Audit report, Hancock County Board of Education, Sparta, Georgia, year ended June 30, 1998

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AUDIT REPORT
I HANCOCK COUNTY BOARD OF EDUCATION SPARTA, GEORGIA YEAR ENDED JUNE 30, 1998
I
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STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

HANCOCK COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I . FINANCIAL

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

EXHIBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP ..

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

7

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

8

ADDmONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

18

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

19

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

20

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

21

3 SCHEDULE OF STATE REVENUE

23

4 SCHEDULE OF EXPENDITURES

LOTIERY PROGRAMS

24

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

5

OVERALL

25

6

BY PROGRAM

26

HANCOCK COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITII
GO\TERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITII REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITII OMB CIRCULAR A-133
SECTIONm AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I
FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 13, 1999

. Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofEducation and Superintendent and Members ofthe Hancock County Board ofEducation

INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE

FINANCIAL STATEMENTS AND SupPLEMENTARY INFORMATION -

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

..

Ladies and Gentlemen:

We have audited the accompanying general purpose financial statements of the Hancock County Board of Education, as of and for the year ended June 30, 1998, as listed in the table of contents. These general purposefinancial statements are the responsibility ofthe Hancock County Board ofEducation's management. Our responsibility is toexpress an opinion on these general purpose financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards and the standards applicable
to financial audits contained in GoYernment Auditing Standards, issued by the Comptroller General ofthe
United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also ~cludes assessing the accounting principles used and significant estimates m3de by management, as well as evaluating the overall financial s~tement 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:
* The general purpose financial statements of the Board did not containa 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.

98ARV13B

* School activity accounts maintained at the individual schools are not included in the general purpose
financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general purpose financial statements.
* The Board did not recognize as expenditures, in the year ended June 30, 1998, a portion of salaries
and the corresponding employer's cost ofrelated benefits earned for contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department ofEducation for the State's share ofthese 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, 1997, were improperly recorded in the year ended June 30, 1998. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed.
The aggregate effects on the general purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects on the general purpose financial statements of the matters referred to in the preceding paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe Hancock County Board ofEducation as ofJune 30, 1998, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated May 13, 1999, on our consideration ofthe Hancock County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.
The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe supplementary information. However we did not audit the information and do not express an opinion on it. In addition, we do not provide assurance that Hancock County Board ofEducation is or will become year 2000 compliant, that the Board's year 2000 remediation efforts will be successful in whole or in part, or that parties with which H3.1lcock County Board ofEducation does business are or will become year 2000 compliant.
Our audit was performed for the purpose offorming an opinion on the general purpose financial statements of the Hancock County Board of Education taken as a whole... The accompanying combining statements (Exhibits E and F) and the financial schedules (Schedules 2 through 6), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes ofadditional analysis and are not a required part of the general purpose financial statements. 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 ofthe 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 whple.
98ARL-13B

A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press ofthe State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respect~ly submitted,
W.~
R sell W. Hinton State Auditor
RWH:gp
98ARL-13B

HANCOCK COUNTY BOARD OF EDUCATION
(

HANCOCK COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30,1998

EXHIBITW

DEBT SERVICE
FUND

$

408.527.53

15,079.51

42,184.01

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS

(Memorandum Only)

JUNE 30.1998

JUNE 30.1997

$ 1,091,445.56 $

533,060.92

554,726.05

549,826.95

21,588.00

42,184.01

121,567.31

$

465,791.05

10,023.63 4,239.22
465,791.05

8,284.51 3,092.58
364,096.94

n4,208.95 406,645.14

n4,208.95 406.645.14

1,100,903.06 588.930.37

$

465.791 .05 $ 1.646.645.14 $ 3.370,851.61 $ 3.269.762.64

$

251,197.51 $

450,235.11

210,728.44

194,583.22

4.661.58

7,331.33

42,184.01

121,567.31

$

406,645.14

406,645.14

588,930.37

1.240,000.00

1.240,000.00

1.465.000.00

$ 1,646.645.14 $ 2,155,416.68 $ 2,827.647.34

$

465,791.05

0.00

$

465.791.05

$

99,315.05

$

465,791.05

364,096.94

78,590.10

361,532.27

10,023.63 4,239.22
656.790.93 $ 1.215,434.93 $

8,284.51 3,092.58
-433,621.27 39.415.22
442.115.30

$

465.791 .05 $ 1.646.645.14 $ 3,370,851.61 $ 3,269,762.64

-3-

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

REVENUES
State Funds Federal Funds Taxes 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 Services Operations
Capital Outlay Debt Service
Principal Interest Paying Agent Fees
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Capital Leases Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commodities Purchased Food

GENERAL FUND

SPECIAL REVENUE
FUND

$ 6,046,295.70 $

212,474,50

6,264.08

2,564,455,69

2,390,677.36

124,264.28

149,974.16

$ 8,567,501.42 $ 2,926,904.35

$ 4,700,594.50 $ 1,203,894.82

264,651.59 192,096,41 259,915.13 370,525,36 649,297.87 160,203.36 524,576.55 579,615.33 21,884.16

245,503.68 1,152.12
81,335.85 82,703.89 4,517.50 69,678.93 182,053.31 78,485.79 923,327.74
252,00

167,496,67 45,485.44

14,788,56
1,43~.51

$ 7,936,342.37 $ 2,889,126.70

$

631,159,05 $

37,777.65

$

$

-15,093.10

$

-15,093,10 $

15,093.10 15,093.10

$

616,065.95 $

52,870.75

-40,352,82

118,174,24

1,739.12 1,146.64

FUND BALANCE JUNE 30

$

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

575,713.13 $

173,930.75

EXHIBIT"B"

CAPITAl PROJECTS
FUND

DEBT SERVICE
FUND

TOTAlS (Memorandum Only)
YEAR ENDED
JUNE 30, 1998 JUNE 30, 1997

$ 6,258,nO.20 $ 6,129,227.88

2,570,719.n

2,228,671.08

$

381,483.11

2,n2,160.47

2,686,497.81

$

-196.94

274,041.50

229,996.79

$

-196.94 $

381,483.11 $ 11,875,691.94 $ 11,274,393.56

$

0.00

$ 5,904,489.32 $ 5,705,639.16

510,155.27 193,248.53 259,915.13 451,861.21 732,001.76 164,720.86 594,255.48 761,668.64 100,369.95 923,327.74
252.00

