Audit report, Hancock County Board of Education, Sparta, Georgia, year ended June 30, 1996

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AUDIT REPORT HANCOCK COUNTY BOARD OF EDUCATION
SPARTA, GEORGIA YEAR ENDED JUNE 30, 1996
STATE OF GEORGIA DEPARTMENT OF AUDITS
254 WASHINGTON STREET ATLANTA. GEORGIA 30334

HANCOCK COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

Page

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE

EXHIBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALLFUNDTYPESANDACCOUNTGROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

5

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

6

ADDITIONAL FINANCIAL INFORMATION

COMBINING 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

25

SCHEDULES

I SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE

26

2 CASH AND CASH EQUIVALENTS

28

3 ACCOUNTS RECEIVABLE

29

4 DEBT SERVICE REQUIREMENTS TO MATURITY

30

SCHEDULE OF REVENUE

5

STATE

31

6

TAXES AND OTHER

32

HANCOCK COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

ADDITIONAL FINANCIAL INFORMATION

SCHEDULES

SCHEDULE OF EXPENDITURES BY OBJECT

7

GENERAL AND SPECIAL REVENUE FUNDS

33

8

LOTTERY PROGRAMS

34

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

9

OVERALL

35

10

BY PROGRAM

36

11 SCHEDULE OF COMPENSATION AND TRAVEL OF BOARD MEMBERS

38

SECTION TI
COMPLIANCE
COMPLIANCE REPORT BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
SINGLE AUDIT REPORT ON COMPLIANCE WITH THE GENERAL REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS
SINGLE AUDIT OPINION ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAMS
SINGLE AUDIT REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS

SECTION III
INTERNAL CONTROL
REPORT ON INTERNAL CONTROL STRUCTURE IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
SINGLE AUDIT REPORT ON THE INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS

HANCOCK COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTIONN FINDINGS AND IMPROPER OR QUESTIONED COSTS SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS

SECTION I FINANCIAL

CLAUDE L. VICKERS
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
November 26, 1996

Honorable Zell Miller, Governor Members ofthe General Assembly Members of the State Board ofEducation
and Superintendent and Members of the Hancock County Board ofEducation
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
Ladies and Gentlemen:
We have audited the general purpose financial statements (Exhibits A through D) of the Hancock County Board of Education, as of and for the year ended June 30, I996, as listed in the table of contents. These financial statements are the responsibility of the Board's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of the Office of Management and Budget Circular A-128, "Audits of State and Local Governments". Those standards and 0MB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose 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.
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:

96ARL-13X

* The general purpose financial statements of the Board did not contain a General Fixed Assets Account Group to account for property and equipment owned by the Board which should be included to conform to generally accepted accounting principles.
* School activity accounts maintained at the individual schools are not included in the general purpose financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general purpose financial statements.
* The Board did not recognize as expenditures, in the year ended June 30, 1996, a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 1996. Also funds received, subsequent to June 30, 1996, from the Georgia Department ofEducation for the State's share of these unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1995, were improperly recorded in the year ended June 30, 1996. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed.
The aggregate effects on the general purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects on the general purpose financial statements of the matters referred to in the third paragraph, the general purpose financial statements present fairly, in all material respects, the financial position ofthe Hancock County Board ofEducation as ofJune 30, 1996, 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 a report dated November 26, 1996, on our consideration ofthe Board's internal control structure and a report dated November 26, 1996, on its compliance with laws and regulations.
The accompanying financial statements have been prepared assuming that the Hancock County Board of Education w_ill continue as a going concern. As discussed in Note 11 to the general purpose financial statements, the Hancock County Board ofEducation has a material deficit fund balance. This condition raises substantial doubt about the Hancock County Board ofEducation's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Our audit was conducted for the purpose of forming an opinion on the general purpose financial statements ofthe Hancock County Board ofEducation taken as a whole. The combining statements (Exhibits E through H) and the financial schedules (Schedules 1 through 11 which includes the Schedule of Federal Financial Assistance) are presented for purposes ofadditional analysis and are not a required part of the general purpose financial statements ofthe Hancock County Board ofEducation. Such information has been subjected to the auditing procedures applied in the audit ofthe general purpose financial statements and, in our opinion, except for the effects of the matters referred to in the third paragraph, such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.
96ARL-13X

A copy ofthis report has been filed as a pennanent 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,
t:7~
Claude L. Vickers State Auditor
CLV:gp 96ARL-13X

HANCOCK COUNTY BOARD OF EDUCATION - 1-

HANCOCK COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP
JUNE 30, 1996

ASSETS
Cash and Cash Equivalents
Accounts Receivable
Due from Other Funds
Inventories Food Donated Commodities Purchased Food
Amount Available in Debt Service Fund
Amount to be Provided in Future Years For Payment of: Bond Debt Capital Lease Agreements

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$

1,922.49

$

95,560.79 $ 439,127.70

231,900.n

5,092.13 2,461.39

Total Assets

$ 327,461.56 $ 446,681.22 $

1,922.49

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Notes Payable Expired Grant Balances Payable Due to Other Funds Deferred Revenue Capital Lease Agreements General Obligation Bonds Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Bus Replacement Funds For Capital Lease Purchases For Continuation of Federal Programs For Debt Service For Expired Grant Balances/Questioned Costs For Inventories Food . Donated Commodities Purchased Food
Unreserved Deficit Undesignated
Total Fund Equity

$ 127,315.05 $

2,821.83

83,820.69

49,954.76

168,269.52

700,000.00

10,2TT.72

231,900.n

$ 911,135.74 $ 463,224.60

$ 157,951.26

383,182.64 $

81,596.28 $

$ 541,133.90 $
-1, 124,808.08 0.00
$ -583,674.18 $

5,092.13 2,461.39
89,149.80 $
-105,693.18 0.00
-16,543.38 $

1,922.49
1,922.49 0.00
1,922.49

Total Liabilities and Fund Equity

$ 327,461.56 $

The notes to the general purpose financial statements are an integral part of this statement.

-2 -

446,681.22 $

1,922.49

DEBT SERVICE
FUND

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS {Memorandum Onl~}
JUNE 30, 1996 JUNE 30, 1995

$ 287,684.36

$ 289,606.85 $ 195,681.46

14,602.75

549,291.24

922,278.53

231,900.n

$

302,287.11

5,092.13 2,461.39
302,287.11

19,205.50 2,n3.11
204,914.33

1,382,712.89 649,763.n

1,382,712.89 649,763.n

1,640,085.67 1,220,245.01

$

302,287.11 $

2,334,763.n $ 3,4131116.15 $ 41205,183.61

$ 130,136.88 $ 397,812.29

133,n5.45

363,143.11

168,269.52

176,068.89

700,000.00

950,000.00

10,2n.72

19,298.93

231,900.n

1,236.03

$

649,763.n

649,763.n

1,220,245.01

1,685,000.00

1,685,000.00

1,845,000.00

$

2,334,763.n $ 3,709,124.11 $ 4,972,804.26

$ 302,287.11
$ 302,287.11 0.00
$ 302,287.11

$ 157,951.26 $ 135,980.68

575,000.00

73.84

302,287.11

204,914.33

466,701.41

142,970.28

5,092.13 2,461.39

19,205.50 2,n3.11

$ 934,493.30 $ 1,080,917.74

-1,230,501.26 0.00

-1,848,538.39 0.00

$ -296,007.96 $ -767,620.65

$ 302,287.11 $

2,334,763.n $ 3,413,116.15 $ 4,205,183.61

-3-

l:W:iCOCK ~Utm'. li!QaBC! QE EDUCAIIQtf
COMBINl;C! ll6TEMEfil QE B~NUI; E~l;NDITUBE ~C! CHAN~!; IN El,!NC! BALANCE
&I. ~Q~BNMl;NTAL E!.!NC! ME VEAR ENQl;C! JUNE 30, 1996

EXHIBIT"B"

BMNUE
State Funds Federal Funds Taxes and Other Funds

GENERAL FUND

SPECIAL REVENUE
FUND

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTALS
{M!!morandum On~} YEAR ENDED
JUNE 301 1996 JUNE 301 1995

s 5,966,274.68 S 205,541.74

53,776.16 2,215,933.45

2,263,574.42

97,287.57 S

s
65.74 $ 325,897.10

6,171,816.42 S
2,269,709.61 2,686,824.83

5,650,701.11 2,528,265.59 2,344,252.23

TolalR-UN

$ 8,283,625.26 $ 2,518,762.76 $

65.74 $ 325,897.10 $ 11,128,350.86 $ 10,523~18.93

1;.XfENOITUBE

Current

ln8tructlon

$

Support Services

Pupil Services

Improvement of Instructional Services

Educational Media Services

General Administration

School Administration

Busi,- Administration

Maintenance and Operation of Plant

Student Transpo,tation Services

Central Support Services

Other Support Services

Food Services Operation

Community Service Operation&

Other Operations of Non-Instructional Services

Capital Outlay

Debi Service

Principal

Interest

Paying Agent F -

"4,275,248.01 $ 1,032,798.50 $

227,-496.90 194,738.26 287,-470.48 344,883.93 551,004.2-4 190,305.80 608,867.39 418,510.03

244,723.88 34,385.08
106,178.79 27,336.95
37,902.32 18,782.50

8,607.33
24,074.73 76,358.62 14,768.87

62,247.28 929,437.56
38.50

51,424.00 99,495.81

16,190.00

0.00

$

$ 160,000.00 67,570.00 954.32

5,308,046.51 $
"472,220.78 229,123.34 287,470.48 "451,062.72 578,341.19 190,305.80 646,769.71 437,292.53
70,854.61 929,437.56
24,113.23 76,358.62 14,768.87
227,614.00 167,065.81
954.32

5,289,683.67
-413,871.-42 301,675.83 198,560.67 479,466.27 591,757.18 306,4-44.30 710,129.05 "452,605.33
1,648.40 71,439.57 1,028,360.87 88,170.21 94,365.04 99,909.00
238,314.47 193,610.43

Total Expenditures
Excess or Revenues over (under) Expenditures

$ 7,373,254.40 S 2,510,021.36 $

s 910,370.86 S

8 741.40 S

0.00 $ 228,524.32 $ 10,111,800.08 S 10,560,011.71

65.74 S 97,372.78 S 1,016,550.78 $

-36,792.78

Qil:li;B El~QIN~ Q!.!BQl;S il.!1;}

Refund of Prior Year Bond Issuance Cost

Capital Leases

Operating Transfers In

Operating Transfers Out

$

$ -S.01

44,487.00 5.01

$

11,995.27

$

44,487.00

5.01

75,563.61

-S.01

-75,563.61

TCICal Other Financing Sources (Uses) $

Excess or R-ues and Other Financing Sources

over (under) Expenditures and Other Financing

Uses

$

-S.01 $ 910,365.85 $

44,492.01 53,233.41 $

$

44,487.00 $

11,995.27

65.74 $ 97,372.78 $ 1,061,037.78 $

-24,797.51

E!.!NC! BALANQI; JUI,): 1

-1,494,040.03

-55,351.70 576,856.75 204,914.33

-767,620.65

-710,905.67

Adjustments For Prior Year Expenditures For Prior Year Receivables (Note 9)
Food Inventory- Net Change in Period Donated Commodities Purchased Food

-14,113.37 -311.72

-575,000.00

-575,000.00
-14,113.37 -311.72

-21,196.95
-8,783.53 -1,936.99

El,!ND BALANC!:,; J!,!N!; ~

$ -5831674.18 $ -161543.38 $ 11922.49 $ 3021287.11 $ -296,007.96 $ -7671620.65

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

HANCOCK COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - (NON-GAAP BASIS} GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 1996

EXHIBIT c-

REVENUES
State Funds Federal Funds Taxes and Other Funds
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 Other Support Services Food Services Operation Community Service Operations Other Operations of Non-Instructional Services
Capital Outlay Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES}
Other Sources Other Uses
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1, 1995

GENERAL FUND

ACTUAL

(BUDGET

BUDGET

BASIS}

$ 5,732,146.00 $ 5,966,274.68 53,ns.1s
21064,717.00 2,263,574.42
$ 7?96,863.00 $ 8,283,625.26

$ 4,390,527.00 $ 4,275,248.01

214,956.00 233,742.00 m,704.oo 253,528.00 432,428.00 167,108.00 488,210.00 448,317.00
8,892.00

227,496.90 194,738.26 287,470.48 344,883.93 551,004.24 190,305.80 608,867.39 418,510.03
8,607.33

67,717.00 79,664.00 115,000.00

24,074.73 76,358.62 14,768.87 1501919.81

s $ 111ni793.oo 7,373,254.40

$ 6191070.00 $ 910,370.86

$

0.00

$

-5.01

$

0.00 $

-5.01

$ 619,070.00 $ 910,365.85 -1,748,000.00 -1,494,040.03

SPECIAL REVENUE FUND

ACTUAL

(BUDGET

BUDGET

BASIS}

$ 885,371.00 $ 205,541.74 1,665,136.00 2,215,933.45 971287.57
$ 21550,507.00 $ 21518,762.76

$ 614,273.00 $ 1,032,798.50

92,784.00 44,576.00

244,723.88 34,385.08

48,361.00

106,178.79 27,336.95

4,402.00 4,218.00 59,536.00 903,251.00 795,187.00

37,902.32 18,782.50 62,247.28 929,437.56
38.50

161190.00

$ 2,566,588.00 $ 2,5101021.36

$ -161081.00 $

8,741.40

$

0.00 $ 44,492.01

$

0.00 $ 44,492.01

$ -16,081.00 $ 53,233.41 -n.330.31

FUND BALANCE JUNE 30, 1996

$ -1,128,930.00 $ -583,674.18

$ -16,081.00 $ -24,096.90

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

HANCOCK COUNTY BOARD OF EDUCATION

EXIIlBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEl\1ENTS

JUNE 30, 1996

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Hancock County Board ofEducation (Board) 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. With the exception ofthe departures from generally accepted accounting principles disclosed in these notes, the financial statements of the Board have been prepared in conformity with generally accepted accounting principles as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting standards.
The more significant of the Board's accounting policies are described below.
REPORTING ENTITY
In evaluating how to define the governmental unit for financial reporting purposes, management has considered the criteria set forth in GASB Codification of Governmental Accounting and Financial Reporting Standards, Section 2100, "Defining the Financial Reporting Entity". The primary government consists of all the organizations that compose the legal entity of the Hancock County Board ofEducation.
Based upon the application of the above criteria, the Hancock County Board ofEducation is determined to be the lowest level ofgovernment exercising oversight responsibility and control over all activities related to public education in Hancock County, Georgia. The Board is not included in any other governmental "reporting entity" as defined by GASB Codification of Governmental Accounting and Financial Reporting Standards.
Board members were elected by the public and have decision making authority, the power to designate management, the ability to significantly influence operations, and primary accountability for fiscal matters. The Board determines the millage rate at which school taxes are levied and may incur bonded indebtedness with voter approval.
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.
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HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEI\IBNTS

JUNE 30, 1996

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 of the 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 of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are primarily received from the Georgia Department of Education and from the Federal government to accomplish specific objectives and are required to be accounted for separately.
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.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - used to account for general obligation bonds outstanding and material capital lease obligations.
BAS.IS 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 (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.

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HANCOCK COUNTY BOARD OF EDUCATION

EXIDBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note I: St.Th-WARY OF SIGNIFICANT ACCOUNTING POLICIES
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
Governmental funds are accounted for using the modified accrual basis ofaccounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are property taxes, intergovernmental grants and investment income. Property taxes are considered available if they are collected and remitted by the collecting agent to the Board within 60 days after fiscal year-end.
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 ofthese contracts. During fiscal year 1996, a substantial number of personnel of the Board were employed for a one hundred and ninety day period beginning in late August 1995 and ending in early June 1996. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1995 and ending in August 1996. State grants to fund the State's share of these contracts were disbursed from the Georgia Department ofEducation to the Board in the same twelve months. As ofJune 30, 1996, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 1996, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30, 1996. Also, the State's portion ofthe compensation paid in July and August 1996 was received and recorded as revenue in the fiscal year subsequent to June 30, 1996. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1995, were recorded in the year ended June 30, 1996. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.
BUDGET
The Hancock County Board ofEducation's budget is a complete financial plan for the Board's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.

