Evans County Board of Education, Claxton, Georgia, report on audit of the financial statements, year ended June 30, 2003

EVANS COUNTY BOARD OF EDUCATION
CLAXTON, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

EVANS 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

3

B

STATEMENT OF ACTIVITIES

4

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

5

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

6

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

7

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

8

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

9

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

11

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

25

EVANS COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

26

3 SCHEDULE OF STATE REVENUE

28

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

30

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

31

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

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

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

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
April 19,2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Evans County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Evans County Board of Education, as of and for the year ended June 30, 2003, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Evans 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 ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective position ofthe governmental activities, each major fund, and the aggregate remaining fund information of the Evans County Board of Education, as of June 30, 2003, and the respective changes in financial position thereoffor the year then ended in conformity with accounting principles generally accepted in the United States of America.
2003-34ARL-11

As discussed in Note 2 to the basic financial statements, during fiscal year 2003, the Board completed a comprehensive inventory of its capital assets for inclusion in the basic financial statements and consolidated its individual school activity accounts for inclusion in the basic financial statements. These changes are in accordance with generally accepted accounting principles.
As described in Note 2, the Evans County Board of Education has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2003.
In accordance with Government Auditing Standards, we have also issued our report dated April 19, 2004, on our consideration ofthe Evans County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through x and page 25 respectively, are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Evans County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
2003-34ARL-11

A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code of Georgia Annotated section 506-24.
Respectfully submitted,
~;41:k

RWH:as 2003-34ARL-11

State Auditor

EVANS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
The discussion and analysis ofEvans County Board ofEducation's financial performance provides an overall review of the Board's financial activities for the fiscal year ended June 30, 2003. The intent of this discussion and analysis is to look at the Board's financial performance as a whole. Readers should also review the financial statements and the notes to the basic financial statements to enhance their understanding of the Board's financial performance.
Financial Highlights
Key financial highlights for 2003 are as follows:
The Board implemented GASB 34 for 2003. Due to this being the implementation year, many comparisons are not available that will be available for 2004.
In total, net assets increased $525,898 which represents a 3.51 percent increase from 2002. This total increase was due to governmental activities since the Board has no business-type activities.
General revenues accounted for $4,499,338 in revenue or 28.31 percent of all revenues. Program specific revenues in the form ofcharges for services and sales, grants and contributions accounted for $11,393,343 or 71.69 percent of total revenues of $15,892,681.
The Board had $15,366,783 in expenses related to governmental activities; only $11,393,343 of these expenses were offset by program specific charges for services, grants or contributions. General revenues (primarily taxes) of$4,499,338 were adequate to provide for these programs.
Among major funds, the General Fund has $14,662,688 in revenues, $15,060,836 in expenditures and a net change of $-339,118 from other financing sources/uses and the change in inventory. The General Fund's balance decreased to $2,973,738 from $3,711,004.
Using the Basic Financial Statements This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the Evans County Board of Education as a financial whole, or as an entire operating entity.
The Statement a/Net Assets and Statement ofActivities provide information about the activities of the whole Board, presenting both an aggregate view ofthe Board's finances and a longer-term view of those finances. Fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. The fund financial statements also look at the Board's most significant funds. In the case of the Evans County Board of Education, the General Fund is by far the most significant fund.
1

EVANS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Reporting the Board as a Whole
Statement ofNet Assets and the Statement ofActivities
While this document contains the large number of funds used by the Board to provide programs and activities for the schools, the view ofthe Board as a whole looks at all financial transactions and asks the question, "How did we do financially during 2003?" The Statement of Net Assets and the Statement of Activities answers this question. These statements include all assets and liabilities using the economic resources focus and accrual basis ofaccounting 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 the cash is received or paid.
These two statements report the Board's net assets and changes in those assets. This change in net assets is important because it tells the reader that, for the Board as a whole, thefinancial position of the Board has improved or diminished. The causes ofthis change may be the result ofmany factors, some financial, some not. Nonfinancial factors include the Board's property tax base, facility conditions, required educational programs and other factors.
In the Statement of Net Assets and the Statement of Activities, the Board has one distinct type of activity:
Governmental Activities - All ofthe Board's programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, food service, principal's accounts and various others.
Reporting the Board's Most Significant Funds
Fund Financial Statements
Fund financial reports provide detailed information about the Board's major funds. The Board uses many funds to account for a multitude of financial transactions. However, these fund financial statements focus on the Board's most significant funds. The Board's major governmentalfunds are the General Fund and Capital Projects Fund.
Governmental Funds Most of the Board's activities are reported in governmental funds, which focus on how money flows into and out ofthose funds and the balances left at year-end available for spending in future periods. These funds are reported using the current financial resources measurement focus and the modified accrual accounting method, 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 Board's general government operations and the basic services it provides. Governmental fund information helps determine whether there are adequate financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds is reconciled in the financial statements.
11

EVANS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Fiduciary Funds The Board is the trustee, orfiduciary, for assets that belong to others, such as the employee benefit programs, and school clubs and organizations within the principals' accounts. The Board 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 Board excludes these activities from the district-wide financial statements because it cannot use these assets to finance its operations.

