Hancock County Board of Education, Sparta, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2003

HANCOCK COUNTY BOARD OF EDUCATION
SPARTA, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

HANCOCK COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

BASIC FINANCIAL STATEMENTS

FUND FINANCIAL STATEMENTS

A

BALANCE SHEET

GOVERNMENTAL FUNDS

3

B

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

4

C

NOTES TO THE BASIC FINANCIAL STATEMENTS

5

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

15

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

16

3 SCHEDULE OF STATE REVENUE

19

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL ST'.A.TEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133

HANCOCK COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

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
August 10, 2004

Honorable Sonny Perdue, 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 BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements of each major fund and the aggregate remaining fund information (Exhibits A through C) ofthe Hancock County Board of Education, as of and for the year ended June 30, 2003, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Hancock County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial 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 opm10ns.
Management has not presented district-wide financial statements to display the financial position and changes in financial position of its governmental activities. Accounting principles generally accepted in the United States of America require presentation of district-wide financial statements. The amounts that would be reported in district-wide financial statements for the Hancock County Board of Education's governmental activities is not reasonably determinable.
2003-34ARL-22

In our opinion, because of the effects of the matter discussed in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of the Hancock County Board ofEducation, as ofJune 30, 2003, or the changes in financial position for the year then ended.
In accordance with Government Auditing Standards, we have also issued our report dated August 10, 2004, on our consideration of the 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. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 15, is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Hancock County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 and 3, which includes the Schedule ofExpenditures ofFederal Awards as required by U.S. Office ofManagement 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 ofthe basic financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe basic financial statements, and in our opinion, except for the effects ofthe matter referred to in the third paragraph, such information, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code of Georgia Annotated section 506-24.
Respectfully submitted,
"

RWH:gp 2003-34ARL-22

State Auditor

HANCOCK COUNTY BOARD OF EDUCATION

HANCOCK COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30. 2003

EXHIBIT"A"

ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Due From Other Funds Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries Payable Expired Grant Balances Payable Due To Other Funds Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Bus Replacement Continuation of Federal Programs Inventories Questioned Costs
Unreserved Undesignated Reported in: General Fund (Deficit) Debt Service
Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

DEBT SERVICE
FUND

TOTAL

$

344,662 $

641.743 $ 986.405

137,750 867,133 180,000
7 049

11,586 18

149,336 867,133 180,000
18 7,049

$ 1,536,594 $

653,347 $ 2, 189,941

$ 1,505,158 1,166,175 3,362 18 662,063
$ 3,336,776

$ 1,505,158 1,166,175 3,362 18 662,063
$ 3,336,776

$

133,676

81,815

7,049

19,494

$ 133,676 81,815 7,049 19,494

-2,042,216 $
$ -1,800,182 $

653,347

-2,042,216 653,347

653,347 $ -1,146,835

$ 1,536,594 $

653,347 $ 2,189,941

The notes to the basic financial statements are an integral part of this statement. -3 -

HANCOCK COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30. 2003

EXHIBIT "B"

REVENUES
Property Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments
Fund Balances - Ending

GENERAL FUND

DEBT SERVICE
FUND

TOTAL

$ 2,496,610 $ 8,825,076 3,091,306 137,996 11,604 340,818
$ 14,903,410 $

17,965 $

2,514,575 8,825,076 3,091,306
137,996 11,604
340,818

17 965 $ 14,921,375

$ 9,357,717

$ 9,357,717

560,007 393,633 385,871 1,409,761 962,562 272,575 $ 1,168,224 936,981
97,981 76,624 1,042,579 135,732

560,007 393,633 385,871 1,409,761 962,562 272,576 1,168,224 936,981
97,981 76,624 1,042,579 135,732

265,000 5 764

265,000 5 764

$ 16,800,247 $ 270,765 $ 17,071,012

$ -1,896,837 $ -252,800 $ -2,149,637

224,021

906,147

1,130,168

-127,366

-127,366

$ -1,800,182 $ 653,347 $ -1, 146,835

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

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "C"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Hancock County Board of Education (School District) 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 School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the fund financial statements and notes to the basic financial statements of the Hancock County Board of Education.
Fund Financial Statements: The fund financial statements provide information about the School District's funds. Eliminations have been made to minimize the double counting of internal activities. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
Debt Service Fund accounts for taxes (property) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
BASIS OF ACCOUNTING
The District-wide governmental financial statements (Statement of Net Assets, Statement of Activities, Reconciliation ofthe Governmental Funds Balance Sheet to the Statement ofNet Assets, and Reconciliation ofthe Governmental Funds Statement ofRevenues, Expenditures and Changes in Fund Balance to the Statement ofActivities) are not presented in the basic financial statements. To conform to generally accepted accounting principles, District-wide financial statements should be reported in the basic financial statements.

