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' GRADY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS EXHIBITS GENERAL-PURPOSE FINANCIAL STATEMENTS COMBINED STATEMENTS-OVERVIEW A COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP 2 B COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS 4 C COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS 7 D STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCES FIDUCIARY FUND TYPE - NONEXPENDABLE TRUST FUND 8 E STATEMENT OF CASH FLOWS FIDUCIARY FUND TYPE - NONEXPENDABLE TRUST FUND 9 F NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS I 0 ADDITIONAL FINANCIAL INFORMATION COMBINING STATEMENTS SPECIAL REVENUE FUND G COMBINING BALANCE SHEET 22 H COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 24 CAPITAL PROJECTS FUND I COMBINING BALANCE SHEET 26 J COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 28 FIDUCIARY FUND TYPES K COMBINING BALANCE SHEET 30 L COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES EXPENDABLE TRUST FUNDS 32 GRADY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL ADDITIONAL FINANCIAL INFORMATION SCHEDULES I SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 34 2 SCHEDULE OF STATE REVENUE 36 3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 39 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) 4 BY PROGRAM 40 5 BY SITE 41 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL RUSSELL W. HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street. S.W Suite 214 Atlanta, Georgia 30334-8400 September 2, 2003 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Grady County Board of Education INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying general-purpose financial statements ofthe Grady County Board of Education, as of and for the year ended June 30, 2002, as listed in the table of contents. These general-purpose financial statements are the responsibility ofthe Grady County Board of Education's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. 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 opm1on. As described in the notes to the general-purpose financial statements, the Board of Education's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows: 2002ARL-13 * The general-purpose financial statements of the Board of Education did not contain a General Fixed Assets Account Group to account for property and equipment owned by the Board of Education which should be included to conform to generally accepted accounting principles. * School activity accounts maintained at the individual schools are not included in the general-purpose financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general-purpose financial statements. * The Board of Education did not recognize as expenditures, in the year ended June 30, 2002, a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 2002. Also funds received, subsequent to June 30, 2002, from the Georgia Department of Education for the State's share of these unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2001, were improperly recorded in the year ended June 30, 2002. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed. The aggregate effects on the general-purpose financial statements of these variances or omissions have not been determined, but are believed to be material. In our opinion, except for the effects on the general-purpose financial statements of the matters referred to in the preceding paragraph, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position of the Grady County Board of Education as of June 30, 2002, and the results of its operations and the cash flows of its nonexpendable trust fund for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated September 2, 2003, on our consideration of the Grady County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements ofthe Grady County Board ofEducation taken as a whole. The accompanying combining statements (Exhibits G through L) and the financial schedules (Schedules I through 5), which includes the Schedule ofExpenditures ofFederal Awards as required by U.S. Office ofManagement 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 general-purpose 2002ARL-13 financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general-purpose financial statements and in our opinion, except for the effects of the matters referred to in the third paragraph, such information is fairly stated, in all material respects, in relation to the general-purpose financial statements taken as a whole. A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated Section 506-24. Respectfully submitted, RWH:as 2002ARL-13 State Auditor GRADY COUNTY BOARD OF EDUCATION GRADY COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP JUNE 30 2002 ASSETS Cash and Cash Equivalents Investments Accounts Receivable Prepaid Items lnventones Food Donated Commod1t1es Purchased Food Amount Available in Debt Service Fund Amount to be Provided 1n Future Years For Payment of Bond Debt GENERAL FUND GOVERNMENTAL FUND TYPES SPECIAL CAPITAL REVENUE PROJECTS FUND FUND $ 2,300,944 51 $ 218,209 19 $ 1,285,997 95 333,000 00 4,674.009 41 365,782 84 833,421 54 1,771,996 89 18,308 06 21,430 53 15,006 93 Total Assets $ 3,018,035 41 $ 1,088,068 19 $ 7,732,004 25 LIABILITIES AND FUND EQUID'. LIABILITIES Cash Overdraft Accounts Payable Salanes Payable Expired Grant Balances Payable Contracts Payable Retainages Payable Deferred Revenue General Obhgat1on Bonds Payable Total L1abll1t1es FUND EQUITY Fund Balances Reserved For Debt Service For Endowment Corpus For lnventones Food Donated Commodities Purchased Food For Purpose of Bond Issue For SPLOST ProJects For State Capital Outlay ProJedS Unreserved Und851gnated Total Fund Equity $ 731,304 60 $ 201,367 63 $ 34,432 00 1,728 00 298,730 98 316 13 12,785 75 1,359.822 30 427,129 30 1,172 51 $ 733 348 73 $ 514,056 87 $ 1,821,383 60 $ $ 2,284,686 68 $ 2,284,686 68 $ 21,430 53 15,006 93 $ 537,573 86 574,011 32 $ 3,196,929 46 2,173,915 62 337.142 57 202,633 00 5,910,620 65 Total L1abll1t1es and Fund Equity $ 3,018,035 41 $ 1,088,068 19 $ The notes to the general-purpose financial statements are an integral part of this statement 7 732 004 25 -2- EXHIBIT "A" DEBT SERVICE FUND FIDUCIARY FUND TYPES TRUST FUNDS ACCOUNT GROUP GENERAL LONG-TERM DEBT TOTALS (Memorandum Only) JUNE 30, 2002 JUNE 30, 2001 $ 16,926 28 $ 3,822,077 93 $ 2,946,473 70 $ 623,369 50 77,500 00 5,707,878 91 6,667,264 00 2,971,201 27 1,093,692 20 18,308 06 2196349 $ 105,340 00 5,619,660 DO 21,430 53 15,006 93 105,340 00 5,619,660 00 16,019 65 14,833 16 110,400 00 5,889,600 00 $ 623,369 50 $ 94,426 28 $ 5,725,000 DO $ 18,280,903 63 $ 16,760,246 20 $ 134,429 50 383,600 00 $ 518,029 50 $ 134,429 50 1,350,704 23 $ 768,185 47 300,458 98 266,530 88 13,101 88 9,457 84 1,359,822 30 47,994 67 427,129 30 94,152 63 1,172 51 $ 5,725,000 00 5,725,000 00 6,000,000 00 $ 5,725,000 00 $ 9,311,818 70 $ 7,186,321 49 $ 105,340 00 $ 7,500 00 0 00 s 105,340 00 $ 86,926 28 94,426 28 $ 105,340 00 $ 110,400 00 7,500 00 7,500 00 21,430 53 15,006 93 3,196,929 46 2, 173,915 62 337.142 57 16,019 65 14,833 16 5,758,087 22 925,327 01 172,715 00 3,111,819 82 2,569,042 67 $ 8,969,084 93 $ 9,573,924 71 $ 623 369 50 $ 94,426 28 $ 5 725 000 00 $ 18,280,903 63 $ 16,760 246 20 -3- GRADY COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS YEAR ENDED JUNE 30 2002 REVENUES State Funds Federal Funds Taxes Other Funds Total Revenues EXPENDITURES Current Instruction Support Services Pupil ServlC8S Improvement of Instructional Services Educational Media Services General Adm1mstrat1on School Adm1mstrabon Business AdmImstrabon Maintenance and Operation of Plant Student Transportatton Services Central Support Services Other Support Services Food Services Operat10n Community Services Operat10ns Capital Outlay Debt Service Pnncipal Interest Paying Agent Fees Total Expenditures Excess of Revenues over (under) Expenditures QTHER FINANCING SQURCES (USES) Proceeds from General Obhgat1on Bonds Par Value Operating Transfers In Operating Transfers Out Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources over (under) Expenditures and Other F,nanc,ng Uses FUND BALANCE JULY 1 Food Inventory - Net Change in Penod Donated Commod1t1es Purchased Food FUND BALANCE JUNE 30 GENERAL FUND GOVERNMENTAL FUND SPECIAL CAPITAL REVENUE PROJECTS FUND FUND $ 20,465,234 28 $ 5,759,475 25 172,469 92 $ 26,397 179 45 $ 836,385 45 $ 3,972,352 94 396,872 96 5,205,611 35 $ 1,665,007 20 1,640,823 00 289,447 08 3,595,277 28 $ 17,887,142 28 $ 811,87708 1,053,530 73 850,765 32 243,296 96 1,524,983 68 162,840 48 2,211,811 76 988,875 93 124,936 39 24,734 11 35,543 15 2,627,377 80 188,055 46 324,499 33 9,541 81 134,113 53 2,987 47 53,509 56 182,635 69 1,590,805 10 21,61641 $ 4,745,303 86 $ 25,920,337 87 $ $ 476,841 58 $ 5,135,142 16 $ 4,745,303 86 70,469 19 $ -1,150,026 58 $ $ -11,863 51 $ -1186351 $ 6,863 51 $ 6 863 51 $ 5,000 00 5.00000 $ 464,978 07 $ 1,819,708 61 77,332 70 $ -1,145,026 58 491,093 97 7,055,647 23 5,410 88 173 77 $ 21284,686 68 $ s 574,011 32 _...;;;s,..9;,;10,..,6=2..o...6_5_ The notes to the general-purpose financial statements are an integral part of this statement -4- EXHIBIT "B" TYPES DEBT SERVICE FUND TOTAL FIDUCIARY FUND TYPE EXPENDABLE TRUST FUNDS TOTALS (Memorandum Only) YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 22,966,626 93 3,972,352 94 $ 488,969 50 7,889,267 75 858,789 96 $ $ 488,969 50 $ 35,687,037 58 $ $ 8,064 29 22,966,626 93 $ 3,972,352 94 7,889,267 75 866,854 25 20,790,705 91 3,772,202 90 7,297,192 34 659 616 38 8,06429 $ 35,695 101 87 $ 32,519,717 53 $ 20,514,520 08 999,932 54 1,378,030 06 860,307 13 377,410 49 1,524,983 68 162,840 48 2,214,799 23 1,042,385 49 124,936 39 $ 182,635 69 1,615,539 21 57,15956 4,745,303 86 $ 275,000 00 219,000 00 29 50 275,000 00 219,000 00 29 50 $ 494,029 50 $ 36 294,813 39 $ $ -5,060 00 $ -607 775 81 $ $ 20,514,520 08 $ 19,726,904 51 5,373 00 5,665 99 999,932 54 1,378,030 06 860,307 13 377,41049 1,524,983 68 162,84048 2,214,799 23 1,042,385 49 130,309 39 182,635 69 1,615,539 21 62,825 55 4,745,303 86 898,060 71 1,468 986 04 854,467 65 373,190 03 1,452,153 17 200,043 34 2,165,277 37 1,063,345 66 158,638 51 181,582 31 1,551,043 88 111,712 79 995,310 58 275,000 00 219,000 00 29 50 24,000 00 11,03899 $ 36,305 852 38 $ 31,224,716 55 -2,974 70 $ -610 750 51 $ 1,295,000 98 $ 11,86351 -1186351 $ 0 00 $ -5,060 00 $ -607,775 81 $ 110,400 00 9,476,849 81 5,410 88 173 77 $ 6,000,000 00 $ 11,863 51 10,670 44 -11,863 51 -10,670 44 $ 0 00 $ 6,000,000 00 -2,974 70 $ 88,518 78 -610,750 51 $ 9,565,368 59 7,295,000 98 2,281,447 49 5,410 88 173 77 -9,424 23 -1,655 65 $ 105,340 00 $ 8 874 658 65 $ ' 85,544 08 $ 8,960,202 73 $ 9,5651368 59 - 5- GRADY COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - CNON-GAAP BASIS} GENERAL AND SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30 2002 EXHIBIT"C" REVENUES State Funds Federal Funds Taxes Other Funds Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educallonal Media Services General AdmIrnS1ra1Jon School Adm1rnstrat1on Business Admin1strat1on Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Serv,ces Operation Communrty Services Operations Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES} Other Sources Other Uses Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources over (under) Expenditures and Other F1nancIng Uses FUND BALANCE JUbY 1 2001 Food lnven1ory - Net Change In Penod Donated Commod1t1es Purchased Food GENERAL FUND BUDGET ACTUAL $ 19,902,747 00 $ 20,465,234 28 5,472,882 00 60,048 00 5,759,475 25 172,469 92 $ 25,435,677 00 $ 26,397,179 45 $ 17,772,234 00 $ 17,887,142 28 734,500 00 923,263 00 865,962 00 234,800 00 1,527,351 00 195,000 00 2,032,327 00 966,190 00 179,050 00 811,877 08 1,053,530 73 850,765 32 243,296 96 1,524,983 68 162,840 48 2,211,811 76 988,875 93 124,936 39 24,734 11 35 543 15 $ 25,430,677 00 $ 25,920,337 87 $ 5,000 00 $ 476,841 58 $ -5,000 00 $ -11,863 51 $ -5,000 00 $ -11,863 51 $ 0 00 s 464,978 07 1,574,12510 1,819,708 61 FUND BALANCE JUNE 30 2002 $ 1 574,125 10 $ 2,284,686 68 SPECIAL REVENUE FUND BUDGET ACTUAL $ 661,237 80 $ 836,385 45 2,899,215 00 3,972,352 94 356,375 00 396,872 96 $ 3,916,827 80 $ 5,205,611 35 $ 1,781,476 80 $ 2,627,377 80 145,649 00 128,778 00 143,549 00 188,055 46 324,499 33 9,541 81 134,113 53 4,000 00 45,300 00 2,987 47 53,509 56 185,300 00 1,482,775 00 182,635 69 1,590,805 10 21,616 41 $ 3,916,827 80 $ 5135,14216 $ 000 $ 70,469 19 $ 6,863 51 $ 6,863 51 $ 000 $ 77,332 70 486,726 71 491,093 97 5,410 88 173 77 $ 486,726 71 $ 574 011 32 The notes to the general-purpose financial statements are an integral part of this statement -7 - GRADY COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCES FIDUCIARY FUND TYPE - NONEXPENDABLE TRUST FUND YEAR ENDED JUNE 30, 2002 EXHIBIT "D" OPERATING REVENUES None Recorded OPERATING EXPENSES None Recorded Operating Income NONOPERATING REVENUES Interest Earned Net Income FUND BALANCE JULY 1 FUND BALANCE JUNE 30 MILDRED PELHAM SCHOLARSHIP FUND TOTALS {Memorandum Onl~~ YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 000 $ 000 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 326.08 326.08 473 19 $ 32608 $ 326.08 $ 473.19 8,556.12 8,55612 8,082.93 $ 8,882 20 $ 8,882.20 $ ======8=,5=56==12= The notes to the general-purpose financial statements are an integral part of this statement. -8 - GRADY COUNTY BOARD OF EDUCATION