Audit report, Dawson County Board of Education, Dawsonville, Georgia, year ended June 30, 1998

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AUDIT REPORT DAWSON COUNTY BOARD OF EDUCATION
DAWSONVILLE, GEORGIA YEAR ENDED JUNE 30,1998
l ~----------------'--~
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

DAWSON COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

6

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

7

ADDmONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

20

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

22

CAPITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

24

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

26

DEBT SERVICE FUND

I

COMBINING BALANCE SHEET

28

J

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

29

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

30

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

31

3 SCHEDULE OF STATE REVENUE

33

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

34

.",,-
DAWSON COUNTY BOARD OF EDUCATION
- TABLE OF CONTENTS -

SECTION I

FINANCIAL

ADDmONAL FINANCIAL INFORMATION

SCHEDULES

5 SCHEDULE OF EXPENDITURES

LOTTERY PROGRAMS

35

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

6

OVERALL

37

7

BY PROGRAM

38

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

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

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

SECTION I FINANCIAL

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
April 14, 1999

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

98ARL-13B

* School activity accounts maintained at the individual schools are not included in the general purpose
financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general purpose financial statements.
* The Board did not recognize as expenditures, in the year ended June 30, 1998, a portion of salaries
and the corresponding employer's cost ofrelated benefits earned for contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department ofEducation for the State's share of these unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues fOfcontractual services completed prior to June 30, 1997, were improperly recorded in the year ended June 30, 1998. To conform to generally accepted accounting principles, revenues'should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed.
The aggregate effects on the general purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects on the general purpose financial statements of the matters referred to in the preceding paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe Dawson County Board ofEducation as of June 30, 1998, and the results of its operations for the year then ended, in conformity with generally accept~ accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated April 14, 1999, on our consideration of the Dawson County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.
The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation ofthe supplementary information. However we did not audit the information and do not express an opinion on it. In addition, we do not provide assurance that Dawson County Board of Education is or will become year 2000 compliant, that the Board's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Dawson County Board ofEducation does business are or will become year 2000 compliant.
Our audit was performed for the purpose of forming an opinion on the general purpose fmancial statements of the Dawson County Board of Education taken as a whole; The accompanying combining statements (Exhibits E through J) and the financial schedules (Schedules 2 through 7), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits ofStates, Local Govemments, and Non-Profit Organizations, are presented for purposes ofadditional analysis and are not a required part of the general purpose financial statements.. 'Such information has been subjected to the auditing procedures applied in the audit ofthe general purpose financial statements and in our opinion, except for the effects ofthe matters referred to in the third paragraph, such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.
98ARL-13B

A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,
d:-~
Claude L. Vickers State Auditor
CLV:jb 98ARL-13B

DAWSON COUNTY BOARD OF EDUCATION
r

DAWSON COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET
AlL FUND mES AND ACCOUNT GROUP JUNE 30, 1998

EXHIBIT "A"

DEBT SERVICE
FUND $ 1,697,854.91
415,693.46

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

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

$ 6,612,970.86 $ 10,241,223.32

240,361.61

1,286,152.47

1,176,n3.31

659,783.75

$ 2,113,548.37

14,935.53 5,584.33
2,113,548.37

9,931.03 4,571.71
453,161.93

14,291,451.63 339,122.02

14,291,451.63 339,122.02

15,281,838.07 338,835.14

$ 2,113,548.37 $ 16.744.122.02 $ 24,794.747.66 $ 28.275,497.42

$

22.072.83 .$

16,337.26

86,694.14

59.112.50

4,393.84

915,303.47

21,546.00

307,403.91

468,786.00

$

339,122.02

339,122.02

338,835.14

16,405,000.00

16,405,000.00

15,735,000.00

$ 16,744,122.02 $ 18,079.990.21 $ 16.639,616.90

$ 2,113.548.37
0.00 $ 2.113,548.37

$

137.64 $

2,113,548.37

14,769.10 453,161.93

14.935.53 5,584.33
2,357,852.40 431,387.57

9,931.03 4.571.71 9,352,413.38 416,600.54

1,791,311.61

1,384,432.83

$ 6,714,757.45 $ 11 ,635.880.52

$ 2,113,548.37 $ 16,744,122.02 $ 24.794,747.66 $ 28,275,497.42 -3-

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

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support services Pupil services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support services Other Support services Food Services Operation Community services Operations
Capital Outlay Debt Service
Principal Interest Paying Agent Fees
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Accrued Interest on Bonds Sold Refunding Bond Issue Cost Premium on Bonds Sold Proceeds from General Obligation Bonds
Par Value Proceeds of Refunding Bonds
Par Value Discount on Bonds Sold Payments to Bond Escrow Agent capital Leases Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commodities Purchased Food
FUND BALANCE JUNE 30
The notes to the general purpose financial statements are an integral part of this statement
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GENERAL FUND