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HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "C"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund balances, nor the revenues, expenses/expenditures and changes in net assets/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 basic financial statements.
For fiscal year 2003, the School District changed its method of accounting for the final two payments on one hundred and ninety day contracts and for the related revenue due from the State to fund these contracts. Adjustments have been made in the fiscal year 2003 financial statements to record costs for salaries and fringe benefits earned by employees through June 30, 2003, (even though paid in July and August 2003) and the related revenue due from the State to fund these contracts. This change is in accordance with generally accepted accounting principles. No adjustment was made for the similar salaries and benefits earned in fiscal year 2002 but recorded in fiscal year 2003 as this information was not readily available.
The net effect ofthe above accounting treatment resulted in the accompanying financial statements reflecting fourteen months of costs for a majority of General Fund salaries and fringe benefits and the related revenue due from the State to fund these contracts. Generally accepted accounting principles require that revenues be recorded when earned or available and measurable as appropriate and that expenditures or expenses as appropriate be recorded when incurred, rather than when funds are received or disbursed.

-6-

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "C"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

RESTATEMENT OF PRIOR YEAR FUND BALANCE-GENERAL FUND

In prior years, the financial activities of the School District's School Food Services Fund, Lottery Programs and Federal Programs were reported as Special Revenue Funds. These funds had a combined fund balance of $-310,673 at July 1, 2002. For fiscal year 2003, these funds have been reported as part of the General Fund. This change is in accordance with generally accepted accounting principles.

General Fund Balance July 1, 2002

$ 534,694

Add Funds Consolidated with General Fund: School Food Services Fund Lottery Programs Federal Programs

172,191 14,056
-496 920

General Fund Balance July 1, 2002 (Restated) CASH AND CASH EQUIVALENTS

$===2=2-4."==02==1

COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the Board to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.

RECEIVABLES

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

PROPERTY TAXES

The Hancock County Board of Commissioners fixed the property tax levy for the 2002 tax digest year (calendar year) on September 24, 2002 (levy date). Taxes were due on November 27, 2002 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2002 tax digest are reported as revenue in the governmental funds for fiscal year 2003. The Hancock County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance oftaxes collected

-7-

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "C"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2003, for maintenance and operations amounted to $2,496,610 and for school bonds amounted to $17,965.

The tax millage rate levied for the 2002 tax year (calendar year) for the Hancock County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

13.63 mills

INVENTORIES

FOOD INVENTORIES On the basic financial statements, inventories of donated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

GENERAL OBLIGATION BONDS

The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government.

DEFICIT FUND BALANCES

Funds reporting a deficit fund balance at June 30, 2003, are as follows:

Fund Type/Fund Name

Deficit Balances

General Fund

$ 2,042,216

The School District plans to liquidate the deficit through an increase in the millage rate and through requests from respective grantors.

Note 3: DEPOSITS

COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not

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HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "C"

Note 3: DEPOSITS
been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. 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,
(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, 2003, the bank balances were $1,207,898. 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 School District or by the School District's agent in the School District's name.

-9-

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "C"

Note 3: DEPOSITS

Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District'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 School District's name.)

The School District's deposits are classified by risk category at June 30, 2003, as follows:

Risk Category

Bank Balance

1

$ 188,506

2

1,019,392

3

0

Total

$ 1,207,898

Note 4: NON-MONETARY TRANSACTIONS

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

Note 5: INTERFUND ASSETS AND LIABILITIES

Due to and due from other funds are recorded for interfund receivables and payables which arise from interfund transactions. Interfund balances at June 30, 2003, consisted of the following:

Due From Other Funds

Due To Other Funds

General Fund Debt Service Funds

$

18

$_ _ _~1~8

Note 6: RISK MANAGEMENT

$===-1=8 $======1==8

The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.

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HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "C"

Note 6: RISK MANAGEMENT

The School District has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions,job related illness or injuries to employees and acts of God. The School District 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 School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

The School District is self-insured with regard to unemployment compensation claims.

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

2002 2003

Beginning of Year Liability

Claims and Changes in Estimates

$

0 $

1 158 $

$

0 $

0 $

Claims Paid

End of Year Liability

1 158 $

0

0 $

0

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

Position Covered
Superintendent All Employees

Amount

$ 100,000

$

50,000

Note 7: LONG-TERM DEBT

GENERAL OBLIGATION DEBT OUTSTANDING The changes in Long-Term Debt during the fiscal year ended June 30, 2003, were as follows:

Balance July 1, 2002
Deductions Debt Retired
Balance June 30, 2003

Governmental Funds General
Obligation Bonds
$ 265,000
265,000
$===~0

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HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "C"

Note 8: ON-BEHALF PAYMENTS
The Board has recognized revenues and costs in the amount of $249,562 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies.
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $224,130
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 $25,432
Note 9: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
Note 10: 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 School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

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HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "C"

Note 10: RETIREMENT PLANS
Fiscal Year 2003 2002 2001

Percentage Contributed
100% 100% 100%

Required Contribution
$ 751,421 $ 691,785 $ 782,198

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HANCOCK COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30. 2003

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

ACTUAL AMOUNTS

$

2,425,096 $

2,425,096 $

2,496,610

7,565,667

7,565,667

8,825,076

2,070,449

2,070,449

3,091,306

137,996

10,000

10,000

11,604

15 000

15 000

340 818

$

12,086,212 $

12,086,212 $

14,903,410

$

8,246,734 $

8,246,734 $

9,357,717

479,129 389,045 348,680 1,168,120 844,934 268,441 987,488 934,805
1,700 110,057
50,197 95412

