Audit report, Hall County Board of Education, Gainesville, Georgia, year ended June 30, 1998

AUDIT REPORT HALL COUNTY BOARD OF EDUCATION
GAINESVILLE, GEORGIA YEAR ENDED JUNE 30, 1998

HALL COUNTY BOARD OF EDUCATION

EXHIBIT "A"

DEBT SERVICE
FUND

FIDUCIARY FUND TYPES TRUST AND AGENCY FUNDS

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS

(Memorandum Only)

JUNE 30, 1998

JUNE 30, 1997

$

53U70.12 $

136.11

$ 14,172,002.55 $ 11,037,582.15

95,107.16

16,299.30

4,661,138.05

1,833,650.09

109,658.44 54,821.15

122,853.30 59,431.91

$

54a.o69.42

548,069.42

1,593,453.84

$

548,069.42 $

55.226,930.58 310,118.94

55,226,930.58 310,118.94

51,351,546.16 608,406.44

136.11 $

56,085,118.94 $ 75,082,739.13 $ 66,702,031.05

$

927,625.89 $

322,749.13

1,115,771.98

902,355.36

20,635.42

14.81

123,142.01

$

136.11

136.11

266.46

$

310,118.94

310,118.94

608,406.44

55,775,000.00

55,775,000.00

52.945,000.00

$

136.11 $

56,085,118.94 $ 58,149,288.34 $ 54,901.934.21

$

548,069.42

0.00

$

548,069.42

$

548,069.42 $

$

212,970.21 $

36,619.57

548,069.42

1,593,453.84

3,696.87

109,658.44 54,821.15
568,481.49 3.419,948.88
557,830.00 1,379,996.05

122,853.30 59,431.91
789,046.64

3,178.35 10,078,496.80

34,376.28 9,160,618.43

$ 16,933,450.79 $ 11,800,096.84

136.11 $

56,085,118.94 $ 75,082,739.13 $ 66,702,031.05

-3-

HALL COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30. 1998

EXHIBIT"B"

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTALS

(Memorandum Only)

YEAR ENDED

JUNE 30,1998

JUNE 30, 1997

$

41,229.00

85,151.00

7,872,390.83 $

2,374,494.02

$ 10,373,264.85 $

$
2,111,034.74 39,190.56

59,734,893.10 $ 7,263,648.12 37,591,125.68 7,407,048.36

2,150,225.30 $ 111,996,715.26 $

55,534,794.n 6,115,574.65 29,385,329.81 4,563,681.71
95,599,380.94

$ 62,413,552.91" $ 55,606,975.37

$

240,000.00

5,297,042.52

4,214,301.70 2,847,366.83 2,227,339.43
633,983.78 5,053,747.89 1,144,038.48 7,512,347.03 3,736,587.75
625,812.91 764,824.05 5,793,443.46 785,n5.15 5,559,767.24

2,906,522.97 2,128,337.17 2,113,743.11
607,306.98 4,764,286.29
960,611.22 6,746,953.38 3,754,855.10
882,338.88 802,153.58 5,562,307.28 683,346.00 13,763,867.03

$ 1,280,000.00 2,035,563.75 7,312.45

1,578,287.50 2,071,082.96
7,312.45

2,231,130.90 3,390,642.40
7,314.00

$ 5,537,042.52 $ 3,322,876.20 $ 106,969,571.52 $ 106,912,691.66

$ 4,836,222.33 $ -1 ,172,650.90 $ 5,027,143.74 $ -11 ,313,310.72

$

124,015.83 $

124,015.83

-226,229.60

-226,229.60

38,165,000.00

38,165,000.00

13,709.60

13,709.60

-37,952,480.00

-37,952,480.00

$

2,875.59

$

303,500.50

3,250.65

369,364.87

230,292.10

-369,364.87

-230,292.10

$

303,500.50 $

127,266.48 $

124,015.83 $

2,875.59

$ 5,139,722.83 $ -1,045,384.42 $ 5,151,159.57 $ -11,310,435.13

789,046.64

1,593,453.84

11,800,096.84

23,079,564.99

-13,194.86 -4,610.76

25,188.62 5,n8.36

$ 5,928,769.47 $

548,069.42 $ 16,933.450.79 $ 11,800,096.84

-5-

HALL COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30. 1998

EXHIBIT"C"

GENERAL FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

REVENUES

State Funds Federal Funds Taxes Other Funds

$ 56,858,747.00 $ 58,667,720.29

5,000.00

v 50,271.22

25,268,737.00 27,607,700.11

1,031,227.41

2,456,704.60

Total Revenues

$ 83,163,711.41 $ 88,782,396.22

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 Food Services Operation Community Services Operations
Capital Outlay Debt Service

$ 59,666,600.96 $ 59,928,354.00

3,000,732.00 2,135,700.20 2,327,016.29
552,846.12 4,778,393.00
585,758.00 7,260,915.44 3,684,848.00
541,854.00 139,250.00 69,339.00
216,711.34

3,324,081.95 2,297,722.84 2,197,598.31
567,813.71 5,053,747.89
904,038.48 7,465,554.27 3,676,892.18
625,812.91 135,208.00
80,494.80 785,775.15 262,724.72 333,806.71

TotalExpenditures

$ 84,959,964.35 $ 87,639,625.92

Excess of Revenues over (under) Expenditures

$ -1,796,252.94 $ j,142,770.30

OTHER FINANCING SOURCES (USES)

Other Sources Other Uses

$

17.61

$ -245,000.00

-369,347.26

Total Other Financing Sources (Uses)

$ -245,000.00 $ -369,329.65

Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses $ -2,041,252.94 $

773,440.65

FUND BALANCE JULY 1. 1997

6,521,252.94

8,539,464.16

Adjustments

FUND BALANCE JUNE 30.1998

$ 4,480,000.00 $ 9,312.904.81

SPECIAL REVENUE FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

$ 1,093,202.00 $ 1,025,943.81

6,937,101.00

7,128,225.90

2,471,004.05

2,536,659.18

$ 10,501,307.05 $ 10,690,828.89

$ 2,586,281.05 $ 2,485,198.91

967,226.87 621,803.00
43,491.00 55,043.00

890,219.75 549,643.99
29,741.12 66,170.07

32,000.00 73,205.00
596,679.13 5,519,436.00

46,792.76 59,695.57
629,616.05 5,712,948.66

$ 10,495,165.05 $ 10,470,026.88

$

6,142.00 $ 220,802.01

$

62,596.11

-17.61

$

62,578.50

$

6,142.00 $ 283,380.51

680,000.00

878,132.20

-17,805.62

$ 686,142.00 $ 1,143,707.09

The notes to the general purpose financial statements are an integral part of this sijltemenl. -7-

