 128,534
170 63 704

$

7,314,107 $ 8,525,093 $

269,021 $

8,794,114

202,459 42 004

194,889 40,038

15,617 4160

210,506 44198

TOTAL QBE FORMULA FUNDS

$

7,558,570 $ 8,760,020 $

288,798 $

9,048,818

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

See notes to the basic financial statements.

- 29-

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 23, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Crawford County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information ofCrawford County Board ofEducation as ofand for the year ended June 30, 2007, which collectively comprise Crawford County Board of Education's basic financial statements and have issued our report thereon dated June 23, 2008. This report was qualified for a departure from generally accepted accounting principles, as identified in the auditor's report on the basic financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Crawford County Board ofEducation's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the Crawford County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness ofthe Crawford County Board of Education's internal control over financial reporting.

2007YB-40

Our consideration ofinternal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies.
A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Crawford County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement ofthe Crawford County Board ofEducation's financial statements that is more than inconsequential will not be prevented or detected by the Crawford County Board ofEducation's internal control. We consider items FS-6391-07-01, FS-6391-07-02, FS-6391-07-03 and FS-6391-07-04 in the accompanying Schedule ofFindings and Questioned Costs to be significant deficiencies in internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Crawford County Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, of the significant deficiencies described above, we consider FS-6391-07-03 to be a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Crawford County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of Crawford County Board of Education in a separate letter dated June 23, 2008.
Crawford County Board ofEducation's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Crawford County Board of Education's response and, accordingly, we express no opinion on it.
2007YB-40

This report is intended solely for the information and use of the management, members of the Crawford County Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
w.4d~
Ru sell W. Hinton, CPA, CGFM State Auditor
RWH:as 2007YB-40

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 23, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Crawford County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Crawford County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2007. Crawford County Board ofEducation's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Crawford County Board 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 ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types 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.
2007SA-55

As described in items FA-6391-07-01 and FA-6391-07-02 in the accompanying Schedule of Findings and Questioned Costs, Crawford County Board of Education did not comply with requirements regarding Activities Allowed/Unallowed, Allowable Costs/Cost Principles, and Procurement and Suspension and Debarment that are applicable to its Twenty-First Century Community Leaming Centers program. Compliance with such requirements is necessary, in our opinion, for Crawford County Board of Education to comply with requirements applicable to that program.
In our opinion, except for the noncompliance described in the preceding paragraph, the Crawford County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2007. The results of our auditing procedures also disclosed instances of noncompliance with those requirements, which are described in the accompanying Schedule ofFindings and Questioned Costs as items FA-6391-07-04 and FA-6391-07-05.
Internal Control Over Compliance
The management of Crawford 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 Crawford County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Crawford County Board of Education's internal control over compliance.
Our consideration of the internal control over compliance was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in the Board's internal control that might be significant deficiencies or material weaknesses as defined below. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be significant deficiencies and others we consider to be material weaknesses.
A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type ofcompliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. We consider the deficiencies in internal control over compliance described in the accompanying Schedule ofFindings and Questioned Costs as items FA-6391-07-01, FA-6391-07-02 and FA-6391-07-03 to be significant deficiencies.
2007SA-55

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control. Of the significant deficiencies in internal control over compliance described in the accompanying Schedule ofFindings and Questioned Costs, we consider items FA-6391-07-01 andFA-6391-07-02 to be to be material weaknesses.
Crawford County Board ofEducation's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Crawford County Board of Education's response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of the management, members of the Crawford County Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
"=R,.,.. ,..ro wM::-k ~u/sell W. Hinton, CPA, CGFM State Auditor
RWH:as 2007SA-55

SECTION III 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 QUESTIONED COSTS YEAR ENDED JUNE 30, 2007

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FS-6391-05-02

Further Action Not Warranted

FS-6391-06-01

Further Action Not Warranted

(1)

FS-63 91-06-02

Further Action Not Warranted

(1)

AUDITOR'S COMMENTS

(1) Findings/internal control deficiencies ofthis nature, that are not deemed significant deficiencies or material weaknesses and do not require reporting in the audit report in accordance with Statements on Auditing Standards (SAS) 112 or Governmental Auditing Standards (Yellow Book), will be communicated in a management letter in subsequent periods.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

FA-6391-06-01 FA-63 91-06-02 FA-6391-06-03

Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

ACTIVITIES ALLOWED OR UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable Expenditures Finding Control Number: FA-6391-06-02

The School District is in the process ofcontacting the Georgia Department ofEducation to determine if a refund is appropriate.