SPECIAL REVENUE
FUND

$ 6,946,409,87 $ 2,374.05
5;505,433.47 227,190.57
$ 12,681,407.96 $-

122,749,00 841,959.39
389,454,10
1,354,162.49

$ 7,328,265.42 $
686,337.56 525,035.80 320,095.16 235,946.29 902,298.47 168,399.60 1,015,192.99 764,226.39 103,320.23
4,056,03
45,233.23 62,571.74
159,988.12 22.996.22

484,111.73
64,645.95 46.514.41
6,140.11
2,589.07 2,121.41 5,520,00 1,173,58 831,818,62

$ 12,343,963.25 $

$

337,444.71 $

1,444,634.88 -90,472.39

$

160,275.00

$

-32,639,86

$

127,635.14 $

$

465,079.85 $

1,245,583,96

17,639,86
17,639.86
-72,832.53 168,120.71
5,004.50 1,012.62

$ V10,663,81 $

101,305,30

EXHIBIT"B"

CAPITAl PROJECTS
FUND

DEBT SERVICE
FUND

TOTAlS

(Memorandum Only)

YEAR ENDED

JUNE 30, 1998

JUNE 30,1997

$ 7,069,158.87 $ 8,913,321.62

844,333.44

717,736.75

$ 2,472,360.09

7,977,793.56

5,983,403,68

$

497,420.86

30,332.11

1,144,397.64

999,268.64

$

497.420.86 $ 2,502,692.20 $ 17,035,683.51 $ 16,613,730.69

$ 7,492,194.81 $
$ 7,492.194.81 $ $ -6,994,773.95 $

$
330.000.00 572,424.34
3,761.25 906,185.59 $ 1,596,506.61 $

7,812,377.15 $
750,983.51 571,550.21 320,095.16 242,086.40 902,298.47 168,399.60 1,017,782.06 766,347.80 108,840.23
5,229.61 831,818.62
45,233.23 7,554,766.55
489,988.12 595.420.56
3.761.25
22,186,978.53 $
-5,151,295.02 $

7,461,039.06
569,182.13 488,071.08 303,252.48 248,310.77 774,279.84 208,734.46 856,639.16 546,521.17
97,056.49 3,395.79
741,274.00 53,149.26
6.494,135.60
475.098.01 621,185.53
1,767.55
19,943,092.38
-3,329,361.69

$

43,394.58 $

43,394.58 $

-79.071.40

-79,071.40

21.086.33 25.140.00

5,910.000.00

9,000,000.00

9.000,000.00

-53,664.35

-53,664.35

-8.846,779.00

-8,846.779.00

160,275.00

$

15.000.00

32.639.86

-32,639.86

$

15,000.00 $

63,879.83 $

224,154.83 $ 5,956,226.33

$ -6,979.773.95 $ 9,769,013.92

1,660.386.44 $ 453,161.93

-4,927,140.19 $ 11,635.880.52

2.626.864.64 9.009.218.50

5,004.50 1,012.62

-850.18 647.56

$ 2,789,239.97 $ 2,113,548.37 $ 6,714,757.45 $ 11,635,880.52

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

DAWSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Dawson County Board ofEducation (Board) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the Board is a primary government and consists of all the organizations that compose its legal entity.
FUND ACCOUNTING
The Board uses funds and an account group to report on its financial position and the results ofits operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available fmancial resources.
General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues~ expenditures and changes in fund balances ofthese accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be .recorded in the general purpose financial statements.
The general purpose financial statements account for all State, Federal, Taxes and Other funds under control ofthe Board, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most ofa Board's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources ofthe Board except those required to be accounted for in another fund. These transactions relate to resources obWned and used for services provided by a board of education.
SPECIAL REVENUE FUND - the fund used to account for the proceeds ofspecific revenue soUrces (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department ofEducation and from the Federal government to accomplish specific educational objectives.
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DAWSON COUNTY BOARD OF EDUCATION

EXIDBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.
DEBT SERVICE FUND - the fund used to account for the accumulation ofresourcesfor,_and_thepayment of, generallong-term principal, interest and paying agent fees.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debt outstanding and material capital lease obligations.
I
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurementfocus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (Le., revenues and other fInancing sources) and decreases (Le., expenditures and other financing uses) in net current_assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
Goverinnental funds are accounted for using the modifIed accrual basis ofaccounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues consi4ered susceptible to accrual are property taxes, local option sales taxes, intergovernmental grants and investment income.
Expenditures are generally recognized when the related fund liability is incurred.
A departure from the above defInitions is the accounting treatment afforded the fInal two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fIscal year 1998, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1997 and ending in early June 1998. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1997 and ending in August 1998. State grants to fund the State's share ofthese contracts were disbursed from the Georgia Department ofEducation to the Board in the same twelve months. As of June 30, 1998, compensation under these employment
-8-

DAWSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
contracts had been earned, but two ofthe twelve monthly payments, due for July and August 1998, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30,1998. Also, the State's portion ofthe compensation paid in July and August 1998 was received and recorded as revenue in the fiscal year subsequent to June 30, 1998. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were recorded in the year ended June 30, 1998. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.
BUDGET
The Dawson County Board ofEducation's budget is a complete financial plan for the Board's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.
The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as' necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions ofthe Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department ofEducation. The Board may increase 9r decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financial institutions. Georgia Laws authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the Board in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchas,e greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Board to
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DAWSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30,1998

Note 1:' SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
invest its funds. In selecting among options for investment ,or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions ofsafety 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,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions ofthe State of Georgia.
RECEIVABLES
Receivables consist ofgrant reimbursements due on Federal, State or other grants for expenditures made but . not reimbursed and other receivables disclosed from information available. Receivables are recorded when
either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The Dawson County Board ofCommissioners fixed the property tax levy for the 1997 tax year (calendar year) on December 20, 1997 (levy date). Taxes were due on February 5, 1998. The lien date for property taxes was January 1, 1997. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1998. The Dawson County Tax Commissioner bills and collects the property taxes for the Board of Education, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance oftaxes collected to the Board.
Tax millage rates levied for the 1997 tax year (calendar year) for the Dawson County Board of Education were as follows (a mill equals $1 per thousand dollars ofassessed value):
-10 -

DAWSON COUNTY BOARD OF EDUCATION

EXIllBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

School Operations School Bonds

17.0 mills 1.0 mills

lMmills

SALES TAXES

Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes and debt service. Special Purpose Local Option Sales Tax collected by the State and remitted to the Board during the
fiscal year amounted to $2,080,07631 and was recorded in the DebtService Funds. The State will terminate
collection of this tax once an additional $8,228,923.69 has been collected or on June 30, 2002 whichever occurs first.

INVENTORIES

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

GENERAL OBLIGATION BONDS

The Board issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. 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 ofthe government. The outstanding amount ofthese bonds is recorded in the General Long-Term Debt Account Group.

INTERFUND TRANSACTIONS

The Board has the following types of interfund transactions:

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

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DAWSON COUNTY BOARD OF EDUCATION

EXIllBIT "D"

:NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operating transfers are recorded for all interfund transactions and reimbursements.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code 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 of the face value of such surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case .of operating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates ofindebtedness or other direct obligations ofthe United States or of . the State of Georgia,
(4) .Bonds, bills, notes, certificates ofindebtedness or other obligations ofthe counties or municipalities of the State of Georgia,
(5) Bonds ofany public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and

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DAWSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

: NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 2: DEPOSITS AND INVESTMENTS

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

CATEGORIZATION OF DEPOSITS At June 30, 1998, the bank balances were $7,067,956.78. The amounts of the total bank balances are classified into three categories of credit risk:

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

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

Risk Category

Bank Balance

1

$ 1,989,412.82

2

580,227.11

3

4,498,316.85

Total

$ 7.067.956.78

CATEGORIZATION OF INVESTMENTS At June 30, 1998, the carrying value of the Board's total investments was $240,361.61 which is materially .the same as fair value. This investment consisted entirely of funds 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 Board did not own any specific identifiable securities in the pool. The investment policy ofthe State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description of the Primary Liquidity Portfolio is as follows:

The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. However, Georgia Fund 1 operates in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to

- 13-

DAWSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 2: DEPOSITS AND INVESTMENTS
be a 2a-7 like pool. The pool is not registered with the SEC as an investment company. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and determines participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value ofthe shares. Participation in the pool is voluntary and deposits consist offunds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds ofthe State of Georgia's General Fund.
Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any ofits agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. Fund 6 maintains a duration ofapproximately one year. The weighted average maturity for Georgia Fund Ion June 30, 1998 was 29 days. The average investment duration for Fund 6 on June 30,1998 was .96 years.
Note 3: NON-MONETARY TRANSACTIONS
The Board receives food commodities from the United States Department ofAgriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories
Note 4: RISK MANAGEMENT
The Board is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness 'or injuries to employees; natural disaster and unemployment compensation.
The Board has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and natural disaster. The Board has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any ofthe past three years.
The Board is self-insured with regard to unemployment compensation claims. The Board accounts for claims within the General Fund with expenditure and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated.
Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:

- 14-

DAWSON COUNTY BOARD OF EDUCATION

EXIDBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 4: RISK MANAGEMENT

Beginning of Year Liability

Claims and Changes in Estimates

1997 1998

$

0.00 $

3.130.00 $

$

0.00 $

2,132.00 $

Claims Paid

End ofYear Liability

3.130.00 $

0.00

2,132.00 $

0.00

The Board participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July 1, 1992 to develop, implement, and administer a program of workers' compensation self-insurance for its member organizations. The Board pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the United States Fidelity and Guaranty Company to proviqe coverage for potential losses sustained by the Fund in excess of $350,000.00 loss per occurrence, up to the statutory limit. Also, should losses within the retained limit of $350,000.00 aggregate to more. than seventy-five percent (75%) of the standard experience rated premium'during the policy tenn, the policy with the United States Fidelity and Guaranty Company will pay the next $1,000,000.00 ofloss.