530,245.87 223,107.09 268,323.48 441,711.14 627,095.63 126,939.00 614,527.09 629,846.85
n,143.85 858,338.72
1,075.86 38,723.00

$

225,000.00

54,138.75

650.25

407,285.23 101,056.70
650.25

422,391.40 115,892.93
650.80

$

0.00 $

279,789.00 $ 11,105.258.07 $ 10,681,651.87

$

-196.94 $

101,694.11 $

n0,433.87 $

592.741.69

$

141,558.00

$

15,093.10

73,275.02

-15,093.10

-73.275.02

$

0.00 $

141,558.00

$

-196.94 $

101,694.11 $

n0,433.87 $

734,299.69

196.94

364,096.94

442,115.30

-296,007.96

1,739.12 1,146.64

5,823.12 -1,999.55

$

0.00 $

465,791.05 $ 1,215,434.93 $

442,115.30

-5-

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

EXHIBIT"C"

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

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES

REPORTING ENTITY

The Hancock County Board ofEducation (Board) was established under the laws ofthe State ofGeorgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the Board is a primary government and consists of all the organizations that compose its legal entity.

FUND ACCOUNTING

The Board uses funds and an account group to report on its financial position and the results ofits operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial.reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.

General Fixed Assets are recorded as expenditures in the various funds at the time ofpurchase. A General Fixed Assets Account Group is not pre~ently maintained by the Board. To conform. to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.

Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances ofthese accounts are reflected in these financial statements. To conform. to generally accepted accounting principles, these accounts should be recorded in the general purpose financial statements.

The general purpose financial statements account for all State, Federal, Taxes and Other funds under control ofthe Board, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:

GOVERNMENTAL FUND TYPES - are used to account for all or most ofa Board's educational activities. Governmental Fund Types include:

GENERAL FUND - the fund used to account for all financial resources ofthe Board except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education.

SPECIAL REVENUE FUND - the fund used to account for the proceeds ofspecific revenue sources (other

".

than for major capital projects) that are legally restricted to expenditures for specified purposes. These

funds are received primarily from the Georgia Department ofEducation and from the Federal government

to accomplish specific educational objectives.

-8-

HANCOCK COUNTXBOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1998

Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES

CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction ofmajor 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 - A financial reporting device used to account for general obligation debt outstanding and material capital lease obligations.

BASIS OF ACCOUNTING

The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.

Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.

Governmental funds are accounted for using the modified accrual basis ofaccounting under which:

accrual Revenues are recognized when susceptible to

(i.e., when theybecome 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.

Expenditures are generally recognized when the related fund li.ability is incurred.

A departure from the above definitions is the accounting treatment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 1998, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1997 and ending in early June 1998. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1997 and ending in August 1998. State grants to fund the State's share ofthese contracts were disbursed from the Georgia Department ofEducation to the Board in the same twelve months. As of June 30, 1998, compensation under these employment

-9-

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
contracts had been earned, but two ofthe twelve monthly payments, due for July and August 1998, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30, 1998. Also, the State's portion ofthe compensation paid in July and August 1998 was received and recorded as revenue in the fiscal year subsequent to June 30, .1998. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were recorded in the year ended June 30, 1998. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.
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 ofthe budget at any level. Th~ budget for all governmental funds is prepared by fund, function and object. The legal level ofbudget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.
The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval 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 fund balance as reflected on Exhibit "B" ofthis report:

-10-

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30.1998

Note 1; .SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES

Special Revenue
Fund

FUND BALANCE JULY 1, 1997

$ 118,174.24

Adjustments Inventories - July 1, 1997 Food Donated Commodities Purchased Foods

-8,284.51 -3.092.58

Fund Balance July 1, 1997 (Budget Basis)

$ 106,797.15

Excess ofRevenues and Other Financing Sources over (under) Expenditures and Other Financing Uses

52,870.75

FUND BALANCE JUNE 30, 1998 (Budget Basis)

$ 159.667.90

CASH AND CASH EQUIVALENTS

COMPOSmON OF DEPOSITS Cash and cash equivalents consist of deposits 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.

RECEIVABLES

Receivables consist ofgrant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recot:ded on the general pmpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

PROPERTY TAXES

The Hancock County Board of Commissioners fixed the property tax levy for the 1997 tax year (calendar year) on October 20, 1997 (ievy date). Taxes were due on December 20, 1997. The lien date for property taxes was January 1, 1997. Taxes collected within the current fiscal year or within 60 days after year-end are
reported as revenue in fiscal year 1998. The Hancock County Tax Commissioner bills and collects the
property taxes for the Board ofEducation and remits the taxes collected to the Board.

-11 -

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1; SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES

Tax millage rates levied for the 1997 tax year (calendar year) for the Hancock County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations School Bonds

14.50 mills ....2..J2mills

16.82 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 received. Purchased foods inventories are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.

PREPAID ITEMS

Payments made to vendors for services that will benefit periods subsequent to June 30, 1998, are recorded as prepaid items.

GENERAL OBLIGATION BONDS

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

INTERFUND TRANSACTIONS

The Board has the following types ofinterfund transactions:

Reimbursements of expenditures 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.

