ELBERT COUNTY BOARD OF EDUCATION
ELBERTON, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED
JUNE 30,2010
(Including Independent Auditor's Reports)

ELBERT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

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 ASSETS

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 ASSETS

FIDUCIARY FUNDS

H

STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

I

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND

ELBERT COUNTY BOARD OF EDUCATION
- TABLE OF CONTENTS -
SECTION I
SCHEDULES SUPPLEMENTARY INFORMATION
2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER M A n E R S BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WlTH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REQUlREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MNOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH O M 0 CIRCULAR A-133
SECTION Ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

ELBERT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION V MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FI NANClAL

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
October 14, 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Elbert County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through I) of the Elbert County Board of Education, as of and for the year ended June 30, 2010, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Elbert County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GovernmentAuditing 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to previously 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 Elbert County Board of Education, as of June 30, 2010, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with GovernmentAuditingStandards, we have also issued our report dated October 14, 2011, on our consideration of the Elbert County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessingthe results of our audit.

Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the Schedule of Revenues, Expendituresand Changes in Fund Balances - Budget and Actual, as presented on pages i through vii and page 25 respectively, 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 about 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 the 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.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Elbert County Board of Education's financial statements as a whole. The accompanying supplementary information consists of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Au&& of States, Local Governments, and Non-Profit Organkations, are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the 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 financial statements as a whole.

A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.

R!s~ectfullvsubmitted,

1 -

~ u q b e lWl . Hinton, CPA, CGFM State Auditor

ELBERT COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010
l ntroduction
Our discussion and analysis of the Elbert County School District's financial performance provides an overview of the School District's financial activities for the fiscal year ended June 30, 2010. The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the notes to the basic financial statements and financial statements to enhance their understanding of the School District's financial performance.
Financial Highlights
Key financial highlights for fiscal year 2010 are as follows:
On the District-wide financial statements, the assets of the School District exceeded liabilities by $23.9 million. Of this amount, the School District has a balance of $1.4 million in unrestricted funds.
The School District had $38.7 million in expenses relating to governmental activities; only $23.0 million of these expenses are offset by program specific charges for services, and grants and contributions. General revenues (primarily property and sales taxes) of $14.5 million were utilized to provide for these programs with the result that Net Assets were decreased by $1.1million.
As stated above, general revenues accounted for $14.5 million or 38.6% of all revenues totaling $37.6 million. Program specific revenues in the form of charges for services, and grants and contributions accounted for the rest.
Overview of the Financial Statements
This annual report consists of three parts; management's discussion and analysis, the basic financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the Districtwide and fund financial statements.
The District-wide financial statements include the Statement of Net Assets and Statement of Activities. These statements provide information about the activities of the School District presenting both short-term and long-term information about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The Governmental Funds statements disclose how basic services are financed in the short-term as well as what remains for future spending. The Fiduciary Funds statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others. The fund financial statements reflect the School District's most significant funds. In the case of the Elbert County School District, the General Fund and District-wideCapital Projects Fund are the most significant funds.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.

ELBERT COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010
District-wide Statements
The District-wide financial statements are basically a consolidation of all of the School District's operating funds into one column called governmental activities. In reviewing the District-wide financial statements, a reader might ask the question, are we in a better financial position than last year? The Statement of Net Assets and the Statement of Activities provides the basis for answering this question. These financial statements include all the School District's assets and liabilities and uses the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net assets and any changes in those assets. The change in net assets is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the results of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs and other factors.
The Statement of Net Assets and the Statement of Activities reflects the School District's governmental activities.
Fund Financial Statements
The School District uses many funds to account for a multitude of financial transactions during the fiscal year. However, the fund financial statements presented in this report provide detailed information about only the School District's significant or major funds.
Governmental Funds: Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using the modified accrual method of accounting which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The differences between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds are reconciled within the financial statements.
Fiduciary Funds: The School District is the trustee, or fiduciary, for assets that belongto others, such as school clubs and organizations within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.
Financial Analysis of the School District as a Whole
Recall that the Statement of Net Assets provides the perspective of the School District as a whole. Table 1provides a summary of the School District's net assets for this fiscal year as compared to the prior fiscal year.

ELBERT COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010

Table 1 Net Assets
Assets Current and Other Assets Capital Assets, Net Total Assets
Liabilities Current and Other Liabilities Long-Term Liabilities Total Liabilities
Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Net Assets

Governmental Activities

Fiscal

Fiscal

Year 2009

Year 2010

(Restated)

Table 2 shows the Changes in Net Assets for this fiscal year as compared to the prior fiscal year

ELBERT COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010

Table 2 Change i n Net Assets
Revenues
Program Revenues: Charges for Services Operating Grants and Contrlbutlons Capital Grants and Contributions
Total Program Revenues
General Revenues: Taxes Property Taxes For Maintenance and Operations Sales Taxes Other Sales Taxes Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Total Revenues
Program Expenses:
Instruction Support Services
Pupil Servlces Improvement of Instructional Services Educational Media Servlces General Administration School Administration Business Administration Maintenance and Operatron of Plant Student Transportation Services Central Support Services Other Support Servrces Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Debt
Total Expenses
Increase (Decrease) in Net Assets

Governmental Activities

Fiscal Year

Fiscal Year

2010

2009

ELBERT COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010

Governmental Activities
The Statement of Activities shows the cost of program services and the charges for services and grants offsetting these services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. Net cost of services can be defined as the total cost less fees generated by the activities and intergovernmental revenue provided for specific programs. The net cost reflects the financial burden on the School District's taxpayers by each activity as compared to the prior fiscal year.
Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2010

Year 2009

Net Cost of Services

Fiscal

Fiscal

Year 2010

Year 2009

Instruction Support Services:
Pupil Services Improvement of Instructional Services Educat~onaMl edia Services General Admin~stration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-InstructionalServices: Enterprise Operations Food Services Interest on Debt

Total Expenses

Although program revenues make up a majority of the revenues, the School District is still dependent upon tax revenues for governmental activities. Over 39.7 percent of instruction activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 40.4 percent.
Financial Analysis of the School District's Funds
The School District's governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues and other financing sources of $37.5 million and total expenditures and other financing uses of $39.2 million.

