> fl Ag oo ,. R l 1fo 'HJ. \C\~&--qq AUDIT REPORT HANCOCK COUNTY BOARD OF EDUCATION SPARTA, GEORGIA YEAR ENDED JUNE 30, 1999 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 5 D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS 6 ADDIDONAL FINANCIAL INFORMATION COMBINING STATEMENTS SPECIAL REVENUE FUND E COMBINING BALANCE SHEET 16 F COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 17 SCHEDULES 1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 18 2 SCHEDULE OF STATE REVENUE 20 3 SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS 21 ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS 4 OVERALL 23 5 BYPROGRAM 24 HANCOCK COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS- SECTION IT COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH O1\ffi CIRCULAR A-133 SECTION Ill 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 w. RUSSELL HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street. S.W., Suite 214 Atlanta. Georgia 30334-8400 May 9, 2000 Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Hancock County Board of Education INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying general purpose financial statements of the Hancock County Board of Education, as of and for the year ended June 30, 1999, as listed in the table of contents. These general purpose financial statements are the responsibility of the Hancock County Board ofEducation's management. Our responsibility is to express an opinion on these general purpose financial statements basec;l on our audit. 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 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 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. 99ARL-13 * 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, 1999, a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 1999. Also funds received, subsequent to June 30, 1999, from the Georgia Department of Education for the State's share of these unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditur~s and related revenues for contractual services completed prior to June 30, 1998, were improperly recorded in the year ended June 30, 1999. 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 of Education as of June 30, 1999, 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 9, 2000, on our consideration ofthe Hancock County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Our audit was performed for the purpose of forming 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 1 through 5), which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the 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 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. 99ARL-13 A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24. Respectfully submitted, ~-~.:::t. R sell W. Hinton St te Auditor RWH:jb 99ARL-13 HANCOCK COUNTY BOARD OF EDUCATION HANCOCK COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 1999 ASSETS Cash and Cash Equivalents Accounts Receivable Prepaid Items 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 GOVERNMENTAL FUND SPECIAL GENERAL REVENUE FUND FUND $ 551,247.83 $ 54,483.33 180,795.19 704,555.03 19,964.91 5,096.20 Total Assets $ 732,043.02 $ 784,099.47 LIABILITIES AND FUND EQUITY LIABILITIES Accounts Payable Salaries Payable Expired Grant Balances Payable Due to Other Funds Capital Lease Agreements General Obligation Bonds Payable Total Liabilities FUND EQUITY Fund Balances Reserved For Continuation of Federal Programs For Debt Service For Expired Grant Balances/Questioned Costs For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated Total Fund Equity $ 37,492.90 $ 64,616.10 2,132.68 215,806.86 48,071.86 4,806.58 $ 44,432.16 $ 328,494.82 $ 25,367.56 $ 7,539.45 19,964.91 5,096.20 680,071.41 405,175.98 $ 687,610.86 $ 455,604.65 Total Liabilities and Fund Eq~ity The notes to the general purpose financial statements are an integral part of this statement. -2- $ 732,043.02 $ 784,099.47 EXHIBIT"A" TYPES DEBT SERVICE FUND $ 541,348.97 20,423.13 4,806.58 ACCOUNT GROUP GENERAL LONG-TERM DEBT TOTALS (Memorandum Only) JUNE 30, 1999 JUNE 30, 1998 $ 1,147,080.13 $ 1,091,445.56 905,773.35 554,726.05 21,588.00 4,806.58 42,184.01 $ 566,578.68 19,964.91 5,096.20 566,578.68 10,023.63 4,239.22 465,791.05 443,421.32 316,743.35 443,421.32 316,743.35 774,208.95 406,645.14 $ 566,578.68 $ 1,326,743.35 $ 3,409,464.52 $ 3,370,851.61 $ 102,109.00 $ 251,197.51 217,939.54 210,728.44 48,071.86 4,661.58 4,806.58 42,184.01 $ 316,743.35 316,743.35 406,645.14 1,010,000.00 1,010,000.00 1,240,000.00 $ 1,326,743.35 $ 1,699,670.33 $ 2,155,416.68 $ 566,578.68 $ 25,367.56 566,578.68 $ 465,791.05 7,539.45 78,590.10 19,964.91 5,096.20 10,023.63 4,239.22 0.00 1,085,247.39 656,790.93 $ 566,578.68 $ 1,709,794.19 $ 1,215,434.93 ~ $ 566,578.68 $ 1,326,743.35 $ 3,409,464.52 $ 3,370,851.61 -3- HANCOCK COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30. 