479,129 389,045 348,680 1,168,120 844,934 268,441 987,488 934,805
1,700 110,057
50,197 95 412

560,007 393,633 385,871 1,409,761 962,562 272,575 1,168,224 936,981
97,981 76,624 1,042,579 135 732

$

13,924,742 $

13,924,742 $

16,800,247

$

-1,838,530 $

-1,838,530 $

-1,896,837

$

1,165,000 $

1,165,000

-183 476

-183 476

$

981,524 $

981 524

$

-857,006 $

-857,006 $

-1,896,837

229,450

229,450

224,021

-1 523

-1 523

-127 366

$

-629,079 $

-629,079 $ ==-~1,~80;;,;:0~1,~82~

See notes to the basic financial statements.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2003

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture. U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program National School Lunch Program Summer Food Service Program for Children
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food and Nutrition Program Food Distribution Program (1)
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 Preschool Capacity Building Improvement
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Title I Comprehensive School Reform Demonstration Grant Grants to Local Educational Agencies School Improvement Title II Enhancing Education Through Technology Improving Teacher Quality Title IV Safe and Drug-Free Schools and Communities TitleV Innovative Education Program Strategies Title VI Rural and Low Income Schools Vocational Education - Basic Grants to States High School Program Basic Grant
Total U. S. Department of Education
Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program
- 16 -

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555 10.559

N/A NIA $ N/A
$

(2) 898,877
(2)
898,877

10.550

N/A
$

35 739 934 616

84.027 84.173 84.027

N/A $
N/A
N/A
$

233,680 7,809 2 050
243,539

84.332
. 84.010
. 84.010
84.318 84.367 84.186 84.298 84.358
84.048

N/A
N/A N/A N/A N/A N/A N/A N/A
N/A
$

76,453 639,483
810 3,357 1,886 3,190 16,468 5,190
45414 1,035,790

$

37,012

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2003

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Health and Human Services, U. S. Department of Direct Headstart Program Pass-Through From Georgia Department of Human Resources Child Care and Development Block Grant
Total U.S. Department of Health and Human Services

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 93.600 93.575

$

992,866

N/A

240,334

$ _ _ _1~,2_3_3~,2_00_

Total Federal Financial Assistance N/A = Not Available

$ ===3=,2=4=0=,6=18=

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 School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($204,464) and for the Summer Food Service Program for Children ($19,041) were not maintained separately and are included in the 2003 National School Lunch Program.

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

The School District did not provide Federal Assistance to any Subrecipient.

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the 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 basic financial statements.

See notes to the basic financial statements.

- 17 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2003

AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV Gifted Student - Category VI Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Principal Supplements Vocational Supervisors Mid-term Adjustment Hold-Harmless Education Equalization Funding Grant Food Services Austerity Reduction Agriculture Construction Related Equipment Other State Programs 4-8 Statewide After School Program K-3 Statewide Reading Program Children's Intervention School Services-Medicaid Health Insurance Preschool Handicapped Program
Office of Treasury and Fiscal Services Public School Employees Retirement
OTHER Community Affairs, Georgia Department of Local Assistance Grant

See notes to the basic financial statements.

- 19 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

57,758

473,320 22,805
1,197,194 129,200 597,834 103,084
1,053,792 790,141 435,796
6,843 313,858 494,809 107,867
31,610 50,383 82,675 163,437 57,004 29,593
345,770 357,542 437,549
321,615 77,311 19,000 50,243 6,407 14,376 6,212
596,694 58,747
-181,380 175,000
17,299 30,186 10,947 224,130 28,493
25,432
4 500
$ ======8=,8=25='=07=6=

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF A{JDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
August 10, 2004

Honorable Sonny Perdue, 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 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 of each major fund and the aggregate remaining fund information of Hancock County Board of Education as of and for the year ended June 30, 2003, which collectively comprise Hancock County Board of Education's basic financial statements and have issued our report thereon dated August 10, 2004. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the basic financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether Hancock County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.

2003-34YB-40

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 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 ourjudgment, could adversely affect Hancock County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule of Findings and Questioned Costs as items FS-6701-03-02, FS-6701-03-03, FS-6701-03-04, FS-6701-03-05, FS-6701-03-06, FS-6701-03-07, FS-6701-03-09, FS-6701-03-10, FS-6701-03-11, FS-6701-03-12 and FS-6701-03-13.
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, ofthe reportable conditions described above, we consider items FS-6701-0302, FS-6701-03-04, FS-6701-03-11 and FS-6701-03-13 to be material weaknesses.
This report is intended solely for the information and use of the 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, ....
Le)~

RWH:gp 2003-34YB-40

State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
August 10, 2004

Honorable Sonny Perdue, 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 ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-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 Comp/iance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2003. Hancock County Board ofEducation's major Federal programs are identified in the Summary of Auditor's Results Section of 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 auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance 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.
2003SA-65