ELBERT COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010

General Fund Budgeting Highlights

The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the General Fund. During the course of fiscal year 2010, the School District amended its general fund budget as needed.

For the General Fund, the final actual revenues and other financing sources of $35.3 million exceeded the original budgeted amounts of $30.9 million by $4.4 million. This difference (final actual vs. original budget) was due primarily to Federal and miscellaneous revenues exceeding the original budget by $4.1 and $0.8 million, respectfully, offset by state funds received being $1.5 million less than originally expected.
The final actual expenditures and other financing uses of $36.3 million exceeded the original budgeted amount of $32.0 million by $4.3 million. This difference was primarily due to grants expenditures that were not considered in the budget process.
CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

At fiscal year ended June 30, 2010, the School District had $22.9 million invested in capital assets, all in governmental activities. Table 4 reflects a summary of these balances net of accumulated depreciation as compared to the prior fiscal year.

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2009

Year 2010

(Restated)

Land

$

Construction In Progress

Building and Building Improvements

Equipment

Land Improvements

1,347,522.00 $
18,814,267.35 2,291,995.96 434,439.44

1,347,522.00 143,008.80
19,151,250.90 2,200,888.80 362,946.44

Total

ELBERT COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDEDJUNE 30,2010

Debt

At fiscal year ended June 30, 2010, the School District had $0.75 million in other long-term debt. Table 5 summarizes the School District's debt for general obligation bonds and capital leases outstanding.
Table 5 Debt at June 30

Governmental Activities

Fiscal

Fiscal

Year 2010

Year 2009

Capital Leases

$

InstallmentSales Agreement

615,372.50 $ 136,517.14

907,140.90 146,516.75

Total

Current Issues

Currently known facts, decisions or conditions that are expected to have a significant effect on financial positions or results of operations are as follows:

State Funding Reductions - The State of Georgia has experienced significant reductions in state revenues and has passed a portion of those reductions to school districts by implementing "Austerity" and other cuts. For the fiscal year ended June 30, 2010, the "Austerity" reduction for the School District was $3,376,083.00. This is in addition to other smaller cuts in funding for media, transportation and staff development. Due to the economic forecasts, future cuts in state funding can be expected; however, it is not known to what extent. American Recovery and Reinvestment Act - For the year ending June 30, 2010, the School District received approximately $2.77 million in Federal stimulus funds (ARRA - American Recovery and Reinvestment Act). Those funds are expected to continue for the 2010 - 2 0 1 1 fiscal year; however, at this time there appears to be no additional funding past the 2 0 1 1 fiscal year.
Due to the School District experiencing reductions in state funding and the discontinuation of the ARRA funds, the School District will be implementing various expenditure reduction measures in the 2 0 1 1 - 2012 fiscal year to provide for a balanced budget with the goal of rebuilding an adequate fund balance to fund future funding reductions.

Contacting the School District's Financial Management

This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Mr. Ben M. Childs, Chief Financial Officer at Elbert County School District, 5 0 Laurel Drive, Elberton, Georgia 30635 or by telephone at (706) 213-4000. You may also email your question to Mr. Childs at bchilds@elbert.kl2.ga.us.

ELBERT COUNTY BOARD OF EDUCATION

ELBERT COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30,2010
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Local Other Due From Other Funds Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Interest Payable Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT "A"
GOVERNMENTAL ACTIVITIES

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

ELBERT COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30,2010

EXHIBIT "B"

EXPENSES
GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Sewices Improvement of Instructional Services Educational Media Serv~ces General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Sewlces Central Support Services Other Support Services Operations of Non-lnstructlonal Services Enterprise Operations Food Services Interest on Short-Termand Long-TermDebt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Opt~onSales Tax For Capital Projecfs Grants and Contributions not Restricted to Specific Programs Investment Earn~ngs Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginningof Year (Restated)

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

Net Assets - End of Year

The notes to the basic f~nanciasl tatements are an integral part of t h ~ statement -2-

ELBERT COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30,2010

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Local Other Due from Other Funds Inventories

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

Total Assets

LIABILITIES AND FUND BALANCES
LIABILITIES
Cash Overdraft Accounts Payable Salaries and Benefits Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs
Unreserved Designatedfor Student Activit~es Undesignated Reported in: General Fund
Total Fund Balances
Total Liabilities and Fund Balances

The notes to the basic financial statements are an integral part of this statement.
-3-

