Effingham County Board of Education, Springfield, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2001

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
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EFFINGHAM COUNTY BOARD OF EDUCATION SPRINGFIELD, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2001
Russell W. Hinton State Auditor

EFFINGHAM COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

GENERAL-PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS -OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

7

D NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

8

ADDITIONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

22

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

24

CAPITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

26

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

28

SCHEDULES

1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

30

2 SCHEDULE OF STATE REVENUE

32

3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

35

ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

4

BY PROGRAM

36

5

BY SITE

37

EFFINGHAM COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
SECTION ID AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

Rt'SSEl.l. \\'. H1!\l'Oi\ STATE AUQITOR
1404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
2:'i-l Washington Street. S.W.. Suite 214 Atlanta, Georgia 30334-8400
April 3, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Effingham County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general-purpose financial statements ofthe Effingham County Board of Education, as of and for the year ended June 30, 2001, as listed in the table of contents. These general-purpose financial statements are the responsibility ofthe Effingham County Board of Education's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit.
We conducted our audit in accordance with 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 ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our op1mon.
As described in the notes to the general-purpose financial statements, the Board of Education's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:

2001ARL-13

* The general-purpose financial statements of the Board of Education did not contain a General Fixed Assets Account Group to account for property and equipment owned by the Board of Education which should be included to conform to generally accepted accounting principles.
* School activity accounts maintained at the individual schools are not included in the
general-purpose financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general-purpose financial statements.
* The Board of Education did not recognize as expenditures, in the year ended
June 30, 2001, a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 2001. Also funds received, subsequent to June 30, 2001, from the Georgia Department of Education for the State's share of these unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2000, were improperly recorded in the year ended June 30, 2001. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed.
The aggregate effects on the general-purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects on the general-purpose financial statements of the matters referred to in the preceding paragraph, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position of the Effingham County Board of Education as of June 30, 2001, and the results ofits operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated April 3, 2002, on our consideration of the Effingham County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements of the Effingham County Board of Education taken as a whole. The accompanying combining statements (Exhibits E through H) and the financial schedules (Schedules 1 through 5), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the general-purpose financial statements. Such information has been subjected to the auditing
2001ARL-13

procedures applied in the audit ofthe general-purpose financial statements and in our opinion, except for the effects of the matters referred to in the third paragraph, such information is fairly stated, in all material respects, in relation to the general-purpose financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office ofthe State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 506-24.
Respectfully submitted,
~w.~ Russell W. Hinton State Auditor
RWH:gp 2001ARL-13

EFFINGHAM COUNTY BOARD OF EDUCATION

EFFINGHAM COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 2001

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

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$

6,565,946.98 $

860,507 30 $

39,933.67

687,852.36

1,083,532.31

1,383,211.30

22,208.97

10,923.30 10,898.25

Total Assets

$ 7,649,479.29 $

904 537.82 $

2 110 997.33

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salaries Payable Short-Term Debt Expired Grant Balances Payable Contracts Payable Retainages Payable Due to Other Funds Deferred Revenue General Obligation Bonds Payable Capital Lease Agreements Intergovernmental Contract Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Bus Replacement Funds For Continuation of Federal Programs For Debt Service For GSBA Project For Inventories Food Donated Commodities Purchased Food For SPLOST Projects For State Capital Outlay Projects Unreserved Undesignated
Total Fund Equity

$

1,483,150.30 $

4,995,000.00

273,332.63 $ 426,137.51
9,227.59

22,208.97

39,599.75

308,085.51
316,354.43 155,871.89

$ 6,500,359.27 $

748 297.48 $

780 311.83

$

69,928.59

618,000.00

$

10,923.30

10,898.25

$

1,330,685.50

461 191.43

$

1 149 120.02 $

134 418.79 156 240.34 $

0.00 1,330,685.50

Total Liabilities and Fund Equity

$

7 649 479.29 $

904,537.82 $

2,1101997.33

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

EXHIBIT "A"

DEBT SERVICE
FUND

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS

(Memorandum Only)

JUNE 30, 2001

JUNE 30, 2000

s

423,680.38

$

7,890,068.33 $

7,546,034.79

3,908.37

691,760.73

753,727.78

100,357.28

2,567,100.89

1,754,212 73

1,000.00

22,208.97

1,080,386.46

$

527,946.03

10,923.30 10,898.25
527,946.03

35,799.29 12,422.95
243,877.57

11,152,053.97 3,518,205.02 160,000 00

11,152,053.97 3,518,205.02 160 000.00

12,606,122.43 3,878,420.74 230,000.00

$

527,946.03 $

15,358,205.02 $ 26,551 165.49 $ 28 142 004.74

$

2,064,568.44 $

2,283,466.40

426,137.51

502,094.77

4,995,000.00

4,995,000.00

9,227.59

18,760.00

316,354.43

219,907.22

155,871.89

80,171.32

22,208.97

1,080,386.46

39,599.75

$

11,680,000.00

11 ,680 ,000.00

12,850,000.00

3,518,205.02

3,518,205.02

3,878,420.74

160 000.00

160 000.00

230,000.00

$

15,358,205.02 $ 23,387,173.60 $ 26,138,206.91

$

527,946.03

0.00

$

527 946.03

$

69,928.59 $

188,104.55

699 09

527,946.03

243,877.57

618,000.00

618,000.00

10,923.30 10,898.25 1,330,685.50

35,799.29 12.422.95 306,018.54 269,523.72

595,610.22

329,35212

$

3 163 991.89 $

2,003 797.83

$

527 946.03 $

153582~ $ 26,551 165.49 $ 2811421004 74

-3-

EFFINGHAM COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 2001

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Food Services Operation
Capital Outlay Debt Service
Principal Interest Paying Agent Fees
Total Expenditures
Excess of Revenues over {under) Expenditures
OTHER FINANCING SOURCES {USES)
Capital Leases Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commodities Purchased Food

