Greene County Board of Education, Greensboro, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2008

GREENE COUNTY BOARD OF EDUCATION
GREENSBORO, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

GREENE 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

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

7

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

8

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

10

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

11

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

13

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

31

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

32

3 SCHEDULE OF STATE REVENUE

34

GREENE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

35

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

37

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

GREENE 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 28, 2009

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members of the Greene County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Greene County Board of Education, as of and for the year ended June 30, 2008, which collectively comprise the Board's basic financial statements as listed in the table ofcontents. These financial statements are the responsibility ofthe Greene County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of Lake Oconee Academy, Inc., which represents 61% of the assets and 100% of the revenues ofthe aggregate remaining fund information. Those financial statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for Lake Oconee Academy, Inc., is based on the report of other auditors.
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 of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Greene County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 and the report of other auditors provide a reasonable basis for our opinions.
2008ARL-12

In our opinion, based on our audit and the report of other auditors, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Greene County Board of Education, as of June 30, 2008, 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.
The Greene County Board of Education has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not to be part of, the basic financial statements.
In accordance with Government Auditing Standards, we have also issued our report dated May 28, 2009, on our consideration ofthe Greene County Board ofEducation's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results ofthat 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.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 31, is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We and the other auditors have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the 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 Greene 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 by us and the other auditors in the audit of the basic financial statements, and in our opinion, based on our audit and the report of other auditors, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
2008ARL-12

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

RWH:as 2008ARL-12

Rus ell W. Hinton, CPA, CGFM State Auditor

GREENE COUNTY BOARD OF EDUCATION

GREENE COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2008
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Loans Payable, Net of Unamortized Discount of $9,275 Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted (Deficit)
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

4,994,756.91

9,370,684.89

979,757.45 832,404.25 522,541.16
52,576.61 32,396.32 1,206,123.07 24,428,110.57

$ ===42=,4=1=9,_35=1=.2=3

$

210,321.30

1,668,682.02

47,655.05

140,725.00

1,934,396.80 6,560,495.07

$

10,562,275.24

$

24,436,959.53

429,814.77 136,421.59 7,003,816.41 -149,936.31

$

31,857,075.99

$ ==4=2='=,4=1='9,=35=1=.2=3

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

GREENE COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2008

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 Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Other Taxes Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$

15,161,743.63 $

1,149,410.32 1,302,934.85
716,588.95 1,168,779.00 1,450,819.60
439,932.58 1,577,702.92 1,479,544.43
60,270.90 425,839.60

23,303.59 1,482,278.70
439,377.19

$

26,878,526.26 $

40,431.19 16,626.81 81,468.08
232,207.01 52,908.24
423,641.33

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

EXHIBIT"B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

5,677,269.18

172,366.33 458,561.49 265,762.12 671,463.96 707,425.82
15,311.04 642,735.28 504,872.09 $
800.70 73,438.36

162.88 1,188,122.46

$

10,378,291.71 $

$ 74,087.00 74 087.00 $

-9,444,043.26
-960,417.18 -844,373.36 -450,826.83 -497,315.04 -661,925.70 -424,621.54 -934,967.64 -900,585.34
-59,470.20 -352,401.24
209,066.30 -241,248.00 -439 377.19
-16,002,506.22

$

13,986,405.97

6,899.13

27,116.65

4,056,528.11 204,656.77 626,970.22 296,119.96

$

19,204,696.81

$

3,202,190.59

28,654,885.40

$ ======3=1='8=57..,,0,..7=5=.9=9

-3-

GREENE COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

$ 3,973,382.96 $ 839,863.36

113,184.72

9,257,500.17

296,086.51 832,404.25 522,541.16
52,576.61 32,396.32

700,816.73

Total Assets

$ 5,822,572.53 $ 10,798,180.26

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Loans Payable
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Debt Service Capital Projects
Unreserved Designated for Student Activities Undesignated Reported in: General Fund Lake Oconee Academy, Inc. (Deficit)
Total Fund Balances

$ 87,956.91 $ 1,655,336.02 47,655.05

87,798.39

$ 1,790,947.98 $

87,798.39

$ 429,814.77 $ 10,710,381.87
112,269.73 3,489,540.05
$ 4,031,624.55 $ 10,710,381.87

Total Liabilities and Fund Balances

$ 5,822,572.53 $ 10,798,180.26

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

EXHIBIT"C"

DEBT SERVICE
FUND

NONMAJOR GOVERNMENTAL
FUND

TOTAL

$ 136,421.59 $

45,089.00 $ 4,994,756.91 9,370,684.89
996,903.24 832,404.25 522,541.16
52,576.61 32,396.32