HALL COUNTY BOARD OF EDUCATION

EXillBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Hall County Board of Education (Board) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and.has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the Board is a primary government and consists of all the organizations that compose its legal entity.
FUND ACCOUNTING
The Board uses funds and an account group to report on its financial position and the results ofits operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances 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 ofthe Board, 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 ofa Board's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for-all financial resources ofthe Board except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education.
SPECIAL REVENUE FUND - the fund used to account for the proceeds ofspecific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department ofEducation and from the Federal government to accomplish specific education3I objectives.
-8-

HALL COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction 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 TYPE - the fund 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. This fund includes:
AGENCY FUND - the fund used to account for assets held in a fiduciary capacity for other funds, governments, or individuals.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debt outstanding and material capital lease obligations.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (Le., revenues and other financing sources) and decreases (Le., 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 fmanced 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.
Agency funds are purely custodial in nature and do not involve measurement of results of operations.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (Le., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are property taxes, local option sales taxes, intergovernmental grants and investment income.

-9-

HALL COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 1998, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1997 and ending in early June 1998. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1997 and ending in August 1998. State grants to fund the State's share ofthese contracts were disbursed from the Georgia Department ofEducation to the Board in the same twelve months. As of June 30, 1998, compensation under these employment
contracts had been earned, but two ofthe twelve monthly payments, due for July and August 1998, had not
been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30, 1998. Also, the State's portion ofthe compensation paid in July and August 1998 was received and recorded as revenue in the fiscal year subsequent to June 30, 1998. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were recorded in the year ended June 30, 1998. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.
Agency funds are accounted for using the modified accrual basis of accounting in recognizing assets and liabilities.
BUDGET
The Hall County Board of Education's budget is a complete financial plan for the Board's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level ofbudget control was established by the Board at the aggregate level. The budget for governmental funds waS prepared on a basis other than generally accepted accounting principles.
The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a :final school budget. This:final budget is then submitted, in accordance with provisions ofthe Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department ofEducation. The Board may increase or decrease the budget at any time during the year. All unexpended budget a?thority lapses at fiscal year-end.

- 10-

HALL COUNTY BOARD OF EDUCATION

ExmBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

COMPOSmON OF DEPOSITS Cash and cash equivalents consist of deposits in authorized fmancial institutions. Georgia Laws authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.

RECEIVABLES

Receivables consist ofgrant 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 Hall County Board of Commissioners fixed the property tax levy for the 1997 tax year (calendar year) on August 25, 1997 (levy date). Taxes were due on December 5, 1997. The lien date for property taxes was January 1, 1997. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1998. The Hall County Tax Commissioner bills and collects the property taxes for the Board ofEducation, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance of taxes collected to the Board.

The tax millage rate levied for the 1997 tax year (calendar year) for the Hall County Board ofEducation was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

~mills

SALES TAXES

Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes and debt service. Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $9,707,726.02 and was recorded in the Capital Projects and Debt Service Funds. The State will terminate collection of this tax once an additional $99,567,273.98 has been collected or on September 30, 2002, whichever occurs first.

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

- 11 -

HALL COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.

GENERAL OBLIGATION BONDS

The Board issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit ofthe government. The outstanding amount ofthese bonds is recorded in the General Long-Term Debt Account Group.

INTERFUND TRANSACTIONS

The Board has the following types ofinterfund transactions:

Reimbursements of expenditures initi3Ily made from a fund that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.

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 or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation ofthis data. Certain reclassifications have been made to the comparative data to conform to the current year classifications.

Note 2: DEPOSITS

COLLATERALIZATION OF DEPOSITS

-

.

Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at

any time in any depository for a time longer than ten days a sum of money which has not been secured by

surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond

and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being

- 12-

HALL COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 2: DEPOSITS
secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone of or any combination 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 ofthe United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations ofthe counties or municipalities ofthe State of Georgia,
(5) Bonds of any public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws ofthe State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 1998, the bank balances were $16,463,061.65. The amounts of the total bank balances are classified into three categories of credit risk:
Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the Board or by the Board's agent in the Board's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Board's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Board's name.)
- 13-

HALL COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 2: DEPOSITS

The Board's deposits are classified by risk category at June 30, 1998, as follows:

Risk Category
1 2 3
Total

Bank Balance
$ 308,OQ1.30 15,549,122.51 605,937.84
$16.463.061.65

Note 3: NON-MONETARY TRANSACTIONS

The Board receives food commodities from the United States Department ofAgriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories

Note4: RISKMANAGEMENT

The Board 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; natural disaster and unemployment compensation.

The Board has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and natural disaster. The Board has neither significantly reduced coverage for these. risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any ofthe past three years.

The Board has established a limited ~sk management program. for workers' compensation claims. A premium is charged when needed by the General Fund to each user fund on the basis ofthe percentage ofthat fund's . payroll t9 total payroll in order to cover estimated claims budgeted by management based on known claims and prior experience. The Board accounts for claims with expenditure and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. An excess coverage insurance policy covers individual claims in excess of $225,000.00 loss per occurrence, up to the statutory limit.

Changes in the workers' compensation claims liability during the last twofiscal years are as follows:

1997 1998

Beginning ofYear Liability

. Claims and Changes in Estimates

$

0.00 $ 209,933.66 $

$

0.00 $ 292.185.97 $

Claims Paid

End ofYear Liability

209,933.66 $

0.00

292.185.97 $

0.00

- 14-

HALL COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 4: RISK MANAGEMENT

The Board is self-insured with regard to unemployment compensation claims. The Board 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 of that loss can be reasonably estimated.

