Dooly County Board of Education, Vienna, Georgia, annual financial report for the fiscal year ended 2016 June 30 (including independent auditor's reports)

DOOLY COUNTY BOARD OF EDUCATION
VIENNA, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2016
(Including Independent Auditor's Reports)

DOOLY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

EXHIBITS

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET POSITION

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

H NOTES TO THE BASIC FINANCIAL STATEMENTS

Page
1 2 3 4 5 6 7 9

FINANCIAL

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

TEACHERS RETIREMENT SYSTEM OF GEORGIA

31

2 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA

32

3 SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA

33

4 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION

34

5 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

35

DOOLY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SCHEDULES

SECTION I SUPPLEMENTARY INFORMATION

8 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 9 SCHEDULE OF STATE REVENUE 10 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

Page
36 37 39

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S 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 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE
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
SECTION V MANAGEMENT'S CORRECTIVE ACTION FOR CURRENT YEAR FINDINGS SCHEDULE OF MANAGEMENT'S CORRECTIVE ACTION

SECTION I FINANCIAL

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
November 29, 2018

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Dooly County Board of Education
INDEPENDENT AUDITOR'S REPORT
Ladies and Gentlemen:
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Dooly County Board of Education (School District), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in 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 from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also

includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the School District, as of June 30, 2016, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 2 to the financial statements, in 2016, the School District adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application, GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and No. 68, and GASB Statement No. 79, Certain External Investment Pools and Pool Participants. Our opinions are not modified with respect to this matter.
Other Matters
Required Supplementary Information
Management has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinions on the basic financial statements are not affected by this missing information.
Accounting principles generally accepted in the United States of America require that the Schedules of Proportionate Share of the Net Pension Liability, Schedule of Contributions to Retirement Systems, Notes to the Required Supplementary Information and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual as presented on pages 31 through 35 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District's basic financial statements. The accompanying supplementary information, consisting of Schedules 6 through 8, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U. S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements.
The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November 29, 2018, on our consideration of the School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control over financial reporting and compliance.
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,
Greg S. Griffin State Auditor

DOOLY COUNTY BOARD OF EDUCATION

DOOLY COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2016
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Inventories Restricted Assets Cash with Fiscal Agent or Trustee Investments with Fiscal Agent or Trustee Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
DEFERRED OUTFLOWS OF RESOURCES
Related to Defined Benefit Pension Plan
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Interest Payable Net Pension Liability Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Related to Defined Benefit Pension Plan
NET POSITION
Net Investment in Capital Assets Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted (Deficit)
Total Net Position

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

8,814,882.28

621,892.26

576,175.88 819,888.00 513,990.58
61,912.76

1,100.57 1,676,817.30
309,734.00 19,596,674.00

32,993,067.63

997,140.18

38,965.41 1,399,067.01
1,428.29 10,318.97 9,795,887.00
1,075,990.34 7,030,028.58
19,351,685.60

2,264,785.00

16,758,794.08
500,278.73 946,025.90 3,610,167.71 (9,441,529.21)

$

12,373,737.21

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

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DOOLY COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2016

EXHIBIT "B"

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 Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Car Tax Sales Taxes Special Purpose Local Option Sales Tax For Debt Services Other Sales Tax Investment Earnings Miscellaneous
Total General Revenues
Change in Net Position
Net Position - Beginning of Year

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET POSITION

$

7,768,277.20 $

382,898.80 657,934.55 209,652.84 754,340.95 1,144,989.53 345,916.84 1,544,135.68 1,086,963.75 143,750.99
42,719.15

500.00 1,061,527.50
147,379.65

$ 15,290,987.43 $

- $
-
189,258.81 20,441.91 -
209,700.72 $

5,642,349.77 $
56,640.63 679,096.53 171,573.08 458,463.55 436,806.47
8,151.55 434,113.16 456,052.90
41,602.08 68,806.70
952,080.24
-
9,405,736.66

(2,125,927.43)
(326,258.17) 21,161.98 (38,079.76)
(295,877.40) (708,183.06) (337,765.29) (1,110,022.52) (630,910.85) (102,148.91)
26,087.55
188,758.81 (89,005.35) (147,379.65)
(5,675,550.05)

4,766,985.84 34,935.22
1,196,683.24 30,449.23 75,878.71
248,416.09
6,353,348.33
677,798.28
11,695,938.93

Net Position - End of Year

$ 12,373,737.21

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

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DOOLY COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2016

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Inventories Restricted Assets Cash with Fiscal Agent or Trustee Investments with Fiscal Agent or Trustee

GENERAL FUND

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 2,297,027.55 $ 7,239,427.73 $

162,267.15

459,625.11

- $ 9,536,455.28

-

621,892.26

471,458.56 819,888.00 513,990.58
61,912.76

104,717.32 -

-

576,175.88

-

819,888.00

-

513,990.58

-

61,912.76

-

-

1,100.57

1,100.57

-

-

1,676,817.30

1,676,817.30

Total Assets
LIABILITIES
Cash Overdraft Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes
FUND BALANCES
Nonspendable Restricted Assigned Unassigned
Total Fund Balances

$ 4,326,544.60 $ 7,803,770.16 $ 1,677,917.87 $ 13,808,232.63

$

- $

38,965.41

1,399,067.01

1,428.29

1,439,460.71

- $ 721,573.00 $

721,573.00

-

-

38,965.41

-

-

1,399,067.01

-

-

1,428.29

721,573.00

2,161,033.71

366,674.20

-

-

366,674.20

61,912.76 438,365.97
45,484.48 1,974,646.48
2,520,409.69

7,803,770.16
-
7,803,770.16

956,344.87
-
956,344.87

61,912.76 9,198,481.00
45,484.48 1,974,646.48
11,280,524.72

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 4,326,544.60 $ 7,803,770.16 $ 1,677,917.87 $ 13,808,232.63

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

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DOOLY COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION JUNE 30, 2016

EXHIBIT "D"

Total fund balances - governmental funds (Exhibit "C")
Amounts reported for governmental activities in the Statement of Net Position are different because:
Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds.
Land Land improvements Buildings and improvements Equipment Accumulated depreciation
Some liabilities, including net pension obligations, are not due and payable in the current period, and, therefore, are not reported in the funds.
Net pension liability
Deferred outflows and inflows of resources related to pensions are applicable to future periods and, therefore, are not reported in the funds.
Taxes that are not available to pay for current period expenditures are deferred in the funds.
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.
Bonds payable Accrued interest Installment Sales Agreement Universal service fund agreement
Net position of governmental activities (Exhibit "A")

$ 11,280,524.72

$

309,734.00

1,599,395.00

25,134,895.00

5,252,863.00

(12,390,479.00)

19,906,408.00

(9,795,887.00) (1,267,644.82)
366,674.20

$ (6,300,000.00) (10,318.97)
(1,685,000.00) (121,018.92)

(8,116,337.89)

$ 12,373,737.21

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

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DOOLY COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2016

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 Central Support Services Other Support Services Enterprise Operations Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Proceeds of Bonds Proceeds from Installment Sales Agreement Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 4,880,613.04 $ 30,449.23
6,888,335.99 2,481,036.67
209,700.72 2,333.67
248,416.09

- $ 1,196,683.24
17,231.14 -

14,740,885.41

1,213,914.38

- $ 56,313.90 -

4,880,613.04 1,227,132.47 6,888,335.99 2,481,036.67
209,700.72 75,878.71
248,416.09

56,313.90 16,011,113.69

7,683,849.51
358,921.13 669,612.48 218,891.19 643,846.32 1,290,192.48 179,212.94 1,469,551.20 856,911.39 115,242.99
43,490.13 500.00
1,030,323.85 -
52,345.62 10,102.34
14,622,993.57
117,891.84

11,978.00
32,800.63 -
958.95 168,563.37 178,863.00
30,930.35 -
40,390.00
1,795,000.00 42,464.18
2,301,948.48
(1,088,034.10)

-
-
920,000.00 84,494.16
1,004,494.16
(948,180.26)

7,695,827.51
391,721.76 669,612.48 218,891.19 643,846.32 1,291,151.43 347,776.31 1,648,414.20 887,841.74 115,242.99
43,490.13 500.00
1,030,323.85 40,390.00
2,767,345.62 137,060.68
17,929,436.21
(1,918,322.52)

-
-
117,891.84
2,402,517.85

4,300,000.00 1,895,000.00
(282,921.16)
5,912,078.84
4,824,044.74
2,979,725.42

282,921.16 -
282,921.16
(665,259.10)
1,621,603.97

4,300,000.00 1,895,000.00
282,921.16 (282,921.16)
6,195,000.00
4,276,677.48
7,003,847.24