STATEMENT OF CASH FLOWS FIDUCIARY FUND TYPE - NONEXPENDABLE TRUST FUND YEAR ENDED JUNE 30, 2002 EXHIBIT"E" Cash Flows from Investing Activities: Interest Received on Investments Purchase of Investments Net Increase (Decrease) in Cash Cash and Cash Eqwvalents - July 1 Cash and Cash Eqwvalents - June 30 MILDRED PELHAM SCHOLARSHIP FUND TOTALS {Memorandum Onl~} YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 326.08 $ 32608 $ $ 326.08 $ 326.08 $ 1,05612 1,056.12 47319 -277 56 195 63 86049 $ 1,382.20 $ 1,382 20 $ =====1=,0=56====12= The notes to the general-purpose financial statements are an integral part of this statement. -9 - GRADY COUNTY BOARD OF EDUCATION EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The Grady County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The School District is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity. FUND ACCOUNTING The School District uses funds and an account group to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources. General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the School District. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types. Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general-purpose financial statements. The general-purpose financial statements account for all State, Federal, Taxes and Other funds under control of the School District, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows: GOVERNMENTAL FUND TYPES - are used to account for all or most of the School District's educational activities. Governmental Fund Types include: GENERAL FUND - the fund used to account for all financial resources of the School District except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education. - JO - GRADY COUNTY BOARD OF EDUCATION EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and from the Federal government to accomplish specific educational objectives. CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities. DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees. FIDUCIARY FUND TYPES - the funds used to account for assets held by a government unit in a trustee capacity or as an agent for individuals, private organizations, other government units and/or other funds. These funds include: NONEXPENDABLE TRUST FUND Mildred Pelham Scholarship Fund - the fund used to account for an endowment of which the corpus is to be invested and preserved intact with the resultant income to be used to provide college scholarships. EXPENDABLE TRUST FUNDS Eleanor Kelley Scholarship Fund - the fund used to account for principal and earnings which may be expended to provide college scholarships. Kenridge Fund - the fund used to account for principal and earnings which may be expended to provide drug education programs. Martin Lincoln Beller Trust Fund - the fund used to account for principal and earnings which may be expended to provide deserving and/or needy children assistance in treatment of eye diseases and blindness. Wight Nurseries Scholarship Fund - the fund used to account for principal and earnings which may be expended to provide scholarships to graduating seniors. ACCOUNT GROUP GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debt outstanding. BASIS OF ACCOUNTING The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental and expendable trust funds are accounted for using a current financial - 11 - GRADY COUNTY BOARD OF EDUCATION EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements ofthese funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources. Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group. All nonexpendable trust funds are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and liabilities associated with the operation of these funds are included on the balance sheet. Operating statements present increases (e.g., revenues) and decreases (e.g., expenses) in net total assets. Governmental and expendable trust funds are accounted for using the modified accrual basis of accounting under which: Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The School District considers receivables collected within sixty days after yearend to be available. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, local option sales taxes, intergovernmental grants and donations. Revenue for property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year the resources are received or susceptible to accrual. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Expenditures are generally recognized when the related fund liability is incurred. A departure from the above definitions is the accounting treatment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 2002, a substantial number of personnel ofthe School District were employed for a one hundred and ninety day period beginning in August 200 I and ending in early June 2002. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 2001 and ending in August 2002. State grants to fund the State's share of these contracts were disbursed from the Georgia Department of Education to the School District in the same twelve months. As of June 30, 2002, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 2002, had not been made. Payments for these two months were made and recorded as expenditures by the School - 12 - GRADY COUNTY BOARD OF EDUCATION EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES District subsequent to June 30, 2002. Also, the State's portion ofthe compensation paid in July and August 2002 was received and recorded as revenue in the fiscal year subsequent to June 30, 2002. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2001, were recorded in the year ended June 30, 2002. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed. The accrual basis ofaccounting, as required by generally accepted accounting principles, is utilized by nonexpendable trust funds. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. BUDGET The Grady County Board of Education's budget is a complete financial plan for the School District's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles. The budget process begins when the School District's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality. At the next regular meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end. CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations. INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported - 13 - GRADY COUNTY BOARD OF EDUCATION EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds and in selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: ( 1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia. RECEIVABLES Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general-purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The Grady County Board of Commissioners fixed the property tax levy for the 200 I tax digest year (calendar year) on October 23, 2001 (levy date). Taxes were due on January 21, 2002 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2001 tax digest are reported as revenue in fiscal year 2002. The Grady County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues during the fiscal year ended June 30, 2002 for maintenance and operations amounted to $5,646,181.19. - 14 - GRADY COUNTY BOARD OF EDUCATION EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The tax millage rate levied for the 2001 tax year (calendar year) for the Grady County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value): School Operations 12.9 mills SALES TAXES Special Purpose Local Option Sales Tax revenue during the year amounted to $2,129,792.50 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 Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets. PREPAID ITEMS Payments made to vendors for services that will benefit periods subsequent to June 30, 2002, are recorded as prepaid items. GENERAL OBLIGATION BONDS The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit ofthe government. The outstanding amount of these bonds is recorded in the General Long-Term Debt Account Group. INTERFUND TRANSACTIONS The School District has the following types of interfund transactions: Reimbursements of expenditures/expenses initially made from a fund that are properly applicable to another fund are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. - 15 - GRADY COUNTY BOARD OF EDUCATION EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Operating transfers are recorded for all interfund transactions other than reimbursements. MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the general-purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results ofoperations or cash flows in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. lnterfund eliminations have not been made in the aggregation of this data. Note 2: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool of public funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts. Acceptable security for deposits consists of any one of or any combination of the following: ( l) 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 - 16 - GRADY COUNTY BOARo OF EDUCATION EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 2: DEPOSITS AND INVESTMENTS (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, 2002, the bank balances were $7,465,562.79. The amounts ofthe total bank balances are classified into three categories of credit risk: Category I - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name. Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name. Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.) The School District's deposits are classified by risk category at June 30, 2002, as follows: Risk Category Bank Balance I $ 343,552.37 2 2,287,408.40 3 4,834,602.02 Total $ 7,465,562.79 CATEGORIZATION OF INVESTMENTS At June 30, 2002, the carrying value of the School District's total investments was $5,297,378.91 which is materially the same as fair value. These investments were uninsured or unregistered with securities held by the counterparty's trust department or agent but not in the School District's name. These investments consisted solely of repurchase agreements. Note 3: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories - 17 - GRADY COUNTY BOARD OF EDUCATION EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 4: 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, errors or omissions and acts ofGod. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years. The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenditure and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: Beginning of Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability 2001 2002 $ 0.00 $ 1,633.68 $ 1,633.68 $ 0.00 $ 0.00 $ 2,029.00 $ 2,029.00 $ 0.00 The School District participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July I, 1992, to develop, implement, and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the United States Fidelity and Guaranty Company to provide coverage for potential losses sustained by the Fund in excess of $350,000.00 loss per occurrence, up to the statutory limit. The School District has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount Superintendent All Other Employees $ 15,000.00 $ I00,000.00 Note 5: OPERATING LEASES Grady County Board ofEducation has entered into various leases as lessee for copiers. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2002, amounted to $107,610.24. Future minimum lease payments for these leases are as follows: - I8 - GRADY COUNTY BOARD OF EDUCATION EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 5: OPERATING LEASES Year Ending Amount 2003 2004 2005 $ 17,255.34 16,500.00 5,500.00 Total $ 32,255.34 Note 6: GENERAL LONG-TERM DEBT GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: Purpose Interest Rate Amount General Government - Series 2001 3.60% $5,725,000.00 The changes in General Long-Term Debt during the fiscal year ended June 30, 2002, were as follows: General Obligation Bonds Balance July 1, 2001 $ 6,000,000.00 Deductions Debt Retired 275,000.00 Balance June 30, 2002 $ 5,725,000.00 At June 30, 2002, payments due by fiscal year which includes principal and interest for these items are as follows: Fiscal Year Ended June 30 General Obligation Bonds 2003 2004 2005 $ 2,508,962.50 2,164,327.50 1,435,552.50 Total Principal and Interest $ 6.108.842.50 - 19 - GRADY COUNTY BOARD OF EDUCATION EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 7: SHORT-TERM DEBT The School District obtains temporary loans in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution ofthe State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred. Beginning Balance Additions Payments Ending Balance Temporary Loans $===0-.0_0 $ 200,000.00 $ 200,000.00 $====="0...,.0.,..0 Note 8: ON-BEHALF PAYMENTS The School District has recognized revenues and expenditures in the amount of $351,331.90 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $307,922.90 Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $43,409.00 Note 9: SIGNIFICANT COMMITMENTS The fol lowing is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2002, together with funding available: Project Unearned Executed Contracts Funding Available From State SA 01 S-665-008 GSFIC 02LW/01 S-665-039 GSFIC Northside Elementary School Additions Southside Elementary School Additions Whigham Elementary School Additions $ 148,638.56 2,078,723.01 117,537.34 86,855.84 55,030.34 $ 29,557.50 