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

Position Covered

Amount

Superintendent Personnel Director Each Principal

$ 150,000.00 $ 14,000.00 $ 10,000.00

Note 5: OPERATING LEASES

Dawson County Board of Education has entered into various leases as lessee for copiers, telephone equipment, trailers and a postage machine. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 1998, amounted to $82,716.14. Future minimum lease payments for these leases are as follows:

Year Ending

Amount

1999 2000 2001 2002

$ 59,699.84 42,816.35 23,633.44 10,140.90

Total

$ 136,290.53

- 15 -

DAWSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 6: GENERAL LONG-TERM DEBT

CAPITAL LEASES The Dawson County Board of Education has entered into various lease agreements as lessee for lights, bleachers, computers, portable classrooms and school 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 ofthe date oftheir inception.

ADVANCE REFUNDING During fiscal year 1998, the Dawson County Board ofEducation issued $9,000,000.00 in General Obligation Refunding Bonds to advance refund $8,000,000.00 of outstanding bonds. The bond issue of $9,000,000.00 less original issue discount of $53,664.35 and underwriters and bond issue cost of $79,071.40 provided net proceeds of$8,867,264.25 ofwhich $8,846,779.00 was deposited in an irrevocable trust with an escrow agent to provide for future debt service payments on the 1994 Bond issue. AS a result,. the 1994 Series Bonds are considered defeased, and the liability for these bonds has been removed from the General Long-Term Debt AccountGroup. The Dawson County Board ofEducation refunded the aforementioned bonds to reduce its total Debt Service payments over 18 years beginning subsequent to fiscal year 1998 by $247,670.81 and to obtain an economic gain (difference between the present values oftotal debt service payments and the old and new debt) of$249,11 1.00.

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

Purpose
General Government - Refunding - Series 1997A General Government - Series 1997 General Government - Refunding - Series 1993

Interest Rates
3.95%- 5.0% 4.5%-4.6% 3.0%-4.3%

Amount
$ 9,000,000.00 5,910,000.00 1.495,000.00
$ 16.405.000.00

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

Balance July 1, 1997
Additions
Deductions . Payments
Defeased Bonds
Balance June 30, 1998

Capital Leases

General Obligation
Bonds

Total

$ 338,835.14 $ 15,735,000.00 $ 16,073,835.14

160,275.00 9,000,000.00 9,160,275.00

159,988.12

330,000.00

489,988.12

8,000,000.00 . 8,000,000.00

$ 339.122.02 $ 16.405.000.00 $ 16.744.122.02

-16 -

DAWSON COUNTY BOARD OF EDUCATION

EXlllBIT "D"

NOTESTO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 6: GENERAL LONG-TERM DEBT

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

Fiscal Year Ended June 30
1999 2000 2001 2002 2003 2004 - 2008 2009 - 2013 2014 - 2018
Total Principal and Interest
Deduct: Imputed Interest
Net Present Value of Future Minimum Lease Payments
Note 7: ON-BEHALF PAYMENTS

Capital Leases

General Obligation
Bonds

Total Debt

$ 165,766.86 $ 2,017,729.17 $ 2,183,496.03 117,552.78 2,140,947.50 2,258,500.28 58,559.77 2,277,247.50 2,335,807.27 36,073.29 2,423,150.00 2,459,223.29 2,399,545.00 2,399,545.00 4,373,867.50 4,373,867.50 4,786,070.00 4,786,070.00 2,038,750.00 2,038,750.00

$ 377,952.70 $ 22.457.306.67 $ 22.835.259.37

38,830.68

$ 339.122.02

The Board has recognized revenues and expenditures in the amount of$269,192.10 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies.

Georgia Department ofEducation Paid to the State Merit System ofPersonnel Administration For Health Insurance ofNon-Certified Personnel In the amount of $213,387.52

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of$18,970.58

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost. In the amount of $36,834.00

Note 8: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the Board as of June 30, 1998:
- 17-

DAWSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 8: SIGNIFICANT COMMITMENTS

Project

Unearned Executed' Contracts

Dawson County, High School Track Dawson County Middle School Renovation New Elementary School

$ 15,649.00 1,416,095.00 1,178,612.55

$ 2.610.356.55

The amounts described in this note are not reflected in the general purpose financial statements.