As described in item FA-6701-03-01 in the accompanying Schedule of Findings and Questioned Costs, Hancock County Board ofEducation did not comply with requirements regarding Activities Allowed or Unallowed and Allowable Costs/Cost Principles that are applicable to its Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies program. Compliance with such requirements is necessary, in our opinion, for Hancock County Board of Education to comply with requirements applicable to that program.
In our opinion, except for the noncompliance described in the preceding paragraph, 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, 2003.
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 ofthe internal control over compliance that, in our judgment, could adversely affect the Hancock County Board of Education's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FA-6701-03-01, FA-6701-03-02, FA-6701-03-03 and FA-6701-0304.
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 of risk that noncompliance with the 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-6701-03-01 and FA-6701-03-04 to be material weaknesses.
2003SA-65

This report is intended solely for the information and use of the 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:gp 2003SA-65

State Auditor

SECTION III 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, 2003

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6701-00-04 FS-6701-01-01 FS-6701-01-02 FS-6701-01-03 FS-6701-01-04 FS-6701-01-05 FS-6701-01-06 FS-6701-01-08 FS-6701-01-09 FS-6701-02-01 FS-6701-02-02 FS-6701-02-03 FS-6701-02-04 FS-6701-02-05 FS-6701-02-06 FS-6701-02-07 FS-6701-02-08 FS-6701-02-09 FS-6701-02-10 FS-6701-02-11 FS-6701-02-12

Partially Resolved - See Corrective Action/Responses Further Action Not Warranted Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Further Action Not Warranted Unresolved - See Corrective Action/Responses Further Action Not Warranted Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

EXPENDITURES/LIABILITIES/DISBURSEMENTS Overpayment of Board Member Per Diem Amount: $4,100.00 Finding Control Number: FS-6701-00-04

Several of the Board members have reimbursed the School Board for the overpayments. Some filed Chapter 13.

EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Expenditures/Inadequate Documentation Finding Control Number: FS-6701-01-02

A new voucher package has been designed to eliminate this finding, which includes package slips, purchase orders, invoices and getting approval from the Finance Department prior to signing off on purchase orders.

- 1-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
EXPENDITURES/LIABILITIES/DISBURSEMENTS Overpayment of Board Member Per Diem Amount: $15,650.00 Finding Control Number: FS-6701-01-03
Several ofthe Board members have reimbursed the School District for the overpayments. Some filed Chapter 13.
EMPLOYEE COMPENSATION Payroll Sample Exceptions Finding Control Number: FS-6701-01-04
The personnel department has been restructured and all deficiencies will be corrected.
GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number: FS-6701-01-05
Internal control has been established to ensure that no journal entry adjusting fund balance is made without proper documentation and review prior to recording to the general ledger.
GENERAL LEDGER Failure to Refund Unexpended Lottery Funds Amount: $2,907.70 Finding Control Number: FS-6701-01-08
A corrected project completion report supported by the accounting records will be submitted to the Bright From the Start: Georgia Department of Early Care and Leaming along with a check for $2,907.70 to repay the unexpended lottery funds.
BOARD MEETINGS Board Meeting Minutes Exceptions Nonmaterial Noncompliance Finding Control Number: FS-6701-02-01
Hancock County Board ofEducation hired a Superintendent as ofJuly 1, 2004. The Board minutes now will be recorded and taped; and will be provided publicly. Minutes will be approved in a timely manner.
-2-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
CASH AND CASH EQUIVALENTS Inadequate Cash Management Procedures Finding Control Number: FS-6701-02-02
Hancock County Board of Education hired a Superintendent as of July 1, 2004. Hancock County Board of Education terminated its Director of Finance in March 2004. Hancock County Board of Education is presently taking application for the Director of Finance position. The current staff has reconciled and are reconciling the bank statements for General Fund and payroll.
BUDGET PREPARATION EXECUTION REVENUES/RECEIVABLE/RECEIPTS Failure to Request Necessary Grand Funds Amount: $497,707.81 Finding Control Number: FS-6701-02-03
Hancock County Board ofEducation terminated its Director of Finance as ofMarch 2004. The Hancock County Board of Education is presently taking application for the Director of Finance position.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Expenditures/Inadequate Documentation Reportable Condition Nonmaterial Noncompliance Amount: $1,949.50 Finding Control Number: FS-6701-02-04
Hancock County Board of Education hired a Superintendent as of July 1, 2004. Hancock County Board of Education terminated its Director of Finance in March 2004. Hancock County Board of Education is presently taking application for the Director of Finance position. The current staff has reconciled and are reconciling the bank statements for General Fund and payroll.
-3-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
EXPENDITURES/LIABILITIES/DISBURSEMENTS Overpayment of Board Member Per Diem Amount: $1,250.00 Finding Control Number: FS-6701-02-05
Hancock County Board of Education is seeking, legal actions in the efforts to recover the funds.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Theft of Funds Amount: $63,228.01 Finding Control Number: FS-6701-02-06
Hancock County Board ofEducation hired a Superintendent as of July 1, 2004. Hancock County Board of Education terminated its Director of Finance in March 2004. Hancock County Board of Education is presently taking application for the Director of Finance position. The current staff has reconciled and are reconciling the bank statements for General Fund and payroll. Legal matter is being handled by Hancock County Board of Education attorney.
EMPLOYEE COMPENSATION Payroll Sample Exceptions Finding Control Number: FS-6701-02-07
Hancock County Board of Education hired a Superintendent as ofJuly 1, 2004. Hancock County Board of Education terminated its Director of Finance in March 2004. Hancock County Board of Education is presently taking application for the Director of Finance position. The current staff has reconciled and are reconciling the bank statements for General Fund and payroll.
GENERAL LEDGER Detail Listing of Salary and Travel Not Reconciled to the General Ledger Finding Control Number: FS-6701-02-08
Hancock County Board of Education hired a Superintendent as ofJuly 1, 2004. Hancock County Board of Education terminated its Director of Finance in March 2004. Hancock County Board of Education is presently taking application for the Director of Finance position. The current staff has reconciled and are reconciling the bank statements for General Fund and payroll.
-4-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
GENERAL LEDGER Failure to Refund Unexpended Lottery Funds Amount: $14,056.23 Finding Control Number: FS-6701-02-09
Hancock County Board of Education hired a Superintendent as of July 1, 2004. Hancock County Board of Education terminated its Director of Finance in March 2004. Hancock County Board of Education is presently taking application for the Director of Finance position. The current staff has reconciled and are reconciling the bank statements for General Fund and payroll.
GENERAL LEDGER Failure to Transmit DE046 Financial Report Timely Finding Control Number: FS-6701-02-10
Hancock County Board of Education terminated its Director of Finance in March 2004.
GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number: FS-6701-02-11
Hancock County Board of Education hired a Superintendent as ofJuly 1, 2004. Hancock County Board of Education terminated its Director of Finance in March 2004. Hancock County Board of Education is presently taking application for the Director of Finance position. The current staff has reconciled and are reconciling the bank statements for General Fund and payroll.
GENERAL LEDGER Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6701-02-12
Due to limited staff.
-5-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-6701-01-01 FA-6701-01-02 FA-6701-01-03 FA-6701-02-01 FA-6701-02-02 FA-6701-02-03 FA-6701-02-04

Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented

CORRECTIVE ACTION/RESPONSES

REPORTING Unexpended Grant Balance Amount: $5,437.79 Finding Control Number: FA-6701-01-03

The U. S. Department of Health and Human Services will be contacted as to the disposition ofthe unexpended grant balance. It has been the policy ofU. S. Department of Health and Human Services to reduce the current year allotment to resolve any unexpended grant funds.

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable Expenditures Questioned Costs: $92,139.63 Finding Control Number: FA-6701-02-01

Hancock County Board of Education hired a Superintendent as ofJuly 1, 2004. Hancock County Board of Education terminated its Director of Finance in March 2004. Hancock County Board of Education is presently taking application for the Director of Finance position. The current staff has reconciled and are reconciling the bank statements for General Fund and payroll.

-6-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES REPORTING Failure to Comply With Single Audit Report Distribution Requirements Finding Control Number: FA-6701-02-03 Hancock County Board of Education hired a Superintendent as ofJuly 1, 2004. Hancock County Board of Education terminated its Director of Finance in March 2004. Hancock County Board of Education is presently taking application for the Director of Finance position. The current staff has reconciled and are reconciling the bank statements for General Fund and payroll.
-7-

SECTION IV FINDINGS AND QUESTIONED COSTS

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Hancock County Board ofEducation's financial statements was adverse due to material 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 Employee Compensation General Ledger

Expenditures/Liabilities/Disbursements Revenues/Receivables/Receipts Capital Assets

All of the reportable conditions described above, except for Employee Compensation are considered to be material weaknesses.

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 ofEducation disclosed reportable conditions in internal control over major programs for the following compliance requirements.

Activities Allowed or Unallowed Allowable Costs/Cost Principles

Period of Availability of Federal Funds Cash Management

All ofthe reportable conditions described above, except Cash Management are considered to be material weaknesses.

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 qualified.

6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The Hancock County Board of Education'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.