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HANCOCK COUNTY BOARD OF EDUCATION

E:xmBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval of this 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 of the Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department ofEducation. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.

The Statement ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual presents actual and budgeted data for the General Fund and Special Revenue Fund. To facilitate comparison with the budget, the following adjustments have been made to actual revenues, expenditures and fund balance as reflected on Exhibit "B" of this report:

Special Revenue
Fund

FUND BALANCE JULY 1, 1995

$ -55,351.70

Adjustments Inventories - July 1, 1995 Food Donated Commodities Purchased Foods

-19,205.50 -2,773.11

Fund B~lance July 1, 1995 (Budget Basis)

$ -77,330.31

Excess ofRevenues and Other Financing Sources over (under) Expenditures

53,233.41

FUND BALANCE JUNE 30, 1996 (Budget Basis)

$ -24,096,90

CASH AND CASH EQUIVALENTS

COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofdeposits (including savings accounts) in authorized financial institutions. Georgia Laws authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations. The placement of proceeds from bond issues in certificates of deposit is limited to financial institutions located within this State.

- 9-

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

RECEIVABLES

Receivables consist ofgrant reimbursements due from Federal, State or other grantors 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 Hancock County Board ofCommissioners fixed the property tax levy for the 1995 tax year (calendar year) on October 26, 1995 (levy date). Taxes were due on December 27, 1995. The lien date for property taxes was January 1, 1995. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1996 since their collection meets the criteria ofGASB codification section P70.103. The Hancock County Tax Commissioner bills and collects the property taxes for the Board of Education, withholds 2.5% of taxes collected as a fee. for tax collection and remits the balance of taxes collected to the Board.

Tax millage rates levied for the 1995 tax year (calendar year) for the Hancock County Board of Education were as follows (a mill equals $1 per thousand dollars ofassessed value):

School Operations School Bonds

15.93 mills 2.32 mills

18.25 mills

INVENTORIES

FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are utilized. 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 offund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.

- 10 -

HANCOCK COUNTY BOARD OF EDUCATION

EXI-IlBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 1: SillvfMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 during the year bonds are issued. Issuance costs, whether or not withheld from actual net proceeds, are reported as capital project expenditures. 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 of these bonds is recorded in the General Long-Term Debt Account Group.

INTERFUND TRANSACTIONS

The Board has the following types ofinterfund transactions:

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

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.

DEFICIT FUND BALANCES

In addition to the General Fund, the following fund reported a deficit fund balance position at June 30, 1996, which is not readily apparent on the general purpose financial statements:

Fund Type/Fund Name

Deficit Balance

Governmental Fund Type Special Revenue Fund School Fcod Services Fund

$ 105,693.18

- 11 -

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

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 ofinsurance, or by collateral. The aggregate of the face value of such surety bond and the market value ofsecurities shall be equal to not less than 110 percent of the public funds being secured after the deduction of the 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 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 ofindebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates ofindebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds ofany 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 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, 1996, the bank balances were $752,555.15. 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.
- 12 -

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATE1\1ENTS

JUNE 30, 1996

Note 2: DEPOSITS

Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Board's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Board's name.)

The Board's deposits are classified by risk category at June 30, 1996, as follows:

Risk Category

Bank Balance

1

$ 400,000.00

2

352,555.15

3

0.00

Total

$ 752,555.15

Note 3: NON-MONETARY TRANSACTIONS

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

Note 4: INTERFUND ASSETS AND LIABILITIES

Due to and due from other funds are recorded for interfund receivables and payables which arise from interfund transactions. The following analysis summarizes the status of all interfund transactions of the Board at June 30, 1996:

Due From Other Funds

Due To Other Funds

General Fund Special Revenue Fund
School Food Services Fund Project Head Start

$ 231,900.77
$ 224,096.03 7 804.74

$ 231,90Q,77 $ 23l,90Q 77

- 13 -

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 5: RISK MANAGEMENT

The Board is exposed to various risks ofloss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; natural disaster; and unemployment compensation.

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

The Board has elected to self-insure for all losses related to natural disaster. The Board has not experienced any losses related to natural disaster in the past three years.

The Board is self-insured with regard to unemployment compensation claims. The Board accounts for claims within the General Fund with 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:

Beginning of Year Liabili!)'.

Claims and Changes in Estimates

Claims Paid

End of Year Liabili!)'.

1995 1996

'

$

0.00 $ 20,801.53 $ 20,801.53 $

0.00

$

0.00 $ 15,713.12 $ 15,713.12 $

0.00

Note 6: OPERATING LEASES

Hancock County Board ofEducation has entered into a lease as lessee for buildings to house the Project Head Start program. This lease is considered for accounting purposes to be an operating lease. The Hancock County Board of Education and the Hancock County Board of Commissioners are in the process of renegotiating this lease, which originally called for annual payments of $10,000.00 for twenty years. There were no payments made in fiscal year 1996, and there is currently no approved payment schedule for this lease.

Note 7: GENERAL LONG-TERM DEBT

CAPITAL LEASES The Hancock County Board of Education has entered into various lease agreements as lessee for bus and equipment purchases. 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 of the date of their inception.

- 14 -

HANCOCK COUNTY BOARD OF EDUCATION

EXIDBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 7: GENERAL LONG-TERM DEBT

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

Purpose

Interest Rates

Amount

General Government - Refunding - Series 1994

2.6%-4.35%

$ 1,685,000.00

The changes in General Long-Term Debt during the fiscal year ended June 30, 1996, were as follows:

Balance July 1, 1995
Additions
Deductions Payments Lump Sum Adjustment (Net ofPenalty)
Balance June 30, 1996

Capital Leases

General Obligation
Bonds

Total

$ 1,220,245.01 $ 1,845,000.00 $ 3,065,245.01

44,487.00

0.00

44,487.00

67,614.00 547,354.24 $ 649,763.77

160,000.00

227,614.00

----

547,354.24

$1 685,000.00 $2,334,763.77

At June 30, 1996, payments due, by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30
1997 1998 1999 2000 2001 2002 and thereafter
Total Principal and Interest
Deduct: Imputed Interest
Net Present Value of Future Minimum Lease Payments

Capital Leases

General Obligation
Bonds

Total Debt

$ 198,629.54 139,666.12 123,476.12 123,476.12 123,476.12 123,476.12

$ 281,595.00 279,138.75 276,060.00 277,242.50 272,600.00 547,816.25

$ 480,224.54
418,804.87
399,536.12 400,718.62 396,076.12 671,292.37

$ 832,200.14 $ 1 934,452.50 $2,766 652.64

182,436.37

$ 649,763.77

- 15 -

HANCOCK COUNTY BOARD OF EDUCATION

EXIIlBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 8: ON-BEHALF PAYMENTS
The Board has recognized revenues and expenditures in the amount of$234,000.89 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies as follows:
Georgia Department ofEducation Paid to the State Merit System ofPersonnel Administration For Health Insurance ofNon-Certified Personnel In the amount of $203,507.89
Office ofTreasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of$30,493.00
Note 9: SIGNIFICANT TRANSACTION
On December 9, 1992, the Hancock County Board ofEducation (Lessee) entered into an Equipment LeasePurchase Agreement with First Continental Capital Corporation (Lessor). Under the terms ofthe agreement, the Lessor deposited $1,414,000.00 into an escrow account at LaSalle National Bank and the lessee was entitled to draw funds out ofthe account as equipment items were purchased. On June 30, 1995, $575,000.00 remained in the escrow account, which was reflected as an accounts receivable on the Board's general purpose financial statements. On December 1, 1995, the Board instructed LaSalle National Bank to return the $575,000.00 balance in escrow to the lessor to apply against the balance of capital lease debt outstanding. Of the amount returned, $547,354.24 was applied to the outstanding principal. See Note 7 - General LongTerm Debt
Note 10: CONTINGENT LIABILITIES
Hancock County Board of Education receives significant financial assistance from'the U. S. government. Entitlement to resources is generally based upon compliance with terms and conditions ofthe grant agreements and applicable Federal regulations, including the expenditure of resources for eligible purposes.
All amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. Audit tests conducted revealed material instances of noncompliance in the National School Lunch Program and Breakfast Program, Safe and Drug-Free Schools, Elementary and Secondary Education Act, Title I and Project Head Start, however, ultimate disposition is not readily determinable. These instances could result in requests for reimbursement to the granter agency for any expenditures which are disallowed under grant terms.
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.

- 16 -

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 11: GOING CONCERN
Substantial doubt about the Board's ability to continue as a going concern is substantiated by the following:
(1) The Board has deficit fund balances at June 30, 1996 in the General Fund and School Food Services Fund of $1,124,808.08 and $105,693.18, respectively. These deficits are approximately 56% of total County Wide Maintenance and Operation School Tax collected during the period under revtew.
(2) The Board has utilized short-term borrowing to reduce cash deficits. During the period from April 10, 1996 - October 31, 1996, the Board borrowed $875,000.00 to cover operating expenses. This constitutes approximately 40% of total gross income from property taxes (fiscal year ended June 30, 1996 gross property tax income).
(3) The Board has utilized long-term borrowing to meet current operating needs by entering into various lease-purchase agreements for Hancock Central High School equipment, school buses and hardware, educational computer software license and system documentation.
Note 12: 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 public employee retirement system (PERS).
TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. A member is eligible for service retirement after 30 years of creditable service, regardless ofage, or after IO years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service and attainment of age 55, at a reduced benefit. Retirement benefits paid to members are equal to 2% of the average of the member's two consecutive highest paid years of service multiplied by the number of years of creditable service up to 40 years. The normal retirement pension is payable monthly for life. Options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death.
Retirement benefits also include death and disability benefits. A disabled member or surviving spouse is entitled to receive annually an amount equal to the member's service retirement benefit or disability retirement, whichever is greater. The death benefit is the amount that would be payable to the member's beneficiary had the member retired on the date of death on either a service retirement allowance or a disability retirement allowance, whichever is larger. The benefit is based on the member's creditable service (minimum of 10 years of service) and compensation up to the time of disability or death.

- 17 -

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATE:MENTS

JUNE 30, 1996

Note 12: RETIREMENT PLANS

Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting ofemployer contnbutions occurs, but the member's contributions are refunded with interest.

The Board's payroll for employees covered by TRS for the year ended June 30, 1996, was $5,266,449.27; total payroll was $6,277,145.94.

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 ofTrustees in accordance with State statute and as advised by their independent actuary. For fiscal year 1996 that rate for employer contributions was 11.81%. The interest rate assumption (rate of return on investments) was 7.50%.

Total contributions made during fiscal year 1996 amounted to $885,292.63, ofwhich $621,967.71 was made by the Board and $263,324.92 was made by employees. These contributions represented 11.81 % (Board) and 5% (employees) of covered payroll.

TRS FUNDING STATUS AND PROGRESS The amount of the total pension benefit obligation is based on a standardized measurement established by Statement No. 5 ofthe Governmental Accounting Standards Board (GASB) that, with some exceptions, must be used by a PERS. The standardized measurement is the actuarial present value of credited projected benefits. This valuation method reflects the present value of estimated pension benefits that will be paid in future years as a result of employee services performed to date, and is adjusted for the effects of projected salary increases. A standardized measure ofthe pension benefit obligation was adopted by the GASB to enable readers of PERS financial statements to assess that PERS funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among other PERS and among other employers.

Total unfunded pension benefit obligation ofTRS as ofJune 30, 1995, was as follows:

Total pension benefit obligation Net assets available for benefits, at cost Unfunded pension benefit obligation

$17,442,607,000.00 15,857.066,000.00
$ 1,585.541,000.00

The measurement ofthe total pension benefit obligation is based on an actuarial valuation as ofJune 30, 1995. Net assets available to pay pension benefits were valued as of the same date. TRS does not make separate measurements ofassets and pension benefit obligation for individual employers.

Total contributions from all employers to TRS for fiscal year ended June 30, 1996 were $607,275,000.00. The Board's contribution for the year ended June 30, 1996 of $621,967.71 was actuarially determined and represented .1024% of total contributions made by all participating employers.

- 18 -

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 12: RETIREMENT PLANS
Ten year historical trend information is presented in the 1996 TRS Component Unit Financial Report. This information is useful in assessing TRS's accumulation of sufficient assets to pay pension benefits as they become due.
PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA (PSERS)
PSERS PLAN DESCRIPTION Substantially all bus drivers, maintenance, custodial, and lunchroom personnel employed by local school systems are covered by the Public School Employees Retirement System of Georgia (PSERS). All employer's contributions are made by the State of Georgia in accordance with State statute.
PSERS provides, in accordance with State statute, service retirement, disability retirement and survivors benefits for its members. A member is eligible for normal service retirement after 10 years of service and attainment ofage 65. A member applying for service retirement with 10 years of service and retires between the ages of 60 and 65 receives a reduced benefit. Monthly retirement benefits paid to members are equal to $8.00 per month multiplied by the number ofyears ofcreditable service. Options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death.
Retirement provisions include death and disability benefits. Disability benefits are the same as if the employee had retired at age 65 as long as the employee has 15 or more years of creditable service. Death benefits are dependent upon the number ofyears of service. Ifthere are less than ten years of service, a lump sum refund of the employee's contributions and interest are made to the beneficiary. Ifthere are more than ten years of service, the beneficiary shall receive for life halfofwhat the employee would have received upon retirement.
Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no ves~ing ofemployer contributions occurs, but the member's contributions are refunded with interest.
There were 67 employees covered under PSERS for the year ended June 30, 1996.
PSERS CONTRIBUTIONS REQUIRED AND MADE Covered employees are required by State statute to contribute $4.00 a month for the nine month school year. Unlike TRS, the Board makes no contribution to PSERS. The State of Georgia is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS' Board of Trustees. Total contributions from employees ofthe Board made during fiscal year 1996 amounted to $2,244.00. Total contribution for all school systems made by the State of Georgia to PSERS for fiscal year ended June 30, 1996, was $9,817,769.80.
Note 13: SURETY BONDS
The School Superintendent, Mr. James T. Wilkerson, is bonded in the amount of $50,000.00 with the RLI Insurance Company, Peoria, Illinois, their Bond No. RSB 616566, on which premium is paid through April 15, 1999.
- 19 -

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

HANCOCK COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 1996

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

ELEMENTARY AND SECONDARY

TITLEI

GRANTS TO

TITLE II

LOCAL

EISENHOWER

EDUCATIONAL PROFESSIONAL

AGENCIES DEVELOPMENT

$ 65,470.42

$

2,244.26

116,323.47 $ 71,410.22 $ 107,233.20

5,092.13 2,461.39
$ 189,347.41 $ 71,410.22 $ 107,233.20 $ ____2,_24_4_.2_6

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Due to Other Funds Deferred Revenue
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs For Expired Grant Balances/Questioned Costs For Inventories Food Donated Commodities Purchased Food
Unreserved Deficit Undesignated
Total Fund Equity

$ $ 18,146.24
45,244.80
224,096.03

2,027.59 $ 150.66

$ 287,487.07 $ 2,178.25 $

$ 69,231.97 $

$ 5,092.13 2,461.39
$ 7,553.52 $
-105,693.18 0.00
$ -98, 139.66 $

69,231.97 $
0.00 69,231.97 $

20,557.66 17,148.33 60,018.04
535.15
98,259.18
8,974.02 $
8,974.02 $ 0.00
8,974.02 $

2,244.26
2,244.26 0.00
2,244.26

Total Liabilities and Fund Equity

------ $ 189,347.41 $ 71,410.22 $ 107,233.20 $

2,244.26

See notes to the general purpose financial statements.