-12 -

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
Operating transfers are recorded for all interfund transactions other than reimbursements.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position 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.
Note 2: DEPOSITS
COLLATERALIZATION OF DEPOSITS Official Code ofGeorgia 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 ofthe face value of such surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone ofor any combination ofthe 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 ofthe United States or of the State ofGeorgia,
(4) Bonds, bills, notes, certificates ofindebtedness or other obligations ofthe counties or municipalities ofthe State ofGeorgia,
(5) Bonds ofany public authority created by the laws ofthe State ofGeorgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose,
(6) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws ofthe State of Georgia, and

-13 -

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 2: PEPOSITS

(7) Bonds, bills, notes, certificates ofindebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS At June 30, 1998, the bank balances were $1,320,699.34. The amounts of the total bank balances are classified into three categories ofcredit risk:

Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the Board or by the Board's agent in the Board's name.
Category 2 - Cash collateralized with securities held by the ,pledging financial institution's trust department or agent in the Board's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held bythe 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, 1998, as follows:

Risk Categmy

Bank Balance

1

$ 616,233.11

2

676,110.83

3

28,355.40

Total

$ ) .320.699.34

Note 3: NON-MONETARY TRANSACTIONS

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

Note 4: RISK MANAGEMENT

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

-14 -

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

WNE30.1998

Note 4: RISK MANAGEMENT

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

The Board is self-insured with regard to unemployment compensation claims. The Board accounts for claims within the General Fund with expenditure and liabilitr being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:

1997 1998

Beginning ofYear Liability

Claims and Changes in Estimates

Claims Paid

End ofYear LiabiliD'

$

0,00 $

4,112,52 $ .. 4,112,52 $

0,00

$

O,QO $

581.00 $

581.00 $

0,00

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

Position Covered

Amount

Superintendent

$ 50,000,00

Note 5: 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 of the future minimum lease payments as of the date of their inception.

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

Purpose

Interest Rates

Amount

General Government - Refunding - Series 1994

2,60% - 4.35%

$.1,240.000.00

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

-15 -

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

ruNE 30. 1998

Note 5: GENERAL LONG-TERM DEBT

Capital Leases

General Obligation
Bonds

Total

Balance July 1, 1997

$ 588,930.37 $ 1,465,000.00 $ 2,053,930.37

Deductions Payments
Balance June 30, 1998

182.285.23

225.000.00

407,285.23

. $ 406.64S!I~ S},240.000.Q2 SJ,646.64S.1J

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

Fiscal Year Ended June 3Q

Capital Leases

General Obligation
Bonds

Total Debt

1999 2000 2001 2002 2003

S 123,476.12 123,476.12 123,476.12 123,476.12

S 276,060.00 277,242.50 272,600.00 277,052.50 27Q,763.7S

S 399,536.12 400,718.62 396,076.12 400,528.62 27Q,763.7S

Total Principal and Interest

S 493,904.48 S).373.718.7S SJ".867.623.23

Deduct: Imputed Interest

87.2S9.34

Net Present Value ofFuture Minimum Lease Payments

$ 426.64S!I~

Note 6: ON-BEHALF PAYMENTS

The Board has recognized revenues and expenditures in the amount ofS210,606.87 for health insurance and retirement contributions paid on the Board's behalfby the following State Agencies.

Georgia Department ofEducation Paid to the State Merit System ofPersonnel Administration For Health Insurance ofNon-Certified Personnel In the amount ofSI80,558.87

-16 -

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 6: ON-BEHALF PAYMENTS

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of$30,048.00

Note 7: CONTINGENT LIABILITIES

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

Note 8: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

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 actuaIy. The required employer contribution rate is 11.81% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: '

Fiscal Year

Percentage Contributed

Required Contribution

1998

100%

$ 705,743.61

1997

100%

$ 663,516.83

1996

100%

$ 621,967.71

-17 -

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

EXHIBIT wE"

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

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

FEDERAL PROGRAMS

TOTALS JUNE 3D, 1998 JUNE 3D, 1997

$ 221,659,49 $ 21,279,81

$ 242,939,30 $ 140,872,19

51,487.00 $ 394,473,49

445,960,49

416,605,94

10,023,63 4,239.22

10,023.63 4,23922

8,284.51 3,092,58

$ 235,922.34 $ 72,766,81 $ 394,473.49 $ 703,162.64 $ 568,855,22

LIABILITIES AND FUND EQUITY
L1ABILmES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Due to Other Funds
Total Uabilities
FUND EQUITY
Fund Balances . Reserved
For Expired Grant Balances/Questioned Costs For Inventories
Food Donated Commodities Purchased Food
Unreserved Undesignated
Total Fund Equity

$ 13,115,78 $ 48,875.81

$ 66,685.47 6,081.34

88,194.34 $ 146,04322 155,n129
4,464,64

$ 61,991,59 $ 72,766,81 $ 394,473.49 $

$ 8,842.46
10,023,63 4,23922 150,825,44 $ $ 173,930.75 $

0,00 $ 0,00 $

$
0,00 0,00 $

88,194.34 $ 225,844,47 210,728,44
4,464,64
529,231,89 $
8,842,46 $
10,023.63 4,23922 150,825,44 173,930.75 $

65,964.83 102,188,58 191,997,88
6,339.81 84,189,88 450,680,98
67,381,93
8,284,51 3,092,58 39,415,22 118,17424

Total Liabilities and Fund Equity

$ 235,922.34 $ 72,766,81 $ 394,473,49 $ 703,162,64 $ 568,855,22

See notes to the general purpose financial statements,

-18-

HANCOCK COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30. 1998

EXHIBIT-P

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

FEDERAL PROGRAMS

TOTALS YEAR ENDED JUNE 30, 1998 JUNE 30,1997

REVENUES

State Funds Federal Funds Other Funds

$ 59,556.00 $ 131,036.23 $ 21,882~27 $ 212,474.50 $ 264,908.80

776,786.13

1,787,669.56 2,564,455.69 2,338,922.62

149,974.16

149,974.16

128,480.30

Total Revenues

$ 986,316.29 $ 131,036.23 $ 1,809,551.83 $ 2,926,904.35 $ 2,732,311.72

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 Services Operations
Debt Service Principal Interest

$ 173,018.16 $ 1,030,876.66 $ 1,203,894.82 $ 1,195,267.73

$ 866,063.61

7,936.95 117.51
2,834.00

237,566.73 1,152.12
81,218.34 .82,703.89
4,517.50 69,678.93 179,219.31 78,485.79 57,264.13
252.00