$ 136,421.59 $====4==5=0=8=9=.o=o $ 1s,802,2s3.38

$

34,566.00 $ 210,321.30

13,346.00

1,668,682.02

47,655.05

150,000.00

150,000.00

$

197 912.00 $ 2,076,658.37

$ 136,421.59
$ $ 136,421.59 $

$ 429,814.77 136,421.59
10,710,381.87

112,269.73

-152,823.00

3,489,540.05 -152,823.00

-152,823.00 $ 14,725,605.01

$ 136,421.59 $====4==5=,0==8==9==.0=0 $ 16,802,263.38

-5-

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GREENE COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2008

EXHIBIT"D"

Total Fund Balances - Governmental Funds (Exhibit "C")

$ 14,725,605.01

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

Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:

Land Construction in Progress Land Improvements Building and Building Improvements Equipment Accumulated Depreciation
Total Capital Assets

$

165,385.00

1,040,738.07

1,653,607.57

28,885,808.34

5,194,422.14

-11,305,727 .48

25,634,233.64

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.

-17,145.79

When issuing debt, Governmental Funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the financial statements of Governmental Activities. The unamortized discount on loans payable is not recorded on the balance sheet for Governmental Funds.

9,275.00

Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:

Bonds Payable Capital Leases Payable Installment Sales Agreement
Total Long-Term Liabilities

$ -7,470,000.00 -652,561.87 -372,330.00

-8,494,891.87

Net Assets of Governmental Activities (Exhibit "A")

$ 31,857,075.99

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

GREENE COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2008

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 Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES {USES)
Discounts on Loans Payable 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

$ 13,974,863.01 204,656.77 $
7,159,710.56 3,292,668.15
423,641.33 102,248.68 133,811.96

4,056,528.11 524,672.86

$ 25,291,600.46 $ 4,581,200.97

$ 13,028,419.81 $ 837,255.40

1,105,074.00 938,679.91 440,297.23
1,053,363.38 1,379,274.01
435,548.77 1,502,819.29 1,146,217.37
60,270.90 335,638.23 288,699.52 1,175,082.32
4,697.84

42,054.32 302,419.94
23,653.36 11,006.69 75,097.86 637,296.92
2,183,428.70

180,673.27 38,251.50

23,580.00 14,125.69

$ 23,113,007.35 $ 4,149,918.88

$ 2,178,593.11 $ 431,282.09

$

-85,000.00 $ -3,649,077.50

$

-85,000.00 $ -3,649,077.50

$ 2,093,593.11 $ -3,217,795.41

1,938,031.44 13,928,177.28

$ 4,031,624.55 $ 10,710,381.87

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

EXHIBIT"E"

DEBT SERVICE
FUND

NONMAJOR GOVERNMENTAL
FUND

TOTAL

$ 13,974,863.01

4,261,184.88

7,159,710.56

3,292,668.15

423,641.33

$

48.68

626,970.22

$

162,308.00

296,119.96

$

48.68 $

162,308.00 $ 30,035,158.11

$
$ 3,155,000.00 387,000.00
$ 3,542,000.00 $ $ -3,541,951.32 $

70,202.00 $ 13,935,877.21

2,282.00 61,835.00 198,473.00 44,539.00
8,888.00

1,149,410.32 1,302,934.85
440,297.23 1,275,489.74 1,423,813.01
446,555.46 1,577,917.15 1,783,514.29
60,270.90 344,526.23 288,699.52 1,175,082.32 2,188,126.54

3,359,253.27 439 377.19

386,219.00 $ 31,191,145.23

-223,911.00 $ -1, 155,987.12

$ $ 3,649,077.50
$ 3,649,077.50 $ $ 107,126.18 $
29,295.41

-13,912.00 $ 85,000.00

-13,912.00 3,734,077.50 -3,734,077.50

71 088.00 $

-13 912.00

-152,823.00 $ -1,169,899.12

0.00

15,895,504.13

$ 136,421.59 $

-152,823.00 $ 14,725,605.01

-9-

GREENE 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, 2008

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 lifes 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.
Bond issuance costs, deferred gains on refundings and similar items when debt is first issued are reported as an expenditure in Governmental Funds, but are reported as deferred charges on the Statement of Net Assets and amortized over the term of the debt, using the straight-line method. The details of this difference in the current period are as follows:
Discount on Loans Payable Amortization of Discount on Loans Payable
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Bond Principal Retirements Capital Lease Payments Installment Sales Agreement Payments
Total Long-Term Debt Repayments
Change in Net Assets of Governmental Activities (Exhibit "B")

$ -1,169,899.12

$ 1,920,978.13
-962,975.43

958,002.70 45,558.74

$

13,912.00

-4,637.00

9,275.00

$ 3,155,000.00
180,673.27 23,580.00

3,359,253.27

$ 3,202,190.59

The notes to the basic financial statements are an integral part of this statement. - 10 -

GREENE COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2008
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT"G"

AGENCY FUNDS
$ =====28='=51=0=.9===8

$

28,510.98

The notes to the basic financial statements are an integral part of this statement. - 11 -

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GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Greene County Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
BLENDED COMPONENT UNIT
The non-profit organization, Lake Oconee Academy, Inc., operates a charter school, Lake Oconee Academy. The Lake Oconee Academy, Inc., (Charter School) is a legally separate tax-exempt component unit of Greene County Board of Education (School District). The Charter School was created through a contract between the School District and the Charter School whereby the School District provides funds to the Charter School to cover the costs of its operations.
Although the Charter School is legally separate from the School District, it is reported as a Special Revenue Fund ofthe School District because it is located in Greene County and almost exclusively provides benefits to the School District in that it is responsible for the public education of the students attending its school. Complete financial statements for the Charter School can be obtained from the Lake Oconee Academy, 6350 Lake Oconee Parkway, Suite 102, Greensboro, Georgia 30642.
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 Greene 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.

