Glascock County Board of Education, Gibson, Georgia, report on audit for the financial statements for the fiscal year ended June 30, 2006

GLASCOCK COUNTY BOARD OF EDUCATION GIBSON, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

GLASCOCK 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

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

9

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

10

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

21

GLASCOCK COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

22

3 SCHEDULE OF STATE REVENUE

23

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

24

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

25

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
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

GLASCOCK COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
May 24, 2007

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members of the Glascock 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) ofthe Glascock County Board of Education, as of and for the year ended June 30, 2006, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Glascock 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 financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Glascock County Board of Education, as of June 30, 2006, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
2006ARL-11

In accordance with Government Auditing Standards, we have also issued our report dated May 24, 2007, on our consideration of the Glascock County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing 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 vii and page 21, respectively, are not a required part ofthe 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 Glascock 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.
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,
~~m~.c~ State Auditor
RWH:as 2006ARL-11

GLASCOCK COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006
The discussion and analysis of the Glascock County Board of Education's financial performance provides an overall review of the Board's financial activities for the fiscal year ended June 30, 2006. 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 fiscal year 2006 are as follows:
In total, net assets increased $397,314, which represents an increase of 10.99 percent over fiscal year 2005 net assets. All of this increase is for governmental activities. The Board has no business-type activities.
General revenues accounted for $1.50 million. This represents 30.38 percent of all revenues. Program specific revenues in the form of grants and contributions and charges for services accounted for $3.43 million or 69.62 percent of total revenues.
The Board had $4.53 million in expenses related to governmental activities. Program specific grants and contributions and charges for services offset $3 .43 million of these expenses. General revenues, primarily property taxes and sales taxes, of $1.50 million were adequate to provide for other expenses for these programs.
Among major funds, the general fund had $4.82 million in revenues and other financing sources and $4.49 million in expenditures for an increase in general fund balance of $0.33 million.
Using the Basic Financial Statements
This annual report consists of a series of financial statements, the District-wide, and fund statements.
The District-wide financial statements, the Statement of Net Assets, and the Statement of Activities are designed to illustrate the School District as an aggregate of its financial activities and present a longer-term view of its finances.
The next level of detail is provided by the fund financial statements. These statements reflect the short-term finances as well as the balances available for future needs. For the Glascock County Board of Education, the General Fund and Capital Project Funds are the most significant funds.
- I-

GLASCOCK COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006
REPORTING THE BOARD AS A WHOLE
The Statement ofNet Assets and Statement ofActivities
While these documents contain the large number of funds used by the Board to provide programs and activities, the view of the Board as a whole looks at all financial transactions and determines how we concluded fiscal year 2006. The Statement of Net Assets and the Statement of Activities provide this information. These statements include all assets and liabilities using the accrual basis of accounting. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the Board's net assets and changes in those assets. This change in net assets is important because it tells the reader whether, for the Board as a whole, the financial position of the Board has improved or diminished. The causes of this change may be the result of many factors, some financial, some not. Reductions or increases in state or local funding, change in property tax base, additional requirements in educational programs, and facility conditions are just a few of the causes for such change.
The Statement ofNet Assets and the Statement of Activities is normally divided into two distinct types of activities, governmental and business type activities. All of the Board's activities are reflected as governmental activities. This includes instruction, pupil services, improvement of instructional services, educational media services, general administration, school administration, business administration, maintenance and operation of plant, student transportation services, other support services, school food services, and various others.
Reporting the Board's Most Significant Funds (Fund Financials)
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, the fund financial statements focus on the Board's most significant funds. The Board's major governmental funds are the general fund and the 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 of those funds and the balances left at year-end available for future spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and 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 you determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship between governmental activities and governmental funds is reconciled in the financial statements.
Fiduciary Funds - The Board is the trustee, or fiduciary, for assets that belong to others, such as the school clubs and organizations with the principals' accounts as well as the Public Library
- 11 -

GLASCOCK COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006

and Family Connections accounts. The Board is responsible for ensuring that the assets reported in these funds are used only for their intended purposes, and used 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 Statement of Net Assets provides the perspective of the Board as a whole. Table 1 provides a summary of the Board's net assets for fiscal year 2006 compared to fiscal year 2005.

Table 1 Net Assets

Governmental Activities

Fiscal

Fiscal

Year 2006

Year 2005

Assets Current and Other Assets Capital Assets, Net

$ 2,140,518 2,311,053

$ 1,717,295 2,326,547

Total Assets

$ 4,451,571 $ 4,043,842

Liabilities Current and Other Liabilities

$ 440,102 $ 429,687

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

$ 2,311,053 186,162
1,514,254

$ 2,326,547 148,854
1,138,754

Total Net Assets

$ 4.011,469 $ 3,614,155

Total net assets increased $397,314 in fiscal year 2006.

Table 2 shows the changes in net assets for fiscal year 2006 compared to the changes in net assets for fiscal year 2005.