245,503.68 1,152.12
81,335.85 82,703.89 4,517.50 69,678.93 182,053.31 78,485.79 923,327.74
252.00

281,044.76 26,371.04 17,298.16 106,061.84 56,087.42
39,113.65 10,307.52 68,611.85 858,338.72

14,788.56 1,432.51

14,788.56 1,432.51

13,508.44 2,681.56

Total Expenditures

$ 866,063.61 $ 200,127.69 $ 1,822,935.40 $ 2,889,126.70 $ 2,674,692.69

Excess of Revenues over (under) Expenditures

$ 120,252.68 $ -69,091.46 $ -13,383.57 $

37,777.65 $

57,619.03

OTHER FINANCING SOURCES

Operating Transfers In

9,256.05

5,837.05

15,093.10

73,275.02

Excess of Revenues and Other Financing Sources

over (under) Expenditures

$ 120,252.68 $ -59,835.41 $ -7,546.52 $

52,870.75 $ 130,894.05

FUND BALANCE JULY 1

50,792.31

59,835.41

7,546.52

118,174.24

-16,543.38

Food Inventory - Net Change in Period Donated Commodities Purchased Food

1,739.12 1,146.64

1,739.12 1,146.64

5,823.12 .-1,999.55

FUND BALANCE JUNE 30

$ 173,930.75 $

0.00 $

0.00 $ 173,930.75 $ 118,17424

See notes to the general purpose financial statements.

-19 -

HANCOCK COUNTY BOARD OF EDUCATION

SCHEDULE "1"

SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

YEAR ENDED JUNE 30. 1998

At June 30, 1998, the Hancock County Board ofEducation had no outstanding contractual commitments for the purpose ofmaking computer systems and other electronic equipment year 2000 compliant. The year 2000 issue is the result ofshortcomings in many electronic data processing systems and other equipment that make operations beyond year 1999 troublesome. The year 2000 issue is ofprimary concern for the Board's financial accounting system. The following stages have been identified as necessary to implement a year 2000 compliant systems.
Awareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 issue.
Assessment Stage - The actual process ofidentifying all ofits systems and individual components of the systems to check for compliance.
Remediation Stage - When changes are made to systems and equipment.
Validation/Testing Stage - The process of ensuring that the changes made to systems and equipment will produce a year 2000 compliant system.
It will be necessary for the Board to progress through all four of these stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected. As ofJune 30, 1998, the financial accounting system was determined to be at the Awareness Stage.
The Board's financial accounting software (GENESIS) and hardware (Wang VS) are owned by the State (Georgia Department ofEducation). These systems have been determined to be critical to the Board's ability to successfully conduct operations. As ofJune 30, 1998, the State had not contracted for the remediation of either the Wang VS operating system or the GENESIS accounting software. In the subsequent period, the Georgia Department of Education remediated the Wang VS operating system and the updated operating system was installed at all GENESIS sites as ofDecemQer 9, 1998. The Georgia Department ofEducation has remediated the GENESIS software and conducted tests at nine pilot sites. The remediated GENESIS softwardhas been provided to all boards ofeducation currently utilizing the GENESIS accounting software.

See notes to the general purpose financial statements. -20 -

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

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

PASS THROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

Agriculture, U. S. Department of

Direct

Summer Food Service Program for Children

1997 Grant

*

1998 Grant

*

Pass-Through From Georgia Department of Education

Food and Nutrition Program

Food Services

School Breakfast Program

1998 Grant

*

National School Lunch Program

1998 Grant

*

Food Distribution Program (1)

10.559 10.559
10,553 10.555 10.550

$

9,073.00

$

6,663.00

6,663,00

NlA

209,013.66

(2)

N/A

507,520.20

796,738.34 (3)

NlA

53,589.27

53,589.27

Total U, S, Department of Agriculture

$

n6,786.13 $

866,063.61

Education, U. S. Department of

Pass-Through From Georgia Department of Education

Elementary and Secondary Education Act

Chapter 2

Block Grant - Flow Through

1994 Grant

Title I

Grants to Local Educational Agencies

1998 Grant

*

Title VI

Innovative Education Program Strategies

1998 Grant

Goals 2000

State and Local Education Systemic

Improvement Grants

1998 Grant

Individuals with Disabilities Education Act

Part 8 - Special Education

Flow Through

1998 Grant

Preschool

1998 Grant

Safe and Drug Free Schools

1998 Grant

Vocational Education - Basic Grants to States

High School Program

Basic Grant

1998 Grant

Tech-Prep Education

1998 Grant

84.151 84.010 84.298
84.276
84,027 84.173 84,186
84.048 84.243

N/A $

-7,546.52

NlA

620,212,00 $

623,500.85 (3)

N/A

9,941.00

9,941.00

NlA

27,536.00

27,536.00

NlA

81,415.00

81,415.00

NlA

6,643.00

28,530.66 (4)

N/A

8,743.00

8,743.00

NlA

31,080,00

33,622.81 (3)

N/A

732.15

732.15

Total U, S, Department of Education

$

n8,755.63 $

814,021,47

-21-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30.1998

SCHEDULEX'

FUNDING AGENCY PROGRAM/GRANT
Health and Human Services, U. S. Department of Direct Project Head Start 04CH4003/26 04CH4003/27 04CH4003/28 Pass-Through From Georgia Department of Medical Assistance Medical Assistance Program 1998 Grant
Total U. S. Department of Health and Human Services

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

* 93.600 * 93.600 * 93.600

$

23,366.01 $

23,366.01

981,874.83

981,874.83

3,673.09

3,673.09

93.n8

NlA

6,264.08

(5)

$ 1,015,178.01 $ 1,008,913.93

. Total Federal Financial Assistance

$ 2,570,719.n $ 2,688,999.01

N/A = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.
(2) Expenditures for the School Breakfast Program were not maintained separately and are included in the 1998 National School Lunch Program.
(3) Expenditures for this program include State, and/or Other Funds. Expenditures are not maintained by fund source.
(4) Expenditures for the Individuals with Disabilities Education Act, Part B - Special Education - Preschool grant along with expenditures for the State Preschool Handicapped Grant were not maintained by fund source.
(5) Expenditures on this program were not maintained by fund source.