- 13 -

GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. All remaining governmental funds are aggregated and reported as nonmajor funds.
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), Bond Proceeds and proceeds from an installment sales agreement to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (sales) legally restricted for the payment ofgeneral longterm principal, interest and paying agent's fees.
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

- 14 -

GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities, acquisitions under capital leases and acquisitions under an installment sales agreement are reported as other financing sources.
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. Official Code of Georgia Annotated Section 45-8-14 authorize the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning
- 15 -

GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate 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 ofGeorgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions ofthe State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration ofcredit risks, interest rate risks or foreign currency risks.
RECEIVABLES
Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The Greene County Board ofCommissioners fixed the property tax levy for the 2007 tax digest year (calendar year) on October 4, 2007 (levy date). Taxes were due on December 20, 2007 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2007 tax digest
- 16 -

GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

are reported as revenue in the governmental funds for fiscal year 2008. The Greene 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 oftaxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2008, for maintenance and operations amounted to $13,940,847.23.

The tax millage rate levied for the 2007 tax year (calendar year) for the Greene County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

8.7 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $4,056,528.11 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 ofart. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.

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GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment

All

NIA

$ 5,000.00 20 to 80 years

$ 5,000.00 25 to 80 years

$ 5,000.00 5 to 20 years

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

GENERAL OBLIGATION BONDS

The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial statements during the first year bonds are issued.

In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.

NET ASSETS

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

Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.

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

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GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
Note 3: 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 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 or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
- 19 -

GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

Note 3: DEPOSITS AND INVESTMENTS

CATEGORIZATION OF DEPOSITS At June 30, 2008, the bank balances were $6,443,467.32. The amounts ofthe total uninsured bank balances are classified into three categories of custodial credit risk:

Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the School District's name.

The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2008, as follows:

Custodial Credit Risk Category

Bank Balance

1

$

0.00

2

6,198,571.62

3

36,179.97

Total

$6,234,751.59

CATEGORIZATION OF INVESTMENTS The School District's investments as of June 30, 2008, are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Type

Fair Value

Other Investments U. S. Treasury Money Market Funds

$ 235,081.16

Investment Pools Office of Treasury and Fiscal Services Georgia Fund 1

9,135.603.73

Total Investments

$ 9,370,684.89

The Georgia Fund 1, formerly referred to as LGIP, administered by the State of Georgia, Office of Treasury and Fiscal Services is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy ofthe State ofGeorgia, Office of Treasury and Fiscal Services for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia

-20-

GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

Note 3: DEPOSITS AND INVESTMENTS

Fund 1 is disclosed in the State ofGeorgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.state. ga. us/intemet/searchRpts.html.

The Primary Liquidity Portfolio consists ofGeorgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2008, was 40 days.

The U.S. Treasury Money Market funds are in an Institutional Treasury Portfolio Fund managed by Fidelity Investments. The Institutional Treasury Portfolio Fund is rated AAAm by Standard and Poor's. The weighted average maturity of the fund is approximately 60 days.

Note 4: NON-MONETARY TRANSACTIONS

The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

Note 5: CAPITAL ASSETS

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

Balances
July 1. 2007

Increases

Decreases

Balances June 30, 2008

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

$ 165,385.00

$

7,461.23 $ 1,033,276.84

0.00 $ 165,385.00 1,040,738.07

Total Capital Assets Not Being Depreciated $ 172,846.23 $ 1,033,276.84 $

0.00 $ 1,206,123.07

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$28,822,808.34 $ 63,000.00

$28,885,808.34

4,635,129.85 824,701.29 $ 265,409.00 5,194,422.14

1,653,607.57

1,653,607.57

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

6,603,026.97 2,926,532.91 1,078.601.17

493,097.92 405,560.70
64,316.81

265,409.00

7,096,124.89 3,066,684.61 1,142,917.98

Total Capital Assets, Being Depreciated, Net $24,503,384.71 $ -75,274.14 $

0.00 $24,428,110.57

Governmental Activity Capital Assets - Net $24,676,230.94 $ 958,002.70 $

0.00 $25,634,233.64

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GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 5: CAPITAL ASSETS

Capital assets being acquired under capital leases as of June 30, 2008, are as follows:

Governmental Funds

Equipment Less: Accumulated Depreciation

$ 309,120.00 152,013.00

$ 157,107.00

Capital assets being acquired under installment sales agreements as ofJune 30, 2008, are as follows:

Governmental Funds

Construction in Progress

$ 149,599.57

Current year depreciation expense by function is as follows:

Instruction Support Services
Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services

$ 595,074.43

$ 34,828.00 22,425.13 26,607.50 878.40 8,218.25 181,738.35 36,099.50

310,795.13 57,105.87

$ 962,975.43

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST), general obligation bond proceeds and installment sales agreement proceeds are restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2008, were as follows:

- 22 -

GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

Note 6: RESTRICTED ASSETS

Restricted Cash and Cash Equivalents: Debt Services Capital Acquisitions
Restricted Investments: Capital Acquisitions

District-wide Capital Projects

Installment

Bond

Sales

SP LOST

Proceeds

Agreement

Debt Service Funds

$ 839,863.36

$ 136,421.59

$ 5,550,934.71 $ 3,471,484.30 $ 235,081.16

Note 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2008, consisted of the following:

Transfer to

Transfers From

District-wide

General

Capital

Fund

Projects

Special Revenue Fund - Lake Oconee Academy, Inc. $ 85,000.00

Debt Service Fund

_ _ _ _ $ 3,649,077.50

Total

$ 85,000.00 $3,649,077.50

Transfers are used to move funding from the General Fund to Lake Oconee Academy for students enrolled in the charter school according to the approved charter and to move Special Purpose Local Option Sales Tax revenue (SPLOST) collected by the District-wide Capital Projects Fund to the Debt Service Fund as needed for repayment of bond principal and interest.

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 participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members ofthe system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery

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GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 8: RISK MANAGEMENT

(including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the system varies by line of coverage.

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:

Beginning ofYear Liability

Claims and Changes in Estimates

Claims Paid

EndofYear Liability

2007 2008

$

0.00 $ 43,222.00 $ 43,222.00 $

0.00

$

0.00 $ 47,574.00 $ 47,574.00 $

0.00

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $500,000.00 loss per occurrence, up to $2,000,000.00.

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

Position Covered

Amount

Superintendent All Other Employees

$ 100,000.00 $ 100,000.00

Note 9: SHORT-TERM DEBT

The School District issues tax anticipation notes in advance ofproperty 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 ofGeorgia limits the aggregate amount ofshort-term debt to 75 percent ofthe 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.

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GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 9: SHORT-TERM DEBT

Short-term debt activity for the fiscal year is as follows:

Beginning Balance

Issued

Redeemed

Ending Balance

Tax Anticipation Notes $====0-,0~0 $3.200.000,00 $3.200.000,00 $====0-,0~0

Note 10: LONG-TERM DEBT

LOANS PAYABLE During the year ended June 30, 2008, the Lake Oconee Academy (Charter School) received noninterest bearing loans from a donor totaling $150,000.00. Under the agreement with the donor, these loans will be repaid from the Charter School cash flow as it generates revenue from additional grades and students to the school or the Charter School has received funding from the Federal Implementation Grant which is distributed to start-up charter schools. It is estimated that the loans will be repaid as of June 30, 2010. The Charter School has recognized the imputed interest (at the current prime rate of3.25%) on these non-interest bearing loans of$13,912.00 as a contribution for 2008, and will accrete this discount over the expected loan term. Interest accretion on these loans totaled $4,637.00 for 2008.

CAPITAL LEASES The Greene County Board of Education has entered into various lease agreements for buses and energy conservation. These lease agreements qualify as capital leases for accounting purposes, and, therefore, have been recorded at the present value ofthe future minimum lease payments as ofthe date of their inception.

INSTALLMENT SALES AGREEMENT The Greene County Board of Education entered into an agreement dated June 1, 2006, with the Northeast Georgia Regional Educational Service Agency for the construction and subsequent lease of the Rutland Center. Under the terms of the agreement, the School District will make annual payments through July 15, 2020.

GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rate

Amount

General Government - Series 2006

3.65%

$ 7.470,000.00

The changes in Long-Term Debt during the fiscal year ended June 30, 2008, were as follows:

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GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 10: LONG-TERM DEBT

Balance
July 1. 2007

Governmental Funds

Additions

Deductions

Balance June 30, 2008

Due Within One Year

G.O. Bonds

$10,625,000.00 $

Capital Leases

833,235.14

Installment Sales Agreement 395,910.00

0.00 $ 3,155,000.00 $ 7,470,000.00 $ 1,765,000.00

180,673.27

652,561.87

145,456.80

23,580.00

372,330.00

23,940.00

$1 l,85!1145.H $

Q,QQ $ 3,352,253.21 $ 8,!12!1,821.81 $ l ,23!l,326.8Q

At June 30, 2008, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30
2009 2010 2011 2012 2013 2014 - 2018 2019 - 2021
Total Principal and Interest