Nore9: CONTINGENTLIAB~ITIES

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

Note 10: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Board who are covered by TRS are required by Stare statute to contribute 5% oftheir gross earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with Stare stature and as advised by their independent actuary. The required employer contribution rate is 11.81%'and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

- 18-

DAWSON COUNTY BOARD OF EDUCATION

EXIDBIT liD"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 10: RETIREMENT PLANS
Fiscal Year
1998 1997 1996

Percentage Contributed
100% 100% 100%

Required Contribution
$ 916,366.10 $ 844,324.33 $ 761,326.50

- 19-

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

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

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

137,211.02 $

0.00

5,966.32

14,935.53 5,584.33

Total Assets

$

163,697,20 $ ==========0=.0=0

Total Liabilities and Fund Equity See notes to the general purpose financial statements,
-20 -

$

163,697.20 $============0=.0=0

EXHIBIT"E"

FEDERAL PROGRAMS

OTHER PROGRAMS

TOTALS
JUNE 30, 1998 JUNE 30, 1997

$

4,393.84 $ 141,604.86 $ 146,477.79

$

110,246.06

116,212.38

119,794.13

14,935.53 5,584.33

9,931.03 4,571.71

$

110,246.06 $

4,393.84 $ 278,337.10 $ 280,774.66

$

63,870.99

9,017.69

37,219.74

$

$ 110,108.42 $

$
4,393.84 4,393.84 $

63,870.99 $ 22,072.83 86,694.14 4,393.84
177,031.80 $

37,204.19 16,337.26 59,112.50
112,653.95

$

137.64

$

137.64 $

14,769.10

14,935.53 5,584.33

9,931.03 4,571.71

0.00 $

0.00

80,647.80

138,848.87

~

$

137.64 $

0.00 $ 101,305.30 $ 168,120.71

$

110,246.06 $

4,393.84 $ 278,337.10 $ 280,774.66

- 21 -

DAWSON COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 1"998

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services General Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation
Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Operating Transfers In
Excess of Revenues and Other Financing Sources over (under) Expenditures
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commodities Purchased Food
Residual Equity Transfer
FUND BALANCE JUNE 30
See notesIto the general purpose financial statements.
-22 -

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

54,700.00 $

390,433.58

328,483.97

$ 773,617.55 $

68,049.00 68,049.00

$

68,049.00

$ 831,818.62

$ 831,818.62 $

$

-58,201,07 $

68,049.00 0.00

$ -58,201.07 $

0.00

153,351.61

0.00

5,004.50 1,012,62

$ 101,167.66 $ =============0=.=0=0=

EXHIBIT"F"

FEDERAL PROGRAMS

OTHER PROGRAMS

TOTALS ,_ YEAR ENDED JUNE 30, 1998 JUNE 30, 1997

$ 122,749.00 $ 126,725.00

$ 451,525.81

841,959.39

714,787.84

363.97 $ _ _6.;...;0~,6;;,.;;0..;;,,6';..;.16~

389,454.10

319,063.06

$ 451,889.78 $ . 60,606.16 $ 1,354,162.49 $ 1,160,575.90

$ 416,062.73

$ 484,111.73 $ 386,470.31

4,039.79 $

60,606.16

64,645.95

7,031.34

46,514.41

46,514.41

23,671.45

6,140.11

6,140.11

822.56

~

2,589.07

2,589.07

604.34

2,121.41

2,121.41

. 775.49

5,520.00

5,520.00

2,054.00

1,173.58

1,173.58

480.70

831,818.62

695,399.01

25,468.43

$ 484,161.10 $

60,606.16 $ 1,444,634.88 $ 1,142,777.63

$

-32,271.32 $

0.00 $

-90,472.39 $

17,798.27

17,639.86

$

-14,631.46 $

14,769.10

17,639.86

0.00 $ 0.00

-72,832.53 $ 168,120.71

17,798.27 101,888.66

5,004.50 . 1,012.62

-850.18 647.56 48,636.40

$

137.64 $============0:=.0=0 $ 101,305.30 $ 168,120.71

- 23-

DAWSON COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30. 1998

ASSETS Cash and Cash Equivalents Investments Accounts Receivable

BOND PROCEEDS

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$ 2,357,852.40

$

240,243.48

398,601.00

Total Assets

$ 2,357,852.40 $===6=38=.844====,4=8

Total Liabilities and Fund Equity

$ 2.357,852.40 $ ==6=3=8.,844::::::.;,;,.4=8=

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

EXHIBIT"G"

SPECIAL PURPOSE LOCAL OPTION
SALES TAX

$

1,222,707.38 $

LOTTERY PROJECT

TOTALS

JUNE 30, 1998

JUNE 30, 1997

31,697.00 $

3,612,256.78 $

9,362,419.91

240,243.48

498,325.01

398,601.00

398,601.00

$

1,222.707.38 $

31,697.00 $ 4,251,101.26 $ 10,259,345.92

$

915,303.47

307,403.91

$

1,222.707.38

$

239,153.91

915,303.47 $

307,403.91

$ 1,461,861.29 $

21,546.00 468.786.00
490,332.00

$ 2,357,852.40 $ 9,352,413.38

$

31,697.00

431,387.57

416,600.54

$

--.;0:.;;.0;;.;:0;-. _ _ _--=0.0.;;;.;;0;-.