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

The Board did not provide Federal Assistance to any SUbrecipient

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

See notes to the general purpose financial statements.

-22-

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

SCHEDULE "3"

AGENCYIFUNDING
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 In-School Suspension Mid-term Adjustment Counselors Grades 4 and 5 Technology Training Local Fair Share Educational Equalization Funding Grant Food Services Other State Programs Ad Valorem Tax Adjustment Alternative Program At-Risk Summer School Program Health Insurance Mentoring Program PSATExams Preschool Handicapped Program Remedial Summer School Program Lottery Programs Alternative School Program Instructional Technology Assistive Technology Classroom Technology,
Greene County Board of Education Youth Apprenticeship Grant
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$ 3,572,197.00
637,984.00 88,142.00
148,541.00 47,706.00
1,033,533.00
290,320.00 67,879.00
118,057.00 39,517,00 69,740,00.. 14,993.00 28,842.00
-759,972.00 386,033.00
$
20,925.00
8,792.97 180,558.87
5,076.00 180.00
5,502.86
11,700.00
30,048.00

$
59,556.00 68,753.00 21,882.27
4,132.00 4,987.00 53,000.00

3,572,197.00 637,984.00 88,142.00 148,541.00 47,706.00
1,033,533.00
290,320.00 67,879.00
118,057.00 39,517.00 69,740.00 14,993.00 28,842.00
-759,972.00 386,033.00
59,556.00
20,925.00 68,753.00
8,792.97 180,558.87
5,076.00 180.00
21,882.27 5,502,86
4,132.00
4,987.00 53,000.00

11,700,00

164.23

164,23

30,048.00

$ 6,046,295,70 $

212,474.50 $ 6,258,770.20

See notes to the general purpose financial statements.

- 23-

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

SCHEDULE "4"

EXPENDITURES
Current Instruction Support Services Pupil Services General Administration Student Transportation Services Debt Service Principal Interest

ALTERNATIVE SCHOOL PROGRAM

INSTRUCTIONAL TECHNOLOGY

ASSISTIVE

CLASSROOM

TECHNOLOGY TECHNOLOGY

PRE-KINDERGARTEN PROGRAM

TOTAL

$

80,595,32 $

5,041,30 $

38,270.36 $.

14,788.56 1,432.51

49,111.18 $ 173,018.16

7,936.95 117.51
2,834.00

7,936.95 117.51
2,834.00

14,788,56 1,432,51

TotalEXpendUures

$

80,595,32 $

5,041,30 $

54,491.43 $

5:;;;9~.9,;;;;99;;o;.64;;;. $ 200,127.69

RECAP: Salaries and Benefits A1temative School Program Pre-Kindergarten Program Other ExpendUures Altemative School Program Instructional Technology Assistive Technology Classroom Technology Pre-Kindergarten Program

$ 76,859,65 55,537,81
3,735,67
5,041.30 54,491,43 4,461.83

$ 200,127.69

See notes to the general purpose financial statements,

-24-

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

SCHEDULE "5"

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

FOURTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS

100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS

$

4,446,864.00 $ _ _.....:1:.=:32=.!.,0;:.::3:.=.5;.;;..00~

$

4,328,746.99

250,505,68 $ _ _-..:.:19:;.;:9:.z.;:,8;..;.1.=.;9,:..:.15~

$

4,579,252.67

-104,750.22 $ _ _...;.4"-"4.;..74""",5;;..;0=2"",,.4.;;..5

$

0.00 $=====0=.0::::::0

See notes to the general purpose financial statements, - 25 -

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

STAFF DEVELOPMENT PROGRAMS Cost of Instruction Professional Development
Total Staff Development Programs
r> Identifies Fourteen Weighted Programs.
see notes to the general purpose financial statements,

$

13,843.00

$

13,843.00 $

0.00

33,863,00

33,863,00

0.00

$

47,706.00 100 $

47,706.00 $ ..................-=0..0...0..

- 26 -

SCHEDULE -6"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES

OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$

348,516.00 $

481,373.73 $

12,778.00 $

494,151.73

914,061.60

837,464.52

45,305.65

882,770.17

$ 1.262,577.60 $ 1.318,838.25 $

58,083.65 $ 1.376,921.90 $

0.00

402,780.60

462,168.67

16,133.04

478,301.71

0.00

638,407.80

726.957.68

32,789.62

759,747.30

0.00

509.721.30

561.153.98

30.483.73

591,637.71

0.00

192.198.60

187.009.97

9.045.19

196,055.16

0.00

209,291.40

187,472.76

23.323.24

210,796.00

0.00

$ 3,214,977.30 $ 3,443.601.31 $

169,858.47 $ 3.613,459.78

$

549,928.80

$

6.923.80 396,842.66 $ 140,187.15

$ 28,773.84

6.923.80 425.616.50 140,187.15

$

549,928.80 $

543,953.61 $

28,773.84 $

572,727.45

0.00

24,256.80

54,829.44

324.67

55,154.11

0.00

$

574,185.60 $

598,783.05 $

29.098.51 $

627.881.56

$

79,327.80 $

83,757.94 $

862.17 $

84,620.11

0.00

$ 3,868,490.70 $ 4,126.142.30 $

199,819.15 $ 4,325,961.45

$

107.767.80 $

202,604.69

'$

202,604.69

0.00

25,919.10

$

50,686.53

50.686.53

0.00

$

133,686.90 $

202.604.69 $

50.686.53 $

253,291.22

$ 4,002,177.60 $ 4,328,746.99 $

. 250,505.68$ 4,579,252.67 $

0.00

$

13,843.00

33,863.00

$~====4=7=,7=06=.0.0.

$

27.455.96 $

27.455.96

20,732.30

20.732.30

$

48,188.26 $

48,188.26 $ .....