Cagital Leases

Princigal

Interest

Installment Sales Agreement

Princigal

Interest

$ 145,456.80 $ 152,680.83 136,511.20 217,913.04

29,364.78 $ 22,140.75 14,556.56
8,688.60

23,940.00 $ 24,930.00 26,010.00 27,090.00 28,170.00 159,300.00 82,890.00

15,488.93 14,493.03 13,455.94 12,373.92 11,246.98 37,668.40 5 791.97

$ 652.561,87 $ 74,750.69 $ 372,330.00 $ 110,519.17

Fiscal Year Ended June 30
2009 2010 2011 2012
Total Principal and Interest

General Obligation Debt

Princigal

Interest

$ l,765,000.00 $ 1,830,000.00 1,900,000.00 1,975,000.00

272,655.00 208,232.50 141,437.50
72,087.50

$ 7,470.000,00 $ 694,412,50

Note 11: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $482,761.09 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 $452,803.88

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GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

Note 11: ON-BEHALF PAYMENTS

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $27,181.21

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$2,776.00

Note 12: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2008:

Project

Unearned Executed Contracts

District Paving Project

$1,057,313.80

The amount described in this note is not reflected in the basic financial statements.

Note 13: SIGNIFICANT CONTINGENT LIABILITIES

Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.

The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.

Note 14: SUBSEQUENT EVENTS

On December 16, 2008, in the subsequent fiscal year, the School District entered into an Intergovernmental Contract with Greene County Development Authority (Authority) for the purpose ofconstructing educational facilities for use by Lake Oconee Academy, Inc. The construction costs for the facilities are financed by revenue bonds of $17,205,000.00 issued by the Authority on February 20, 2009. The bonds issued are limited obligations ofthe Authority and do not constitute a debt or general obligation ofthe School District. However, the Intergovernmental Contract obligates the School District to make payments to the Authority for all principal and interest due and payable for the issued bonds.

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GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 15: POSTEMPLOYMENT BENEFITS

Georgia Retiree Health Benefit Fund

Plan Description. The School District contributes to the Georgia Retiree Health Benefit Fund ("GRHBF"), a cost-sharing multiple-employer defined benefit postemployment healthcare plan administered by the Department of Community Health. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries. Pursuant to Title 45, Chapter 18 of the Official Code ofGeorgia Annotated, the authority to establish and amend the benefit provisions ofthe plan is assigned to the Board of Community Health. The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department ofCommunity Health at 2 Peachtree Street, Atlanta, Georgia 30303.

Funding Policy. The contribution requirements of plan members and participating employers are established and may be amended by the Board of Community Health. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) of the cost of health insurance coverage.

Participating employers are statutorily required to contribute in accordance with the employer contribution rate established by the Board of Community Health. This contribution rate is established to fund both the active and retired employee health insurance plans based on projected pay-as-you-go financing requirements. The employer contribution rates for the combined active and retiree plans for the fiscal year ended June 30, 2008, were as follows:

Teachers Non-Certificated Employees

18.534% of state-based salaries $162.72 per month

The School District's contribution to the health insurance plans for the fiscal year ended June 30, 2008, was $1,872,508.10, which equaled the required contribution.

Note 16: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

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GREENE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 16: 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 ofTrustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$ 1,140,251.84 $ 1,174,497.73 $ 1,194,457.00

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GREENE COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2008

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL !1l

FINAL (1)

ACTUAL AMOUNTS

$ 13,552,415.33 $ 13,552,415.33 $ 13,974,863.01

204,656.77

6,882,298.77

7,046,705.98

7,159,710.56

3,605,623.89

3,526,619.33

3,292,668.15

53,281.43

53,281.43

423,641.33

34,300.00

34,300.00

102,248.68

168,289.71

168,289.71

133,811.96

$ 24,296,209.13 $ 24,381,611.78 $ 25,291,600.46

$ 13,722,769.25 $ 13,835,353.17 $ 13,028,419.81

966,224.20 991,284.62 502,176.54 1,091, 169.49 1,293,200.46 566,320.21 1,800,356.53 1,221,331.19 60,478.72 426,862.83
1,135,381.65 277,500.00

1,001,224.20 1,127,474.98
522,176.54 1,090,607.30 1,310,527.46
566,320.21 1,800,356.53 1,221,331.19
60,478.72 324,800.00
1,135,381.65 277,500.00

1,105,074.00 938,679.91 440,297.23
1,053,363.38 1,379,274.01
435,548.77 1,502,819.29 1,146,217.37
60,270.90 335,638.23 288,699.52 1,175,082.32
4,697.84 218,924.77

$ 24,055,055.69 $ 24,273,531.95 $ 23,113,007.35

$

241,153.44 $

108,079.83 $

2, 178,593.11

$

283,456.83 $

283,456.83

-283,456.83

-283,456.83 $

-85,000.00

$

0.00 $

0.00 $

-85,000.00

$

241,153.44 $

108,079.83 $

2,093,593.11

1,901,331.30

1,901,331.30

1,938,031.44

65,278.58

31,140.21

Fund Balances - Ending

$

2,201,763.32 $

2,040,551.34 $

4,031,624.55

Notes to the Schedule of Revenues, Ex11enditures 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.