GENERAL FUND

SPECIAL REVENUE
FUND

$ 33,365,541.81 $ 1,236,248.56 88,133.79 3,446,162.27
10,516,328.73 523,669.18 1,566,813.05
$ 44,493,673.51 $ 6,249,223.88

$ 30,237,229.37 $ 2,803,366.73

1,570,286.66 1,016,374.84 1,556,404.03
583,295.07 2,628,689.37
709,161.30 3,282,329.96 2,401,378.47
131,135.46

276,380.32 44,251.62 224,587.01
28,185.99 2,832,271.87

227,411.21 39,309.06

3,466.00

$ 44,383,004.80 $ 6,212,509.54 $ 110,668.71 $ 36 714.34

$ 97,005.36 $ -97,005.36
$ -97,005.36 $ 97,005.36

$

13,663.35 $

1,135,456.67

133,719.70 48,921.33

-24,875.99 -1,524.70

FUND BALANCE JUNE 30

$ 1,149,120.02 $ 156,240.34

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

EXHIBIT"B"

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTALS (Memorandum Only)
YEAR ENDED JUNE 30, 2001 JUNE 30, 2000

$ 1,595,540.68
3,689,173.65 $
75 410.35

$
2,122,695.73 77 957.87

36,197,331.05 $
3,534,296.06 16,328,198.11
2,243,850.45

31,965,955.87 3,447,210.02
15,903,114.32 2,159,161.59

$ 5,360,124.68 $ 2,200,653.60 $ 58,303,675.67 $ 53,475,441.80

$ 33,040,596.10 $ 30,253,710.97

$ 4,178,716.20

1,846,666.98 1,060,626.46 1,556,404.03
807,882.08 2,628,689.37
709,161.30 3,282,329.96 2,429,564.46 2,832,271.87 4,309,851.66

2,270,663.67 1,066,349.98 1,396,942.74
830,088.18 2,425, 144.27
697,451.46 3,095,512.53 2,561,791.59 2,880,999.62 2,908,979.45

716,338.51 $
226,926.73

1,170,000.00 743,945.00 2 640.14

2,117,215.72 1,010,180.79
2 640.14

1,965,484.14 1,072,615.16
4,665.53

$ 5,121,981.44 $ 1,916,585.14 $ 57,634,080.92 $ 53,430,399.29

$ 238,143.24 $ 284,068.46 $

669,594.75 $

45,042.51

$ 517,000.00 $ 517,000.00

$

517,000.00 $

431,595.36

97,005.36

432,036.62

-97,005.36

-432,036.62

$

517,000.00 $

431,595.36

$ 755,143.24 $
575,542.26

284,068.46 $ 1,186,594.75 $

476,637.87

243,877.57

2,003,797.83

1,508,874.89

-24,875.99 -1 524.70

15,391.66 2 893.41

$ 1,330,685.50 $ 527,946.03 $ 3,163,991.89 $ 2,003,797.83

-5-

EFFINGHAM COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - (NON-GAAP BASIS)
GENERAL AND SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2001

EXHIBIT "C"

GENERAL FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

REVENUES

State Funds Federal Funds Taxes Other Funds

$ 32,824,984.00 $ 33,365,541.81 88,133.79
10,255,603.00 10,516,328.73 523,669.18

Total Revenues

$ 43,080,587.00 $ 44,493,673.51

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 Food Services Operation
Capital Outlay Debt Service

$ 30,381,308.00 $ 30,237,229.37

839,477.00 975,144.00 1,533,658.00 471,953.00 2,430,518.00 402,166.00 2,993,725.00 2,435,992.00

1,570,286.66 1,016,374.84 1,556,404.03
583,295.07 2,628,689.37
709,161.30 3,282,329.96 2,401,378.47

616,646.00

131,135.46 266.720.27

Total Expenditures

$ 43,080,587.00 $ 44,383,004.80

Excess of Revenues over (under) Expenditures

$

0.00 $ 110668.71

OTHER FINANCING SOURCES (USES)

Other Sources Other Uses

$ -97,005.36

Total Other Financing Sources (Uses)

$ -97,005.36

Excess of Revenues and Other Financing Sources

over (under) Expenditures and Other Financing

Uses

$

0.00 $

13,663.35

FUND BALANCE JULY 1, 2000

1,592,999.75 1,135,456.67

Food Inventory - Net Change in Pe1iod Donated Commodities Purchased Food

FUND BALANCE JUNE 30, 2001

$ 1,592,999.75 $ 1,149,120.02

SPECIAL REVENUE FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

$ 1,195,244.00 $ 1,236,248.56 3,140,590.00 3,446,162.27
1,541,375.00 1,566,813.05
$ 5,877,209.00 $ 6,249,223.88

$ 2,429,732.00 $ 2,803,366.73

383,215.00 152,144.00

276,380.32 44,251.62

170,138.00

224,587.01

7,240.00

28,185.99

2,734,740.00 2,832,271.87

3,466.00

$ 5,877,209.00 $ 6,212,509.54

$

0.00 $ 36 714.34

$ 97,005.36 $ 97,005.36

$

0.00 $ 133,719.70

-349,772.21

48,921.33

-24,875.99 -1 524.70

$ -349,772.21 $ 156,240.34

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

EFFINGHAM COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 200 I

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Effingham County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The 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.
FUND ACCOUNTING
The School District uses funds and an account group 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. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the School District. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general-purpose financial statements.
The general-purpose financial statements account for all State, Federal, Taxes and Other funds under control of the School District, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most of a School District's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources of the School District except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education.