- iii -

GLASCOCK COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006

Table 2 Change in Net Assets

Revenues Program Revenues: Charges for Services Operating Grants and Contributions Capital Grants and Contributions

Governmental Activities

Fiscal

Fiscal

Year 2006

Year 2005

$ 145,787 3,263,319 212979

$ 158,841 2,992,604 232041

Total Program Revenues

$ 3A312085 $ 32174A86

General Revenues:

Taxes

Property Taxes

$

Sales Taxes

Grants and Contributions not Restricted to

Specific Programs

Investment Earnings

Miscellaneous

900,681 $ 193,181
301,787 58,421 422904

886,341 148,064
206,308 25,459 322026

Total General Revenues

$ IA962974 $ 122982198

Total Revenues

$ 429282059 $ 4A722684

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 ofNon-Instructional Services Enterprise Operations Food Services

$ 2,676,314
256,597 146,917 61,606 227,787 151,334 92,294 367,343 179,442
2,484 46,034
24,221 2982372

$ 2,658,080
239,829 54,458 57,888
298,618 131,823 59,683 362,199 168,270
2,105 56,933
2822199

Total Expenses

$ 425302745 $ 43722085

Increase in Net Assets

$ 397.314 $ 100.599

Governmental Activities

The Board is dependent upon operating grants and property taxes to support governmental activities. Instruction comprises 59.07 percent, Support Service 33.81 percent, Enterprise Operations 0.53 percent, and Food Service 6.59 percent of governmental program expenses.

- IV -

GLASCOCK COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006

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 of services and the net cost of services for fiscal year 2006 as compared to fiscal year 2005. It identifies the cost of these services supported by tax revenue and unrestricted State entitlements.

Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year2006 Year 2005

Net Cost of Services

Fiscal

Fiscal

Year2006 Year 2005

Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services

$ 2,676,314$ 2,658,080 $ 559,860 $ 663,765

256,597 146,917 61,606 227,787 151,334 92,294 367,343 179,442
2,484 46,034

239,829 54,458 57,888
298,618 131,823 59,683 362,199 168,270
2,105 56,933

86,693 46,483 11,559 -3,551 32,452 92,294 209,930 19,837
2,484 27,088

78,905 -1,805 8,156 76,081 22,922 59,683 213,186 12,756 2,105 56,933

24,221 298,372

282,199

-149 14,680

4 912

Total Expenses

$ 4,530,745 $ 4,372,085 $ 1,022,660 $ 1,197,599

Although program revenues make up a majority of the total revenues, the Board remains dependent upon tax revenue for governmental activities. Over 20.92 percent of instruction activities are supported through taxes, interest and other general revenues; for all governmental activities, general revenue support is 24.27 percent for fiscal year 2006.

The Board's Funds

Highlights in Governmental Funds

Governmental funds include both the general fund and the District-wide capital project fund. Total revenues in governmental funds were $4.93 million while total expenditures in governmental funds were $4.52 million leaving excess in revenue of $0.41 million over expenditures. When added to the beginning fund balance of $1.29 million, the excess in revenue increases the ending fund balance to $1.70 million. This positive change in fund balance of governmental funds indicates that the Board was able to meet current costs from current revenues.

Transfers in and out of $0.09 million from capital project fund to general fund were due to repayment of capital project expenditures.

-v-

GLASCOCK COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006

Highlights in General Fund Budgeting

The Board's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund.

During fiscal year 2006, the Board amended its general fund budget as needed. The Board uses function-based budgeting, which is designed to tightly control total function budgets while providing flexibility for site management.

Total revenues in the General Fund for fiscal year 2006 were $4.73 million while total expenditures were $4.49 million leaving an excess of revenue over expenditures in the general fund of $0.24 million. A transfer from capital projects to general fund of $0.09 million increased the fund balance additionally. When added to the beginning year fund balance, the net increase of $0.33 million placed our ending year general fund balance at $1.54 million. This positive change in fund balance once again indicates that the Board was able to meet current costs from current revenues.

Capital Assets

At the end of fiscal year 2006, the Board had $2.31 million invested in capital assets. Table 4, shown below, indicates balances as of June 30, 2006.

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2006

Year 2005

Land Buildings Equipment

$

79,058

1,813,264

418.731

$

79,058

1,827,742

419 747

Total

$ 2.311,053 $ 2,326,547

Debt The Board has no Long-Term Debt outstanding.

Current Issues
The additional revenue received in fiscal year 2006 through program funds such as Title I Distinguished District and Title 11-D, as well as an increase in interest on investments and midterm allotment funding assisted the Board in having a fiscally sound year.
The Board remains optimistic of financial security for fiscal year 2007.

- vi -

GLASCOCK COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 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 reflect the Board's accountability for the money it receives. If you have questions about this report or need additional information, please contact Mary Griswell, Financial Director at the Glascock County Board of Education, 738 Railroad Avenue, Gibson, Georgia 30810.
-vu -

GLASCOCK COUNTY BOARD OF EDUCATION

GLASCOCK COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2006
ASSETS Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES Salaries Payable Deposits and Deferred Revenues
Total Liabilities NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

1,800,340

43,915 292,612
381 400 2,870

79,058 2,082,990
857,005 -708,000

$ ======='4=45=1=5=71;,,.