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CRAWFORD COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES REPORTING Failure to File Accurate Completion Report Finding Control Number: FA-6391-06-03 It seems that in the past the completion reports were completed in a timely manner early in July. Then, after reports were completed, adjustments to program salaries were made which make the ending numbers incorrect. In the future, we will not fill out the completion reports until after adjustments are made. Then, no adjustments will be allowed after completion reports are done. Also, the School District is in the process ofcontacting the Georgia Department of Education to determine if a refund is appropriate.
-2 -

SECTION IV FINDINGS AND QUESTIONED COSTS

CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

I SUMMARY OF AUDITOR'S RESULTS

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

2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Crawford County Board ofEducation disclosed financial statement significant deficiencies related to the following control categories.

Cash and Cash Equivalents General Ledger Financial Reporting

Expenditures/Liabilities/Disbursements Employee Compensation Capital Assets

Of the significant deficiencies described above, Financial Reporting is considered to be a material weakness.

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

4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Crawford County Board of Education disclosed significant deficiencies in internal control over major programs for the following compliance requirements.

Activities Allowed or Unallowed Allowable Costs/Cost Principles

Reporting Procurement and Suspension and Debarment

Ofthe significant deficiencies described above, Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Procurement and Suspension and Debarment are considered to be material weaknesses.

5. Type of Report 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, except for Twenty-First Century Community Leaming Centers which was qualified.

6. Audit Findings Required to be Reported by Section .510(a) ofOMB Circular A-133 The Crawford County Board of Education's audit disclosed audit findings required to be reported by section .510(a) ofOMB Circular A-133. These audit findings are included in section IV of this report.

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CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

I SUMMARY OF AUDITOR'S RESULTS

7. Major Programs Federal awards audited as major programs are as follows: 84.010 Title I Grants to Local Educational Agencies 84.027 Special Education - Grants to States 84.173 Special Education - Preschool Grants 84.287 Twenty-First Century Community Learning Centers 84.357 Reading First State Grant

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.

9. Low Risk Auditee The Crawford County Board ofEducation did not qualify as a low risk auditee as defined by Section .530 ofOMB Circular A-133.

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER Inadequate Internal Controls Significant Deficiency Finding Control Number: FS-6391-07-01

Condition:

The accounting procedures ofthe School District were insufficient to provide for adequate internal controls.

Criteria:

The School District's Board and management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: NIA

Information:

Cash and Cash Equivalents Bank statements were not reconciled to the total cash listed on the general ledger. The variance for the General Fund account was $3,231.56.
Six accounts were detected through confirmations that operate using the Board name and tax identification number. These accounts were not recorded on the general ledger and it was indicated that they were not under Board control.

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CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER Inadequate Internal Controls Significant Deficiency Finding Control Number: FS-6391-07-01

Expenditures/Liabilities/Disbursements A GSBA promissory note in the amount of $55,856.00 was not recorded on the general ledger. During subsequent period review, it was determined fiscal year 2007 expenditures were understated by $27,633.98. Three ofthe ten SPLOST expenditures tested were not approved by the Board.

Employee Compensation The salaries and benefits payable listing provided as documentation was $88,332.10 greater that the amount recorded on the School District's general ledger.

General Ledger Of 66 journal entries made by the central office, 14 were missing from the journal entry book. Ofthe 16 entries reviewed by the auditor, four were unapproved, two did not have supporting documentation, and two were incorrect/ unallowable.