ELBERT COUNTY BOARD OF EDUCATION RECONCILIATIONOFTHE GOVERNMENTALFUNDS BALANCESHEET
TO THE STATEMENT OF NET ASSETS JUNE 30,2010
Total Fund Balances - Governmental Funds (Exhibit "C") Amounts reported for Governmental Activities in the Statement of Net Assets are
different because: Cap~taAl ssets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of: Land Land Improvements Buildings Equipment Accumulated Depreciation Total Capital Assets Taxes that are not available to pay for current period expenditures are deferred In the funds. Long-TermLiabilities, are not due and payable in the current period and therefore are not reported as l~abilitiesIn the funds. Long-TermLiabilities at year-end consist of: Accrued Interest Capital Leases Payable Installment Sales Agreement Total Long-Term Liabilities
Net Assets of Governmental Activities (Exhibit "A")
The notes to the basic financial statements are an integral part of thls statement.
- 4 -

ELBERT COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30,2010

EXHIBIT "EM

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Chargesfor Services Investment Earnlngs Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Serv~ces Improvement of Instructional Services Educational Media Services General Administration School Adm~nistration Business Administration Ma~ntenanceand Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operat~on
Capital Outlay Debt Services
Principal Dues and Fees Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$

-1,585,129.61 $ -118,651.21 $ -1,703,780.82

$

-1,001.015.66 $ -702,765.16 $ -1,703,780.82

1,954,781.37

702,765.16

2,657,546.53

Fund Balances - Ending

$

953,765.71 $

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

0.00 $

953,765.71

ELBERT COUNTY BOARD OF EDUCATION RECONCILIATIONOFTHE GOVERNMENTALFUNDS STATEMENTOF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30,2010
Total Net Change In Fund Balances - Governmental Funds (Exhibit" E )
Amount?, reported for Governmental Actlvltles In the Statement of Activlties are d~fferenbt ecause:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Actlvltles, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreclatlon Expense
Excess of Capital Outlay over Depreciation Expense
Taxes reported in the Statement of Activltiesthat do not provide current financial resources are not reported as revenues in the funds.
Repaymentof Long-Term Debt is reported as an expend~turein Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Asset?,. in the current year, these amounts conslst of:
Capital Lease Payments Installment Sales Agreement
Total Long-Term Debt Repayments
Some items reported in the Statement of Activities do not require the use of current financial resourcesand therefore are not reported as expenditures in Governmental Funds. This activity consist of:
Net Increase in Accrued Interest
Change in Net Assets of Governmental Activities (Exhibit "B"]

EXHIBIT "F"

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

ELBERT COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30,2010

ASSETS Cash and Cash Equivalents Investments
Total Assets

PRIVATE PURPOSE TRUSTS

LIABILITIES Due To Other Funds Funds Heldfor Others
Total Liabilities NET ASSETS Held in Trust for Private Purposes
Total Liabilities and Net Assets

EXHIBIT "G"
AGENCY FUNDS

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

ELBERT COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS YEAR ENDED JUNE 30,2010
ADDITIONS Investment Earnings Interest
DEDUCTIONS Scholarships Change in Net Assets
Net Assets - Beginning
Net Assets - Ending

EXHIBIT "H"
PRIVATE PURPOSE TRUSTS

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

ELBERT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "I"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Elbert County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Elbert County Board of Education.
Distrr-ct-wide Statements: The Statement of Net Assets 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 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.
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 Financia/ 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 statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources includingspecial Purpose Local Option Sales Tax (SPLOST)to be used for the acquisition, construction or renovation of major capital facilities.

ELBERT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "I"

The School District reports the following fiduciary fund types:
Private Purpose Trust funds report trust arrangements under which principal and income benefit various scholarships.
Agency funds account for assets held by the School District as an agent for various school organizations.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless 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 are 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. 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 gneral long-term 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.
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.
The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are contracted for the school year (July 1- June 30) and paid over a twelve month contract period, generally September 1through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.

ELBERT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "I"

NEW ACCOUNTING PRONOUNCEMENTS

In fiscal year 2010, the School District adopted the Governmental Accounting and Standards Board (GASB) Statement No. 51, Accounting and Reporting for Intangible Assets. The provisions of this Statement generally require retroactive reportingfor intangible assets acquired after June 30, 1980, with the exception of those intangible assets that have indefinite useful lives and those that are considered internally generated.

In addition, the School District adopted GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instrumenb. The provisions of this Statement impacts disclosure regarding derivative instruments entered into by the state and local governments. Derivative disclosures, if any, will be identified in Note 3.

RESTATEMENT OF PRIOR YEAR NET ASSETS

For fiscal year 2010, the School District made a variety of prior period adjustments due to various errors or omissions, which require the restatement of the June 30, 2009, net assets in Governmental Activities. The result is an increase in Net Assets at July 1,2009, of $1,493,093.25. These changes are in accordance with generally accepted accounting principles.

Net Assets,July 1,2009, as previously reported

$

23,598,029.85

Errors and Omissions of Capital Assets

1,493,093.25

Net Assets,July 1,2009, as restated

CASH AND CASH EQUIVALENTS
Composition of Deposits Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 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
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 interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. 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. 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,

ELBERT COUNN BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30.2010

EXHIBIT "I"

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 Georgia Fund 1administered by the State of Georgia, Office of Treasury and Fiscal
Services,
7. Repurchase agreements, and
8. Obligations of other political subdivisions of the State of Georgia.

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

RECEIVABLES

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

PROPERTY TAXES

The Elbert County Board of Commissioners fixed the property tax levy for the 2009 tax digest year (calendar year) on September 15, 2009 (levy date). Taxes were due on December 2, 2009 (lien date). Taxes collected within the current fiscal year or within 6 0 days after year-end on the 2009 tax digest are reported as revenue in the governmental funds for fiscal year 2010. The Elbert County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2010, for maintenance and operations amounted to $8,222,513.85.