$

435,117

4985

$

440 102

$

2,311,053

22,850 163,312 1,514,254

$

4 011 469

$ ======4==4=5=1=5.7.1...,.

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

GLASCOCK COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2006

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$

2,676,314

256,597 146,917
61,606 227,787 151,334
92,294 367,343 179,442
2,484 46,034 $

24,221 298,372

$

4 530 745 $

18,946
24,370 102 471
145 787

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

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

2,116,454

169,904 100,434 50,047 231,338 118,882

157,413 137,626 $

181 221

$

3,263,319 $

$ 21,979 21 979 $

-559,860
-86,693 -46,483 -11,559
3,551 -32,452 -92,294 -209,930 -19,837
-2,484 -27,088
149 -14 680
-1,099,660

$

900,681

193,181 301,787
58,421 42 904

$

1496974

$

397,314

3 614 155

$===4=0=1=1=4=69=

-3-

GLASCOCK COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2006

EXHIBIT"C"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$ 1,668,063 $
14,083 292,612
381 400 2 870

132,277 $ 31,035

1,800,340
45,118 292,612
381 400 2870

$ 1,978,409 $

163,312 $ =====2=,1=4==1'=72=1=

$

435,117

4985

$

440,102

$

435,117

4985

$

440102

$

19,980

2,870

$

1,515,457 $ 1,538,307 $

$ 163,312
163,312 $

19,.980 2,870
163,312
1,515,457
1 701 619

$ 1,978,409 $

163,312 $ =====2=1=4=1=72=1=

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

GLASCOCK COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2006

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 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.

$

$

79,058

2,082,990

857,005

-708,000

1,701,619
2,311,053 -1 203

Net Assets of Governmental Activities (Exhibit "A")

$ =====4,..01=1==4=6=9

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

GLASCOCK COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2006

EXHIBIT"E"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$

898,792

$

2,928,396

658,689

145,787

54,582

42 904

$ 4,729,150 $

$ 193,181
3,839 197,020 $

898,792 193,181 2,928,396 658,689 145,787 58,421 42 904
4,926,170

$ 2,581,316

256,597 146,917 60,905 227,787 151,334 92,294 366,582 238,757
2,484 46,034 24,221 292,781
$

$ 4,488,009 $

$

241 141 $

$
27,242 27,242 $ 169,778 $

2,581,316
256,597 146,917 60,905 227,787 151,334 92,294 366,582 238,757
2,484 46,034 24,221 292,781 27,242
4,515,251
410 919

$

90,000

$

$

90 000 $

$

331,141 $

1,207,166

$ -90,000
-90,000 $ 79,778 $ 83 534

90,000 -90 000
0 410,919
1,290,700

$ 1,538,307 $ 163,312 $=====11,=70=1=,6=19=

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

GLASCOCK 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, 2006

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
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.
Change in Net Assets of Governmental Activities (Exhibit "B")

$

410,919

$

76,792

-92,286

-15,494 1889

$====3,..97..,,,3..1....,4

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

(This page left intentionally blank)

GLASCOCK COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS
JUNE 30, 2006
ASSETS Accounts Receivable, Net
Other
LIABILITIES Cash Overdraft Funds Held for Others
Total Liabilities

EXHIBIT"G"

AGENCY FUNDS
$ ===54='=63=5=

$

3,339

51,296

$ ===54='=63..,5=

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

GLASCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Glascock County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Glascock 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 ofActivities 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 ofgoods 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.

- 10-

GLASCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

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 Special Purpose Local Option Sales Tax (SPLOST) 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 ofwhen 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. Capital asset acquisitions are reported as expenditures in governmental funds.

- 11 -

GLASCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The School District funds certain programs by a combination ofspecific 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.

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 School District 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 Glascock County Board of Commissioners fixed the property tax levy for the 2005 tax digest year (calendar year) on July 28, 2005 (levy date). Taxes were due on December 20, 2005 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2005 tax digest are reported as revenue in the governmental funds for fiscal year 2006. The Glascock County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes 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, 2006, for maintenance and operations amounted to $898,792.

The tax millage rate levied for the 2005 tax year (calendar year) for the Glascock County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

15.21 mills

- 12 -

GLASCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

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 $193,181 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 of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value ofassets 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 Buildings and Improvements Equipment

All

NIA

All

20 to 90 years

$

5,000 1 to 16 years

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

- 13 -

GLASCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

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 of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. 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.
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, 2006, the bank balances were $533,218. The amounts of the total bank balances are classified into four categories of custodial credit risk:

- 14 -

GLASCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"H"

Note 3: DEPOSITS

Category 1 - Cash that is insured (e.g., Federal Deposit 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 - Cash collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.
Category 4 - Uncollateralized.