The Board as a Whole

The perspective of the statement of net assets is of the Board as a whole. Table 1 provides a summary of the Board's net assets for 2003. Since this is the first year the Board has prepared financial statements following GASB Statement 34, net assets comparisons to fiscal year 2002 are not available.

Table 1 Net Assets (in Thousands)

Governmental Activities Fiscal Year 2003

Assets Current and Other Assets Capital Assets, Net

$ 5,257,319 12,382,360

Total Assets

$ 17,639,679

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 2,027,096 87,582

Total Liabilities

$ 2,114,678

Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted

$ 12,294,778 412,567
2,817,656

Total Net Assets

$ 15,525.001

Total net assets increased $525,898 to $15,525,001.

Table 2 shows the changes in net assets for fiscal year 2003. Since this is the first year the Board has prepared financial statements following GASB Statement 34, revenue and expense comparisons to fiscal year 2002 are not available.

111

EVANS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Table 2 Change in Net Assets
(in Thousands)
Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions
Total Program Revenues
General Revenues: Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Total Revenues
Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt
Total Expenses
Increase in Net Assets

Governmental Activities Fiscal Year 2003
$ 469,299 10,924,044
$ 11,393,343
$ 1,902,094 5,035
1,229,341 3,831
1,022,422 63,053
273,562
$ 4,499,338
$ 15,892,681
$ 9,664,805
494,331 812,577 275,105 311,346 847,548
94,316 844,455 548,157
5,112 281,560
234,006 2,719
944,269 6 477
$ 15,366,783
$ 525~898

IV

EVANS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Figure A shows the funding sources for the revenues. 62 percent ofthe Board's revenues are derived from state grants. Property Taxes make up 12 percent of the total funding, while an additional 8 percent is earnedfrom the county's sales taxes.

Figure A Sources of Revenue for Fiscal Year 2003

State Funds 62%

Federal Funds

13% Property
~ ~~:s Sales Taxes
~ W ~----------- 8%
,, / ~ Charg~s for Services

Other

3%

2%

V

EVANS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

As shown in Figure B, Instruction comprised 62 percent ofgovernmental program expenses. Food Services and School Administration made up 6% ofgovernmentalprogram expenses each; Maintenance and Operations and Student Transportation Services made up 5% and 4%, respectively. Pupil Services and Educational Media Services made up 3% and 2%, respectively. Central and Business Administration Services comprised 3% ofthe total governmentalprogram expenses.

Student Transportation
Services 4%

Figure B Functional Expenses for Fiscal Year 2003

Other Support Services 2%

Enterprise Operations 2%

Maintenance and Operation of Plant Business 5% Administration 1%
School Administration 6%

Food Services 6%

General Administration

2% Pupil Services

3% Educational Media

Services

2%

Improvement of

Instructional Services

5%

Instruction 62%

VI

EVANS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Governmental Activities

The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows, for governmental activities, the total cost ofservices and the net cost of services. That is, it identifies the net cost of services being those services supported by tax revenue and unrestricted State entitlements. Since this is the first year the Board has prepared financial statements following GASB Statement 34, the cost ofservice comparisons are not available for fiscal year 2002.

Table 3 Governmental Activities
(in Thousands)

Total Cost of Services
Fiscal Year 2003

Net Cost of Services
Fiscal Year 2003

Percentage of Net Cost to Total Cost of Services
Fiscal Year 2003

Instruction

$ 9,664,805

Support Services

Pupil Services

494,331

Improvement of Instructional Services

812,577

Educational Media Services

275,105

General Administration

311,346

School Administration

847,548

Business Administration

94,316

Maintenance and Operation of Plant

844,455

Student Transportation Services

548,157

Central Support Services

5,112

Other Support Services

281,560

Operations ofNon-Instructional Services

Enterprise Operations

234,006

Community Services

2,719

Food Services

944,269

Interest on Short-Term and

Long-Term Debt

6477

$ 1,978,864
144,886 561,281 118,199 -48,753 430,008
91,964 411,543 230,495
5,112 74,864
742
-32,242
6477

20.47%
29.31% 69.07% 42.97% -15.66% 50.74% 97.51% 48.73% 42.05% 100.00% 26.59%
0.32% 0%
-3.41 %
100.00%

Total Expenses

$ 15~366~783 $ 3~973A40

25.86%

Althoughprogram revenues make up a majority ofthe funding, the Board is still dependent upon tax revenues for governmental activities. Approximately 20.5 percent of instruction activities are supported through taxes and other general revenues, and for all governmental activities general revenue support is approximately 25.9 percent.