- 1-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
I SUMMARY OF AUDITOR'S RESULTS
7. Major Programs Federal awards audited as major programs are as follows: 84.010 Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies 84.010 Elementary and Secondary Education Act - Title I - School Improvement 93.600 Project Head Start
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.
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
BOARD MEETINGS Board Meeting Minutes Exceptions Nonmaterial Noncompliance Repeated From Prior Year Finding Control Number: FS-6701-03-01
An examination ofthe minutes ofthe regular and called meetings ofthe Hancock County Board of Education from March 11, 2004 through July 22, 2004 revealed the following exceptions:
Minutes from eight meetings could not be provided.
Minutes for meetings for the months of March 11, 2004 through July 22, 2004 were not prepared nor approved in a timely manner.
Minutes did not contain the signatures necessary to document approved copies ofofficial board minutes.
Official Code of Georgia Annotated Section 20-2-57(a) states in part:
"The superintendent or the board's nominee shall record in a book, to be provided for the purpose, all official proceedings ofthe local board, which shall be a public record open to the inspection ofany person interested therein; and all such proceedings, when so recorded, shall be signed by the chairperson and countersigned by the secretary."
-2-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
BOARD MEETINGS Board Meeting Minutes Exceptions Nonmaterial Noncompliance Repeated From Prior Year Finding Control Number: FS-6701-03-01
These conditions were a result of the School District's apparent disregard for their fiduciary duty to the citizens of Hancock County. The current School District should implement procedures to ensure that all minutes are properly recorded, documented and executed in a timely manner.
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS Inadequate Cash Management Procedures Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6701-03-02
An examination of the internal control procedures revealed that the School District did not provide for adequate cash management procedures as follows:
Bank reconciliations were not prepared.
Deposits included on the bank statements, including property taxes of $11,662 for the General Fund and $60,713 for the Debt Service Fund, were not recorded on the general ledger.
Lists of outstanding and voided checks were unavailable.
A bank account opened during the year under review was not set up in the general ledger.
These conditions were a result of management's decision to limit the number of administrative staff made responsible for accounting functions. The School District should review the accounting procedures in place, design procedures that will enhance cash management procedures relative to the above control category, and implement those procedures to strengthen the internal control over accounting functions.
-3 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
BUDGET PREPARATION EXECUTION Deficit Fund Balance Reportable Condition Finding Control Number: FS-6701-03-03
At June 30, 2003, the General Fund of the Hancock County Board of Education reported a deficit fund balance in the amount of$2,042,216 which is considered to be an irregularity in the accordance with O.C.G.A. 20-2-67. This condition occurred because management approved expenditures in excess of funds available in the General Fund. The School District should establish appropriate policies and procedures designed to ensure that in future periods the School District does not report a deficit.
REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Report School Activity Accounts Reportable Condition - Material Weakness Finding Control Number: FS-6701-03-04
The Hancock County Board ofEducation did not report assets, liabilities and fund balances, nor the revenues, expenses/expenditures and changes in net assets/fund balances of the school activity accounts which are maintained at the individual schools within its basic financial statements. This omission of material amounts, by management, is considered to be a financial irregularity in accordance with O.C.G.A 20-2-67 and this condition results in the basic financial statements ofthe School District being incomplete and not in accordance with generally accepted accounting principles. The School District should establish appropriate policies and procedures designed to ensure that all financial activity of the various school activity accounts are reported within its basic financial statements as required.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Documentation Reportable Condition Repeated From Prior Year Finding Control Number: FS-6701-03-05
An examination offifty-one expenditure vouchers was performed to test the validity and accuracy of the expenditure transactions. The following deficiencies were noted:
Eleven vouchers contained no indication of administrative approval prior to payment.
Seven expenditure vouchers could not be located.
-4 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Documentation Reportable Condition Repeated From Prior Year Finding Control Number: FS-6701-03-05
Five vouchers did not contain an original invoice.
Two vouchers were charged to the wrong account on the general ledger.
These conditions were a result of management's failure to adequately monitor and implement procedures to ensure that all expenditure voucher packages are reviewed for accuracy, proper documentation and correctness of classification prior to payment and recording of expenditures in the financial records. Appropriate action should be taken by the School District to ensure that voucher packages are properly prepared, reviewed and retained.
EMPLOYEE COMPENSATION Inaccurate Reporting of Senior Management Compensation Reportable Condition Amount: $7,800 Finding Control Number: FS-6701-03-06
Our examination of compensation paid to senior management of the School District revealed a significant error in the amount reported as salary to the Department of Audits and Accounts. The School District failed to include $7,800 paid to the superintendent in addition to the contract between the superintendent and School District. This overpayment is also part of those noted in Finding Control Number FS-6701-03-07.
The School District reported a salary of$150,000 for Superintendent Melvyn Williams in its salary and travel report for the period ended June 30, 3003. The actual compensation for Dr. Williams totaled $157,800, which includes the $7,800 referenced above.
The School District should implement procedures to ensure that all employee compensation is included in the salary total reported to the Department of Audits and Accounts.
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION Payroll Sample Exceptions Reportable Condition Amount: $24,620 Repeated From Prior Year Finding Control Number: FS-6701-03-07 A sample of forty-three employee payroll records and personnel files was performed to test the validity and accuracy of the payroll transactions. The following deficiencies were noted:
The superintendent was overpaid salary in the amount of $7,800. The School District was unable to provide official School District minutes formally approving this increase over the approved contract between the superintendent and the School District.
A salary overpayment in the amount of$902 was made to one employee which resulted from the School District's failure to deduct excess leave taken.
A salary overpayment in the amount of$13,431 was made to one employee. The School District was unable to provide documentation to support the payment made in excess of the employee's approved salary contract.
A salary overpayment in the amount of $2,487 was due to the School District using the incorrect base pay rate in calculating the employee's salary.
The personnel files for sixteen employees contained inadequate documentation to support the employee's rate of pay. These included a total of $191,029 in salary payments.
These conditions were a result of management's failure to adequately monitor and implement procedures to ensure that payments made to employees are based on an approved rate of pay that is adequately documented in the employee's personnel file. Internal controls should be implemented by the School District to ensure that personnel files are properly maintained and all payments to employees are based on an approved rate ofpay. The School Board should review these matters and determine if reimbursement for deposit to the School District's General Fund is appropriate.
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Detail Listing of Salary and Travel Not Reconciled to the General Ledger Nonmaterial Noncompliance Repeated From Prior Year Finding Control Number: FS-6701-03-08