1999 EXHIBIT "B" REVENUES GENERAL FUND SPECIAL REVENUE FUND DEBT SERVICE FUND TOTALS {Memorandum Onl~) YEAR ENDED JUNE 30, 1999 JUNE 30, 1998 State Funds Federal Funds Taxes Other Funds Total Revenues EXPENDITURES $ 6.664.663.82 $ 159.555.05 15,595.50 2,652,314.30 2,347,102.23 $ 117125.14 104,203.66 $ 9,144,486.69 $ 2,916,073.01 $ $ 377,542.34 6.824,218.87 $ 2,667,909.80 2,724,644.57 221,328.80 6,258,770.20 2,570,719.77 2,772,160.47 274 041.50 377,542.34 $ 12,438,102.04 $ 11,875,691.94 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 $ 5,246,399.73 $ 1,032,510.82 395,535.22 174,312.98 224,242.15 519,724.09 698,805.55 146,058.90 575,268.88 773,357.97 27,316.43 2,305.42 251,393.60 100,195.16 131,272.95 36,493.13 2,892.75 56,802.66 52,875.85 69,296.34 917,248.73 120,000.90 89,901.79 $ 33,574.33 $ 6,278,910.55 $ 5,904,489.32 646,928.82 274,508.14 224,242.15 650,997.04 735,298.68 148,951.65 632,071.54 826,233.82 96,612.77 919,554.15 120,000.90 510,155.27 193,248.53 259,915.13 451,861.21 732,001.76 164,720.86 594,255.48 761,668.64 100,369.95 923,327.74 252.00 230,000.00 46,060.00 694.71 319,901.79 79,634.33 694.71 407,285.23 101,056.70 650.25 Total Expenditures Excess of Revenues over (under) Expenditures $ 9,026,804.34 $ 2,650,981.99 $ $ 117,682.35 $ 265,091.02 $ 276,754.71 $ 11,954,541.04 $ 11,105,258.07 100,787.63 $ 483,561.00 $ 770,433.87 OTHER FINANCING SOURCES {USES} Operating Transfers In Operating Transfers Out Total Other Financing Sources (Uses) $ $ -5,784.62 $ -5,784.62 $ 5,784.62 5,784.62 $ 5,784.62 $ 15,093.10 -5,784.62 -15,093.10 $ 0.00 $ 0.00 Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses $ FUND BALANCE JULY 1 111,897.73 $ 575,713.13 270,875.64 $ 173,930.75 100,787.63 $ 483,561.00 $ 465,791.05 1,215,434.93 770,433.87 442,115.30 Food Inventory - Net Change in Period Donated Commodities Purchased Food 9,941.28 856.98 9,941.28 856.98 1,739.12 1146.64 FUND BALANCE JUNE 30 $ 6871610.86 $ 4551604.65 $ 5661578.68 $ 1i709i794_19 $ 112151434.93 The notes to the general purpose financial statements are an integral part of this statement. -4- 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. 1999 EXHIBIT"C" GENERAL FUND ACTUAL (BUDGET BUDGET BASIS) REVENUES State Funds Federal Funds Taxes Other Funds $ 7,090,456.00 $ 6,664,663.82 15,595.50 15,595.50 2,400,000.00 2,347,102.23 117,125.14 Total Revenues $ 9,506,051.50 $ 9,144,486.69 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 Capital Outlay Debt Service $ 4,879,310.00 $ 5,246,399.73 407,259.00 237,196.00 269,497.00 387,265.00 694,328.00 151,240.00 600,100.00 625,183.00 78,890.00 123,000.00 395,535.22 174,312.98 224,242.15 519,724.09 698,805.55 146,058.90 575,268.88 773,357.97 27,316.43 2,305.42 120,000.90 123,476.12 Total Expenditures $ 8,453,268.00 $ 9,026,804.34 Excess of Revenues over (under) Expenditures $ 1,052,783.50 $ 117,682.35 OTHER FINANCING SOURCES /USES) Other Sources Other Uses $ -5,784.62 Total Other Financing Sources (Uses) $ -5,784.62 Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses $ 1,052,783.50 $ 111,897.73 FUND BALANCE JULY 1. 1998 301,288.86 575,713.13 Adjustments 251,342.72 FUND BALANCE JUNE 30, 1999 $ 1,605,415.08 $ 687,610.86 SPECIAL REVENUE FUND ACTUAL (BUDGET BUDGET BASIS) $ 767,252.00 $ 159,555.05 954,903.00 2,652,314.30 104,203.66 $ 1,722,155.00 $ 2,916,073.01 $ 1,050,726.00 $ 1,032,510.82 236,973.00 119,645.00 251,393.60 100,195.16 175,754.00 15,000.00 68,459.00 51,852.00 77,471.00 865,626.00 131,272.95 36,493.13 2,892.75 56,802.66 52,875.85 69,296.34 917,248.73 $ 2,661,506.00 $ 2,650,981.99 $ -939,351.00 $ 265,091.02 $ 5,784.62 $ 5,784.62 $ -939,351.00 $ 235,290.31 -136,548.24 270,875.64 159,667.90 $ -840,608.93 $ 430,543.54 The notes to the general purpose financial statements are an integral part of this statement. -5- HANCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANGIAL STATEMENTS JUNE 30, 1999 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The Hancock County Board of Education (Board) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the Board is a primary government and consists of all the organizations that compose its legal entity. FUND ACCOUNTING The Board uses funds and an account group to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a :financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources. General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types. Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general purpose financial statements. The general purpose financial statements account for all State, Federal, Taxes and Other funds under control of the 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 of a 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 of specific revenue sources that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and from the Federal government to accomplish specific educational objectives. -6- HANCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1999 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 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 of accounting 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 detennined 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 liability is incurred. A departure from the above definitions is the accounting treatment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 1999, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1998 and ending in early June 1999. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1998 and ending in August 1999. State grants to fund the State's share ofthese contracts were disbursed from the Georgia Department of Education to the Board in the same twelve months. As of June 30, 1999, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 1999, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30, 1999. Also, the State's portion of the compensation paid in July and August 1999 was received and recorded as revenue in the fiscal year subsequent to June 30, 1999. Conversely, the similar expenditures -7- HANCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1999 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES and related revenues for contractual services completed prior to June 30, 1998, were recorded in the year ended June 30, 1999. 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 of Education's budget is a complete financial plan for the Board's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level ofbudget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles. The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality. At the next regular meeting 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" of this report: FUND BALANCE JULY 1, 1998 Adjustments Inventories - July 1, 1998 Food Donated Commodities Purchased Foods Fund Balance July 1, 1998 (Budget Basis) Excess ofRevenues and Other Financing Sources over (under) Expenditures and Other Financing Uses FUND BALANCE JUNE 30, 1999 (Budget Basis) Special Revenue Fund $ 173,930.75 -10,023.63 -4,239.22 $ 159,667.90 270,875.64 $ 4301543.54 - 8- HANCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1999 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS COMPOSITION 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 of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The Hancock County Board of Commissioners fixed the property tax levy for the 1998 tax year (calendar year) on September 18, 1998 (levy date). Taxes were due on November 20, 1998. The lien date for property taxes was January 1, 1998. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1999. 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 1998 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 INVENTORIES 14.50 mills 2.32 mills 16.82 mills 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. -9- HANCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1999 Note 1: SUMMARY 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 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 of the 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 of interfund 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. 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 of Georgia Annotated (OCGA) Section45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts. Acceptable security for deposits consists of any one of or any combination of the following: (1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, -10- HANCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1999 Note 2: DEPOSITS (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, (4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, (5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose, (6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and (7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by 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, 1999, the bank balances were $1,796,760.86. The amounts of the total bank balances are classified into three categories of credit risk: Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the Board or by the Board's agent in the Board's name. Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Board's name. Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Board's name.) The Board's deposits are classified by risk category at June 30, 1999, as follows: Risk Category 1 2 3 Total Bank Balance $ 742,092.67 977,823.06 76,845.13 $ 1,796.760.86 - 11 - HANCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1999 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: 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. 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 of 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: 1998 1999 Beginning of Year Liability Claims and Changes in Estimates $ 0.00 $ 581.00 $ $ 0.00 $ 7 788.17 $ Claims Paid End of Year Liability 581.00 $ 0.00 7 788.17 $ 0.00 The Board has purchased a surety bond to provide additional insurance coverage as follows: Position Covered Amount All Employees (Per Loss) $ 50,000.00 Note 5: GENERAL LONG-TERM DEBT CAPITAL LEASES The Hancock County Board ofEducation has entered into various lease agreements as lessee for 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. - 12 - HANCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1999 Note 5: GENERAL LONG-TERM DEBT GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: Purpose Interest Rates Amount General Government - Refunding - Series 1994 2.60% - 4.35% $ 1,010,000.00 The changes in General Long-Term Debt during the fiscal year ended June 30, 1999, were as follows: Capital Leases General Obligation Bonds Total Balance July 1, 1998 $ 406,645.14 $1,240,000.00 $1,646,645.14 Deductions Debt Retired 89,901.79 230,000.00 319,901.79 Balance June 30, 1999 $ 316.743.35 $ 1.010.000.00 $ 1.326,743.35 At June 30, 1999, payments due by fiscal year which includes principal and interest for these items are as follows: Fiscal Year Ended June 30 Capital Leases General Obligation Bonds Total Debt 