Vll

EVANS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
The Board's Funds
The Board's governmental funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues and other financing sources of$16,330,825 and expenditures and other financing uses of $17,809,621. There was a decrease in the fund balance totaling $1,478,796 for the governmental funds as a whole. The General Fund had a decrease of $737,266, the Capital Projects Funds had a decrease of$741,530 due to the CMS PE, Band and Classroom Project's expenditures exceeding Sales Tax receipts in fiscal year 2003. The negative change in the fund balance of the general fund for the year reflects that the Board chose to fund current year costs with both general fund revenues and fund equity. The negative change in the fund balance of the Capital Projects Funds reflects that the Board had held off on SPLOST-funded construction projects in the previous year in order to allow fund equity to build up to fund projects in fiscal year 2003.
General Fund Budgeting Highlights
The Board's budget is prepared in accordance with Georgia law. The most significant budgeted fund is the General Fund.
During the course of fiscal year 2003, the Board amended its General Fund budget as needed. The Board uses site-based budgeting. The budgeting systems are designed to tightly control total site budgets but provide flexibility for site management.
For the General Fund, the final budgeted revenues and other financing sources of $12,574,074 remained the same as the original budgeted amount. The actual revenues and other financing sources of $14,662,688 exceeded the budgeted amount by $2,088,614. The additional revenues were mainly the result of the School District not budgeting for state and Federal grants and conservative budgeting for property and sales taxes.
The final budgeted expenditures and otherfinancing uses of$13,244,426 were less than the original budgeted expenditures and other financing uses by $15,554. This difference represents .12%. The actual expenditures and other financing uses of $15,443,908 was $2,199,482 more than budgeted. The additional expenditures were a result of the aforementioned state and Federal grants that had not been budgeted.
The difference in the beginning and ending fund balances is the result ofthe Board's decision to use revenues and fund equity to fund current year expenditures.
General Fund expenditures and otherfinancing uses exceeded revenues and otherfinancing sources by $737,266. The Board had adopted a budget where expenditures exceeded revenues by $670,352 and decided during the year to make a large land purchase of$383,072. The conservative budgeting
vm

EVANS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

of Property Tax revenues and the more liberal budgeting of General Fund expenditures caused the actual expenditures to exceed the actual revenues only by $398,148. However, the large land purchase of$383,072 added to the $398,148 caused fund equity to decrease by $737,266.

Capital Assets

At the end of fiscal 2003 the Board had $12,382,360 invested in capital assets, net of depreciation, all in governmental activities. Table 4 shows fiscal year 2003 balances. Since this is the first year the Board has prepared financial statements following GASB Statement 34, capital assets comparisons to fiscal year 2002 are not available.

Table 4 Capital Assets (Net of Depreciation, in Thousands)

Governmental Activities Fiscal Year 2003

Land Construction in Progress Buildings and Improvements Equipment Land Improvements

$ 603,934 1,789,472 8,999,897 688,199 300,858

Total

$ 12,382,360

Current Issues

The Evans County School System consists of four campuses located in Evans County with an approximate population of 10,738 in 2001. Evans County's land area is approximately 185 square miles with 56.8 persons per square mile. During the 2002-2003 school year, 1,895 students were enrolled in grades PK-12. Limited employment is available in the small rural county but additional employment is usually found in Statesboro which is 19 miles away, Tattnall County at the Correctional Facilities, and Savannah which is approximately 50 miles away.

Evans County's school system ranks 160 out of 180 school systems for the fiscal year 2003 millage rate. Eight of the school systems ranking in the twenty systems lower than Evans County have a permanent local option sales tax for school operations, which is why they have lower property tax rates. Evans County school operations millage rate is 11.00 mills; the average school operations millage rate for the state is 14.62.

IX

EVANS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
In 1999, Evans County had 3,778 households with an average of 2.62 persons per household. The median household money income was $25,447 (1999). The per capita money income (1999) was $12,758 and 27% of the population was living below the poverty level. The largest employer is Claxton Poultry with the school system and hospital coming in second and third, respectively. High school graduates for 25+ age group were at 65.7%. Only 9% ofthe population 25+ holds a bachelors degree or higher. In 2000, 2,195 persons age 5+ were classified as persons with disabilities. In 2000, 4,381 housing units were available. The home ownership rate was 71.5% with the median value ofowner-occupied housing units being $69,000 as compared to Georgia's $111,200. In 2000, only 12 building permits were issued. Evans County does not seem to be growing and the school population is projected to decrease by 37 students per year over the next five years. The Hispanic population has increased to around 6% in 2000 which is slightly above the state at 5.3%. Contacting the Board's Financial Management This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the Board's finances and to show the Board's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Alison A. Boatright, CPA and Financial Director at the Evans County Board ofEducation, 613 West Main Street, Claxton, Georgia 3041 7. You may also email your questions to aboatright@evans.kl2.ga.us.
X