$ 2,520,409.69 $ 7,803,770.16 $ 956,344.87 $ 11,280,524.72

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

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DOOLY 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, 2016

EXHIBIT "F"

Net change in fund balances total 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.
Capital Outlay Depreciation Expense
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts and the difference between the carrying value of refunded debt and the acquisition cost of refunded debt when debt is first issued. These amounts are deferred and amortized in the Statement of Activities.
General obligation bonds issued Installment Sales Agreement Bond principal retirements Capital lease payments Installment Sales Agreement payment U.S.F Agreement
District pension contributions are reported as expenditures in the governmental funds when made. However, they are reported as deferred outflows of resources in the Statement of Net Position because the reported net pension liability is measured a year before the District's report date. Pension expense, which is the change in the net pension liability adjusted for changes in deferred outflows and inflows of resources related to pensions, is reported in the Statement of Activities.
Pension expense
Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.
Accrued interest

$ 4,276,677.48

$ 186,050.00 (985,539.00)

(799,489.00)

(78,691.98)

$ (4,300,000.00) (1,895,000.00) 710,000.00 1,795,000.00 210,000.00 52,345.62

(3,427,654.38)

717,275.13 (10,318.97)

Change in net position of governmental activities (Exhibit "B")

$ 677,798.28

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

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DOOLY COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2016
ASSETS Cash and Cash Equivalents Investments
Total Assets LIABILITIES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS $ 17,436.85 26,001.36 $ 43,438.21
$ 43,438.21

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

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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Dooly County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a board elected by the voters and a Superintendent appointed by the Board. The School District 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
The accompanying financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the School District's accounting policies are described below.
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the government-wide financial statements, fund financial statements and notes to the basic financial statements. The government-wide statements focus on the School District as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information's usefulness.
GOVERNMENT-WIDE STATEMENTS:
The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Net Position presents the School District's non-fiduciary assets and liabilities, with the difference reported as net position. Net position is reported in three categories as follows:
1. Net investment in capital assets consists of the School District's total investment in capital assets, net of accumulated depreciation, and reduced by outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets.
2. Restricted net position consists of resources for which the School District is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties or imposed by law through constitutional provisions or enabling legislation.
3. Unrestricted net position consists of resources not meeting the definition of the two preceding categories. Unrestricted net positon often has constraints on resources imposed by management which can be removed or modified.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.

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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. 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 of internal activities. Separate financial statements are presented for governmental and fiduciary funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
The general fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund.
The capital projects fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) and Bond Proceeds that are restricted, committed or assigned for capital outlay expenditures, including the acquisition or construction of capital facilities and other capital assets.
The debt service fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest.
The School District reports the following fiduciary fund type:
Agency funds are used to report resources held by the School District in a purely custodial capacity (assets equal liabilities) and do not involve measurement of results of operations.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The government-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes and grants. 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 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 of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 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 longterm debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2016, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application. This statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This statement provides guidance for determining a fair value measurement for financial reporting purposes. This statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The School District did not have any items that required a reassessment of value for reporting purposes as a result of adoption of this statement.
In fiscal year 2016, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and No. 68. This statement establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68, Accounting and Financial Reporting for Pensions, as well as for the assets accumulated for purposes of providing those pensions. In addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement No. 68. It also amends certain provisions of Statement No. 67, Financial Reporting for Pension Plans, and Statement No. 68 for pension plans and pensions that are within their respective scopes. The adoption of this statement does not have a significant impact on the School District's financial statements.
In fiscal year 2016, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 79, Certain External Investment Pools and Pool Participants. This statement addresses accounting and financial reporting for certain external investment pools and pool participants. If an external investment pool meets the criteria in this statement and measures all of its investments at amortized cost, the pool's participants also should measure their investments in that external investment pool at amortized cost for financial reporting purposes. The School District participates in an external investment pool, the State of Georgia local government investment pool (Georgia Fund 1), which does not meet the criteria of this statement. Therefore, the investment in this pool is measured at fair value as provided in paragraph 11 of GASB Statement No. 31, as amended.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, demand deposits, investments in the State of Georgia local government investment pool (Georgia Fund 1) 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 (O.C.G.A.) 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
The School District can invest its funds as permitted by O.C.G.A.36-83-4. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity.

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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

Investments made by the School District 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. All other investments are reported at fair value.
For accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired.
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.
INVENTORIES
Food Inventories
On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (calculated on the first-in first-out basis).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.
RESTRICTED ASSETS
Certain resources set aside for repayment of debt are classified as restricted assets on the Statement of Net Position because their use is limited by applicable statutes, e.a. Qualified Zone Academy Bond sinking funds.
CAPITAL ASSETS
On the government-wide financial statements, capital assets are recorded 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 acquisition value on the date donated. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. The School District does not capitalize book collections or works of art.
Capital acquisition and construction are recorded as expenditures in the governmental fund financial statements at the time of purchase (including ancillary charges), and the related assets are reported as capital assets in the governmental activities column in the government-wide financial statements.
Depreciation is computed using the straight-line for all assets, except land, and is used to allocate the actual or estimated historical cost of capital assets over estimated useful lives.

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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

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

Capitalization Policy

Estimated Useful Life

Land Construction in Progress Land Improvements Buildings and Improvements Equipment Intangible Assets

All

$

5,000.00

$

5,000.00

$

5,000.00

$

5,000.00

$ 10,000.00 to 100,000.00

N/A N/A
15 years 10 to 80 years
5 to 12 years 20 years

DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of financial position will report a separate section for deferred outflows of resources. This separate financial statement element, represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then.
In addition to liabilities, the statement of financial position will report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time.

LONG-TERM LIABILITIES AND BOND DISCOUNTS/PREMIUMS
In the School District's government-wide financial statements, outstanding debt is reported as liabilities. Bond premiums and discounts and the difference between the reacquisition price and the net carrying value of refunded debt are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued.
In the governmental fund financial statements, the School District recognizes the proceeds of debt and premiums as other financing sources of the current period. Bond issuance costs are reported as debt service expenditures.

PENSIONS
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

FUND BALANCES
Fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent.
The School District's fund balances are classified as follows:
Nonspendable consists of resources that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.
Restricted consists of resources that can be used only for specific purposes pursuant constraints either (1) externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.
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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

Committed consists of resources that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board. The Board is the School District's highest level of decisionmaking authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned consists of resources constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.
Unassigned consists of resources within the general fund not meeting the definition of any aforementioned category. The general fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance.
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
PROPERTY TAXES
The Dooly County Board of Commissioners adopted the property tax levy for the 2015 tax digest year (calendar year) on September 25, 2015 (levy date) based on property values as of January 1, 2015. Taxes were due on December 20, 2015 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2015 tax digest are reported as revenue in the governmental funds for fiscal year 2016. The Dooly County Board of Commissioners 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, 2016, for maintenance and operations amounted to $4,556,093.39.
The tax millage rate levied for the 2015 tax year (calendar year) for the School District was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

16.404 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $289,584.43 during fiscal year ended June 30, 2016.
SALES TAXES
Education Special Purpose Local Option Sales Tax (ESPLOST), at the fund reporting level, during the year amounted to $1,196,683.24 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.
NOTE 3: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds is prepared and

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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the general fund was prepared in accordance with accounting principles generally accepted in the United States of America.
The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines, and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of O.C.G.A.20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
See the General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual in the Supplementary Information Section for a detail of any over/under expenditures during the fiscal year under review.
NOTE 4: DEPOSITS, CASH EQUIVALENTS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
O.C.G.A. 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110% of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110% of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

- 15 -

DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

CATEGORIZATION OF DEPOSITS
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2016, the School District had deposits with a carrying amount of $2,999,905.15, and a bank balance of $3,865,190.44. The bank balances insured by Federal depository insurance were $500,000.00 and the bank balances collateralized with securities held by the pledging financial institution in the School District's name were $3,365,190.44.