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EFFINGHAM COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and from the Federal government to accomplish specific educational objectives.
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.
DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debt outstanding, capital lease obligations and intergovernmental contracts.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements ofthese funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The School District considers receivables collected within sixty days after yearend to be available and therefore susceptible to accrual. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, local option sales taxes, intergovernmental grants and donations. Revenue for property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year the resources are received or susceptible to accrual. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
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EFFINGHAM COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures are generally recognized when the related fund liability is incurred.
A departure from the above definitions is the accounting treatment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 2001, a substantial number ofpersonnel ofthe School District were employed for a one hundred and ninety day period beginning in August 2000 and ending in early June 2001. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 2000 and ending in August 2001. State grants to fund the State's share of these contracts were disbursed from the Georgia Department of Education to the School District in the same twelve months. As of June 30, 2001, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 2001, had not been made. Payments for these two months were made and recorded as expenditures by the School District subsequent to June 30, 2001. Also, the State's portion ofthe compensation paid in July and August 2001 was received and recorded as revenue in the fiscal year subsequent to June 30, 2001. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2000, were recorded in the year ended June 30, 2001. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.
BUDGET
The Effingham County Board of Education's budget is a complete financial plan for the School District's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.
The budget process begins when the School District's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167(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.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial

EFFINGHAM COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions of the State of Georgia.
RECEIVABLES
Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general-purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

- 11 -

EFFINGHAM COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 200 I

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PROPERTY TAXES

The Effingham County Board of Commissioners fixed the property tax levy for the 2000 tax year (calendar year) on August 18, 2000 (levy date). Taxes were due on November 15, 2000 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 2001. The Effingham County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues during the fiscal year ended June 30, 2001 for maintenance and operations amounted to $10,192,316.07 and for school bonds amounted to $2,071,486.57.

Tax millage rates levied for the 2000 tax year (calendar year) for the Effingham County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations School Bonds

13.56 mills 2.89 mills

16.45 mills

SALES TAXES

Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes. Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $3,689,173.65 and was recorded in the Capital Projects Fund. The State will terminate collection of this tax once an additional $3,016,991.20 has been collected or on December 31, 2002, whichever occurs first.

INVENTORIES

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

- 12 -

EFFINGHAM COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction ofmajor capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit ofthe government. The outstanding amount of these bonds is recorded in the General Long-Term Debt Account Group.
INTERFUND TRANSACTIONS
The School District has the following types of interfund transactions:
Reimbursements ofexpenditures initially made from a fund that are properly applicable to another fund are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.
Operating transfers are recorded for all interfund transactions other than reimbursements.
MEMORANDUM ONLY-TOTAL COLUMNS
Total columns on the general-purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results ofoperations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45--8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of any one of or any combination of the following:

- 13 -

EFFINGHAM COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 2: DEPOSITS AND INVESTMENTS
(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 the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 2001, the bank balances were $9,136,901.03. The amounts ofthe total bank balances are classified into three categories of credit risk:
Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.)
The School District's deposits are classified by risk category at June 30, 2001, as follows:

- 14 -

----- -----

EFFINGHAM COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 2: DEPOSITS AND INVESTMENTS

Risk Category

Bank Balance

$ 1,877,924.88

2

7,258,976.15

3

0.00

Total

$ 9,136,901.03

CATEGORIZATION OF INVESTMENTS Investments are classified as to risk by the three categories described below:

Category 1 - Insured or registered, or securities held by the School District or the School District's agent in the School District's name.
Category 2 - Uninsured or unregistered, with securities held by the counterparty's trust department or agent in the School District's name.
Category 3 - Uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent but not in the School District's name.

At June 30, 2001, the carrying value of the School District's total investments was $691,760.73 which is materially the same as fair value. The investments are classified as to risk categories as follows:

TYI1e of Investment

Investment Portfolio

Account

s

Local Government Investment Pools

Total Investments

Risk Categories

2

3

Carrying Amount

Fair Value

Q.Q0 $_lQ445.Q0 $

0.QQ $ 30,445.00 $ 30,445.00

661 315.73

661 315.73

$ 621,160.13 $ 621 76Q.11

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

The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the Securities and Exchange Comri1ission as an investment company but does operate

- 15 -

EFFINGHAM COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 2: DEPOSITS AND INVESTMENTS

Georgia Fund I in a manner consistent with Rule 2a-7 of the Investment Company Act of 1940 and is considered to be a 2a-7 like pool. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.

Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2001, was 39 days. The average investment duration for Fund 6 on June 30, 2001, was 6 months.