The tax millage rate levied for the 2009 tax year (calendar year) for the Elbert County Board of Education was as follows (a mill equals $ 1 per thousand dollars of assessed value):

School Operations

15.99 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $2,264,180.45 and is to be used for capital outlay for educational purposes. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

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 (first-in, first-out). The School District uses the consumption method to account for

ELBERT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "I"

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

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment Intangible Assets

Any Amount $ 5,000.00 $ 5,000.00 $ 5,000.00 $ 5,000.00

N/A 20 years up to 50 years 2 to 25 years
5 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.

Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets, generally 5 years.

NET ASSETS

The School District's net assets in the District-wide Statements are classified as follows:

Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net of 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 invested in capital assets, net of related debt.

Restricted net assets-These represent resources for which the School District is legally or contractually obligated to spend resources for continuation of Federal Programs, in accordance with restrictions imposed by external third parties.

ELBERT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "I"

Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
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.
NOTE 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) 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 of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent 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. Section 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 percent 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. lnsurance on accounts provided by the Federal Deposit lnsurance 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.

ELBERT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "I"

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. At June 30, 2010, the bank balances were $3,056,984.11. The amounts exposed to custodial credit risk are classified into three categories as follows:

Category 1Category 2 -
Category 3 -

Uncollateralized, Cash collateralized with securities held by the pledgingfinancial institution, or Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name.

The School District's deposits by custodial risk category at June 30, 2010, are as follows:

Custodial Credit Risk C a t e ~ o w

Bank Balance

Total
CATEGORIZATIONOF INVESTMENTS

The School District's investments as of June 30, 2010, are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Type

Fair Value

Other Investments U. S. Treasury Money Market Funds

$ 39,780.92

The U.S. Treasury Money Market Funds are in an Institutional Treasury Portfolio fund managed by Fidelity Investments. The Institutional Treasury Portfolio Fund is rated AAAm by Standard and Poor's. The weighted average maturity of the fund is approximately 54 days.
NOTE 4: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

ELBERT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "I"

NOTE 5: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year:

Governmental Activities Capital Assets. Not Being Depreciated:
Land Construction Work In Progress

Balances July 1.2009
(Restated)

l ncreases

Decreases

Balances June 30,2010

$

1,347,522.00 $

143,008.80

0.00 $

$ 143,008.80

1,347,522.00 0.00

Total Capital Assets, Not Berng Depreciated $

1,490,530.80 $

0.00 $

143,008.80 $

1,347,522.00

Capital Assets, Being Depreciated: Buildings and Improvements Equipment Land Improvements

$ 27,205,977.20 $ 4,869,324.84 2,533,492.36

274,676.89 $ 411.420.05
96,234.00

0.00 $

27,480.654.09 5,280.744.89 2.629.726.36

Less: Accumulated Depreciation: Buildings and Improvements Equipment Land lmprovements

Total Capital Assets, Being Depreciated, Net $ 21,715,086.14 $

Governmental Activity Capital Assets - Net

$ 23,205,616.94 $

-174,383.39 $ -174,383.39 $

0.00 $ 21,540,702.75 143,008.80 $ 22,888,224.75

Capital assets being acquired under capital leases as of June 30, 2010, are as follows:
Governmental Funds
Buildings and lmprovements Equipment Less: Accumulated Depreciation

ELBERT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010
Current year depreciation expense by function is as follows:
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 Community Services Food Services

EXHIBIT "I"

NOTE 6: INTERFUNDASSETS AND LIABILITIES

Due to and due from other funds are recorded for interfund receivables and payables which arise from interfund transactions. lnterfund balances at June 30, 2010, consisted of the following:

Due From Other Funds

Due To Other Funds

General Fund Private Purpose Trust Fund

The General Fund receivable is a result of financing the scholarships for the trust fund as the Private Purpose Trust funds were in Certificates of Deposit at the time.
NOTE 7: INTERFUND TRANSFERS

lnterfund transfers for the year ended June 30, 2010, consisted of the following:

Transfer to

Transfers From
District-wide Capital Projects

General Fund

The transfer from the District-wide Capital Projects Fund to the General Fund is a result of financing construction projects in prior years in the General Fund that will be reimbursed by the District-wide Capital Projects Fund.

ELBERT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "I"

NOTE 8: RISK MANAGEMENT

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

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

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

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.

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

follows:

Claims and

Beginningof Year

Changes in

Claims

End of Year

Liability

Estimates

Paid

Liability

The School District participates in the Georgia Education Workers' Compensation 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 insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $700,000.00 loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Fund in excess of $700,000.00 loss per occurrence, up to $1,000,000.00, with an aggregate limit of $2,000,000.00.

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

Position Covered Superintendent

Amount $ 100,000.00

ELBERT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "I"

NOTE 9: OPERATING LEASES

Elbert County Board of Education has entered into various leases as lessee for copiers. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2010, for governmental funds amounted to $42,495.00. Future minimum lease payments for these leases are as follows:

Year Ending

Governmental Funds

Total
NOTE 10: SHORT-TERM DEBT
The School District issues 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 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 3 1of 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

$

0.00 $

1,000,000.00 $

1,000,000.00 $

0.00

NOTE 11: LONG-TERM DEBT
CAPITAL LEASES
The Elbert County Board of Education has entered into various lease agreements for capital equipment and facility renovation. 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.
INSTALLMENT SALES AGREEMENT
The Elbert County Board of Education entered into an agreement with the Northeast Georgia Regional Educational Service Agency (NGRESA) dated July 1, 2006, for the construction and subsequent lease of the Rutland Center. Under the terms of the agreement, the School District will make annual paymentsthrough July 15,2020.