2000 2001 2002 2003 $ 123,476.12 123,476.12 123,476.12 $ 277,242.50 272,600.00 277,052.50 270,763.75 $ 400,718.62 396,076.12 400,528.62 270,763.75 Total Principal and Interest $ 370,428.36 $ 1.097.658.75 $ 1,468.087.11 Deduct: Imputed Interest 53,685.Ql Net Present Value ofFuture Minimum Lease Payments $ 316.743.35 - 13 - HANCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1999 Note 6: ON-BEHALF PAYMENTS The Board has recognized revenues and expenditures in the amount of$198,608.76 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies. Georgia Department of Education Paid to the State Merit System of Personnel Administration For Health Insurance of Non-Certified Personnel In the amount of $163,507.76 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 $35,101.00 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. The Board is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine Board operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the general purpose financial statements. 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 of the 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. The required employer contribution rate is 11.95% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: - 14 - HANCOCK COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1999 Note 8: RETIREMENT PLANS Fiscal Year 1999 1998 1997 Percentage Contributed 100% 100% 100% Required Contribution $ 747,584.34 $ 705,743.61 $ 663,516.83 - 15 - HANCOCK COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30. 1999 EXHIBIT"E" ASSETS Cash and Cash Equivalents Accounts Receivable Inventories Food Donated Commodities Purchased Food SCHOOL FOOD SERVICES FUND LOTTERY PROGRAMS FEDERAL PROGRAMS TOTALS JUNE 30, 1999 JUNE 30, 1998 $ 470,652.64 $ 470,652.64 $ 242,939.30 $ 40,556.28 $ 663,998.75 704,555.03 445,960.49 19,964.91 5,096.20 19,964.91 5,096.20 10,023.63 4,239.22 Total Assets $ 495,713.75 $ 40,556.28 $ 663,998.75 $ 1,200,268.78 $ 703,162.64 LIABILITIES AND FUND EQUITY LIABILITIES Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable $ $ 16,822.16 48,654.50 Total Liabilities $ 65,476.66 $ FUND EQUITY Fund Balances Reserved For Continuation of Federal Programs For Expired Grant Balances/Questioned Costs For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated $ 19,964.91 5,096.20 405,175.98 $ Total Fund Equity $ 430,237.09 $ 27,929.08 $ 5,948.06 6,679.14 388,240.23 $ 41,845.88 - 160,473.22 48,071.86 40,556.28 $ 638,631.19 $ 416,169.31 $ 64,616.10 215,806.86 48,071.86 744,664.13 $ 88,194.34 225,844.47 210,728.44 4,464.64 529,231.89 $ 25,367.56 $ 25,367.56 $ 8,842.46 0.00 0.00 $ 19,964.91 5,096.20 0.00 405,175.98 25,367.56 $ 455,604.65 $ 10,023.63 4,239.22 150,825.44 173,930.75 Total Liabilities and Fund Equity $ 495,713.75 $ 40,556.28 $ 663,998.75 $ 1,200,268.78 $ 703,162.64 See notes to the general purpose financial statements. - 16- HANCOCK COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 1999 EXHIBIT"F" REVENUES SCHOOL FOOD SERVICES FUND LOTTERY PROGRAMS FEDERAL PROGRAMS TOTALS YEAR ENDED JUNE 30, 1999 JUNE 30, 1998 State Funds Federal Funds Other Funds $ 58,296.00 $ 1,000,257.15 104,203.66 101,259.05 $ 159,555.05 $ 212,474.50 $ 1,652,057.15 2,652,314.30 2,564,455.69 104,203.66 149,974.16 Total Revenues $ 1,162,756.81 $ 101,259.05 $ 1,652,057.15 $ 2,916,073.01 $ 2,926,904.35 EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional 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 $ $ 917,248.73 90,488.20 $ 942,022.62 $ 1,032,510.82 $ 1,203,894.82 10,721.85 49.00 240,671.75 100,195.16 131,223.95 36,493.13 2,892.75 56,802.66 52,875.85 69,296.34 251,393.60 100,195.16 131,272.95 36,493.13 2,892.75 56,802.66 52,875.85 69,296.34 917,248.73 245,503.68 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 14,788.56 1,432.51 Total Expenditures $ 917,248.73 $ 101,259.05 $ 1,632,474.21 $ 2,650,981.99 $ 2,889,126.70 Excess of Revenues over (under) Expenditures $ 245,508.08 $ 0.00 $ 19,582.94 $ 265,091.02 $ 37,777.65 OTHER FINANCING SOURCES Operating Transfers In 5,784.62 5,784.62 15,093.10 Excess of Revenues and Other Financing Sources over (under) Expenditures $ 245,508.08 $ 0.00 $ 25,367.56 $ 270,875.64 $ 52,870.75 FUND BALANCE JULY 1 173,930.75 0.00 0.00 173,930.75 118,174.24 Food Inventory - Net Change in Period Donated Commodities Purchased Food 9,941.28 856.98 9,941.28 856.98 1,739.12 1,146.64 FUND BALANCE JUNE 30 $ 430,237.09 $ 0.00 $ 25,367.56 $ 455,604.65 $ 173,930.75 See notes to the general purpose financial statements. -17 - HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30. 1999 SCHEDULE "1" FUNDING AGENCY PROGRAM/GRANT CFDA NUMBER Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program 1999 Grant National School Lunch Program 1999 Grant . . 10.553 10.555 Total Child Nutrition Cluster Other Programs Pass-Through From Georgia Department of Education Food and Nutrition Program Food Distribution Program (1) Pass-Through From Office of School Readiness Food and Nutrition Program Child and Adult Care Food Program 1999 Contract 10.550 10.558 Total U.S. Department of Agriculture Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Flow Through 1999 Grant Preschool 1999 Grant Capacity Building and Improvement 1999 Grant 84.027 84.173 84.173 Total Special Education Cluster Other Programs Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Title I Grants to Local Educational Agencies 1999 Grant . 