Hancock County Board of Education, Sparta, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2006

HANCOCK COUNTY BOARD OF EDUCATION
SPARTA, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006
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

1

B

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

2

C

NOTES TO THE BASIC FINANCIAL STATEMENTS

3

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

11

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

12

3 SCHEDULE OF STATE REVENUE

14

4 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

15

HANCOCK COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS 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 ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
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
SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 6, 2007

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe 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, 2006, which collectively comprise the Board's basic financial statements as listed in the table ofcontents. 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 opinions.
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 ofAmerica require presentation ofdistrict-wide financial statements. The amounts that would be reported in district-wide financial statements for the Hancock County Board of Education's governmental activities are not reasonably determinable.
2006ARL-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, 2006, or the changes in financial position for the year then ended.
In accordance with Government Auditing Standards, we have also issued our report dated March 6, 2007, 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 grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 11, 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 through 4, 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 basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the 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 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,

RWH:as 2006ARL-22

Ru sell W. Hinton, CPA, CGFM State Auditor

HANCOCK COUNTY BOARD OF EDUCATION

HANCOCK COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2006

EXHIBIT"A"

ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
State Government Federal Government Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries Payable Short-Term Debt Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Bus Replacement Continuation of Federal Programs Capital Projects
Unreserved Undesignated Reported in: General Fund (Deficit)
Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$

968,850 $

3,064,413 $

796,993 303,458
-66

4,033,263
796,993 303,458
-66

$

2,069,235 $

3,064,413 $ ======5="'1=3=31=,64=8=

$

501,642

1,306,736

400,000

399,615

$ 2,607,993

$

501,642

1,306,736

400,000

399,615

$

2,607,993

$

171,820

$

111,719

$ 3,064,413

-822,297

$

-538,758 $ 3,064,413 $

171,820 111,719 3,064,413
-822,297 2,525,655

$

2,069,235 $

3,064.413 $ ===5=,1,..3.3..,..,64=8=

The notes to the basic financial statements are an integral part of this statement. - 1-

HANCOCK COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2006

EXHIBIT"B"

REVENUES
Property Taxes Sales 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
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Proceeds of Long-Term Capital Related Debt
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$ 3,820,394 $
6,568,349 3,709,776
38,885 2,074 199,358
$ 14,338,836 $

$ 126,560
35,253 161,813 $

3,820,394 126,560
6,568,349 3,709,776
38,885 37,327 199,358
14,500,649

$ 7,164,807 $
744,910 318,199 184,110 1,182,085 659,136 180,412 883,220 911,031 42,423 150,595 768 547
$ 13,189,475 $
$ 1,149,361 $

0 $
0 $ 161,813 $

7,164,807
744,910 318,199 184,110 1,182,085 659,136 180,412 883,220 911,031 42,423 150,595 768 547
13,189,475
1,311,174

2,902,600

$ 1,149,361 $ 3,064,413 $

-1,707,396

0

19 277

2,902,600 4,213,774 -1,707,396
19277

$ -538,758 $ 3,064,413 $ ====2=,5=2=5'=65=5=

The notes to the basic financial statements are an integral part of this statement. -2-

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

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 ofthe 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.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) and Bond Proceeds to be used for the acquisition, construction or renovation of major capital facilities.
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, 2006

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, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral long-term liabilities 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.
CASH AND CASH EQUIVALENTS
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 School District 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.

-4-

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "C"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PROPERTY TAXES

The Hancock County Board of Commissioners fixed the property tax levy for the 2005 tax digest year (calendar year) on October 12, 2005 (levy date). Taxes were due on December 12, 2005 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2005 tax digest are reported as revenue in the governmental funds for fiscal year 2006. The Hancock County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2006, for maintenance and operations amounted to $3,617,130 and for school bonds amounted to $12,199.

The tax millage rate levied for the 2005 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

14.9 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $126,560 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

INVENTORIES

FOOD INVENTORIES On the basic financial statements, inventories ofdonated 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.

DEFICIT FUND BALANCES

The fund reporting a deficit fund balance at June 30, 2006, is as follows:

Fund Type/Fund Name

Deficit Balance

General Fund

$ 822,297

-5-

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"C"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District plans to eradicate the deficit through a reduction in force, through requests from respective grantors, a reduction in spending, the refund of Federal funds, which are owed to the School District and an increase in the millage rate.
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 ofmoney which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa 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.
Acceptable security for deposits consists of any one of or any combination ofthe following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates 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 ofthe State of Georgia,
(5) Bonds of any public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws ofthe State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest 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.

-6-

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"C"

Note 3: DEPOSITS

CATEGORIZATION OF DEPOSITS At June 30, 2006, the bank balances were $4,109,520. The amounts of the total bank balances are classified into four categories of custodial credit risk:

Category 1 - Cash that is insured (e.g., Federal Deposit Insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name.
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 - Cash collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.
Category 4 - Uncollateralized.

The School District's deposits are classified by custodial credit risk category at June 30, 2006, as follows:

Custodial Credit Risk Category

Bank Balance

1

$ 200,000

2

985,211

3

2,924,309

4

0

Total

$ 4,109.520

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: RISK MANAGEMENT

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.

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 ofGod. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.

-7-

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"C"

Note 5: RISK MANAGEMENT

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenditures and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated.

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

2005 2006

Beginning ofYear Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

$

10,532 $

35,973 $

46,505 $

0

$

0 $

37,630 $

32,882 $

4 748

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

Position Covered

Amount

Superintendent All Employees

$ 100,000

$

50,000

Note 6: SHORT-TERM DEBT

The School District obtains temporary loans in advance ofproperty tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution ofthe State ofGeorgia limits the aggregate amount ofshort-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred.

Short-term debt activity for the fiscal year is as follows:

Beginning Balance

Issued

Redeemed

Ending Balance

Temporary Loans

$ 1,200.000 $ 1.100.000 $ 1,900.000 $ 400,000

Note 7: 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.