Note 3: NON-MONETARY TRANSACTIONS

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

Note 4: INTERFUND ASSETS AND LIABILITIES

Due to and due from other funds are recorded for interfund receivables and payables which arise from interfund transactions. The following analysis summarizes the status of all interfund transactions of the School District at June 30, 2001:

Due From Other Funds

Due To Other Funds

General Fund Special Revenue Fund
School Food Service Fund

$ 22,208.97 $ 22,208.97

$ 22!208.97 $ 22!208.97

- 16 -

EFFINGHAM COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 5: RISK MANAGEMENT

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

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

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

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

2000 2001

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

$

0.00 $

5,305.34 $

0.00 $

5,305.34

$

5,305.34 $

5,654.00 $

8 698.34 $

2,261.00

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

Position Covered

Amount

Superintendent Each Employee

$ 100,000.00 $ 50,000.00

Note 7: GENERAL LONG-TERM DEBT

CAPITAL LEASES The Effingham County Board of Education entered into an agreement on October 1, 1994, with the Georgia School Boards Association (GSBA), Incorporated for the construction and subsequent lease of various school facilities.. Under the terms of the lease agreement, the Board will make semiannual payments through January 15, 2005. This lease includes an annual renewal clause.

The Effingham County Board of Education has entered into lease agreements for buses, equipment and an intergovernmental contract with the City of Springfield to finance a sanitary sewer system to serve the schools. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of inception.

- 17 -

EFFINGHAM COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 7: GENERAL LONG-TERM DEBT

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

Purpose

Interest Rates

Amount

General Government - Series 1994

4.20% - 6.25% $11,680,000.00

Voters have authorized $10,000,000.00 in general obligation debt for constructing, equipping and furnishing new schools which was not issued as ofJune 30, 2001. This bond issue is associated with a SPLOST referendum approved June 19, 2001 which will take effect upon termination of the current SPLOST referendum.

The changes in General Long-Term Debt during the fiscal year ended June 30, 2001, were as follows:

Cagital Leases

GSBA

Other

Intergovernmental Contract
Trust Certificates

General Obligation
Bonds

Total

Balance July I, 2000 $3,490,000.00 $ 388,420.74 $ 230,000.00 $12,850,000.00 $16,958,420.74

Additions Capital Leases

5 I 7,000.00

517,000.00

Deductions Debt Retired

625,000.00 252,215.72

70 000.00 I, 170,000.00 2,117,215.72

Balance June 30, 2001 $2,865 000.00 $ 653,205.02 $ ]GQ,000.00 $] I 680 000.00 $15 358 205.02

At June 30, 2001, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

Cagital Leases

GSBA

Other

Intergovernmental Contract
Trust Certificates

General Obligation
Bonds

Total Debt

2002 2003 2004 2005 2006 2007 - 201 I

$ 823,187.50 $ 247,268.78 $ 821,887.50 240,001.02 822,793.76 121,327.72 820,531.26 121,327.72

87,885.00 91,885.00

$ l ,903,690.00 1,893,420.00 1,888,932.50 1,874,562.50 1,865,462.50 5,607.812.50

$ 3,062,031.28 3,047,193.52 2,833,053.98 2,816,421.48 1,865,462.50 5,607,812.50

Total Principal and

Interest

$3,288,400.02 $ 729,925.24 $ 179,770.00 $15 033,880.00 $19,231 9752.6

Deduct: Imputed Interest

423,400.02

76.720.22

19 770.00

Net Present Value Of Future Minimum Lease Payments $2 865 000.00 $ 653 205.02 $ 160 000 00

- 18 -

EFFINGHAM COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 8: SHORT-TERM DEBT

The School District issues tax anticipation notes and obtains temporary loans in advance ofproperty 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 ofthe State of Georgia limits the aggregate amount of short-tem1 debt to 75 percent 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 ofthe calendar year in which the debt was incurred.

Beginning Balance

Additions

Payments

Ending Balance

Tax Anticipation Note~.

$4,995,000.00 $4,995,000.00 $4,995,000.00 $4,995,000.00

Note 9: ON-BEHALF PAYMENTS

The School District has recognized revenues and expenditures in the amount of $669,512.24 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $492,330.60

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (IRS) Employer's Cost In the amount of $53,304.64

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $123,877.00

Note 10: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction orrenovation contracts executed by the School District as of June 30, 2001, together with funding available:

- 19 -

EFFINGHAM COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 10: SIGNIFICANT COMMITMENTS

Project

Unearned Executed Contracts

Funding Available From State

0 l /00S-651-003 02/0lS-651-013

$ 5,119,027.19 $ 2,773,586.92

515,058.11

585,464.00

$ 5,634,085.30 $ 3,359,050.92

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

Note 11: CONTINGENT LIABILITIES

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

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

Note 12: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.29% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

- 20 -

EFFINGHAM COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 200 I

Note 12: RETIREMENT PLANS
Fiscal Year
2001 2000 1999

Percentage Contributed
100% 100% 100%

Required Contribution
$ 3,316,988.35 $ 3,142,296.36 $2,939,807.31

- 21 -

EFFINGHAM COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 2001

ASSETS
Cash and Cash Equivalents
Accounts Receivable
Due from Other Funds
Inventories Food Donated Commodities Purchased Food

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

296,437.28 $

149,011.32

22,208.97

10,923.30 10 898.25

Total Assets

$

340,467.80 $ ===14=9=0=1=1=.3=2

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salaries Payable Expired Grant Balances Payable Due to Other Funds Deferred Revenue
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity

$

36,018.55 $

148,208.91

57,243.88 91,767.44

$

184,227.46 $

149 011.32

$

10,923.30

10,898.25

134 418.79 $

$

156,240.34 $

0.00 0.00

Total Liabilities and Fund Equity See notes to the general-purpose financial statements.
- 22 -

$

340 467.80 $ ====14=9=01=1=.3=2

EXHIBIT "E"

FEDERAL PROGRAMS

TOTALS

JUNE 30, 2001

JUNE 30, 2000

$

415,058.70 $

860,507.30 $

986,503.49

8,976.07

22,208.97

10,923.30 10,898.25

35,799.29 12,422.95

$

415 058.70 $

904,537.82 $ 1,043,701.80

$

180,070.20 $

273,332.63 $

311,652.97

186,161.16

426,137.51

466,289.00

9,227.59

9,227.59

18,760.00

198,078.50

39 599.75

39 599.75

$

415 058.70 $

748 297.48 $

994 780.47

$

699.09

$

10,923.30

10,898.25

35,799.29 12,422.95

$

0.00

134 418.79

0.00

$

0.00 $

'156,240.34 $

48 921.33

$

415 058.70 $

904,537.82 $ 1,043,701.80

- 23 -

EFFINGHAM COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2001

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services General Administration Student Transportation Services Food Services Operation
Capital Outlay Debt Service
Principal
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Operating Transfers In
Excess of Revenues and Other Financing Sources over (under) Expenditures
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commodities Purchased Food
FUND BALANCE JUNE 30

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

238,902.00 $

1,160,975.61

1,566,813.05

$ 2,966,690.66 $

997,346.56 997,346.56

$ $ 2,832,271.87

924,732.45
21,831.49
36,393.20 25,291.20

$ 2,832,271.87 $ 1,008,248.34

$

134,418.79 $

-10,901.78

$

134,418.79 $

48,222.24

-24,875.99 -1 524.70

10901.78
0.00 0.00

$

156,240.34 $ =======o=.o===o

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

EXHIBIT "F"

FEDERAL PROGRAMS

TOTALS

YEAR ENDED

JUNE 30, 2001

JUNE 30, 2000

$ 1,2:36,248.56 $ 1,242,722.27

$ 2,285,186.66

3,446,162.27

3,376,837.83

1,566,813.05

1,537,216.64

$ 2,285,186.66 $ 6,249,223.88 $ 6 156 776.74

$ 1,878,634.28 $ 2,803,366.73 $ 2,780,805.96

254,548.83 44,251.62 188,193.81 2,894.79

276,380.32 44,251.62
224,587.01 .28,185.99
2,832,271.87

250,093.05 120,091.42 186,146.45
2,600.11 2,880,999.62
252.69

3 466.00

3 466.00

$ 2,371,989.33 $ 6,212,509.54 $ 6,220,989.30

$

-86,802.67 $

36,714.34 $

-64,212.56

86 103.58

97,005.36

430,668.64

$

-699.09 $

133,719.70 $

366,456.08

699.09

48,921.33

-335,819.82

-24,875.99 -1 524.70

15,391.66 2 893.41

$

0.00 $

156,240.34 $ ===4=8,..9=2=1=3=3

- 25 -

EFFINGHAM COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 2001

ASSETS Cash and Cash Equivalents Investments Accounts Receivable

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

SPECIAL PURPOSE LOCAL OPTION SALES TAX

$

89,783.04 $

75,513.16

687,852.36

454 446.47

599 997.83

Total Assets

$

544,229.51 $ =====1,=36=3=,3=6=3=35=

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Contracts Payable Retainages Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For SPLOST Projects For State Capital Outlay Projects Unreserved Undesignated
Total Fund Equity

$

215,983.11 $

209,762.97

118 483.43

32,677.85

$

544 229.51 $

32,677.85

$

1,330,685.50

$

0.00

0.00

$

0.00 $

1,330,685.50

Total Liabilities and Fund Equity

$

544 229.51 $ ===1=,36=3=,3=63=.3=5

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

EXHIBIT"G"

LOTTERY PROJECT

TOTALS

JUNE 30, 2001

JUNE 30, 2000

$

'165,296.20 $

404,340.06

fi87,852.36

268,939.31

$ _ _ _32_8~7_6_7_.o_o

1,:'383,211.30

630,999.38

$

328 767.00 $

2,236,359.86 $

1,304,278.75

$

125,362.53 $

'125,362.53 $

385,127.26

59,424.55 106,591.46

:!08,085.51
:i 1 6 , 3 5 4 . 4 3

43,530.69 219,907.22

37 388.46

'155871.89

80 171.32

$

328,767.00 $

905 674.36 $

728,736.49

$

$ _ _ _ _ _o_.o_o

$

0.00 $

1,330,685.50 $

306,018.54 269,523.72

0.00

0.00

1,330,685.50 $ _ _..c..,57'--'5'-'--',5'--'4=2.=2~6

$

328,767.00 $

2,236,359.86 $

1,304,278.75

- 27 -

EFFINGHAM COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 2001

REVENUES
State Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Capital Outlay Salaries Employee Benefits Land and Land Improvements Building and Building Improvements Equipment
Debt Service Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Capital Leases Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