- 31 -

GREENE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2008

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) Pass-Through From Office of Treasury and Fiscal Services National Forest Reserve Funds
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 Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Enhancing Education Through Technology Program Improving Teacher Quality State Grants Rural Education Safe and Drug-Free Schools and Communities - State Grants State Grants for Innovative Programs Title I Grants to Local Educational Agencies Pass-Through From Greene County Dreamers Twenty-First Century Community Learning Centers
Total U.S. Department of Education
Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program
Total Federal Financial Assistance
NIA= Not Available

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

NIA NIA $
$

(2) 965,148.35
965,148.35

10.550 10.665

NIA NIA
$

81,445.29 {3} 1,046,593.64

84.027 84.173

NIA $ NIA
$

468,190.00 35,270.00
503,460.00

84.048 84.318 84.367 84.358 84.186 84.298 * 84.010
84.287

NIA NIA NIA NIA NIA NIA NIA
NIA
$

33,324.00 117,451.00 224,460.00 64,091.00
1,292.13 4,386.00 876,978.29
243,190.14
2,068,632.56

$

127,110.32

$=====3=,2=42='=33,..6.,..5.2...

- 32 -

GREENE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2008

SCHEDULE "2"

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 ($360,810.26) were not maintained separately and are included in the 2008 National School Lunch Program.
(3) Funds earned on this program, in the amount of $67,405.78, do not require reporting of expenditures.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Greene 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.

- 33-

GREENE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2008
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 Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Alternative Education Program English for Speakers of Other Languages (ESOL) 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 Vocational Supervisors Mid-term Adjustment Hold-Harmless Preschool Handicapped Program Food Services Health Insurance Teachers' Retirement System Vocational Education Amended Formula Adjustment Other State Programs Charter Schools-Facility Funding High School Graduation Program Middle School Remedial National Teacher Certification Virtual School
Office of Treasury and Fiscal Services Public School Employees Retirement

See notes to the basic financial statements.

- 34-

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

525,901.89

453,277.00 10,694.00
825,795.00 47,199.00
386,443.00 65,935.00
618,893.00 536,955.00 248,694.00 940,241.00 257,841.00
51,079.00 65,939.00 122,320.00 35,714.00 23,793.00
242,426.00 290,249.00 295,938.00
377,473.00 74,087.00 20,000.00 52,592.00 17,327.00 11,258.00 52,723.00 64,448.00
452,803.88 27,181.21 83,390.58
-192,896.00
20,000.00 42,096.00
2,886.00 5,888.00
350.00
2 776.00
$ ======7'==1=59==,7=1=0=.5=6

GREENE COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2008

SCHEDULE "4"

PROJECT
The renovation, improvement and equipping of existing school buildings and other facilities, the acquisition, construction and equipping of additional administrative, support and physical education facilities at existing school and the acquisition of all property necessary or desirable therefore, both real and personal.
Adding to, constructing, renovating, repairing, improving and equipping school system buildings and facilities, including but not limited to a school bus depot, athletic and fine arts facilities and security improvements and equipment; acquiring various new equipment, fixtures and furnishings for existing facilities system-wide, including computer technology and software, acquiring school buses and transportation equipment; equipping existing classrooms and instructional and support space; acquiring part of a psychoeducational facility; paying and general obligation debt of the School District in conjunction with the imposition of such sales and use tax; and paying the expenses incident to accomplishing the foregoing.

ORIGINAL ESTIMATED
COST(1)

CURRENT ESTIMATED COSTS(2)

AMOUNT EXPENDED IN CURRENT YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEAR(3)

PROJECT STATUS

$ 10,000,000.00 $ 10,565,642.88

$ 10,565,642.88 Ongoing

19,000,000.00 19,000,000.00 $ 4,261,220.88

1,366,925.93 Ongoing

$ 291000,000.00 $ 29,565,642.88 $ 4,261,220.88 $ 11,932,568.81

(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 projects. Includes all cost from project inception to completion.
(3) The voters of Greene County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

See notes to the basic financial statements.