-8-

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"C"

Note 7: SIGNIFICANT CONTINGENT LIABILITIES

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 8: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% oftheir 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:

Fiscal Year

Percentage Contributed

Required Contribution

2006 2005 2004

100% 100% 100%

$ 631,621 $ 683,202 $ 691,114

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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, 2006

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
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING USES
Other Uses
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

ACTUAL AMOUNTS

$

3,860,041 $

3,860,041 $

3,820,394

6,441,673

6,507,861

6,568,349

2,108,864

3,738,487

3,709,776

32,950

32,950

38,885

300

300

2,074

119 000

119 000

199 358

$

12,562,828 $

14,258,639 $

14,338,836

$

7,161,833 $

7,127,419 $

7,164,807

782,148 166,837 204,478 1,223,808 659,060 184,174 880,738 1,018,597
83,902 851 964

804,929 326,634 204,329 1,211,406 636,700 182,845 865,139 982,272
109,923 862 671

744,910 318,199 184,110 1,182,085 659,136 180,412 883,220 911,031
42,423 150,595 768 547

$

13,217,539 $

13,314,267 $

13,189,475

$

-654,711 $

944,372 $

1,149,361

-505,202

-505,202

$

-1,159,913 $

439,170 $

1,149,361

-1,064,551

-1,064,551

-1,707,396

-1 038 971

-1 038 971

19277

Fund Balances - Ending

$

-3,263,435 $

-1,664,352 $===-5=3=8==7=58=

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

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, 2006

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1)
Total U.S. Department of Agriculture
Corporation for National and Community Service Pass-Through From Georgia Department of Education Learn and Serve America School and Community Based Programs
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Education for Homeless Children and Youth Enhancing Education Through Technology Program Hurricane Education Recovery Improving Teacher Quality State Grants Rural Education Safe and Drug-Free Schools and Communities State Grants for Innovative Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States Pass-Through From Oconee Regional Educational Service Agency Advanced Placement Grant
Total U.S. Department of Education
Health and Human Services, U. S. Department of Direct Head Start Pass-Through From Georgia Department of Human Resources Temporary Assistance for Needy Families
Total U.S. Department of Health and Human Services

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

. 10.553 10.555

NIA

N/A

$

$

(2) 614 983
614,983

10.550

N/A
$

40 943 655,926

94.004

N/A $

12 511

84.027 84.173

NIA $ NIA
$

274,324 1 970
276,294

84.196 84.318 84.938 84.367 84.358 84.186
. 84.298 84.010 84.048
84.330
. 93.600
93.558

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

9,144 4,023 (3) 157,288 33,236 4,060 26,791 708,288 7,761
53284
1,280,169

$
N/A
$

1,259,995 23 776
1,283,771

- 12 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2006

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

$ _ _ _1-'-"'0'--4=2"'--96~

Total Federal Financial Assistance
N/A = Not Available

$ ===3=,3=3=6e!=,6=73=

Notes to the Schedule of Expenditures of Federal Awards

(1) The amount shown for the Food Donation 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 ($211,201) were not maintained separately and are included in the 2006 National School Lunch Program.
(3) Funds earned on the Hurricane Education Recovery program, in the amount of $8,956, do not require reporting of expenditures.

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 fund financial statements.

See notes to the basic financial statements.

- 13 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2006
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 CategoryV 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 Vocational Education Austerity Reduction Other State Programs Limited School Choice Program Preschool Handicapped Program

See notes to the basic financial statements.

- 14 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

96,529

347,760 17,801
844,686 112,903 462,988 54,210 869,798 751,876 224,614
5,190 217,456 393,377 249,427
63,229 34,535 31,240 66,144 128,466 42,356 26,407
303,316 325,910 366,593
332,079 49,758 20,000 44,757 5,019 4,546 136,424
229,487 47,602 3,126
-377,541
21,545 14 736
$ ====6!=,56=8;,.,,3=4=9

HANCOCK COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2006

SCHEDULE "4"

DESCRIPTION

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION {1l {2l

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

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 Grades (6-8) 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

420,758 $ 30,169
1,006,747 137,488 556,677
71,292
1,036,454 893,883 267,735
1,083,157
43,260 38,292 79205

265,198 $ 39,920 774,796 92,026 487,162
200,990
1,018,604 944,121 310,369
94,147 500,757 288,177
12,613
21,157 127,977

11,154 $ 17,938 83,286
-430 65,509 91,470 39,128 36,078 -7,356
435

276,352 39,920 792,734 92,026
570,448
200,990 -430
1,084,113 1,035,591
349,497
130,225 493,401 288,177
12,613
21,157 128,412

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

5,665,117 $ 5,178,014 $

337,212 $

5,515,226

Media Center Program Staff and Professional Development

153,740 31577

179,020

5,090 1 946

184,110 1 946

TOTAL QBE FORMULA FUNDS

$

5,850.434 $ 5,357,034 $

344,248 $=~5=1=,7...,01~,2=8_2

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State budget austerity reduction.

See notes to the basic financial statements.

-15 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Russell W. Hinton
STATE AUDITOR
(404) 858-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 6, 2007

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 INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS 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, 2006, which collectively comprise Hancock County Board of Education's basic financial statements and have issued our report thereon dated March 6, 2007. 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.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Hancock County Board ofEducation's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to provide an opinion 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 of the internal control over financial reporting that, in our judgment, could adversely affect Hancock County Board of Education's ability to record, process, summarize and report

2006YB-60

financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-6701-06-01, FS-6701-06-02, FS-6701-06-03, FS-6701-06-04, FS-6701-06-06, FS-6701-06-07, FS-6701-06-08, FS-6701-06-09, FS-6701-06-10, FS-6701-06-11, FS-6701-06-12, FS-6701-06-13 and FS-6701-06-15.
A material weakness is a reportable condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud 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, we consider items FS-6701-06-06, FS-6701-06-07, FS-6701-06-11 and FS-6701-06-15 to be material weaknesses.
Compliance and Other Matters
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 grant agreements, 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 instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying Schedule of Findings and Questioned Costs as items FS-6701-06-06 and FS-6701-06-15.
This report is intended solely for the information and use of the management and members of the Hancock County Board of Education and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:as 2006YB-60

ell W. Hinton, CPA, CGFM State Auditor

Russell W. Hinton
STATE AUDITOR
(404) 658-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 6, 2007

Honorable Sonny Perdue, Governor Members ofthe 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 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 U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2006. 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 ofcompliance 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 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