..0....0.0=

- 27-

SECTIONn COMPLIANCE AND INTERNAL CON1ROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 13,1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Hancock County Board ofEducation
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements ofHancock County Board ofEducation as ofand for the year ended June 30, 1998, and have issued our report thereon dated May 13, 1999. 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 the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether Hancock County Board of Education's financial statements are free ofmaterial misstatement, we performed tests ofits compliance with certain provisions of laws, regulatioris, contracts and grants, noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective ofour audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reportin,g
In planning and perfomring our audit, we considered Hancock County Board of Education's intemal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its
98YB-40

operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in our judgement, could adversely affect Hancock County Board of Education's ability to record, process, summarize and report financial data consistent with assertions ofmanagement in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-6701-98-01 and FS-6701-98-03.
A material weakness is a condition in which the design or operation of one or more ofthe internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course ofperforming their assigned functions. Our consideration ofthe internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, all ofthe reportable conditions described above are considered to be material weaknesses.
This report is intended solely for the information and use ofmanagement, members ofthe Hancock County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~J.~ Russell W. Hinton State Auditor
RWH:gp 98YB-40

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 13, 1999

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board ofEducation
and Superintendent and Members ofthe Hancock County Board ofEducation
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INIERNAL CONIROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Hancock County Board of Education with the types of compliance requirements des'cribed in the U.S. Office ofManagement and Budget (OME) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1998. Hancock County Board ofEducation's major Federal programs are identified in the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Hancock County Board of Education's management. Our responsibility is to express an opinion on Hancock County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with generally accepted auditing standards; the standards applicable to financi~ audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and OMB Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Hancock County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Hancock County Board ofEducation's compliance with those requirements.

98SA-45

In our opinion, the Hancock County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 1998.
Internal Control Over Compliance
The management of Hancock County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Hancock County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133.
We noted certain matters involving the internal control over compliance and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over compliance that, in our judgement, could adversely affect the Hancock County Board of Education's ability to administer a major Federal program in accordance with applicable requirements of laws, regulations, contracts and grants. Reportable conditions are described in the accompanying Schedule ofFmdings and Questioned Costs as items FA-6701-98-01, FA-6701-98-02, FA-6701-98-03, FA-6701-98-04 and FA-6701-98-05.
A material weakness is a condition in which the design or operation ofone or more of the internal control components does not reduce to a relatively low level ofrisk that noncompliance with applicable requirements oflaws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over' compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, ofthe reportable conditions described above, we consider items FA-6701-98-02, FA-6701-98-03 and FA-6701-98-05 to be material weaknesses.
This report is intended solely for the information and use ofmanagement, members ofthe Hancock County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should . not be used by anyone other than these specified parties.
Respectfully submitted,
~IA).~ Russell W. Hinton State Auditor
RWH:gp 98SA-45

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

HANCOCK COUNTY BOARD OF EDUCATION
AUDITEE'S RESPONSE
SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

6701-93-02 6701-93-04 6701-93-07 6701-93-08(A) 6701-94-01 6701-94-04 6701-94-05 6701-94-07 6701-94-21 6701-95-01 6701-95-02 6701-95-03 6701-95-04 6701-95-05 6701-95-07 6701-96-01 6701-96-02 6701-96-03 FS-6701-97-01 FS-6701-97-02 FS-6701..97-03 FS-6701-97-04 FS-6701-97-05 FS-6701-97-06 FS-6701-97-07 FS-6701-97-08

Further Action not Warranted Further Action not Warranted Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Further Action not Warranted Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Further Action not Warranted Further Action not Warranted Pre:viously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented
Further Action not Viarranted
Further Action not Warranted Partially Resolved - See Corrective ActionlResponses Unresolved - See Corrective ActionlResponses Unresolved - See Corrective ActionlResponses Partially Resolved - See Corrective ActionlResponses Previously Reported Corrective Action Implemented Unresolved - See Corrective ActionlResponses Previously Reported Corrective Action Implemented Partially Resolved - See Corrective ActionlResponses . Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Unresolved - See Corrective ActionlResponses

CORRECTIVE ACTIONIRESPONSES

EXPENDITURESILIABILITIESIDISBURSEMENTS Failure to Meet Expenditure Requirements Amount: $39,364.37 Finding Control Number: 6701-96-01

Hancock County Board ofEducation has implemented procedures to eliminate this finding in future years.

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HANCOCK COUNTY BOARD OF EDUCATION
AUDITEE'S RESPONSE
SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QIJESTIONED COSTS

CORRECTIVE ACTIONIRESPONSES

EXPENDITURESILIABILITIESIDISBURSEMENTS Failure to Meet Expenditure Requirements Amount: $39,364.37 Finding Control Number: 6701-96-01

Auditor's Note: The Hancock County Board ofEducation provided additional documentation to the Georgia Department ofEducation supporting actual expenditures in the amount of$141,053.00, leaving an adjusted balance of $39,364.37.

EXPENDITURESILIABILITIESIDISBURSEMENTS Failure to Meet Expenditure Requirements Amount: $20,943.13 Finding Control Number: 6701-96-02

Hancock CountyBoard ofEducation has implemented procedures to eliminate this finding in future

years.

'

EXPENDITURESILIABILITIESIDISBURSEMENTS Failure to Meet Expenditure Requirements Amount: $1,900.69 Finding Control Number: 6701-96-03

Hancock CountyBoard ofEducation has implemented procedures to eliminate this finding in future years.

CASH AND CASH EQUIVALENTS Inadequate Separation ofDuties Finding Control Number: FS-6701-97-01

Hancock County Board ofEducation reassigned somejob duties, but is not able to provide adequate staffto resolve finding.

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HANCOCK COUNTY BOARD OF EDUCATION
AUDIIEE'S RESPONSE
SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CORRECTIVE ACTIONIRESPONSES

EXPENDITURESILIABll1TIESIDISBURSEMENTS Failure to Meet Expenditure Requirements Amount: $7,539.45 Finding Control Number: FS-6701-97-03

Hancock County Board ofEducation has implemented procedures to eliminate this finding in future years.

Hancock County Board ofEducation provided separate accountability for Flow Through funds in fiscal year 1998. Preschool funds are being maintained separately in fiscal year 1999.