0.00

0.00

$

0.00 $

31,697.00 $ 2,789,239.97 $ 9,769,013.92

$ 1,222,707.38 $

31,697.00 $ 4,251.101.26 $ 10,259,345.92

- 25-

DAWSON COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 1998

FUND BALANCE JUNE 30

$ 2,357,852.40 $ =======3=99=,6=9:=0=.5=:7

See notes to the general purpose financial statements. -26 -

EXHIBIT"H"

SPECIAL PURPOSE LOCAL OPTION
SALES TAX

LOTIERY PROJECT

TOTALS

YEAR ENDED

JUNE 30,1998

JUNE 30,1997

$

261,898.47 $

$

261,898.47 $

$ 0.00 $ _ _4=9.;..,l7'..;.:42=0=.86,;;..

0.00 $

497,420.86 $

2,500,439.50 475,361.07
2.975,800.57

$ 4,608,872.94 $ $ 4,608,872.94 $ $ -4,346,974.47 $

$ 0.00 0.00 $ 0.00 $

$ 379.46 7,491,815.35 7,492,194.81 $ -6,994,n3.95 $

67,310.84
212,438.40 6,146,883.96 6,426,633.20 -3,450,832.63

$ 4,346,974.47 $

$ 4,346,974.47 $

$

0.00 $

0.00

31,697.00 $ 31,697.00 $

$
6,955,125.19 -6,940,125.19
15,000.00 $

25,140.00
5.910,000.00 3,704,402.20 -3,704,402.20
5,935,140.00

31,697.00 $ 0.00

-6,979,n3.95 $ 9.769,013.92

2,484,307.37 7,284,706.55

$

0.00 $

31,697.00 $ 2,789,239.97 $ 9,769,013.92

-27 -

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

EXHIBIT "I"

ASSETS Cash and Cash Equivalents Accounts Receivable

PROPERTY TAXES FOR BOND DEBT

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

JUNE 30, 1998

JUNE 30, 1997

$

884,791,04 $

813,063.87 $ 1,697,854.91 $

432,196,17

14,135,69"

401,557.n

415.693.46

20,965.76

Total Assets

$

898.926,73 $ 1,214,621.64 $ 2,113,548,37 $ ======4:=5=3::!::1:,=61,;:,,9=3=

FUND EQUITY

Fund Balances Reserved For Debt Service Unreserved Undesignated

$

898,926.73 $ 1,214,621.64 $ 2,113.548.37 $

453,161.93

0,00

0.00

0.00

0.00

Total Fund Equity $

898.926.73 $ 1.214.621.64 $ 2.113.548.37 $ ====4,;.;5=:3:1::1:'=61=.9=3=

See notes to the general purpose financial statements. - 28-

See notes to the general purpose financial statements.

-29-

, DAWSON COUNTY BOARD OF EDUCATION

SCHEDULE "1"

SCHEDULE OF REOUIRED SUPPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

.

YEAR ENDED JUNE 30. 1998

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

See notes to the general purpose financial statements. - 30-

DAWSON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 1998

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Pass-Through from Office of Treasury and Fiscal Services National Forest Reserve Funds Pass-Through from Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program 1998 Grant National School Lunch Program 1998 Grant Food Distribution Program (1)
Total U. S. Department of Agriculture
Appalachian Regional Commission Direct Appalachian State Research, Technical Assistance, and Demonstration Projects
Contract No. GA-12403-96-1-302-Q430
Education, U. S. Department of Pass-Through from Georgia Department of Education Elementary and Secondary Education Act Title I Grants to Local Educational Agencies 1998 Grant Title II Eisenhower Professional Development 1998 Grant Title VI Innovative Education Program Strategies 1998 Grant Individuals with Disabilities Education Act Part B - Special Education Flow Through 1998 Grant Preschool 1998 Grant Vocational Education - Basic Grants to States High School Program Basic Grant 1998 Grant Tech-Prep Education 1998 Grant
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY 10
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

10.665

NJA $

2,374.05

(4)

* 10.553
* 10.555 * 10.550

NJA

85,724.89

N/A

. 253,850.67 $

N/A

50,858.02

$

392,807.63 $

(2)
780,960.60 (3) 50,858.02
831,818.62

23.011

$

15,583.62 $

30,819.55 (3)