2006SA-55

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.
As described in items FA-6701-06-01, FA-6701-06-02 and FA-6701-06-04 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 Title I Grants to Local Educational Agencies Program (CFDA 84.010), Food Services - National School Breakfast Program (CFDA 10.553), and Food Services - National School Lunch Program (CFDA 10.555) major Federal programs. Compliance with such requirements is necessary, in our opinion, for Hancock County Board ofEducation to comply with requirements applicable to those programs.
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, 2006. The results ofour auditing procedures also disclosed nonmaterial instances ofnoncompliance with those requirements, which are described in the accompanying Schedule ofFindings and Questioned Costs as items FA-6701-06-07, FA-6701-06-08, FA-6701-06-09, FA-6701-06-10, FA-6701-06-13, FA-6701-06-14, FA-6701-06-16, FA-6701-06-17, FA-6701-06-18, FA-6701-06-19, FA-6701-06-20 and FA-6701-06-21.
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 ofexpressing 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-6701-06-01, FA-6701-06-02, FA-6701-06-03, FA-6701-06-04, FA-6701-06-05, FA-6701-06-06, FA-6701-06-11, FA-6701-06-12 and FA-6701-06-15.
A material weakness is a reportable condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level ofrisk that noncompliance with the applicable requirements of laws, regulations, contracts and grants caused by error or fraud that
2006SA-55

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 ofthe 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 items FA-6701-06-01, FA6701-06-02 and FA-6701-06-04 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,

.

':D~~-~~
~:sell W. Hinton, CPA, CGFM
State Auditor

RWH:as 2006SA-55

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, 2006

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FS-6701-01-03 Further Action Not Warranted

(1)

FS-6701-01-04 Further Action Not Warranted

(1)

FS-6701-02-03 Partially Resolved - See Corrective Action/Responses

FS-6701-02-05 Unresolved - See Corrective Action/Responses

FS-6701-02-06 Partially Resolved - See Corrective Action/Responses

FS-6701-03-02 Further Action Not Warranted

FS-6701-03-06 Unresolved - See Corrective Action/Responses

FS-6701-03-07 Unresolved - See Corrective Action/Responses

FS-6701-03-09 Partially Resolved - See Corrective Action/Responses

FS-6701-03-11 Further Action Not Warranted

FS-6701-04-01 Further Action Not Warranted

(1)

FS-6701-04-03 Further Action Not Warranted

(1)

FS-6701-04-04 Further Action Not Warranted

FS-6701-04-05 Further Action Not Warranted

FS-6701-04-06 Further Action Not Warranted

FS-6701-04-07 Further Action Not Warranted

(1)

FS-6701-04-08 Unresolved - See Corrective Action/Responses

FS-6701-04-09 Partially Resolved - See Corrective Action/Responses

FS-6701-04-10 Partially Resolved - See Corrective Action/Responses

FS-6701-04-13 Partially Resolved - See Corrective Action/Responses

FS-6701-04-15 Further Action Not Warranted

FS-6701-04-16 Further Action Not Warranted

FS-6701-04-17 Further Action Not Warranted

FS-6701-05-01 Unresolved - See Corrective Action/Responses

FS-6701-05-02 Unresolved - See Corrective Action/Responses

FS-6701-05-03 Unresolved- See Corrective Action/Responses

FS-6701-05-04 Unresolved - See Corrective Action/Responses

FS-6701-05-05 Unresolved- See Corrective Action/Responses

FS-6701-05-06 Unresolved - See Corrective Action/Responses

FS-6701-05-07 Unresolved - See Corrective Action/Responses

FS-6701-05-08 Unresolved - See Corrective Action/Responses

FS-6701-05-09 Unresolved - See Corrective Action/Responses

FS-6701-05-10 Unresolved - See Corrective Action/Responses

FS-6701-05-11 Unresolved - See Corrective Action/Responses

FS-6701-05-12 Unresolved - See Corrective Action/Responses

FS-6701-05-13 Unresolved - See Corrective Action/Responses

FS-6701-05-14 Unresolved - See Corrective Action/Responses

- 1-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FS-6701-05-15 FS-6701-05-16

Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

AUDITOR'S COMMENTS

(1) While these findings will not be reported or require follow-up in subsequent years, management still has responsibility for the resolution of these findings.

CORRECTIVE ACTION/RESPONSES

BUDGET PREPARATION EXECUTION REVENUES/RECEIVABLES/RECEIPTS Failure to Request Necessary Grant Funds Amount: $106,508.24 Finding Control Number: FS-6701-02-03

We have employed a system-wide bookkeeper to draw down and manage all grants funds.

EXPENDITURES/LIABILITIES/DISBURSEMENTS Overpayment of Board Member Per Diem Amount: $1,250.00 Finding Control Number: FS-6701-02-05

The School Board's attorney is presently working on this matter. The specific individual has been contacted. Reimbursement actions are being addressed. Both of the former Board members have filed bankruptcy. One Board member has been paying into the Federal trustee's account. The system receives a monthly check.

EXPENDITURES/LIABILITIES/DISBURSEMENTS Theft of Funds Amount: $63,228.01 Finding Control Number: FS-6701-02-06

As reported last year, Dr. Melvin Williams pays the United States District Court a monthly payment. It appears that he is paying $1,400 monthly.

-2-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES EMPLOYEE COMPENSATION Inaccurate Reporting of Senior Management Compensation Amount: $7,800 Finding Control Number: FS-6701-03-06 These funds will be retrieved through the courts. EMPLOYEE COMPENSATION Payroll Sample Exceptions Amount: $24,620 Finding Control Number: FS-6701-03-07 This finding will be cleared by the financial management ensuring that there is not an exception to the payroll samples. This action will be guaranteed by the usages ofregular and supplemental contracts and salary scales. GENERAL LEDGER Failure to Refund Unexpended Funds Amount: $71,212 Finding Control Number: FS-6701-03-09 The failure to refund unexpended funds will be corrected by establishing a payment plan for the $71,212. A bookkeeper has been employed to complete a monthly report of the expenditure of funds.
-3-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
EXPENDITURES/LIABILITIES/DISBURSEMENTS QBE Allotments and Expenditures Reports Not Supported by Accounting Records Finding Control Number: FS-6701-04-08
Internal controls will be implemented to eliminate errors in the accounting process. All allotments and expenditures will accurately support the accounting records.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Undocumented/Improper Corporate Credit Card Expenditures Amount: $34,367.44 Finding Control Number: FS-6701-04-09
The administration retrieved credit cards. The only credit card is used only to reserve out of town hotel lodging. The lodging and travel expenses are paid with a check from the school system. The credit card is also used to register for training and workshops (made by the Superintendent's secretary). Reimbursements are rendered by the proper documentation. The Food Service Director is no longer employed by the Hancock County Board ofEducation. The new Food Service Director does not have access to a credit card. Reimbursement was made by school nutrition only.
EMPLOYEE COMPENSATION Payroll Sample Exceptions Finding Control Number: FS-6701-04-10
The administration will ensure that there will not be exceptions to the payroll samples. A new financial program (CSI) has been installed replacing the PC Genesis program. The usage of regular and supplemental contracts and salary scales will also guarantee this action.
GENERAL LEDGER Failure to Refund Unexpended Funds Amount: $201,074 Finding Control Number: FS-6701-04-13
The Georgia Department of Education was contacted and we are still waiting on a response. Moreover, we have repaid confirmed amounts.
-4 -