GENERAL LEDGER Failure to Maintain Separate Accountability Finding Control Number: FS-6701-97-05

Hancock County Board ofEd~cation provided separate accountability for Flow Through funds in fiscal year 1998. Preschool funds are being maintained separately in fiscal year 1999.

GENERAL FIXED ASSETS.

.

Failure to Maintain General Fixed Assets Account Group

Finding Control Number: FS-6701-97-08

The management ofthe Hancock County Board ofEducation chooses not to maintain a systemwide General Fixed Assets Account Group within the formal accounting records due to volume and cost.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONEP COSTS

FINDING CONTROL NUMBER AND STATUS

6701-93-05 6701-94-05 6701-94-06 6701-94-13 6701-94-14 6701-94-17 6701-95-05 6701-95-13

Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Further Action not Warranted Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Further Action not Warranted Further Action not Warranted Previously Reported Corrective Action Implemented

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HANCOCKCQUNTY BOARD OF EDUCATION
AUDITEE'S RESPONSE
SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998

PRIOR YEAR FEDERAL AWARD FINDINGS AND QlJESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

6701-96-06 6701-96-09 FA-6701-97-0l FA-6701-97-02 FA-6701-97-03

Previously Reported Corrective Action Implemented Further Action not Warranted Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Umesolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

SPECIAL TESTS AND PROVISIONS Inadequate Financial Records Finding Control Number: FA-6701-97-03

No corrective action was taken by the Board.

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SECTION IV
,
FINDINGS AND QUESTIONED COSTS

HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QlJESTIONED COSTS
YEAR ENDED ruNE 30. 1998

I SUMMARy OF AUDITOR'S RESULTS

1. we of&mort Issued on the Financial Statements The auditor's opinion on the Hancock County Board ofEducation's financial statements was qualified for various departures from generally accepted accounting principles.

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

Cash and Cash Equivalents

General Fixed Assets

All of the reportable conditions described above are considered to be material weaknesses.

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

4. Reportable Conditions in Internal Control Over Major Programs
The audit report for the Hancock County Board of Education disclosed reportable conditions in internal control pver major programs for the following compliance requirements.

Activities Allowed or Unallowed Eligibility

Special Tests and Provisions

Of the reportable conditions described above, Eligibility and Special Tests and Provisions are considered to be material weaknesses.

5. Txpe ofRe.port Issued on Compliance for Mmor Programs The auditor's opinion on the Hancock County Board of Education's report on compliance with requirements applicable to major programs was unqualified.

6. Audit Findings Required to be Reported by Section ,510Ca) of OMB Circular A-133 The Hancock County Board ofEducation's audit disclosed audit findings required to be reported by section .510(a) ofOMB Circular A-133. These audit findings are included in section N of this report.

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program 10.559 Food and Nutrition Program - Summer School Food Services Program 84.010 Elementary and SecondaryEducation Act - Title I - Grants to Local Educational Agencies 93.600 Project Head Start