Cause:

These deficiencies were a result of the School Board and management's failure to ensure that internal controls were established, implemented and functioning.

Effect:

Errors or irregularities may not be detected by the Board in a timely manner. Fraudulent or illegal activities may be conducted using the Board's name and Tax ID number.

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CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER Inadequate Internal Controls Significant Deficiency Finding Control Number: FS-6391-07-01

Recommendation:

The School District should: Implement controls sufficient to ensure that the key accounting functions ofcustody, record keeping and authorization are separated and/or utilize management oversight ofthese incompatible activities. Ensure that only Board management controlled business is conducted in Crawford County Board of Education's name and using its tax identification number. All such activities should be recorded in the general ledger and reported on the financial statements. All transactions and journal entries should be checked for accuracy using sufficient supporting documentation and should be approved in writing. All documentation and approvals should be obtained before recording or payment. Deposits, investments and cash accounts should be reconciled and all variances should be fully investigated in a timely manner.

GENERAL LEDGER Deficit Fund Balances Significant Deficiency Finding Control Number: FS-6391-07-02

Condition:

Several of the School District's Federal program funds had deficit fund balances at year end.

Criteria:

Chapter 22 Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration indicates that School Districts must prepare their financial statements in accordance with generally accepted accounting principles.

Questioned Cost: NIA

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CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Deficit Fund Balances Significant Deficiency Finding Control Number: FS-6391-07-02

Information:

Examination of the accounting records revealed that five of the School District's Federal programs had the following deficit fund balances at June 30, 2007:
Special Education - $24,792 Vocational Education - $1,557 Innovative Education - $3,735 Title II - $56,306 Twenty-First Century - $33,265

Cause:

Management failed to use effective budgeting techniques and continued charging expenditures to Federal programs after the award amount had been depleted.

Effect:

The result is an over reporting ofFederal expenditures and an under reporting of general fund expenditures. The budgets for these Federal programs were not balanced.

Recommendation:

The School District should implement procedures to ensure that Federal program expenditures are compared to, and kept within the budgeted reimbursable amounts. All over expenditures should be paid out of the General Fund. The deficit fund balances for these Federal program funds should be eliminated through transfers from the General Fund.

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-6391-07-03

Condition:

The School District did not have adequate controls in place over the financial statement reporting process.

Criteria:

Management is responsible for having adequate controls over the financial reporting process, which not only includes proper recording oftransactions to the general ledger, but extends to accurate preparation and presentation ofthe financial statements, including note disclosures.

-5-

CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-6391-07-03

Questioned Cost: NIA

Information:

The Governmental Accounting Standards Board (GASB) Statement 34 reporting model requires the presentation ofboth fund level and entity-wide level statements in the School District's financial statements. During the audit, numerous correcting entries were proposed by the auditor and accepted by the client to properly present the entity's fund level and entity-wide level financial statements. In addition, several immaterial misstatements identified during the audit were not corrected on the financial statements.

During the auditor's review of the Fiduciary funds account Funds Held for Others, it was discovered that the School District has changed its method of accounting for the Agency fund portion of Student Activities. The Middle School had agency activity reported in prior years, but none reported in the current year. This change in accounting principle is not in conformity with accounting principles generally accepted in the United States of America.

Cause:

The School District did not implement an adequate system ofinternal control over the financial statement reporting process.

Effect:

The School District does not have adequate controls in place to ensure that the financial statements were properly prepared in accordance with generally accepted accounting principles. This deficiency is considered to be a financial statement irregularity in accordance with the O.C.G.A. 20-2-67.

Recommendation:

The School District should develop and implement internal controls over the financial statement reporting process to ensure that activity is properly recorded in the general ledger; to verify that financial statements (including note disclosures) properly reflect activity reported in the general ledger; and to include a monitoring process to evaluate the accuracy of the financials presented for audit.