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

1997 1998

Beginning ofYear Liability

Claims and Changes in Estimates

$

2,165.00 $

4.395.00 $

$

0.00 $

3.768.00 $

Claims Paid

End ofYear Liability

6,560.00 $

0.00

3,768.00 $

0.00

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

Position Covered

Amount

Superintendent All Other Employees

$ 25,000.00 $ 25,000.00

Note 5: GENERAL LONG-TERM DEBT

CAPITAL LEASES The Hall County Board of Education has entered into various lease agreements as lessee for computer equipment and copiers. 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 oftheir inception.

ADVANCE REFUNDING During fiscal year 1998, the Hall County Board ofEducation issued $38,165,000.00 in General Obligation Refunding Bonds to advance refund $34,055,000.00 ofoutstanding bonds. The bond issue of$38,165,000.00 plus premium of $13,709.60 less underwriters fees and bond issue cost of$226,229.60 provided net proceeds of $37,952,480.00. The total net proceeds were deposited in an irrevocable trust with an escrow agent to provide for future debt service payments on the 1991, 1992 and 1994 Bond issues. As a result, the 1991, 1992 and 1994 Series Bonds are considered defeased, and the liability for these bonds has been removed from the General Long-Term Debt Account Group. The Hall County Board ofEducation refunded the aforementioned bonds to reduce its total Debt Service payments over the next eighteen years by $1,102,819.18 and to obtain an economic gain (difference between the present values oftotal debt service payments and the old and new debt) of$I,121,097.20.

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HALL COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSEFINANCIAL STATEMENTS

JUNE 30, 1998

Note 5: GENERAL LONG-TERM DEBT

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

Purpose

Interest Rates

Amount

General Government - Refunding - Series 1997 General Government - Refunding - Series 1992B

4.50% - 5.00% 3.15% - 6.40%

$38,165,000.00 17,610,000.00

$55,775,000.00

The changes in General Long-Term Debt during the fiscal year ended June 30, 1998, were as follows:

Capital Leases

General Obligation
Bonds

Total

Balance July 1, 1997

$ 608,085.62 $52,945,000.00 $53,553,085.62

Retroactive Restatement ofPrior Year Balances

320.82

320.82

Balance July 1, 1997 Restated

$ 608,406.44 $52,945,000.00 $53,553,406.44

Additions

38,165,000.00 38,165,000.00

Deductions Payments Bonds Defeased

298,287.50 1,280,000.00 1,578,287.50 34,055,000.00 34,055,000.00

Balance June 30, 1998

$ 310.118.94 $55.775.000.00 $56,085.118.94

At June 30, 1998, payments due by fiscal year which includes principal and interest for these items are as follows:

- 16 -

HALL COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 5: GENERAL LONG-TERM DEBT

Fiscal Year Ended June 30

Capital Leases

General Obligation
Bonds

Total Debt

1999 2000 2001 2002 2003 2004 - 2008 2009 - 2013 2014 - 2018

$ 326,958.53 88.78

$ 5,396,115.00 5,397,915.00 5,885,632.50 5,984,832.50 5,609,127.50
28,486,256.25 16,621,862.50 6.466,650.00

$ 5,723,073.53 5,398,003.78 5,885,632.50 5,984,832.50 5,609,127.50
28,486,256.25 16,621,862.50 6.466,650.00

Total Principal and Interest

$ 327,047.31 $79.848.391.25 $80,175.438.56

Deduct: Imputed Interest

16,928.37

Net Present Value ofFuture Minimum Lease Payments

$ 310.118.94

Note 6: ON-BEHALF PAYMENTS

TheBoard has recognized revenues and expenditures in the amount of $1,537,793.57 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies.

Georgia Department ofEducation Paid to the State Merit System ofPersonnel Administration For Health Insurance ofNon-Certified Personnel In the amount of $1,229,440.40

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $84,444.17

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 $223,909.00

- 17 -

HALL COUNTY BOARD OF EDUCATION

EXIDBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 7: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the Board as of June 30, 1998, together with funding available:.

Project
Chestatee Middle School C. W. Davis Middle School
GSFIC-99/98S-669-0 18 Lottery-99G/98S-669-054 New Northwest High School New Southwest High School Tornado Repairs - FEMA North Hall High School Lanier Elementary School

Unearned Executed Contracts

Funding Available From State

$ 6,883,523.98 6,963,208.12
422,477.00 795,036.00
1,579,639.61 1,477,835.73

$ 1,506,143.00 3,364,794.00
563,119.00

$18.121.720.44 $ 5.434.056.00

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

Note 8: CONTINGENT LIABILITIES

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

The Board is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine Board operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the general purpose financial statements.

Note 9: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

- 18 -

HALL COUNTY BOARD OF EDUCATION

EXlllBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 9: RETIREMENT PLANS

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Board who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution ~te is 11.81% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

1998 1997 1996

100% 100% 100%

$ 6,507,479.96 $ 5,842,666.38 $ 5,240,915.10

- 19-

HALL COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30,1998

ASSETS
Cash and Cash Equivalents
Accounts Receivable
Inventories Food Donated Commodities Purchased Food

SCHOOL FOOD
SERVICES FUND

LOITERY PROGRAMS

$

981,248.33 $

25,298,68

36,149.00

109,658.44 54,821.15

Total Assets

$ 1,181,876.92 $=====25=,2;;;,;;9=8;,;;,,6=8

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable
Total Liabilities
FUND EQUITY
Fund Balances
Re~erved
For Continuation of Federal Programs For Inventories
Food Donated Commodities Purchased Food
Unreserved Undesignated
Total Fund Equity
Total Liabilities and Fund Equity
See notes to the general purpose financial statements.
-20 -

$

122,651,41 $

295,432.81

$

418,084.22 $

25,298.68 25,298.68

$

109,658.44

54,821.15

599,313.11 $

$

763,792.70 $

0.00
0.00

$ 1,181,876.92 $ =====,;2,,05;,;2;,9:,=8=.6=8=

EXHIBIT"E"