155,443.30 $2,486,785.09 $ 185,000.80 - 20 - GRADY COUNTY BOARD OF EDUCATION EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 9: SIGNIFICANT COMMITMENTS The amounts described in this note are not reflected in the general-purpose financial statements. Note 10: CONTINGENT LIABILITIES Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. Note 11: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school districts are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 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 2002 2001 2000 100% 100% 100% $ 1,708,708.06 $1,984,151.53 $ 1,920,043.29 - 21 - GRADY COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 2002 ASSETS Cash and Cash Equivalents Accounts Receivable lnventones Food Donated Commodities Purchased Food SCHOOL FOOD SERVICES FUND LOTTERY PROGRAMS $ 578,839 96 $ 72,739.29 10,867 87 90,425.88 21,430.53 15,006.93 Total Assets $ 626,145.29 $ ==1=6=3=1,=65====17= LIABILITIES AND FUND EQUITY LIABILITIES Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Deferred Revenue Total Liab1lit1es FUND EQUITY Fund Balances Reserved For lnventones Food Donated Commodities Purchased Food Unreserved Undes1gnated Total Fund Equity $ 10,777.63 $ 98,576.70 41,356 34 64,450 74 137 73 $ 52,133.97 $ 163,165 17 $ 21,430 53 15,006.93 537,573 86 $ 0.00 $ 574,011 32 $ 0 00 Total L1ab1hties and Fund Equity See notes to the general-purpose financial statements. - 22 - $ 626, 145.29 $ ==1,;.;6=3:l:::1,=6==5..,.17== EXHIBIT"G" FEDERAL PROGRAMS TOTALS JUNE 30, 2002 JUNE 30, 2001 $ 651,579.25 $ 601,987 45 $ 732,127 79 833,421.54 540,463 81 21,430 53 15,006 93 16,019 65 14,833 16 $ 732,127.79 $ 1,521,438.25 $ 1,173,304 07 $ 433,370 06 $ 433,370 06 $ 237,072 59 92,013.30 201,367.63 171,457 38 192,923.90 298,730 98 266,530.88 12,648 02 12,785.75 7,149.25 1,172.51 1,172.51 $ 732,127.79 $ 947,426.93 $ 682,210 10 $ $ _ _ _ _0_._00:.,_ $ _ _ _ _ _0._00.c.... $ 21,430 53 $ 15,006.93 16,019.65 14,833 16 537,573.86 460,24116 574,01132 $ _ _4_9_1.._,0_93_97_ $ 732,127 79 $ 1,521,438.25 $ 1,173,304.07 - 23 - - - - - - - - - - - - - - - - - - - -- ---- -- - - - - - GRADY COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2002 REVENUES State Funds Federal Funds Other Funds Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation Community Services Operations Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES Operating Transfers In Excess of Revenues and Other Financing Sources over (under) Expenditures FUND BALANCE JULY 1 Food Inventory - Net Change in Period Donated Commod1t1es Purchased Food SCHOOL FOOD SERVICES FUND LOTTERY PROGRAMS $ 116,534.00 $ 1,154,469.33 396,872.96 $ 1,667,876.29 $ 719,851.45 719,851 45 $ $ 1,590,543.59 654,170.60 41,181.42 6,398 37 1,396.93 2,840 00 13,602.62 261.51 $ 1,590,543.59 $ $ 77,332.70 $ 719,851 45 0 00 $ 77,332 70 $ 491,093.97 5,410.88 173 77 000 0.00 FUND BALANCE JUNE 30 See notes to the general-purpose financial statements. - 24 - $ 574,011.32 $ ======-0=.0-0= EXHIBIT"H" FEDERAL PROGRAMS TOTALS YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 836,385 45 $ 821,775.22 $ 2,817,883 61 3,972,352 94 3,761,003 13 396,872 96 367,251 35 $ 2,817,883.61 $ 5,205,611.35 $ 4,950,029 70 $ 1,973,207 20 $ 2,627,377.80 $ 2,386,370 60 146,874 04 318,100 96 9,541 81 132,716 60 147 47 39,906 94 182,635 69 21,61641 188,055 46 324,499.33 9,541 81 134,113 53 2,987.47 53,509 56 182,635 69 1,590,805 10 21,61641 93,802.02 483,850 28 13,703.34 134,097 26 5,199.18 44,100 07 181,257 44 1,526,427 95 43,876 73 $ 2,824,747 12 $ 5,135,142 16 $ 4,912,684 87 $ -6,863 51 $ 70,469 19 $ 37,344 83 6,863 51 6,863 51 5,670 44 $ 000 $ 77,332 70 $ 43,015 27 0.00 491,093 97 459,158 58 5,410 88 173 77 -9,424.23 -1,655 65 $ 000 $ 574,011.32 $ ==4=9=1='0=93=9=7= - 25 - GRADY COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 2002 ASSETS Cash and Cash Equivalents Investments Accounts Receivable Total Assets LIABILITIES AND FUND EQUITY LIABILITIES Cash Overdraft Accounts Payable Contracts Payable Retainages Payable Total Liab1lit1es FUND EQUITY Fund Balances Reserved For Purposes of Bond Issue For SPLOST ProJects For State Caprtal Outlay ProJects Unreserved Undes1gnated Total Fund Equity Total Liabilities and Fund Equity REGULAR BOND PROCEEDS $ 202,633 00 $ 633,303 37 2,563,626.09 $ 202,633.00 $ 3,196,929.46 $ 3,196,929.46 $ _ _2_0_2'--,6_33_0_0_ $ 202,633.00 $ 000 3,196,929.46 $ 202,633 00 $ 3,196,929 46 See notes to the general-purpose financial statements. - 26- EXHIBIT "I" GEORGIA STATE FINANCING AND INVESTMENT COMMISSION SPECIAL PURPOSE LOCAL OPTION SALES TAX $ 266,017.50 $ 182,473 24 $ 2, 110,383.32 1,398,989.70 373,007 19 LOTTERY PROJECT TOTALS JUNE 30, 2002 JUNE 30, 2001 1,570 84 $ 1,285,997 95 $ 683,541 14 4,674,009 41 6,421,364 00 1,771,996.89 334,877 34 $ 1,665,007 20 $ 2,665,863 75 $ 1,570 84 $ 7,732,004 25 $ 7,439,782 48 $ 34,432 00 1,020,188 20 $ 273,244 43 $ 1,327,864.63 $ 338,063.26 $ 153,884 87 491,948 13 $ $ 1,570 84 1,570 84 $ $ 34,432 00 1,359,822 30 427,129 30 1,821,383.60 $ 224,005.91 17,982 04 47,994 67 94,152 63 384,135 25 $ 2,173,915.62 $ 337,142 57 0.00 0.00 $ $ 337,142 57 $ 2,173,915.62 $ $ 000 000 $ 3,196,929.46 $ 2,173,915 62 337,142 57 202,633.00 5,910,620.65 $ 5,758,087.22 925,327.01 172,715.00 199,518 00 7,055,647.23 $ 1,665,007 20 $ 2,665,863 75 $ 1,570 84 $ 7,732,004.25 $ 7,439,782 48 - 27 - GRADY COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 2002 REVENUES State Funds Taxes Other Funds Total Revenues EXPENDITURES Current Support Services Business Adm1rnstra!lon Capital Outlay Building and Building Improvements Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Proceeds from General Obligation Bonds Par Value Operating Transfers In Operating Transfers Out Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses FUND BALANCE JULY 1 FUND BALANCE JUNE 30 REGULAR BOND PROCEEDS $ 0 00 $ 225,332 16 $ 0 00 $ 225,332 16 $ 0 00 $ 12,600 00 $ 0 00 $ 12,600 00 $ 0.00 $ 212,732 16 $ 3,11500 $ -2,773,889 92 $ 3,115 00 $ -2,773,889 92 $ 3,11500 $ -2,561, 157 76 199,518 00 5,758,087 22 $ 202,633 00 $ 3,196,929 46 See notes to the general-purpose financial statements - 28 - EXHIBIT "J" GEORGIA STATE FINANCING AND INVESTMENT COMMISSION SPECIAL PURPOSE LOCAL OPTION SALES TAX LOTTERY PROJECT TOTALS YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 1,665,007 20 $ $ 1,640,823.00 64,114 92 $ 1,665,007.20 $ 1,704,937 92 $ 0 00 $ 0 00 $ 1,665,007 20 $ 1,640,823 00 289,447 08 3,595,277 28 $ 107,839 00 1,716,049.86 35,411 99 1,859,300 85 $ 2,980,222 16 $ 1,665,575 99 $ $ 2,980,222 16 $ 1,665,575 99 $ $ -1,315,21496 $ 39,361.93 $ $ 18,043 04 86,905 71 $ 4,745,303 86 995,310 58 86,905 71 $ 4,745,303 86 $ 1,013,353 62 -86,905 71 $ -1,150,026 