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
ACCOUNTING CONTROLS (OVERALL) Inadequate Access Controls Finding Control Number: FS-6701-05-01
We have purchased a new accounting software system that will eliminate the finding on inappropriate access controls. Only the finance consultant will have complete access. Everyone else will be coded as "read only" with exception to those areas that are job specific.
ACCOUNTING CONTROLS (OVERALL) Inadequate Policies and Procedures Finding Control Number: FS-6701-05-02
The purchase and implementation ofCSI will eliminate the finding. This refers to backup and security. A disaster recovery plan will be developed to guarantee that we will be able to access any information on, after, before or during a catastrophe.
CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Finding Control Number: FS-6701-05-03
Members ofthe accounting staffhave been assigned duties that will provide for adequate internal control over accounting functions. Management has achieved an adequate system of internal control by separating the duties involving key accounting functions. Internal controls have been implemented to ensure that all bank accounts are reconciled to the general ledger.
BUDGET PREPARATION/EXECUTION Deficit Fund Balance Finding Control Number: FS-6701-05-04
The deficit is tremendously reduced. However, we will continue to implement practices and procedures to ensure that the deficit is eliminated in the next two years. A deficit reduction plan will be built into the 2007-2008 budget.
-5-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
REVENUES/RECEIPTS/RECEIVABLES EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Report School Activity Accounts Finding Control Number: FS-6701-05-05
The School District has plans of assigning the school financial activity reports to be reported to the basic financial system (CSI) starting in April of 2007. All bookkeepers will be trained to ensure that the CSI program will be used for this activity.
PROCUREMENT Inadequate Accounting Procedures Finding Control Number: FS-6701-05-06
We have implemented policies, procedures and actions to ensure that this finding does not reoccur.
PROCUREMENT Inadequate Internal Control Procedures Amount: $30,883 Finding Control Number: FS-6701-05-07
The Superintendent signs all contracts. Then, the contract is presented to the Board of Education for approval. The Board of Education must approve all contracts before they are deemed legal.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Documentation/Improper Expenditure Finding Control Number: FS-6701-05-08
Management will review all purchase orders for required documentation and to ensure that expenditures are for educational purposes.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Follow State Travel Regulations Finding Control Number: FS-6701-05-09
Management will continue to review all travel vouchers and documentation to ensure that all travel expenditures adhere to state travel regulations. The School District will seek refund of the overpayment to the Board member ($38.00).
-6 -

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
EXPENDITURES/LIABILITIES/DISBURSEMENTS QBE Allotments and Expenditures Reports Not Supported by Accounting Records Finding Control Number: FS-6701-05-10
Procedures are in place to ensure that reports are supported by accounting records.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Undocumented/Improper Corporate Credit Card Expenditures Amount: $2,291 Finding Control Number: FS-6701-05-11
The Board ofEducation will review these expenditures to determine ifthis amount is due. Credit cards were given to the Superintendent for destruction and obliteration. No additional charges will occur.
EMPLOYEE COMPENSATION Payroll Sample Exceptions Finding Control Number: FS-6701-05-12
The Board of Education will review the documentation to determine if refunds are necessary.
GENERAL LEDGER Failure to Refund Unexpended Funds Amount: $97,460 Finding Control Number: FS-6701-05-13
These funds will be sent back to the Georgia Department of Education before June 30, 2007.
GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number: FS-6701-05-14
The Superintendent will sign off on all reconciled bank statements and journal entries.
-7-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CORRECTIVE ACTION/RESPONSES

GENERAL LEDGER Inadequate Control Over Subsidiary Ledgers Finding Control Number: FS-6701-05-15

The School District will ensure that subsidiary records are reconciled with the general ledger.

CAPITAL ASSETS Failure to Maintain Capital Assets and Report Depreciation Cost Finding Control Number: FS-6701-05-16

The local Board of Education is working with The Valuation Advisory Group, Inc. (F. Gregory Rhodes) to ensure that capital assets and depreciation costs are reported within its basic financial statements as required by generally accepted accounting principles.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FA-6701-01-03 Further Action Not Warranted

(1)

FA-6701-02-01 Unresolved - See Corrective Action/Responses

FA-6701-02-03 Unresolved - See Corrective Action/Responses

FA-6701-03-01 Unresolved - See Corrective Action/Responses

FA-6701-03-02 Unresolved - See Corrective Action/Responses

FA-6701-04-01 Partially Resolved - See Corrective Action/Responses

FA-6701-04-02 Unresolved - See Corrective Action/Responses

FA-6701-04-03 Unresolved - See Corrective Action/Responses

FA-6701-04-04 Unresolved - See Corrective Action/Responses

FA-6701-04-06 Partially Resolved - See Corrective Action/Responses

FA-6701-04-07 Unresolved - See Corrective Action/Responses

FA-6701-04-08 Unresolved - See Corrective Action/Responses

FA-6701-04-09 Further Action Not Warranted

FA-6701-05-01 Unresolved - See Corrective Action/Responses

FA-6701-05-02 Unresolved - See Corrective Action/Responses

FA-6701-05-03 Unresolved - See Corrective Action/Responses

FA-6701-05-04 Unresolved - See Corrective Action/Responses

FA-6701-05-05 Unresolved - See Corrective Action/Responses

FA-6701-05-06 Unresolved- See Corrective Action/Responses

- 8-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FA-6701-05-07 FA-6701-05-08 FA-6701-05-09 FA-6701-05-10 FA-6701-05-11

Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

AUDITOR'S COMMENTS

(1) While this finding will not be reported or require follow-up in subsequent years, management still has responsibility for the resolution of this finding.

CORRECTIVE ACTION/RESPONSES

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

The Superintendent and the accounting department will eliminate this finding by implementing proper accounting and purchasing procedures as previously reported. We are reimbursing the state as mandated.