Reconciliation of cash and cash equivalents balances to carrying value of deposits:

Statement of Net Position Cash and cash equivalents Restricted cash held by trustee
Statement of Fiduciary Net Position Cash and cash equivalents

$ 8,814,882.28 1,100.57
17,436.85

Total cash and cash equivalents

8,833,419.70

Add: Deposits with original maturity of three months or more reported as investments

647,893.62

Less: Investment pools reported as cash and cash equivalents
Georgia Fund 1

6,481,408.17

Total carrying value of deposits - June 30, 2016

$ 2,999,905.15

CATEGORIZATION OF CASH EQUIVALENTS
The School District reported cash equivalents of $6,481,408.17 in Georgia Fund 1, a local government investment pool, which is included in the cash balances above. Georgia Fund 1 is not registered with the SEC as an investment company and does not 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, which approximates fair value. The pool is an AAAf rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund1may not exceed 60days.The weighted average maturity for Georgia Fund1on June 30, 2016, was 42 days.
Georgia Fund 1, administered by the State of Georgia, Office of the State Treasurer, is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1, does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at www.audits.ga.gov/SGD/CAFR.html.
CATEGORIZATION OF INVESTMENTS
At June 30, 2016, the School District had the following investments:

Investment Type

Fair Value

Investment Maturity Less Than 1 Year

Debt Securities Federal National Mortgage Association $ 1,676,817.30 $

1,676,817.30

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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

Fair Value of Investments
The School District measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines recognize a three-tiered fair value hierarchy, as follows:
Level 1: Quoted prices for identical investments in active markets; Level 2: Observable inputs other than quoted market prices; and, Level 3: Unobservable inputs.
At June 30, the School District had the following investments by fair value level:

Investment by fair value level

Fair Value

Level 2

Federal National Mortgage Association $ 1,676,817.30 $ 1,676,817.30

Interest Rate Risk
Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The School District does not have a formal policy for managing interest rate risk.

Custodial Credit Risk
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk.

At June 30, 2016, $1,676,817.30 of the School District's applicable investments were held by the investment's counterparty, not in the School District's name.

Credit Quality Risk
Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State law limits investments to those prescribed by O.C.G.A.36-83-4. The School District does not have a formal policy that would further limit its investment choices or one that addresses credit risk. The investments subject to credit quality risk are reflected below:

Rated Debt Investments

Fair Value

Quality Ratings A1

Debt Securities Federal National Mortgage Association $ 1,676,817.30 $

1,676,817.30

Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The School District does not have a formal policy for managing concentration of credit risk. More than 5% of the School District's investments are in a Federal National Mortgage Association Discount Note. This investment is 19% of the School District's total investments.
NOTE 5: RESTRICTED ASSETS
The restricted assets represent the cash balance and investment balance, totaling $1,100.57 and $1,676,817.30, respectively, for the QZAB Bond Sinking Fund.

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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

NOTE 6: CAPITAL ASSETS
The following is a summary of changes in the capital assets for governmental activities during the fiscal year:

Balances July 1, 2015

Increases

Decreases

Balances June 30, 2016

Governmental Activities Capital Assets, Not Being Depreciated:
Land

$

309,734.00 $

- $

- $

309,734.00

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements
Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

25,040,599.00 5,523,118.00 1,584,618.00
6,796,040.00 3,848,679.00 1,107,453.00

94,296.00 70,564.00 21,190.00
555,205.00 374,878.00
55,456.00

340,819.00
6,413.00
340,819.00
6,413.00

25,134,895.00 5,252,863.00 1,599,395.00
7,351,245.00 3,882,738.00 1,156,496.00

Total Capital Assets, Being Depreciated, Net

20,396,163.00

(799,489.00)

-

19,596,674.00

Governmental Activity Capital Assets - Net

$ 20,705,897.00 $ (799,489.00) $

- $ 19,906,408.00

Current year depreciation expense by function is as follows:

Instruction Support Services
General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Food Services

$ 11,199.00 356.00 505.00
31,098.00 189,556.00
28,508.00

$ 699,624.00
261,222.00 24,693.00

$ 985,539.00

NOTE 7: INTERFUND TRANSFERS
Interfund transfers for the year ended June 30, 2016, consisted of the following:

Transfers to

Transfers From Capital Projects
Fund

Debt Service Fund $ 282,921.16
Transfers are used to move sales tax revenues collected by the capital projects fund to the debt service fund for bond principal and interest payments.

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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

NOTE 8: SHORT-TERM DEBT
The School District issued tax anticipation notes in advance of property tax collections, depositing the proceeds in its general fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75% of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred.
Short-term debt activity for the fiscal year is as follows:

Beginning Balance

Issued

Redeemed

Ending Balance

Tax Anticipation Notes

$

- $ 496,500.00 $ 496,500.00 $

-

NOTE 9: LONG-TERM LIABILITIES
The changes in long-term liabilities during the fiscal year for governmental activities, were as follows:

Balance July 1, 2015

Additions

Deductions

Balance June 30, 2016

Due Within One Year

General Obligation (G.O.) Bonds $ 710,000.00 $

Qualified Zone Academy Bonds

2,000,000.00

Capital Lease

1,795,000.00

Installment Sales Agreement

-

U.S.F. Agreement

173,364.54

4,300,000.00 $ 710,000.00 $

-

-

-

1,795,000.00

1,895,000.00

210,000.00

-

52,345.62

4,300,000.00 $ 2,000,000.00
1,685,000.00
121,018.92

825,000.00 -
195,000.00 55,990.34

$ 4,678,364.54 $ 6,195,000.00 $ 2,767,345.62 $ 8,106,018.92 $ 1,075,990.34

GENERAL OBLIGATION DEBT OUTSTANDING
The School District's bonded debt consists of various issues of general obligation bonds that are generally callable with interest payable semiannually. Bond proceeds primarily pay for acquiring or constructing capital facilities. The School District repays general obligation bonds from voter-approved sales taxes. General obligation bonds are direct obligations and pledge the full faith and credit of the School District.
During the current year, the School District issued general obligation bonds totaling $4,300,000.00 for various capital outlay projects.
General obligation bonds currently outstanding are as follows:

Description

Interest Rates

Issue Date

Maturity Date

Amount Issued

Amount Outstanding

General Government - Series 2015

1.44%

9/10/2015

5/1/2021 $ 4,300,000.00 $ 4,300,000.00

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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

The following schedule details debt service requirements to maturity for the School District's total general obligation bonds payable:

Fiscal Year Ended June 30:

General Obligation Debt

Principal

Interest

2017 2018 2019 2020 2021

$ 825,000.00 $ 840,000.00 860,000.00 880,000.00 895,000.00

61,920.00 50,040.00 37,944.00 25,560.00 12,888.00

Total Principal and Interest $ 4,300,000.00 $ 188,352.00

QUALIFIED ZONE ACADEMY BONDS (QZAB)
Section 226 of the Taxpayer Relief Act of 1997 (Public Law 105-34) provides for a source of capital at no or at nominal interest rates for costs incurred by School Districts in connection with the establishment of special academic programs, in partnership with the business community.

This agreement established a method of repayment for qualified interest-free debt instrument. The agreement required the School District to deposit funds annually into a sinking fund account on or before May 1, 2011. The amount on deposit at June 30, 2016 was $1,677,917.87.

Debt currently outstanding under Qualified Zone Academy Bonds is as follows:

Description

Interest Rates

Issue Date

Maturity Date

Amount Issued

Amount Outstanding

Series 2005C QZAB

0.00%

10/20/2005

10/20/2021 $ 2,000,000.00 $ 2,000,000.00

The following schedule reports the annual Qualified Zone Academy Bond payments:

Fiscal Year Ended June 30:

Principal

Interest

2022

$

2,000,000.00 $

-

CAPITAL LEASES
The Dooly County Board of Education entered into an agreement dated July 1, 2006, with the Georgia School Board Association for the construction and subsequent lease of six new classrooms, an administrative suite, and a corridor which connects the Dooly County High School Building with the gymnasium. During the current fiscal year, the School District entered into an installment sales agreement to refinance this lease with the Georgia Municipal Association, Inc.

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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

INSTALLMENT SALES AGREEMENT
The School District entered into an agreement dated October 1, 2015 with the Georgia Municipal Association, Inc. (GMA) in order to refinance a capital lease dated July1, 2006 with the Georgia School Boards Association (GSBA). Under the terms of the installment sales agreement, the GMA purchased the real property consisting of six classrooms, an administrative suite addition, and a corridor attaching the school building to the gymnasium from the GSBA. The School District will make annual payments through May 1, 2024 to purchase the property from the GMA. The debt currently outstanding, associated with this agreement is as follows:

Purpose

Interest Rate

Issue Date

Maturity Date

Amount Issued

Amount Outstanding

Dooly County High School Improvements

2.15%

10/1/2015

5/1/2024 $

The following is a schedule of total installment sales agreement payments:

1,895,000.00 $

1,685,000.00

Fiscal Year Ended June 30:

Principal

Interest

2017 2018 2019 2020 2021 2022 - 2024

$

195,000.00 $

199,000.00

204,000.00

208,000.00

213,000.00

666,000.00

36,228.00 32,036.00 27,756.00 23,370.00 18,898.00 28,854.00

Total Principal and Interest $

1,685,000.00 $

167,142.00

UNIVERSAL SERVICE FUND AGREEMENT
The Dooly County Board of Education entered into an agreement with the Universal Service Administrative Company, dated June 19, 2013, for the funding commitment of previous projects. The School District did not meet bidding requirements and has been ordered to rescind in full all services provided through e-rate funding. Under the terms of this agreement, the School District will make annual payments through fiscal year 2019.