The School District's deposits are classified by custodial credit risk category at June 30, 2006, as follows:

Custodial Credit Risk Category

Bank Balance

1

$ 100,000

2

433,218

3

0

4

0

Total

$====5-33-,2=1==8

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

Note 5: CAPITAL ASSETS

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

- 15 -

GLASCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"H"

Note 5:. CAPITAL ASSETS

Balances July l, 2005

Increases

Decreases

Balances June 30. 2006

Governmental Activities

Capital Assets, Not Being Depreciated:

Land

$

79,058 $

0 $

0 $

79,058

Capital Assets Being Depreciated Buildings and Improvements Equipment

$ 2,065,622 $ 797,581

17,368 $ 59,424

0 $ 2,082,990 857,005

Less Accumulated Depreciation for: Buildings and Improvements Equipment

237,880 377.834

31,846 60,440

269,726 438,274

Total Capital Assets, Being Depreciated, Net $ 2,247,489 $

-15 494 $

0 $ 2,231,995

Governmental Activity Capital Assets - Net $ 2,326,541 $

-15 494 $

Q $ 2,311,053

Current year depreciation expense by function is as follows:

Instruction Support Services
Educational Media Services Maintenance and Operation of Plant Student Transportation Services Food Services

$

86,756

$

541

588

84

1,213 4 317

$===92-,2=8-6

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) is reported as restricted assets in the Statement of Net Assets because its use is limited by applicable statutory provisions. Restricted assets at June 30, 2006, were as follows:

District-wide Capital Projects SPLOST

Restricted Cash and Cash Equivalents: Capital Acquisitions

$ 132,277

- 16 -

GLASCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"H"

Note 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2006, consisted of the following:

Transfer to

Transfers From District-wide Capital Projects

General Fund

$.=="6i90~,o~o~o

Transfers are used for the repayment of local funds used to pay for SPLOST expenditures prior to having enough SPLOST revenues to pay for the SPLOST project. Transfers of $45,000, $120,000 and $90,000 during fiscal years 2004, 2005 and 2006, respectively, complete the repayment of $255,000 in local funds transferred from the General Fund in fiscal year 2003.

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

The School District has elected to self-insure for all losses related to acts of God. In addition, the School District has elected to self-insure for errors or omissions, which includes, among other risks, risks for sexual harassment and discrimination. The School District has not experienced any losses related to these risks in the past three years.

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

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

2005 2006

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

$

0 $

1 914 $

1 305 $

609

$

609 $

0 $

609 $

0

- 17 -

GLASCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"H"

Note 8: RISK MANAGEMENT

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

Position Covered

Amount

Superintendent Principal Bookkeeper

$

25,000

$

5,000

$

10,000

Note 9: 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.

Note 10: SUBSEQUENT EVENTS

On March 20, 2007, the voters of Glascock County Board of Education voted in favor of a Special Purpose Local Option Sales Tax referendum for educational purposes. The reimposition ofthe tax approved by the voters, as stated on the Official Ballot of Glascock County, is as follows:

"Shall a special one percent sales and use tax for educational purposes be continued in Glascock County for a period not to exceed 20 calendar quarters (5 years), commencing on the first day of the expiration of the current tax, for the purpose of raising not more than $1,000,000 of net proceeds by said tax, for the following projects: adding to, renovating, repairing, improving, and equipping existing school buildings and other facilities including, but not limited to, the school cafeteria, physical education athletic fields and facilities and administrative offices; acquiring system-wide technology and safety equipment; and the acquiring ofany property desirable therefore, both real and personal, the maximum amount of the projects to be paid with the sales and use tax proceeds not to exceed $1,000,000?"

Note 11: 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 ofGeorgia (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.

- 18 -

GLASCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"H"

Note 11: 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

2006 2005 2004

100% 100% 100%

$ 223,817 $ 219,890 $ 227,621

- 19 -

(This page left intentionally blank)

GLASCOCK COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006

SCHEDULE "1"

REVENUES
Property Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation
Total Expenditures
Excess of Revenues over {under) Expenditures
OTHER FINANCING SOURCES
Other Sources
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL {1)

FINAL {1)

ACTUAL AMOUNTS

$

905,947 $

905,947 $

898,792

2,548,985

2,747,228

2,928,396

602,936

816,658

658,689

105,300

105,300

145,787

18,000

18,000

54,582

42 904

$

4 181168 $

4,593,133 $

4,729,150

$

2,627,464 $

2,768,554 $

2,581,316

213,453 59,332 63,355
241,211 153,764
91,000 364,043 163,787
22,000
269,635

239,504 111,845
63,355 241,211 154,714
91,000 364,113 170,856
22,000
269,635

256,597 146,917
60,905 227,787 151,334
92,294 366,582 238,757
2,484 46,034 24,221 292,781

$

4,269,044 $

4 496 787 $

4,488,009

$

-87,876 $

96,346 $

241,141

90 000

100 000

90 000

$

2,124 $

196,346 $

331,141

1,207,411

1,207,411

1,207,166

785

785

Fund Balances - Ending

$

1,210,320 $

1,404,542 $ ===1=,5=3=8=,3=07=

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.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 21 -

GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEDAR ENDED JUNE 30, 2006

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1)
Total U.S. Department of Agriculture
Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Direct Rural Education Pass-Through From Georgia Department of Education Enhancing Education Through Technology Program Improving Teacher Quality State Grants Safe and Drug-Free Schools and Communities State Grants for Innovative Education Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

. 10.553 . 10.555

N/A N/A $
$

(2) 268,763
268,763

10.550

N/A
$

9 613 278,376

84.027 84.173

N/A $ N/A
$

116,486 6946
123,432

84.358
84.318 84.367 84.186
. 84.298 84.010 84.048

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

21,139
157,868 34,729
3,067 1,577 139,301 10754
491 867

Total Federal Financial Assistance
N/A = Not Available

$-=--==7-7,..0=2=43_

Notes to the Schedule of Expenditures of Federal Awards

(1) The amount shown for the Food Donation 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 the funds earned on the School Breakfast Program ($45,244) were not maintained separately and are included in the 2006 National School Lunch Program.

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 Glascock 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 fund financial statements.

See notes to the basic financial statements.

-22-

GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2006

AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV Category V Gifted Student - Category VI Alternative Education Program 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 Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs K-8 Reading and Mathematics Program Preschool Handicapped Program Lottery Program Student Information System

See notes to the basic financial statements.

- 23-

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

148,795

162,393 4,042
399,459 9,317
179,803 289,388 192,148 136,050
5,734 64,252 148,044 47,470 33,534 55,820 24,709 50,534 15,843 10,948
235,220 113,409 157,413
124,874 21,979 12,000 29,964 1,969 3,344
301,787 14,404 7,125
-128,407
25,000 26,498
3 534
$===2=,9=28..,,=39=6=

GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2006

SCHEDULE "4"

PROJECT
Construction of additional classrooms, instructional and support space such as, but not limited to, an auditorium and/or gymnasium, recreational fields and grounds, and to provide furnishings, equipment and fixtures for such areas at Glascock County Consolidated School, remodeling and renovation of existing classrooms, recreational fields and grounds at Glascock County Consolidated School

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

$ 1,000,000 $ 1,000,000 $

27,242 $ 643,309 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 Glascock County approved the imposition of a 1% sales tax to fund the above project. Amounts expended for this 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.

- 24 -

GLASCOCK COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2006

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

Middle Grades (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category II

Category Ill

CategoryV

Gifted Student - Category VI

Alternative Education Program

179,684 $ 5,364
443,895 9,620
202,853 318,042 217,633 146,264 325,553
58,897 26 938

164,613 $
384,591 20,549
235,326 306,623 317,609 104,904
162,007 115,663
56,828 81,676 36133

6,747 $ 76
8,127 839
3,807 9,147 4,456 6,251
1,835 1,939
6,419

171,360 76
392,718 21,388
239,133 315,770 322,065 111,155
163,842 117,602
56,828 88,095 36133

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

1,934,743 $ 1,986,522 $

49,643 $

2,036,165

Media Center Program Staff and Professional Development

56,089 12 270

56,274 9 036

4,631 8 712

60,905 17 748

TOTAL QBE FORMULA FUNDS

$

2,003,102 $ 2,051,832 $

62986 $==~2,~1~14~,8~1=8

(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.

- 25-

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
May 24, 2007

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Glascock County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information ofGlascock County Board ofEducation as ofand for the year ended June 30, 2006, which collectively comprise Glascock County Board of Education's basic financial statements and have issued our report thereon dated May 24, 2007. 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 of the United States.
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 opinions on the financial statements and not to provide an opinion on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgment, could adversely affect Glascock County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-6621-06-01, FS-6621-06-02 and FS-6621-06-04.
2006YB-30

A material weakness is a reportable condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud 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 none of the reportable conditions described above are material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Glascock 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 grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of the management and members of the Glascock County Board of Education and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~~-4~ Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2006YB-30

Russell W. Hinton
STATE AUDITOR
(404) 858-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
May 24, 2007

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members of the Glascock County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Glascock County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2006. Glascock County Board ofEducation's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility 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 ofcompliance 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 ofStates, 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 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

2006SA-40

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 of Education's compliance with those requirements.
In our opinion, the Glascock County Board ofEducation complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2006. The results of our auditing procedures disclosed an instance of nonmaterial noncompliance with those requirements, which is required to be reported in accordance with 0MB Circular A-133 and which is described in the accompanying Schedule of Findings and Questioned Costs as item FA-6621-06-03.
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 of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
We noted certain matters involving the internal control over compliance 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 compliance that, in our judgment, could adversely affect the Glascock County Board of Education's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FA-6621-06-01 and FA-6621-06-02.
A material weakness is a reportable condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level ofrisk that noncompliance with the applicable requirements of laws, regulations, contracts and grants caused by error or fraud 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 none of the reportable conditions described above are material weaknesses.
2006SA-40

This report is intended solely for the information and use of the management, members of the Glascock County Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~w.4 Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2006SA-40

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

GLASCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6621-04-01 FS-6621-04-02 FS-6621-05-01 FS-6621-05-02 FS-6621-05-03

Further Action Not Warranted Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/DISBURSEMENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls Procedures Finding Control Number: FS-6621-05-01

The school principal has been made aware that there are instances ofteachers not turning in receipts to the school secretary for deposit in a timely manner. The principal has informed teachers that cash and check receipts must be turned in to the school secretary no more than three days from the day ofreceipt. Ifa cash deposit is held for one or more days by the teacher, it must be locked in a secure location by the teacher.

CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Accounting/Internal Control Deficiencies Finding Control Number: FS-6621-05-02

The school food service director has been made aware that purchases were made for noncontract services or goods without prior approval. The school food service director will work to make sure that all goods and services have prior written approval before ordering.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-6621-04-01 FA-6621-05-01 FA-6621-05-02 FA-6621-05-03

Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented

- 1-

GLASCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Controls Procedures Finding Control Number: FA-6621-05-01 The school food service director has been made aware that purchases were made for noncontracted services or goods without prior approval. The director will work to make sure that all goods and services have prior written approval before ordering.
-2-

SECTION IV FINDINGS AND QUESTIONED COSTS

GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

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 unqualified.

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

Expenditures/Liabilities/Disbursements Revenues/Receivables/Receipts

General Ledger

None ofthe reportable conditions described above are considered to be material weaknesses.

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

4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Glascock County Board ofEducation disclosed reportable conditions in internal control over major programs for the following compliance requirements.

Activities Allowed or Unallowed

Allowable Costs/Cost Principles

None ofthe 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 Required to be Reported by Section .510(a) of 0MB Circular A-133 The Glascock County Board of Education's audit disclosed audit findings required to be reported by section .510(a) of 0MB 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 Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 84.010 Title I Grants to Local Educational Agencies

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

- 1-

GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

I SUMMARY OF AUDITOR'S RESULTS

9. Low Risk Auditee The Glascock County Board ofEducation did not qualify as a low risk auditee as defined by Section .530 of 0MB Circular A-133.

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Reportable Condition Finding Control Number: FS-6621-06-01

Condition:

This is a repeat finding (FS-6621-05-01 and FS-6621-04-01) from the years ending June 30, 2005 and 2004, respectively. The accounting procedures of the School District were insufficient to provide adequate separation ofduties and internal controls over school activity accounts.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and provide reasonable assurance that transactions are processed according to established procedures. Such internal controls would limit any one individual's access to both physical assets and the related accounting records.

Questioned Cost: NIA

Information:

Revenues/Receivables/Receipts Deposit preparation function was not separated from the record keeping and cash custody functions. Five of the fifteen receipts reviewed were not deposited in a timely manner.
Expenditures/Liabilities/Disbursements The check writing function was not separated from the record keeping or check signing function. Based upon a review of 15 vouchers, the following deficiencies were noted: 1) Three vouchers did not include a purchase order indicating prior approval of purchases. 2) One instance was noted where sales tax was paid.

-2-

GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Reportable Condition Finding Control Number: FS-6621-06-01

Cause:

These deficiencies were a result of management's failure to ensure that internal controls were established, implemented and functioning at the school level and to assign responsibilities to achieve appropriate separation ofduties and utilize management oversight of the incompatible activities to properly safeguard assets.

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation:

The School District should revise and monitor controls to provide reasonable assurance that transactions are processed according to established procedures, implement procedures to ensure that key accounting functions of custody, record keeping, and authorization are separated and/or utilize management oversight of these incompatible activities.

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls /Inadequate Documentation Reportable Condition Finding Control Number: FS-6621-06-02

Condition:

This is a repeat finding (FS-6621-05-02 and FS-6621-04-02) from the years ending June 30, 2005 and 2004, respectively. A review of expenditures revealed that the School District failed to implement internal controls to ensure that expenditures were properly authorized and documented.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are properly approved, documented, processed, and reported in accordance with State law, procedures established by the Georgia Department of Education and School District policies and procedures.

Questioned Cost: NIA

-3-

GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls /Inadequate Documentation Reportable Condition Finding Control Number: FS-6621-06-02

Information:

A review of eighty-eight vouchers revealed the following: Eleven vouchers contained no purchase order indicating prior approval of purchases. Two purchase orders were not approved prior to purchase. One voucher had no evidence of receipt of goods. Two instances were noted where sales taxes were paid.

Cause:

Management failed to adequately monitor and implement procedures to ensure that all expenditure vouchers include required purchase orders, approval prior to purchase, evidence of receipt, and no sales taxes paid.

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation: The School District should review current policies regarding expenditures to ensure that expenditures are properly approved and documented.

EMPLOYEE COMPENSATION Inaccurate Reporting of Senior Management Compensation Nonmaterial Noncompliance Finding Control Number: FS-6621-06-03

Condition:

Our examination of compensation paid to senior management of the School District revealed an error in the amount reported as salary to the Department of Audits and Accounts.