SPECIAL PURPOSE LOCAL OPTION SALES TAX

$

1,222,413.08

$ 3,689,173.65

75 410.35

$

1,222,413.08 $ 3 764 584.00

$

64,300.22

14,160.66

$

2,120,110.15

518,000.00 269,627.69 204,557.11

716,338.51 226,926.73

$

2,198,571.03 $ 1,935,450.04

$

-976 157.95 $ 1,829,133.96

$

517,000.00

$

706,634.23

-1,321,467.00

$

706,634.23 $

-804 467.00

$

-269,523.72 $ 1,024,666.96

269,523.72

306 018.54

FUND BALANCE JUNE 30

$

0.00 $ ==1=,3=3=0=,6=8=5=5==0

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

---------

EXHIBIT "H"

LOTTERY PROJECT

TOTALS

YEAR ENDED

JUNE 30, 2001

JUNE 30, 2000

$

373,127.60 $ 1,595,540.68 $

460,818.80

3,689,173.65

3,884,156.54

75 410.35

39,730.62

$

373 127.60 $ 5,360,124.68 $ 4,384,705.96

$

64,300.22 $

181,550.37

14,160.66

31,772.37

518,000.00

$

987,960.37

3,377,698.21

2,093,301.13

204,557.11

317,248.49

716,338.51 226,926.73

590,000.00 239,950.00

$

987,960.37 $ 5,121,981.44 $ 3,453,822.36

$

-614 832.77 $

238 143.24 $

930,883.60

$

517,000.00

$

614,832.77

1,321,467.00 $ 1,249,400.02

-1 ,321,467.00

-1 ,249,400.02

$

614 832.77 $

517 000.00 $

0.00

$

0.00 $

755,143.24 $

930,883.60

0.00

575,542.26

-355 341.34

$

0.00 $ 1,330,685.50 $ ===57=5=,5=4=2.=2=6

- 29 -

EFFINGHAM COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2001

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program National School Lunch Program

. 10.553
. 10.555

NIA

$ 174,604.10

(2)

NIA

869,464.51 $

2,715,364.87 (3)

Total Child Nutrition Cluster

$ 1,044,068.61 $

2,715,364.87

Other Programs

Pass-Through From Georgia Department of Education

Food and Nutrition Program

Food Distribution Program (1)

10.550

NIA

116,907.00

116,907.00

Total U. S. Department of Agriculture

$ 1,160,975.61 $

2,832,271.87

Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Flow Through Preschool Capacity Building Improvement

. 84.027
* 84.173 * 84.173

N/A

$ 640,702.00 $

NIA

69,602.00

N/A

22,181.00

707,796.46 (4) 77,163.96 (4) 22,181.00

Total Special Education Cluster

$ 732,485.00 $

807,141.42

Other Programs

Pass-Through From Armstrong Atlantic State University

Title II

Teacher Quality Enhancement Grants Programs

84.336

NIA

Pass-Through From Georgia Department of Education

Comprehensive School Reform Demonstration Project

84.332

N/A

Elementary and Secondary Education Act

Title I

Comprehensive School Reform Demonstration

Site Evaluation

84.010

N/A

Even Start

84.213

NIA

Grants to Local Educational Agencies

84.010

NIA

Title 11

Eisenhower Professional Development

84.281

NIA

Title 111 Technology Literacy Challenge Fund Grants

84.318

NIA

Title VI Innovative Education Program Strategies

84.298

NIA

Class Size Reduction

84.340

NIA

Vocational Education - Basic Grants to States

High School Program

Basic Grant

84.048

NIA

32,669.06 53,827.00
4,300.00 261,050.00 819,597.41
13,863.62 122,742.57 41,414.00 144,772.00
58,466.00

33,368.15 54,551.70 (4)
4,300.00 264,306.33 (4) 819,597.41
13,863.62 122,742.57 41,989.85 (4) 151,546.70 (4)
58,581.58 (4)

Total U. S. Department of Education

$ 2,285,186.66 $

2,371,989.33

- 30 -

EFFINGHAM COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2001

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

$ 88,133.79

(3)

Total Federal Financial Assistance

$ 3,534,296.06 $ =====5,=2=04=,2=6=1=.2=0

N/A = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.
(2) Expenditures for the School Breakfast Program were not maintained separately and are included in the 2001 National School Lunch Program.
(3) Expenditures are not maintained by fund source. (4) Expenditures for this program include State, and/or Other Funds.

Major Programs are identified by an asterisk () in front of the CFDA number.

The School District did not provide Federal Assistance to any Subrecipient.

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Effingham County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the general-purpose financial statements.

See notes to the general-purpose financial statements.

- 31

EFFINGHAM COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2001

SCHEDULE "2"

AGENCY/FUNDING

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

TOTAL

GRANTS Community Affairs, Georgia Department of Governor's Emergency Funds (1) Local Assistance Grants

$

19,000.00

15,000.00

$

19,000.00

15,000.00

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 Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category 111 Category IV Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program Staff and Professional Development Indirect Cost Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Principal Supplements Vocational Supervisors Education Equalization Funding Grant Food Services Vocational Education Other State Programs At-Risk Summer School Program Environmental Science Program Health Insurance Mentor Teachers Preschool Handicapped Program Remedial Summer School Teachers' Retirement Lottery Programs Computers in the Classroom Exceptional Growth-Capital Outlay

1,476,054.00 367,192.00
4,290,343.00 1,018,305.00 2,450,365.00 4,242,408.00 3,377,284.00 1,466,948.00
92,603.00 734.350.00 1,721,817.00 424,862.00
23,326.00 419,709.00 216,571.00 325,901.00
11,643.00 724,066.00 204,776.00 4,462,126.00