The following is a schedule of total Universal Service Fund Agreement payments:

Fiscal Year Ended June 30:

Principal

Interest

2017 2018 2019

$

55,990.34 $

59,888.83

5,139.75

6,457.63 2,559.13
28.91

Total Principal and Interest $ 121,018.92 $

9,045.67

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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

NOTE 10: RISK MANAGEMENT
INSURANCE
Commercial Insurance
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; natural disasters and unemployment compensation. Settled claims resulting from these insured risks have not exceed commercial insurance coverage in any of the past three fiscal years.
Georgia School Boards Association Risk and Insurance Management System
The School District participates in the Georgia School Boards Association Risk and Insurance Management System (the System), a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium to the System for its general insurance coverage. Additional coverage is provided through agreements by the System with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the System varies by line of coverage.
WORKERS' COMPENSATION
Georgia Education Workers' Compensation Trust
The School District participates in the Georgia Education Workers' Compensation Trust (the Trust), a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general workers' compensation insurance coverage. Specific excess of loss insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1.0 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2.0 million. The Trust covers the first $1.0 million of each Employers Liability claim with Safety National providing additional Employers Liability limits up to a $2.0 million per occurrence maximum. Safety National Casualty Company also provides $2.0 million in aggregate coverage to the Trust, attaching at 110% of the loss fund and based on the Fund's annual normal premium.
The School District has had no worker's compensation claims in the past two fiscal years.
UNEMPLOYMENT COMPENSATION
The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the general fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2015 $

-

$ 17,231.50

$ 17,231.50

$

-

2016 $

-

$ 13,079.30

$ 13,079.30

$

-

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

Position Covered

Amount

Superintendent

$ 50,000.00

NOTE 11: FUND BALANCE CLASSIFICATION DETAILS
The School District's financial statements include the following amounts presented in the aggregate at June 30, 2016:

Nonspendable Inventories
Restricted Continuation of Federal Programs Capital Projects Debt Service
Assigned School Activity Accounts
Unassigned

$
$ 438,365.97 7,803,770.16 956,344.87

61,912.76
9,198,481.00 45,484.48
1,974,646.48

Fund Balance, June 30, 2016

$ 11,280,524.72

When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.
NOTE 12: SIGNIFICANT CONTINGENT LIABILITIES
FEDERAL GRANTS
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. Any disallowances resulting from the grantor audit may become a liability of the School District. However, the School District believes that such disallowances, if any, will be immaterial to its overall financial position.
LITIGATION
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to have a material adverse effect on the financial condition of the School District.

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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

NOTE 13: POST-EMPLOYMENT BENEFITS

GEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND

P lan Description. The Georgia School Personnel Post-Employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). Additional information about the School OPEB Fund is disclosed in the State of Georgia Comprehensive Annual Financial Report. This report can be obtained from the Georgia Department of Audits and Accounts at www.audits.ga.gov/SGD/CAFR.html.

Funding P olicy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012 pay approximately 25% of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.

Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "payas-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.

The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2016:

For certificated teachers, librarians and regional educational service agencies and certain other eligible participants:

July 1, 2015 June 30, 2016

$945.00 per member per month

For non-certificated school personnel:

July 1, 2015 December 31, 2015 $596.20 per member per month

January 1, 2016 June 30, 2016 $746.20 per member per month

No additional contribution was required by the Board for fiscal year 2016 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation.

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DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

The School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows:

Percentage Contributed

Required Contribution

100%

$

1,533,745.00

100%

$

1,487,024.00

100%

$

1,460,001.56

NOTE 14: RETIREMENT PLANS
The School District participates in various retirement plans administered by the State of Georgia, as further explained below.

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
P lan Description: All teachers of the School District as defined in O.C.G.A 47-3-60 and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers Retirement System of Georgia issues a publicly available separate financial audit report that can be obtained at www.trsga.com/publications.
Benefits P rovided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.
Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2016. The School District's contractually required contribution rate for the year ended June 30, 2016 was 14.27% of annual School District payroll, of which 14.10% of payroll was required from the School District and 0.17% of payroll was required from the State. For the current fiscal year, employer contributions to the pension plan were $997,140.18 and $12,379.44 from the School District and the State, respectively.

PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS)
P lan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the

- 25 -

DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.
Benefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service.

Upon retirement, the member will receive a monthly benefit of $14.75, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits.
Contributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current fiscal year contribution was $41,308.00.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
At June 30, 2016, the School District reported a liability of $9,795,887.00 for its proportionate share of the net pension liability for TRS.
The TRS net pension liability reflected a reduction for support provided to the School District by the State of Georgia for certain public school support personnel. The amount recognized by the School District as its proportionate share of the net pension liability, the related State of Georgia support, and the total portion of the net pension liability that was associated with the School District were as follows:

School District's proportionate share of the net pension liability

$ 9,795,887.00

State of Georgia's proportionate share of the net pension liability associated with the School District

135,037.00

Total

$ 9,930,924.00

The net pension liability for TRS was measured as of June 30, 2015. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2014. An expected total pension liability as of June 30, 2015 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2015.

- 26 -

DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

At June 30, 2015, the School District's TRS proportion was 0.064345%, which was a decrease of 0.004951% from its proportion measured as of June 30, 2014.

At June 30, 2016, the School District did not have a PSERS liability for a proportionate share of the net pension liability because of a Special Funding Situation with the State of Georgia, which is responsible for the net pension liability of the plan. The amount of the State's proportionate share of the net pension liability associated with the School District is $221,931.00.

The PSERS net pension liability was measured as of June 30, 2015. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2014. An expected total pension liability as of June 30, 2015 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2015.

For the year ended June 30, 2016, the School District recognized pension expense of $308,641.00 for TRS and $13,235.00 for PSERS and revenue of $29,864.00 for TRS and $13,235.00 for PSERS. The revenue is support provided by the State of Georgia. For TRS the State of Georgia support is provided only for certain support personnel.

At June 30, 2016, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

TRS
Deferred Outflows of Resources

Deferred Inflows of Resources

Differences between expected and actual

experience

$

- $

86,160.00

Net difference between projected and actual earnings on pension plan investments

-

826,293.00

Changes in proportion and differences between School District contributions and proportionate share of contributions

-

1,352,332.00

School District contributions subsequent to the

measurement date

997,140.18

-

Total

$

997,140.18 $ 2,264,785.00

- 27 -

DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

The School District contributions subsequent to the measurement date of $997,140.18 for TRS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30:

TRS

2017 2018 2019 2020 2021

$

(763,787.00)

$

(763,787.00)

$

(763,788.00)

$

63,123.00

$

(36,546.00)

Actuarial assum ptions: The total pension liability as of June 30, 2015 was determined by an actuarial valuation as of June 30, 2014, using the following actuarial assumptions, applied to all periods included in the measurement:

Teachers Retirement System:
Inflation Salary increases

3.00% 3.75% 7.00%, average, including inflation

Investment rate of return

7.50%, net of pension plan investment expense, including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females set back two years for males and set back three years for females.

The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

Public School Employees Retirement System:

Inflation

3.00%

Salary increases

N/A

Investment rate of return

7.50%, net of pension plan investment expense, including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table set forward one year for males for the period after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back two years for males and set forward one year for females for the period after disability retirement.
The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.
The long-term expected rate of return on TRS and PSERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return

- 28 -

DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

by weighting the expected future real rates of return by the target asset allocation percentage and by

adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of

return for each major asset class are summarized in the following table:

Long-term

Target

expected real

Asset class

allocation

rate of return*

Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks
Total

30.00% 39.70%
3.70% 1.60% 18.90% 6.10%
100.00%

3.00% 6.50% 10.00% 13.00% 6.50% 11.00%

* Rates shown are net of the 3.00% assumed rate of inflation

Discount rate: The discount rate used to measure the total TRS and PSERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and PSERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Sensitivity of the School District's proportionate share of the net pension liability to changes in the discount rate: The following presents the School District's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the School District's proportionate share of the net pension liability would be if it were calculated using a discount rate that
is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate:

Teachers Retirement System:

1% Decrease (6.50%)

Current Discount Rate (7.50%)

1% Increase (8.50%)

School District's proportionate share of the Net Pension Liability

$ 16,833,492.00 $

9,795,887.00 $ 3,995,227.00

P ension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS and PSERS financial report which is publically available at www.trsga.com/publications and http://www.ers.ga.gov/formspubs/formspubs.html.
NOTE 15: SUBSEQUENT EVENTS
On November 4, 2016, the School District issued a tax anticipation note for cash flow purposes for an amount not to exceed $1,000,000.00. The note had an interest rate of 3.50% with a maturity date of December 31, 2016. One draw, in the amount of $500,000.00, was required to meet the cash flow needs of the School District. The note was paid on December 31, 2016.