84.010 Title VI Innovative Education Program Strategies 1999 Grant 84.298 Goals2000 State and Local Education Systemic Improvement Grants 1999 Grant 84.276 Safe and Drug-Free Schools 1999 Grant 84.186 Vocational Education - Basic Grants to States High School Program Basic Grant 1999 Grant 84.048 Tech-Prep Education 1999 Grant 84.243 PASSTHROUGH ENTITY ID NUMBER N/A $ NIA $ NIA NIA $ NIA $ NIA NIA $ NIA NIA NIA NIA NIA NIA FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD 314,230.93 603,428.21 $ 917,659.14 $ (2) 875,175.05 (3) 875,175.05 42,073.68 42,073.68 40,524.33 1,000,257.15 $ {2! 917,248.73 90,886.75 $ 14,570.00 216.00 105,672.75 $ 90,886.75 14,570.00 216.00 105,672.75 550,168.57 1,336.76 75,214.00 13,457.00 26,632.00 1,445.81 550,168.57 1,336.76 75,214.00 13,457.00 32,416.62 (3) 1,445.81 -18- HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 1999 SCHEDULE "1" FUNDING AGENCY PROGRAM/GRANT Education, U. S. Department of Other Programs Pass-Through From Oconee Regional Educational Service Agency Elementary and Secondary Education Act Title I Grants to Local Educational Agencies 1999 Grant Total U. S. Department of Education Health and Human Services, U.S. Department of Direct Head Start 04CH4003/28 04CH4003/29 Total U. S. Department of Health and Human Services OTHER FEDERAL ASSISTANCE Defense, U. S. Department of Direct Department of the Navy Troops to Teachers Program 1999 Grant CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD * 84.010 N/A $ $ 4,soo.oo $ _ _ _4'""'.sc...;o....;;.o.;..;;.o-'-o 778,426.89 $ _ _ _784--'-,2_1_1_.5_1 93.600 93.600 $ 869,758.66 $ 844,391.10 3,871.60 3,871.60 $ 873,630.26 $ ___84_8~,2_6_2_.7_0 $ _ _ _1-'5-'-,5--'-9-"-5.-'-50"- (4) Total Federal Financial Assistance NIA = Not Available $ 2,667,909.80 $ 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 Child and Adult Care Food Program and the School Breakfast Program were not maintained separately and are induded in the 1999 National School Lunch Program. (3) Expenditures for this program indude State, and/or Other Funds. Expenditures are not maintained by fund source. (4) 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 indudes the Federal grant activity of the Hancock County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the general purpose financial statements. 2,549,722.94 See notes to the general purpose financial statements. -19- HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 1999 SCHEDULE "2" AGENCY/FUNDING GOVERNMENTAL FUND TYPES SPECIAL GENERAL REVENUE FUND FUND 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 Specialist Local Five Mill Share Educational Equalization Funding Grant Food Services Other State Programs Alternative Program Apprenticeship Program Health Insurance Innovative Programs Mentoring Program Outdoor Classroom Grant Student Records Grant Lottery Programs Assistive Technology Computers in the Classroom 3,715,315.00 845,805.00 110,685.00 161,335.00 47,493.00 1,074,008.00 294,884.00 88,807.00 122,740.00 41,996.00 53,306.00 15,872.00 28,842.00 -794,002.00 461,837.00 $ 58,900.00 9,000.00 163,507.76 5,000.00 6,804.00 500.00 1,326.06 $ 58,296.00 5,160.28 35,396.00 Office of School Readiness Pre-Kindergarten Program 60,702.77 Office of Treasury and Fiscal Services Public School Employees Retirement 35,101.00 CONTRACTS Education, Georgia Department of Georgia's Reading Challenge Program Reading First Program 67,750.00 47,852.00 TOTAL 3,715,315.00 845,805.00 110,685.00 161,335.00 47,493.00 1,074,008.00 294,884.00 88,807.00 122,740.00 41,996.00 53,306.00 15,872.00 28,842.00 -794,002.00 461,837.00 58,296.00 58,900.00 9,000.00 163,507.76 5,000.00 6,804.00 500.00 1,326.06 5,160.28 35,396.00 60,102.n 35,101.00 67,750.00 47,852.00 $ 6,664,663.82 $ 159,555.05 $ 6,824,218.87 See notes to the general purpose financial statements. -20 - HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS YEAR ENDED JUNE 30, 1999 SCHEDULE "3" EXPENDITURES Current Instruction Support Services Pupil Services Generai Administration ASSISTIVE TECHNOLOGY COMPUTERS INTHE CLASSROOM PRE-KINDERGARTEN PROGRAM TOTAL $ 5,160.28 $ 35,396.00 $ 49,931.92 $ 10,721.85 49.00 90,488.20 10,721.85 49.00 Total Expenditures $ 5,160.28 $ 35,396.00 $ 60,702.77 $ ==1=0=1='2=59==05= RECAP: Salaries and Benefits Pre-Kindergarten Program $ Other Expenditures Assistive Technology Computers in the Classroom Pre-Kindergarten Program 59,870.20 5,160.28 35,396.00 832.57 $ ==1=01=,2=5=9=.0=5 See notes to the general purpose financial statements. - 21 - HANCOCK COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL GENERAL FUND- QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 1999 SCHEDULE "4" 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 $ 4,886,446.00 $ 154,667.00 $ 4,680,900.27 315,484.99 $ _ _ _2:;.;5:;.:5;.c.,4;.c.7_;.1'-"-.3_1 $ 4,996,385.26 -58,354.82 $ _ _ _4__,_9_3_8..._,0_3_0_.44_ $ 0.00 $=====0.