REPORTING Failure to Comply With Single Audit Report Distribution Requirements Finding Control Number: FA-6701-02-03

Management has implemented the procedures of date stamping documents/reports when they are received and forwarded to the appropriate administrator for processing. A due date is scheduled for the documents/reports to be returned to the Superintendent for the single audit distribution requirements.

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HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable Expenditures Amount: $91,168 Finding Control Number: FA-6701-03-01 The Superintendent has assigned the Assistant Superintendent the duties ofmanaging the Title I program to ensure that qualified personnel and all proper expenditures are charged correctly to the program. All expenditures are reviewed and approved by the Assistant Superintendent. CASH MANAGEMENT Excessive Cash Balances Amount: $1,153 Finding Control Number: FA-6701-03-02 We will use the drawdown guidelines suggested by the Georgia Department ofEducation to ensure that interest does not accrue on cash balances. ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable Expenditures Amount: $5,188 Finding Control Number: FA-6701-04-01 The Food Service Director has been terminated and the credit card has been canceled. The amount of$5,188 will be collected. This finding will be turned over to the court system between March 2 to March 5, 2007. We will send documentation.
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HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable Expenditures Amount: $29,280 Finding Control Number: FA-6701-04-02
Internal controls have been implemented to ensure that only employees of the Title I program are paid with Title I funds. Time sheets and time logs are submitted and signed by the employee, Title I Director and Superintendent before an employee is paid. This will ensure that no other employees are paid from the Title I program. The School District will refund the Georgia Department of Education $29,280 for the Title I program.
ACTMTIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable Expenditures Amount: $5,543 Finding Control Number: FA-6701-04-03
We are working with John Dunn of the Georgia Department of Education to resolve this finding.
CASH MANAGEMENT Excessive Cash Balances Amount: $159 Finding Control Number: FA-6701-04-04
The School District will make a refund in the amount of$159 to the Georgia Department of Education.
PROGRAM INCOME SPECIAL REPORTING SPECIAL TESTS AND PROVISIONS Inadequate Internal Control Procedures Finding Control Number: FA-6701-04-06
The School Food Services Director has implemented procedures to ensure that internal control procedures are practiced.
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HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES OTHER-SINGLE AUDIT REPORTING PACKAGE Noncompliance with Audit Report Distribution and Corrective Action Requirements Finding Control Number: FA-6701-04-07 We will mail out this audit to all the necessary stakeholders. REPORTING Inadequate Internal Control Procedures Finding Control Number: FA-6701-04-08 A corrected completion report was submitted in fiscal year 2007. ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Accounting/Internal Control Deficiencies Unallowable Expenditures Amount: $14,749 Finding Control Number: FA-6701-05-01 We have implemented procedures to correct this finding. We are also working with Mr. John Dunn of Georgia Department of Education to determine if repayment is necessary. ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Accounting/Internal Control Deficiencies Finding Control Number: FA-6701-05-02 Procedures have been implemented to correct this finding. Purchase orders and timesheets will be available at the next inspection.
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HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Lack of Internal Controls Regarding Payroll Records Unallowable Expenditures Amount: $442,545 Finding Control Number: FA-6701-05-03
Documentation is available to verify salaries and timesheets necessary to satisfy this finding. Mr. John Dunn of Georgia Department of Education will provide guidance on this matter.
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable Expenditures Amount: $276 Finding Control Number: FA-6701-05-04
This money will be returned to Georgia Department ofEducation. We will make sure that expenditures will be made from the correct budget.
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable Expenditures Amount: $50,101 Finding Control Number: FA-6701-05-05
To ensure that this finding will never occur again, all purchase orders must be signed by the program director/manager before they are signed by the Superintendent. Purchase orders will not be processed without the Superintendent's signature.
The Head Start program currently has a pay scale and employee timesheet in place.
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HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
CASH MANAGEMENT Excessive Cash Balances Failure to Refund Interest Amount: $147 Finding Control Number: FA-6701-05-06
This finding is currently under review by Mr. John Dunn of Georgia Department of Education.
ELIGIBILITY MATCHING, LEVEL OF EFFORT AND EARMARKING PROCUREMENT Inadequate Internal Control Procedures Amount: $5,197 Finding Control Number: FA-6701-05-07
The procurement policy being used by the other Federal programs is the guide for this program. We are in the process of approving a new policy to direct procurement of purchases.
PROGRAM INCOME SPECIAL REPORTING SPECIAL TESTS AND PROVISIONS Inadequate Internal Control Procedures Finding Control Number: FA-6701-05-08
We have reviewed and implemented internal controls to monitor compliance of Federal guidelines. The new food service director has made tremendous gains in this area.
OTHER - SINGLE AUDIT REPORTING PACKAGE Noncompliance with Audit Report Distribution and Corrective Action Plan Requirements Finding Control Number: FA-6701-05-09
This finding will be corrected by mailing a copy of the 2004 audit to the respective entities.
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HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES REPORTING Submission of Inaccurate Federal Program Completion Reports Amount: $173,108 Finding Control Number: FA-6701-05-10 We will return the money in intervals and be finished by June 30, 2007. SPECIAL TESTS AND PROVISIONS Fiscal Requirements of Schoolwide Program Not Fully Implemented Finding Control Number: FA-6701-05-11 We are going to implement Georgia Department of Education guidelines for the Schoolwide Programs.
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SECTION IV FINDINGS AND QUESTIONED COSTS

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

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 Revenues/Receivables/Receipts Capital Assets

Expenditures/Liabilities/Disbursements Budget Preparation/Execution General Ledger Accounting Controls (Overall)

Of the reportable conditions described above, Revenues/Receivables/Receipts, Expenditures/Liabilities/Disbursements, General Ledger and Capital Assets are considered to be material weaknesses.

3. Noncompliance Material to the Financial Statements The audit of the Hancock County Board of Education disclosed two instances of noncompliance deemed material to the financial statements. This noncompliance involved the Board's failure to report School Activity Accounts and Capital Assets within the basic 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 Reporting

Allowable Costs/Cost Principles Procurement/Suspension/Debarment

Of the reportable conditions described above, Activities Allowed or Unallowed and Allowable Costs/Cost Principles 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 all major programs was qualified.

6. Audit Findings Reguired 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) ofOMB Circular A-133. These audit findings are included in section IV of this report.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

I SUMMARY OF AUDITOR'S RESULTS

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 84.010 Title I Grants to Local Educational Agencies 93 .600 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 ofEducation did not qualify as a low risk auditee as defined by Section .530 ofOMB Circular A-133.