Criteria:

O.C.G.A. 50-6-27 states in part: "Each ... local board ofeducation is required and directed to submit to the state auditor, in a format prescribed by the state auditor, a listing of all personnel of such... local board ofeducation showing name, title or functional area, salary and travel expense for each individual."

Questioned Cost: NIA

Information:

The School District failed to include $2,253 for benefits paid on the Superintendent's behalf on the salary and travel report submitted to the Department ofAudits. These payments were in accordance with the contract between the Superintendent and the School District.

-4-

GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EMPLOYEE COMPENSATION Inaccurate Reporting of Senior Management Compensation Nonmaterial Noncompliance Finding Control Number: FS-6621-06-03

The School District reported a salary of $79,965 for Superintendent Mr. James Holton in its salary and travel report for the period ended June 30, 2006. The actual compensation for Mr. Holton totaled $82,218, which includes the $2,253 payments referenced above.

Cause:

Management failed to implement procedures to ensure that all employee compensation is reported as salary to the Department ofAudits and Accounts.

Effect:

The failure of the School District to submit total compensation paid to employees leads to inaccurate external reporting.

Recommendation:

The School District should implement procedures to ensure that all employee compensation is included in the salary total reported to the Department of Audits and Accounts.

GENERAL LEDGER Incomplete General Ledger/DE046 Financial Report Reportable Condition Finding Control Number: FS-6621-06-04

Condition:

The School District failed to include all fiscal year activity in the DE046 financial report submitted to the Georgia Department of Education.

Criteria:

Chapter 22 Annual Financial Reporting of the Financial Management for Local Units of Administration indicates that School Districts must prepare their financial statements in accordance with generally accepted accounting principles.

Questioned Cost: NIA

Information:

Quality Basic Education receivable/revenue related to the July and August 2006 salary and fringe benefits payments earned as ofJune 30, 2006, was not recorded in the general ledger. An audit adjustment in the amount of $288,873 was necessary to record the receivable/revenue.

Cause:

Management failed to comply with the requirements of the Georgia Department of Education regarding financial reporting.

-5-

GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Incomplete General Ledger/DE046 Financial Report Reportable Condition Finding Control Number: FS-6621-06-04

Effect:

The failure ofthe School District to maintain a complete and accurate general ledger can lead to inaccurate internal and external reporting.

Recommendation:

The School District should implement controls to ensure that Georgia Department of Education's policies and procedures are followed and implement procedures to ensure that all financial data is properly recorded in the general ledger and reported in the DE046.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unauthorized Expenditures Reportable Condition U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6621-06-01

Condition:

This is a repeat finding (FA-6621-05-01 and FA-6621-04-01) from the years ending June 30, 2005 and 2004, respectively. A review of expenditures charged to the Child Nutrition Cluster (CFDA 10.553 and 10.555) program revealed that costs were not properly authorized to ensure compliance with grant requirements.

Criteria:

Provisions of the 0MB Circular A-87, Cost Principles for Determining Allowable Costs, require that "to be allowable under Federal awards, costs must be ... authorized or not prohibited under state or local laws or regulations" and "supported by underlying documentation."

Questioned Cost: NIA

Information:

A review of thirty expenditure vouchers for Child Nutrition Cluster (CFDA 10.553 and l 0.555) revealed the following deficiencies:
Seven vouchers contained no purchase order indicating prior approval of purchases.
One instance was noted where sales tax was paid.

-6-

GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unauthorized Expenditures Reportable Condition U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6621-06-01

Cause:

Management failed to monitor compliance with Federal guidelines to ensure that expenditures charged to the Federal Program were allowable, approved, and properly documented.

Effect:

Failure to ensure that expenditures are allowable, approved, and properly documented can result in noncompliance with the requirements of the Federal grant.

Recommendation:

The School District should implement procedures to ensure that all expenditures charged to the Federal Program are allowable under 0MB Circular A-87, and that all proper approvals have been obtained prior to expenditure of program funds.

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unauthorized Expenditures Reportable Condition U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6621-06-02

Condition:

A review ofexpenditures charged to the Title I Grants to Local Educational Agencies (84.010) program revealed that the School District failed to ensure that expenditures were properly authorized and in compliance with grant requirements.

Criteria:

Provisions of the 0MB Circular A-87, Cost Principles for Determining Allowable Costs, require that "to be allowable under Federal awards, costs must be... authorized or not prohibited under state or local laws or regulations" and "supported by underlying documentation."

Questioned Cost: NIA

-7-

GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unauthorized Expenditures Reportable Condition U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6621-06-02

Information:

A review of twenty-eight expenditures for the Title I program revealed the following deficiencies:

Two vouchers contained no purchase order indicating prior approval of purchases.
Two purchase orders were not approved prior to purchase. One instance was noted where sales tax was paid.