84.010 84.281 84.298

NJA $ N/A N/A

245,671.83 $ 27,952.65 9,715.00

245,671.83 29,952.01 (3) 9,715.00

84.027

NJA

84.173

NJA

97,361.18 9,078.48

97,361.18 9,078.48

84.048 84.243

N/A N/A
$

11,763.05 34,400.00 435,942.19 $

11,763.05 49,800.00 (3) 453,341.55

Total Federal Financial Assistance N/A = Not Available

$

844,333.44 $ 1,315,979.72

- 31 -

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

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.
(2) Expenditures for the School Breakfast Program were not maintained separately and are included in the 1998 National School Lunch Program.
(3) Expenditures for this program include State, and/or Other Funds. Expenditures are not maintained by fund source.
(4) Funds eamed on this program do not require reporting of expenditures.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The Board did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes Federal grant activity of the Dawson County Board of Education and is presented on the modified accrual basis of accounting which is the same basis of accounting in the presentation of the general purpose financial statements.

See notes to the general purpose financial statements.

- 32-

DAWSON COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 1998

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Community Affairs, Georgia Department of Govemor's Emergency Funds (1)
Education, Georgia Department of Quality Basic Education General and Career Education Programs Special Education Programs Remedial Education Program Media Center Programs Staff Development Programs Indirect Cost Pupil Transportation . Regular Bus Replacement Middle School Incentive Program Special Instructional Assistance In-School Suspension Mid-term Adjustment Counselors Grades 4 and 5 Technology Training Local Fair Share Food Services Vocational Education Other State Programs Ad Valorem Tax Adjustment Advanced Placement Exams Altemative Program At-Risk Summer School Program Governor's Emergency Funds (2) Health Insurance Innovative Programs Mentoring Program Mentor Teacher Program Preschool Handicapped Program Remedial Summer School Program Teachers' Retirement Lottery Programs Alternative School Program Instructional Technology Assistive Technology Classroom Technology
Office of Treasury and Fiscal Services Public School Employees Retirement

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

15,000.00

$

15,000.00

4,607,204.00 654,005.00 142,817.00 193,152.00 56,222.00
1,254,526.00
303,552,00 105,490.00 168,366.00 247,352.00 84,592.00 146,205.00 21,510.00 28,842.00 -1,606,337.00
$ 33,679.00
75,170.00 170.00
92,500.00 6,140.27 2,000.00 213,387.52 2,600.00 7,000.00 7,144.00 25,730.00 2,586.50 18,970.58
36,834.00

54,70000
4,132.00 5,456.00 58,461.00

4,607,204,00 654,005.00 142,817,00 193,152,00 56,222.00
1,254,526,00
303,552.00 105,490.00 168,366.00 247,352.00 84,592.00 146,205.00 21,510.00 28,842,00 -1,606,337.00 54,700,00 33,679.00
75,170,00 170.00
92,500.00 6,140.27 2,000.00
213,387,52 2,600.00 7,000.00 7,144.00
25,730.00 2,586.50 18,970.58
4,132,00
5,456.00 58,461,00

36,834.00

$ 6,946,409.87 $

122,749.00 $ 7,069,158,87

(1) Provide a Security System for a New Dawson County High School (2) Dawson County Primary Elementary School - 1997 Georgia School of Excellence

See notes to the general purpose financial statements.

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

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED
COST (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED IN PRIOR
YEARS

Payment of Principal and Interest due on

the 1993 and 1994 Bonds

$

3,SOO,000.00 $

3,500,000.00 $

653,906.89 $

0.00

Acquisition, Construction and Equipping of a New Elementary School and Necessary Furnishings and Equipment, Including the Acquisition of All Necessary Property

6,809,000.00

6,809,000.00

4,857,390.39

212,438.40

$ 10,309,000.00 $ 10,309,000.00 $

5,S11,297.28 $ ==-===2,;;;12..,.4...3..8....4..=0

(1) The Board's original cost estimate as specified in the resolution calling for the imposition ofthe Local Option Sales Tax.
(2) The Board's current estimate of total cost for each project. Includes all cost from project inception to completion.
(3) The voters of Dawson 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 project.

See notes to the general purpose financial statements.