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

ACCOUNTING CONTROLS (OVERALL) Inadequate Access Controls Reportable Condition Finding Control Number: FS-6701-06-01

Condition:

This is a repeat finding (FS-6701-05-01 and FS-6701-04-01) from the years ended June 30, 2005, and 2004, respectively. The accounting procedures of the School District did not maintain adequate separation of duties in the Financial Accounting System or the School Lunchroom System.

Criteria:

Separation of duties involving key accounting functions, both manual and automated, is the basis for achieving an adequate system of internal control.

Questioned Cost: NIA

Information:

Access controls in the Financial Accounting System and the School Lunchroom System do not prevent users from accessing accounting functions that are outside of their area of responsibility.

Cause:

The School District's management is responsible for designing and maintaining internal controls that restrict access to programs or data. Management has not limited the access rights of users of the Financial Accounting System or the School Lunchroom System.

Effect:

Errors and/or irregularities may not be detected in a timely manner.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

ACCOUNTING CONTROLS (OVERALL) Inadequate Access Controls Reportable Condition Finding Control Number: FS-6701-06-01

Recommendation:

Management should ensure that the access controls in the accounting information system should complement the system of internal control by limiting an employee's access to only the accounting functions necessary for the performance of the employee's duties.

ACCOUNTING CONTROLS (OVERALL) Inadequate General Controls Reportable Condition Finding Control Number: FS-6701-06-02

Condition:

This is a repeat finding (FS-6701-05-02) from the year ended June 30, 2005. Our examination ofthe School District included a review ofgeneral controls related to their financial information systems. We noted weaknesses in internal controls which we consider relevant to the School District's financial statements for the fiscal year ended June 30, 2006.

Criteria:

Policies and procedures should be in place to reasonably mitigate the risk of loss, manipulation, or corruption of data due to internal or external threats.

Questioned Cost: NIA

Information:

Weaknesses in internal control over financial information systems were identified at the School District.

Cause:

Management did not implement proper policies or controls over risk assessments, backups and disaster recovery, system acquisition, access to financial information systems and separation of duties.

Effect:

Without satisfactory controls in place, losses, changes or misuses of data could occur and possibly not be detected.

Recommendation:

Management should perform a complete risk assessment to identify internal and external threats that could cause loss, manipulation, or corruption ofdata maintained in the financial information system. Policies and procedures should be developed and implemented to address the weaknesses.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Separation of Duties Reportable Condition Finding Control Number: FS-6701-06-03

Condition:

This is a repeat finding (FS-6701-05-03, FS-6701-04-03 and FS-6701-03-02) from the years ended June 30, 2005, 2004 and 2003. The accounting procedures of the School District were insufficient to provide adequate separation of duties over the accounting functions.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties. Such controls would limit any one individual's access to both physical assets and the related accounting records.

Questioned Cost: NIA

Information:

Cash and Cash Equivalents The bank reconciliation function was not separated from the check preparation or general ledger function. The reconciliation ofthe operating bank account was not performed by someone independent of the general ledger function. No administrative review was performed to determine that bank reconciliations were correct and that all required adjustments had been made. A bank reconciliation for the Extended Day bank account was not prepared. A listing ofoutstanding checks, voided checks and non-sufficient fund checks was not available for testing.

Expenditures/Liabilities/Disbursements The duty of approving vouchers for payment for all funds was not adequately separated from the duty of writing checks.

Cause:

The School District has not assigned responsibilities to achieve appropriate separation of duties nor utilized management oversight of the incompatible activities to properly safeguard assets.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Separation of Duties Reportable Condition Finding Control Number: FS-6701-06-03

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation:

The School District should establish procedures to ensure that cash is reviewed and reconciled to the general ledger on a monthly basis. Also, the School District should implement procedures to ensure that the key accounting functions of custody, record keeping and authorization are separated and/or utilize management oversight of these incompatible activities. In addition, management should ensure that bank reconciliations are prepared for all bank accounts and that proper documentation is maintained for review.

BUDGET PREPARATION/EXECUTION Deficit Fund Balance Reportable Condition Finding Control Number: FS-6701-06-04

Condition:

This is a repeat finding (FS-6701-05-04 and FS-6701-04-04) from the years ended June 30, 2005, and 2004, respectively. At June 30, 2006, the General Fund of the Hancock County Board of Education reported a deficit fund balance.

Criteria:

Chapter 25 Reporting/or LUAs with General Fund Deficit Balances of the Financial Management for Local Units ofAdministration states in part: "The seriousness of fund balance deficits cannot be overstated. The Georgia Department of Education requires those LUAs with deficit balances to meet certain reporting requirements."

Questioned Cost: NIA

Information:

The School District's General Fund reported a deficit fund balance in the amount of $822,297.

Cause:

The School District failed to adequately budget for the prior year deficit in the General Fund.

Effect:

A financial statement irregularity in accordance with O.C.G.A. 20-2-67.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

BUDGET PREPARATION/EXECUTION Deficit Fund Balance Reportable Condition Finding Control Number: FS-6701-06-04

Recommendation:

The School District should establish policies and procedures designed to ensure that in future periods the School District does not report a deficit fund balance.

BUDGET PREPARATION/EXECUTION Failure to Comply with Requirements of O.C.G.A. 20-2-67 Nonmaterial Noncompliance Finding Control Number: FS-6701-06-05

Condition:

School District did not comply with O.C.G.A. 20-2-67.

Criteria:

Official Code of Georgia Annotated (O.C.G.A.) 20-2-67 Local school system or school subject to corrective action plan for budget deficit; financial operationsform; publication; mailing to Department ofEducation and local governing body, states in part,

"(b)...From the time such irregularity or budget deficit is discovered until the time it is eliminated, the local school superintendent shall present to each member of the local board of education for his or her review and written acknowledgment a monthly report containing all anticipated expenditures by budget function for such school or school system during the current month. The report shall be presented to local board members on or before the tenth business day of each month. Each monthly report shall be signed by each member of that local board and recorded and retained in the minutes of the meeting of the local board of education.