EVANS COUNTY BOARD OF EDUCATION

EVANS COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2003
ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation
Tota I Assets
LIABILITIES
Accounts Payable Salaries Payable Retainages Payable Deposits and Deferred Revenues 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 Capital Projects Un restricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

3,555,172

380,104 1,089,621
161,926 40,736 29,760

603,934 1,789,472 1,251,607 10,943,256 1,651,194 -3,857,103

$ ===1=7=,6=3=9=,6=79=

$

554,271

1,375,773

93,940

3,112

77,944 9 638

$

2 114 678

$

12,294,778

222,076 190,491 21817,656

$

15,525,001

$ ===1=7===,6=3====9'==67=9=

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

EVANS COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30 2003

EXHIBIT "B"

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

GOVERNMENTAL ACTIVITIES

Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt

$ 9,664,805 $
494,331 812,577 275,105 311,346 847,548
94,316 844,455 548,157
5,112 281,560
234,006 2,719
944,269 6 477

1,720 $
17,429 233,264 216,886

7,684,221 $
349,445 251,296 156,906 360,099 417,540
2,352 415,483 317,662
206,696
2,719 759,625

-1,978,864
-144,886 -561,281 -118,199
48,753 -430,008
-91,964 -411,543 -230,495
-5, 112 -74,864
-742 0
32,242 -6 477

Total Governmental Activities

$ 15,366,783 $

469299 $======1=0=9=2=4=0=4=4= $

-3,973,440

General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous

$

1,902,094

5,035

1,229,341 3,831
1,022,422 63,053
273 562

Total General Revenues

$_ _ _ _4_.,_49_9_._,_33_8_

Change in Net Assets

$

525,898

Net Assets - Beginning of Year

14 999,103

Net Assets - Ending of Year

$===1=5=5=2=5=00=1=

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

EVANS COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2003

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Inventories Capital Projects
Unreserved Designated for Self-Insurance Undesignated Reported in: General Fund
Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$ 3,490,772 $
94,079 1,089,621
161,926 40,736 29,760

64,400 $ 220,031

3,555,172
314,110 1,089,621
161,926 40,736 29,760

$ 4,906,894 $

284,431 $====5,:::::::::19=1=,3=2=5

$

554,271

1,375,773

$

3,112

$ 1,933,156 $

$ 93,940
93,940 $

554,271 1,375,773
93,940 3,112
2,027,096

$

192,316

29,760

$

1,623

2,750,039

$ 2,973,738 $

$ 190,491
190,491 $

192,316 29,760 190,491
1,623
2,750,039
3,164,229

$ 4,906,894 $

284 431 $======5=,1=9=1,=32=5=

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

EVANS COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2003

EXHIBIT "D"

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

$

3,164,229

$

603,934

1,789,472

1,251,607

10,943,256

1,651,194

-3,857,103

12,382,360

65,994

-87,582

Net Assets of Governmental Activities (Exhibit "A")

$ 15,525,001

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

EVANS COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2003

EXHIBIT"E"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$ 1,918,065

$

3,831 $ 1,229,341

9,808,172

2,138,476

469,299

51,283

11,770

273,562

$ 14,662,688 $ 1,241 111 $

1,918,065 1,233,172 9,808,172 2,138,476
469,299 63,053
273,562
15,903,799

$ 9,502,540

$

494,331 811,610 268,552 308,153 841,280
94,316 808,585 456,496
5,112 267,512 234,006
2,719 883,931
$

2,365,713

75,216 6,477

$ 15,060,836 $ 2,365,713 $

$

-398, 148 $ -1, 124,602 $

9,502,540
494,331 811,610 268,552 308,153 841,280
94,316 808,585 456,496
5,112 267,512 234,006
2,719 883,931 2,365,713
75,216 6,477
17,426,549
-1,522,750

$

43,954

$

$

383,072

-383,072

$

-339,118 $

383,072 $

$

-737,266 $ -741,530 $

3,711,004

932,021

43,954 383,072 -383,072
43,954
-1,478,796
4,643,025

Fund Balances - Ending

$ 2,973,738 $

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

190 491 $==3=,1=6=4=,2=29=

EVANS COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2003

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")

$ -1,478,796

Amounts reported for Governmental Activities in the Statement of Activities are different because:

Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:

Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense

$ 2,312,234 -3271684

1,984,550

Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.

-11,118

Some of the Capital Assets acquired this year were financed with capital leases. In Governmental Funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Assets, the lease obligation is reported as a Long-Term Liability.