FEDERAL PROGRAMS

OTHER PROGRAMS

TOTALS
JUNE 30, 1998 JUNE 30, 1997

$ 165,827.43 $ 1,172,374.44 $ 997,185.55

$ 736,444.00

10,129.66

782,722.66

674,346.65

109,658.44 54,821.15

122,853.30 59,431.91

$ 736,444.00 $ 175,957.09 $ 2,119,576.69 $ 1,853,817.41

$ 120,922.59 116,943.84 $ 264,971.94 20,635.42
$ 523,473.79 $

$ 1,960.25 7,052.66
9,012.91 $

120,922.59 $ 266,854.18 567,457.41 20,635.42
975,869.60 $

334,176.18 161,931.14 479,563.08
14.81
975,685.21

$ 212,970.21

$ 212,970.21 $

36,619.57

109,658.44 54,821.15

122,853.30 59,431.91

0.00 $ 166,944.18

766,257.29

659,227.42

$

212,970.21 $

166,944.18 $ 1,143,707.09 $

878,132.20

$

736,444.00 $

175,957.09 $ 2,119,576.69 $ 1,853,817.41

- 21 -

HALL COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30.1998

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
Debt Service Principal Interest
Total Expendnures
Excess of Revenues over (under) Expendnures
OTHER FINANCING SOURCES (USES)
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
Food Inventory - Net Change in Period Donated Commodities Purchased Food
Residual Equity Transfer
FUND BALANCE JUNE 30

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$ 427,250,00 $ 2,913,900,97 2,482,188,77
$ 5,823,339,74 $

509,181.00 509,181,00

$ 525,662.37

$ 5,708,041.44

$ 5,708,041,44 $ $ 115,298.30 $

525,662,37 -16,481,37

$
$
$ 115,298,30 $ 666,300.02
-13,194.86 -4,610,76

16,481,37 16,481.37
0.00 0,00

$ 763,792,70 $

=======0,=0.0.

See notes to the general purpose financial statements,

-22 -

EXHIBIT"F"

FEDERAL
PROGRAMS

OTHER PROGRAMS

TOTALS
YEAR ENDED JUNE 30,1998 JUNE 30,1997

$ $ 4,214,324.93
329.87
$ 4,214,654.80 $

89,512.81 $ 54,140.54

1,025,943.81 $ 7,128,225.90 2,536,659.18

1,282,875.65 6,067,079.23 2,223,223.42

143,653.35 $ 10,690,828.89 $ 9,573,178.30

$ 1,959,536.54
758,949.55 $ 549,643.99 29,741.12
66,170.07 46,792.76 48,200.41 625,302.92
81.54
$ 4,084,418.90 $
$ 130,235.90 $

$ 2,485,198.91 $ 1,948,235.80

131,270.20
11,495.16 4,313.13 4,825.68

890,219.75 549,643.99
29,741.12 66,170.07 46,792.76 59,695.57 629,616.05 5,712,948.66

805,388.91 458,535.41
203,164.41 72,069.69 63,884.74
686,045.58 5,470,183.37

214,360.21 39,863.92

151,904.17 $ 10,470,026.88 $ 9,961,732.04

-8,250.82 $ 220,802.01 $ -388,553.74

$

46,114.74

$

$

46,114.74 $

$ -17.61
-17.61 $

62,596.11 $ -17.61
62,578.50 $

191,465.47 191,465.47

$ 176,350.64 $

-8,268.43 $ 283,380.51 $ -197,088.27

36,619.57

175,212.61

878,132.20

1,111,284.99

-13,194.86 -4,610.76

25,188.62 5,778.36
-67,031.50

$ 212,970.21 $ 166,944.18 $ 1,143,707.09 $ 878,132.20

- 23-

HALL COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND . JUNE 30. 1998

ASSETS Cash and Cash Equivalents Investments Accounts Receivable

REGULAR

BOND PROCEEDS

GEORGIA STATE FINANCING AND
INVESTMENT
COMMISSION

$

2,513.05 $

808,481.49 $

167,349.00

Total Assets

$

2,513.05 $

808,481.49 $ ==========16=7==:,34::=.;9'::0::0.0..

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Retainages Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Purposes of Bond Issue For SPLOST Projects For State Capital Outlay Projects For Tornado Recovery Unreserved Undesignated
Total Fund Equity
Total Liabilities and Fund EqUity

$

240,000.00

$

240,000.00

$

568,481.49

$

167,349.00

$

2,513.05

0.00

0.00

$

2,513.05 $

568.481.49 $

167,349.00

$

2,513.05 $

808.481.49 $====1=:6=7,=34=9=.0=0

See notes to the general purpose financial statements.

- 24-

EXHIBIT"G"

SPECIAL PURPOSE LOCAL OPTION SALES TAX

FEMA PROJECTS

LOTTERY PROJECT

TOTALS

JUNE 30, 1998

JUNE 30, 1997

$ 1,024,315.27 $ 1,379,996.05 $

390,481.00 $ 3,773,135.86 $

817,081.49

95,107.16

2,395,633.61

2,395,633.61

45,913.20

$ 3.419,948.88 $ 1.379,996.05 $

390,481.00 $ 6,168,769.47 $====9=5=8,=10==:1=.8=5

$

45,913.20

$

240,000.00

123,142.01

$

240,000.00 $ _ _.:.16:::.::9;.z.;,0:.;:5;.::;.5.:,:2.:,.1

$ 3,419,948.88 $
$ 1,379,996.05

0.00

0.00

$ 3,419,948.88 $ 1,379,996.05 $

$ 390,481.00
0.00 390,481.00 $

568,481.49 $ 3,419,948.88
557,830.00 1,379,996.05
2,513.05
5,928,769.47 $

789,046.64
0.00 789,046.64

$ 3,419,948.88 $ 1,379,996.05 $

390.481.00 $ 6,168,769.47 $===95:=8=,1=0=:1=:.8=5

- 25-

HALL COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 1998

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Current Support Services Business Administration
Capital Outlay Land and Land Improvements Building and Building Improvements Equipment
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
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

REGULAR

BOND PROCEEDS

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$

15.000,00

$

0,00

28,134,67 $

2.502,92

$

43.134,67 $

2.502.92 $

0,00

$

240,000,00

$

88.357.25

$

0,00

240.579,81

395.448.23

16,185,06

50.722,74

$

345,122,12 $

686.170,97 $

0,00

$

-301,987.45 $

-683,668,05 $

0,00

$

304,500.50 $

464,102.90 $

0,00

-1.000,00

$

304.500,50 $

463.102,90 $

$

2.513,05 $

-220.565.15 $

0,00

789.046,64

167.349,00 167.349.00 167.349.00
0.00

FUND BALANCE JUNE 30

$

2.513.05 $

568.481,49 $

16.7.,..34,.9.,0.0.

