CrA A~oo .fi I Ea.(, G-s Ilfl1-~~ AUDIT REPORT GLASCOCK COUNTY BOARD OF EDUCATION GmSON, GEORGIA YEAR ENDED JUNE 30, 1998 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS 254 WASHINGTON STREET ATLANTA, GEORGIA 30334-8400 GLASCOCK COUN1Y BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS EXIDBITS GENERAL PURPOSE FINANCIAL STATEMENTS COMBINED STATEMENTS - OVERVIEW A COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP 2 B COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES 4 C COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS 7 D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS 8 ADDmONAL FINANCIAL INFORMATION COMBINING STATEMENTS SPECIAL REVENUE FUND E COMBINING BALANCE SHEET 20 F COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 21 CAPITAL PROJECTS FUND G COMBINING BALANCE SHEET 22 H COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 23 DEBT SERVICE FUND I COMBINING BALANCE SHEET 24 J COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 25 SCHEDULES 1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 26 2 SCHEDULE OF STATE REVENUE 28 3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 29 GLASCOCK COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTIONI FINANCIAL ADDITIONAL FINANCIAL INFORMATION SCHEDULES 4 SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS 30 ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS 5 OVERALL 31 6 BY PROGRAM 32 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 wrrn GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE wrrn REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 SECTION ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL CLAUDE L. VICKERS STAlE AUDIlOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S,w., Suite 214 Atlanta, Georgia 30334-8400 March 30, 1999 Honorable Roy E. Barnes, Governor Members of the General Assembly Members ofthe State Board ofEducation and Superintendent and Members ofthe Glascock County Board of Education INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying general purpose financial statements of the Glascock County Board of Education, as of and for the year ended June 30, 1998, as listed in the table of contents. These general purpose financial statements are the responsibility ofthe Glascock County Board ofEducation's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. Except as discussed in the following paragraph, we conducted our audit in accordance with generally.accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Governmental Accounting Standards Board Technical Bulletin 98-1, Disclosures About Year 2000 Issues, requires disclosure of certain matters regarding the year 2000 issue. Glascock County Board of Education has included such disclosures in the significant commitments section ofthe Notes to the Financial Statements. Because ofthe unprecedented nature ofthe year 2000 issue, its effects and the success ofrelated remediation efforts will not be fully determinable until year 2000 and thereafter. Accordingly, insufficient audit evidence exists to support Glascock County Board ofEducation's disclosures with respectto the year 2000 issue made in the Notes to the Financial Statements. Further, we do not provide assurance that Glascock County Board 98ARL-13A ofEducation is or will be year 2000 ready, that Glascock County Board ofEducation's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Glascock County Board ofEducation does business will be year 2000 ready. As described in the notes to the general purpose financial statements, the Board's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows: * The general purpose financial statements of the Board did not contain a General Fixed Assets Account Group to account for property and equipment owned by the Board which should be included to conform to generally accepted accounting principles. * School activity accounts maintained at the individual schools are not included in the general purpose financial statements.. To conform to generally accepted accounting principles, these accounts should be included in the general purpose financial statements. * The Board did not recognize as expenditures, in the year ended June 30, 1998, a portion of salaries and the corresponding employer's cost ofrelated benefits earned for contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department ofEducation for the State's share ofthese unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were improperly recorded in the year ended June 30, 1998. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed. The aggregate effects on the general purpose financial statements ofthese variances or omissions have not been determined, but are believed to be material. .~" In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had we been able to examine sufficient evidence regarding year 2000 disclosures as discussed in the third paragraph and except for the effects on the general purpose financial statements of the matters referred to in the preceding paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the Glascock County Board of Education as of June 30, 1998, and the results ofits operations for the year then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated March 30, 1999, on our consideration ofthe Glascock County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions oflaws, regulations, contracts and grants. Our audit was performed for the purpose of forming an opinion on the general purpose financial statements of the Glascock County Board of Education taken as a whole. The accompanying combining statements (Exhibits E through 1) and the financial schedules (Schedules 1 through 6), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits o/States, Local Governments, and Non-Profit Organizations, are presented for purposes ofadditional 98ARL-13A analysis and are not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe general purpose financial statements and in our opinion, except for the effects ofsuch adjustments, ifany, as might have been determined to be necessary had we been able to examine sufficient evidence regarding year 2000 disclosures as discussed in the third paragraph and except for the effects of the matters referred to in the fourth paragraph, such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press ofthe State, as provided for by Official Code of Georgia Annotated Section 50-6-24. Respectfully submitted, ~~ Claude L. Vickers State Auditor