-6-

CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Significant Deficiency Finding Control Number: FS-6391-07-04

Condition:

The School District failed to adequately maintain the capital assets listing and failed to accurately reflect the capital assets on the general ledger.

Criteria:

Chapter 37 Fixed Assets Financial Management for Georgia Local Units of Administration indicates that School Districts must establish fixed asset policies, define system requirements, implement a fixed asset system and maintain fixed asset inventory records.

Questioned Cost: NIA

Information:

A review of the capital assets listing and the general ledger revealed the following deficiencies:

Two current year and three prior year purchases were not properly capitalized. The net value, after depreciation, was $67,125.40.
Current year additions to the listing were missing location, brand and asset identification tag numbers.
Of eight additions that were tested, three were not properly depreciated using the half-year convention per Board policy.
Of ten assets traced from the listing to location, three had no identification tag.

Cause:

The School District failed to adequately implement all necessary capital assets policies to ensure adequate internal controls over capital assets and failed to follow all Board approved capital assets policies that had been placed into operation in the School District.

Effect:

The failure ofthe School District to maintain a complete and accurate capital assets listing can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles.

Recommendation:

The School District should review its capital assets records and make appropriate adjustments to ensure that capital assets records conform to the School District's approved capital assets policy and generally accepted accounting principles.

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CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED Unallowable Activities Unallowable Expenditures Material Weakness Material Noncompliance U. S. Department of Education Through Georgia Department of Education Twenty-First Century Community Learning Centers (CFDA 84.287) Finding Control Number: FA-6391-07-01

Condition:

A review ofthe Twenty-First Century Community Learning Centers (CFDA 84.287) program revealed unapproved and unallowable expenditures.

Criteria:

Sections 4101 and 4105 of Title IV-B of No Child Left Behind (NCLB) requires that the Twenty-First Century Community Leaming Centers (21 st Century) program specify that funds are to be used to provide tutorial services to students to meet State and local standards in core academic subjects. Funds may be used to offer students a broad array of additional services, programs and activities that are designed to reinforce and complement the regular academic program ofparticipating students. Funds may also be used to support families of students (underlining supplied) with opportunities for literacy and related educational development. Specific approved activities, in line with NCLB, are included in the approved Georgia Department of Education (GDOE) application.

Questioned Cost: $96,798

Information:

During a review of21 st Century expenditures, several did not conform to the provisions of Sections 4101 and 4105 of Title IV-B of NCLB, and to the budgets and grant application approved by GDOE. While funds are to be used for students and their families, we identified activities, such as apprenticeship programs, daycare/Pre-K programs, senior citizen programs and programming inclusive ofnon-target students that were funded with 21 st Century program funds. Furthermore, these activities were not included in the GDOE approved application. These expenditures were attributed to the program being a "community" learning program and all members of the community were invited to participate. These activities were primarily provided at the "Family Learning Center". A calculation of known expenditures related to the "Family Leaming Center" facility equals $96,798 and is not considered to be all inclusive.

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CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED Unallowable Activities Unallowable Expenditures Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education Twenty-First Century Community Learning Centers (CFDA 84.287) Finding Control Number: FA-6391-07-01

Cause:

The School District and management failed to implement internal controls for monitoring compliance with the GDOE approved application and Federal grant requirements.

Effect:

Failure to comply with approved program activities and properly monitor expenditures for compliance resulted in material noncompliance with the requirements of this Federal grant.

Recommendation:

The School District should implement policies sufficient to ensure that only activities specifically detailed and budgeted in the approved program application are expended. The Georgia Department of Education (GDOE) should review this program to determine if all activities are, in fact, allowable. If unallowable activities have occurred, then costs should be questioned by GDOE as deemed necessary.

ALLOWABLE COSTS/COST PRINCIPLES PROCUREMENT AND SUSPENSION AND DEBARMENT Unallowable Activities Unallowable Expenditures Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education Twenty-First Century Community Learning Centers (CFDA 84.287) Finding Control Number: FA-6391-07-02

Condition:

A review ofthe Twenty-First Century Community Learning Centers (CFDA 84.287) program revealed undocumented and unallowable expenditures.