ELBERT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "I"

The changes in Long-Term Debt during the fiscal year ended June 30, 2010, were as follows:

Balance July 1.2009

Additions

Governmental Funds Deductions

Balance June 30,2010

Due With~n One Year

Capital Leases

$

Installment Sales Agreement

907,140.90 $ 146,516.75

0.00 $

291,768.40 $ 9,999.61

615,372.50 $ 136,517.14

155.931.89 9.825.69

At June 30, 2010, payments due by fiscal year which includes principal and interest for these items are as follows:

Capital Leases

Installment Sales Agreement

Principal

Interest

Principal

Interest

Fiscal Year Ended June 30:

Total Principal and Interest

$

615,372.50 $

59.227.38 $

136,517.14 $

34.302.80

NOTE 12: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $104,664.92 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 $67,393.30
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $22,939.22
Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer'sCost In the amount of $14,332.40

ELBERT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "I"

NOTE 13: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal Government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believe that such disallowance, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determined, but is not believed to be material to the basic financial statements.
NOTE 14: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL EMPLOYEES POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan 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 Fun provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Insurance Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, t o the Board of Community Health (Board).
Funding Policy. 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. On average, plan members pay approximately 25 of the cost of health insurance coverage.
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 "pay-as-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, 2010:
For certificated teachers, librarians and regional educational service agencies:

July 2009 August 2009 - October 2009 November 2009 -June 2010

18.534% of covered payroll for August Coverage 14.492% of covered payroll for September - November Coverage 18.534% of covered payroll for December - July Coverage

For non-certificated school personnel:

July 2009 -June 2010

$162.72 per member per month plus Department of Education contribution of $22,838,311.00

ELBERT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "I"

No additional contribution was required by the Board for fiscal year 2010 nor contributed to the State OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other post-employment benefits and are subject to appropriation.

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

Required

Fiscal Year

Contributed

Contribution

NOTE 15: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. 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.
On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1,1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member 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. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 4 0 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 6 0 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.

ELBERT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "I"

Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 1 0 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2010, were 5.25%of annual salary. The member contribution rate will increase to 5.53%effective July 1,2010. Employer contributions required for fiscal year 2010 were 9.74% of annual salary as required by the June 30, 2007, actuarial valuation. The employer contribution rate will increase to 10.28% effective July 1,2010.

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage
Contributed

Required
Contribution

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ELBERT COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BAMNCES BUDGET AND ACTUAL
YEAR ENDEDJUNE 30,2010

SCHEDULE "1"

REVENUES
Property Taxes State Funds Federal Funds Chargesfor S e ~ ~ c e s Investment Earnings M~scellaneous
EXPENDITURES
Current lnstruct~on Support Services Pupil Sewlces Improvement of Instructional Sewlces Educational Media Servlces General Adrninistratlon School Administration Bus~nessAdministration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation
Capital Outlay Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Other Sources
Net Change in Fund Balances
Fund Balances- Beg~nn~ng
Adjustments
Fund Balances- Ending

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

Notes to the Schedule of Revenues. Ex~endituresand Changes ln Fund Balances Budget and Actual (1) Originaland Final Budget amounts do not include budgetedrevenues or expenditures of the various principal accounts. The accompanyingschedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the bas~sof accounting used in the presentation of the fund financial statements.
See notes to the basic financial statements.

ELBERT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30.2010

SCHEDULE "2"

FUNDiNG AGENCY PROGRAM/GRANT
Agriculture. U. S. Department of Child Nutrition Cluster Pass-ThroughFrom Georg~aDepartment of Education Food Services School Breakfast Program National School Lunch Program
Total U. S. Department of Agriculture
Education. U. S. Department of Education Technology State Grants Cluster Pass-ThroughFrom Georgia Department of Education Education Technology State Grants
Special Education Cluster Pass-Through From Georgia Department of Education Special Education
ARRA - Grants to States ARRA - Preschool Grants
Grants to States Preschool Grants
Total Special Education Cluster
State Fiscal Stabilization Fund Cluster Pass-Through From Georgia Department of Education ARRA - Education State Grants
Title I, Part A Cluster Pass-Through From Georgia Department of Education ARRA T i t l e IGrants to Local Educatlonai Agencles Title I Grants to Local Educational Agencies
Total T~tleI. Part A Cluster
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States English LanguageAcquisition Grants ImprovingTeacher Quality State Grants Migrant Education -State Grant Program Rural Education Safe and Drug-FreeSchools and Communities - State Grants
Total Other Programs
Total U. S. Department of Education
Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program
Total Federal Financ~aAl ssistance
N/A = Not Available

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

ELBERT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30.2010

SCHEDULE "2"

Notes to the Schedule of Exgendituresof Federal Awards
(1) Includes the Federallyassigned value of donated commod~tiesfor the Food Donation Program In the amount of $95,065.04.
( 2 ) Expendituresfor the funds earned on the School Breakfast Program ($433,926.74) were not maintained separately and are included in the 2010 National School Lunch Program.
Major Programsare identified by an aster~sk(*) in front of the CFDA number
The School District did not provide Federal Assistance to any Subrec~pient.
The accompanyingschedule of expenditures of Federal awards includes the Federal grant activity of the Elbert County Board of Educationand is presented on the modlfied 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.