-20-

EXHIBIT"E"

EDUCATION ACT TITLE VI
INNOVATIVE EDUCATION PROGRAM STRATEGIES

INDIVIDUALS WITH

DISABILITIES EDUCATION ACT

PARTS

SPECIAL EDUCATION

FLOW

THROUGH

PRESCHOOL

SAFE AND DRUG-FREE SCHOOLS

PROJECT

TOTALS

HEAD START JUNE 30, 1996 JUNE 30, 1995

$

6,174.47

$

5,520.67

$

79,409.82 $

85,170.05

$ 38,657.15 $

11,745.19

151.55 $ 93,606.92

439,127.70

247,248.27

5,092.13 2,461.39

19,205.50 2,773.11

$

6,174.47 $ 38,657.15 $

11,745.19 $

5,672.22 $ 93,606.92 $ 526,091.04 $ 354,396.93

$ 30,041.57 $

11,745.19

$ 17,859.64 $

82,231.65 $ 178,942.47

$

6.90

2,996.38

$

1,217.98

10,288.27

49,954.76

34,202.31

541.60

5,356.84

600.00

56,508.24

168,269.52

176,068.89

5,625.97

262.36

3,854.24

10,277.72

19,298.93

7,804.74

231,900.77

1,236.03

$

6,174.47 $ 38,657.15 $

11,745.19 $

5,672.22 $ 92,460.89 $ 542,634.42 $ 409,748.63

$

73.84

$

1,146.03 $

81,596.28

84,764.58

5,092.13 2,461.39

19,205.50 2,773.11

$

1,146.03 $

89,149.80 $ 106,817.03

-105,693.18

-162, 168.73

$

0.00 $

0.00 $

0.00 $

0.00

0.00

0.00

0.00

$

0.00 $

0.00 $

0.00 $

0.00 $

1,146.03 $ -16,543.38 $ -55,351.70

$

6,174.47 $ 38,657.15 $

11,745.19 $

5,672.22 $ 93,606.92 $ 526,091.04 $ 354,396.93

- 21 -

HANCOCK COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 1996

REVENUES
State Funds Federal Funds Taxes and Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services General Administration School Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation Community Service Operations Other Operations of Non-Instructional Services
Capital Outlay Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Capital Leases Operating Transfers In
Total Other Financing Sources
Excess of Revenues and Other Financing Sources over (under) Expenditures
FUND BALANCE JULY 1
Adjustments For Prior Year Expenditures
Food Inventory - Net Change in Period Donated Commodities Purchased Food

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

ELEMENTARY AND SECONDARY

TITLE I

GRANTS TO

TITLE II

LOCAL

EISENHOWER

EDUCATIONAL PROFESSIONAL

AGENCIES

DEVELOPMENT

$ 59,718.00 $ 145,823.74

769,345.77

$

97,287.57

$ 926,351.34 $ 145,823.74 $

577,612.43 $ 577,612.43 $

9,691.00 9,691.00

$ 163,699.48 $ 14,712.64

425,745.03
36,594.55 5,433.40 $
48,282.98

$ 869,875.79

61,556.47

7,387.74 59.00

16,190.00 $ 869,875.79 $ 194,602.12 $ $ 56,475.55 $ -48,778.38 $

577,612.43 $ 0.00 $

$ 44,4B7.00 5.01
$ 44,492.01

$ 56,475.55 $ -140,190.12

-4,286.37 $ 73,518.34

0.00 $ 8,974.02

7,446.74 2,244.26
2,244.26 0.00

-14,113.37 -311.72

FUND BALANCE JUNE 30 See notes to the general purpose financial statements.

$ -98, 139.66 $ - 22 -

69,231.97 $

------ 8,974.02 $

2,244.26

EXHIBIT"F"

EDUCATION ACT TITLE VI
INNOVATIVE EDUCATION PROGRAM STRATEGIES

INDIVIDUALS WITH

DISABILITIES EDUCATION ACT

PARTS

SPECIAL EDUCATION

FLOW

THROUGH

PRESCHOOL

SAFE AND DRUG-FREE SCHOOLS

PROJECT HEAD START

TOTALS YEAR ENDED JUNE 30, 1996 JUNE 30, 1995

$

13,241.03 $ 64,964.43 $

$

13,241.03 $ 64,964.43 $

20,111.40 $ 20,111.40 $

$ 205,541.74 $ 295,194.00

17,360.56 $ 743,606.83 2,215,933.45 2,489,863.92

97,287.57

81,309.19

17,360.56 $ 743,606.83 $ 2,518,762.76 $ 2,866,367.11

$

6,794.35 $ 36,001.95 $

6,280.19 166.49

27,308.28 354.42
1,709.25

384.89

$

13,241.03 $ 65,758.79 $

$

0.00 $

-794.36 $

15,362.05 $ 3,532.63 1,178.22
38.50
20,111.40 $ 0.00 $

8,356.16 $ 376,839.48 $ 1,032,798.50 $ 1,126,279.95

10,104.29
49.50 62.81

162,575.78 4,825.04
54,782.85 27,336.95 37,902.32 18,348.11
628.00 59,561.77

244,723.88 34,385.08 106,178.79 27,336.95 37,902.32 18,782.50 62,247.28
929,437.56 38.50

221,644.98 53,617.35
105,197.79 28,810.82 37,967.38 22,312.99 61,050.91 1,028,360.87

16,190.00

10,440.00 99,249.00 55,980.00

18,572.76 $ 742,800.30 $ 2,510,021.36 $ 2,850,912.04

-1,212.20 $

806.53 $

8,741.40 $ 15,455.07

$

0.00 $

-794.36 $

0.00

794.36

0.00 $ 0.00

-1,212.20 $ 1,212.20

$

44,487.00

5.01 $

$

44,492.01 $

16.00 16.00

806.53 $ 339.50

53,233.41 $ -55,351.70

15,471.07 -38,905.30

-14,113.37 -311.72

-21,196.95
-8,783.53 -1,936.99

$

0.00 $

------ 0.00 $

0.00 $

0.00 $ 1,146.03 $ -16,543.38 $ -55,351.70

-23-

HANCOCK COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 1996

EXHIBIT G"

ASSETS Cash and Cash Equivalents Accounts Receivable

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION
PROJECT 90-670-044

PROJECT HEAD START

TOTALS JUNE 30, 1996 JUNE 30, 1995

$

0.00 $

1,922.49 $

1,922.49 $

1,856.75

575,000.00

Total Assets

$

0.00 $

1,922.49 $

1,922.49 s-===5.7..s.....=856....,.7_5

FUND EQUITY

Fund Balances

Reserved

For Capital Lease Purchases

For Expired Grant Balances/Questioned Costs

$

$ Unreserved
Undesignated

Total Fund Equity

$

0.00 $ 0.00 $ 0.00

$ 1,922.49 $ _ _ _1_,_922_._49_

1,922.49 $

1,922.49 $

0.00

0.00

575,000.00 1,856.75
576,856.75
0.00

0.00 $

1,922.49 $

1,s22.4s s _ _57_.s...a..5.6.,..1..s_

See notes to the general purpose financial statements.

-24-

HANCOCK COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 1996

EXHIBIT"H"

REVENUES Taxes and Other Funds
EXPENDITURES None Recorded
Excess of Revenues over (under) Expenditures OTHER FINANCING (USES)
Operating Transfers Out Excess of Revenues over (under) Expenditures and
Other Financing Uses FUND BALANCE JULY 1
Adjustments For Prior Year Receivables

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION
PROJECT 90-670-044

PROJECT HEAD START

TOTALS YEAR ENDED JUNE 30, 1996 JUNE 30, 1995

$

0.00 $

65.74 $

65.74 $

63.32

$

0.00 $

0.00 $

0.00 $

0.00

$

0.00 $

65.74 $

65.74 $

63.32

-75,547.61

$

0.00 $

65.74 $

65.74 $

-75,484.29

575,000.00

1,856.75

576,856.75

652,341.04

-575,000.00

-575,000.00

0.00

FUND BALANCE JUNE 30

$

0.00 $

1,922.49 $

1,922.49 $ 576,856.75

See notes to the general purpose financial statements.

-25-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
YEAR ENDED JUNE 30, 1996

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U.S. Department of Direct Summer Food Service Program for Children 1995 Grant 1996 Grant Through Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program 1996 Grant National School Lunch Program 1996 Grant Food Distribution Program (1)
Total U.S. Department of Agriculture
Education, U.S. Department of Through Georgia Department of Education Elementary and Secondary Education Act Title I Grants to Local Educational Agencies 1996 Grant Title II Eisenhower Professional Development 1996 Grant Title VI Innovative Education Program Strategies 1996 Grant Individuals with Disabilities Education Act Part B - Special Education Flow Through 1994 Carry-Over 1995 Regular 1996 Grant Preschool 1996 Grant 1996 Innovative Special Education Program Safe and Drug-Free Schools 1994 Carry-Over 1996 Grant Vocational Education - Basic Grants to States High School Program Basic Grant 1996 Grant Through Putnam County Board of Education Vocational Education Tech Prep 1996 Grant
Total U.S. Department of Education

CFDA NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

10.559 $ 10.559

8,473.03 $
8,429.00

8,810.12 10,221.65 (3)

10.553
* 10.555
10.550
$

188,316.57
499,897.44 64,229.73
769,345.77 $

(2)
786,614.29 (3) 64,229.73
869,875.79

* 84.010 $ 577,612.43 $

577,612.43

84.281

9,691.00

7,446.74

84.298

13,241.03

13,241.03

84.027 84.027 84.027
84.173 84.173
84.186 84.186

-640.52 -153.84 65,758.79
10,111.40 10,000.00
-1,212.20 18,572.76

65,758.79 10,111.40 10,000.00
18,572.76

84.048

38,242.28

(4)

84.243
$

5,606.32 746,829.45 $

(4) 702,743.15

- 26 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
YEAR ENDED JUNE 30, 1996

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Health and Human Services, U.S. Department of Direct Project Head Start 04CH4003/25 04CH4003/26 Through Georgia Department of Human Resources Substance Abuse - Block Grant 1996 Grant Through Georgia Department of Medical Assistance Healthcare Financing Administration 1996 Grant
Total U.S. Department of Health and Human Services

CFDA NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

* 93.600 $ * 93.600

725,652.92 $
17,953.91

724,846.39 17,953.91

93.218

1,568.16

(4)

93.778

8,359.40

(4)

$ 753,534.39 $

742,800.30

Total Federal Financial Assistance

$ 2,269,709.61 $ 2,315,419.24

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

(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 1996 National School Lunch Program.
(3) Expenditures for this program include State, and/or Local and Other Funds. Expenditures are not maintained by fund source.
(4) Expenditures on this program were not maintained by fund source.

See notes to the general purpose financial statements. - 27 -

HANCOCK COUNTY BOARD OF EDUCATION CASH AND CASH EQUIVALENTS JUNE 30, 1996

SCHEDULE "2"

NONINTEREST BEARING ACCOUNTS Bank of Hancock County, Sparta, Georgia United Security Bank, Sparta, Georgia
INTEREST BEARING ACCOUNTS Bank of Hancock County, Sparta, Georgia Demand Deposits (3.50%) Passbook Savings Accounts (3.50%)

$ 249,735.76
11,325.65 $ 261,061.41

$ -108,483.96 6,892.52

-101,591.44

$ 159,469.97

See notes to the general purpose financial statements. - 28 -

HANCOCK COUNTY BOARD OF EDUCATION ACCOUNTS RECEIVABLE JUNE 30, 1996

SCHEDULE "3"

GOVERNMENTAL FUND TYPES

SPECIAL

DEBT

GENERAL REVENUE 'SERVICE

FUND

FUND

FUND

TOTAL

Agriculture, U. S. Department of Summer Food Service Program for Children

$ 8,429.00

$ 8,429.00

Education, Georgia Department of

Food Services

School Breakfast Program

National School Lunch Program

Vocational Education

Federal Funds

$

Other State Program

Preschool Handicapped Program

Lottery Programs

Instructional Technology

Pre-Kindergarten Program

Technology Installation

Federal Programs

Elementary and Secondary Education Act

Title I

Grants to Local Educational Agencies

Individuals with Disabilities Education Act

Part B - Special Education

Flow Through

Preschool

1,945.23 3,423.00

29,377.32 78,517.15
31,976.65 11,013.47 28,420.10
107,233.20
38,657.15 11,745.19

29,377.32 78,517.15
1,945.23 3,423.00 31,976.65 11,013.47 28,420.10
107,233.20
38,657.15 11,745.19

Georgia Cities in Schools, Incorporated Shared Service Contributions

2,816.68

2,816.68

Greene County Board of Education Youth Apprenticeship Grant

5,140.71

5,140.71

Hancock County Tax Commissioner County Wide Bond Tax County Wide School Tax

82,235.17

$ 14,602.75

14,602.75 82,235.17

Health and Human Services, U. S. Department of Project Head Start

93,606.92

93,606.92

Various Sources Vendor Overpayments

151.55

151.55

$ 95,560.79 $ 439,127.70 $ 14,602.75 $ 549,291.24
See notes to the general purpose financial statements. - 29 -

HANCOCK COUNTY BOARD OF EDUCATION DEBT SERVICE REQUIREMENTS TO MATURITY
JUNE 30, 1996

SCHEDULE "4"

PAYMENTS DUE IN FISCAL YEAR ENDING JUNE 30
1997 1998 1999 2000 2001 2002 2003

TOTAL DEBT SERVICE

1994 ISSUE

INTEREST

PRINCIPAL

$ 281,595.00 $
279,138.75 276,060.00 277,242.50 272,600.00 277,052.50 270,763.75

61,595.00 $
54,138.75 46,060.00 37,242.50 27,600.00 17,052.50
5,763.75

220,000.00 225,000.00 230,000.00 240,000.00 245,000.00 260,000.00 265,000.00

$ 1,934,452.50 $ 249,452.50 $ 1,685,000.00

CHANGES IN GENERAL LONG-TERM DEBT Bonds Payable at July 1, 1995 Bonds Retired During Period

1994 ISSUE $ 1,845,000.00
160,000.00

Bonds Payable at June 30, 1996

$ 1,685,000.00

MATURITY DATES Semi-Annual Interest Payment Dates Annual Debt Retirement Date

FEB 1 -AUG 1 FEB 1

See notes to the general purpose financial statements. - 30 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 1996

SCHEDULE 5

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 Middle School Incentive Program Special Instructional Assistance In-School Suspension Counselors Grades 4 and 5 Technology Training Local Fair Share Educational Equalization Funding Grant Food Services Vocational Education Other State Programs Alternative Programs At-Risk Summer School Program Health Insurance Mentor Teacher Program Preschool Handicapped Program Remedial Summer School Program Lottery Programs Instructional Technology Media Center and Library Equipment Pre-Kindergarten Program Safe Schools Grant Technology Installation
Greene County Board of Education Youth Apprenticeship Grant
Office of Treasury and Fiscal Services Public School Employees Retirement

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$ 3,398,751.00
620,214.00 102,429.00 145,243.00
50,852.00 1,021,198.00
283,755.00 80,934.00
120,447.00 41,966.00 34,684.00
9,919.00 25,765.00 -692,637 .00 408,295.00
$ 600.00
20,000.00 12,053.64 203,507.89
6,825.00 21,263.00
4,584.24

$ 3,398,751.00
620,214.00 102,429.00 145,243.00
50,852.00 1,021,198.00

59,718.00

283,755.00 80,934.00
120,447.00 41,966.00 34,684.00 9,919.00 25,765.00
-692,637 .00 408,295.00
59,718.00 600.00

20,000.00 12,053.64 203,507.89 6,825.00 21,263.00 4,584.24

58,193.65 -4,286.37 60,481.36
800.00 30,635.10

58,193.65 -4,286.37 60,481.36
800.00 30,635.10

15,132.91

15,132.91

30,493.00

30,493.00

$ 5,966,274.68 $ 205,541.74 $ 6,171,816.42

See notes to the general purpose financial statements. - 31 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF TAXES AND OTHER REVENUE
YEAR ENDED JUNE 30, 1996

SCHEDULE"S"

Taxes County Wide Bond Tax County Wide School Tax Railroad Car Tax Real Estate Transfer Tax
Other Sources Indirect Cost Special Revenue Fund Interest Earned Lost and Damaged Books Milk Court Settlement Rents Sales Meals School Assets Shared Service Contributions Georgia Cities in Schools, Incorporated Georgia College Project Head Start Use of Buses Other

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE PROJECTS

FUND

FUND

DEBT SERVICE
FUND

TOTAL

$ 2,204,475.58 5,448.37 3,658.55

$ 324,511.85 $ 324,511.85

2,204,475.58

814.13

6,262.50

546.68

4,205.23

59.00 30,055.97 $
210.00
1,092.50

3,270.45 $ 86.05

256.48

43,719.90

11,060.99 575.00
551.00 6,130.98

50,211.17

65.74

24.44

59.00 33,416.60
210.00 86.05
1,092.50
43,719.90 256.48
11,060.99 575.00
50,211.17 551.00
6,130.98

s 2,263,574.42 s 97,287.57 s _ _ _e_5._74_S 325,897.10 s 2,686,824.83

See notes to the general purpose financial statements.