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CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES PROCUREMENT AND SUSPENSION AND DEBARMENT Unallowable Activities Unallowable Expenditures Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education Twenty-First Century Community Learning Centers (CFDA 84.287) Finding Control Number: FA-6391-07-02

Criteria:

0MB Circular A-87 guidelines require that "Governmental units assume responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives and the terms and conditions of the Federal award. To be allowable under Federal awards, costs must meet the following general criteria: (1) Be allocable to Federal awards under the provisions of the Circular. (2) Be adequately documented. (3) Budget estimates or other distribution percentages determined before the services are performed do not qualify as support for charges to Federal awards. (4) Adequacy of the contractual agreement for service e.g., description of the service, estimate of time required, rate of compensation and termination provisions".

The Crawford County Board ofEducation's nepotism policy states that "close relatives may not be employed in the same school or under the same administrative unit head".

Questioned Cost: $179,408

Information:

Line item budget amounts varied greatly from actual expenditures. In addition, actual expenditures were not reliable due to inconsistent coding of expenditure line items. The approved Georgia Department of Education (GDOE) grant application included a budget of$70,584 for Administration and Business Support Services. The School District's financial records indicated that $67,066 was charged to these line items; however, the auditor's estimate of miscoded amounts is $126,488. The total of known and estimated miscoded amounts is approximately $193,554 which represents $122,970 in excess of the approved budget. Additionally, the known and estimated miscoded amounts are approximately 23 % of total program expenditures.

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CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ALLOWABLE COSTS/COST PRINCIPLES PROCUREMENT AND SUSPENSION AND DEBARMENT Unallowable Activities Unallowable Expenditures Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education Twenty-First Century Community Leaming Centers (CFDA 84.287) Finding Control Number: FA-6391-07-02
Six expenditures were unapproved by the Program Director or Coordinator.
Five expenditures lacked evidence of receipt.
Fuel expenditures were based on the approved budget. Four months of all the School District's fuel expenditures totaling $56,438 were charged to the 21 st Century program. The program Director specifically stated that these charges were based on the budgeted amount.
Appropriate contracts were not executed by the School District, as follows:
1) We requested, but did not receive, contracts for services provided by the following organizations: Ace, Pure Potential, Boys and Girls Club and Big Brothers Big Sisters.
2) The School District retained the services of 146 non-employees without contract or written agreement. The total amount paid for these individuals was $285,849 or 34% of total expenditures. While these individuals did receive 1099's documenting pay received, many of them may be considered employees by labor law definitions subject to withholdings and employer contributions. Additionally, several had no application, fingerprints, or background checks on file. Finally, student workers were retained without appropriate work permits.
3) Three of the Director's relatives as well as three of the Coordinator's relatives were paid a total of $82,073 for professional services and thus creating the appearance of nepotism. There was no indication that the School District's personnel followed its nepotism policy.
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CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES PROCUREMENT AND SUSPENSION AND DEBARMENT Unallowable Activities Unallowable Expenditures Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education Twenty-First Century Community Learning Centers (CFDA 84.287) Finding Control Number: FA-6391-07-02

Cause:

The School District and management failed to implement internal controls for monitoring compliance with the GDOE approved application, Federal grant requirements, State labor laws and Board policies.

Effect:

Failure to properly monitor expenditures for compliance resulted in material noncompliance with the requirements of this Federal grant.

Recommendation: Management should ensure that:

1) Expenditures are compared to the approved budget, charged to the correct function and approved by the Program Director. Management should ensure that no expenditures exceed the budgeted line item.

2) Expenditures are adequately documented, including but not limited to, time logs, documentation of students or family members receiving services, actual transportation costs, and activity participant rosters.

3) Contracts or other written understandings are executed and placed on file for substantially all partners, contractors, and professionals retained.

4) Work permits, applications, background checks and fingerprints are obtained and maintained.