ELBERT COUNTY BOARD OF EDUCATION SCHEDULE OFSTATE REVENUE YEAR ENDEDJUNE 30.2010
GRANTS Brlght 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 lntervention Program
Primary Grades (1-3) Program
Primary Grades - Eariy lntervention (1-3) Program
Upper Elementary Grades (4-5) Program
Upper Elementary Grades - Early lntervention (4-5)Program
Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabllitles
Category I Category II Category Ill Category IV Category V
Gifted Student - Category VI
Remedial Education Program Aiternat~veEducation Program English Speakers of Other Languages (ESOL) Media Center Program 2 0 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportat~on Regular Sparslty Nursing Services Vocational Supervisors Migrant Education Mid-term Adjustment Hold-Harmless Education Equalization Funding Grant Food Services Vocational Educat~on Amended Formula Adjustment 3 Day Furlough-Austerity Reduction Other State Programs Driver Education Grants Dual Enrollment Georgia Special Needs Scholarship Fund- Reimbursement Health Insurance H~ghSchool Graduation Coach National Teacher Certification Preschool Handicapped Program Rule 1 0 Special Education State Grant Teachers' Retirement Tuition for the Multi-Handicapped Virtual Schools Grant
Office of Treasury and Fiscal Services Publ~cEmployeesRetirement System
See notes to the basic financial statements.

SCHEDULE "3"
GOVERNMENTAL FUND TYPE GENERAL FUND

ELBERT COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30,2010

SCHEDULE "4"

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR(3)(4)

AMOUNT EXPENDED IN PRIOR YEARS (3) (4)

PROJECT STATUS (5)

(1) Addingto, renovating repairing, improving

equipping and furnishing existing school buildings

and other facilities, including but not limited to

athletlc/physicai education facilities.

transportation and maintenance facilities,

additional classrooms and parking areas.

$

(2) HVAC mechanicalsystems and roofing.

(3) Acquiringsystem-widetechnologyand safety equipment.

(4) Purchasingtextbooks.

(5) Acquiringschool buses and other school vehicles.

(6) Acquiringof any property desirable therefore, both real and personal.

6.439.408.26 $ 762.900.51
3.228.499.72 2,482.319.30 1,986.872.21
100.000.00

6,439,408.26 $ 762,900.51
3.228.499.72 2,482,319.30 1.986.872.21
100.000.00

874,512.16 $ 2.053.962.23 Ongolng

207.656.18

58,122.31 Ongoing

354.324.90 195,528.73

781,904.98 Ongoing 669,259.10 Ongoing

412,533.43

288.360.53 Ongoing

Ongoing

(1) The School Distr~ct'soriginal cost estimate as specified in the resolutioncalling for the imposition of the Local Option Sales Tax.

(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.

(3) The voters of Elbert County approved the lmposltlon 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 projects.

(4) In additlon to the expendituresshown above, the School District has incurred interest to provide advance funding for the above projects as follows:

Prior Yearzi

$

618,052.65

Current Year

48,032.17

Total

$

666.084.82

(5) All of the projects listed for the SPLOST 2006 are expected to be completed by June 30. 2013 and all projects are currently within the proposed budgetfor each project. Revenues for the projects are within budgetaryllmlts and gu~delines. At t h ~ tsime, no surplus or deficit is expected to occur with the projects listed.

See notes to the basic financial statements.

(This page left intentionally blank)

ELBERT COUNTY BOARD OF EDUCATION
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTSAND EXPENDITURES- BY PROGRAM
YEAR ENDED JUNE 30.2010

SCHEDULE " 5

Direct Instructional Programs Kindergarten Program Kindergarten Program-Early intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper ElementaryGrades (4-5) Program Upper ElementaryGrades-Earlylnterventlon (4-5) Program Middle School ( 6 8 ) Program High School General Education (9-12) Program Vocational Laboratoly (9-12) Program Students with Disabilities Category II Categoty Ill Category IV Category V Gifted Student - Category VI Remedlal Educatlon Program Alternative Educatlon Program English Speakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development
TOTAL QBE FORMULA FUNDS

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

ELIGIBLE QBE PROGRAM COSTS

SAWRIES

OPERATIONS

TOTAL

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

See notes t o the basic financial statements.

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
October 14, 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Elbert County Board of Education
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAlTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Elbert County Board of Education as of and for the year ended June 30, 2010, which collectively comprise Elbert County Board of Education's basic financial statements and have issued our report thereon dated October 14, 2011. 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 GovernmentAuditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Re~orting
In planning and performing our audit, we considered Elbert County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Elbert County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Elbert County Board of Education's internal control over financial reporting.
Our consideration of internal control over financial reporting 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 financial reporting that might be deficiencies, significant deficiencies, or material weaknesses and therefore, there can be no assurances that all deficiencies, significant deficiencies or material weaknesses have been identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses and other deficiencies that we consider to be significant deficiencies.

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 item FS-6521-10-02 to be a material weakness.
A signfiwntdeficiencyis 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 item FS-6521-10-01 in the accompanying Schedule of Findings and Questioned Costs to be a significant deficiency in internal control over financial reporting.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Elbert County Board of Education's financial statements are free of 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.
We noted certain matters that we have reported to management of Elbert County Board of Education in a separate letter dated October 14, 2011.
Elbert County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Elbert County Board of Education's response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of management, members of the Elbert County Board of Education, others within the entity, 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,

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
October 1 4 , 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Elbert County Board of Education
INDEPENDENTAUDITOR'S REPORT ON COMPLIANCE WITH REOUIREMENTSTHAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Ladies and Gentlemen:

We have audited Elbert County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010. Elbert County Board of Education's major Federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major Federal programs is the responsibility of Elbert County Board of Education's management. Our responsibility is to express an opinion on Elbert 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 OMB Circular A-133, Audits of States, Local Governmen&, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Elbert 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 Elbert County Board of Education's compliance with those requirements.
In our opinion, the Elbert County Board of Education complied, in all material respects, with the 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, 2010.