-43,954

Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:

Capital Lease Payments

75 216

Change in Net Assets of Governmental Activities (Exhibit "B")

$ ==5=2=5==,8=98=

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

EVANS COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2003
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT"G"
AGENCY FUNDS $ ===3=0=,9=39=
$ ===30='=93=9=

The notes to the basic financial statements are an integral part of this statement. -9-

EVANS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Evans County Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the 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 Evans County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement 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 ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.

- 11 -

EVANS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Bond Proceeds, grants from Georgia State Financing and Investment Commission and Special Purpose Local Option Sales Tax Proceeds to be used for the acquisition, construction or renovation of major capital facilities.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless 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, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral long-term liabilities and acquisitions under capital leases are reported as other financing sources.
- 12 -

EVANS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

A substantial number of personnel of the School District were employed for a one hundred and ninety day period beginning in August 2002 and ending in early June 2003. Employment contracts for these employment periods typically specify that compensation be paid in twelve equal monthly payments beginning in September 2002 and ending in August 2003. State grants to fund the State's share of these contracts are disbursed to the School District in the same twelve month period. In accordance with generally accepted accounting principles, salary and fringe benefit costs and the related revenue from the State to fund these contracts are recorded in the fiscal period covered by these financial statements.

RESTATEMENT OF PRIOR YEAR FUND BALANCE - GENERAL FUND

In prior years, the financial activities of the School District's School Food Services Fund, Lottery Programs and Federal Programs were reported as Special Revenue Funds. These funds had a combined fund balance of $122,445 at July 1, 2002. For fiscal year 2003, these funds have been reported as part of the General Fund. In addition, governmental fund activity from the various school activity accounts, which were not reported in the prior year's financial statements, have been reported within the General Fund for fiscal year ended June 30, 2003. The governmental fund activity ofthe various school activity accounts had a fund balance of $61,083 at July 1, 2002. This change is in accordance with generally accepted accounting principles.

General Fund Balance July 1, 2002

$ 3,527,476

Add Funds Consolidated with General Fund: School Food Services Fund School Activity Account - Governmental Activity

122,445 61,083

General Fund Balance July 1, 2002 (Restated)

$ 3,711.004

CHANGES IN ACCOUNTING PRINCIPLES

The Evans County Board ofEducation has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis -for State and Local Governments, as of June 30, 2003.

The provisions ofGASB Statement No. 34 require the inclusion ofa Statement ofNet Assets. The elements comprising Net Assets - Beginning include the following:

- 13 -

EVANS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General Fund (Restated) July 1, 2002 Capital Projects Fund

$ 3,711,004 932,021

Governmental Funds (Restated) July 1, 2002 Capital Assets Accumulated Depreciation Property Tax Revenue Timing Differences Capital Leases Payable

$ 4,643,025 13,927,229 -3,529,419 77,112 -118,844

Net Assets Beginning (See Exhibit "B")

$ 14~999~103

CASH AND CASH EQUIVALENTS

COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the Board to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.

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 Evans County Board of Commissioners fixed the property tax levy for the 2002 tax digest year (calendar year) on September 25, 2002 (levy date). Taxes were due on December 20, 2002 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2002 tax digest are reported as revenue in the governmental funds for fiscal year 2003. The Evans 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, 2003, for maintenance and operations amounted to $1,913,030.

The tax millage rate levied for the 2002 tax year (calendar year) for the Evans County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

11.0 mills

- 14 -

EVANS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SALES TAXES
Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,229,341 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

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

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time ofpurchase. 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 fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost ofnormal 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.

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 Computer Applications

Any Amount

$

5,000

$

5,000

$

5,000

$

5,000

NIA 20 to 80 years IO to 80 years
4 to 20 years 6 years

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

- 15 -

EVANS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 3: DEPOSITS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 2003, the bank balances were $4,157,474. The amounts of the total bank balances are classified into three categories of credit risk:

- 16 -

EVANS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 3: DEPOSITS

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

The School District's deposits are classified by risk category at June 30, 2003, as follows:

Risk Category

Bank Balance

1

$ 200,000

2

3,957,474

3

0

Total

$ 4,157.474

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

- 17 -

EVANS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "H"

Note 5: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

Balances July 1, 2002

Increases

Balances Decreases June 30, 2003

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress

$ 223,126 $ 380,808 $

0

1,789,472

0 $ 603,934 1,789,472

Total Capital Assets Not Being Depreciated $ 223,126 $ 2,170,280 $

0 $ 2,393,406

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 10,943,256 1,509,240 $ 1,251,607

$ 141,954

0 $ 10,943,256 1,651,194 1,251,607

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

1,799,691 830,798 898,930

143,668 132,197 51,819

1,943,359 962,995 950,749

Total Capital Assets, Being Depreciated, Net $ 10,174,684 $ -185,730 $

0 $ 9,988,954

Governmental Activity Capital Assets - Net $ 10,397.810 $ 1,984.550 $

0 $ 12,382.360

Capital assets being acquired under capital leases as of June 30, 2003, are as follows:

Governmental Funds

Equipment

Current year depreciation expense by function is as follows:

Instruction

Support Services

Improvements of Instructional Services

$

Educational Media Services

General Administration

School Administration

Maintenance and Operation of Plant

Student Transportation Services

Other Support Services

Food Services

$==4:::::::::::3=:::l!:::,9==5==4

$
606 4,105 2,000 3,926 26,854 84,950 65,803

101,644
188,244 37,796

$====3::::::=2:::::::::i!7'===68===4

- 18 -

EVANS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) is reported as a restricted asset in the Statement ofNet Assets because its use is limited by statutory provisions. Restricted assets at June 30, 2003, were as follows:

District-wide Capital Projects SPLOST

Restricted Cash and Cash Equivalents: Capital Acquisitions
Note 7: INTERFUND TRANSFERS

$===64=,4=0=0

Interfund transfers for the year ended June 30, 2003, consisted of the following:

Transfer to

Transfers From General Fund

District-wide Capital Projects

$=====3====8===i3===o1====2

Transfers are used to move property tax revenues collected by the General Fund to the District-wide Capital Projects Fund as required match or supplemental funding source for capital construction projects.

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. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any ofthe past three years.

The 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. In connection with this program, a self-insurance reserve has been established within the General Fund by the School District. The School District accounts for claims within the General Fund with expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. Evans County Board of Education has not paid unemployment compensation claims during the past two fiscal years.

- 19 -

EVANS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 8: RISK MANAGEMENT

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 $400,000 loss per occurrence, up to $2,000,000.

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

Position Covered

Amount

Superintendent Each Principal

$ 100,000

$

25,000

Note 9: LONG-TERM DEBT

CAPITAL LEASES The Evans County Board ofEducation has entered into various lease agreements as lessee for energy management equipment and the purchase ofa bus. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception.

The changes in Long-Term Debt during the fiscal year ended June 30, 2003, were as follows:

Governmental Funds Capital Leases

Balance July 1, 2002

$ 118,844

Additions Capital Leases

43,954

Deductions Debt Retired

75,216

Balance June 30, 2003
Portion of Long-Term Debt Due within One Year

$==8===-7===58==2 $_------'-7_7"---94_4

- 20 -

EVANS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 9: LONG-TERM DEBT

At June 30, 2003, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

Ca_gital Leases

Princi_gal

Interest

2004 2005

$

77,944 $

9,638

3,688 82

Total Principal and Interest

$

87.582 $

3 770

Note 10: ON-BEHALF PAYMENTS

The Board has recognized revenues and costs in the amount of $142,362 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance ofNon-Certified Personnel In the amount of $120,451

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $21,911

Note 11: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2003, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

Claxton Middle School Renovation Claxton High School Gym Renovation

$ 104,143 $ 278,170 56,765

$ 160.908 $ 278.170

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

- 21 -

EVANS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 12: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
Note 13: SUBSEQUENT EVENTS
On September 16, 2003, the voters of Evans County voted in favor of a Special Purpose Local Option Sales Tax referendum for education purposes. The imposition ofthe tax approved by voters, as stated on the Official Ballot of Evans County, is as follows.
"Shall a one percent sales and use tax for educational purposes be imposed in the Evans County School District for a period oftime not to exceed twenty consecutive calendar quarters and for the raising of not more than $7,800,000 for the purpose of funding the following capital outlay projects: adding to, remodeling, renovating, improving, and equipping existing educational buildings, properties, and facilities of the School District, and acquiring any necessary personal property and equipment, including buses, computers and related technology, copiers, heating and air conditioning systems, lighting, and similar equipment?
If imposition of the tax is approved by the voters, such vote shall also constitute approval of the issuance of general obligation debt of the Evans County School District in the principal amount of $5,400,000 for the above capital outlay purposes."
Note 14: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

- 22 -

EVANS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 14: RETIREMENT PLANS

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2003 2002 2001

100% 100% 100%

$ 771,954 $ 731,986 $ 803,939

- 23 -

EVANS COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30 2003

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL {1}

FINAL {1}

ACTUAL AMOUNTS

$

1,912,365 $

1,912,365 $

1,918,065

3,831

9,393,975

9,393,975

9,808,172

772,391

772,391

2,138,476

204,653

204,653

469,299

67,600

67,600

51,283

2231090

223,090

273,562

$

12,574,074 $

12,574,074 $

14,662,688

$

8,289,588 $

8,286,704 $

9,502,540

245,731 557,677 266,983 309,456 886,711 204,088 937,750 390,152
4,550 174,241
993,053