See notes to the general purpose financial statements.

- 26-

EXHIBIT"H"

SPECIAL PURPOSE LOCAL OPTION
SALES TAX

FEMA PROJECTS

LOTTERY PROJECT

TOTALS

YEAR ENDED

JUNE 30,1998

JUNE 30,1997

$

26,229.00 $

85,151.00

$ 7,872,390.83

47,207.30

2,296.649.13

$ 7,919,598.13 $ 2.408,029.13 $

0.00 $

41,229.00 $ 85,151.00 7.872,390.83 2.374,494.02

0.00 $ 10.373.264.85 $

642,761.18
361.012.52 1,003,773.70

$ 2.193,339.09

$

1,284.377.26 $ 1.028,033.08

$ 3.477.716.35 $ 1.028,033.08 $ $ 4.441.881.78 $ 1,379,996.05 $

$ 0.00
0.00 $ 0.00 $

240,000.00

2,281,696.34 2,948,438.38 $
66,907.80

11.973.923.06 937,025.90

5,537.042.52 $ 12,910,948.96

4.836,222.33 $ -11,907,175.26

$ -1 ,021 .932.90 $ -1,021,932.90

$

390.481.00 $ 1,326.433.40 $

-1 ,022.932.90

$

390.481.00 $

303.500.50 $

38,826.63 38.826.63

$ 3,419,948.88 $ 1,379,996.05 $

0.00

0.00

390,481.00 $ 0.00

5.139,722.83 $ -11,868,348.63

789,046.64

12.657,395.27

$ 3,419.948.88 $ 1,379.996.05 $

390,481.00 $ 5,928.769.47 $ _....7...8.9.'""'.04;;;,,;,;;,6_.6.4.

- 27-

HALL COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET DEBT SERVICE FUND JUNE 30, 1998

EXHIBIT "I"

ASSETS Cash and Cash Equivalents Accounts Receivable

PROPERTY TAXES FOR
BOND DEBT

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

JUNE 30.1998

JUNE 30,1997

$ 531,770.12 $

0.00 $

531.770.12 $ 1,401,876.50

16,299.30

16,299.30

191,577.34

Total Assets

$ 548,069.42 $

0.00 $

548,069.42 $======1,=59=3=,4..5..=3.=84=

FUND EQUITY
Fund Balances Reserved For Debt Service Unreserved Undesignated

$ 548,069,42 $ 0.00

0.00 $ 0.00

548,069,42 $ 0.00

1,593,453.84 0.00

Total Fund Equity

$ 548,069.42 $

0.00 $

548,069.42 $ ======1,=59=3=,4..5..=3.=84=

See notes to the general purpose financial statements.

-28 -

HALL 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

EXlllBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

7

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

8

ADDmONAL FINANCIAL INFORMATION

COMBINING AND INDIVIDUAL FUND STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

20

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

22

CAPITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

24

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

26

DEBT SERVICE FUND

I

COMBINING BALANCE SHEET

28

J

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

29

K

FIDUCIARY FUND TYPE

STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUND

31

HALL COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

ADDITIONAL FINANCIAL INFORMATION

SCHEDULES

1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

32

2 SCHEDULE OF STATE REVENUE

34

3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

36

4 SCHEDULE OF EXPENDITURES

LOTTERY PROGRAMS

37

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

5

OVERALL

39

6

BY PROGRAM

40

SECTIONll
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 INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

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

SECTIONN 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
May 14,1999

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Hall County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general purpose financial statements of the Hall County Board of Education, as of and for the year ended June 30, 1998, as listed in the table of contents. These general purpose financial statements are the responsibility ofthe Hall County Board ofEducation's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit.
Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial auditS contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and .perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall -financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
We did not observe the taking of either the Federal donated commodities inventory or purchased foods inventory at June 30, 1998, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures.
As described in the notes to the general purpose financial statements, the Board's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:

98ARL-13B

* The general purpose fmancial statements of the Board did not contain a General Fixed Assets
Account Group to account for property and equipment owned by the Board which should be included to conform to generally accepted accounting principles.
* School activity accounts maintained at the individual schools are not included in the general purpose
financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general purpose financial statements.
* The Board did not recognize as expenditures, in the year ended June 30, 1998, a portion of salaries
and the corresponding employer's cost ofrelated benefits earned for contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department of Education for the State's share of these umecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were improperly recorded in the year ended June 30,1998. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed.
The aggregate effects on the. general purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects of such adjustments, ifany, on the Special Revenue Fund, as might have
been determined to be necessary had we been able to satisfy ourselves as to the accuracy of the food service inventories as discussed in the third paragraph and except for the effects on the general purpose fmancial 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 Hall County Board of Education as of June 30, 1998, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated May 14, 1999, on
our consideration ofthe Hall County Board ofEducation's internal control over financial reporting and our tests ofits compliance with certain provisions of laws, regulations, contracts and grants.
The Board has not presented the disclosures required by Governmental Accounting Standards Board (GASB) Technical Bulletin 98-1, Disclosures About Year 2000 Issues, as amended by Technical Bulletin 99-1, that the GASB has determined are necessary to supplement, although not be a part of, the basic financial statements. In addition, we do not provide assurance that Hall County Board of Education is or will become year 2000 compliant, that Hall County Board ofEducation's year 2000 remediation efforts will be successful in whole or in part, or that parties with which the Board does business are or will become year 2000 compliant.
Our audit was performed for the purpose of forming an opinion on the general purpose fmancial statements ofthe Hall County Board of Education taken as a whole. The accompanying combining and individual fund statements (Exhibits E through K) and the financial schedules (Schedules 1 through 6), which includes the Schedule ofExpenditures ofFederal Awards as required by U. S. Office of Management and Budget Circular
A-133, Audits o/States, Local Governments, and Non-Profit Organizations, are presented for purposes of
98ARL-13B

additional analysis and are not a required part ofthe general purpose 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 effect ofadjustments, if any, on the Special Revenue Fund, as might have been determined to be necessary had we been able to satisfy ourselves as to the accuracy of the food service inventories as discussed in the third paragraph and except for the effects ofthe matters referred to in the fourth paragraph, such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,
~ ... Q W.~~ Russell W. Hinton State Auditor
RWH:gp 98ARL-13B