58 $ _ _8_4_5'-,94_7_2_3_ s 1,479,642 53 $ 1,209,226 68 $ $ 1,479,642 53 $ 1,209,226 68 $ $ 164,427 57 $ 1,248,588 61 $ 172,715 00 925,327 01 86,905 71 $ $ 2,778,889 92 -2,773,889 92 86,905 71 $ 5,000 00 $ 6,000,000 00 683,217 09 -678,217 09 6,005,000 00 0.00 $ -1,145,026 58 $ 0 00 7,055,647.23 6,850,947 23 204,700 00 $ 337,142 57 $ 2,173,915 62 $ 0 00 $ 5,910,620 65 $ 7,055,647 23 - 29 - --------------------------- --------- ---------------- GRADY COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET FIDUCIARY FUND TYPES JUNE 30, 2002 ASSETS Cash and Cash Equivalents Investments NONEXPENDABLE TRUST FUND MILDRED PELHAM SCHOLARSHIP FUND ELEANOR KELLEY SCHOLARSHIP FUND $ 1,382 20 $ 2,576 05 7,500 00 25,500 00 Total Assets $ 8,882 20 $===2=8=,0=7=6=05= FUND EQUITY Fund Balances Reserved For Endowment Corpus Unreserved Undes1gnated $ 7,500 00 1,382 20 $ _ _-=2:.::.8.!.::,0.:.76::...::.;05::_ Total Fund Equity $ 8,882 20 $===2=8=,0=76==05= See notes to the general-purpose financial statements - 30 - EXHIBIT"K" EXPENDABLE TRUST FUNDS MARTIN LINCOLN KENRIDGE BELLER FUND TRUST FUND WIGHT NURSERIES SCHOLARSHIP FUND TOTALS JUNE 30, 2002 JUNE 30, 2001 $ 4,11247 $ 4,829 00 $ 4,026 56 $ 16,926 28 $ 18,574 90 44,500 00 77,500 00 78,500 00 $ 4,11247 $ 49,329 00 $ 4,026 56 $ 94,426 28 $ ===9=7=,0=74=9=0= $ 7,500 00 $ 7,500 00 $ 4,11247 $ 49,329 00 $ _ _ _4'--,0_26_56_ 86,926 28 89,574 90 $ 4,11247 $ 49,329 00 $ 4,026 56 $ 94,426 28 $ 97,074 90 ========= - 31 - GRADY COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES FIDUCIARY FUND TYPE - EXPENDABLE TRUST FUNDS YEAR ENDED JUNE 30. 2002 REVENUES Other Funds EXPENDITURES Current Support Services Central Support Services Community Service Operations Total Expenditures Excess of Revenues over (under) Expenditures FUND BALANCE JULY 1 ELEANOR KELLEY SCHOLARSHIP FUND KENRIDGE FUND $ 1,072 03 $ 3,000 00 $ 500 00 $ 5,665 99 $ 500 00 $ 5,665 99 $ 572 03 s -2,665 99 27,504 02 6,778 46 FUND BALANCE JUNE 30 $ 28,076 05 $ ===4='=11=2=4=7= See notes to the general-purpose financial statements - 32 - EXHIBIT "L" MARTIN LINCOLN BELLER TRUST FUND WIGHT NURSERIES SCHOLARSHIP FUND TOTALS YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 1,963 21 $ 2,029 05 $ 8,064 29 $ _ _ _1_0.:,_,3_30_67_ $ 2,873 00 $ 2,000 00 $ 5,373 00 $ 4,319 00 5,665 99 2,459 96 $ 2,873 00 $ 2,000 00 $ 11,038 99 $ _ _ _6~,7_78_96_ $ -909 79 $ 29 05 $ -2,974 70 $ 3,551 71 50,238.79 3,997 51 88,518 78 84,967 07 $ 49,329 00 $ 4,026 56 $ 85,544 08 $ ====8=8,=51=8 =78= - 33 - GRADY COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30. 2002 SCHEDULE "1" FUNDING AGENCY PROGRAM/GRANT Agnculture, U S Department of Child Nutrlbon Cluster Pass-Through From Georgia Department of Educabon Food and Nutntion Program Food Services School Breakfast Program Nallonal School Lunch Program Total Child Nutnlton Cluster Other Programs Pass-Through From Georgia Department of Education Food and Nutnbon Program Food D1stnbut1on Program (1) Total U S Department of Agnculture Education, U S Department of Special Education Cluster Pass-Through From Georgia Deparbnent of Education lnd1v1duals with D1sab1ht1es Education Act Part B - Special Educabon Flow Through Capacity Building Improvement Preschool Total Special Educatton Cluster Other Programs Pass-Through From Chattahoochee-Flint Reg10nal Educational Service Agency Elementary and Secondary Education Act Titlel Migrant Education Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Titlel Grants to Local Educallonal Agencies Trtlell Eisenhower Professional Development T1tlelll Technology Lrteracy Challenge Fund Grants Title VI Innovative Education Program Strateg10s Class Size Reduction Stewart B McKinney Homeless Assistance Act Education for Homeless Children and Youth Vocational Education - Basic Grants to States High School Program Basic Grant Total U S Deparbnent of Education CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD 10 553 10 555 NIA s 277,374 28 (2) NIA 786,416 36 $ 1,499,864 90 (3) $ 1,063,790.64 $ 1,499,864 90 10 550 NIA 90,678.69 90,678 69 $ 1,154,469 33 $ 1,590,543 59 . 84 027 . 84173 . 84173 NIA $ 497,93043 $ NIA 14,897.25 NIA 38,241 36 $ 551,069 04 $ 497,930 43 14,897 25 38,241 36 551,069 04 84 011 NIA 122,474.42 122,474 42 84 010 84 281 84 318 84298 84 340 84196 84 048 NIA 1,049,354 80 1,049,372 16 (3) NIA 34,930 18 34,930 18 NIA 379,177 48 379,177 48 NIA 35,309 00 35,745 81 (3) NIA 164,214 00 164,855 57 (3) NIA 7,496 66 7,496 66 NIA 72,538 00 73,382 44 (3) s $ 2,416,563 58 2,418,503 76 - 34- GRADY COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30 2002 SCHEDULE "1" FUNDING AGENCY PROGRAM/GRANT Labor, U S Department of Pass-Through From Georgia Department of Labor Workforce Investment Act Pass-Through From SOWEGA Council on Aging, Incorporated T1Ue V - Senior Community Service Employment Program Total U S Department of Labor Defense, U S Department of Direct Department of the Navy R O T C Program CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD 17259 NIA $ 24,404 63 $ 25,124 63 (3) 17 235 NIA 338,405 57 $ 362,810 20 $ 338,405 57 363,530 20 $ 38,509 83 $ 42,713 16 (3) Total Federal Financial Assistance N/A = Not Available $ 3.e12.352 94 $===-4""i4""15=.2=e=o=1=1 Notes to the Schedule of Expenditures of Federal Awards (1) The amounts shown for the Food D1stnbut1on Program represents the Federally assigned value of nonmonetary assistance for donated commod1lles received and/or consumed by the system dunng the current fiscal year (2) Expenditures for the School Breakfast Program were not maintained separately and are included in the 2002 National School Lunch Program (3) Expenditures for this program include State, and/or Other Funds Expenditures are not maintained by fund source MaIor Programs are 1denllfied by an astensk (*) in front of the CFDA number The School D1stnct did not provide Federal Assistance to any Subrecip1ent The accompanying schedule of expenditures of Federal awards includes the Federal grant acllv1ty of the Grady County Board of Education and 1s presented on the modified accrual basis of accounting whteh 1s the basis of accounting used in the presentallon of the general-purpose financial statements See notes to the general-purpose finallClal statements - 35 - ----------------------------- --- - - - --- ----------- GRADY COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30 2002 SCHEDULE "2" AGENCY/FUNDING GOVERNMENTAL FUND TYPES SPECIAL CAPITAL GENERAL REVENUE PROJECTS FUND FUND FUND TOTAL GRANTS Educa!Jon, Georgia Department of Quahty Basic Education Direct Instruct1onal Cost Kindergarten Program $ Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary - Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with