5) All employees and paid professionals comply with the School District's nepotism policy. Documentation ofqualifications, open competition, and the hiring rationale should be retained to eliminate all appearance of nepotism.

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CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES PROCUREMENT AND SUSPENSION AND DEBARMENT Unallowable Activities Unallowable Expenditures Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education Twenty-First Century Community Leaming Centers (CFDA 84.287) Finding Control Number: FA-6391-07-02

The School District should contact their attorney regarding State and Federal labor laws, especially regarding overtime.

The Georgia Department ofEducation (GDOE) should review this program to determine if all activities are, in fact, allowable. Ifunallowable activities have occurred, then costs should be questioned by GDOE as deemed necessary.

REPORTING Failure to File Accurate Completion Reports Significant Deficiency U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Reading First State Grant Program (CFDA 84.357) Special Education Cluster (CFDA 84.027 and 84.173) Finding Control Number: FA-6391-07-03

Condition:

This is a repeat finding (FA-6391-06-01) from the year ended June 30, 2006. The School District failed to file accurate completion reports for the Title I Grants to Local Educational Agencies program, the Reading First State Grant program, and the Special Education Flow-Through program. In addition, the Title I completion report was not filed by the required deadline.

Criteria:

The instructions provided by the Georgia Department ofEducation mandate that financial management systems provide accurate, complete and current disclosures for the financial results of each grant program. Completion reports are to be completed by the September 30 following the award year.

Questioned Cost: $24,714.78

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CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

REPORTING Failure to File Accurate Completion Reports Significant Deficiency U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Reading First State Grant Program (CFDA 84.357) Special Education Cluster (CFDA 84.027 and 84.173) Finding Control Number: FA-6391-07-03

Information:

A review of the School District's accounting records revealed that the completion reports were not supported by the total expenditures for these programs as indicated below:

Actual Program Expenditures

Expenditures per Completion
Report

Variance

Title I Reading First Special Education
Flow-Through

$ 569,979.88 $ 239,630.48
$ 359,889.85

$ 584,351.99 $242,125.00
$367,738.00

$ 14,372.11 $ 2,494.52
$ 7,848.15

The Title I completion report was submitted on October 10, 2007.

Cause:

Management failed to implement procedures to ensure compliance with the specific requirements imposed by the Georgia Department of Education.

Effect:

Failure to properly complete the completion report can result in inaccurate and incomplete disclosures for the financial results of these Federal grants resulting in material noncompliance.

Recommendation:

Appropriate procedures should be implemented to ensure that accurate completion reports are submitted to the Georgia Department of Education (GDOE) by the required deadline. GDOE should review this matter to determine if a reclaim of funds is necessary.

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CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Inadequate Schoolwide Plan Nonmaterial Noncompliance U. S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6391-07-04

Condition:

Schoolwide plans for the participating schools did not adequately address implementation, control or allocation through the use of individualized budgets. Plans provided werenot sufficient to meet the requirements ofTitle I Grants to Local Educational Agencies (CFDA 84.010).

Criteria:

Title I, Section 1114(b) requires a comprehensive plan that: "(i) describes how the school will implement the components... (ii) describes how the school will use resources under this part and from other sources to implement those components... (iii) includes a list of State educational agency and local educational agency programs and other Federal programs under subsection (a)(3) that will be consolidated in the schoolwide program... "

Questioned Cost: NIA

Information:

For each participating facility schoolwide plans were requested and reviewed. The amount and source of funds to be combined was not adequately described using budgets or other detailed illustrations ofhow the revenues and expenditures would be used to address the needs identified in each school's needs assessment.

Cause:

These deficiencies were a result of management's failure to ensure that Federal award guidelines were followed.

Effect:

Failure to implement adequate schoolwide plans may result m noncompliance with the Federal program.

Recommendation:

Management should ensure that schoolwide plans are developed to address each facilities' comprehensive needs assessment. Each plan should include all resources available and indicate, through the use of a budget, how the resources will be utilized to meet the needs identified. The cost allocation plan should be based on these budgets.