CLV:jb 98ARL-13A GLASCOCK COUNTY BOARD OF EDUCATION GLASCOCK COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP JUNE 30,1998 ASSETS Cash and Cash Equivalents Investments Accounts Receivable Inventories Food Donated Commodities Purchased Food Amount Available in Debt Service Fund Amount to be Provided in FutureYears For Payment of Bond Debt Service GENERAL FUND GOVERNMENTAL FUND TYPES SPECIAL CAPITAL REVENUE PROJECTS FUND FUND $ 21,521,04 $ 113,756.81 $ 21.249,04 1,498,130.38 13,760,52 47,075.01 24,417,95 2,604.71 548.73 Total Assets $ 1,566,726.43 $ 141,328.20 $ 3..50.,.0.9..5..6. LIABILITIES AND FUND EQUITY LIABILITIES Accounts Payable Salaries Payable Expired Grant Balances Payable General Obligation Bonds Payable Total Liabilities FUND EQUITY Fund Balances Reserved For Bus Replacement Funds For Continuation of Federal Programs For Debt Service For Expired Grant Balances/Questioned Costs For Inventories Food Donated Commodities Purchased Food For State Capital Outlay Projects Unreserved Undesignated Total Fund Equity $ 22,090,74 $ 4,314.56 19,632,62 3,533,00 11,036,74 $ 25.623.74 $ 34.983.92 $ 23,503,85 $ 34,788.42 10,537,51 2,604.71 548.73 1.507.061.33 $ 1.541.102.69 $ 68,402.42 $ 106,344,28 $ 35.009.56 35.009.56 Total Liabilities and Fund Equity $ 1.566.726.43 $ The notes to the general purpose financial statements are an integral part of this statement. -2- 141,328.20 $ 35,009.56 EXHIBIT "A" DEBT SERVICE FUND $ 201.32 169,284.35 42,017.07 ACCOUNT GROUP GENERAL LONG-TERM DEBT TOTALS (Memorandum Only) JUNE 30,1998 JUNE 30,1997 $ 156,728.21 $ 122,656.71 1,681,175.25 1,319,910.41 113,510.03 28,414.13 $ 211,502.74 68.497.26 2,604.71 548.73 211,502.74 68,497.26 2,352.01 614.48 103,643.52 226,356.48 $ 211,502.74 $ 280.000.00$ 1.803,947.74 $ 26,405.30 $ 18,789.63 19,632.62 11,317.76 14,569.74 1,347.47 $ 280,000.00 280.000.00 330,000.00 $ 280.000.00 $ 340.607.66 $ . 361.454.86 $ 211,502.74 0.00 $ 211,502.74 $ 23,503.85 $ 33,664.61 34,788.42 211,502.74 103,643.52 10,537.51 10,537.51 2,604.71 548.73 2,352.01 614.48 27,869.42 1.610,473.31 1,263,811.33 $ 1,893.959.27 $ 1,442,492.88 $ 211,502.74 $ 280.000.00 $ 1.803,947.74 -3- GLASCOCK COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 1998 FUND BALANCE JUNE 30 $ 1,541,102.69 $ _ .........1..06""'"".".,.3..4.4..,;;;;28. The notes to the general purpose financial statements are an integral part of this statement. -4- EXHIBIT"B" CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTALS (Memorandum Only) YEAR ENDED JUNE 30,1998 JUNE 30.1997 $ 1,990,449.51 $ 1,767,232.95 525,817.61 211,221.81 $ 171,558.23 863,605.05 780,349.91 $ 42,879.00 5,734.47 191.413.37 126,841.52 $ 42,879.00 $ 177,292.70 $ 3,571,285.54 $ 2,885,646.19 $ 1,920,921.87 $ 1,478,787.78 $ 43,726.99 126,712.04 91,409.85 59,651.62 159,135.94 100,573.70 2,751.00 178,307.41 183,690.42 10,164.55 173,527.23 43,726.99 81,683.80 39,149.55 53,594.75 136,387.79 65,832.28 24,037.00 165,736.87 172,181.67 24,361.30 156,897.04 12,599.25 $ 50,000.00 18,390.00 1.043.48 50,000.00 18,390.00 1.043.48 45,000.00 20,595.00 1.047.44 $ 43.726.99 $ 69.433.48 $ 3.120,006.10 $ 2.477,891.52 $ -847.99 $ 107,859.22 $ 451,279.44 $ 407.754.67 $ 5,274.83 -5,274.83 $ 0.00 $ -847.99 $ 107,859.22 $ 451,279.44 $ 407,754.67 35,857.55 103,643.52 1,442,492.88 1,034,778.78 252.70 -65.75 409.98 -450.55 $ 35.009.56 $ 211,502.74 $ 1,893,959.27 $ 1,442,492.88 -5- The notes to the general purpose financial statements are an integral part of this statement. -7- GLASCOCK COUNTY BOARD OF EDUCATION EXHIBIT "0" : NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 3D. 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The Glascock County Board ofEducation (Board) was established under the laws ofthe State ofGeorgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the Board is a primary government and consists of all the organizations that compose its legal entity. FUND ACCOUNTING The Board uses funds and an account group to report on its financial position and the results ofits operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources. General Fixed Assets are recorded as expenditures in the various funds at the time ofpurchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types. Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances ofthese accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general purpose financial statements. The general purpose financial statements account for all State, Federal, Taxes and Other funds under control ofthe Board, in compliance with generally accej>ted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows: GOVERNMENTAL FUND TYPES - are used to account for all or most ofa Board's educational activities. Governmental Fund Types include: GENERAL FUND - the fund used to account for all financial resources ofthe Board except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education. SPECIAL REVENUE FUND - the fund used to account for the proceeds ofspecific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department ofEducation and from the Federal government to accomplish specific educational objectives. -8- GLASCOCK COUNTY BOARD OF EDUCATION EXlllBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction ofmajor capital facilities. DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees. ACCOUNT GROUP GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debt outstanding. BASIS OF ACCOUNTING The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (Le., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure ofavailable spendable resources. Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group. Governmental funds are accounted for using the modified accrual basis of accounting under which: Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are property taxes, local option sales taxes, intergovernmental grants and investment income. Expenditures are generally recognized when the related fund liability is incurred. A departure from the above definitions is the accounting treatment afforded the final two payments on GeneralFund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 1998, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 19,97 and ending in early June 1998. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1997 and ending in August 1998. State grants to fund the State's share ofthese contracts were disbursed from the Georgia Department ofEducation to the Board in the same twelve months. As of June 30, 1998, compensation under these employment -9- GLASCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES contracts had been earned, but two ofthe twelve monthly payments, due for July and August 1998, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30, 1998. Also, the State's portion ofthe compensation paid in July and August 1998 was received and recorded as revenue in the fiscal year subsequent to June 30, 1998. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were recorded in the year ended June 30, 1998. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed. BUDGET The GlascockCounty Board ofEducation's budget is a complete financial plan for the Board's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe budget at any levet The budget for all governmental funds is prepared by fund, function and object. The legal level ofbudget control was established by the Board at the fund level. The budget for governmental funds was prepared on a basis other than generally accepted . accounting principles. The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions ofthe Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department ofEducation. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end. The Statement ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual presents actual and budgeted data for the General Fund and Special Revenue Fund. To facilitate comparison with the budget, the folloWing adjustments have been made to fund balance as reflected on Exhibit "B" ofthis report: - 10- GLASCOCK COUNTY BOARD OF EDUCATION ExmBIT "0" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 1: SlTh1MARY OF SIGNIFICANT ACCOUNTING POLICIES Special Revenue Fund FUND BALANCE JULY 1, 1997 $ 64,543.84 Adjustments Inventories - July 1, 1997 Food Donated Commodities Purchased Foods -2,352.01 -614.48 Fund Balance July 1, 1997 (Budget Basis) $ 61,577.35 Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses 41.613.49 FUND BALANCE JUNE 30, 1998 (Budget Basis) $ 103,190.84 CASH AND CASH EQUIVALENTS COMPOSmON OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financial institutions. Georgia Laws authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations. INVESTMENTS COMPOSmON OF INVESTMENTS Inve~ents made by the Board in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value;' The Official Code of Georgia Annotated Section 36-83-4 authorizes the Board to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, - 11 - GLASCOCK COUNTY BOARD OF EDUCATION EXlllBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State of Georgia, Office ofTreasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions ofthe State of Georgia. RECEIVABLES Receivables consist ofgrant reimbursemeIlts due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The Glascock County Board of Commissioners fixed the property tax levy for the 1997 tax year (calendar year) on September 18, 1997 (levy date). Taxes were due on December 20,1997. The lien date for property taxes was January 1, 1997. Taxes collected within the current fiscal year or within 60 days after year-end are reportedcas revenue in fiscal year 1998. The Glascock County Tax Commissioner bills and collects the property taxes for the Board ofEducation, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance of taxes collected to the Board. The tax millage rate levied for the 1997 tax year (calendar year) for the Glascock County Board ofEducation was as follows (a mill equals $1' per thousand dollars ofassessed value): School Operations H.2.lmills SALES TAXES Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes and debt service. Special Purpose Local Option Sales Tax collected by.the State and remitted to the Board during the - 12- GLASCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES fiscal year amounted to $165,978.78 and was recorded in the Debt Service Fund. The State will terminate collection ofthis tax once an additional $834,021.22 has been collected or on June 30, 2002 whichever occurs first. INVENTORIES FOOD INVENTORIES c Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets. GENERAL OBLIGATION BONDS The Board issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the General Long-Term Debt Account Group. INTERFUND TRANSACTIONS The Board has the following types of interfund transactions: Reimbursements ofexpenditures initially made from a fund that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed. MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do ~ot present financial position or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this da~. - 13- GLASCOCK COUNTY BOARD OF EDUCATION EXIllBIT "0" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998 Note 2: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bon~ by guarantee ofinsurance, or by collateral; The aggregate ofthe face value of such surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts. Acceptable security for deposits consists of anyone of or any combination ofthe following: (1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (3) Bonds, bills, notes, certificates ofindebtedness or other direct obligations of the United States or of the State of Georgia, (4) Bonds, bills, notes, certificates ofindebtedness or other obligations ofthe counties or municipalities ofthe State of Georgia, (5) Bonds ofany public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use ofthe 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. CATEGORIZATION OF DEPOSITS At June 30, 1998, the bank balances were $378,408.86. The amounts ofthe total bank balances are classified into three categories of credit risk: Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the Board or by the Board's agent in the Board's name. - 14- GLASCOCK COUNTY BOARD OF EDUCATION EXHIBIT "0" : :NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 2: DEPOSITS AND INVESTMENTS Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Board's name. Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Board's name.) The Board's deposits are classified by risk category atJune 30, 1998, as follows: Risk Category Bank Balance 1 $ 100,000.00 2 0.00 3 278,408.86 Total $ 378.408.86 CATEGORIZATION OF INVESTMENTS At June 30, 1998, the carrying value ofthe Board's total investments was $1,681,175.25 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the Board did not own any specific identifiable securities in the pool. The investment policy ofthe State ofGeorgia, Office ofTreasury and Fiscal Services for the Local Government Investment Pool (primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows: The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. However, Georgia Fund 1 operates in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to be a 2a-7 like pool. The pool is not registered with the SEC as an investment company. The pool's primary objectives are safety ofcapital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and determines participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist offunds from local governments; operating and trust funds ofGeorgia's state agencies, colleges and universities; and current operating funds ofthe State of Georgia's General Fund. Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average - 15 - GLASCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 2: DEPOSITS AND INVESTMENTS maturity ofGeorgia Fund 1 may not exceed 60 days. Fund 6 maintains a duration ofapproximately one year. The weighted average maturity for Georgia Fund 1 on June 30, 1998 was 29 days. The average investment duration for Fund 6 on June 30, 1998 was .96 years. . Note 3: NON-MONETARY TRANSACTIONS The Board receives food commodities from the United States Department ofAgriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories Note 4: RISK MANAGEMENT The Board is exposed to various risks ofloss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; natural disaster and unemployment compensation. The Board has obtained commercial insurance for risk of loss associated with torts, assets, and errors or omissions. The Board has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any ofthe past three years. The Board has elected to self-insure for all losses related to natural disaster. The Board has not experienced any losses related to this risk in the past three years. The Board is self-insured with regard to unemployment compensation claims. The Board accounts for claims within the General Fund with exp~nditure 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: o Beginning ofYear Liability Claims and Changes in Estimates Claims Paid End ofYear Liability 1997 1998 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 15,629.00 $ 13,389.00 $ 2,240.00 The Board 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 Board 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 United States Fidelity and Guaranty Company to provide coverage for potential losses sustained by the Trust in excess of $250,000.00 loss per occurrence, up to $2,000,000.00. - 16- GLASCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 4: RISK MANAGEMENT The Board has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount Superintendent Principal $ 25,000.00 $ 5,000.00 Note 5: GENERAL LONG-TERM DEBT GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: PUlJ'ose Interest Rates Amount General Government - Series 1992 3.8%-6.0% $ 280,000.00 The changes in General Long-Term. Debt during the fiscal year ended June 30, 1998, were as follows: Balance July 1, 1997 Deductions Payments Balance June 30, 1998 General Obligation Bonds $ 330,000.00 50,000.00 $ 280,000.00 At June 30, 1998, payments due by fiscal year which includes principal and interest for these items are as follows: Fiscal Year Ended June 30 General Obligation Bonds 1999 2000 2001 2002 2003 $ 65,815.00 68,190.00 65,220.00 67,140.00 63,600.00 Total Principal and Interest $ 329;965,00 - 17 - GLASCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30,1998 Note 6: ON-BEHALF PAYMENTS The Board has recognized revenues and expenditures in the amount of $38,753.96 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies. . Georgia Department ofEducation Paid to the State Merit System ofPersonnel Administration For Health Insurance ofNon-Certified Personnel In the amount of $29,545.96 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 $9,208.00 Note 7: SIGNIFICANT COMMITMENTS At June 30, 1998, the Board had no outstanding contractual commitments for the purpose ofmaking computer systems and other electronic equipment year 2000 compliant. The year 2000 issue is the result of shortcomings in many electronic data processing systems and other equipment that make operations beyond year 1999 troublesome. The year 2000 issue is of primary concern for the Board's financial accounting as system. The following stages have been identified necessary to implement a year 2000 compliant systems. Awareness Stage - Encompasses establishing a budget and project plan for dealing with the rear 2000 issue. Assessment Stage - The actual process of identifying all of its systems and individual components of the systems to check for compliance. Replediation Stage - When changes are made to systems and equipment. . Validation/Testing Stage - The process of ensuring that the changes made to systems and equipment will produce a year 2000 compliant system. It will be necessary for the Board to progress through all four of these stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected. The Board's fmancial accounting software (GENESIS) and hardware (Wang VS) is owned by the State (Georgia Department of Education). As ofJune 30, 1998, the State had not contracted for the remediation of either the Wang VS operating system or the GENESIS accounting software. In the subsequent period, the Georgia Department ofEducation has remediated the Wang VS operating system and the updated system was installed at all GENESIS sites as ofDecember 9, 1998. The 'Georgia Department ofEducation has remediated - 18- GLASCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 7: SIGNIFICANT COMMITMENTS the GENESIS software and conducted tests at nine pilot sites. The remediated GENESIS software has been provided to all boards of education currently utilizing the GENESIS accounting software. Note 8: CONTINGENT LIABILITIES Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grant terms. The Board believes that such disallowances, if any, will be immaterial to its overall financial position. Note 9: 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. TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Board who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.81% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 1998 1997 1996 100% 100% 100% $ 185,324.98 $ 154,721.66 $ 145,640.31 - 19- GLASCOCK COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 1998 EXHIBIT "E" ASSETS cash and cash Equivalents Accounts Receivable Inventories Food Donated