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DOOLY COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "1"

Year Ended

School District's proportion of the
net pension liability

School District's proportionate share of the net pension liability

State of Georgia's proportionate share of the
net pension liability associated with the School
District

2016 2015

0.064350% $ 0.069296% $

9,795,887.00 $ 8,754,636.00 $

135,037.00 $ 30,826.00 $

Total
9,930,924.00 8,785,462.00

School District's covered payroll

School District's proportionate share of the net pension liability as a percentage of its covered
payroll

Plan fiduciary net position as a
percentage of the total pension liability

$

6,800,258.94

$

7,069,568.40

144.05% 123.84%

81.44% 84.03%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 31 -

DOOLY COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "2"

Year Ended
2016 2015

School District's proportion of the
net pension liability

School District's proportionate share of the
net pension liability

State of Georgia's proprotionate share of the net pension liaibility
associated with the School District

0.00% $ 0.00% $

-

$

-

$

221,931.00 $ 164,743.00 $

Total

School District's covered payroll

School District's proportionate share of the net pension liability as a percentage of its
covered payroll

Plan fiduciary net position as a
percentage of the total pension liability

221,931.00 $ 164,743.00 $

547,942.61 523,971.52

N/A

87.00%

N/A

88.29%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 32 -

DOOLY COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "3"

Year Ended

Contractually required contribution

Contributions in relation to the contractually required
contribution

Contribution deficiency (excess)

2016

$

997,140.18 $

997,140.18 $

-

2015

$

894,234.05 $

894,234.05 $

-

2014

$

868,143.00 $

868,143.00 $

-

School District's covered payroll
$ 7,074,419.20 $ 6,800,258.94 $ 7,069,568.40

Contribution as a percentage of covered
payroll
14.10% 13.15% 12.28%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 33 -

DOOLY COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2016

SCHEDULE "4"

Teachers' Retirement System

Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience.
Method and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2016 reported in that schedule:

Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation rate Salary increases Investment rate of return
Public School Employees Retirement System

June 30, 2013 Entry age Level percentage of payroll, closed 30 years Five-year smoothed market 3.00% 3.75 7.00%, including inflation 7.50%, net of pension plan investment
expense, including inflation

Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP-2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience.

Method and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2016 reported in that schedule:

Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation rate Salary increases Investment rate of return
Cost-of living adjustments

June 30, 2013 Entry age Level dollar, closed 25 years Five-year smoothed market 3.00% N/A 7.50%, net of pension plan investment
expense, including inflation 1.50% semi-annually

- 34 -

DOOLY COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2016

SCHEDULE "5"

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 Central Support Services Other Support Services Enterprise Operations Food Services Operation
Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Other Sources Other Uses
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments
Fund Balances - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$

4,707,722.00 $ 4,707,722.00 $ 4,880,613.04 $ 172,891.04

37,000.00

37,000.00

30,449.23

(6,550.77)

6,746,728.00

6,747,189.00

6,888,335.99

141,146.99

2,693,474.00

4,088,558.00

2,481,036.67 (1,607,521.33)

15,000.00

14,500.00

209,700.72

195,200.72

1,150.00

1,650.00

2,333.67

683.67

155,517.00

160,136.00

248,416.09

88,280.09

14,356,591.00 15,756,755.00 14,740,885.41 (1,015,869.59)

8,067,339.00

8,143,047.00

7,683,849.51

389,716.00 613,397.00 249,380.00 498,926.00 1,233,717.00 185,104.00 1,380,812.00 951,208.00
80,218.00 44,355.00
1,230,000.00
-

390,867.00 2,161,111.00
249,380.00 470,481.00 1,233,717.00 185,104.00 1,380,812.00 961,689.00 103,718.00
29,587.00 -
1,230,000.00 -

358,921.13 669,612.48 218,891.19 643,846.32 1,290,192.48 179,212.94 1,469,551.20 856,911.39 115,242.99
43,490.13 500.00
1,030,323.85 62,447.96

14,924,172.00 16,539,513.00 14,622,993.57

(567,581.00)

(782,758.00)

117,891.84

459,197.49
31,945.87 1,491,498.52
30,488.81 (173,365.32)
(56,475.48) 5,891.06
(88,739.20) 104,777.61 (11,524.99) (13,903.13)
(500.00) 199,676.15 (62,447.96)
1,916,519.43
900,649.84

108,287.00 (102,887.00)
5,400.00 (562,181.00) 624,629.62
(4,081.27)

108,287.00 (102,887.00)
5,400.00 (777,358.00) 806,893.82
(3,487.83)

117,891.84 2,402,517.85 -

(108,287.00) 102,887.00
(5,400.00) 895,249.84 1,595,624.03
3,487.83

$

58,367.35 $

26,047.99 $ 2,520,409.69 $ 2,494,361.70

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include the budgeted revenues or expenditures of the various principal accounts. The principal accounts had actual revenues of $181,742.74 and actual expenditures $189,258.81.
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.

- 35 -

DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2016

SCHEDULE "6"

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 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
Other Programs Direct Career and Technical Education - Basic Grants to States English Language Acquisition Grants Improving Teacher Quality State Grants Migrant Education - State Grant Program Rural Education Title I Grants to Local Educational Agencies
Total Other Programs
Total U. S. Department of Education
Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

16165GA324N1099 $ 16165GA324N1099

229,063.79 758,762.45
987,826.24

84.027

H027A150073

339,451.56

84.048 84.365 84.367 84.011 84.358 84.010

V048A150010 S365A150010 S367A150001 S011A150011 S358B150010 S010A150010

25,884.07 4,101.64
152,429.65 26,035.79 6,977.34
629,648.52
845,077.01
1,184,528.57

12.UNKNOWN

73,942.67

Total Expenditures of Federal Awards

$ 2,246,297.48

Notes to the Schedule of Expenditures of Federal Awards

Note 1. Basis of Presentation

The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of the Dooly County Board of Education (the "Board") under programs of the federal government for the year ended June 30, 2016. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Board, it is not intended to and does not present the financial position or changes in net position of the Board.

Note 2. Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following, as applicable, either the cost principles in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments , or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards , wherein certain types of expenditures are not allowable or are limited as to reimbursement. The Board has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance.

See notes to the basic financial statements.

- 36 -

DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2016
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 Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Principal Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Mid-term Adjustment Hold-Harmless Amended Formula Adjustment Categorical Grants Pupil Transportation Nursing Services Sparsity Other State Programs Food Services Math and Science Supplements Teachers' Retirement Vocational Education Vocational Supervisors
Office of the State Treasurer Public School Employees Retirement
See notes to the basic financial statements.

SCHEDULE "7"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

415,811.20

494,072.00 55,624.00
1,029,616.00 119,062.00 449,370.00 113,899.00 745,762.00 576,125.00 357,363.00 649,984.00 56,086.00 83,445.00 56,599.00 107,675.00 139,209.00 44,073.00 23,105.00 742.00
303,214.00 348,070.00 324,587.00
62,206.00 (281,623.00)
314,470.00 45,000.00 54,382.00
25,630.00 11,346.35 12,379.44 96,418.00 13,326.00
41,308.00
$ 6,888,335.99

- 37 -

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DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2016

SCHEDULE "8"

PROJECTS

SPLOST III (2008)

1. To provide funds to pay or to be applied toward the cost of paying all or

a portion of certain previously incurred general obligation debt and

acquiring certain previously financed educational facilities at Dooly County

High School.

$

2. To provide funds to pay or to be applied toward the cost of constructing additional classrooms at existing educational facilities;

3. To provide funds to pay or to be applied toward the cost of improving existing educational facilities, including making energy management upgrades, purchasing equipment and upgrading athletic facilities;

4. To provide funds to pay or to be applied toward the cost of acquiring and upgrading system-wide instructional and administrative technology;

5. To provide funds to pay or to be applied toward the cost of purchasing safety and security equipment;

6. To provide funds to pay or to be applied toward the cost of purchasing textbooks and furnishing;

7. To provide funds to pay or to be applied toward the cost of purchasing vocational, fine arts, physical education and athletic equipment;

8. To provide funds to pay or to be applied toward the cost of purchasing school buses, maintenance vehicles and equipment;

ORIGINAL ESTIMATED
COST(1)
6,000,000.00 $ 1,200,000.00
379,000.00 550,000.00
25,000.00 250,000.00
50,000.00 546,000.00

CURRENT ESTIMATED COSTS(2)

AMOUNT EXPENDED IN FY 2016(3)

6,152,382.47 $ 900,000.00

969,392.16 $ -

437,172.89 550,000.00 325,000.00 259,800.19
69,855.63 546,000.00

43,431.00 81,526.00
6,928.35 958.95
44,778.63 24,002.00

AMOUNT EXPENDED IN PRIOR YEARS(3)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED

ESTIMATED COMPLETION
DATE

3,175,251.46 $ 15,744.12

- $ 15,744.12

393,741.89 375,655.24 299,647.57 258,841.24
25,077.00 420,265.84

437,172.89 457,181.24 306,575.92 259,800.19
69,855.63 444,267.84

-

6/30/2018

-

Complete

-

Complete

-

Complete

-

Complete

-

Complete

-

Complete

-

Complete

9. To provide funds to pay or to be applied toward the cost of and acquiring any property necessary or desirable therefor, both real and personal.