The detailed listing of salary and travel payments made to employees as submitted to the Georgia Department of Audits and Accounts by the School District was not reconciled to the general ledger as presented for audit. Unidentifiable variances of $196,560 for salaries and $16,795 for travel remained between the detail and the general ledger.

This condition occurred because management did not ensure that amounts submitted to the Georgia Department of Audits were reconciled to the School District's general ledger. Administrative procedures should be implemented to ensure that the detailed listing of salaries and travel is reconciled to the School District's general ledger prior to submission to the Georgia Department of Audits and Accounts.

GENERAL LEDGER Failure to Refund Unexpended Funds Reportable Condition Nonmaterial Noncompliance Amount: $71,212 Repeated From Prior Year Finding Control Number: FS-6701-03-09

An examination of the School District's compliance with regulations for the Lottery and Federal Programs revealed that the School District failed to return unearned grant funds. An unearned balance remained at June 30, 2003 per the School District's accounting records as follows:

Lottery Program Pre-Kindergarten Program
Federal Programs Individuals with Disabilities Education Act Part B - Special Education Flow Through (CFDA 84.027) Elementary and Secondary Education Act Title I - Grants to Local Educational Agencies (CFDA 84.010) Vocational Education - Basic Grants to States (CFDA 84.048)

$ 7,138
$ 4,106 $55,511 $ 4,457

This deficiency occurred because personnel failed to accurately record expenditures on the completion reports. Appropriate procedures should be implemented to ensure that completion reports are submitted with accurate data. The School District should submit corrected completion