Commodities Purchased Food SCHOOL FOOD SERVICES FUND LOTTERY PROGRAMS FEDERAL PROGRAMS TOTALS JUNE 30,1998 JUNE 30,1997 $ 75,175,20 $ 6,912,68 $ 31,668,93 $ 113,756.81 $ 67,795,02 1,231,00 23,186.95 24,417.95 15.535,15 2,604,71 548.73 2,604,71 548,73 2,352,01 614,48 Total Assets $ 79,559,64 $ 6,912.68 $ 54,855.88 $ 141.328,20 $ 86,296.66 LIABILITIES AND FUND EQUITY LIABILITIES cash Overdraft Accounts Payable $ Salaries Payable expired Grant Balances Payable Total LIabilities $ FUND EQUITY Fund Balances Reserved For Continuation of Federal Programs For Inventories Food Donated Commodities $ Purchased Food Unreserved Undesignated Total Fund Equity $ 1,200.10 $ 6,803.68 8,003,78 $ 2,604.71 548.73 68,402,42 $ 71,555.86 $ 1.223.18 $ 5,337.00 352.50 6.912.68 $ $ 0,00 0.00 $ Total LIabilities and Fund Equity $ c' 79,559.64 $ 6,912,68 $ 1.891,28 $ 7,491.94 10,684.24 20,067.46 $ $ 4.314,56 19,632.62 11.036,74 34,983.92 $ 7,184,86 1,962,51 11,317.76 1.287.69 21,752.82 34,788.42 $ 34,788.42 0,00 34,788,42 $ 2,604.71 $ 548.73 68,402.42 106,344.28 $ 2,352.01 614.48 61,5n.35 64.543.84 54,855,88 $ 141.328.20 $ 86,296,66 See notes to the general purpose financial statements. -20- See notes to the general purpose financial statements. -21 - GLASCOCK COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30,1998 EXHIBIT"G" ASSETS Cash and Cash Equivalents Investments Accounts Receivable Total Assets REGULAR GEORGIA STATE FINANCING AND INVESTMENT COMMISSION TOTALS JUNE 30,1998 JUNE 30,1997 $ 21,249.04 $ 0.00 $ 21,249.04 $ 4,139.34 13,760.52 13,760.52 35,465.36 357.18 $ 35,009.56 $ 0.00 $ 35,009,56 $ 39,961.88 LIABILITIES AND FUND EQUITY LIABILITIES Cash Overdraft FUND EQUITY Fund Balances Reserved For State Capital Outlay Projects Unreserved Undesignated $ Total Fund Equity $ 35,009,56 $ 35,009.56 $ Total Liabilities and Fund Equity $ 35,009.56 $ $ 4,104.33 0,00 $ 0.00 $ $ 35,009,56 35,009.56 $ 27,869.42 7,988.13 35,857,55 0.00 $ 35,009.56 $ 39,961.88 See notes to the general purpose financial statements, -22- GLASCOCK COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 1998 EXHIBIT "H" REVENUES Other Funds $ EXPENDITURES Capital Outlay Building and Building Improvements $ Excess of Revenues over (under) Expenditures $ FUND BALANCE JULY 1 Residual Equity Transfer REGULAR GEORGIA STATE FINANCING AND INVESTMENT COMMISSION TOTALS YEAR ENDED JUNE 30. 1998 JUNE 30.1997 42.879,00 $ 0,00 $ 42.879,00 $ 4.357.37 43.726,99 $ -847.99 $ 7,988.13 27.869.42 0,00 $ 0.00 $ 27,869,42 -27.869.42 43.726.99 $ -847.99 $ 35,857.55 0.00 12.599.25 -8.241.88 44,099.43 FUND BALANCE JUNE 30 $ 35.009,56 $ 0,00 $ 35,009,56 $ 3.5.8;;,;5..7..,;;;;,5-.5 See notes to the general purpose financial statements. -23- GLASCOCK COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET DEBT SERVICE FUND JUNE 30,1998 EXHIBIT "I" ASSETS Cash and Cash Equivalents Investments Accounts Receivable PROPERTY TAXES FOR BOND DEBT SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS JUNE 30. 1998 JUNE 30, 1997 $ 201.32 $ 201.32 $ 9,387,67 44,887.53 $ 124,396,82_ 169,284.35 92,965,80 435,11 41.581,96 42.017.07 1.290.05 Total Assets $ 45,523.96 $ 165.978,78 $ 211.502.74 $ =======1:=03:::1::,64===:;3,=52= FUND EQUITY Fund Balances Reserved For Debt Service $ Unreserved Undesignated 45,523.96 $ 0,00 165,978,78 $ 0.00 211,502.74 $ 0.00 103,643.52 0,00 Total Fund EqUity $ 45.523,96 $ 165,978,78 $ 211.502,74 $ =======1:=03:::1::.64===:;3,=52= See notes to the general purpose financial statements, -24- GLASCOCK COUNJY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES DEBT SERVICE FUND YEAR ENDED JUNE 30, 1998 EXHIBIT"J" REVENUES Taxes Other Funds Total Revenues EXPENDITURES Debt Service Principal Interest Paying Agent Fees Total Expenditures Excess of Revenues over (under) Expenditures FUND BALANCE JULY 1 PROPERTY TAXES FOR BOND DEBT SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS YEAR ENDED JUNE 30, 1998 JUNE 30,1997 $ 5,579.45 $ 165,978.78 $ 171,558,23 $ 96,252.61 5,734.47 5,734.47 4,363.72 $ 11,313.92 $ 165.978.78 $ 1n.292.70 $ 100,616.33 $ 50,000.00 $ 18,390.00 1.043.48 0.00 $ 50,000.00 $ 18,390,00 1,043.48 $ 69,433.48 $ 0.00 $ 69,433.48 $ $ -58,119.56 $ 165,978.78 $ 107,859.22 $ 103,643.52 0.00 103,643.52 45,000.00 20,595.00 1,047.44 66.642.44 33,973.89 69.669.63 FUND BALANCE JUNE 30 $ 45,523.96 $ 165,978.78 $ 211,502,74 $ 103,643.52 See notes to the general purpose financial statements. -25- GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 1998 SCHEDULE "1" Total Federal Financial Assistance = N/A Not Available $ 525.817.61 $ 56;,;0io!O.7.0;,;;,3.;;;;;.2.4.. -26- GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 3D. 1998 SCHEDULE "1" Notes to the Schedule of Expenditures of Federal Awards (1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year. (2) Expenditures for the School Breakfast Program were not maintained separately and are included in the 1998 National School Lunch Program. (3) Expenditures for this program include State. and/or Other Funds. Expenditures are not maintained by fund source. Major Programsare identified by an asterisk (*) in front of the CFDA number. The Board did not provide Federal Assistance to any SUbrecipienl The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Glascock County Board of Education and is presented on the modified accrual basis of accounting which is the same basis of accounting used in the presentation of the general purpose financial statements. See notes to the general purpose financial statements. -27 - GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 1998 SCHEDULE "2" AGENCYIFUNDING GOVERNMENTAL FUND TYPES SPECIAL GENERAL REVENUE FUND FUND GRANTS Education, Georgia Department of Quality Basic Education General and Career Education Programs $ Special Education Programs Remedial Education Program Media Center Programs Staff Development Programs Indirect Cost Pupil Transportation Regular Bus Replacement Special Instructional Assistance In-School Suspension Mid-term Adjustment Counselors Grades 4 and 5 Technology Training Local Fair Share Educational Equalization Funding Grant Food Services Other State Programs Ad Valorem Tax Adjustment At-Risk Summer School Program Health Insurance Mentor Teacher Program Preschool Handicapped Program Remedial Summer School Program Special Education Low Incidence Grant Lottery Programs Instructional Technology Classroom Technology 997,590.00 217,516.00 21,470.00 41,223.00 13,624.00 335,450.00 109,307.00 27,159.00 57,927.00 