=0=0 See notes to the general purpose financial statements. - 23 - HANCOCK COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - BY PROGRAM GENERAL FUND- QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 1999 GENERAL AND CAREER EDUCATION PROGRAMS Kindergarten (*) Grades 1 - 3 (*) Sub-Total - K-3 Grades 4 - 5 (*) Grades 6 - 8 (*) Grades 9 - 12 (*) High School Laboratories (*) Vocational Education Laboratories (*) Total General and Career Education Programs SPECIAL EDUCATION PROGRAMS Regular Programs Category I (*) Category II (*) Category Ill (*) Sub-Total - Regular Category VI (Gifted) (*) Total Special Education Programs REMEDIAL EDUCATION PROGRAM{*} Total Fourteen Weighted Programs MEDIA CENTER PROGRAMS Salaries Operations Total Media Center Programs Total Fourteen Weighted and-Media Center Programs ALLOTMENTS FROM GEORGIA DEPARTMENT OF REQUIRED ORIGINAL % ORIGINAL MID-TERM $ 457,458.00 $ 411,712.20 $ 1,016,842.00 915,157.80 $ 1,474,300.00 90 $ 1,326,870.00 $ 474,043.00 90 426,638.70 735,868.00 90 662,281.20 523,036.00 90 470,732.40 250,901.00 90 225,810.90 257,167.00 90 231,450.30 $ 3,715,315.00 $ 3,343,783.50 $ 0.00 0.00 53,306.00 53,306.00 $ 759,821.00 $ 683,838.90 $ 0.00 $ 759,821.00 90 $ 683,838.90 $ 85,984.00 90 77,385.60 $ 845,805.00 $ 761,224.50 $ $ 110,685.00 90 $ 99,616.50 $ $ 4,671,805.00 $ 4,204,624.50 $ 0.00 0.00 0.00 53,306.00 $ 126,973.00 90 $ 114,275.70 $ 34,362.00 100 34,362.00 $ 161,335.00 $ 148,637.70 $ 0.00 0.00 $ 4,833,140.00 $ 4,353,262.20 $ 53,306.00 STAFF DEVELOPMENT PROGRAMS Cost of Instruction Professional Development Total Staff Development Programs (*) Identifies Fourteen Weighted Programs. See notes to the general purpose financial statements. $ 14,974.00 32,519.00 $ 14,974.00 $ 32,519.00 0.00 0.00 $ 47,493.00 100 $ 47.493.oo $ =======o=.o=o 24 SCHEDULE "5" EDUCATION TOTAL REQUIRED ACTUAL EXPENDITURES SALARIES OPERATIONS TOTAL AMOUNT OF UNDEREXPENDITURE FOR REQUIRED ALLOTMENT $ 411,712.20 $ 479,708.77 $ 7,176.19 $ 486,884.96 915,157.80 823,080.56 27,408.47 850,489.03 $ 1,326,870.00 $ 1,302,789.33 $ 34,584.66 $ 1,337,373.99 $ 0.00 426,638.70 542,674.92 13,482.11 556,157.03 0.00 662,281.20 737,268.56 25,779.16 763,047.72 0.00 524,038.40 615,674.70 71,705.59 687,380.29 0.00 225,810.90 202,530.33 23,488.83 226,019.16 0.00 231,450.30 202,212.98 30,119.03 232,332.01 0.00 $ 3,397,089.50 $ 3,603,150.82 $ 199,159.38 $ 3,802,310.20 $ 683,838.90 $ $ 392,005.33 239,325.74 5,001.12 $ 48,863.49 618.15 5,001.12 440,868.82 239,943.89 $ 683,838.90 $ 631,331.07 $ 54,482.76 $ 685,813.83 0.00 77,385.60 92,840.70 1,521.49 94,362.19 0.00 $ 761,224.50 $ 724,171.77 $ 56,004.25 $ 780,176.02 $ 99,616.50 $ 193,901.54 $ 307.68 $ 194,209.22 0.00 $ 4,257,930.50 $ 4,521,224.13 $ 255,471.31 $ 4,776,695.44 $ 114,275.70 $ 159,676.14 $ 159,676.14 0.00 34,362.00 $ 60,013.68 60,013.68 0.00 $ 148,637.70 $ 159,676.14 $ 60,013.68 $ 219,689.82 $ 4,406,568.20 $ 4,680,900.27 $ 315,484.99 $ 4,996,385.26 $ 0.00 $ 14,974.00 32,519.00 $ ====47=,4=93=.0=0 $ 23,561.28 $ 23,561.28 24,832.10 24,832.10 $ 48,393.38 $ 48,393.38 $=======0==00= 25 SECTION IT COMPLIANCE AND INTERNAL CONTROL REPORTS w. RUSSELL HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street. S.W.. Suite 214 Atlanta, Georgia 30334-8400 May 9, 2000 Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Hancock County Board of Education REPORT ON COMPLIA.~CE 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 of and for the year ended June 30, 1999, and have issued our report thereon dated May 9, 2000. 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 of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered Hancock County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its 99YB-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 of the 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 of Findings and Questioned Costs as items FS-6701-99-01, FS-6701-99-02 and FS-6701-99-03. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, of the reportable conditions described above, item FS-~701-99-03 is considered to be a material weakness. This report is intended solely for the information and use of management, members of the Hancock County Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, i.oA. sell W. Hinton State Auditor RWH:jb 99YB-40 w. RUSSELL H1NTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street. S.W.. Suite 214 Atlanta, Georgia 30'.B4-8400 May 9, 2000 Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Hancock County Board of Education REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 Ladies and Gentlemen: Compliance We have audited the compliance of Hancock County Board of Education with the types of compliance requirements described in the US. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1999. Hancock County Board of Education'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 financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the 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 of Education's compliance with those requirements. 99SA-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 of its major Federal programs for the year ended June 30, 1999. 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 of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133. 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 ofFindings and Questioned Costs as items FA-6701-99-01 and FA-6701-99-02. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level 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, of the reportable conditions described above, we consider item FA-6701-99-02 to be a material weakness. This report is intended solely for the information and use of management, members of the 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, RWH:jb 99SA-45 State Auditor SECTION ID 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 YEARENDEDJUNE30, 1999 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS 6701-96-01 6701-96-02 6701-96-03 FS-6701-97-01 FS-6701-97-03 FS-6701-97-05 FS-6701-97-08 FS-6701-98-01 FS-6701-98-02 FS-6701-98-03 Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Further Action Not Warranted Umesolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Umesolved - See Corrective Action/Responses CORRECTIVE ACTION/RESPONSES EXPENDITURES/LIABILITIES/DISBURSEMENTS 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. CASH AND CASH EQUNALENTS Inadequate Separation ofDuties Finding Control Number: FS-6701-98-01 The Assistant Director ofFinance is in charge ofbank reconciliations. The Director ofFinance is in charge of check writing and the bookkeeper is in charge ofthe recording of disbursements. GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6701-98-03 The management of the Hancock County Board of Education chooses not to maintain a systemwide General Fixed Assets Account Group within the formal accounting records due to volume and cost. - 1- HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1999 PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FA-6701-97-03 FA-6701-98-01 F A-6701-98-02 F A-6701-98-03 F A-6701-98-04 FA-6701-98-05 Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented -2- SECTION IV FINDINGS AND QUESTIONED COSTS HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1999 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the Hancock County Board of Education's financial statements was qualified for various departures from generally accepted accounting principles. 2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Hancock County Board of Education disclosed financial statement reportable conditions related to the following control categories. Cash and Cash Equivalents General Fixed Assets Expenditures/Liabilities/Disbursements Of the reportable conditions described above, General Fixed Assets is considered to be a material weakness. 3. Noncompliance Material to the Financial Statements The audit of the Hancock County Board of Education 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 over major programs for the following compliance requirements. Activities Allowed or Unallowed Eligibility Of the reportable conditions described above, Eligibility is considered to be a material weakness. 5. Type of Report Issued on Compliance for Major 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 .510(a) of 0MB Circular A-133 The Hancock County Board ofEducation's audit disclosed audit findings required to be reported by section .510(a) of 0MB Circular A-133. These audit findings are included in section IV 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 84.01 O Elementary and Secondary Education Act- Title I- Grants to Local Educational Agencies - 1- HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1999 I SUMMARY OF AUDITOR'S RESULTS 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00. 9. Low Risk Auditee The Hancock County Board of Education did not qualify as a low risk auditee as defined by Section .530 of 0MB Circular A-133. II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUIVALENTS Inadequate Separation of Duties Reportable Condition Repeated From Prior Year Finding Control Number: FS-6701-99-01 An examination of the internal control procedures revealed that the Board did not provide for adequate separation of duties in the performance of the following accounting functions and related procedures: (1) Check writing was not separated from the recording of disbursements. (2) The functions of check signing, bank reconciliations, and review of bank reconciliations were performed by the Director of Finance, who is not independent of general ledger operations. These conditions were a result of management's decision to limit the number of administrative staff made responsible for accounting functions. The Board should review the accounting procedures in place, design procedures which would enhance segregation of duties relative to the above control category, and implement those procedures to strengthen the internal control over the accounting functions. EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Expenditures/Inadequate Documentation/Voucher Sample Exceptions Reportable Condition Nonmaterial Noncompliance Amount: $5,010.15 Finding Control Number: FS-6701-99-02 An exan1ination of expenditure and travel vouchers was performed to test the validity and accuracy of the expenditure transactions. A sample of 127 expenditure vouchers revealed the following deficiencies: (1) Four (4) vouchers were charged as QBE "Basic Expenditures" which did not involve the interaction of students and teachers as required by Georgia Department ofEducation regulations. (2) Seven (7) vouchers did not contain an original invoice. -2- HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1999 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Expenditures/Inadequate Documentation/Voucher