Internal Control Over Com~liance
Management of Elbert County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal programs. In planning and performing our audit, we considered Elbert County Board of Education's internal control over compliance with the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, 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 Elbert County Board of Education's internal control over compliance.
A defciency 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.
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 deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, we identified a deficiency in internal controls over compliance that we consider to be a significant deficiency as described in the accompanying Schedule of Findings and Questioned Costs as item FA-6521-10-01. 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.
Elbert County Board of Education's response to the finding identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Elbert County Board of Education's response and, accordingly, we express no opinion on the response.
This report is intended solely for the information and use of management, members of the Elbert County Board of Education, others within the entity, 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.
Res~ectfullysubmitted.
CPA, CGFM

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

ELBERT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6521-08-01 FS-6521-09-01 FS-652 1-09-02

Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-6521-09-01

We concur with this finding. The School District's Chief Financial Officer will complete a detailed capital asset inventory by facility with appropriate personnel to ensure that the capital asset listing is complete and accurate. This will include verifying the accuracy of the cost basis and recalculation of the accumulated depreciation for each asset. In addition, the Chief Financial Officer will develop a capital asset procedures manual for implementation by the School District to ensure that internal controls are documented and all appropriate staff are aware of the proper procedures.

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Finding Control Number: FS-6521-09-02

We concur with the finding. The School District will implement internal control procedures over financial reporting to include review and analysis of the financial statements by other knowledgeable staff. The Chief Financial Officer will prepare the financial statements and have other accounting personnel review the statements for accuracy, completeness and conformance with generally accepted accounting principles. The Chief Financial Officer will ensure that financial statements are prepared and reviewed prior to the start of audit field work for the fiscal year end June 30, 2010.

PRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS

No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

ELBERT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010

I SUMMARYOFAUDITOR'SRESULTS

Financial Statements

Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Aggregate Remaining Fund Information

Unqualified

Internal control over financial reporting:

Material weakness identified?

Yes

Significant deficiency identified?

Yes

Noncompliance material to financial statements noted:

Federal Awards

lnternal Control over major programs:

Material weakness identified?

N 0

Significant deficiency identified?

Yes

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

Unqualified

Any audit findings disclosed that are required to be reported in

accordance with OMB Circular A-133, Section 510(a)?

Yes

Identification of major programs:

CFDA Number(s1

Name of Federal Program or Cluster

Title I, Part A Cluster Special Education Cluster State Fiscal Stabilization Fund Cluster Education Technology State Grants Cluster

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

Auditee qualified as low-risk auditee?

II FINANCIALSTATEMENT FINDINGS AND QUESTIONEDCOSTS

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Significant Deficiency Finding Control Number: FS-6521-10-01
Condition: This is a repeat finding (FS-6521-09-01) from the year ended June 30, 2009. The School District failed to adequately maintain capital assets records.

ELBERT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIALSTATEMENT FINDINGSAND QUESTIONEDCOSTS
CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Significant Deficiency Finding Control Number: FS-6521-10-01
Criteria: Chapter 37 Implementing a &pita1 Assefs Management System of the Financial Management for Georgia Local Units of Administration provides that School Districts must establish fixed asset policies, define system requirements, implement a fixed asset system and maintain fixed asset inventory records.
Questioned Cost: N/A
Information: The following deficiencies were noted during the review of capital assets:
Restated beginning capital assets balances were not fully supported by documentation provided by the School District. The School District failed to capitalize $112,199.04 of capital assets meetingthe threshold. The School District incorrectly recorded $17,420.00 of capital assets that did not meet the threshold. An asset purchased in the subsequent period was capitalized in the year under review totaling $30,575.00. Due to a lack of sufficient information, several items on the capital assets listing could not be specifically identified during physical examination. Land and Land Improvements at a location owned by the School District, and currently being leased to the county, were included on the capital assets listing; however, the building was omitted. Review of voucher packages for capital assets expenditures identified a couple of items which were purchased by the Chief Financial Officer without proper review and approval. One of these voucher packages lacked any supporting documentation for the purchase. Several items on the capital assets listing were included with no acquisition cost. The School District did not accurately calculate depreciation expense. Useful life terms used to calculate depreciation were not maintained in accordance with the School District's capitalization policy. Numerous items being carried on the capital assets listing are fully depreciated but are still in regular use.
Cause: The School District failed to properly maintain its capital assets records in accordance with their own approved capital assets policy.
Effect: The failure of the School District to maintain a complete and accurate capital assets listing, as well as proper oversight, can lead to inaccurate internal and external reporting as well as noncompliance with generally accepted accounting principles.