39,707.00 8,318.00 3,735.00 28,842.00 -205,992.00 95,965.00 $ 12,119.00 1,844.77 29,545.96 564.00 1,373.29 385.00 $ 14,594.00 12,127.00 53,000.00 Office of School Readiness Pre-Kindergarten Program 63,847.49 Office of Treasury and Fiscal Services Public School Employees Retirement 9,208.00 TOTAL 997,590.00 217,516.00 21,470.00 41,223.00 13,624.00 335,450.00 109,307.00 27,159.00 57,927.00 39,707.00 8,318.00 3,735.00 28,842.00 -205,992.00 95,965.00 14,594.00 12,119.00 1,844.77 29,545.96 564.00 12,127.00 ,1,373.29 385.00 53,000.00 63,847.49 9.208.00 $ 1,846,881.02 $ 143,568.49 $ 1,990,449.51 See notes to the general purpose financial statements. - 28- GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 1998 SCHEDULE "3" PROJECT Construction of additional classrooms, instructional and support space at Glascock Consolidated School, as well as remodeling and renovating ~xisting classrooms, recreational fields, and grounds and to provide furnishings, equipment and fixtures for such areas Payments of principal and interest due on 1992 bonds ORIGINAL ESTIMATED COST (1) CURRENT ESTIMATED COST (2) AMOUNT EXPENDED IN CURRENT YEAR (3) AMOUNT EXPENDED IN PRIOR YEARS $ 695,000.00 $ 695,000.00 $ 0.00 $ 0.00 305,000.00 305,000.00 69,433.48 0.00 $ 1,000,000,00 $ 1,000,000.00 $ 69,433.48 $ ......._ .....0.;0,;;.0.0.. (1) The Board's original cost estimate as specified in the resolution calling for imposition ofthe Local Option Sales Tax. (2) The Board's current estimate of total cost for each project. Includes all cost from project inception to completion. (3) The voters of Glascock County approved the imposition of a 1% sales tax to fund the above projects. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project. See notes to the general purpose financial statements. -29 - GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS YEAR ENDED JUNE 30. 1998 SCHEDULE "4" EXPENDITURES Current Instruction Support Services Improvement of Instructional Services Student Transportation Services INSTRUCTIONAL TECHNOLOGY CLASSROOM TECHNOLOGY PRE-KINDERGARTEN PROGRAM $ 53,000.00 $ 63,753.60 $ 36.00 57.89 TOTAL 116,753.60 36.00 57.89 Total Expenditures $ 53,000.00 $ 63,847.49 $ _ _1:=1=6,=84=7::::;.4:=9 RECAP: Salaries and Benefits Pre-Kindergarten Program Other Expenditures Instructional Technology Classroom Technology Pre-Kindergarten Program $ 39,197.70 53,000.00 24,649.79 $ 116,847.49 See notes to the general purpose financial statements. - 30- GLASCOCK COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 1998 SCHEDULE "5" Minimum Expenditure Requirements (Total Allotment) Expenditures on Combined Program Basis Salaries Operations Less: Expenditures for Media Center Programs in Excess of Total Media Allotment Expenditures per Audit Amount of Underexpenditure for Total Allotment FOURTEEN WEIGHTED AND MEDIA CENTER PROGRAMS 100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS $ 1,286,117,00 $ _ _---=4,.::JO,i.::;63:;:2:.:.::,0:.::.,0 $ 1,311,458,52 66,669,38 $ _ _--=5:::J8!~42==8:.:.:,9:.::.,6 $ 1,378,127.90 -15,331,78 $ 1,362,796.12 $ 0.00 $=====0=.0=0 See notes to the general purpose financial statements, - 31 - GLASCOCK COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - BY PROGRAM GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 1998 GENERAL AND CAREER EDUCATION PROGRAMS Kindergarten (") Grades 1 - 3 (") Sub-Total- K-3 Grades 4 - 5 (") Grades 6 - 8 (*) Grades 9 - 12 (") High School Laboratories (*) Vocational Education Laboratories (") Total General and Career Education Programs SPECIAL EDUCATION PROGRAMS Regular Programs Category I (") Category II (*) Category III (") Category IV (*) Total Special Education Programs REMEDIAL EDUCATION PROGRAM r> Total Fourteen Weighted Programs MEDIA CENTER PROGRAMS Salaries Operations Total Media Center Programs ALLOTMENTS FROM DEPARTMENT OF EDUCATION REQUIRED ORIGINAL -:L ORIGINAL MID-TERM $ 81,055.00 $ 72,949.50 $ 286,907.00 258,216,30 $ 367,962.00 90 $ 331,165.80 $ 111,463,00 90 100,316.70 234,301.00 90 210,870.90 129,666.00 90 116,699.40 53,082.00 90 47,773.80 101,116.00 90 91,004,40 $ 997,590,00 $ 897,831.00 $ 4,159.00 4,159.00 4,159.00 8,318.00 $ 217,516.00 $ 195,764,40 $ 0.00 $ 217,516.00 90 $ 195,764,40 $ $ 21,470.00 90 $ 19,323,00 $ $ 1,236,576,00 $ 1,112,918.40 $ 0,00 0.00 8,318.00 $ 33,197.00 90 $ 29,877.30 $ 0.00 8,026.00 90 7,223,40 $ 41,223.00 $ 37,100.70 $ 0,00 Total Fourteen Weighted and Media Center Programs $ 1,277,799.00 $ 1,150,019.10 $===.8=,=31=:8=.0=0 STAFF DEVELOPMENT PROGRAMS Cost of Instruction Professional Development $ 3,950,00 $. 3,950.00 $ 0.00 9,674.00 9,674,00 0.00 Total Staff Development Programs (") Identifies Fourteen Weighted Programs. See notes to the general purpose financial statements, $ 13,624.00 100 $ 13,624.00 $======0=.00= - 32 - SCHEDULE "6" TOTAL REQUIRED ACTUAL EXPENDITURES SALARIES OPERATIONS TOTAL AMOUNT OF UNDEREXPENDITURE FOR REQUIRED ALLOTMENT $ n,108.50 $ 84,710.87 $ 1,708.66 $ 86,419.53 258,216.30 249,925.38 7,990.67 257,916.05 $ 335,324.80 $ 334,636.25 $ 9,699.33 $ 344,335.58 $ 0.00 104,475.70 162,509.61 2,879.40 165,389.01 0.00 210,870.90 249,733.29 5,285.75 255,019.04 0.00 116,699.40 132,119.87 1,820.52 133,940.39 0.00 47,n3.80 56,763.09 765.13 57,528.22 0.00 91,004.40 117,506.69 12,040.72 129,547.41 0.00 $ 906,149.00 $ 1,053,268.80 $ 32,490.85 $ 1,085,759.65 $ 195,764.40 $ 6,965.94 $ 43,700.18 115,377.31 7,277.90 -54.52 $ 440.63 6,633.63 18,918.37 6,911.42 44,140.81 122,010.94 26,196.27 $ 195,764.40 $ 173,321.33 $ 25,938.11 $ 199,259.44 0.00 $ 19,323.00 $ 36,554.03 $ 0.00 $ 36,554.03 0.00 $ 1,121,236.40 $ 1,263,144.16 $ 58,428.96 $ 1,321,573.12 $ 29,877.30 $ 48,314.36 $ 48,314.36 0.00 7,223.40 $ _ _~8'i=.24.;.;:0;.;.;.4:=-2 8,240.42 0.00 $ 37,100.70 $ 48,314.36 $ 8,240.42 $ _ _".;;5.;;"l6,.::.;554:.:.;.;,.7.