- 32 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES BY OBJECT GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 1996

SCHEDULE '7"

EXPENDITURES
Operating Costs Salaries Employee Benefits Travel of Employees Professional and Technical Services Compensation and Travel of Board Members Water, Sewer and Cleaning Services Repair and Maintenance Services Insurance Communications Commodity Hauling Shared Services Other Purchased Services Supplies Energy Food Usage Books, Textbooks and Periodicals Dues and Fees Interest Expense Federal Indirect Costs Other Expenditures Unidentified Variance
Nonoperating Costs Principal and Interest Building and Building Improvements Equipment

GENERAL FUND

SPECIAL REVENUE
FUND

TOTAL

$ 4,848,477.82 $ 1,428,668.12 $ 6,277,145.94

1,275,193.08

258,631.51

1,533,824.59

27,667.94

17,892.57

45,560.51

86,908.32

45,050.96

131,959.28

15,297.02

15,297.02

37,610.18

37,610.18

36,165.78

12,039.16

48,204.94

39,610.56

39,610.56

54,903.87

1,000.00

55,903.87

3,655.68

3,655.68

33,887.00

59,410.37

93,297.37

409.50

1,259.77

1,669.27

223,829.99

82,320.09

306,150.08

281,786.03

7,404.50

289,190.53

443,815.28

443,815.28

112,925.26

112,925.26

28,709.47

4,614.09

33,323.56

81,972.86

81,972.86

59.00

59.00

2,658.50

134.50

2,793.00

1,577.39

1,577.39

150,919.81 14,768.87 17,975.15

16,190.00 127,875.76

167,109.81 14,768.87
145,850.91

Total Expenditures

$ 7,373,254.40 $ 2,510,021.36 $ 9,883,275.76

See notes to the general purpose financial statements. - 33 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE Of EXPENDJTURES BY OBJECT
LOTTERY PROGRAMS YEAR ENDED JUNE 30, 1996

SCHEDULE a-

EXPENDITURES
Operating Costs Salaries Employee Benefits Travel of Employees Supplies other Expenditures
Nonoperating Costs Principal and Interest Equipment

INSTRUCTIONAL PRE-KINDERGARTEN

TECHNOLOGY {1}

PROGRAM

SAFE SCHOOLS
GRANT

TECHNOLOGY INSTALLATION

TOTAL

$

$

16,190.00

42,003.65

46,868.56 10,345.36
1,672.29 1,460.65
134.50
$

805.01 $

$ 30,635.10

46,868.56 10,345.36
1,672.29 1,460.65
134.50
16,190.00 73,443.76

Total Expenditures $

58,193.65 $

60,481.36 $

805.01 $

30,635.10 $

1501115.12

(1) Expenditures in the amount of $44,487.00 associated with the inception of a capital lease have been excluded from this schedule.

See notes to the general purpose financial statements.

- 34 -

HANCOCK COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30. 1996

SCHEDULE "9"

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

THIRTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS

100% TEST FOR OPERATIONS PORTION OF THIRTEEN WEIGHTED PROGRAMS

$ 4,266,637.00 $

144,825.00

___ __ $ 4,001,832.12 193,912.94 $

12_3_.,_881.87

$ 4,195,745.06

-109,525.43 $ 4,086,219.63

$

180,417.37 $ =====2=0'=94=3=.1=3

See notes to the general purpose financial statements. - 35 -

HANCOCK COUNTY BQARP OF EDUCATION
ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS BY PROGRAM
GENERAL FUND QUALITY BASIC EDUCATION PROGRAMS
YEAR ENDED JUNE 3Q 1996

Gl;NERAL ANQ ~eiBEl;R El2UCATION PROGBAMS
Kindergarten (") Grades 1 - 3 (")
Sub-Total K-3 Grades 4 5 r) Grades 6 8 r) Grades 9-12 r) High School Laboratories r) Vocational Education Laboratories r)
Total General and Career Education Programs SPECIAL EDUCATION PROGRAMS
Regular Programs Category I (") Category II (") Category Ill (") Sub-Total Regular Category V (Gifted) (") Total Special Education Programs
REMEDIAL EDUCATION PROGRAM Cl
Total Thirteen Weighted Programs MEDIA CENTER PROGRAMS
Salaries Operations
Total Media Center Programs
Total Thirteen Weighted and Media Center Programs

ALLOTMENTS FROM DEPARTMENT OF EDUCATION

REQUIRED

ORIGINAL

'16

ORIGINAL

MID-TERM

$

408,sn.oo

$

367,714.80 $

0.00

832,652.00

749,386.80

$ 1,241,224.00 90 '$ 1,117,101.60 $

0.00

409,561.00 90

368,604.90

716,053.00 90

644,447.70

574,329.00 90

516,896.10

196,471.00 90

176,823.90

261,113.00 90

235,001.70

$ 3,398,751.00

$ 3,058,875.90 $

0.00

$

593,517.00

$

534,165.30 $

0.00

$

593,517.00 90 $

534,165.30 $

0.00

26,697.00 90

24,027.30

$

620,214.00

$

558,192.60 $

0.00

$

102,429.00 90 $

92,186.10 $

0.00

$ 4,121,394.00

$ 3,709,254.60 $

0.00

$

113,790.00 90 $

102,411.00 $

0.00

31,453.00 90

28,307.70

$

145,243.00

$

130,718.70 $

0.00

$ 4,266,637.00

$ 3,839,973.30 $

0.00

STAFF DEVELOPMENT PROGRAMS Cost of Instruction Professional Development
Total Staff Development (") Identifies Thirteen Weighted Programs. See notes to the general purpose financial statements.

$

12,543.00

$

12,543.00 $

0.00

38,309.00

38,309.00

0.00

$

50,852.00 100 $

so,ss2.oo s 2====0=.00=

- 36

SCHEDULE "10"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES

OPERATIONS

TOTAL

AMOUNTOF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$

367,714.80 $

749,386.80

$ 1,117,101.60 $

368,604.90

644,447.70

516,896.10

176,823.90

235,001.70

$ 3,058,875.90 $

326,53522 $ 814,463.62 1,140,998.84 $ 414,353.13 740,978.54 434,207.53 143,028.04 252,574.77 3,126,140.85 $

5,412.11 $ 24,884.43 30,296.54 $ 18,386.38 22,418.06 21,n6.so
322.01 17,086.41 110,285.90 $

331,947.33 839,348.05 1,171,295.38 $ 432,739.51 763,396.60 455,984.03 143,350.05 269,661.18 3,236,426.75

0.00 0.00 0.00 60,912.07 33,473.85 0.00

$

534,165.30

$

15,740.51 385,958.44 $ 143,537.21

$ 9,41026 3,239.18

15,740.51 395,368.70 146,n6.39

$

534,165.30 $

545,236.16 $

12,649.44 $

557,885.60

0.00

24,027.30

43,661.45

268.74

43.930.19

0.00

$

558,192.60 $

588,897.61 $

12,918.18 $

601,815.79

$

92,186.10 $

102,056.30 $

677.79 $

102,734.09

0.00

$ 3,709,254.60 $ 3,817,094.76 $

123,881.87 $ 3,940,976.63

$

102,411.00 $

184,737.36

$

184,737.36

0.00

28,307.70

$

70,031.07

70,031.07

0.00

$

130,718.70 $

184,737.36 $

70,031.07 $

254,768.43

$ 3,839,973.30 $ 4,001,832.12 $

193,912.94 $ 4,195,745.06 $

94,385.92

==========

$

12,543.00

38,309.00

$ -==50===,8=52...0.0=

$

11,193.93 $

11,193.93

37,757.38

37,757.38

$

48,951.31 $

48,951.31 $ ======1=,900==69=

37

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF COMPENSATION AND TRAVEL OF BOARD MEMBERS
YEAR ENDED JUNE 30, 1996

SCHEDULE "11"

BOARD MEMBER ADDRESS
Ms. Emma Clayton, Chairperson (*)
P. 0. Box42
Sparta, Georgia 31087
Mr. Arthur M. Benson (*)
P. 0. Box314
Sparta, Georgia 31087
Ms. Ruby C. Clayton (*) 603 East Broad Street Sparta, Georgia 31087
Mr. W. Elmer Harper(*)
P. 0. Box 123
Sparta, Georgia 31087
Mr. Freddie L. Jones (*) Route 3, Box 284 Milledgeville, Georgia 31061

COMPENSATION

TRAVEL

$

2,600.00 $

457.00

1,800.00

1,973.19

1,650.00

246.38

1,850.00

1,358.82

1,850.00

1,511.63

$

9,750.00 $ =====5=,54=7=.0=2

(*) Denotes Board Members Serving as of June 30, 1996

See notes to the general purpose financial statements. - 38 -

SECTION II COMPLIANCE

CLAUDE L. VICKERS
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
November 26, 1996

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Superintendent and Members of the Hancock County Board ofEducation
COMPLIANCE REPORT BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the general purpose financial statements of the Hancock County Board ofEducation as of and for the year ended June 30, 1996, and have issued our report thereon dated November 26, 1996. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.
We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement.
Compliance with laws, regulations, contracts, and grants applicable to Hancock County Board ofEducation is the responsibility ofthe Board's management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we performed tests of the Board's compliance with certain provisions oflaws, regulations, contracts, and grants. However, the objective of our audit of the financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion.
The results ofour tests of compliance disclosed material instances of noncompliance, which are described in the Schedule ofFindings and Improper or Questioned Costs.

96CRL-20

We considered these material instances of noncompliance in forming our opinion on whether the fiscal year 1996 general purpose financial statements are presented fairly, in all material respects, in conformity with generally accepted accounting principles, and this report does not affect our report dated November 26, 1996 on those general purpose financial statements.
This report is intended for the information of management, the Federal cognizant audit agency and other Federal granter agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,

CLV:gp 96CRL-20

Claude L. Vickers State Auditor

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
November 26, 1996

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Superintendent and Members of the Hancock County Board ofEducation

SINGLE AUDIT REPORT ON COMPLIANCE WITH THE GENERAL REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS

Ladies and Gentlemen:

We have audited the general purpose financial statements ofthe Hancock County Board ofEducation as of and for the year ended June 30, 1996, and have issued our report thereon dated November 26, 1996. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.

We have applied procedures to test the Hancock County Board ofEducation's compliance with the following requirements applicable to each ofits Federal financial assistance programs which are listed in the Schedule ofFederal Financial Assistance, for the year ended June 30, 1996:

(1) Political Activity

(5) Allowable Costs/Cost Principles

(2) Civil Rights

(6) Drug-Free Workplace Act

(3) Cash Management

(7) Audit Follow-Up/Resolution

(4) Federal Financial Reports

(8) Administrative Requirements

Our procedures were limited to the applicable procedures described in the Office ofManagement and Budget's "Compliance Supplement for Single Audits of State and Local Governments" and other additional procedures as deemed necessary. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the Board's compliance with the requirements listed in the preceding paragraph. Accordingly, we do not express such an opinion.

96CRL-75

Material instances of noncompliance consist offailures to follow the general requirements that caused us to conclude that the misstatements resulting from those failures are material to the Federal financial assistance programs. The results of our tests of compliance disclosed a material instance of noncompliance that is described in the Schedule ofFindings and Improper or Questioned Costs.
With respect to the items tested, the Hancock County Board ofEducation complied with those requirements, except as described in the Schedule ofFindings and Improper or Questioned Costs. However, the extent of noncompliance noted in our testing indicates that, with respect to items that were not tested by us, there is more than a relatively low risk that the Board may not have complied with the requirements referred to in the second paragraph. These matters were considered by us in evaluating whether the general purpose financial statements are presented fairly in conformity with generally accepted accounting principles. Additionally, the results ofour procedures disclosed immaterial instances of noncompliance with those requirements, which are described in the Schedule ofFindings and Improper or Questioned Costs.
This report is intended for the information of management, the Federal cognizant audit agency and other Federal granter agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
CLV:gp 96CRL-75

CLAUDE L. VICKERS
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
November 26, 1996

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Superintendent and Members of the Hancock County Board ofEducation

SINGLE AUDIT OPINION ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAMS

Ladies and Gentlemen:

We have audited the general purpose financial statements of the Hancock County Board of Education as of and for the year ended June 30, 1996, and have issued our report thereon dated November 26, 1996. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.

We also have audited the Hancock County Board ofEducation's compliance with the requirements governing:

(I) Types of Services Allowed or Unallowed

(5) Applicable Special Tests and Provisions

(2) Eligibility
(3) Matching, Level of Effort, and/or Earmarking
(4) Reporting

(6) Other Requirements a) Claims for Advances and Reimbursements b) Amounts Claimed and Used for Matching

These requirements are applicable to each of its major Federal financial assistance programs which are identified in the Schedule ofFederal Financial Assistance, for the year ended June 30, 1996. The management ofthe Hancock County Board ofEducation is responsible for the Board's compliance with those requirements. Our responsibility is to express an opinion on compliance with those requirements based on our audit.

96CRL-110

We conducted our audit ofcompliance in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General ofthe United States; and the provisions of the Office of Management and Budget (0MB) Circular A-128, "Audits of State and Local Governments". Those standards and 0MB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether material noncompliance with the requirements referred to above occurred. An audit includes examining, on a test basis, evidence about the Hancock County Board ofEducation's compliance with those requirements. We believe that our audit provides a reasonable basis for our opinion.

The results of our audit procedures for major programs as administered by the Hancock County Board of Education disclosed material instances of noncompliance with the specific requirements as described in the Schedule of Findings and Improper or Questioned Costs. In our opinion, the Hancock County Board of Education's compliance with these requirements, as described in the Schedule ofFindings and Improper or Questioned Costs, is necessary for the Board to comply with the requirements applicable to major programs.

In addition, the results of our audit procedures disclosed immaterial instances of noncompliance with the requirements referred to above, which are also described in the Schedule of Findings and Improper or Questioned Costs. We considered all instances of noncompliance in forming our opinion on compliance, which is expressed in the following paragraph.

In our opinion, except for those instances of noncompliance with the requirements applicable to major programs referred to in the fourth paragraph of this report and identified in the Schedule of Findings and Improper or Questioned Costs, the Hancock County Board ofEducation complied, in all material respects, with the requirements as disclosed in the second paragraph that are applicable to its major Federal financial assistance programs for the year ended June 30, 1996.

This report is intended for the information of management, the Federal cognizant audit agency and other

Federal grantor agencies. This restriction is not intended to limit the distribution of this report which is a

matter of public record.

R~x~

CLV:gp 96CRL-l 10

Claude L. Vickers State Auditor

CLAUDE L. VICKERS
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
November 26, 1996

Honorable Zell Miller, Governor Members of the General Assembly Members of the State Board ofEducation
and Superintendent and Members of the Hancock County Board ofEducation

SINGLE AUDIT REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS

Ladies and Gentlemen:

We have audited the general purpose financial statements of the Hancock County Board ofEducation as of and for the year ended June 30, 1996, and have issued our report thereon dated November 26, 1996. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.