221,752 557,677 266,983 309,456 886,711 204,088 949,120 390,152
4,550 174,180
993,053

494,331 811,610 268,552 308,153 841,280
94,316 808,585 456,496
5,112 267,512 234,006
2,719 883,931
81,693

$

13,2591980 $

13,244,426 $

15,060,836

$

-6851906 $

-670,352 $

-398,148

$

43,954

-383,072

$

-339,118

$

-685,906 $

-670,352 $

-737,266

4,099,220

4,099,220

3,711,004

-18, 148

-18,148

0

Fund Balances - Ending

$

3,3951166 $

3,410,720 $ ===2=,9=7=3,=73=8=

Notes to the Schedule of Revenues Expenditures and Changes in Fund Balances Budget and Actual

(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.

See notes to the basic financial statements.

- 25 -

EVANS COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30 2003

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U.S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food and Nutrition Program Food Distribution Program (1)
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Flow Through Preschool
Total Special Education Cluster
Other Programs Direct Impact Aid
Pass-Through From First District Regional Educational Service Agency d/b/a Live Oak Migrant Education Agency Elementary and Secondary Education Act Title I Migrant Education Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Title I Grants to Local Educational Agencies School Improvement Title II Eisenhower Professional Development Enhancing Education Through Technology Improving Teacher Quality Title Ill Limited English Proficient Title VI Innovative Education Program Strategies Rural and Low Income Schools Vocational Education - Basic Grants to States High School Program Basic Grant
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

NIA N/A $
$

(2) 840,145 (3)
840,145

10.550

N/A
$

39,078 879,223

* 84.027 84.173

N/A $ N/A
$

289,509 (3) 34,707
324,216

84.041

(4)

84.011

N/A

15,913

* 84.010 * 84.010
84.281 84.318 84.367
84.365
84.298 84.358
84.048

N/A
N/A
N/A N/A N/A
N/A
N/A N/A
N/A
$

706,679 (3) 5,635 (3)
5,100 22,059 (3) 132,206
10,666 (3)
19,059 40,604
36,450 (3)
1,318,587

- 26 -

EVANS COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30 2003

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Health and Human Services, U.S. Department of Direct Rural Health Outreach Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

93.912

$ _ _ _ _1_2_9.,__1,_5_7

Total Federal Financial Assistance N/A = Not Available

$ ========2,=32=6=,9=6=7

Notes to the Schedule of Expenditures of Federal Awards

(1) The amount shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for funds earned on the School Breakfast Program ($177,208) were not maintained separately and are included in the 2003 National School Lunch Program.
(3) Expenditures for this program include State, and/or Other Funds. Expenditures are not maintained by fund source.
(4) Funds earned on the Impact Aid program, in the amount of $182 do not require reporting of expenditures.

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

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

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

See notes to the basic financial statements.

- 27 -

EVANS COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2003
AGENCY/FUNDING
GRANTS Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category 111 Category IV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Principal Supplements Vocational Supervisors Migrant Education Mid-term Adjustment Hold-Harmless Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs 4-8 Statewide After School Program K-3 Statewide Reading Program Apprenticeship Program Health Insurance Mentor Teachers Preschool Handicapped Program Lottery Programs Assistive Technology Computers in the Classroom Post Secondary Options Student Information System
- 28 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

490,589

85,989

870,677

210,456

547,081

177,209

1,050,991

722,257

334,634

40,617 272,396 759,885
61,149 226,358
54,290 75,800 57,235 160,397 52,211 35,253

335,702 357,201 491,520

270,313 63,574 19,000 54,639 7,407 13,590 3,835
238,732 768,737
63,616 106,288 -215,837
22,165 26,335 76,097 120,451
3,486 25,970
6,629 2,205
295 45,949

EVANS COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2003
AGENCY/FUNDING
GRANTS Northwest Georgia Regional Educational Service Agency Student Achievement Grant
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACT Human Resources, Georgia Department of Family Connection
OTHER Community Affairs, Georgia Department of Local Assistance Grant

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

60,366

472,522

21,911

50,000

10,000

$=====9=,8=0=8'=17=2=

See notes to the basic financial statements.

- 29-

EVANS COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2003

SCHEDULE "4"

PROJECT
Construction, furnishing and equipping of additional classrooms, instructional and support space, including construction of new athletic and physical education facilities as well as expansion, remodeling and renovating existing classrooms, instructional and support space, physical education and athletic facilities and grounds at all School District facilities and to provide furnishings, equipment and fixtures for such areas, including technology equipment and retrofitting to accommodate such equipment, at existing facilities, and the payment of expenses incident thereto

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

$

612001000 $

610231661 $

119821640 $

312331657 Ongoing

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

See notes to the basic financial statements.