1,476,054.00 367,192.00
4,290,343.00 1,018,305.00 2,450,365.00 4,242,408.00 3,377,284.00 1,466,948.00
92,603.00 734,350.00 1,721,817.00 424,862.00
23,326.00 419,709.00 216,571.00 325,901.00
11,643.00 724,066.00 204,776.00 4,462,126.00

1,135,959.00 331,946.00 172,699.00 34,340.00 60,905.00
2,471,426.00 $
185,986.60

238,902.00

9,539.82 750.00
492,330.60 17,441.00 76,291.00 7,519.15 53,304.64

171,774.00 $ 373,127.60

1,135,959.00 331,946.00 172,699.00 34,340.00 60,905.00
2,471,426.00 238,902.00 185,986.60
9,539.82 750.00
492,330.60 17,441.00 76,291.00 7,519.15 53,304.64
171,774.00 373,127.60

Georgia State Financing and Investment Commission Reimbursement on Construction Projects

1,222,413.08

1,222,413.08

Office of School Readiness Pre-Kindergarten Program

825,572.56

825,572.56

Office of Treasury and Fiscal Services Public School Employees Retirement

123,877.00

123,877.00

---------

- 32 -
-----

EFFINGHAM COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30 2001

SCHEDULE "2"

AGENCY/FUNDING
CONTRACTS Education, Georgia Department of Georgia's Reading Challenge Reading First Program

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

TOTAL

$

65,930.00

40,648.00

$

65,930.00

40,648.00

$ 33,365,541.81 $ 1,236,248.56 $ 1,595,540.68 $ 36,197,331.05

(1) The purpose of the funds is for the purchase of technology equipment at Springfield Central Elementary School

See notes to the general-purpose financial statements.

-33-

EFFINGHAM COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX-PROJECTS
YEAR ENDED JUNE 30. 2001

SCHEDULE "3"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED
COST (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

Payments as required under the Public Facilities Master Lease of the Ebenezer Elementary School in order to facilitate the purchase of said facility

$ 4,874,000.00 $ 6,428,301.27 $ 821,937.52 $ 2,317,963.75 Ongoing

The construction. remodeling, furnishin~I and equipping of various schools and athletic facilities including acquiring necessary technology

10,126,000.00

16,704,796.69

4,300,043.92

7,957,238.45 Ongoing

$ 15,000,000.00 $ 23,133,097.96 $ 5,121,981.44 $ 10,275,202.20

(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 of each project. Includes all cost from project inception to completion.
(3) The Voters of Effingham County approved the imposition of a 1% sales tax to fund the above projects. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the lif,e of the projects.

See notes to the general-purpose financial statements.

- 35-

EFFINGHAM COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM /QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2001

SCHEDULE "4"

DESCRIPTION

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Primary Grades (1-3) Program

Primary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Middle Grades (6-8) Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category I

Category II

Category Ill

Category IV

Category V

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

1,651,379.00 $ 410,807.00
4,799,950.00 1,139,259.00 2,741,420.00
4,746,319.00 3,778,437.00 1,641,192.00 3,352,937.00

1,642,787.42 $ 920,290.74
4,808,881.66 1,195,135.27 3,148,512.61 1,001,224.19 4,127,360.68 4,778,086.26 1,351,581.81
232,101.32 794,245.23 1,985,437.80
70,342.03

469,563.00 242,294.00 364,611.00
13,026.00

478,992.47 219,878.79 353,442.30
14,811.46

34,543.66 $ 763.25
180,870.78 540.25
49,810.92 117,930.44
787.50 186,810.44 205,388.62
14,214.32 14,332.37 38,643.44 10,591.40
1,851.00 7,575.30 3,860.56 14,565.23

1,677,331.08 921,053.99
4,989,752.44 1,195,675.52 3,198,323.53 1,119,154.63 4,128,148.18 4,964,896.70 1,556,970.43
246,315.64 808,577.60 2,024,081.24
80,933.43 1,851.00
486,567.77 223,739.35 368,007.53
14,811.46

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

25,351,194.00 $ 27,123,112.04 $ 883,079.48 $ 28,006,191.52

Media Center Program Staff and Professional Development

810,070.00 229,099.00

985,542.36 135,198.16

553,754.43 100,795.36

1,539,296.79 235,993.52

TOTAL QBE FORMULA FUNDS

$

26,390,363.00 $ 28,243,852.56 $ 1,537,629.27 $ 29,781,481.83

(1) Comprised of State Funds plus Local Five Mill Share.

See notes to the general-purpose financial statements.

- 36 -

EFFINGHAM COUNTY BOARD OF EDUCATION GENl=RAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30. 2001

SCHEDULE "5"

SITE
South Effingham Elementary School Guyton Elementary School Springfield Central Elementary School Sandhill Elementary School South Effingham High School Effingham County Middle School Ebenezer Elementary School South Effingham Middle School Effingham County High School Marlow Elementary School Rincon Elementary School The Ark Alternative School Program Central Office (Alternative Education Program)
TOTAL
(1) Comprised of State Funds plus Local Five Mill Share.