=.8 $ 1,158,337.10 $ 1,311,458.52 $ 66,669.38 $ 1,378,127.90 $======0=.0=0 $ 3,950.00 9,674.00 $====13=,6=:2=4=:.0::0 $ 13,991.07 $ 13,991.07 4,648.97 4,648.97 $ 18,640.04 $ 18,640.04 $==============0=.00= - 33 - SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS CLAUDE L. VICKERS STATE AUDIlOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400 March 30,1999 Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofEducation and Superintendent and Members ofthe Glascock County Board ofEducation 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 Glascock County Board ofEducation as ofand for the year ended June 30, 1998, and have issued our report thereon dated March 30, 1999. This report was qualified for a scope limitation and for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller Gene~al of the United States. We were unable to examine sufficient audit evidence regarding year 2000 disclosures as required' by Governmental Accounting Standards Board Technical Bulletin 98-1, Disclosures About Year 2000 Issues. This bulletin requires disclosure' of certain matters regarding the year 2000 issue in order for financial statements to be prepared in conformity with generally accepted accounting principles. Compliance As part of obtaining reasonable assurance about whether Glascock County Board of Education's financial statements are :free ofmaterial misstatement, we performed tests ofits compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. . 98YB-40 Internal Control Over Financial Reporting In planning and performing our audit, we considered Glascock County Board ofEducation'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 control over financial reporting. However, we noted certain matters involving the internal control over fmancial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in our judgement, could adversely affect Glascock County Board of Education's ability to record, process, summarize and report financial data consistent with assertions ofmanagement in the financial statements. Reportable conditions are described in the accompanying Schedule of Findings and Questioned Costs as items FS-6621-98-01 and FS-6621-98-02. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, all ofthe reportable conditions noted above are also considered to be material weaknesses. This report is intended for the information ofmanagement, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended tolimit the distribution ofthis report which is a matter ofpublic record. Respectfully submitted, ~ Claude L. Vickers State Auditor CLV:jb 98YB-40 CLAUDE L. VICKERS STATE AUDllOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400 March 30, 1999 Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board of Education and Superintendent and Members ofthe Glascock County Board ofEducation REPORT ON COMPLIANCE WITH REQillREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULARA-133 Ladies and Gentlemen: Compliance We have audited the compliance of Glascock County Board of Education with the types of compliance requirements described in the u.s. Office ofManagement and Budget (OME) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1998. Glascock County Board ofEducation's major Federal programs are identified in 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 Glascock County Board of Education's management. Our responsibility is to express an opinion on Glascock County Board of Education's compliance based on our audit. We conducted our audit of compliance in accordance with generally accepted auditing standards; 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 ofStates, Local Governments, 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 Glascock 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 Glascock County Board ofEducation's compliance with those requirem~ts. . 98SA-30 In our opinion, the Glascock 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, 1998. Internal Control Over Compliance The management of Glascock 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 Glascock 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 QMB Circular A-133. We noted a certain matter involving the internal control over compliance and its operation thatwe consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over compliance that, in our judgement, could adversely affect Glascock County Board ofEducation's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. The reportable condition is described in the accompanying Schedule ofFindings and Questioned Costs as item FA-6621-98- 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 toa relatively low level ofrisk that noncompliance with applicable requirements oflaws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe that the reportable condition noted above is not a material weakness. This report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended to limit the distribution ofthis report which is a matter of public record. Respectfully submitted, ~~- Claude L. Vickers State Auditor CLV:jb 98SA-30 SECTION ill AUDITEE'S RESPONSE TO PRIOR YEAR FlNDINGS AND QUESTIONED COSTS GLASCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIQNED COSTS YEAR ENDED JUNE 30, 1998 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS 6621-93-01 6621-93-02 6621-96-01 6621-97-01 Umesolved - See Corrective Action/Responses Umesolved - See Corrective Action/Responses Umesolved - See Corrective Action/Responses Umesolved - See Corrective Action/Responses CORRECTIVE ACTIONIRESPONSES CASH AND CASH EQUIVALENTS Inadequate Separation ofDuties Finding Control Number: 6621-93-01 This finding will remain umesolved because it is not financially feasible for this school system to hire enough staffto maintain separation of duties. GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: 6621-93-02 This finding will remain umesolved because it is not financially feasible for this small school system to maintain General Fixed Assets Account Group. EXPENDITURESILIABILITIESIDISBURSEMENTS Failure to Meet Expenditure Requirements Amount: $6,872.78 Finding Control Number: 6621-96-01 This finding will be resolved during a future fiscal year when the system's Local Fair Share is increased to reflect the underexpenditure. EXPENDITURESILIABILITIESIDISBURSEMENTS Failure to Meet Expenditure Requirements Amount: $3,664.73 . Finding Control Number: 6621-97.;01 This rmding will be resolved during a future fiscal year when the system's Local Fair Share is increased to reflect the underexpenditure. SECTION IV FINDINGS AND QUESTIONED COSTS GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the Glascock County Board ofEducation's financial statements was qualified for a scope limitation and for various departures from generally accepted accounting principles. 2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Glascock County Board ofEducation disclosed financial statement reportable conditions related to the following control categories. Cash and Cash Equivalents Revenues/Receivables/Receipts General Ledger General Fixed Assets All of the reportable conditions described above are considered to be material weaknesses. 