In connection with our audit of the fiscal year 1996 general purpose financial statements of the Hancock County Board of Education and with our consideration of the Board's internal control structure used to administer Federal financial assistance programs, as required by Office ofManagement and Budget (0MB) Circular A-f28, "Audits of State and Local Governments", we selected certain transactions applicable to certain nonmajor Federal financial assistance programs for the year ended June 30, 1996. As required by 0MB Circular A-128, we have performed auditing procedures on the selected transactions to test compliance with the requirements governing:

(1) Types of Services Allowed or Unallowed

(2) Eligibility

Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the Hancock County Board ofEducation's compliance with these requirements. Accordingly, we do not express such an opinion.

96CRL-140

Material instances of noncompliance consist offailures to follow requirements or violations of prohibitions, contained in statutes, regulations, contracts, or grants that cause us to conclude that the aggregation of the misstatements resulting from those failures or violations is material to a Federal financial assistance program.
With respect to the items tested, the results of our procedures disclosed material instances of noncompliance with the requirements listed in the second paragraph, that are described in the Schedule of Findings and Improper or Questioned Costs. With respect to the items not tested, nothing came to our attention that caused us to believe that the Hancock County Board ofEducation, had not complied, in all material respects, with those requirements.
This report is intended for the information of management, the Federal cognizant audit agency and other Federal grantor agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,
t$."--'~
Claude L. Vickers State Auditor
CLV:gp 96CRL-140

SECTION III INTERNAL CONTROL

CLAUDE L. VICKERS
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
November 26, 1996

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Hancock County Board ofEducation
REPORT ON INTERNAL CONTROL STRUCTURE IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the general purpose financial statements of the Hancock County Board of Education as of and for the year ended June 30, 1996, and have issued our report thereon dated November 26, 1996. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.
We conducted our audit in accordance with generally accepted auditing standards, and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement.
The management ofthe Hancock County Board of Education is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to p~ovide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation ofgeneral purpose financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate.

96ICL-4

In planning and peifonning our audit ofthe general purpose financial statements of the Hancock County Board ofEducation for the year ended June 30, 1996, we obtained an understanding ofthe internal control structure. With respect to the internal control structure, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk in order to detennine our auditing procedure for the purpose of expressing our opinion on the general purpose financial statements and not to provide an opinion on the internal control structure. Accordingly, we do not express such an opinion.

We noted certain matters involving the internal control structure and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements.

As described in the Schedule ofFindings and Improper or Questioned Costs, reportable conditions were noted in the following control categories:

(I) Accounting Controls (Overall)

(4) General Ledger

(2) Cash and Cash Equivalents

(5) General Fixed Assets

(3) Expenditures/Liabilities/Disbursements

A material weakness is a reportable condition in which the design or operation of one or more of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of peiforming their assigned functions.

Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, as described in the Schedule ofFindings and Improper or Questioned Costs, all ofthe control categories listed above include reportable conditions that are also considered to be material weaknesses.

These conditions were considered in determining the nature, timing, and extent of the procedures to be peiformed in our audit ofthe Hancock County Board ofEducation's financial statements and this report does not affect our report thereon dated November 26, 1996.

96ICL-4

This report is intended for the information of management, the Federal cognizant audit agency and other Federal granter agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.

CLV:gp 96ICL-4

Claude L. Vickers State Auditor

CLAUDE L. VICKERS
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
November 26, 1996

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Superintendent and Members of the Hancock County Board ofEducation
SINGLE AUDIT REPORT ON THE INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS
Ladies and Gentlemen:
We have audited the general purpose financial statements ofthe Hancock County Board of Education as of and for the year ended June 30, 1996, and have issued our report thereon dated November 26, 1996. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. We have also audited the Board's compliance with requirements applicable to major Federal financial assistance programs and have issued our opinion thereon dated November 26, 1996.
We conducted our audit in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States; and the provisions of Office of Management-and Budget (0MB) Circular A-128, "Audits ofState and Local Governments". Those standards and 0MB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement and about whether the Hancock County Board of Education complied with laws and regulations, noncompliance with which would be material to a major Federal financial assistance program.
In planning and performing our audit for the year ended June 30, 1996, we considered the Board's internal control structure in order to determine our auditing procedures for the purpose of expressing our opinions on the Board's general purpose financial statements and on its compliance with requirements applicable to major Federal financial assistance programs and to report on the internal control structure in accordance with 0MB Circular A-128. This report addresses our consideration ofinternal control structure policies and procedures relevant to compliance with requirements applicable to Federal financial assistance programs. We have addressed internal control structure policies and procedures relevant to our audit of the general purpose financial statements in a separate report dated November 26, 1996.
96ICL-8

The management of the Hancock County Board ofEducation is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives ofan internal control structure are to provide management with reasonable, but not absolute, assurance that, assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles, and that Federal financial assistance programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal control structure, errors, irregularities, or instances of noncompliance may nevertheless occur and not be detected. Also, projection ofany evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate.

For the purpose of this report, we have classified the significant internal control structure policies and procedures used in administering Federal financial assistance programs in the following control categories:

GENERAL REQUIREMENTS

SPECIFIC REQUIREMENTS

(I) Political Activity (2) Civil Rights (3) Cash Management (4) Federal Financial Reports

(I) Types of Services Allowed or Unallowed
(2) Eligibility
(3) Matching, Level ofEffort, and/or Earmarking

(5) Allowable Costs/Cost Principles

(4) Reporting

(6) Drug-Free Workplace Act (7) Audit Follow-Up/Resolution (8) Administrative Requirements

(5) Applicable Special Tests and Provisions
(6) Other Requirements a) Claims for Advances and Reimbursements b) Amounts Claimed and Used for Matching

For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and determined whether they have been placed in operation, and we assessed control risk.

During the year ended June 30, 1996, the Hancock County Board of Education expended 80% of its total Federal financial assistance under major Federal financial assistance programs.

96ICL-8

We performed tests of controls, as required by 0MB Circular A-128, to evaluate the effectiveness of the design and operation of internal control structure policies and procedures that we considered relevant to preventing or detecting material noncompliance with general requirements and specific requirements as described above that are applicable to each ofthe Board's major Federal financial assistance programs, which are identified in the Schedule ofFederal Financial Assistance. Our procedures were less in scope than would be necessary to render an opinion on these internal control structure policies and procedures. Accordingly, we do not express such an opinion.

We noted certain matters involving the internal control structure and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control structure that, in our judgment, could adversely affect the Board's ability to administer Federal financial assistance programs in accordance with applicable laws and regulations.

As described in the Schedule ofFindings and Improper or Questioned Costs, reportable conditions were noted in the follo"Ying control categories:

(1) Federal Financial Reports

(4) Eligibility

(2) Allowable Costs/Cost Principles

(5) Applicable Special Tests and Provisions

(3) Administrative Requirements

A material weakness is a reportable condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that noncompliance with laws and regulations that would be material to a Federal financial assistance program may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions.

Our consideration of the internal control structure policies and procedures used in administering Federal financial assistance would not necessarily disclose all matters in the internal control structure that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, as described in the Schedule ofFindings and Improper or Questioned Costs, all ofthe control categories listed above include reportable conditions that are also considered to be material weaknesses.

These conditions were considered in determining the nature, timing, and extent of the procedures to be performed in our audit ofthe Hancock County Board ofEducation's compliance with requirements applicable to its major Federal financial assistance programs for the year ended June 30, 1996, and this report does not affect our report thereon dated November 26, 1996.

96ICL-8

This report is intended for the information of management, the Federal cognizant audit agency and other Federal grantor agencies and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,