PROJECTS

SPLOST IV (2014)

1. To provide funds to pay or to be applied toward the cost of making certain lease-purchase payments in connection with the construction and renovation of certain improvements at Dooly County High School.

2. To provide funds to pay or to be applied toward the cost of constructing additional classrooms at existing educational facilities;

3. To provide funds to pay or to be applied toward the cost of improving existing educational facilities, including making energy management upgrades, purchasing equipment and upgrading athletic facilities;

4. To provide funds to pay or to be applied toward the cost of acquiring and upgrading system-wide instructional and administrative technology, including reimbursements for purchased instructional and administrative technology;
5. To provide funds to pay or to be applied toward the cost of purchasing safety and security equipment;
6. To provide funds to pay or to be applied toward the cost of purchasing textbooks and furnishing;

7. To provide funds to pay or to be applied toward the cost of purchasing vocational, fine arts, physical education and athletic equipment;

8. To provide funds to pay or to be applied toward the cost of purchasing school buses, maintenance vehicles and equipment, including but not limited to, purchasing maintenance equipment for athletic fields;

9. To provide funds to pay or to be applied toward the cost of purchasing band and athletic uniforms and equipment;

10. To provide funds to pay or to be applied toward the cost of repairing HVAC and roofing of existing facilities;

11, To provide funds to pay or to be applied toward the cost of and acquiring any property necessary or desirable therefor, both real and personal.
12. To pay capitalized interest and the cost of issuing debt.

500,000.00 9,500,000.00
2,100,000.00 1,400,000.00
550,000.00
550,000.00 125,000.00 600,000.00 200,000.00 1,250,000.00
50,000.00 175,000.00 500,000.00
7,500,000.00

347,617.53 9,587,828.71
2,100,000.00 1,400,000.00
550,000.00
550,000.00 125,000.00 600,000.00 200,000.00 1,250,000.00
50,000.00 175,000.00 500,000.00 146,129.55 7,646,129.55

1,171,017.09

4,964,224.36

1,990,597.83

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

146,129.55

-

-

146,129.55

-

-

-

Complete

-

-

6/30/2020

-

6/30/2020

-

6/30/2020

-

6/30/2020

-

6/30/2020

-

6/30/2020

-

6/30/2020

-

6/30/2020

-

6/30/2020

-

6/30/2020

-

6/30/2020

-

6/30/2020

-

$ 17,000,000.00 $

17,233,958.26 $

1,317,146.64 $

4,964,224.36 $

1,990,597.83 $

-

(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 project. Includes all cost from project inception to completion.
(3) The voters of Dooly County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project(s)

See notes to the basic financial statements.

- 39 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
November 29, 2018

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Dooly 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
INDEPENDENT AUDITOR'S REPORT
Ladies and Gentlemen:
We have audited, 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, the financial statements of the governmental activities, and the aggregate remaining fund information of Dooly County Board of Education (School District) as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements and have issued our report thereon dated November 29, 2018.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the School District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and a significant deficiency.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a

material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS 2016-001 and FS 2016-003 to be material weaknesses.
A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS 2016-002 and FS 2016-004 to be significant deficiencies.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the School District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
School District's Response to Findings
The School District's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,
Greg S. Griffin State Auditor

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
November 29, 2018

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Dooly County Board of Education
REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE
INDEPENDENT AUDITOR'S REPORT
Ladies and Gentlemen:
Report on Compliance for Each Major Federal Program
We have audited Dooly County Board of Education's (School District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2016. The School District's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs.
Management's Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the School District's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 School District'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 on compliance for each major federal program. However, our audit does not provide a legal determination of the School District's compliance.
Opinion on Each Major Federal Program
In our opinion, the School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2016.
Other Matters
The results of our auditing procedures disclosed instances of noncompliance, which are required to be reported in accordance with the Uniform Guidance and which are described in the accompanying Schedule of Findings and Questioned Costs as items FA 2016-002 and FA 2016-003. Our opinion on each major federal program is not modified with respect to these matters.
The School District's response to the noncompliance findings identified in our audit is described in the accompanying schedule of findings and questioned costs. The School District's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
Report on Internal Control over Compliance
Management of the School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, 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 School District's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, we identified certain deficiencies in internal control over compliance, as described in the accompanying Schedule of Findings and Questioned Costs as item FA 2016-001 that we consider to be a significant deficiency.

The School District's response to the internal control over compliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,
Greg S. Griffin State Auditor

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

DOOLY COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS-2014-001 Control Category: Internal Control Impact: Compliance Impact:

Inadequate Internal Controls Financial Reporting Material Weakness None

Finding Status:

Unresolved

The plan of action is to have adequate controls over the financial reporting process which includes accurate preparation and presentation of the financial statements. Since the School District has key personnel in place, completeness and accuracy of all activity recorded should be achieved with the upcoming financial reporting.

FS 2015-001 Control Category:
Internal Control Impact: Compliance Impact:

Accounting Control Procedures Accounting Controls (Overall) Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Employee Compensation General Ledger Capital Assets Material Weakness None

Finding Status:

Unresolved

Policies for managing user access to the financial application, school food point of sale system and student information system will be developed and implemented in fiscal year 2019. Internal controls have been reviewed to ensure transactions are processed according to established procedures.

FS-2015-002 Control Category:
Internal Control Impact: Compliance Impact:

Internal Control Procedures over Student Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Funds Held for Others Significant Deficiency None

Finding Status:

Unresolved

Internal controls have been reviewed to ensure transactions are processed according the established procedures. A School Activity Account Procedure Manual is to be revised in fiscal year 2019.

- 1 -

DOOLY COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FINANCIAL AWARD FINDINGS AND QUESTIONED COSTS

FS-2015-003 Control Category: Internal Control Impact: Compliance Impact:

Internal Controls over Financial Reporting Financial Reporting Material Weakness None

Finding Status:

Unresolved

The plan of action is to have adequate controls over the financial reporting process which includes accurate preparation and presentation of the financial statements. Since the School District has key personnel in place, completeness and accuracy of all activity recorded should be achieved with the upcoming financial reporting.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA-2015-001 Compliance Requirement Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title:
Questioned Cost:

Internal Control Procedures Allowable Costs/Cost Principles Significant Deficiency Nonmaterial Noncompliance U.S Department of Education Georgia Department of Education Title I, Part A (CFDA 84.010) 21st Century Community Learning Centers (CFDA 84.287) $57,185.64

Finding Status:

Partially Resolved

Internal controls have been reviewed to ensure employee compensation charged to Federal programs is adequately documented.

- 2 -

SECTION IV FINDINGS AND QUESTIONED COSTS

DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information
Internal control over financial reporting: Material weaknesses identified? Significant deficiency identified?
Noncompliance material to financial statements noted:

Federal Awards
Internal Control over major programs: Material weakness identified? Significant deficiency identified?

Type of auditor's report issued on compliance for major programs: All major programs

Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)?
Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555

Child Nutrition Cluster

Dollar threshold used to distinguish between Type A and Type B programs:

Auditee qualified as low-risk auditee?

Unmodified Yes Yes No
No Yes Unmodified Yes
$750,000.00 No

- 1 -

DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2016-001 Control Categories:
Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: Questioned Cost:

Internal Controls at the Central Office Accounting Controls (Overall) Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Employee Compensation General Ledger Capital Assets Material Weakness Material Noncompliance FS 2015-001 $82,897.86

Description: The accounting procedures of the School District were insufficient to provide adequate internal controls at the Central Office.

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

Condition: Accounting Controls (Overall)
The School District did not have adequate logical access controls in place to ensure only appropriate users have access to their significant financial application and school food service point of sale system. For the financial application, we noted several users with access rights that exceeded their need to complete their assigned job functions. Further, the access granted did not adequately separate the functions of initiating, authorizing, and recording transactions, reconciliations, and maintaining the custody of assets. Inadequate password parameters were also noted for the financial application, as well as the school food service point of sale system.
The School District did not have a Disaster Recovery Policy in place for the year under audit. The School District did not complete a risk assessment related to Information Technology Risks
for the year under audit. The School District did not have a formal procedure for granting, transferring or removing
access to the financial application or the school food service point of sale system. The School District did not perform a job restore for the financial application or the school food
service point of sale system to ensure data backed up is recoverable.