ELBERT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIAL STATEMENT FINDINGS AND QUESTIONEDCOSTS
CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Significant Deficiency Finding Control Number: FS-6521-10-01
Recommendation: The School District should reassess internal control procedures related to capital assets to ensure that they are in place and operating effectively. The School District should review its capital assets activity and make appropriate adjustments to ensure that the capital assets activity conforms to the School District's approved capital assets policy and generally accepted accounting principles.
FINANCIAL REPORTING Inadequate Internal Controls over Financial Reporting Material Weakness Finding Control Number: FS6521-10-02
Condition: This is a repeat finding (FS-6521-09-02 and FS-6521-08-01) from the fiscal years ending June 30, 2009, and June 30, 2008, respectively. The School District did not have adequate controls in place to ensure that all required activity was included in the financial statement information presented for audit.
Criteria: Chapter 22A, 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.
Questioned Cost: N/A
Information: The Governmental Accounting Standards Board (GASB) Statement 34 reporting model requires the presentation of both fund level and entity-wide level statements in the School District's financial statements. During the audit, numerous correcting entries were proposed by the auditors and accepted by the client to properly present the entity's fund level and entity-wide level financial statements.
Cause: The School District did not implement an adequate system of internal control over the financial reporting process.
Effect: The School District did not have adequate controls in place to ensure that the financial statements were properly prepared in accordance with generally accepted accounting principles.

ELBERT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIAL STATEMENT FINDINGSAND QUESTIONEDCOSTS
FINANCIAL REPORTING Inadequate Internal Controls over Financial Reporting Material Weakness Finding Control Number: FS-6521-10-02
Recommendation: The School District should develop and implement internal controls over the financial statement reporting process to ensure that activity is properly recorded in the general ledger; to verify that financial statements (including note disclosures) properly reflect activity reported in the general ledger; and to include a monitoring process to evaluate the accuracy of the financials presented for audit.
Ill FEDERAL AWARD FINDINGS AND QUESTIONEDCOSTS
ALLOWABLE COSTS/COST PRINCIPLES Improper Time and Attendance Records Significant Deficiency U. S. Department of Education Through Georgia Department of Education Title I Cluster, Part A Cluster (CFDA84.010 and 84.389) Special Education Cluster (CFDA 84.027,84.173,84.391 and 84.392) Finding Control Number: FA-6521-10-01
Condition: We identified deficiencies in internal controls related to employee compensation expenses paid from the Title I and Special Education programs.
Criteria: Provisions of the OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, require that "Where employees work on multiple activities or cost objectives, a distribution of their salaries or wages will be supported by personnel activity reports or equivalent documentation that meets the following standards:
a) They must reflect an after-the-fact distribution of the actual activity of each employee.
b) They must account for the total activity for which the employee is compensated.
c) They must be prepared at least monthly and must coincide with one or more pay periods, and
d) They must be signed by the employee.
Such documentary support will be required where employees work on:
a) More than one Federal award, or
b) A Federal award and a non-Federal award."

ELBERT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
Ill FEDERALAWARD FINDINGSAND QUESTIONEDCOSTS
ALLOWABLE COSTS/COST PRINCIPLES Improper Time and Attendance Records Significant Deficiency U. S. Department of Education Through Georgia Department of Education Title I Cluster, Part A Cluster (CFDA 84.010 and 84.389) Special Education Cluster (CFDA 84.027,84.173,84.391 and 84.392) Finding Control Number: FA-6521-10-01
Questioned Cost: $11,690.72 Title I, Part A Cluster (CFDA 84.010 and 84.389)
Information: Testing of employee compensation payments charged to the Title I and Special Education programs revealed:
Timesheets for split-funded employees were signed by a Title I coordinator in advance. Photocopied, signed timesheets were distributed for the employee to enter the time spent on Title I and non-Title I related activity. Additionally, the timesheet filled out by the employee did not correspond to the employee's class schedule and cannot be used to substantiate the percentage of Title I reimbursement. The Title I program was overcharged by $4,130.39.
During testing over one employee paid from the Special Education program and the Title I program, it was noted that the actual time worked on each program did not correspond to the amount charged for each program. The Title I program was overcharged and the Special Education program was undercharged by $7,560.33.
Periodic Certification Forms were signed and dated prior to the dates that services were performed rather than after and in some instances were not completed.
Cause: Management failed to implement controls for monitoring compliance with Federal guidelines to ensure that proper documentation was maintained related to employee compensation expenses paid from Federal award programs.
Effect: Failure to adequately monitor compliance related to employee compensation expenses paid from Federal award programs could result in material noncompliance with the requirements of these Federal grants.
Recommendation: The School District should establish procedures to ensure that adequate time records and periodic certification forms that support the basis for compensation are maintained for all split-funded and fully-funded Title I and Special Education employees. The Georgia Department of Education should review this matter to determine if a reclaim of funds is appropriate.

SECTION V MANAGEMENT'S RESPONSES

ELBERT COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30,2010

Finding Control Number: FS-6521-10-01

We concur with this finding. The District will reassess the process and procedures pertaining to capital assets, to include additional staff members in order to ensure that all assets are capitalized as required by the District's capitalization policy. The procedures will be in place during the final audit close out for the fiscal year ending June 30, 2011.

Finding Control Number: FS-6521-10-02

We concur with this finding. The District will utilize additional staff to ensure that all activity is recorded and accurately presented in accordance with generally accepted accounting principles. Additional staff will be available for the Finance department for the fiscal year ending June 30, 2011.

Finding Control Number: FA-6521-10-01

We concur with this finding. The District will revise its policies and procedures concerning Federally funded positions to ensure that a quarterly review of the timesheets is completed and documentation is in compliance with Federal and state requirements. The District will implement the necessary procedures immediately.

Contact Person: Telephone: Fax: Email:

Ben M. Childs, Chief Financial Officer (706) 213-4000 (706) 283-6874 bchilds@ebl ert.kl2.ga.u~