-35-

(This page left intentionally blank)

GREENE COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2008

SCHEDULE "5"

DESCRIPTION

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Primary Grades (1-3) Program

Primary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Upper Elementary Grades-Early Intervention (4-5)

Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category I

Category II

Category Ill

CategoryV

Gifted Student - Category VI

Alternative Education Program

English Speakers of Other Languages (ESOL)

915,224.00 $ 20,887.00 1,724,506.00 95,693.00 815,454.00

828,276.99 $ 43,965.90 1,612,116.07 105,799.98 924,510.54

127,281.00 1,315,093.00 1,093,433.00
534,455.00 1,984,962.00
512,610.00 107,203.00 131 672.00

73,987.49 1,143,239.22 1,576,055.47
508,214.66
363,049.54 198,870.61 1,144,170.82
1,393.91 491,203.71
93,675.02 178,476.28

49,814.76 $ 415.18
60,506.00 1,048.12
26,953.26
242.35 50,380.59 120,689.83 23,389.31
144,142.99
5,269.15
7,299.92

878,091.75 44,381.08
1,672,622.07 106,848.10 951,463.80
74,229.84 1,193,619.81 1,696,745.30
531,603.97
507,192.53 198,870.61 1,144,170.82
1,393.91 496,472.86
93,675.02 185,776.20

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

9,378,473.00 $ 9,287,006.21 $ 490,151.46 $ 9,777,157.67

Media Center Program Staff and Professional Development

253,747.00 48 182.00

332,369.89

57,090.40

389,460.29 171,992.98

TOTAL QBE FORMULA FUNDS

$

9,680,402.00 $ 9,619,376.10 $ 547,241.86 $ 10,338,610.94

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

See notes to the basic financial statements.

- 37 -

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 28, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Greene 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 of Greene County Board of Education as of and for the year ended June 30, 2008, which collectively comprise Greene County Board of Education's basic financial statements and have issued our report thereon dated May 28, 2009. 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. Other auditors audit the financial statements of the Lake Oconee Academy, Inc., (Charter School), as described in our report on Greene County Board ofEducation's financial statements. This report does not include the results ofother auditors testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Greene County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the Greene County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Greene County Board of Education's internal control over financial reporting.

2008YB-30X

Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies.
A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Greene County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Greene County Board of Education's financial statements that is more than inconsequential will not be prevented or detected by the Greene County Board of Education's internal control. We consider items FS-6661-08-01 and FS-6661-08-02 in the accompanying Schedule of Findings and Questioned Costs to be significant deficiencies in internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Greene County Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we believe that none of the significant deficiencies described above are material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Greene 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.
We noted certain matters that we have reported to management of Greene County Board of Education in a separate letter dated May 28, 2009.
Greene County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Greene County Board of Education's response and, accordingly, we express no opinion on it.
2008YB-30X

This report is intended solely for the information and use of management, members of the Greene County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
--:.?~ m. w . ~
~u1sell W. Hinton, CPA, CGFM State Auditor
RWH:as 2008YB-30X

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 28, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Greene 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 ofGreene County Board ofEducation with the types ofcompliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to its major Federal program for the year ended June 30, 2008. Greene County Board of Education's major Federal program is identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements oflaws, regulations, contracts and grants applicable to its major Federal program is the responsibility of Greene County Board of Education's management. Our responsibility is to express an opinion on Greene County Board ofEducation'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 of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types 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 Greene County Board ofEducation's compliance with those requirements and performing such other procedures as we considered necessary in the

2008SA-10

circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Greene County Board of Education's compliance with those requirements.
In our opinion, the Greene County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to its major Federal program for the year ended June 30, 2008.
Internal Control Over Compliance
The management of Greene 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 Greene County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose ofexpressing an opinion on the effectiveness ofinternal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Greene County Board of Education's internal control over compliance.
A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type ofcompliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement ofa Federal program will not be prevented or detected by the entity's internal control.
Our consideration ofthe internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
2008SA-10

This report is intended solely for the information and use of management, members ofthe Greene County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~.m_w.~
Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2008SA-10

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

GREENE COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6661-06-03 FS-6661-07-01

Further Action Not Warranted Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over Credit Card Expenditures Finding Control Number: FS-6661-07-01

We concur with this finding. The Board implemented a new purchasing policy in September 2008. It is the intent of the Administration that credit cards are the responsibility of each holder.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

F A-6661-06-02

Partially Resolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

SPECIAL TESTS AND PROVISIONS Deficiencies in Hiring "Highly Qualified" Personnel U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6661-06-02

The Board is currently awaiting a review from the Georgia Department ofEducation to see if a reclaim of funds is appropriate.

SECTION IV FINDINGS AND QUESTIONED COSTS

GREENE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

I SUMMARY OF AUDITOR'S RESULTS

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

2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Greene County Board of Education disclosed financial statement significant deficiencies related to the following control categories.

Cash and Cash Equivalents Employee Compensation Accounting Controls (Overall)

Expenditures/Liabilities/Disbursements Revenues/Receivables/Receipts

None of the significant deficiencies described above are considered to be material weaknesses.

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

4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Greene County Board ofEducation did not disclose any significant deficiencies in internal control over major programs.

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

6. Audit Findings Required to be Reported by Section .510(a) ofOMB Circular A-133 The Greene 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 The Federal award audited as a major program is as follows: 84.010 Title I Grants to Local Educational Agencies

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.