Cash and Cash Equivalents The School District did not have adequate internal controls in place to ensure that the bank reconciliation function was separate from the record keeping function. Bank reconciliations were either not performed, not documented or not reviewed for thirty of the forty-eight reconciliations reviewed. Timely bank reconciliation approvals were not performed for thirty-eight out of the fourty-eight reconciliations reviewed. For several bank accounts, there were variances between the bank reconciliations and the balance on the general ledger.

- 2 -

DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Capital Assets The School District did not capitalize $48,105.74 of eligible equipment. The School District recorded capital asset additions in the incorrect function on the capital assets listing. The School District did not properly approve the disposition of four assets.
Revenues/Receivables/Receipts The School District did not have adequate internal controls in place to ensure that the asset custody and reconciliation functions were separate from the record keeping function and the journal entry function. State and federal grants were not properly monitored resulting in numerous variances when compared to the amounts paid by the grantor agency. For more details, see FA 2016-003.
Expenditures/Liabilities/Disbursements The School District did not have adequate internal controls in place to ensure that the purchase order function was separated from the functions of cutting checks, reconciling bank statements and entering journal entries. Our examination of subsequent period expenditures revealed several unrecorded accounts payable totaling $58,183.25. Our examination of fifteen expenditures to consultants revealed that there was no contract on file and that the vendor was not approved by the Board. For more details, see FA 2016-002. The School District made an undocumented payment in the amount of $2,201.44 to the former Superintendent. Our examination of fifty-seven expenditures revealed the following deficiencies: o One expenditure could not be located. o Eighteen expenditures did not show evidence of proper approval prior to purchase. o Six expenditures did not have evidence to support goods were received from the vendor prior to payment. o One expenditure was not allowable under the grant charged. o Eleven expenditures were charged to the incorrect function. o Seven expenditures were not charged to the correct period. o One expenditure's documentation did not agree to the general ledger.
Employee Compensation The School District did not have adequate procedures in place to ensure proper separation of duties or to ensure employee compensation expenditures were properly documented, calculated and approved before disbursement. Our review of twenty-three employees' salaries revealed the following deficiencies: o Overpayments totaling $82,897.86 were noted for nine employees due to salaries not being calculated using Board approved salary scales, and no documentation maintained for amounts paid above contract or for supplements paid. o Underpayments totaling $13,954.55 were noted for nineteen employees due to the School District using an incorrect local supplement in their salary calculations and because the School District did not provide one employee's final pay-out. o There were no approvals of supplements and stipends for leadership and athletic positions. The School District could not provide a detailed listing of salaries and benefits payable.
- 3 -

DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
General Ledger Federal program funds reported deficit fund balances in the amount of $50,751.08 due to inadequate monitoring during the year under audit. The School District did not submit its DE-046 or budget reports by the Georgia Department of Education's required deadline. Our review of thirty-three journal entries revealed the following deficiencies: o Twenty-nine journal entries did not have proper approval. o Twenty-three journal entries were not adequately documented. o Seventeen journal entries could not be determined to be appropriate. o Twelve journal entries could not be determined to be accurate. o Fourteen journal entries could not be determined to be in the correct period. The School District's journal entries were not sequential for the month tested by the auditor, which could result in data being recorded in an incorrect accounting period. The School District recorded a journal entry that overstated cash and understated expenditures in the amount of $40,248.00 that should have been recorded in the subsequent period.
Cause: In discussing this deficiency with the School District, they stated that these issues were a result of a lack of separation of duties and internal control procedures within the finance department due to lack of experience and training.
Effect or Potential Effect: Without satisfactory accounting controls and procedures in place, the School District could place itself in a position where potential misappropriation of assets could occur. In addition, the lack of controls impacted its reporting of financial position and results of operations
Recommendation: The School District should review accounting procedures in place and design and implement procedures relative to the above control categories to strengthen the internal controls over the accounting functions. Management should ensure that proper separation of duties exists. In the case when management determines that separation of duties is not cost beneficial, management should implement compensating controls that assist in assuring that transactions are properly processed and reported.
Views of Responsible Officials: We concur with this finding.
- 4 -

DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2016-002 Control Categories:
Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding:

Internal Control Procedures over School Activity Accounts Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Funds Held for Others General Ledger Significant Deficiency None FS 2015-002

Description: The accounting procedures of the School District were insufficient to provide for adequate internal controls over the school activity accounts.

Criteria: The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and reasonable assurance that transactions are processed according to established procedures.

Condition: The following deficiencies were noted with the School District's school activity accounts:

Revenues/Receivables/Receipts The key accounting functions of receipt preparation, record keeping and bank reconciliation were not adequately separated. Our examination of ten receipts revealed one receipt did not agree to the deposit amount. The entity did not properly report its school activity revenues between miscellaneous revenue and charges for services.

Expenditures/Liabilities/Disbursements The key accounting functions of check preparation, record keeping and bank reconciliation were not adequately separated. Our examination of twelve expenditures revealed the following discrepancies: o Eleven expenditures did not have evidence of receipt of goods and/or services prior to payment. o Two expenditures did not have documentation that agreed to the check amount.

Funds Held for Others One school activity account was misclassified as agency funds rather than governmental funds. One agency account had a deficit fund balance. There was no documentation to support the establishment of a new club account.

General Ledger The School District did not properly record the financial activity related to the school activity accounts. As a result, the prior year numbers were reported in the current year with a financial statement journal entry. The entity could not document that School Activity account activity was reviewed quarterly.

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DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Cause: In discussing this deficiency with the School District, they stated that the errors were made due to the schools not having a school activity account policy manual. In addition, the schools do not have adequate personnel in order to be able to separate the duties.
Effect or Potential Effect: Failure to maintain adequate internal controls over school activity accounts increases the risk that misstatements could occur in the financial statements due to errors or fraud and not be detected in a timely manner.
Recommendation: The School District should establish control procedures to ensure that the key accounting functions of receipt preparation, check preparation, bank reconciliation and record keeping are separated. In the case when management determines separation of duties is not cost beneficial, management should implement compensating controls that assist in assuring that transactions are properly processed and reported. In addition, the School District should implement procedures to ensure that receipts and disbursements are adequately documented and recorded in the financial records. The School District should also establish a monitoring process to provide reasonable assurance that transactions are processed according to established procedures.
Views of Responsible Officials: We concur with this finding.

FS 2016-003 Control Categories: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding:

Internal Controls Over Financial Reporting Financial Reporting Material Weakness None FS 2015-003, FS 2014-001

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

Criteria: Management is responsible for having adequate controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). The School District's internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills and experience to prepare GAAP based financial statements and include all disclosures as required by the Governmental Accounting Standards Board (GASB).
GASB Statement No. 34, Basic Financial Statements Management's Discussion and Analysis- for State and Local Governments (Statement), requires governments to present government-wide and fund financial statements as well as a summary reconciliation of the (a) total governmental fund balances to the net position of governmental activities in the Statement of Net Position, and (b) total change in governmental fund balances to the change in the net position of governmental activities in the Statement of Activities. In addition, the statement requires information about the government's major and nonmajor funds in the aggregate, to be provided in the fund financial statements.