(c) Not later than September 30 of the year, each local board of education shall cause to be published in the official county organ wherein the local school system is located once a week for two weeks a statement of actual financial operations for such schools or school system identified by the Department ofAudits and Accounts as having financial irregularities ... Prior to publication, such form shall be executed by the local board of education and signed by each member of said board and the local school superintendent.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

BUDGET PREPARATION/EXECUTION Failure to Comply with Requirements ofO.C.G.A. 20-2-67 Nonmaterial Noncompliance Finding Control Number: FS-6701-06-05

(d) A copy of the actual financial operations form required to be published by subsection (c) ofthis Code section shall be mailed by each local board of education to the Department of Education and the local county board of commissioners or local municipal governing authority. A current copy of said form shall be maintained on file in the central administrative office of the local school system for public inspection for a period ofat least two years from the date of its publication. Copies of the statement shall be made available on request."

Questioned Cost: NIA

Information:

The School District did not (1) present a monthly report containing all anticipated expenditures; (2) publish actual financial operations; and (3) submit actual financial operations to appropriate authorities as required by O.C.G.A. 20-2-67.

Cause:

Management of the School District did not take appropriate action to meet the reporting requirements specified in O.C.G.A. 20-2-67.

Effect:

The School District did not comply with legal requirements specified in O.C.G.A. 20-2-67.

Recommendation: The School District should ensure that procedures are in place to comply with legal requirements specified in O.C.G.A. 20-2-67.

REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Report School Activity Accounts Reportable Condition - Material Weakness Material Noncompliance Finding Control Number: FS-6701-06-06

Condition:

This is a repeat finding (FS-6701-05-05 and FS-6701-04-05) from the years ended June 30, 2005, and 2004, respectively. The School District failed to report assets, liabilities and fund balances, revenues, expenses/expenditures and changes in net assets/fund balances ofthe school activity accounts which are maintained at the individual schools within its basic financial statements.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Report School Activity Accounts Reportable Condition - Material Weakness Material Noncompliance Finding Control Number: FS-6701-06-06

Criteria:

Chapter 22 Annual Financial Reporting of the Financial Management for Local Units of Administration indicates that School Districts must prepare their financial statements in accordance with generally accepted accounting principles.

Questioned Cost: NIA

Information:

School Activity Accounts activity was not recorded in the School District's general ledger as required.

Cause:

Management failed to comply with generally accepted accounting principles and the requirements of the Georgia Department of Education regarding financial reporting.

Effect:

This condition results in the basic financial statements ofthe School District being incomplete and not in accordance with generally accepted accounting principles. This condition is considered to be a financial statement irregularity in accordance with O.C.G.A. 20-2-67.

Recommendation:

The School District should implement controls to ensure that Georgia Department of Education policies and procedures are followed and. implement procedures to ensure that all financial data is properly recorded in the general ledger, reported in the DE046 and prepared in accordance with generally accepted accounting principles.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Documentation Reportable Condition - Material Weakness Finding Control Number: FS-6701-06-07

Condition:

This is a repeat finding (FS-6701-05-08 and FS-6701-04-06) from the years ended June 30, 2005, and 2004, respectively. A review of expenditures revealed that the School District failed to implement internal controls to ensure that expenditures were properly documented, authorized and made for educational purposes.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are properly approved, documented, processed, and reported in accordance with State law, procedures established by the Georgia Department of Education and School District policies and procedures.

Questioned Cost: $14,066

Information:

Weaknesses in internal controls relating to expenditures were noted as follows:
Procedures were not in place to ensure purchase orders were completed and approved in accordance with School District policy.
Procedures were not in place to ensure documentation was available to support purchases.
Procedures were not in place to ensure evidence of receipt of goods prior to disbursement of funds.

A review of forty expenditure vouchers revealed the following: Eighteen vouchers contained no purchase order. Seventeen vouchers contained no indication ofadministrative approval prior to payment. Nine vouchers totaling $14,066 could not be located. Six vouchers contained no evidence of receipt of goods.

Cause:

Management failed to adequately monitor and implement procedures to ensure that all expenditure voucher packages include required purchase orders and are documented prior to payment and recording ofexpenditures in the financial records.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Documentation Reportable Condition - Material Weakness Finding Control Number: FS-6701-06-07

Effect:

Errors and/or irregularities may occur and not be detected in a timely manner.

Recommendation:

The School District should review current policies regarding expenditures to ensure that expenditures are properly approved and documented prior to disbursement.

EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Follow Statewide Travel Regulations Reportable Condition Nonmaterial Noncompliance Finding Control Number: FS-6701-06-08

Condition:

This is a repeat finding (FS-6701-05-09 and FS-6701-04-07) from the years ended June 30, 2005, and 2004, respectively. The School District did not comply with travel regulations ofthe Georgia Department ofEducation as set forth in the Financial Management for Georgia Local Units of Administration.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: $1,573

Information:

Weaknesses in internal controls relating to travel payments were noted as follows:
Procedures were not in place to ensure that meal limits were adhered to. Procedures were not in place to ensure that travel vouchers were
properly completed and approved.

A review of twenty-two travel vouchers for the Superintendent and Board Members noted the following deficiencies:
Eight vouchers totaling $1,367 could not be located. Meal limitations of $28 per day were not adhered to. The lunch
amount on one voucher was reimbursed $10 in excess ofthe allowable amount.

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Follow Statewide Travel Regulations Reportable Condition Nonmaterial Noncompliance Finding Control Number: FS-6701-06-08

Travel vouchers for six employees did not include all necessary requirements such as odometer readings, automobile license number, origin and destination, explanation for the purpose ofthe trip, receipts for taxi or shuttle services. In addition, these vouchers were not always properly approved.
One voucher did not provide applicable dates of travel in order to verify meals in the amount of $56 were eligible for reimbursement.
One voucher did not include receipts for parking in the amount of$140. Three vouchers requested meals in total and not by individual meal, as
required.

Cause:

Management failed to implement internal controls to ensure that employee travel expenses are in compliance with statewide travel regulations.

Effect:

Errors and/or irregularities may occur and not be detected in a timely manner.

Recommendation:

The School District should review current policies regarding travel expenditures to ensure that expenditures are in compliance with statewide travel regulations. In addition, the School District should review the questioned costs noted above and determine the amount of reimbursement due from the individuals involved.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EMPLOYEE COMPENSATION Inaccurate Salary Calculations Reportable Condition Finding Control Number: FS-6701-06-09

Condition:

This is a repeat finding (FS-6701-05-12, FS-6701-04-10, FS-6701-03-06 and FS-6701-03-07) from the years ended June 30, 2005, 2004, and 2003, respectively. The School District failed to implement procedures to ensure that salary payments were accurately calculated and documented.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that employees are paid according to approved salary schedules and that documentation is maintained to support the salary payments.