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Failure to Refund Unexpended Funds Reportable Condition Nonmaterial Noncompliance Amount: $71,212 Repeated From Prior Year Finding Control Number: FS-6701-03-09
reports with documentation supporting expenditures and return any unearned Pre-Kindergarten Program funds to the Bright From the Start: Georgia Department of Early Care and Leaming and any unearned Federal grants to the Georgia Department of Education.
GENERAL LEDGER Failure to Transmit DE046 Financial Report Timely Reportable Condition Repeated From Prior Year Finding Control Number: FS-6701-03-10
The Hancock County Board of Education failed to transmit their DE046 Financial Report to the Georgia Department of Education in a timely manner. Consequently, the Georgia Department of Audits and Accounts was unable to prepare the Quality Basic Education Program Schedule of Allotments and Expenditures by program that is normally included as additional financial information to the basic financial statements.
This condition was the result of management's failure to adhere to procedures to ensure that the accounting records were closed in a timely manner. Internal controls should be implemented by the School District to ensure that the accounting records are closed soon enough after the end of the fiscal year that the DE046 can be submitted timely and additional financial information can be prepared.
GENERAL LEDGER Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-6701-03-11
An examination ofthe School District's internal control procedures revealed that the School District did not provide for adequate accounting procedures as follows:
Journal entry documentation and descriptions could not be provided by the School District.
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-6701-03-11
Journal entries were not reviewed and approved by someone independent ofthe general ledger journal entry function.
The School District failed to make a journal entry to reflect the transfer of$327,963 from the Debt Service Fund to the General Fund. Consequently, this transfer is not reported in the financial statements.
These conditions were a result ofmanagement's decision to limit the number ofadministrative staff made responsible for accounting functions. Internal controls should be implemented by the School District to ensure that all entries are posted, properly documented and reviewed prior to recording to the general ledger.
GENERAL LEDGER Inadequate Control Over Subsidiary Ledgers Reportable Condition Finding Control Number: FS-6701-03-12
Our examination ofthe accounting records ofthe Hancock County Board ofEducation revealed that the School District did not provide for adequate general ledger procedures as follows:
There was a variance of $296,094 between the cash subsidiary reports and the general ledger.
The accounts payable listing varied from the general ledger by $922.
The School District was unable to provide a reconciliation of these general ledger balances to the subsidiary reports.
The School District's failure to ensure that subsidiary records are reconciled with the general ledger causes internal reports to management, generated from the subsidiary reports, to be inaccurate and misleading. This condition can lead to erroneous decisions by the School District management and result in inaccurate reporting of financial information.
This condition was the result of management's decision to limit the number of administrative staff made responsible for accounting functions. Internal controls should be implemented by the School District to ensure that all subsidiary reports are properly reconciled to the general ledger.
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CAPITAL ASSETS Failure to Maintain Capital Assets and Report Depreciation Cost Reportable Condition - Material Weakness Finding Control Number: FS-6701-03-13
The Hancock County Board of Education did not report district-wide Capital Assets records and depreciation cost within its basic financial statements at June 30, 2003 as required by generally accepted accounting principles. This omission ofmaterial amounts, by management, is considered to be a financial irregularity in accordance with O.C.G.A 20-2-67 and this condition results in the basic financial statements of the School District being incomplete and not in accordance with generally accepted accounting principles. The School District should establish appropriate policies and procedures designed to ensure that Capital Assets and depreciation cost are reported within its basic financial statements as required.
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable Expenditures Reportable Condition - Material Weakness Material Noncompliance U. S. Department of Education Through Georgia Department of Education Amount: $91,168 Repeated From Prior Year Finding Control Number: FA-6701-03-01
During the year in review, the School District expended $91,168 in Elementary and Secondary Education Act-Title I Program funds (CFDA No. 84.010) to support costs that were not related to the Title I program. Ofthis amount, $90,323 was incurred for personnel service costs and $845 for other costs. This occurred because accounting policies and procedures did not exist to properly confirm and document that expenditures charged to the Title I program were for allowable program purposes. These questioned costs represent 14% ofthe $639,483 in Federal funding made available to the Title I program in fiscal year 2003.
Provisions ofOMB Circular A-87, Cost Principles for Determining Allowable Costs, require that personnel who work solely on a Federal program confirm their activity through a certification that is to be prepared at least semi-annually. For those personnel who work on more than one Federal program or other activities, a monthly personnel activity report or similar documentation is required to confirm their work. Such documentation reflects after-the-fact certification oftheir actual activity and serves as a basis for the compensation that may be charged to a Federal program. The School
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable Expenditures Reportable Condition - Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education Amount: $91,168 Repeated From Prior Year Finding Control Number: FA-6701-03-01
District had no procedures in place to conform to these requirements and thus no documentation existed to verify activities of Title I personnel.
Our review ofpersonnel costs charged to the Title I program disclosed$ 85,698 in salaries of seven employees who had no involvement with the Title I program. It was further noted that a portion of two other employee's salary amounting to $4,625 was charged to the Title I program although the Title I Director could not verify that the employees worked in a Title I activity. One of these employees held administrative positions in the central office. Our review of non-personal service costs also disclosed three instances in which $845 in Title I funds were either (1) used to support non-Title I costs, or (2) the School District did not have documentation to support the expenditure.
The School District should implement procedures to ensure that all personnel salary costs charged to the Title I program are for only those personnel whose time has been confirmed as expended on Title I program activities. Measures should be initiated to include the Title I Director in the process of approving expenditures that are related and allowable to the Title I program. The School District should refund $91,168 to the Georgia Department of Education for the unallowable expenditures.
CASH MANAGEMENT Excessive Cash Balances Failure to Refund Interest Reportable Condition U.S. Department of Education Through Georgia Department of Education Amount: $1,153 Finding Control Number: FA-6701-03-02
A review of cash management procedures for the Elementary and Secondary Education Act - Title I Program funds (CFDA No. 84.010) disclosed that cash draws were made in advance of immediate cash needs, resulting in the accumulation of excessive cash balances. The Title I program maintained excessive ending monthly cash balances for nine months of the year under review. In
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CASH MANAGEMENT Excessive Cash Balances Failure to Refund Interest Reportable Condition U. S. Department of Education Through Georgia Department of Education Amount: $1,153 Finding Control Number: FA-6701-03-02
addition, the School District earned $1,153 in interest revenue which was not refunded to the Georgia Department of Education.
This condition occurred because the School District did not have procedures in place to accurately forecast cash needs on the required "Contract Budget and Monthly Cumulative Contract Expenditure Report". Procedures should be implemented to accurately forecast cash needs based on actual expenditures incurred in order to minimize or eliminate the time elapsing between the transfer of funds from the Georgia Department of Education and the disbursement of such funds by the School District. The School District should refund $1,153 to the Georgia Department of Education for unallowable interest proceeds.
CASH MANAGEMENT Failure to Refund Interest Reportable Condition U. S. Department of Health and Human Services Amount: $290 Finding Control Number: FA-6701-03-03
A review of the cash management procedures for the Head Start program (CFDA No. 93.600) disclosed that interest earned in the amount of $290 was not refunded to the U. S. Department of Health and Human Services.
This condition was the result ofmanagement's failure to implement internal controls for monitoring compliance with Federal guidelines. The School District should review the Federal compliance procedures in place, design procedures which would enhance monitoring compliance with Federal guidelines and proper internal controls relative to the above Federal compliance requirement and implement those procedures to strengthen the internal control over Federal programs.
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS PERIOD OF AVAILABILITY Expenditures After Grant Period Reportable Condition - Material Weakness U.S. Department of Health and Human Services Amount: $8,391 Finding Control Number: FA-6701-03-04 A review of the Head Start program (CFDA No. 93.600) revealed that there were expenditures charged to the program after the end of the grant period. The approved grant period for the Head Start program is June 1, 2002 through May 31, 2003. There were four expenditures noted totaling $8,391 that were subsequent to the approved grant period. The School District should contact the U.S. Department of Health and Human Services to obtain instructions regarding the resolution of this unexpended grant balance.
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