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DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Chapter II 2 Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles.
Condition: The following errors and omissions were noted in the School District's financial statements, note disclosures and supplementary information presented for audit:
Deferred inflows and deferred outflows were not booked correctly on the government wide statements. A misclassification in the amount of $681,332.00 was noted between deferred inflows and deferred outflows related to defined benefit pension plans. An adjustment to the financial statements was proposed by the auditors and accepted by the School District.
The School District did not disclose its liability for compensated absences in the amount of $69,542.04.
Fund balance on the governmental fund statements was misclassified by $94,557.85 between restricted and unassigned.
The School District misclassified bond issuance costs in the amount of $106,397.55 on the governmental fund statements and government-wide statements. An adjustment to the financial statements was proposed by the auditors and accepted by the School District.
Net Investment in Capital Assets was overstated by $304,927.50 due to calculation errors. An adjustment to the financial statements was proposed by the auditors and accepted by the School District.
The salaries and benefits payable summary did not agree to the amount reported in the financial statements by $54,369.10.
Numerous errors were noted with the cash note reported by the School District, including carrying amount, bank balance, FDIC insured balances, and collateral balances. Adjustments to the notes to the financial statements were proposed by the auditors and accepted by the School District.
Numerous errors were noted with the investment note reported by the School District. Adjustments to the notes to the financial statements were proposed by the auditors and accepted by the School District.
The School District did not disclose its operating leases, with current year payments of $30,907.20 and future minimum lease payments of $39,191.80.
Capital assets were not classified correctly in the capital asset note. A misclassification in the amount of $99,684.00 was made between buildings and land improvements.
Numerous errors were noted with the Schedule of Proportionate Share of the Net Pension Liability for TRS, Schedule of Proportionate Share of the Net Pension Liability for PSERS, Schedule of Contributions to TRS, Notes to the Required Supplementary Information , Schedule of Expenditures of Federal Awards and Schedule of SPLOST Expenditures. Adjustments were proposed by the auditors and accepted by the School District.
The Reconciliation of the Governmental Funds Balance Sheet contained significant errors. Adjustments were proposed by the auditors and accepted by the School District.
Other immaterial audit adjustments and reclassifications were proposed by the auditors and accepted by the client to properly present the School District's financial statements, note disclosures and supplemental information.
Cause: Although the School District hired a consultant to prepare their financial statements, errors occurred due to a lack of oversight by the School District.
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DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Effect or Potential Effect: Material and significant misstatements and misclassifications were included in the financial statements presented for audit. The lack of controls and monitoring could impact the reporting of the School District's financial position and results of operations.
Recommendation: The School District should strengthen their internal controls and preparation and review procedures over financial reporting to ensure that the financial statements, including disclosures and schedules, presented for audit are complete and accurate. These procedures should be performed by a properly trained individual possessing a thorough understanding of GAAP, the applicable GASB pronouncements, and knowledge of the School District's activities and operations. The School District should consider implementing the use of a review checklist to assist in the review process over the financial statements.
Views of Responsible Officials: We concur with this finding.

FS 2016-004 Control Categories: Internal Control Impact: Compliance Impact:

Improper Use of SPLOST Proceeds Expenditures/Liabilities/Disbursements Significant Deficiency Nonmaterial Noncompliance

Description: The School District expended Special Purpose Local Option Sales Tax (SPLOST) proceeds on an item not specifically identified in the SPLOST project referendum.

Criteria: According to Paragraph IV, Section VI, Article VIII of the Constitution of the State of Georgia, "the purpose or purposes for which the proceeds of the tax are to be used and may be expended include: (1) Capital Outlay projects for educational purposes; (2) the retirement of previously incurred general obligation debt with respect only to capital outlay projects of the school system..." Official Code of Georgia Annotated 48-8-121 states, "The proceeds received from the tax authorized by this part shall be used exclusively for the purpose or purposes specified in the resolution or ordinance calling for imposition of the tax".

The Attorney General's Official Opinion 97-7 for O.C.G.A. 20-2-260(b)(5), states, "capital outlay
projects as used in the educational sales tax purposes amendment should be read as well to refer to
major, permanent, or long-lived improvements or betterments, such as would be properly chargeable to a capital asset account and as distinguished from current expenditures and ordinary maintenance expenses".

Condition: During the year under review, the School District expended $94,296.00 of SPLOST proceeds for construction of a medical clinic that was not approved in the SPLOST referendum.

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DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Cause: In discussing this deficiency with the School District, they stated that they failed to have adequate controls in place to ensure that these expenditures were covered by the SPLOST referendum.
Effect of Potential Effect: Improper use of the Special Purpose Local Option Sales Tax (SPLOST) proceeds.
Cause: The School District should ensure that any use of SPLOST funds is appropriate in accordance with State law and the SPLOST referendum as approved by the voters of Dooly County.
Views of Responsible Officials: We concur with this finding.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA 2016-001 Control Categories: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Costs: Repeat of Prior Year Finding:

Time and Effort Support Allowable Costs/Cost Principles Significant Deficiency Nonmaterial Noncompliance U.S. Department of Agriculture Georgia Department of Education CFDA 10.553 and 10.555 Child Nutrition Cluster 16165GA324N1099 $4,386.32 FA 2015-001

Description: A review of employee compensation charged to the Child Nutrition Cluster (CFDA 10.553 and 10.555) revealed that internal control procedures were not in place to ensure that employee compensation was properly documented.

Criteria: 2 CFR Part 200.403 states in part that "costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles... (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity... (g) Be adequately documented..."

Condition: Our review revealed that the Director was paid more than the amount documented in the approved salary scale, and no Board approval existed for the excess.

Questioned Cost: $4,386.32

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DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Cause: In discussing this deficiency with the School District, they stated that this issue was a result of a lack of internal control procedures within the finance department.
Effect or Potential Effect: Failure to ensure that employee compensation is adequately documented resulted in noncompliance with the requirements of the federal grants.
Recommendation: The School District should implement procedures to ensure that all employee compensation charged to federal programs is adequately documented. The Georgia Department of Education should review this matter to determine if a reclaim of funds is appropriate.
Views of Responsible Officials: We concur with this finding.

FA 2016-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title:
Federal Award Number:
Questioned Costs:

Controls Over Expenditures Allowable Costs/Cost Principles Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education CFDA 84.010 Title I Grants to Local Educational Agencies CFDA 84.367 Improving Teacher Quality State Grants S010A150010 - Title I Grants to Local Educational Agencies S367A150001 Improving Teacher Quality State Grants $33,200.00

Description: A review of federal program expenditures revealed that internal control procedures were not in place to ensure that expenditures paid to consultants were allowable.

Criteria: 2 CFR 200.403 states in part that "costs must meet the following general criteria in order to be allowable under federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles... (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity...." (g) Be adequately documented..."

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DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
2 CFR 200.303(a) states that the non-Federal entity must "establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award."
Condition: Our review of expenditures paid to consultants revealed the following:
Eleven out of nineteen consultant transactions reviewed for the Improving Teacher Quality State Grant were not allowable due to overlapping payments with another School District for the same dates of service, because the vendor had already worked the maximum number of days allowed per his contract, because there was no invoice or approved contract on file for the vendor, or because the School District had overspent their federal budget for the particular service being purchased.
Three out of twenty-seven consultant expenditures reviewed for the Title I Grants to Local Educational Agencies were not allowable because there no invoices to support the cost.
Questioned Cost: $5,400.00 in Title I Grants to Local Educational Agencies $27,800.00 in Improving Teacher Quality State Grants
Cause: In discussing this deficiency with the School District, they stated these issues were a result of a lack of internal control procedures within the Central Office.
Effect or Potential Effect: Failure to ensure that expenditures are allowable resulted in noncompliance with the requirements of the federal grant awards.
Recommendation: The School District should implement internal control procedures to ensure that all expenditures are allowable. The Georgia Department of Education should review these matters to determine if a reclaim of funds is appropriate.
Views of Responsible Officials: We concur with this finding.
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DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA 2016-003 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title:
Federal Award Number:
Questioned Costs:

Refund of Unexpended Grants Reporting Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education CFDA 84.010 Title I Grants to Local Educational Agencies CFDA 84.358 Rural Education CFDA 84.365 English Language Acquisition Grants CFDA 84.367 Improving Teacher Quality State Grants S010A150010 S358B150010 S365A150010 S367A150001 None Identified

Description: The School District failed to refund unearned grants balances to the Georgia Department of Education.

Criteria: 2 CFR 200.343 (d) states "The non-Federal entity must promptly refund any balances of unobligated cash that the Federal awarding agency or pass-through entity paid in advance or paid and that are not authorized to be retained by the non-Federal entity for use in other projects."
Chapter V-1, State and Federal Fiscal Rules and Procedures of the Financial Management for Georgia Local Units of Administration states, "This chapter sets forth the principal requirements that a School District must meet to account for and externally report its budget and financial operations relating to state and Federally funded programs administered by the Georgia Department of Education." Unearned funds must be returned to the Georgia Department of Education.

Condition: Our review of the School District's accounting records revealed the following:
The School District did not return unearned Title I Grants to Local Education Agencies funds of $278,789.89 on hand as of year-end.
The School District did not return unearned Rural Education funds of $19,902.66 on hand as of year-end.
The School District did not return unearned English Language Acquisition Grants funds of $9,974.17 on hand as of year-end.
The School District did not return unearned Improving Teacher Quality State Grants funds of $25,339.38 on hand as of year-end.

Questioned Cost: None.

Cause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of time and resources to investigate these balances.

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DOOLY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Effect or Potential Effect: The lack of monitoring of expenditures and funds drawn down resulted in noncompliance with the Federal grant requirements and could impact the School District's ability to obtain future grants. Recommendation: The School District should implement procedures to ensure that Federal grants are accounted for according to Federal requirements and that unearned funds on hand at the end of the grant period are returned to the grantor timely. The Georgia Department of Education should review this matter to determine if a reclaim of funds is appropriate. Views of Responsible Officials: We concur with this finding.
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SECTION V MANAGEMENT'S CORRECTIVE ACTION