- 30 -

EVANS COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE}
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2003

SCHEDULE "5"

DESCRIPTION

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION {1} {2}

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Primary Grades (1-3) Program

Primary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Upper Elementary Grades-Early Intervention (4-5)

Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category I

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

537,604 $ 94,204
954,728 261,426 604,854
185,443 1,170,417
803,970 371,506 1,265,847
246,185 52,498 84,470 59189

605,220 $ 91,071
1,013,636 337,509 491,967
157,431 1,195,014 1,025,583
444,662
1,286,501 187,336 24,196 120,599 461242

13,977 $ 728
65,110 2,794 32,240
796 51,442 46,797 33,634
15,041 4,929 11 1,607 82

619,197 91,799
1,078,746 340,303 524,207
158,227 1,246,456 1,072,380
478,296
1,301,542 192,265 24,207 122,206 46,324

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

6,692,341 $ 7,026,967 $

269,188 $

7,296,155

Media Center Program Staff and Professional Development

177,524 39,006

243,526 20,668

21,495 19,110

265,021 39,778

TOTAL QBE FORMULA FUNDS

$

6,9081871 $ 7,291,161 $

3091793 $ ===7,=60=0=,9=5=4

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State budget austerity reduction.

See notes to the basic financial statements.

- 31 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
April 19, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Evans County Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Evans County Board of Education as of and for the year ended June 30, 2003, which collectively comprise Evans County Board ofEducation's basic financial statements and have issued our report thereon dated April 19, 2004. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether Evans County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective ofour audit, and accordingly, we do not express such an opinion. The results ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Evans County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal
2003-34YB-30

control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Evans County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. The reportable condition is described in the accompanying Schedule ofFindings and Questioned Costs as item FS-6541-03-01.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe the reportable condition described above is not a material weakness.
This report is intended solely for the information and use ofthe management, members ofthe Evans County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
-- ~-~~

RWH:as 2003-34YB-30

State Auditor

RUSSELL W. HINTON
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
April 19, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Evans County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance ofEvans County Board ofEducation with the types ofcompliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2003. Evans County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section ofthe 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 Evans County Board of Education's management. Our responsibility is to express an opinion on Evans 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 ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Evans 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 Evans County Board of Education's compliance with those requirements.
2003SA-10

In our opinion, the Evans County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 2003.
Internal Control Over Compliance
The management of Evans County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Evans County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level of risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use ofthe management, members ofthe Evans County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:as 2003SA-10

State Auditor

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

EVANS COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6541-01-01 FS-6541-02-01

Further Action Not Warranted Previously Reported Corrective Action Implemented

SECTION IV FINDINGS AND QUESTIONED COSTS

EVANS COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Evans County Board of Education's financial statements was unqualified.

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

Cash and Cash Equivalents Revenues/Receivables/Receipts

Expenditures/Liabilities/Disbursements

The reportable condition described above is not considered to be a material weakness.

3. Noncompliance Material to the Financial Statements The audit ofthe Evans County Board ofEducation disclosed no instances ofnoncompliance that were deemed to be material to the financial statements.

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

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

6. Audit Findings Required to be Reported by Section .5 lO(a) of 0MB Circular A-133 The Evans County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) of 0MB Circular A-133.

7. Major Programs Federal awards audited as major programs are as follows: 84.010 Elementary and Secondary Education Act-Title I- Grants to Local Educational Agencies 84.010 Elementary and Secondary Education Act - Title I - School Improvement 84.027 Individuals with Disabilities Education Act - Part B - Special Education Flow Through 84.173 Individuals with Disabilities Education Act - Part B - Special Education Preschool

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

- 1-

EVANS COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
I SUMMARY OF AUDITOR'S RESULTS
9. Low Risk Auditee The Evans County Board of Education qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133.
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Reportable Condition Finding Control Number: FS-6541-03-01
Our examination ofthe various school principal's accounts disclosed weaknesses in internal controls as discussed below:
Cash and Cash Equivalents The bank reconciliation function was not separated from the record keeping and voucher payment functions.
Revenues/Receivables/Receipts Deposit preparation was not separated from the record keeping and cash custody functions. Based on a sample of 26 items, two receipts did not contain supporting documentation; one receipt was not deposited in a timely manner; and documentation for six receipts did not have dates, signatures and/or activity codes.
Expenditures/Liabilities/Disbursements The check writing function was not separated from the record keeping function. Based on a sample of 25 items, eight vouchers lacked adequate supporting documentation and two purchase orders were dated after the invoice was received.
These deficiencies were a result ofmanagement's decision to limit the number ofadministrative staff made responsible at the various principal account sites for the accounting functions and their failure to ensure established controls were functioning as designed. Management should implement additional procedures to ensure that the key accounting functions of custody, record keeping and authorization are segregated.
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.
-2 -