HALL COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
DEBT SERVICE FUND YEAR ENDED JUNE 30. 1998

EXHIBIT"J"

PROPERTY TAXES FOR
BOND DEBT

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS YEAR ENDED JUNE 30.1998 JUNE 30. 1997

REVENUES

Taxes Other Funds

$

275.699.55 $ 1.835.335.19 $ 2.111.034.74 $ 5,965.017.74

39.190.56

39.190.56

58.203.40

Total Revenues

$

314,890.11 $ 1.835,335.19 $ 2,150.225.30 $ 6.023,221.14

EXPENDITURES

Debt Service Principal Interest Paying Agent Fees

$ 1,280,000.00 $ 1,280,000.00 $ 1,925.000.00

$ 1.465.401.25

570,162.50

2,035,563.75

3.335.036.25

7.312.45

7,312.45

7.314.00

Total Expendttures

$ 1.472.713.70 $

1.850,162.50 $ 3,322.876.20 $ 5,267,350.25

Excess of Revenues over (under~Expenditures

$ -1.157,823.59 $

-14,827.31 $ -1.172.650.90 $

755,870.89

OTHER FINANCING SOURCES (USES)

Accrued Interest on Bonds Sold Refunding Bond Issuance Cost Proceeds of Refunding Bonds
Par Value Premium on Bonds Sold Payments to Bond Escrow Agent Operating Transfers In Operating Transfers Out

$

124,015.83

-226,229.60

38,165.000.00 13.709.60
-37,952,480.00 3.250.65 $
-14.827.31

$

124,015.83

-226,229.60

14,827.31

38,165,000.00 13,709.60
-37,952,480.00 18,On.96 -14.827.31

Total Other Financing Sources (Uses)

$

112,439.17 $

14.827.31 $

127,266.48

Excess of Revenues and Other. Financing Sources over (under) Expendttures and Other Financing Uses $

-1,045.384.42 $

0.00 $ -1,045,384.42 $

755,870.89

FUND BALANCE JULY 1

1,593.453.84

0.00

1,593.453.84

837,582.95

FUND BALANCE JUNE 30

$

548.069.42 $

0.00 $

548.069.42 $ 1.593.453.84

See notes to the general purpose financial statements.

- 29-

HALL COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUND YEAR ENDED JUNE 30, 1998

EXHIBIT"K"

BENEVOLENT FUND
ASSETS Cash and Cash Equivalents

BALANCE JULY 1,1997

ADDITIONS

DEDUCTIONS

BALANCE JUNE 30,1998

$

266.46 $

150.00 $

280,35 $ ====13=6:.;.1.=1

LIABILITIES Funds Held for Others

$

266.46 $

1S0.00 $

280.35 $====13;;,;;6;,;,,;,1==1

See notes to the general purpose financial statements,

- 31 -

HALL COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30,1998

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U, S, Department of Direct Summer Food Service Program for Children 1998 Grant Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program 1998 Grant National School Lunch Program 1998 Grant Food Distribution Program (1)
Total U. S, Department of Agriculture
Corporation for National and Community Service Pass-Through From Georgia Department of Education Leam and Serve America - School and Community Based Programs 1998 Grant
Education, U. S. Department of Pass-Through From Georgia Department of Education Elementary and Secondary Education Act TItle I Grants to Local Educational Agencies 1998 Grant Migrant Education" Piedmont Migrant Education Agency 1998 Grant Title II Eisenhower Professional Development 1998 Grant TItle VI Innovative Education Program Strategies 1998 Grant TItle VII Immigrant Education 1997 Grant 1998 Grant Goals 2000 State and Local Education Systemic Improvement Grants 1998 Grant Individuals with Disabilities Education Act Part B - Special Education Flow Through 1998 Grant Preschool 1998 Grant Safe and Drug-Free Schools 1998 Grant

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

10,559

$

19,551,52 $

19,551.52

* 10,553
* 10,555 * 10.550

N/A

605,535.21

(2)

N/A

1,888,513,44

5,288,189.12 (3)

N/A

400,300,80

400,300.80

$ 2,913,900.97 $ 5,708,041.44

94,004

N/A

$

13,570,23 $

13,570,23

84.010 84,011 84.281 84.298 84.162 84.162

N/A

$

1,168,297,47 $

1,164,782,84

NlA

1,405,728.92

1,230,932.41 (3)(5)

N/A

49,245.00

49,245.00

NlA

74,888,00

74,888.00

N/A

2,290.37

N/A

51,502.08

51,502,08

84,276

N/A

165,736.58

165,748.78 (3)

84.027

N/A

84.173

NlA

84,186

NlA

835,749,08 132,847,00
84,443.60

835,749.08 132,847.00
84,443,60

- 32-

HALL COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 1998

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

Education, U, S. Department of Pass-Through From Georgia Department of Education Vocational Education - Basic Grants to States High School Program Basic Grant 1998 Grant Tech-Prep Education 1997 Grant Pass-Through From Piedmont Migrant Education Agency Elementary and Secondary Education Act Title I Migrant Education 1998 Grant

84,048 84,243
84.011

N/A $ N/A

113,643,00 $ 5,000,00

137,812,92 (3) 25,208,83 (3)

N/A

113,673,97

115,397.76 (3)

Total U, S, Department of Education

$ 4,200,754,70 $ 4,070,848,67

Federal Emergency Management Agency Pass-Through From Office of the Govemor Disaster Assistance

83.516

N/A $

85,151,00 $ 1,028,033,08 (3)

OTHER FEDERAL ASSISTANCE

Defense, U. S, Department of Direct Department of the Navy R.O,T.C, Program 1998 Grant

$

50,271.22

(4)

Total Federal Financial Assistance
= NlA Not Available

$ 7,263,648,12 $ 10,820,493.42

Notes to the Schedule of Expenditures of Federal Awards

(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.
(2) Expenditures for the School Breakfast Program were not maintained separately and are included in the 1998 National School Lunch Program,
(3) Expenditures for this program include State, and/or Other Funds. Expenditures are not maintained by fund source,
(4) Expenditures on this program were not maintained by fund source. (5) Includes Federal Assistance of $470,963.18 provided to subrecipients.