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE QBE PROGRAM COSTS

$

2,107,122.00 $

2,255,439.54

1,795,394.00

2,135,894.87

2,065,997.00

2,329,486.77

1,522,508.00

1,605,972.91

3,010,042.00

3,305,398.36

3, 155,552.00

3,284,498.84

1,826,723.00

1,910,124.38

2,707,757.00

2,974,419.27

3,450,587.00

3,945,000.68

1,557,586.00

1,752,906.33

1,787,315.00

1,974,608.14

368,007.53

364,611.00

164,433.90

$

25,351,194.00 $ 28,006,191.52

See notes to the general-purpose financial statements. - 37 -

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS

Rt'SSl:1.1. \\". H1,TO'-
STATE AUDITOR
,aoa, 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street.SW., Suite 214 Atlanta. Georgia 30334-8400
April 3, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Effingham County Board of Education
REPORT ON COMPL1'\NCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements ofEffingham County Board ofEducation as of and for the year ended June 30, 2001, and have issued our report thereon dated April 3, 2002. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general-purpose financial statements. We conducted our audit in accordance with 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.
Compliance
As part of obtaining reasonable assurance about whether Effingham County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grants, 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 ofnoncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Effingham County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal
2001 YB-40

control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Effingham County Board of Education's ability to record, process, summarize and report financial data consistent with assertions ofmanagement in the financial statements. Reportable conditions are described in the accompanymg Schedule of Findings and Questioned Costs as items FS-6511-01-01 and FS-6511-01-02.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, ofthe reportable conditions described above, we consider item FS-6511-0102 to be a material weakness.
This report is intended solely for the information and use of the management, members of the Effingham County Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:gp 2001YB-40

State Auditor

R11ssu.1. \\'. H,~n>~
STATE AUDITOR 1404 656-2174

0EPART1\1ENT OF AUDITS AND ACCOUNTS
254 Washington Street. S.W.. Suile214 Atlanta. Georgia 30334-8400
April 3, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Effingham County Board of Education
REPORT ON COMPLIA~\JCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Effingham County Board of Education with the types of compliance requirements described in the U.S. Office ofAfanagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2001. Effingham County Board ofEducation's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility ofEffingham County Board of Education's management. Our responsibility is to express an opinion on Effingham County Board of Education's compliance based on our audit.
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 0MB Circular Al 33, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance 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 Effingham County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Effingham County Board ofEducation's compliance with those requirements.
2001SA-10

In our opinion, the Effingham County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2001.
Internal Control Over Compliance
The management of Effingham County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Effingham County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level of risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the management, members of the Effingham County Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:gp 2001SA-10

State Auditor

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

EFFil--TGHAM COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FWDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001

PRIOR YEAR FINANCIAL STATEMENT FWDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6511-99-02 FS-6511-00-01

Further Action Not Warranted Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6511-00-01

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

SECTION IV FINDINGS AND QUESTIONED COSTS

EFFTI\/GHAM COUNTY BOARD OF EDUCATION SCHEDULE OF FINDTI'-!GS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001

I SUMMARY OF AUDITOR'S RESULTS

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

2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Effingham County Board of Education disclosed financial statement reportable conditions related to the following control categories.

Employee Compensation

General Fixed Assets

Of the reportable conditions described above, General Fixed Assets is considered to be a material weakness.

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

4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Effingham County Board of Education did not disclose any reportable conditions in internal control over major programs.

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

6. Audit Findings Requ:tred to be Reported by Section .510{a) of 0MB Circular A-133 The Effingham County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133.

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program 84.027 Individuals with Disabilities Education Act - Part B - Special Education Flow Through 84.173 Individuals with Disabilities Education Act - Part B - Special Education Preschool 84.173 Individuals with Disabilities Education Act - Part B - Special Education Capacity Building Improvement

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

- 1-

EFFINGHAM COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
I SUMMARY OF AUDITOR'S RESULTS
9. Low Risk Audi tee The Effingham County Board ofEducation qualified as a low risk auditee based on a waiver granted by the U.S. Department of Education.
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION Salary Underpayments/Overpayment Reportable Condition Amount: $5,211.lS(Net) Finding Control Number: FS-6511-01-01
The accounting procedures ofthe Effingham County Board ofEducation were insufficient to provide adequate control over the employee compensation process. A sample of47 personnel files revealed the following deficiencies:
(1) One employee was overpaid in the amount of $5,338.07 because the School District issued a paycheck-after the employee was no longer employed by the School District.
(2) Two employees were underpaid in the amount of$126.92 due to incorrect calculations of their local salary supplement.
These deficiencies were the results of management's failure to update the payroll system once individuals were no longer employed by the School District and failure to correctly calculate local salary supplement payments.
Management should develop and implement policies and procedures to ensure that salaries are calculated correctly. When an employee leaves the system he or she should be immediately removed from the payroll system and management should establish appropriate internal controls over employee compensation.
Management's Response:
We concur with the finding and additional procedures have been implemented to prevent the deficiencies from occurring in the future.
-2-
- - - - - - - - - -- - - - - - - - - - -- - - - - - - - - - - - --

EFFil\JGHAM COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6511-01-02 The Effingham County Board of Education did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general-purpose financial statements ofthe School District being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the School District to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the School District and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. Management's Response: Due to current staffing limitations and budgetary considerations prohibiting the hiring of additional staff the School District has decided not to pursue the recording of general fixed assets on the financial statements. III FEDERAL AWARI) FINDINGS AND QUESTIONED COSTS No matters were reported.
-3-