Cause:

Management failed to monitor compliance with Federal guidelines to ensure that expenditures charged to the Federal Program were allowable, approved, and properly documented.

Effect:

Failure to ensure that program costs are allowable, approved, and properly documented can result in noncompliance with the requirements of the Federal grant.

Recommendation:

The School District should implement procedures to ensure that all expenditures charged to the Federal Program are allowable under 0MB Circular A-87, and that all proper approvals have been obtained prior to expenditure of program funds.

-8-

GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Fiscal Requirements of Schoolwide Program Not Fully Implemented Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (84.010) Finding Control Number: FA-6621-06-03

Condition:

During the year under review, the School District identified its one consolidated school as participating in a schoolwide program. We noted that the School District did not allocate the schoolwide program expenditures to specific Federal funds in proportion to the different Federal funds provided in support ofthe schoolwide program. The School District also did not develop a cost allocation plan that would provide them with the knowledge of how the cost should be distributed.

Criteria:

In line with 0MB Circular A-87 requirements, schoolwide expenditures should be charged to those Federal funding sources supporting the schoolwide program in a reasonable manner. If there is only one Federal funding source, then costs should be charged to the Federal program based on the specific benefits derived from that cost. When more than one Federal program supports a schoolwide program, then schoolwide program expenditures may be allocated to specific Federal funds in proportion to the different Federal funds provided in support of the schoolwide program. To distribute such costs, provisions ofOMB Circular A-87, Attachment E, F.3 state that a cost allocation plan should be developed, documented, and maintained for audit.

Questioned Cost: NIA

Information:

The School District identified its one consolidated school as participating in a schoolwide program. We noted that the School District did not allocate the schoolwide program expenditures to specific Federal funds in proportion to the different Federal funds provided in support of the schoolwide program. The School District also did not develop a cost allocation plan that would provide them with the knowledge of how the cost should be distributed.

Cause:

School District personnel were not fully aware of these requirements.

Effect:

Failure to appropriately allocate costs can result in noncompliance with requirements ofthe Federal grant.

-9-

GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Fiscal Requirements of Schoolwide Program Not Fully Implemented Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (84.010) Finding Control Number: FA-6621-06-03

Recommendation:

The School District should allocate the schoolwide program expenditures to specific Federal funds in proportion to the different Federal funds provided in support of the schoolwide program. Also, a cost allocation plan should be developed, documented, and maintained for audit. The School District should seek additional guidance from the Georgia Department ofEducation to implement procedures for allocating schoolwide program expenditures.

- 10-

SECTIONV MANAGEMENT'S RESPONSES

GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-6621-06-01 We concur with this finding. The actions listed were implemented in fiscal year 2007. The school secretary has implemented the following changes to improve the internal control procedures for the school activity accounts. The school principal now reviews and approves the bank statement prior to secretary reconciling as well as providing a final approval after check reconciliation. Procedures have been put in place to allow board office secretary to make daily bank deposits for the school secretary. The school principal has informed all staff members that monies received from students must be documented and forwarded to school secretary for deposit within three business days. Approval from the school principal is now required prior to the processing ofchecks. Secretary will not make payment for sales tax. Finding Control Number: FS-6621-06-02 We concur with this finding. The actions listed were implemented in fiscal year 2007. Procedures have been put in place to allow designated managerial employees to approve expenditures prior to purchase. Verification ofreceipt ofgoods will be made prior to payment and sales tax will not be paid on purchased goods and services. Finding Control Number: FS-6621-06-03 We concur with this finding. The action listed was implemented in fiscal year 2006. Bookkeeper was made aware of correct reporting procedures for Board paid benefits to administrative employees in November 2006. This change was implemented in December 2006. All employee compensation will report correctly for fiscal year 2007. Finding Control Number: FS-6621-06-04 We concur with this finding. The actions listed were implemented in fiscal year 2007. Bookkeeper will record all QBE receivables for the months ofJuly and August as well as any other revenues receivable that apply.
- 1-

GLASCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FA-6621-06-01 We concur with this finding. The actions listed were implemented in fiscal year 2007. School Nutrition Director has implemented procedures to ensure that no purchases are made in school lunchroom without prior approval. School Nutrition Bookkeeper will ensure that sales tax is not paid on expenditures. Finding Control Number: FA-6621-06-02 We concur with this finding. The actions listed were implemented in fiscal year 2007. Procedures have been implemented to ensure that prior approval is given by the Title I Director or Superintendent before purchases are made. Bookkeeper will review invoices to ensure that no sales tax is being paid. Finding Control Number: FA-6621-06-03 We concur with this finding. The actions listed were implemented in fiscal year 2007. Title I Director and Bookkeeper will continue to make improvements on the reporting ofschoolwide expenditures to meet Federal requirements. A cost allocation plan has been prepared to show how Title I funds are combined with other Federal funds to meet the needs of the schoolwide program. Contact Person: Mary Griswell, Financial Officer Phone: (706) 598-2291 Fax Number: (706) 598-2611 E-mail Address: mgriswell@glascock.kl2.ga.us
-2-