CLV:gp 96ICL-8

Claude L. Vickers State Auditor

SECTION IV FINDINGS AND IMPROPER OR QUESTIONED COSTS

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED ruNE 30, 1996
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Improper Expenditure Financial Statements Amount: $117,000.00 Audit Control Number 6701-93-01
The audit report for the year ended June 30, 1991, noted that on January 13, 1989, Hancock County Board ofEducation entered into an agreenient with the Hancock Board ofCommissioners to construct a new Project Head Start facility. As part ofthis agreement, funds of$50,000.00 from fiscal year 1990 and $67,000.00 from fiscal year 1991, were provided by the Hancock County Board ofEducation's General Fund for construction of the facility, which was built on a tract ofland owned by the Hancock County Board of Commissioners.
The Board ofEducation has asserted that the payments totaling $117,000.00 are prepayments ofa lease on the Project Head Start facility. However, our audit disclosed that evidence did not support this claim. The Hancock County Board of Education and the Hancock County Board of Commissioners are in the process of renegotiating the Head Start operating agreement. (See Note 6)
In response to an inquiry from the State Superintendent of Schools, the Attorney General of Georgia rendered an opinion, dated October 31, 1957, to the effect that school funds may not be spent for the construction of a building on property not owned by a local board of education. Appropriate action should be taken by the Board to secure reimbursement of the $117,000.00 for deposit to the Board's General Fund.
AUDIT FOLLOW-UP/RESOLUTION Deficit Fund Balance Financial Statements Audit Control Number 6701-93-07
The audit report for the year ended June 30, 1995, reported that liabilities and reserved fund balances exceeded assets available for the General Fund by $1,686,369.66. The Financial Management for Georgia Local Units ofAdministration (FMGLUA), Section II, Chapter 25, provides that school systems with deficits are subject to special budgeting and financial reporting requirements which includes a requirement to provide for a minimum of one mill ofdeficit reduction when budgeting for school operations.
On February 14, 1996, the Board submitted a "Deficit Financing Elimination Plan" to the Georgia Department of Education (GDOE) for the 1995-96 school year which included budget reductions and a millage rate increase. While the Hancock County Board of Education is in compliance with GDOE's deficit reduction regulations, the Board should continue its efforts to eliminate all fund deficits.
- 1-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Failure to Remit State Income Tax Employee Withholdings Financial Statements Finding Resolved Audit Control Number 6701-94-02
The audit report for the year ended June 30, 1994, reported that the Board failed to properly remit employee payroll withholdings for State taxes to the Georgia Department ofRevenue. This liability consisted of State Income Taxes of $307,272.33 along with penalties and interest of $82,766.80. As of June 30, 1995, an unremitted balance of$299,796.10 remained due to the Georgia Department ofRevenue, which consisted of $148,958.12 of delinquent State Income Taxes, $57,400.24 in interest charges and $93,437.74 in penalties.
During the year under review, the Board remitted $253,083.36 to the Georgia Department of Revenue for delinquent taxes of$148,958.12, interest charges of$57,400.24 and penalties of$46,725.00. The Georgia Department ofRevenue waived the remaining penalties of$46,712.74.
AUDIT FOLLOW-UP/RESOLUTION Failure to Meet Expenditure Requirements Financial Statements Amount: $6,115.41 Audit Control Number 6701-94-03
The audit report for the year ended June 30, 1994, reported that _the Board had underexpenditures of Quality Basic Education (QBE) funds of$2,256.49 for the Remedial Education Program - Salaries portion, $48.24 for the Grades K-3 Program - Operations portion, $1,944.05 for the Vocational Education Laboratories Program- Operations portion and $1,866.63 for the Special Education Programs - Operations portion. For the year under review, no adjustments were made to the Board's local fair share by the Georgia Department ofEducation to refund the underexpenditures as required. The total amount of $6,115.41 should be returned to the Georgia Department of Education through an increase in the Board's local fair share for the QBE programs in a subsequent fiscal period.
AUDIT FOLLOW-UP/RESOLUTION Failure to Utilize Funds for Intended Purpose Financial Statements Amount: $8,743.59 Audit Control Number 6701-94-04
The audit report for the year ended June 30, 1994, reported that equipment items purchased at a cost of $8,743.59 were in storage at the Board's central office and had not been installed at M. E. Lewis, Sr. Elementary School as required. These items were purchased with funds derived from the Computers in Classrooms - Lottery Grant. For the fiscal year ended June 30, 1995, audit tests revealed that the equipment
- 2-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Failure to Utilize Funds for Intended Purpose Financial Statements Amount: $8,743.59 Audit Control Number 6701-94-04
had been installed with the exception ofa laser printer which was reported as stolen and some software which
could not be located. As these equipment items were not installed and made available for classroom use in a timely manner, the Georgia Department ofEducation should review this matter to determine if a refund is appropriate.
AUDIT FOLLOW-UP/RESOLUTION Salary Overpayment Federal Financial Assistance Amount: $10,121.44 Audit Control Number 6701-94-06
The audit report for the year ended June 30, 1994, stated that the Board overpaid Project Head Start program (CFDA 93.600) non-certified administrative employees in the amount of $10,121.44 for fiscal year ending June 30, 1994. The Board should contact the U. S. Department of Health and Human Services regarding allowability of these expenditures.
AUDIT FOLLOW-UP/RESOLUTION Lack ofExpenditure/Obligation Documentation Federal Financial Assistance Amount: $8,974.02 Audit Control Number 6701-94-10
The audit report for the year ended June 30, 1994, stated that the project completion reports submitted for the Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies (CFDA 84.010), included expenditures of $1,762.72 and $7,211.30 for the 1993 Carry-Over and 1994 Regular projects, respectively. These expenditures were not documented by the Board. In a letter dated August 21, 1996, the Georgia Department ofEducation requested that the Board refund the $8,974.02 in questioned cost. However, as of the date of this audit, refund of the $8,974.02 in questioned cost had not been made. This questioned cost should be refunded to the Georgia Department ofEducation as required.
- 3-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Lack ofExpenditure/Obligation Documentation Federal Financial Assistance Finding Resolved Audit Control Number 6701-94-11
The audit report for the year ended June 30, 1994, noted that the project completion report submitted for the Individuals with Disabilities Education Act - Part B - Special Education - Flow Through Program (CFDA 84.027), 1994 Regular project, included expenditures of$153.84 which could not be documented. As a result, an unexpended grant balance of$153.84 remained on hand at June 30, 1994, which should be refunded to the Georgia Department of Education. This amount had not been refunded as of June 30, 1996. However, a refund of$153.84 was made by the Board to the Georgia Department ofEducation in the subsequent fiscal year and this amount is included in the accounts payable as shown on the Combined Balance Sheet, Exhibit "A", of this report.
AUDIT FOLLOW-UP/RESOLUTION Lack ofDocumentation for Expenditures Federal Financial Assistance Amount: $1,944.90 Audit Control Number 6701-94-12
The audit report for the year ended June 30, 1994, reported that journal entries were made by Board personnel to transfer expenditures in the amount of$1,944.90 from the General Fund to the Elementary and Secondary Education Act - Chapter 2 - Block Grant Flow Through Program (CFDA 84.151), 1994 project. These journal entries were made without supporting documentation as required by Office ofManagement and Budget Circular A-87.
In a letter dated August 21, 1996, the Georgia Department ofEducation requested that the Board refund the $1,944.90 in questioned cost. However, as ofthe date ofthis audit, refund ofthe $1,944.90 in questioned cost had not been made. This questioned cost should be refunded to the Georgia Department of Education as required.
AUDIT FOLLOW-UP/RESOLUTION Failure to Utilize Funds for Intended Purpose Federal Financial Assistance Amount: $28,578.30 Audit Control Number 6701-94-14
The audit report for the year ended June 30, 1994, reported that the Board purchased $13,614.00 of computer equipment from Elementary and Secondary Education Act - Chapter 2 - Block Grant Flow Through Program (CFDA 84. 151) funds which did not meet the cost allowability criteria of the Office of Management and
- 4-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Failure to Utilize Funds for Intended Purpose Federal Financial Assistance Amount: $28,578.30 Audit Control Number 6701-94-14
Budget Circular A-87. This equipment was not installed and available for use in the period from which the grant funds were expended.
The audit report for the year ended June 30, 1995, reported that on June 26, 1995, the Board purchased additional computer equipment for $14,538.60 and educational software for $425.70 from 1995 Chapter 2 Program funds and 1994 Chapter 2 Program funds, respectively. These expenditures did not meet the cost allowability criteria of Circular A-87, because the equipment and software were not installed and utilized in the period from which the funds were expended.
The Georgia Department ofEducation has reviewed the questioned costs of $13,614.00 disclosed in the 1994 audit report, and in a letter dated August 21, 1996, has requested a refund of this amount from the Board. However, as of the date of this report, refund of the $13,614.00 in questioned cost had not been made as required. In addition, the Georgia Department of Education should review the remaining questioned expenditures of$14,964.30 to determine if a reclaim of funds is appropriate.
AUDIT FOLLOW-UP/RESOLUTION Additional Salary Payments Financial Statements Amount: $8,762.31 Audit Control Number 6701-94-21
The audit report for the year ended June 30, 1995, reported that the Board approved salary payments of $8,762.31 to three employees for unused annual leave. There are no provisions made for payments of this nature in the Board's annual leave policy or in the employees' employment contracts. Reimbursement of $8,762.31 should be secured by the Board for deposit to the Board's General Fund.
AUDIT FOLLOW-UP/RESOLUTION Failure to Meet Expenditure Requirements Financial Statements Amount: $14,385.60 Audit Control Number 6701-95-01
The audit report for the year ended June 30, 1995, reported that the Board had underexpenditures of Quality Basic Education (QBE) funds of $12,089.41 for the operations portion of the Media Centers Program and $2,296.19 for the StaffDevelopment Program. For the year under review, no adjustments were made to the
- 5-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Failure to Meet Expenditure Requirements Financial Statements Amount: $14,385.60 Audit Control Number 6701-95-01
Board's local fair share by the Georgia Department ofEducation to refund the expenditures as required. The total amount of$14,385.60 should be returned to the Georgia Department ofEducation through an increase in the Board's local fair share for the QBE programs in a subsequent fiscal period.
AUDIT FOLLOW-UP/RESOLUTION Failure to Meet Expenditure Requirements Financial Statements Amount: $29,404.44 Audit Control Number 6701-95-02
The audit report for the year ended June 30, 1995, reported that the Board had an underexpenditure ofQuality Basic Education (QBE) funds of $29,404.44 for Operational Costs portion of the Thirteen Weighted Programs. For the year under review, no adjustment was made to the Board's local fair share by the Georgia Department ofEducation to refund the expenditure as required. The underexpenditure of$29,404.44 should be returned to the Georgia Department ofEducation through an increase in the Board's local fair share for the QBE programs in a subsequent fiscal period.
AUDIT FOLLOW-UP/RESOLUTION Unearned Lottery Funds Financial Statements Amount: $69,231.97 Audit Control Number 6701-95-03
The audit report for the year ended June 30, 1995, reported that the Board had unearned Lottery Program fund balances of$73,518.34, consisting of $69,231.97 in the Pre-Kindergarten Program funds and $4,286.37 in the Media Center and Library Equipment Program funds. In the year under review, the Board refunded $4,286.37 to the Georgia Department ofEducation for the Media Center and Library Equipment Program, leaving an unearned lottery fund balance of $69,231.97 in the Pre-Kindergarten Program. In a letter dated August 21, 1996, the Georgia Department ofEducation requested that the Board refund the $69,231.97 in questioned cost. However, as of the date of this audit, refund of the questioned cost of$69,231.97 had not been made. Refund of this questioned cost should be made to the Georgia Department of Education as required.
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE.OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Improper Lottery Fund Expenditures Financial Statements Amount: $6,390.49 Audit Control Number 6701-95-04
The audit report for the year ended June 30, 1995, reported improper expenditures of $3,000.00 from the 1994 Distant Leaming Program and $3,390.49 from the Media Center and Library Equipment Program. These expenditures were made for supply items which were not encumbered by June 30, 1994, as required by the Georgia Department ofEducation.
In a letter dated August 21, 1996, the Georgia Department ofEducation requested that the Board refund the $6,390.49 in questioned cost. However, as of the date of this audit, refund of the questioned cost of $6,390.49 had not been made. Refund of this questioned cost should be made to the Georgia Department of Education as required.
AUDIT FOLLOW-UP/RESOLUTION Advance Payments to Employees Financial Statements Finding Resolved Audit Control Number 6701-95-06
The audit report for the year ended June 30, 1995, reported that two employees received salary advances totaling $4,407.63. These advances constituted interest free loans (gratuities) which are prohibited by the Constitution ofthe State of Georgia. In the year under review, the Board discontinued this practice.
AUDIT FOLLOW-UP/RESOLUTION Failure to Monitor Labor Standards Federal Financial Assistance Finding Deleted Audit Control Number 6701-95-08
The audit report for the year ended June 30, 1995, stated that a review of the Board's Federally funded construction project revealed that the provisions of the Davis-Bacon Act were not being met. In the year under review, the Board did not receive any Federal construction funds. The Board should establish procedures to ensure compliance with the provisions of the Davis-Bacon Act in the event that Federal construction funds are received in subsequent years.
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Lack ofExpenditure/Obligation Documentation Federal Financial Assistance Finding Resolved Audit Control Number 6701-95-09
The audit report for the year ended June 30, 1995, stated that the project completion report submitted for the Individuals with Disabilities Education Act - Part B - Special Education - Flow Through Program (CFDA 84.027), 1994 Carry-Over project, included expenditures of$640.52 which could not be documented and were not liquidated in the subsequent fiscal year. As a result, an unexpended grant balance of$640.52 remained on hand at June 30, 1995. This amount had not been refunded as of June 30, 1996. However, a refund of $640.52 was made by the Board to the Georgia Department ofEducation in the subsequent fiscal year and this amount is included in the accounts payable as shown on the Combined Balance Sheet, Exhibit "A", ofthis report.
AUDIT FOLLOW-UP/RESOLUTION Lack ofExpenditure/Obligation Documentation Federal Financial Assistance Finding Resolved Audit Control Number 6701-95-10
The audit report for the year ended June 30, 1995, stated that the project completion report submitted for the Safe and Drug-Free Schools Program (CFDA 84.186), 1994 Carry-Over project, included expenditures of $1,212.20 for a vendor overpayment. Audit adjustments were made to record an accounts receivable from the vendor resulting in an unexpended grant balance of $1,212.20. This amount had not been refunded as of June 30, 199~. However, a refund of $1,212.20 was made by the Board to the Georgia Department of Education in the subsequent fiscal year and this amount is included in the accounts payable as shown on the Combined Balance Sheet, Exhibit "A", of this report.
AUDIT FOLLOW-UP/RESOLUTION Improper Expenditures Federal Financial Assistance Amount: $3,894.14 Audit Control Number 6701-95-11
The audit report for the year ended June 30, 1995, reported that $3,894.14 was expended from the School Food Services Fund (CFDA 10.555) to provide meals during the summer. The majority ofthese meals were provided to campers at a summer recreation program sponsored by the Hancock County Board of Commissioners for which the Board ofEducation did not receive reimbursement.
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Improper Expenditures Federal Financial Assistance Amount: $3,894.14 Audit Control Number 6701-95-11
In the year under review, no reimbursements were received. The Board should determine the exact amount of funds spent to provide meals to campers and request reimbursement from the Hancock County Board of Commissioners.
AUDIT FOLLOW-UP/RESOLUTION Improper Expenditures/Food Purchases not Shipped to Schools Federal Financial Assistance Finding Resolved Audit Control Number 6701-95-12
The audit report for the year ended June 30, 1995, noted that from November 1993 through June 1995 the Board purchased food items from Monarch, Incorporated in the amount of $6,010.87 from School Food Service Funds (CFDA 10.553 and 10.555) which were delivered to several locations in Milledgeville, Georgia. There was no receipt evidence available to document that these goods were ever received by the Hancock County School System.
On December 18, 1995, the Georgia Bureau ofInvestigation opened an investigation of the expenditures in question. On April 2, 1996, the GBI made a presentation to the Hancock County Grand Jury in regards to the investigation. The Grand Jury was satisfied with the results ofthe GBI investigation and recommended that no additional action be taken.
For the year under review, there was no evidence ofany food purchases being delivered to any locations other than the Hancock County School System.
AUDIT FOLLOW-UP/RESOLUTION Questioned Salary Payments Federal Financial Assistance Amount: $3,345.46 Audit Control Number 6701-95-13
The audit report for the year ended June 30, 1995, stated that two employees of the Project Head Start program (CFDA 93.600) also served as bailiffs for the Hancock County Superior Court during normal work hours. When Court was in session the employees were allowed to take "jury duty" leave with no charge for any personal leave days and no reduction in salary. From fiscal year ended June 30, 1993 through October 20, 1995, these employees had received approximately $3,345.46 in compensation from the Head Start program while serving some type of court duty.

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Questioned Salary Payments Federal Financial Assistance Amount: $3,345.46 Audit Control Number 6701-95-13
OCGA Code Section 15-13-30 refers to bailiffs in relation to the "performance oftheir official duties", and OCGA Code Section 15-13-31 refers to bailiffs as "public officials". Also, OCGA Code Section 15-12-7 sets the compensation of bailiffs and specifically clistinguishes between the "compensation" of bailiffs and the "expense allowance" ofjurors.
From this information, it is evident that bailiffs are employees of the Court. Therefore, these individuals are working for two employers and accordingly, should not receive compensation from the Board while serving as bailiffs for the Court.
This questioned cost had not been resolved at June 30, 1996. The Board should determine the exact number ofdays these individuals served as bailiffs and request reimbursement for any days which exceed personal leave available. The Board should request that the U. S. Department ofHealth and Human Services review this matter to determine ifa reclaim of funds is appropriate.
AUDIT FOLLOW-UP/RESOLUTION Failure to Maintain Documentation for Eligible Attendance Areas Federal Financial Assistance Finding Resolved Audit Control Number 6701-95-14
The audit report for the year ended June 30, 1995, noted that the Board could not provide documentation to support the determination of eligible attendance areas in Sections IV, V and VI ofthe Program application (DE-0370), for the 1995 Elementary and Secondary Education Act - Title I (CFDA 84.010) Program as required by 34 CFR 76.730. For the year under review, the Board provided adequate documentation to support the determination of eligible attendance areas as required.
AUDIT FOLLOW-UP/RESOLUTION Failure to File Reports Within Required Time Period Federal Financial Assistance Finding Resolved Audit Control Number 6701-95-15
The audit report for the year ended June 30, 1995, stated that the Board failed to file the DE form 0106, School Data Form to the Georgia Department ofEducation for the National School Lunch Program (CFDA
10.555) and the School Breakfast Program (CFDA 10.553) within the required time period for four (4) of the nine (9) monthly reports. Also, the reports were not signed by the appropriate Board official certifying their
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Failure to File Reports Within Required Time Period Federal Financial Assistance Finding Resolved Audit Control Number 6701-95-15
accuracy. The Georgia School Food and Nutrition Record Keeping Guide requires that the DE form 106 be transmitted by the fifteenth calendar day ofthe following month and an appropriate Board official must certify its accuracy. For the year under review~ audit tests revealed that the DE form 106 reports were submitted in a timely manner and were signed by appropriate Board personnel as required.
PRIOR YEAR/CURRENT YEAR
ACCOUNTING CONTROLS (OVERALL) - Financial Statements ADMINISTRATIVE REQUIREMENTS - Federal Financial Assistance Inadequate Separation ofDuties Reportable Condition - Material Weakness Audit Control Number 6701-93-02
The audit report for the year ended June 30, 1995, noted that the Board did not provide for adequate separation of duties in the performance of accounting functions and related procedures. For the year under review, our audit noted no improvement regarding adequate separation of employee duties. This deficiency was a result of management's decision to limit the number of administrative staff made responsible for accounting functions. Management should periodically review this decision to determine if employee duties can be reassigned to achieve a higher degree of internal control with existing staff.
Note: All Federal financial assistance programs reflected on the Schedule of Federal Financial Assistance, 11Schedule 111 of this report, are affected by this finding.
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Financial Statements Reportable Condition - Material Weakness Audit Control Number 6701-93-04
The audit report for the year ended June 30, 1995, noted that the management had chosen not to maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. In the year under review, the Hancock County Board ofEducation did not establish a General Fixed Assets Account Group within the formal accounting records. This condition results in the general purpose financial statements of the Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Board to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group.
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR/CURRENT YEAR
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Financial Statements Reportable Condition- Material Weakness Audit Control Number 6701-93-04
These subsidiary records should include an inventory ofland, 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.
FEDERAL FINANCIAL REPORTS Failure to Refund Unexpended Grant Balance Federal Financial -Assistance Major Program Nonmaterial Noncompliance Amount: $2,188.15 Audit Control Number 6701-93-05
The audit report for the year ended June 30, 1995, reported that an unexpended grant balance of$2,122.41 remained on hand at the close of the fiscal year for the Project Head Start program (CFDA 93.600). This unexpended balance consisted of$265.66 on deposit in the Special Revenue Fund and $1,856.75 on deposit in the Capital Projects Fund.
During the year under review, the unexpended grant balance of $1,856.75 for the Capital Projects Fund Project Head Start was increased by $65.74 as a result of interest received leaving an unexpended grant balance of $1,922.49 as of June 30, 1996. The total unexpended grant balances of $2, 188.15 should be refunded to the U. S. Department ofHealth and Human Services.
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Financial Statements Reportable Condition - Material Weakness Audit Control Number 6701-93-08(A)
The audit report for the year ended June 30, 1995, reported that the Board's accounting procedures did not provide for adequate internal controls over cash assets ofthe Board. For the year under review, extensive audit procedures was performed on cash and cash reconciliation procedures. These procedures revealed the following deficiencies:
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND Th1PROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR/CURRENT YEAR
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Financial Statements Reportable Condition - Material Weakness Audit Control Number 6701-93-0S(A)
(1) The June 30, 1996, bank reconciliation for the general operating account was not reconciled to the general ledger. The reconciliation was "out of balance" by $8,280.36, but the Board recorded an accounts receivable for this amount in the general ledger in an attempt to balance the bank reconciliation. However, there was no documentation supporting this accounts receivable. Audit tests revealed that $6,497.28 of the "out of balance" condition was interfund payroll transfers due from the School Food Services bank account. The remaining balance of$1,783.08 could not be identified and is reflected as an unidentified variance as shown on Schedule "7" ofthis report.
(2) The June 30, 1996, bank reconciliation for the payroll clearing account was not properly reconciled to the general ledger. Audit tests revealed $205.69 which could not be identified and is reflected as an unidentified variance as shown on Schedule "7" ofthis report.
(3) Several bank statements and bank reconciliations were missing for the Head Start program, the Capital Projects Fund and the Debt Service Fund bank accounts. Also, the general ledger for the Debt Service Fund was not posted for May and June 1996 activity. Audit adjustments in the amount of$213,549.80 were necessary to record the Debt Service Fund general ledger activity for May and June 1996.
(4) Checks were not written in numerical sequence. This is primarily attributable to the large number ofmanual checks written by the Board every month.
(5) Instances were noted where checks cleared the bank but were never recorded in the check register or the accounting records. This practice contributed to the unidentified variances noted in items (1) and (2) above.
(6) The Board did not properly record the voiding ofstale dated checks or the issuance of replacement checks. As a result, replacement checks were not recorded on the general ledger. The Board attempted to handle these transactions by manipulating the outstanding check list which contributed to the difficulties encountered in the reconciliation process.
(7) Duplicate check numbers were used in the general operating account.
(8) Two large sequences of checks could not be accounted for by Board personnel. The majority of the checks were not recorded on the accounting records nor were they located in the voided check files. There were also numerous additional individual checks which could not be identified as being written or voided.
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR/CURRENT YEAR
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Financial Statements Reportable Condition - Material Weakness Audit Control Number 6701-93-0S(A)
(9) Bank reconciliations did not indicate that an administrative review was performed to determine that bank reconciliations were correct and that all required adjustments had been made.
These deficiencies were a result of the Board's failure to adequately manage the cash assets ofthe Hancock County Board ofEducation. The Board should establish internal controls to ensure that:
(1) Monthly bank reconciliations are reconciled with the general ledger.
(2) All disbursements should be properly recorded on the accounting records prior to the release of checks.
(3) Checks are written in numerical sequence and the issuance ofmanual checks is discontinued, except for unusual situations which would require supervisory approval.
(4) Unused checks are properly safeguarded. Also, files should be maintained to account for voided and spoiled checks.
(5) Adjusting journal entries are adequately explained and documented.
(6) Supervisory personnel review bank reconciliations for accuracy.
GENERAL LEDGER - Financial Statements ADMINISTRATIVE REQUIREMENTS - Federal Financial Assistance Inadequate Accounting Procedures Reportable Condition - Material Weakness Audit Control Number 6701-93-0S(B)
The audit report for the year ended June 30, 1995, noted that the Board's accounting procedures were insufficient to provide for adequate internal control over the journal entry process. The following deficiencies continued to exist during the year under review:
(I) Journal entries were not supported by either adequate documentation or written explanations.
(2) Journal entries were made to the accounting records without proper supervisory approval.
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR/CURRENT YEAR
GENERAL LEDGER - Financial Statements ADMINISTRATIVE REQUIREMENTS - Federal Financial Assistance Inadequate Accounting Procedures Reportable Condition - Material Weakness Audit Control Number 6701-93-0S(B)
This condition was the result of management's failure to adequately monitor and document journal entries. The Board should implement procedures to ensure that journal entries are properly approved and documented prior to entry into the accounting system.
Note: All Federal financial assistance programs listed in the Schedule of Federal Financial Assistance, Schedule 111 11 of this report, are affected by this finding.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Unidentified Payroll Withholdings Financial Statements Nonmaterial Noncompliance Audit Control Number 6701-94-01
The audit report for the year ended June 30, 1995, reported unpaid payroll withholding liability account balances of $29,144.70. For the year under review, the various payroll liability accounts within the General Fund had a net combined balance of $23,442.30. These balances could not be identified by individuals and are the result of nonpayment of employee withholdings to appropriate parties.
This condition occurred because the Board did not have adequate cash available to remit withholding balances to appropriate third parties. Appropriate accounting procedures should be established by the Board to remit accurate and timely payments to appropriate parties. The Board should consult their legal counsel for assistance in resolving this matter.
EXPENDITURES/LIABILITIES/DISBURSEMENTS - Financial Statements ALLOWABLE COSTS/COST PRINCIPLES - Federal Financial Assistance Inadequate Documentation ofTravel Expenditures Major/Nonmajor Programs Reportable Condition Nonmaterial Noncompliance Amount: $12,519.22 Audit Control Number 6701-94-05
The audit report for the year ended June 30, 1995, noted that tests of employees' travel vouchers revealed that the Board did not comply with travel regulations of the Georgia Department of Education as set forth in Chapter 40, Section 5 of the Financial Management for Georgia Local Units of Administration (FMGLUA). Travel overreimbursements of$116.54 from the General Fund, $53.01 from the Elementary and Secondary
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR/CURRENT YEAR
EXPENDITIJRES/LIABILITIES/DISBURSEMENTS - Financial Statements ALLOWABLE COSTS/COST PRINCIPLES - Federal Financial Assistance Inadequate Documentation ofTravel Expenditures Major/Nonmajor Programs Reportable Condition Nonmaterial Noncompliance Amount: $12,519.22 Audit Control Number 6701-94-05
Education Act-Title II, 1995 Regular Program (CFDA 84.164), and $17.77 from the School Food Services Fund (CFDA 10.553 and 10.555) were reported. It was also reported that Project Head Start program (CFDA 93.600) employees received per diem rates for overnight travel instead of being reimbursed for actual travel as provided for in provisions of FMGLUA, which resulted in questioned costs of $11,488.17. These questioned costs had not been resolved as ofthe date of this audit.
For the year under review, an examination of the Board's travel expenditures revealed that the Board once again did not comply with travel regulations as provided in FMGLUA The following deficiencies were noted:
( 1) The Board reimbursed employees for the noon meal for non-overnight travel even though the meal was not an integral part ofthe meeting attended and the employees did not leave home before 6:30 a.m. and return home after 7:30 p.m. Forty-five (45) vouchers paid from the Project Head Start program included improper expenditures ofthis nature resulting in overreimbursements of $668.08.
(2) Ten (10) vouchers were identified where employees received improper travel reimbursements from the Project Head Start program. In eight (8) of these instances the employees received $159.65 in meal reimbursements in excess of state approved rates. Two (2) vouchers totaling $16.00 were for miscellaneous expense reimbursements made without adequate documentation.
These improper travel expenditures occurred because management disregarded the provisions ofFMGLUA. Internal controls should be implemented by the Board to ensure that all travel expenditures are reviewed for proper documentation, approval and compliance with travel regulations prior to payment and recording of such expenditures in the financial records.
The Board should secure reimbursement of $187.32 for the questioned costs cited above. Ofthis amount, $116.54 should be deposited to the Board's General Fund, $17.77 should be deposited to the School Food Services Fund, and $53.01 should be returned to the Georgia Department ofEducation for Elementary and Secondary Education Act - Title II, 1995 Regular Program Grant (CFDA 84.164). In addition, the U. S. Department ofHealth and Human Services (DHHS) should review the Project Head Start program (CFDA 93.600) questioned travel expenditures of$12,331.90 which do not comply with the Board's travel regulations as set forth in Chapter 40, Section 5 of the FMGLUA. DHHS should determine if a reclaim of funds is appropriate.
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996