D1sab1ht1es Category I Category II Category Ill Category IV Supplemental Speech Gifted Student - Category VI Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program Staff and Professional Development Indirect Cost Twenty Days Add1t,onal Instruction Categoncal Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Principal Supplements Vocational Supervisors Migrant Education Mid-term AdJustment Hold-Harmless Education Equalization Funding Grant Focx! Services Vocational Education Other State Programs 4-8 Statewide After School Program Apprent,cesh,p Program Health Insurance K-3 Statewide Reading Program Mentor Teachers Next Generation Schools Outdoor Classroom Post Secondary Options Preschool Handicapped Program Lottery Programs Ass1st1ve Technology Computers in the Classroom 1,218,860 00 157,041 00 2 497,804 00 510,131 00 1,461,031 00 286 696 00 680,209 00 1,915,397 00 1,936,746 00 1,021,706 00 12,788 00 850,594 00 830,831 00 119,632 00 2,519 00 121,164 00 209,849 00 54,811 00 435,044 00 75 133 00 2,555 589 00 137,187 00 615,322 00 167,966 00 20,000 00 99,528 00 17,783 00 37,624 00 795 00 67,908 00 1,665,939 00 $ 116,534 00 75,000 00 30,503 91 45,244 70 307,922 90 55,748 90 612 00 74,696 30 737 57 4 751 00 42 981 00 8,436 27 124,851 88 $ 1 218,860 00 157,041 00 2,497,804 00 510 131 00 1,461,031 00 286 696 00 680,209 00 1,915,397 00 1,936,746 00 1,021,706 00 12 788 00 850,594 00 830,831 00 119,632 00 2,519 00 121 164 00 209 849 00 54,811 00 435,044 00 75,133 00 2,555,589 00 137,18700 615,322 00 167,966 00 20 000 00 99 528 00 17 783 00 37,624 00 795 00 67,908 00 1,665,939 00 116 534 00 75,000 00 30,503 91 45,244 70 307,922 90 55,748 90 612 00 74,696 30 737 57 4,751 00 42,981 00 8,436 27 124,851 88 Georgia State Financing and Investment Commission Reimbursement on Construction Proiects $ 1,665,007 20 1,665,007 20 Office of School Readiness Pre-Kindergarten Program 586,563 30 586 563 30 - 36 GRADY COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30 2002 SCHEDULE "2" AGENCY/FUNDING GRANTS Office of Treasury and Fiscal Services Public School Employees Retirement GOVERNMENTAL FUND TYPES SPECIAL CAPITAL GENERAL REVENUE PROJECTS FUND FUND FUND TOTAL $ _ _ _4""'3,'-4""-09--'-00"- $ _ _ _4.:c,3,_;_40.:_;9:;_0.:_;0:_ $ 20.465,234 28 S 836 385 45 $ 1 665,007 20 $ 22,966,626 93 See notes to the general-purpose financial statements - 37 - GRADY COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30. 2002 SCHEDULE "3" PROJECT The construction of additional classrooms at the vanous schools within Grady County excepting Cairo High School and the renovation of existing fac1h!les at each of the schools within Grady County and to provide furnishings, equipment and fixtures lo be used in the above-described renovated and expanded fac1h!les Also, the issuance of general obligation debt of the Grady County School D1stnct in an amount not to exceed $6,000,000 00 for the purpose of financing the cost of the capital outlay proJects of the Grady County School D1stnct descnbed above ORIGINAL ESTIMATED COST (1) CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR (3) (4) AMOUNT EXPENDED IN PRIOR YEARS (3) (4) PROJECT STATUS $ 12,000,000 00 $ 12,000,000 00 $ 4,745,303 86 $ 995,310 58 Ongoing (1) The School D1stnct's ongInal cost estimate as specified In the resolution calling for the 1mposItion of the Local Option Sales Tax (2) The School District's current estimate of total cost for the pro1ecl Includes all cost from pro1ect 1ncept1on to completion (3) The voters of Grady County approved the ImposIlIon of a 1% sales tax to fund the above pro1ect and retire associated debt Amounts expended for lh1s pro1ect may include sales lax proceeds, state, local property taxes and/or other funds over the hfe of the proiect (4) In add1l1on to the expenditures shown above, the School District has incurred interest to provide advance funding for the above proiect as follows Pnor Years $ 24,000 00 Current Year 219,000 00 Total $ 243,000 00 See notes to the general-purpose financial statements - 39 - GRADY COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM {QBE) ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30. 2002 SCHEDULE "4" DESCRIPTION ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) ELIGIBLE QBE PROGRAM COSTS SALARIES OPERATIONS TOTAL Direct Instructional Programs Kindergarten Program $ Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with D1sab1lltles Category I Category II Category Ill Category IV Gifted Student - Category VI Alternative Education Program English Speakers of Other Languages (ESOL) TOTAL DIRECT INSTRUCTIONAL PROGRAMS $ 1,354,355 00 $ 174,498 00 2,775.474 00 566,840 00 1,623,173 00 1,234,522 86 $ 159,674 74 2,916,143 47 465,424 22 1,970,431 73 47,243 67 $ 895 45 114,177 73 4,631 56 82.302 20 1,281,766 53 160,570 19 3,030,321 20 470,055 78 2,052,733 93 318,841 00 755,825 00 2,128,323 00 2,152,045 00 1,135,284 00 2,018,283 00 134,633 00 233,177 00 60,904 00 218,693 80 749,276 28 2,337,076 12 2,673,957 55 984,054 17 28,940 17 735,144 61 953,175 47 101,287 62 115.475 66 229,012 89 48,244 62 s 15,431,655 00 $ 15,920,535 98 42,103 05 106,835 04 139,400 10 67,973 03 218,693 80 791,379 33 2,443,911 16 2,813,357 65 1,052,027 20 4,747 07 14,533 54 7,213 75 285 34 2,523 46 6,736 61 562 36 33,687 24 749,678 15 960,389 22 101,572 96 117,999 12 235,749 50 48,806 98 642,163 96 $ 16,562,699 94 Media Center Program Staff and Professional Development 483.405 00 83,486 00 618,575 61 44,985 86 110.458 68 50,617 40 729,034 29 95,603 26 TOTAL QBE FORMULA FUNDS $ 15,998,546 00 $ 16 584,097 45 $ 803,240 04 $ 17,387,337 49 (1) Comprised of State Funds plus Local Five Mill Share See notes to the general-purpose financial statements - 40- GRADY COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30, 2002 SCHEDULE "5" SITE Washington Middle School Easts1de Elementary School Cairo High School Whigham Elementary School Norths1de Elementary School Southside Elementary School Shiver Elementary School CrossRoads Alternative Central Office (Alternative Education Program) Transportation Facility Other Auxiliary Facility TOTAL (1) Comprised of State Funds plus Local Five Mill Share ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) ELIGIBLE QBE PROGRAM COSTS $ 2,832,277 00 $ 3,123,789 89 1,982,122.00 2,208,859 37 3,919,162 00 4,408,982 71 1,281,026 00 1,451,218 94 1,358,907 00 1,317,01560 2,545,247 00 2,553,657.27 1,279,737 00 1,312,47665 114,896 09 233,177 00 56,296 82 108 58 15,398 02 $ 15,431,655 00 $ 16,562,699 94 See notes to the general-purpose financial statements - 41 - SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS 1USSELI, W. HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S W Suite 214 Atlanta, Georgia 30334-8400 September 2, 2003 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Grady County Board of Education REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT Of FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladies and Gentlemen: We have audited the financial statements of Grady County Board of Education as of and for the year ended June 30, 2002, and have issued our report thereon dated September 2, 2003. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general-purpose financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards. issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether Grady County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts However. providmg an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered Grady County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal 2002YB-41 control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in our judgment, could adversely affect Grady County Board of Education's ability to record, process. summarize and report financial data consistent with assertions of management in the financial statements. The reportable condition is described in the accompanying Schedule ofFmdings and Questioned Costs as item FS-6651-02-0 I. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we consider item FS-6651-02-01 to be a material weakness. This report is intended solely for the information and use of the management, members ofthe Grady 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, r ~wOQ.~~ R sell W. Hinton ~-.......___ ""'1119'1~ ' State Auditor RWH:as 2002YB-41 {USSELL W. HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400 September 2, 2003 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Grady County Board of Education REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLlANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 Ladies and Gentlemen: Compliance We have audited the compliance of Grady County Board of Education with the types of compliance requirements described in the US Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2002. Grady County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Grady County Board of Education's management. Our responsibility is to express an opinion on Grady County Board of Education's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A133, Audits vf States, Local Governments, and Non-Profit Organizatwns. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtam 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 audil includes examining, on a test basis, evidence about the Grady County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Grady County Board of Education's compliance with those requirements. 2002SA-10 In our opinion, the Grady County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2002. Internal Control Over Compliance The management of Grady 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 Grady County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more ofthe internal control components does not reduce to a relatively low level of risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the management. members of the Grady 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, .----.... ~~ RWI-l:as 2002SA-10 SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS GRADY COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-6651-00-0 l FS-6651-01-01 Further Action Not Warranted Unresolved - See Corrective Action/Response CORRECTIVE ACTION/RESPONSES GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group finding Control Number: FS-6651-01-0 l The School District has, during the subsequent period, employed a valuation services organization to assist them with set up of a General Fixed Assets System to be utilized in subsequent periods. SECTION IV FINDINGS AND QUESTIONED COSTS GRADY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 I SUMMARY OF AUDITOR'S RESULTS I. Type of Report Issued on the Financial Statements The auditor's opinion on the Grady County Board of Education's financial statements was qualified for various departures from generally accepted accounting principles. 2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Grady County Board of Education disclosed a financial statement reportable condition related to the following control category. General Fixed Assets The reportable condition described above is considered to be a material weakness. 3. Noncompliance Material to the Financial Statements The audit ofthe Grady County Board of Education disclosed no instances ofnoncompliance that were deemed to be material to the financial statements. 4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Grady County Board of Education did not disclose any reportable conditions in internal control over major programs. 5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Grady County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified. 6. Audit Findings Required to be Reported by Section .5 IO{a) of 0MB Circular A-133 The Grady County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133. 7. Major Programs Federal awards audited as major programs are as follows: 84.027 Individuals with Disabilities Education Act - Part B - Special Education Flow Through 84.173 Individuals with Disabilities Education Act - Part B - Special Education Preschool 84.173 Individuals with Disabilities Education Act - Part B - Special Education Capacity Building Improvement 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services- National School Lunch Program 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00. -l - ------ -- - - -------------- GRADY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 I SUMMARY OF AUDITOR'S RESULTS 9. Low Risk Auditee The Grady County Board of Education qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133. II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated from Prior Year Finding Control Number: FS-6651-02-0 I The Grady County Board of Education did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general-purpose financial statements ofthe School District being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the School District to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the School District and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained ofall additions and deletions to the General Fixed Assets Account Group. Management's Response: The School District has, during the subsequent period, employed a valuation services organization to assist them with set up of a General Fixed Assets System to be utilized in subsequent periods. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. -2-