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HANCOCK COUNTY BOARD OF EDUCATION
.SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED ruNE 30. 1998
I SUMMARy OF AUDITOR'S RESULTS
8. J:xpe "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk Auditee
The Hancock County Board ofEducation did not qualify as a low risk auditee as defined bySection .530 ofOMB Circular A-133.
IT FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequate Separation ofDuties Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6701-98-0l
An examination of the internal control procedures revealed that the Board did not provide for adequate separation of duties in the performance ofthe following accounting functions and related procedures:
1. Check writing was not separated from the recording ofdisbursements.
2. The functions of check signing, bank reconciliations, and review of bank reconciliations were performed by the Director ofFinance, who is not independent of general ledger operations.
These conditions were a result ofmanagement's decision to limit the number of administrative staffmade responsible for accounting functions. The Board should review the accounting procedures in place, design procedures which would enhance segregation ofduties relative to the above control category, and implement those procedures to strengthen the internal control over the accounting functions.
GENERAL LEDGER Failure to Maintain Separate Accountability Nonmaterial Noncompliance Repeated From Prior Year Finding Control Number: FS-6701-98-02
The Board did not maintain its Individuals with Disabilities Education Act - Part B - Special Education Preschool and State Preschool Handicapped grants in separate special revenue funds as required by the Georgia Department ofEducation. This condition occurred because management claimed not to be aware of the accounting instructions provid.ed by the Georgia Department of Education. The Board .should take appropriate action to restructure its accounting records and maintain them in accordance with prescribed policies.
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HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998
IT FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6701-98-03
The Hancock County Board ofEducation failed to maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This results in the general purpose financial statements ofthe Board being incomplete and not in accordance with generally accepted accounting principles. .Appropriate action should be taken by the Board to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory 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 ~ditions and deletions to the General Fixed Assets Account Group. .
ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ACTNlTIES ALLOWED OR UNALLOWED Failure to Provide Correct Meal Counts Reportable Condition Nonmaterial Noncompliance U. S. Department ofAgriculture Through Georgia Department ofEducation Amount: $6,S01.61 Finding Control Number: FA-6701-98-01
Our review ofthe Board's National School Lunch Program and School Breakfast Program (CFD~ Numbers 10.SS3 and 10.SSS) for the Hancock County High School revealed that the meal counting system did not provide an accurate count of meals served at the point of service as required by Federal regulations. Specifically, for the test month of October 1997, the meal count system used produced a reimbursement amount for :free and reduced price meals that was greater than the amount possible assuming the maximum number of eligible students. Consequently, the Board requested reimbursement for excess meals, which resulted in an over-reimbursement to the Board of$6,S01.61. In addition, the DE form 0107 (System Claim and Requisition for Reimbursement) and the supporting DE 0118 (Daily Record of Number of Lunches Served) for each school was not signed by an appropriate Board official certifying to its accuracy. The Georgia School Food and Nutrition Record Keepini Guide requires that an appropriate Board official must certify the accuracy of submitted reports.
These conditions OCCUlTed because management failed to establish internal controls as required in Federal Regulations 7 CPR 21O.7(a), which states:
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HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 3Q, 1998
m FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ACTNITIES ALLOWED OR UNALLOWED Failure to Provide Correct Meal Counts Reportable Condition Nonmaterial Noncompliance U. S. Department ofAgriculture Through Georgia Department ofEducation Amount: $6,501.61 Finding Control Number: FA-6701-98-01
"The school food authority shall establish internal controls which ensure the accuracy of lunch counts prior to submission ofthe monthly claim for reimbursement."
The Board should establish policies to ensure that the point ofservice meal counting system is accurate each month and based on the actual number of students served. The recor4s should be reconcilable to the class roster, the daily meal counts,daily cash receipts, bank deposits and requisitions for Federal reimbursements.
The Georgia Department of Education should review this matter to detennine the amount ofoverclaim to be refunded.
EUGffiILITY Failure to Change Students Status ofEligibility Reportable Condition - Material Weakness U. S. Department ofEducation Through Georgia Department ofEducation Amount: $1,167.79 Finding Control Number: FA-6701-98-02
Our review ofthe Board's verification ofeligibility for free and reduced price meals under the National School Lunch Program and School Breakfast Program (CFDA Numbers 10.553 and 10.555) revealed that six students were noted as having their benefits denied/terminated on the summary of verification efforts. However, the Board did not indicate on each application and on the master list the change in eligibility. As a result, changes were not made as required to the master list of eligible students. Therefore, these six students continued to receive free/reduced price breakfasts and lUnches after having been denied eligibility through the Board's verification efforts resulting in an overreimbursement to the Board of $1,167.79.
This condition resulted from management failing to follow provisions as set forth in U. S. Department of Agriculture's "Eligibility Guidance for School Meals" manual and 7 CFR 245 and because management did not sufficiently supervise the verification process of applications.
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HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998
ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ELIGffiILITY Failure to Change Students Status ofEligibility Reportable Condition - Material Weakness U. S. Department ofEducation Through Georgia Department ofEducation Amount: $1,167.79 Finding Control Number: FA-6701-98-02
The Board should initiate policies requiring that the master list ofall school lunchrooms be updated monthly in accordance with program requirements. The Georgia Department ofEducation should evaluate the Board's compliance with these requirements and determine ifadditional amounts should be reclaimed.
ELIGffiILITY Record Retention Reportable Condition - Material Weakness U. S. Department of Agriculture Through Georgia Department ofEducation Finding Control Number: FA-6701-98-03
Our review ofthe Board's eligibility determination procedures for free and reduced price meals under the National School Lunch Program and School Breakfast Program (CFDA Numbers 10.553 and 10.555) revealed that the Board could not provide documentation supporting the "approval/denial process" or the "additional review of free and reduced applications process" as outlined in the Board's Free and ReducedPriced Meals Policy Statement.
The Board utilized a computerized process to approve free and/or reduced priced meal applications, but failed to have a responsible official document the process was actually performed as instructed in "Eligibility Guidance for School Meals Manual" issued by the United States Department ofAgriculture. The Board also failed to indicate any subsequent review ofthe master list or applications by a Board official to insure that the eligibility ofthe applicationswas determined correctly.
These deficiencies were the result of management's failure to maintain adequate records and to follow required guidelines established by the United States Department ofAgriculture. The Board should implement procedures to ensure that each master list contains approval by a Board Official and that a system to review the approved applications is implemented.
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HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDlNGS AND QUESTIONED COSTS
YEAR ENDED ruNE 3Q, 1998
ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
EUGffiILITY Failure to Correctly Utilize Preceding Year Applications Reportable Condition Nonmaterial Noncompliance U, S, Department ofAgriculture Through Georgia Department ofEducation Amount: $1,173,06 Finding Control Number: FA-6701-98-04
Our review ofthe Board's National School Lunch Program and School Breakfast Program (CFDA Numbers 10,SS3 and 10.5SS) for the M, E, Lewis Elementary School revealed that the Board incorrectly applied a procedure which allows for the use ofpreceding year's approved applications as a basis to prepare and serve free and reduced price meals at the beginning ofa school year, Specifically, the Board utilized the preceding year approved applications for a period of forty (40) days instead ofthe maximum of thirty (30) days as provided by 7 CPR 24S,6(b), Consequently, the Board received reimbursement for excess free meals, which resulted in an over-reimbursement to the Board of $1,173,06,
This condition occurred because management failed to establish internal controls for utilizing preceding year applications as required in Federal Regulation 7 CFR 24S,6(b), which states:
"",applications from the previous year may be used to determine eligibility only during the 30 operating days following the first operating day at the beginning ofthe school year","
The Board should establish policies and procedures to ensure that prior to the processing of the current year applications, preceding year-approved applications are only to be utilized up to 30 operating days from the first operating day ofthe beginning ofthe school year,
The Georgia Department of Education sholild review this matter to determine the amount of overclaim to be refunded,
SPECIAL TESTS AND PROVISIONS Inadequate Financial Records Reportable Condition - Material Weakness U, S, Department ofEducation Through Georgia Department ofEducation Finding Control Number: FA-6701-98-0S
Our tests ofcontrols for the Elementary and Secondary Education - Title I Program (CFDA 84,010) revealed that there were no controls in place to ensure that the amount ofnon-Federal funds allocated to Title I schoolwide-program schools was not reduced from the prior year, In addition, there were no controls in place to ensure that non-Federal funds provided to school-wide and non-school wide program Title I schools was
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HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998
ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
SPECIAL TESTS AND PROVISIONS Inadequate Financial Records Reportable Condition - Material Weakness U. S. Department of Education Through Georgia Department ofEducation Finding Control Number: FA-6701-98-05 equitable. Therefore, we could not determine if Title I program funds were being properly used to supplement, and not supplant, non-Federal funds as required by Title I regulations. This internal control deficiency occurred because the Board did not use facility codes which would enable the tracking of expenditures by school. The Board should establish internal controls to ensure that expenditures can be accounted for by school and that Federal funds used for school-wide projects are only used to supplement the amount ofnon-Federal funds allocated to those $chools. The Georgia Department of Education should review this matter to determine if a reclaim of funds is appropriate.
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