PRIOR YEAR/CURRENT YEAR

GENERAL LEDGER Detailed Listing of Salaries and Travel Not Reconciled Financial Statements Nonmaterial Noncompliance Audit Control Number 6701-94-07

The audit report for the year ended June 30, 1995, reported that the detailed listing of salary and travel payments made to employees submitted by the Board to the Georgia Department of Audits was not reconciled with the general ledger as presented for audit. For the year under review, the detailed listing of salary and travel payments again was not reconciled with the general ledger. The detailed listing of salaries and travel had net "unlocated variances" of $2,424.23 and $15,918.62, respectively, which are reflected in a separately issued report titled "Supplementary Information - Summary and Schedule of Salaries and Travel".

This condition occurred because management did not reconcile amounts submitted to the Georgia Department of Audits to the Board's general ledger. Procedures should be established by the Board to ensure that the detailed listing ofsalary and travel is reconciled to the accounting records prior to submission to the Georgia Department of Audits.

ALLOWABLE COSTS/COST PRINCIPLES Time and Attendance Records not Utilized Federal Financial Assistance Major/Nonmajor Programs Reportable Condition - Material Weakness Material Noncompliance Amount: $161,811.68 Audit Control Number 6701-94-13

The audit report for the year ended June 30, 1995, reported that salaries and benefits charged to the following Federal financial assistance programs were not supported by time and attendance records as required by Office ofManagement and Budget Circular A-87:

Safe and Drug-Free Schools (CFDA 84.186) Elementary and Secondary Education Act - Title I (CFDA 84.010) Project Head Start Program (CFDA 93.600)

$13,100.51 $94,913.09 $16,622.45

For the year under review, audit tests ofsalaries and benefits charged to Federal financial assistance programs again revealed that expenditures charged to the following programs were not supported by the required time and attendance records:

Elementary and Secondary Education Act - Title I (CFDA 84.010) Project Head Start Program (CFDA 93.600)

$24,175.63 $13,000.00

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE_ OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR/CURRENT YEAR
ALLOWABLE COSTS/COST PRINCIPLES Time and Attendance Records not Utilized Federal Financial Assistance Major/Nonmajor Programs Reportable Condition - Material Weakness Material Noncompliance Amount: $161,811.68 Audit Control Number 6701-94-13
This problem occurred because management did not maintain adequate time and.attendance records on splitfunded personnel. Appropriate internal controls should be established by the Board to ensure that all salary charges of employees involved ~n Federal and/or State projects are based on actual hours worked.
In a letter dated August 21, 1996, the Georgia Department ofEducation requested that the Board refund the prior year questioned cost of$108,013.60 applicable to U. S. Department ofEducation programs. However, as ofthe date ofthis audit, refund ofthe questioned cost of$108,013.60 had not been made. Refunds totalling $132,189.23, which includes the current year questioned costs of$24,175.63, should be made to the Georgia Department ofEducation as required. In addition, the U. S. Department ofHealth and Human Services should review the questioned cost of$29,622.45 relative to the Project Head Start program to determine ifa reclaim offunds is appropriate.
ADMINISTRATIVE REQUIREMENTS Inadequate Inventory Records Federal Financial Assistance Major/Nonmajor Program Reportable Condition - Material Weakness Nonmaterial Noncompliance Audit Control Number 6701-94-15
The audit report for the year ended June 30, 1995, reported that the Board's property management records were incomplete and failed to meet property management standards as set forth in Section V, Chapter 41 of the Financial Management for Georgia Local Units ofAdministration (FMGLUA) handbook for the following Federal financial assistance programs:
National School Lunch Program (CFDA 10.555) Elementary and Secondary Education Act -Title I Program (CFDA 84.010) Elementary and Secondary Education Act - Chapter 2 - Block Grant - Flow Through Program (CFDA 84.151) Project Head Start Program (CFDA 93.600)
For the year under review, the Board properly updated the equipment inventory records for the Chapter 2 and Project Head Start programs. However, the Board's property management records again failed to meet FMGLUA property management standards for the following programs:
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR/CURRENT YEAR
ADMINISTRATIVE REQUIREMENTS Inadequate Inventory Records Federal Financial Assistance Major/Nonmajor Program Reportable Condition - Material Weakness Nonmaterial Noncompliance Audit Control Number 6701-94-15
National School Lunch Program (CFDA 10.555) - An annual physical inventory count was not made for this program.
Elementary and Secondary Education Act - Title I Program (CFDA 84.010) - Equipment inventory items purchased during the year under review were not added to the inventory listing.
These conditions occurred because management did not have adequate inventory procedures. An inventory system should be implemented that provides for the identification of all equipment purchased as outlined in Chapter 41 ofFMGLUA. -Perpetual records should include historical information regarding additions and deletions made to the equipment inventory during each fiscal year (when applicable). Periodic physical inventory counts should be performed and reconciled to the property records to ensure the accuracy of inventory records.
AUDIT FOLLOW-UP/RESOLUTION Failure to File Corrective Action Plans Federal Financial Assistance Major/Nonmajor Programs Nonmaterial Noncompliance Audit Control Number 6701-94-16
The audit report for the year ended June 30, 1995, reported that the Board failed to submit a corrective action plan for the 1994 audit report to the Georgia Department of Education and for the 1993 and 1994 audit reports to the U. S. Department of Health and Human Services as required by O:MB Circular A-128. On November 25, 1995, and then again on April 10, 1996, and June 21, 1996, the Georgia Department of Education requested that the Board submit corrective action plans for each finding disclosed in the 1994 audit report. As ofthe date of this audit, the Board has yet to file a comprehensive corrective action plan with the Georgia Department of Education. Also, the Board has not submitted corrective action plans to the U. S. Department ofHealth and Human Services for Project Head Start program findings disclosed in the 1993 and 1994 audit reports.
During the year under review, the Board failed to submit a corrective action plan for the 1995 audit report as required by 0MB Circular A-128 to the following providers of Federal financial assistance for the programs indicated:
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996

PRIOR YEAR/CURRENT YEAR

AUDIT FOLLOW-UP/RESOLUTION Failure to File Corrective Action Plans Federal Financial Assistance Major/Nonmajor Programs Nonmaterial Noncompliance Audit Control Number 6701-94-16

ENTITY

PROGRAM

Education, Georgia Department of
Health and Human Services, U.S. Department of

School Food Services Fund (CFDA 10.550, 10.553, 10.555)
Safe and Drug-Free Schools (CFDA 84.186)
Elementary and Secondary Education Act Title I (CFDA 84.010) Chapter 2 (CFDA 84.151)
Individuals with Disabilities Education Act, Part B - Special Education - Flow Through (CFDA 84.027)
Project Head Start Program (CFDA 93.600)

The audit report for fiscal year ended June 30, 1995, noted that the Board was required to submit a corrective action plan to the U. S. Department ofHealth and Human Services, however, management maintained that they were unaware ofthe requirement. Also, the Board did not send a corrective action plan to the Georgia Department of Education because of a transition in management personnel. The Board should implement procedures to ensure that corrective action plans are submitted in a timely manner as required.

ELIGIBILITY Record Retention Federal Financial Assistance Major/Nonmajor Program Reportable Condition - Material Weakness Material Noncompliance Audit Control Number 6701-94-17

The audit report for the year ended June 30, 1994, noted that the Master Lists ofFree and Reduced Price Meal Applications for the M. E. Lewis, Sr. Elementary SchooL Southwest Elementary School, and Hancock Central High School for the National School Lunch Program (CFDA 10.555) and the School Breakfast Program (CFDA 10.553) were not accurately maintained as required by the Guidance for School Officials on Free and Reduced Price Meals and Verification Regulations, as issued by the Georgia Department ofEducation. The

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE-OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR/CURRENT YEAR
ELIGIBILITY Record Retention Federal Financial Assistance Major/Nonmajor Program Reportable Condition - Material Weakness Material Noncompliance Audit Control Number 6701-94-17
number of applications listed on the "Master List of Eligible Students" did not reconcile with the DE form 0118, "Daily Record ofNumber ofLunches Served".
During fiscal year ended June 30, 1995, the Board participated in Provision II of the Special Assistance Certification and Reimbursement Alternatives Program. Under this program, all students are allowed to eat free and applications are taken only once every three years. Therefore, the Board did not retake applications and was unable to provide documentation for the resolution of this finding.
For the year under review, the Board no longer participates in Provision II of the Special Assistance Certification and Reimbursement Alternatives Program. Therefore, the Board once again took applications at all three schools. Audit tests revealed that the "Master List ofEligible Students" was properly maintained and reconciled at M. E. Lewis, Sr. Elementary School. However, the "master lists" at Southwest Elementary School and Hancock Central High School were not properly maintained and could not be reconciled with the DE form 0118.
These problems occurred because management did not ensure that appropriate records were adequately maintained. The Board should implement procedures to ensure that the Master Lists ofFree and Reduced Price Meal Applications are updated when necessary and ensure that appropriate reconciliations are made on a continuing basis. The Georgia Department ofEducation should evaluate the Board's compliance with the program requirements and determine amounts to be reclaimed, if any.
ELIGIBILITY Failure to Document Verification Process Federal Financial Assistance Major/Nonmajor Program Reportable Condition - Material Weakness Material Noncompliance Audit Control Number 6701-94-18
The audit report for the year ended June 30, 1994, noted that a review of free and reduced price meal applications for the National School Lunch and Breakfast Program (CFDA 10.555 and 10.553) disclosed deficiencies in application verification procedures at Hancock Central High School and Southwest Elementary School. The applications at Hancock Central High School were not verified and the applications at Southwest
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996

PRIOR YEAR/CURRENT YEAR

ELIGIBILITY Failure to Document Verification Process Federal Financial Assistance Major/Nonmajor Program Reportable Condition - Material Weakness Material Noncompliance Audit Control Number 6701-94-18

Elementary School did not include required documentation in accordance with U. S. Department of Agriculture's "Eligibility for School Meals" manual and 7 CFR 245.6a.

During fiscal year ended June 30, 1995, the Board participated in Provision II of the Special Assistance Certification and Reimbursement Alternatives Program. Under this program, all students are allowed to eat free and applications are taken only once every three years. Therefore, the Board did not retake applications and was unable to provide documentation for the resolution of this finding.