9. Low Risk Auditee The Greene County Board ofEducation qualified as a low risk auditee as defined by Section .530 ofOMB Circular A-133.

- 1-

GREENE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over Credit Card Expenditures Significant Deficiency Finding Control Number: FS-6661-08-01

Condition:

This is a repeat finding (FS-6661-06-03 and FS-6661-07-01) from the fiscal years ended June 30, 2006, and June 30, 2007, respectively. The School District has not established internal controls related to management's usage of credit cards issued in the name of the Board.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that expenditures are properly authorized, documented and allowable.

Questioned Cost: NIA

Information:

Weaknesses in internal controls related to the credit card usage by management, including Board Members and the Superintendent, were as follows:

The School District did not have a written policy regarding the use of credit cards by management.
Procedures were not in place to ensure that charges were allowable prior to the use of the credit cards.
More than one card with the same account number was being used to charge expenditures and travel; thereby, making it difficult to determine if purchases were made by authorized users.
Personal expenses were charged to the Board's credit card by a Board Member. The School District was later reimbursed for these expenditures.
The School District does not appear to be following Statewide Travel Regulations issued by the State Accounting Office regarding meal reimbursements.
Travel charges were not identified by individual, making it difficult to determine whether travel paid to employees and board members was properly reported on the Salary and Travel Supplement to Georgia Department of Audits and Accounts.

Cause:

These deficiencies were a result of management's failure to ensure that internal controls were established, implemented and functioning with regard to the credit cards.

-2-

GREENE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over Credit Card Expenditures Significant Deficiency Finding Control Number: FS-6661-08-01

Effect:

Errors and/or irregularities may not be detected in a timely manner. Travel reported on the Salary and Travel Supplement may be incorrect.

Recommendation:

We recommend that management move quickly and decisively to address the deficiencies noted above because management's actions related to establishing good internal controls are the foundation for an effective internal control structure. Effective internal control policies and procedures should be implemented to ensure that credit card expenditures are properly authorized, documented, allowable and utilized for educational purposes only.

ACCOUNTING CONTROLS (OVERALL) CASH AND CASH EQUIVALENTS EMPLOYEE COMPENSATION REVENUES/RECEIVABLES/RECEIPTS Inadequate Separation of Duties Significant Deficiency Finding Control Number: FS-6661-08-02

Condition:

The accounting procedures ofthe School District were insufficient to provide for adequate separation of duties related to accounting controls (overall), cash and cash equivalents, employee compensation and revenues/receivables/receipts.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide adequate separation of duties involving key accounting functions, both manual and automated.

Questioned Cost: NIA

Information:

Accounting Controls (Overall) Access controls in the Financial Accounting System did not prevent users from accessing accounting functions that were outside of their area of responsibility.

-3 -

GREENE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

ACCOUNTING CONTROLS (OVERALL) CASH AND CASH EQUIVALENTS EMPLOYEE COMPENSATION REVENUES/RECEIVABLES/RECEIPTS Inadequate Separation of Duties Significant Deficiency Finding Control Number: FS-6661-08-02

Cash and Cash Equivalents The bank reconciliation was not performed by someone independent of the general ledger function, including the ability to post journal entries. Bank reconciliations were not reviewed by an individual independent of the reconciliation process.

Employee Compensation Personnel and payroll functions were not separated. The same individual that enters employee information into the personnel system also calculates employee compensation, processes payroll transactions, and posts information to the general ledger.

Revenues/Receivables/Receipts Deposits preparation was not separated from the record keeping and cash custody functions.

Cause:

This deficiency was a result of the School District's decision to limit the number of administrative staff made responsible for accounting functions.

Effect:

Fraud, errors and/or irregularities may not be detected in a timely manner.

Recommendation:

Management should review this decision to determine ifemployee duties can be reassigned to achieve a higher degree of internal controls, including monitoring, with the existing staffand should also implement procedures to ensure that key accounting functions of custody, record keeping and authorization are separated.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

-4-

SECTIONV MANAGEMENT'S RESPONSES

GREENE COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2008
Finding Control Number: FS-6661-08-01
Concur:
At the conclusion of fiscal year 2008, the policy pertaining to Credit Card use had not been implemented. On September 8, 2008, the Greene County Board ofEducation passed its Credit Card policy, Descriptor Code: DJE. The policy addresses controls and allowable uses of Credit Cards. The policy has been implemented and the uses of cards are monitored by the Business Department and CFO.
Finding Control Number: FS-6661-08-02
Concur:
Due to the limited size of staff in the Business Department and the current software being used, we have created and implemented internal procedures to serve as mitigating controls. The procedures provide compensating duties that overlap each ofthe noted Functions that are of concern. Although procedures have been created, the process will continue to be reviewed for effectiveness. As warranted, changes will be made.
Contact Person: Dean N. Ware Title: CFO Phone: (706) 454-1008 Fax: (706) 453-9019 e-mail: dean.ware@Greene.kl2.ga.us