3. Noncompliance Material to the Financial Statements The audit ofthe Glascock 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 Glascock County Board of Education disclosed reportable conditions in internal control over major programs for the following compliance requirements. Cash Management Reporting Equipment and Real Property Management None of the reportable conditions described above are considered to be material weaknesses. 5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on'the Glascock County Board of Education's report on compliance with requirements applicable to major programs was unqualified. 6. Audit Findings Reguired to be Reported by Section .510(a) ofOMB Circular A-133 The Glascock County Board of Education's audit disclosed audit findings required to be reported by section .51O(a) of OMB Circular A-133. These audit findings are included in section IV of this report. 7. Major Programs Federal awards audited as major programs are as follows: . 10.553 Food and Nutrition Program - Food Services - School Bre8kfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program 84.276 Goals 2000 - State and Local Education Systemic Improvement Grant - 1- GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,. 1998 I .SUMMARY OF AUDITOR'S RESULTS 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00. 9. Low Risk Auditee The Glascock County Board ofEducation did not qualify as a low risk auditee as defined by Section .530 ofOMB Circular A-133. II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUIVALENTS REVENUESIRECEIVABLESIRECEIPTS GENERAL LEDGER Inadequate Internal Control Procedures Reportable Condition - Material Weakness Repeated from Prior Year Finding Control Number: FS-6621-98-01 A review ofthe Board's internal control policies and procedures noted deficiencies in providing for adequate internal control over the control categories as noted below: CASH AND CASH EQUIVALENTS The bank reconciliation function is not separated from the record keeping, check preparation and deposit functions. . . A petty cash fund was found to be in existence at the Board for postage. The petty cash fund did not appear on the accounting records nor was a periodic reconciliation performed for this fund. REVENUESIRECEIVABLESIRECEIPTS Thecash receipts function for the School Food Services Fund is not separated from the deposit function and lor record keeping function. GENERAL LEDGER Journal entries were not consistently supported by adequate documentation and descriptions. Journal entries were not reviewed and approved by someone independent ofthe general ledger function. These conditions were a result of management's decision to limit the number of administrative staff made responsible for accounting functions and their failure to institute proper internal controls over these areas. The Board should review the accounting procedures in place, design procedures which would enhance segregation ofduties and proper internal controls relative to the. above control categories and implement those .procedures to strengthen the internal control over the accounting functions. -2- GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 1998 IT FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated from Prior Year Finding Control Number: FS-6621-98-02 The Glascock County Board of Education did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general purpose financial statements of the Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be takenby the Board to establish accounting controls and procedures to provide for the maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings, and equipment owned by the Board and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. ill FEDERAL AWARD FINDINGS AND OUESTIONED COSTS CASH MANAGEMENT EQUIPMENT-AND REAL PROPERTY MANAGEMENT REPORTING Inadequate Internal Control Procedures Reportable Condition U. S. Department of Education Through Georgia Department ofEducation Finding Control Number: FA-6621-98-01 A review ofthe Board's internal control policies and procedures noted deficiencies in providing for adequate internal control over the Goals 2000 - State and Local Education Systemic Improvement Grant (CFDA 84.276) for the following compliance requirements: CASH MANAGEMENT Review of cash management procedures for the Goals 2000 - State and Local Education Systemic Improvement Grant (CFDA 84.276) disclosed that cash draws utilizing DE form 0147, "Quarterly Report ofExpenditures and Estimated Requirement for Grant Funds", were made in advance of immediate cash needs, resulting in the accumulation of excessive cash balances. EQUIPMENT AND REAL PROPERTY MANAGEMENT The property management records for the Goals 2000 - State and Local Education Systemic Improvement Grant (CFDA 84.276) were incomplete and failed to meet applicable property management standards as -3- GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1998 ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CASH MANAGEMENT EQUIPMENT AND REAL PRQPERTY MANAGEMENT REPORTING Inadequate Internal Control Procedures Reportable Condition U. S. Department of Education Through Georgia Department ofEducation Finding Control Number: FA-6621-98-01 set forth in Chapter 41, of the Financial Management for Georgia Local Units of Administration (FMGLUA). A review of the inventory records presented for examination revealed the records did not include acquisition dates, condition of equipment or proper funding source. REPORTING A comparison of the completion report for the Goals 2000 - State and Local Education Systemic Improvement Grant (CFDA 84.276) to the accounting records revealed that the project completion report was not supported by total expenditures recorded for this program in the accounting records. The instructions provided by the Georgia Department ofEducation mandate that financial management systems provide for aCcurate, complete and current disclosure of the financial results of each grant program. These conditions were a result of management's failure to implement internal controls for monitoring compliance with federal guidelines. The Board should review the federal compliance procedures in place, design procedures which would enhance monitoring compliance with federal guidelines and proper internal controls relative to the above federal compliance requirements and implement those procedures to strengthen the internal control over federal programs. -4-