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CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Deficiencies in Hiring "Highly Qualified" Personnel Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6391-07-05

Condition:

A review ofpersonnel revealed that teachers that are not highly qualified are retained and hired to teach core subjects at schoolwide Title I schools.

Criteria:

Title I, Section 1119(a) requires that: "Beginning with the first day of the first school year after the date of enactment of the No Child Left Behind Act of 2001, each local educational agency receiving assistance under this part shall ensure that all teachers hired after such day and teaching in a program supported with funds under this part are highly qualified and ...develop a plan to ensure that all teachers teaching within the School District served by the local educational agency are highly qualified not later than the end of the 2005-2006 school year."

Questioned Cost: NIA

Information:

Thirteen teachers employed in schoolwide facilities are not highly qualified with eight teaching core subjects. Nine were hired subsequent to the date of enactment. Four existing teachers were retained after the cutoff.

Cause:

Management failed to ensure that teachers hired and assigned met the requirements imposed by No Child Left Behind regulations.

Effect:

Failure to meet the staffing requirements may result in material noncompliance with the Federal program.

Recommendation:

The School District should implement procedures sufficient to ensure that all teachers hired are highly qualified. Currently employed teachers who are not highly qualified should be transferred to assignments that do not involve core subjects until they attain Hi-Q status.

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SECTIONV MANAGEMENT'S RESPONSES

CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2007
Finding Control Number: FS-6391-07-01
We concur with this finding. The Board will implement controls sufficient to ensure the key accounting functions ofcustody, record keeping and authorization and use management oversight of these incompatible activities. The unauthorized use of the school tax identification number has already been corrected. All transactions and journal entries will be checked for accuracy with sufficient supporting documentation and approved in writing. All deposits, investments and cash accounts will be reconciled and all variances will be fully investigated in a timely manner.
Finding Control Number: FS-6391-07-02
We concur with this finding. These expenses were paid out of the general fund.
Finding Control Number: FS-6391-07-03
We concur with this finding. The government has evaluated the cost vs benefit of establishing internal controls over the preparation of financial statements in accordance with generally accepted accounting principles and determined that it is in the best interests ofthe government to outsource this task to its independent auditors and to carefully review the draft financial statements and notes prior to approving them and accepting responsibility for their content and presentation.
Finding Control Number: FS-6391-07-04
We concur with this finding. We will review our capital assets records and make appropriate adjustments to ensure capital assets records conform to our School District's approved capital assets policy and generally accepted accounting principles.
Finding Control Number: FA-6391-07-01
We disagree with this finding. We will follow up with the Georgia Department ofEducation to clear this finding.
Finding Control Number: FA-6391-07-02
We partially agree with this finding. We will ensure that expenditures are compared to the approved budget and charged to the correct function, also that expenditures are documented. We will consult with Georgia Department of Education to determine if contracts are necessary. Work permits and background checks are already up to date. We have clarified our management flow chart to make sure there is not an appearance of nepotism.
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CRAWFORD COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2007
Finding Control Number: FA-6391-07-03 We concur with this finding. Final completion reports were computed before all adjustments and accruals were completed. We will make sure completion reports are done after all adjustments and accruals are completed. Finding Control Number: FA-6391-07-04 We concur with this finding. We will ensure schoolwide plans are developed to address each facility's comprehensive needs assessment. Each plan will include all resources available and indicate, through the use ofa budget, how the resources will be utilized to meet the needs identified. The cost allocation plan will be based on these budgets. Finding Control Number: FA-6391-07-05 We concur with this finding. We will implement procedures sufficient to ensure all teachers hired are highly qualified. Currently employed teachers who are not highly qualified will be transferred to assignments that do not involve core subjects until they attain Hi-Q status. Contact Person: John Douglas, Superintendent Phone: (478) 836-3131 Fax: (478) 836-3114 E-mail Address: jdouglas@crawford.kl2.ga.us
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