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EXPENDITURES
Current Instruction

DAWSON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES LOTIERY PROGRAMS YEAR ENDED JUNE 30. 1998

SCHEDULE "5"

ALTERNATIVE SCHOOL PROGRAM

INSTRUCTIONAL TECHNOLOGY

ASS ISTIVE

CLASSROOM

TECHNOLOGY TECHNOLOGY

TOTAL

$

4,132.00 $

5,456.00 $

58,461.00 $===68=,04====9.=0=0

See notes to the general purpose financial statements. - 35-

In our opinion, the Dawson 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, 1998.
Internal Control Over Compliance
The management of Dawson 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 Dawson County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133.
We noted certain matters involving the internal control over compliance and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over compliance that, in our judgement, could adversely affect Dawson County Board ofEducation's ability to administer a major Federal programin accordance with applicable requirements of laws, regulations, contracts and grants. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as item FA-642198-01.
A material weakness is a condition in which the design or operation of one or more ofthe internal control components does not reduce to a relatively low level ofrisk that noncompliance with applicable requirements oflaws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, the reportable conditions described above are also considered to be material weaknesses.
This report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. :This restriction is not intended to limit the distribution ofthis report which is a matter of public record.
CLV:jb 98SA-35

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

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

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

6421-93-01 FS-6421-97-01

Further Action Not Warranted Umesolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6421-97-01

Due to the current staffing limitations and budgetary considerations prohibiting the hiring of additional administrative staff, the Board has decided not to pursue the recording of general fixed . assets to the financial statements.

SECTIONN FINDINGS AND QUESTIONED COSTS

DAWSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998

I SUMMARY OF AUDITOR'S RESULTS

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

2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The auditreport for the Dawson County Board ofEducation disclosed a financial statement reportable condition related to the following control category.

General Fixed Assets

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

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

4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Dawson County Board of Education disclosed reportable conditions in internal control over major programs for the following compliance requirements.

Eligibility

Reporting

All of the reportable conditions described above are considered to be material weaknesses.

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

6. Audit Findings Required to be Reported by Section .5lO(a) ofOMB Circular A-133 The Dawson County Board of Education's audit disclosed an audit finding required to be reported by . section .51O(a) ofOMB Circular A-133. This audit finding is included in section IV of this report.

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program 10.550 Food and Nutrition Program - Food Distribution Program

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

- 1-

DAWSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 1998
I SUMMARY OF AUDITOR'S RESULTS
9. Low Risk Auditee The Dawson County Board ofEducation was audited as a low risk auditee based on a waiver granted by the U. S. Department ofEducation.
n FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Failure to Transfer Local Matching Funds Nonmaterial Noncompliance Finding Control Number: FS-6421-98-01
The Board failed to transfer local matching funds as required for the approved State Capital Outlay Project for the 1998 fiscal year. Both the instructions in Chapter 41 ofthe Financial Managementfor Georgia Local Units of Administration and the agreement signed by the Board to receive the funding require that the Board transfer local matching funds by year end-and designate those funds by project name and number. This condition occurred because management was unaware ofthis requirement. A correcting audit adjustment was necessary to transfer $31,697.00 from the Capital Projects Bond Issue Fund to the Lottery Project Number 99G/98S-642-038 as required.
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated from Prior Year Finding Control Number: FS-6421-98-02
The Dawson County Board of Education did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general purpose financial statements of the Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Board to establish accounting controls and procedures to provide for maintenance ofa General Fixed Assets Account Group. These subsidiary records should include an inventory ofland, buildings and equipment owned by the Board and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group.
-2-

DAWSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 1998
ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ELIGIBILITY REPORTING Inadequate Internal Controls Reportable Condition - Material Weakness U. S. Department of Agriculture Through Georgia Department ofEducation Finding Control Number: FA-6421-98-01
Internal control procedures performed on the Child Nutrition Cluster program (CFDA No. 10.553 and 10.555) revealed deficiencies in the following control categories:
1) Reporting - Controls were not in place to ensure that the Form DE 0118 - Daily Record ofNumber ofLunches Served, was properly completed in accordance with compliance requirements.
Our review ofthe Form DE0118 for the months of September 1997 through May 1998 revealed that the top portion of the form that calculates the attendance factor had not been completed for any month for any school. Other tests revealed that there were no signatures provided by either the School Food Service Managers or the School Food Service Director as required in the bottom portion ofthe form to indicate that a review or approval ofthe Form DE 0118 was performed by the proper official.
2) Eligibility - Controls were not in place to ensure that only eligible students were receiving free and reduced-price meals. Also, controls were not in place to ensure that the master list of eligible students was updated on a regular basis.
Tests performed, revealed that the number of students served reduced-price meals exceeded the maximum number of students eligible for reduced-price meals. The list of students served reduced price meals was compared to the eligible students included on the master list, revealing several students that were served reduced meals, but were not included on the master list and had no approved application for reduced-price meals on file. Other tests revealed that when the master list
was updated at the central office and then forwarded to the individual school lunchroom managers,
the School Food Service Lunchroom Manager was not updating the master list to agree with the one provided by the central office. This resulted in the number of students served reduced-price meals exceeding the maximum number of students eligible for reduced-price meals
Management should familiarize themselves with Federal regulations dealing with the Child Nutrition Cluster Programs in order to develop an adequate internal control structure consisting ofpr~ceduresdesigned to ensure that compliance requirements will be met.
-3-