For the -year under review, the Board no longer participates in Provision II of the Special Assistance Certification and Reimbursement Alternatives Program. Therefore, the Board was required to perform the required application verification procedures. Audit tests revealed that the Board adequately performed application verification procedures at M. E. Lewis, Sr. Elementary School and Southwest Elementary School. However, verification testing requirements were not met at Hancock Central High School. Only seven (7) of thirty (30) required eligibility verifications were performed. Ofthese seven (7), none were properly completed _for income verification or eligibility determination.

These problems occurred because management did not ensure that the required verification procedures were properly completed at Hancock Central High School. The Board should implement procedures to ensure that verification offree and reduced price meal applications are properly performed and documented in accordance with eligibility requirements. The Georgia Department ofEducation should evaluate the Board's compliance with the program requirements and determine amounts to be reclaimed, if any.

REPORTING Failure to File Required Reports Within Required Time Period Federal Financial Assistance Major Program Nonmaterial Noncompliance Audit Control Number 6701-94-20

The audit report for the year ended June 30, 1995, noted that the Board did not file the DE form O107, System

Claim and Requisition for Reimbursement for the National School Lunch Program (CFDA 10.555) within the

required time period.

J

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR/CURRENT YEAR
REPORTING Failure to File Required Reports Within Required Time Period Federal Financial Assistance Major Program Nonmaterial Noncompliance Audit Control Number 6701-94-20
For the year under review, the Board once again failed to file the DE form 0107 reports with the Georgia Department ofEducation within the required time period for three (3) of the nine (9) monthly reports. The Georgia School Food and Nutrition Record Keeping Guide requires that the DE form 0107 be transmitted by the tenth calendar day ofthe following month. This condition occurred because management failed to ensure timely submission of these reports. The Board should ~nsure that reports are submitted as required by the grant agreements.
EXPENDITURES/LIABILITIES/DISBURSEMENTS - Financial Statements ALLOWABLE COSTS/COST PRINCIPLES - Federal Financial Assistance Voucher Sample Exceptions Major/Nonmajor Programs Reportable Condition - Material Weakness Audit Control Number 6701-95-05
The audit report for the year ended June 30, 1995, disclosed internal control deficiencies over the expenditure voucher preparation and approval process. For the year under review, expenditure samples totaling 162 items were performed on the General Fund and the Special Revenue Fund and revealed the following deficiencies:
(1) Fifty (50) expenditure vouchers were paid without proper approval.
(2) Seven (7) expenditure voucher packages did not include original invoices.
(3) Twenty-three (23) expenditure vouchers were paid without evidence of receipt of goods or servtces.
(4) Fourteen (14) expenditure vouchers could not be located.
(5) Five (5) expenditure vouchers were posted to the improper account codes.
(6) Two (2) expenditure vouchers were processed and paid but were not recorded on the accounting records.
(7) One (1) expenditure voucher was not paid promptly in order to take advantage of a discount offered.
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996

PRIOR YEAR/CURRENT YEAR

EXPENDITURES/LIABILITIES/DISBURSEMENTS - Financial Statements ALLOWABLE COSTS/COST PRINCIPLES - Federal Financial Assistance Voucher Sample Exceptions Major/Nonmajor Programs Reportable Condition - Material Weakness Audit Control Number 6701-95-05

These deficiencies occurred because the Board did not have adequate control procedures over the voucher preparation and approval process. Internal controls should be implemented by the Board to ensure that all expenditure voucher packages are complete, accurate, properly approved, and paid in a timely manner.

Note: Elementary and Secondary Education Act-Title} (CFDA 84.010), Project Head Start (CFDA 93.600), and all nonmajor Federal financial assistance programs listed in the Schedule ofFederal Financial Assistance, Schedule "l" ofthis report, are affected by this finding.

EMPLOYEE COMPENSATION Salary Overpayments Financial Statements Nonmaterial Noncompliance Amount: $8,831.03 Audit Control Number 6701-95-07

The audit report for the year ended June 30, 1995, stated that payroll testing procedures revealed that one employee had been overpaid in the amount of$645.00. For the year under review, a sample of 40 employees payroll charges revealed that the Board overpaid former superintendent M. E. Lewis, Sr. in the amount of $8,186.03. This overpayment occurred because the Board paid Mr. Lewis for the entire month of August, 1995 rather than prorating his salary for the eight days he worked during the month. Reimbursements of $8,831.03 should be secured and deposited to the Board's General Fund.

REPORTING Failu_re to File Reports Within Required Time Period Federal Financial Assistance Major Program Nonmaterial Noncompliance Audit Control Number 6701-95-16

The audit report for the year ended June 30, 1995, stated that the Board failed to file Elementary and

Secondary Education Act - Title I (CFDA 84.010) program activity reports with the Georgia Department of

Education by the required due date. For the year under review, the program activity reports again were not

submitted by the required due date as listed below:



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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996

PRIOR YEAR/CURRENT YEAR

REPORTING Failure to File Reports Within Required Time Period Federal Financial Assistance Major Program Nonmaterial Noncompliance Audit Control Number 6701-95-16

Report Submitted

Due Date

Date Submitted

DE 0020

Demographic Data Report for Title I

July 15, 1996

August 12, 1996

DE 0600

School Achievement and Improvements Report

July 15, 1996

August 12, 1996

These conditions occurred because management had difficulty in obtaining reliable information for the reports. Appropriate procedures should be established to ensure that each program report is submitted by the required due date.

APPLICABLE SPECIAL TESTS AND PROVISIONS Failure to Maintain Documentation for Schoolwide Project Federal Financial Assistance Major Program Reportable Condition - Material Weakness Material Noncompliance Audit Control Number 6701-95-17

The audit report for the year ended June 30, 1995, stated that M. E. Lewis, Sr. Elementary School had been approved for a "Schoolwide" project by the Georgia Department ofEducation in accordance with Federal regulations as set forth in the Policy Guidance for Title I, Part A - Improving Basic Programs Operated by Local Educational Agencies. However, the Board could not provide any documentation to support that the various requirements for a "Schoolwide" project were met.

For the year under review, the approved application for the Elementary and Secondary Education Act - Title I (CFDA 84.010) Program project indicated that M. E. Lewis, Sr. Elementary School and Southwest Elementary School were approved for "Schoolwide" projects. However, the Board could not provide copies ofthe "Schoolwide Program School Plan" for each school and other documentation necessary to verify that the various requirements for schools selected as "Schoolwide" projects were met.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR/CURRENT YEAR
APPLICABLE SPECIAL TESTS AND PROVISIONS Failure to Maintain Documentation for Schoolwide Project Federal Financial Assistance Major Program Reportable Condition - Material Weakness Material Noncompliance Audit Control Number 6701-95-17
Management indicated that a new Title I coordinator was hired for fiscal year 1996, and believes that documentation was lost in the transition. The Board should establish procedures to ensure that proper documentation is maintained in accordance with Title I regulations for schools which participate in the
"Schoolwide" project. The Georgia Department of Education should review this matter to determine if a
reclaim offunds is appropriate.
EMPLOYEE COMPENSATION Superintendent Exceeding Established Authority Financial Statements Material Noncompliance Audit Control Number 6701-95-18
The position of Director of Administrative and Operational Services was abolished by Board resolution on April 13, 1995. The minutes stated further that the employee was offered the position ofAdministrator ofthe Alternative School but refused to accept that position. On April 14, 1995, the Superintendent, Mr. M. E. Lewis, Sr., provided this employee with a contract and rehired him for his position of Director of Administrative and Operational Services at an annual salary _of$56,701.00 without Board approval.
The Superintendent, Mr. M. E. Lewis, Sr., exceeded his authority in making this personnel decision in light of the Board's previously issued directives. During the year under review, a Board resolution effective November 6, 1995, removed this employee from the position ofDirector of Administrative and Operational Services and placed him in the position ofprincipal ofHancock Central High School.
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
CURRENT YEAR
EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Meet Expenditure Requirements Financial Statements Nonmaterial Noncompliance Amount: $180,417.37 Audit Control Number 6701-96-01
For the year under review, the Board had underexpenditures of Quality Basic Education (QBE) funds of $180,417.37 for the Thirteen Weighted and Media Center Programs (Overall). This underexpenditure offunds occurred because management did not properly monitor expenditures of QBE funds. The underexpenditure of$180,417.37 should be returned to the Georgia Department ofEducation through an increase in the Board's local fair share for the QBE programs in a subsequent fiscal period.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Meet Expenditure Requirements Financial Statements Nonmaterial Noncompliance Amount: $20,943.13 Audit Control Number 6701-96-02
For the year under review, the Board had underexpenditures of Quality Basic Education (QBE) funds of $20,943.13 for the Operation's portion ofthe Thirteen Weighted Programs (overall). QBE regulations require that Operational Cost (expenditures) for all Thirteen Weighted Programs should equal or exceed 100% of the original allotment for Operational Cost plus 100% of the mid-term allotment allocated to operational costs of the Thirteen Weighted Programs.
This underexpenditure offunds occurred because management did not properly monitor expenditures of QBE funds. The underexpenditure of $20,943.13 should be returned to the Georgia Department of Education _through an increase in the Board's local fair share for the QBE programs in a subsequent fiscal period.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Meet Expenditure Requirements Financial Statements Nonmaterial Noncompliance Amount: $1,900.69 Audit Control Number 6701-96-03
For the year under review, the Board had underexpenditures of Quality Basic Education (QBE) funds of $1,900.69 for the StaffDevelopment Program. This questioned cost resulted from management's failure to monitor expenditures to reach the required minimum allotment for the Staff Development Program as
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE-OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
CURRENT YEAR
EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Meet Expenditure Requirements Financial Statements Nonmaterial Noncompliance Amount: $1,900.69 Audit Control Number 6701-96-03
provided in QBE regulations. The underexpenditure of $1,900.69 should be returned to the Georgia Department of Education through an increase in the Board's local fair share for the QBE programs in a subsequent fiscal period.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Lottery Fund Expenditures Financial Statements Nonmaterial Noncompliance Amount: $1,190.00 Audit Control Number 6701-96-04
Audit tests of Lottery Program expenditures revealed that the Board spent $1,190.00 of Instructional Technology-Computers in Classrooms funds designated for Hancock Central High School on equipment for Southwest Elementary School. In a letter dated April 13, 1995, the Georgia Department ofEducation notified local education agencies that "Once funds are designated by project by facility they may not be reallocated to another project or facility". The reallocation of funds by the Board occurred because management did not properly monitor the expenditure ofLottery Program funds. The Georgia Department should review this matter to determine if a reclaim offunds is appropriate.
FEDERAL FINANCIAL REPORTS Inadequate Accounting Records Federal Financial Assistance Major Program Reportable Condition - Material Weakness Nonmaterial Noncompliance Amount: $880.37 Audit Control Number 6701-96-05
Expenditures reported on the Financial Status Report SF 269, which was submitted to the U. S. Department ofHealth and Human Services for the 1996 Project Head Start program (CFDA 93.600), were not supported by expenditures recorded on the Board's accounting records. Amounts reported on the Financial Status Report were obtained from manual records maintained by the Head Start program accountant. The accounting records for this program were in poor condition and extensive audit procedures were required to reconcile the
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HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS YEAR ENDED JUNE 30, 1996
CURRENT YEAR
FEDERAL FINANCIAL REPORTS Inadequate Accounting Records Federal Financial Assistance Major Program Reportable Condition - Material Weakness Nonmaterial Noncompliance Amount: $880.37 Audit Control Number 6701-96-05
accounting records with the activity reported on the Financial Status Report. Audit adjustments were made to correct the accounting records ofthe 1996 grant program, leaving an unexpended grant balance of$880.37, which should be returned to the U.S. Department ofHealth and Human Services.
Management stated that the Project Head Start program accountant was on maternity leave during the latter part of fiscal year 1996, and no one else was available to adequately maintain the accounting records. Appropriate procedures should be established to ensure that the accounting records are properly maintained and that financial reports submitted accurately reflect information recorded in the general ledger.
ALLOWABLE COSTS/COST PRINCIPLES Lack ofDocumentation for Expenditures Federal Financial Assistance Major Program Reportable Condition Nonmaterial Noncompliance Amount: $31,195.00 Audit Control Number 6701-96-06
An examination of expenditures charged to the Project Head Start program (CFDA 93.600) revealed that $31,195.00 was transferred to the General Fund to reimburse a portion of the program's costs which were initially paid by the General Fund. This transfer was based on budgeted amounts with no supporting documentation available for the actual costs incurred. 0MB Circular A-87 requires that expenditures charged to Federal financial assistance programs must be supported by adequate documentation. The U. S. Department ofHealth and Human Services should review this matter to determine the allowability of the expenditures in question.
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HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996

CURRENT YEAR

ALLOWABLE COSTS/COST PRINCIPLES Lack ofDocumentation for Expenditures Federal Financial Assistance Reportable Condition Nonmaterial Noncompliance Amount: $2,244.26 Audit Control Number 6701-96-07

Testing ofjournal entries posted to the Elementary and Secondary Education Act - Eisenhower Professional Development - Title II (CFDA 84.281), 1996 grant revealed that journal entries were made transferring $2,244.26 of expenditures from the General Fund to the Title II program. These journal entries were undocumented; therefore, audit adjustments were made removing these expenditures from the Title II program, which resulted in an unexpended grant balance of $2,244.26, and this amount should be refunded to the Georgia Department ofEducation.

AUDIT FOLLOW-UP/RESOLUTION Audit Distribution Requirements Federal Financial Assistance Major/Nonmajor Programs Nonmaterial Noncompliance Audit Control Number 6701-96-08

The Board failed to submit a copy of the 1995 audit report to the following providers of Federal financial assistance:

ENTITY

PROGRAM

Agriculture, U. S. Department of

Food and Nutrition Program Summer Food Service Program for Children (CFDA 10.559)

Health and Human Services, U.S. Department of Project Head Start Program (CFDA 93.600)

Paragraph 13fofOMB Circular A-128 requires that recipients ofFederal financial assistance submit copies
ofsingle audit reports to those agencies providing Federal financial assistance within 30 days of completion
ofthe audit. Due to a reorganization ofadministrative staffduties, the Board could not provide documentation
as to when, or it: the reports were distributed. Procedures should be implemented to ensure that reports are
submitted to granter agencies in accordance with audit distribution requirements.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER. OR QUESTIONED COSTS
I
YEAR ENDED JUNE 30, 1996
CURRENT YEAR
ADMINISTRATIVE REQUIREMENTS Federal Financial Assistance Failure to Maintain Separate Accountability for Vocational Education Program Funds Reportable Condition - Material Weakness Nonmaterial Noncompliance Audit Control Number 6701-96-09
The accounting records for the Federally funded Vocational Education grant programs were maintained within the General Fund and could not be separated for report purposes. The Georgia Department ofEducation's Revised Guidelines for Requisitioning Vocational Funds requires that beginning with fiscal year 1996, Federal vocational projects should be accounted for in separate "Special Revenue Fund" on a project - by - project basis.
Management stated that this situation occurred because they were unaware of the new Georgia Department ofEducation regulations. The Board should establish separate funds within the accounting records to report the activity ofFederally funded vocational projects as required.
REPORTING
Failure to Meet Comparability Reporting Requirements Federal Financial Assistance Major Program Nonmaterial Noncompliance Audit Control Number 6701-96-10
The Board is required to submit a Comparability Report DE form 0467 for the Elementary and Secondary Education Act - Title I program (CFDA 84.010) to the Georgia Department of Education biennially. In addition, the Board is required to maintain records to demonstrate that comparability procedural requirements are performed annually. For the year under review, the Board could not provide any documentation that comparability procedures were performed in fiscal year 1996 as required.
Management stated that a new Title I coordinator was hired in fiscal year 1996, and they believe that the documentation was lost in the transition. Procedures should be implemented to ensure that compliance procedures are completed and documented in accordance with GDOE instructions.
Note: The Hancock County Board ofEducation was provided an opportunity to include pertinent comments from the Board's management concerning these audit findings, conclusions and recommendations. The Board has elected not to provide comments for inclusion in this report.
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