Sample Exceptions Reportable Condition Nonmaterial Noncompliance Amount: $5,010.15 Finding Control Number: FS-6701-99-02 (3) Fifteen (15) expenditure vouchers could not be located. (4) Two (2) expenditures were paid twice, once from an original invoice and once from a statement of account. (5) Eight (8) expenditure vouchers were for improper purposes as follows: Purchase of Extracurricular Athletic Uniforms and Equipment Flowers Tribute Plaques $4,692.15 283.00 35.00 $5,010.15 The Official Code of Georgia Annotated Section 20-2-411 provides, in part, as follows: "... school funds shall be used for educational purposes and may be used to pay the salaries of personnel and to pay for the utilization of school facilities, including school buses; for extracurricular and interscholastic activities, including literary events, music, and athletic programs within individual schools and between schools in the same or different school systems when ~uch activities are sponsored by local boards of education as an integral part of the total school program; and for no other purpose... ". An unofficial opinion of the Attorney General U79-6, dated February 13, 1979, also provides as follows: "...neither the constitutional provision nor the statute so much as purport to authorize the use of school funds to purchase football uniforms and equipment or indeed do anything else other than those things authorized by the Ga. Constitution and statute." Expenditures of this nature are considered to be beyond the customary scope of expenditures for "educational purposes". Appropriate action should be taken by the Board to secure reimbursement of these improper expenditures for deposit to the Board's General Fund. These conditions were a result of management's failure to adequately monitor and implement procedures to ensure that all expenditure vouchers are reviewed for accuracy, proper documentation, and correctness of classification prior to payment and recording of expenditures in the financial records. -3 - HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1999 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6701-99-03 The Hancock County Board of Education 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 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. These subsidiary records should include an inventory of land, buildings and equipment owned by the Board and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ACTIVITIES ALLOWED OR UNALLOWED Failure to Provide Correct Meal Counts Reportable Condition Nonmaterial Noncompliance U.S. Department of Agriculture Through Georgia Department of Education Finding Control Number: FA-6701-99-01 A review of the Board's National School Lunch Program and School Breakfast Program (CFDA Numbers 10.553 and 10.555) for M. E. Lewis Elementary School conducted by the Georgia Department of Education 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. The count was taken from attendance records turned in by the teachers rather than using student cards. In addition, lunch count totals by category were not correctly combined and recorded; 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. This condition occurred because management failed to establish internal controls as required in Federal Regulations 7 CFR 210.7(a), which states: "The school food authority shall establish internal controls which ensure the accuracy of lunch counts prior to submission of the monthly claim for reimbursement." -4- HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1999 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ACTNITIES ALLOWED OR UNALLOWED Failure to Provide Correct Meal Counts Reportable Condition Nonmaterial Noncompliance U. S. Department of Agriculture Through Georgia Department of Education Finding Control Number: FA-6701-99-01 The Board should establish policies to ensure that the point of service meal counting system is accurate each month and is based on the actual number of students served. The records should be reconcilable to the class roster, the daily meal counts, daily cash receipts, bank deposits and requisitions for Federal reimbursements. ELIGIBILITY Failure to Correctly Approve Applications Reportable Condition - Material Wealrness U.S. Department of Agriculture Through Georgia Department of Education Finding Control Number: FA-6701-99-02 A review of the Board's verification of eligibility for free and reduced price meals under the National School Lunch Program and School Breakfast Program (CFDA Numbers 10.553 and 10.555) for the M. E. Lewis Elementary School conducted by the Georgia Department of Education revealed that twenty-one students eligibility was incorrectly determined. This number included students who were receiving free meals but were ineligible, students who were receiving free meals who should be receiving reduced price meals, and students eligible to receive free meals who were not. 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 approval process of applications. The Board should initiate policies requiring that personnel responsible for the approval of free and reduced price meal applications should be adequately supervised and made aware of the regulations and guidelines relating to required information on an application. -5-