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

The accompanying schedule of expenditures of Federal Awards includes the Federal grant activity of the Hall County Board of Education and is presented on the modified accrual basis of accounting which . is the same basis of accounting used in the presentation of the general purpose financial statements.

See notes to the general purpose financial statements,

- 33-

HALL COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30,1998

SCHEDULE ''2''

AGENCY/FUNDING
GRANTS Education, Georgia Department of Quality Basic Education General and Career Education Programs Special Education Programs Remedial Education Program Media Center Programs Staff Development Programs Indirect Cost Pupil Transportation Regular Bus Replacement Limited English Speaking Middle School Incentive Program Special Instructional Assistance In-School Suspension Mid-term Adjustment Migrant Mid-term Adjustment Counselors Grades 4 and 5 Technology Training Local Fair Share Educational Equalization Funding Grant Food Services Vocational Education Other State Programs Ad Valorem Tax Adjustment Alternative Program Apprenticeship Program At-Risk Summer School Program Environmental Science Program Health Insurance Innovative Programs Mentoring Program Mentor Teacher Program Pay for Performance Program Preschool Handicapped Program PSATExams Remedial Summer School Program Student Records Teachers' Retirement Lottery Programs Alternative Program Instructional Technology Assistive Technology Classroom Technology
Human Resources, Department of Family Connection
Medical Assistance, Department of Family Connection

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE PROJECTS

FUND

FUND

FUND

TOTAL

$ 36,354,042.00 5,755,148,00 1,285,321,00 1,539,260.00 465,387.00 9,487,471,00

1,610,415.00 463,073,00 666,172.00
1,317,559.00 1,116,763.00
328,028,00 1,387,436.00
20,510,00 . 165,315.00
201,896.00 -8,478,848.00 2,138,358,00
$ 152,438.74

427,250~00

492,178.00 90,500.00 60,000.00 44,584.29 2,000.00
1,229,440.40 5,000.00 10,000.00 18,424.00
154,000.00 229,114.00
520.00 16,912,69 29,949,00 84,444,17

4,132.00

25,848.00 479,201.00

50,000,00

39,512,81

- 34-

$ 36,354,042,00 5,755,148.00 1,285,321,00 1,539,260,00 465,387.00 9,487,471.00
1,610,415.00 463,073.00 666,172,00
1,317,559,00 1,116,763,00
328,028,00 1,387,436,00
20,510,00 165,315,00 201,896.00 -8,478,848,00 2,138,358.00 427,250.00 152,438.74
492,178.00 90,500.00 60,000.00 44,584,29 2,000.00
1,229,440.40 5,000.00 10,000.00 18,424,00
154,000.00 229,114.00
520.00 16,912.69 29,949,00 84,444.17
4,132,00
25,848.00 479,201.00
50,000.00
39,512,81.

HALL COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30.1998

SCHEDULE ''2"

AGENCY/FUNDING
GRANTS Natural Resources, Department of Governor's Emergency Funds
Office of the Governor Governor's Emergency Funds
Office ofTreasury and Fiscal Services Public School Employees Retirement
CONTRACT Education, Georgia Department of Leadership Development Program

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE PROJECTS

FUND

FUND

FUND

TOTAL

$ 223,909.00

$ 15,000.00 (1) $ 15,000.00

26,229.00 (2)

26,229.00

223,909.00

1,000.00

1,000.00

$ 58,667,720.29 $ 1,025,943.81 $ 41,229.00

$ 59.734,893.10

(1) The purpose of these funds is to improve conditions and facilities of the ballfield at East Hall Middle School.
(2) The purpose of the funds is for tornado recovery.

See notes to the general purpose financial statements.

- 35-

HALL COUNlY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX. PROJECTS
YEAR ENDED JUNE 30, 1998

SCHEDULE "3"

PROJECT
Payments of portion of payments, including principal and interest, due on the 1991, 1992, 1992B and 1994 bonds
Acquisition, construction and equipping of one elementary school, parking areas and grounds
Acquisition, construction and equipping of two middle schools, parking areas and grounds
Acquisition, construction and equipping of two high schools, parking areas, stadiums, and grounds
Acquisition and site preparation of real estate for Mure school district purposes
Construction of additional classrooms, instructional and support space, remodeling and renovating existing classrooms, instructional and support space, furnishings, equipment and fixtures, technology equipment and retrofitting to accommodate such equipment for such areas at existing facilities.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED
COST (2)

AMOUNT EXPENDED IN CURRENT YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS

$ 27,500,000.00 $ 24,000,000,00 $ 1,850,162.50 $

0,00

6,500,000.00

6,500,000,00

24,000,000.00

19,000,000.00 1,624,043.26

31,000,000.00

30,000,000.00

4,500,000.00

4,500,000,00 2,193,339.09

22,000,000,00

22,000,000.00

682,266.90

$ 115,500,000.00 $ 106,000,000,00 $ 6,349,811,75 $

0,00

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

See notes to the general purpose financial statements.

- 36-

EXPENDITURES
Current Instruction

HALL COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS YEAR ENDED JUNE 30, 1998

SCHEDULE "4"

ALTERNATIVE PROGRAM

INSTRUCTIONAL TECHNOLOGY

ASSISTIVE

CLASSROOM

TECHNOLOGY TECHNOLOGY

TOTAL

$

4,132.00 $

27,554,32 $

493,976,05 $ ======5=2~5,=66=2=,3=7

See notes to the general purpose financial statements. - 37-

HALL COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 1998

SCHEDULE "5"

Minimum Expenditure Requirements (Total Allotment) Expenditures on Combined Program Basis
Salaries Operations
Less: Expenditures for Media Center Programs in Excess of Total Media Allotment
Expenditures per Audit
Amount of Underexpenditure for Total Allotment

FOURTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS

100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS

$

46,031,661.00 $ _---.:1~,3=2::J.8,==53:.:.1.:.=.6=_5

$

52,390,607.76

2,494,148.20 $ _--=2:.L:,2::=.29:.1.,7.:..,:7....:.9:.::;.8..:..1

$

54,884,755.96

-574,434.53 $ _--=:54~,3~10::J,;,3=:2:..:,1,:;.:.4=..3

$

0.00 $====",;O;:;.O~O

See notes to the general purpose financial statements. - 39 -

HALL COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS BY PROGRAM
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 3D. 1998

SCHEDULE "6"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES

OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$ 3,804,563.70 $ 5,125,825.28 $

112,186.28 $ 5,238,011.56

9,953,625.90

11,576,360.66

614,560.67

12,190,921.33

$ 13,758,189.60 $ 16,702,185.94 $

726,746.95 $ 17,428,932.89 $

0.00

4,500,510.50

6,583,359.54

316,527.41

6,899,886.95

0.00

7,232,144.50

7,927,364.43

514,457.59

8,441,822.02

0.00

4,616,950.20

6,186,999.10

188,988.11

6,375,987.21

0.00

1,206,589.50

1,831,928.03

72,563.31

1,904,491.34

0.00

2,361,554.30

2,670,577.57

264,656.03

2,935,233.60

0.00

$ 33,675,938.60 $ 41,902,414.61 $ 2,083,939.40 $ 43,986,354.01

$ 4,452,281.00 $

60,630.13 $ 894,572.16 5,219,553.88 287,110.18
21,087.85

13,331.82 $ 18,845.24 42,842.95 29,669.20

73,961.95 913,417.40 5,262,396.83 316,779.38
21.087.85

$ 4,452,281.00 $ 6,482,954.20 $

104,689.21 $ 6,587,643.41

0.00

937,686.20

938,127.74

23,466.47

961,594.21

0.00

$ 5,389,967.20 $ 7,421,081.94 $

128,155.68 $ 7,549,237.62

$ 1,049,876.10 $ 1,180,617.07 $

17,684.73 $ 1,198,301.80

0.00

$ 40,115,781.90 $ 50,504,113.62 $ 2,229,779.81 $ 52,733,893.43

$ 1,158,133.61 $ 1,886,494.14

$ 1,886,494.14

0.00

264,368.39

$

264,368.39

264,368.39

0.00

$ 1,422,502.00 $ 1.886,494.14 $

264,368.39 $ 2,150,862.53

$ 41,538,283.90 $ 52,390,607.76 $ 2,494,148.20 $ 54,884,755.96 $

0.00

$

139,498.00

330,299.00

$ =====4=6:9i::!:,7=:9;,;,,7.;,;;,00=

$

208,479.29 $

208,479.29

267,633.38

267,633.38

$

476,112.67 $

476,112.67 $ .....0==....._ _....,:;0.;:,00=

- 41 -

SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS

RUSSELL W. HINTON
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 14,1999

.Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Hall 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 ofHall County Board ofEducation as ofand for the year ended June 30, 1998, and have issued our report thereon dated May 14, 1999. This report was qualified for a scope limitation and for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
We did not observe the taking of either the Federal donated commodities inventory or the purchased foods inventory at June 30, 1998, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures.
Compliance
As part of obtaining reasonable assurance about whether Hall County Board of Education's financial statements are free ofmaterial misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards.

98YB-40

Internal Control Over Financial Reporting
In planning and perfonning our audit, we considered Hall County Board ofEducation's internal control over financial reporting in order to detennine our auditing procedures for the purpose of expressing our opinion on the fmancial statements and not to provide assurance on the internal control over fmancial 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 judgement, could adversely affect Hall County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the fmancial statements. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FS-6691-98-01.
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 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 perfonning their assigned functions. Our consideration ofthe 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, the reportable condition described above is considered to be a material weakness.
This report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended to llinit the distribution ofthis report which is a matter of public record.
Respectfully submitted,
~~-~ Russell W. Hinton State Auditor
RWH:gp 98YB-40

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
May 14,1999

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members ofthe Hall County Board of Education
REPORT ON COMPLIANCE WITH REOUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Hall County Board of Education with the types of compliance
requirements described in the u.s. Office ofManagement and Budget (OMB) Circular A-i33 Compliance
Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 1998. Hall County Board ofEducation's major Federal programs are identified in the accompanying Schedule ofFindings 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 Hall County Board of Education's management. Our responsibility is to express an opinion on Hall County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and OMB Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Hall County Board ofEducation'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 Hall County Board of Education's compliance with those requirements.

98SA-10

In our opinion, the Hall County Board ofEducation complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 1998.
Internal Control Over Compliance
The management ofHall County Board ofEducation 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 Hall County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A133.
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 ofone or more ofthe internal control components does not reduce to a relatively low level ofrisk 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 for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended to limit the distribution ofthis report which is a matter of public record.
Respectfully submitted,
~4 fN. to...J..::, Russell W. Hinton State Auditor
RWH:gp 98SA-I0

SECTION ill AUDlTEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

HALL COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

6691-93-06 6691-95-01 FS-6691-97-01

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

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6691-97-01

Due to current staffing limitations and budget constraints, the system has decided not to pursue the recording of general fixed assets in the fmancial statements.

SECTION IV FINDINGS AND QUESTIONED COSTS

HALL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND OUESTIONED COSTS
YEAR ENDED JUNE 30, 1998

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Hall County Board ofEducation's financial statements was qualified for a scope limitation and for various departures from generally accepted accounting principles.

2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Hall 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 of the Hall County Board ofEducation disclosed no instances of noncompliance that were deemed to be material to the financial statements.

4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Hall 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 Hall County Board of Education's report on compliance with requirements applicable to major programs was unqualified.

6. Audit Findings Required to be Reported by Section .510(a) ofOMBCircular A-133 The Hall County Board of Education's audit did not disclose audit findings required to be reported by section .51O(a) ofOMB Circular A-133.

7. Major Programs Federal awards audited as major programs are as follows: 10.550 Food and Nutrition Program - Food Services - Food Distribution Program 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.

9. Low Risk Auditee

_

The Hall County Board of Education was audited as a low risk auditee based on a waiver granted by

the U. S. Department of Education.

- 1-

HALL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND OUESTIONED COSTS
YEAR ENDED JUNE 30, 1998
n 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-6691-98-01 The Hall County Board ofEducation did not maintain a system-wide General Fixed Assets Account Group within the fonnal accounting records as required by generally accepted accounting principles. This condition results in the general purpose financial statements ofthe Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Board 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 Board and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained ofall additions and deletions to the General Fixed Assets Account Group. ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
-2-