Questioned Cost: $190,213

Information:

Weaknesses in internal controls related to employee compensation were noted as follows:
Procedures were not in place to ensure that personnel files include adequate documentation to support salary payments.
Procedures were not in place to ensure that salary payments are properly calculated based on an approved rate ofpay.

Based on a review of fifteen employee payroll records, the following deficiencies were noted:
Personnel files for eleven employees in the amount of$129,938 did not include adequate documentation to support the employees' rate ofpay.
Two employees were .underpaid in the amount of $50 and $254, respectively, based on documentation provided.

An approved contract or other documentation was not provided to support salary payments in the amount of$56,383 to the former Superintendent.

Documentation was not provided to support salary payments in the amount of $3,892 to the current Superintendent.

Cause:

These deficiencies 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.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EMPLOYEE COMPENSATION Inaccurate Salary Calculations Reportable Condition Finding Control Number: FS-6701-06-09

Effect:

Errors and/or irregularities may occur and not be detected in a timely manner.

Recommendation:

Internal controls should be implemented by the School District to ensure that personnel files are properly maintained and all salary payments to employees are based on an approved rate of pay.

GENERAL LEDGER Failure to Refund Unexpended Funds Reportable Condition Finding Control Number: FS-6701-06-10

Condition:

This is a repeat finding (FS-6701-05-13, FS-6701-04-13 andFS-6701-03-09) from the years ended June 30, 2005, 2004, and 2003, respectively. In the year under review, the School District failed to return unearned grant funds for the Lottery Programs.

Criteria:

Unexpended grant funds should be refunded to the appropriate grantors.

Questioned Cost: $226

Information:

An unearned balance remained at June 30, 2006, per the School District's accounting records as follows:

Lottery Program Pre-Kindergarten Program

$ 226

Cause:

Management failed to implement controls to ensure that grant funds are expended in accordance with program requirements.

Effect:

Failure to expend grant funds in accordance with program requirements results in unearned balances.

Recommendation:

The School District should implement procedures to ensure that grant approved funds are properly expended according to grant guidelines. The School District should return the unearned Pre-Kindergarten Program funds to the Bright From the Start: Georgia Department of Early Care and Learning.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-6701-06-11

Condition:

This is a repeat finding (FS-6701-05-14, FS-6701-04-15, and FS-6701-0311) from the years ended June 30, 2005, 2004, and 2003, respectively. A review ofinternal control procedures revealed that the School District failed to implement controls to ensure that journal entries were properly documented, approved and posted.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are properly approved, documented, processed, and reported in accordance with State law, procedures established by the Georgia Department of Education and School District policies and procedures.

Questioned Cost: NIA

Information:

Weaknesses in internal controls relating to journal entries were noted as follows:
Procedures were not in place to ensure that journal entries were approved by someone independent of the general ledger journal entry function.
Procedures were not in place to ensure documentation was available to support journal entries.
Procedures were not in place to ensure that prior year audit entries were properly made and posted.

A review of twenty-five journal entries revealed the following: Nine journal entries could not be located for review. Twenty-four journal entries were not reviewed and approved by someone independent of the general ledger journal entry function. Five journal entries did not include appropriate documentation or descriptions. The School District failed to record prior year audit entries in the amount of$766,483.

Cause:

Management failed to adequately monitor and implement procedures to ensure that all journal entries are properly documented, approved and posted in the accounting records.

- 14 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-6701-06-11

Effect:

The lack of adequate control over the journal entry process may result in material misstatements which would not be detected in a timely manner.

Recommendation:

The School District should review current internal control procedures to ensure that journal entries are properly approved, documented and posted in the accounting records.

GENERAL LEDGER Inadequate Control over Subsidiary Ledgers Reportable Condition Finding Control Number: FS-6701-06-12

Condition:

This is a repeat finding (FS-6701-05-15, FS-6701-04-16 andFS-6701-03-12) from the years ended June 30, 2005, 2004, and 2003, respectively. The School District failed to implement internal controls to ensure that general ledger account balances were properly reconciled to the subsidiary records.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: NIA

Information:
Cause: Effect:

Our examination ofthe accounting records revealed that the School District did not provide for adequate general ledger procedures as follows:
The accounts payable listing varied from the general ledger by $753. The salaries payable listing varied from the general ledger by $33,729. The School District was unable to provide a reconciliation of these
general ledger balances to the subsidiary reports.
Management failed to implement internal controls to ensure that general ledger accounts are reconciled with subsidiary records.
Errors and/or irregularities may not be detected in a timely manner.

- 15 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Inadequate Control over Subsidiary Ledgers Reportable Condition Finding Control Number: FS-6701-06-12

Recommendation: The School District should implement internal controls to ensure that all subsidiary reports are properly reconciled to the general ledger.

GENERAL LEDGER Failure to Report the Financial Statements in a Timely Manner Reportable Condition Finding Control Number: FS-6701-06-13

Condition:

The School District failed to submit the DE046 to the Georgia Department of Education in a timely manner.

Criteria:

Chapter I Introduction to LUA Accounting ofthe Financial Management for Georgia Local Units of Administration indicates that "accounting records must provide meaningful, reliable, accurate and timely information to the many persons and groups with legitimate interests in the financial affairs of an LUA."

Questioned Cost: NIA

Information:

The School District's DE046 financial report was submitted to the Georgia Department of Education on January 3, 2007.

The School District's Quality Basic Education (QBE) Allotments and Expenditures Report by Program was not available from the Georgia Department of Education for audit until after the completion of audit field work and as a result, we were unable to determine ifthe report was supported by program expenditures in the accounting records as required by Chapter 24 of the Financial Management for Georgia Local Units of Administration.

Cause:

Management failed to comply with the due date of September 30, 2006, as established by the Georgia Department of Education.

Effect:

The failure ofthe School District to prepare and submit the financial report in a timely manner prohibits legitimate users of the report from being able to have timely access to the financial information provided. We were unable to test the validity of eligible QBE program costs.

- 16 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Failure to Report the Financial Statements in a Timely Manner Reportable Condition Finding Control Number: FS-6701-06-13

Recommendation:

The School District should implement controls to ensure that Georgia Department of Education policies and procedures are followed and that financial data is submitted to the Georgia Department of Education, as required, and available for audit upon request.

GENERAL LEDGER Detail Listing of Salary and Travel Not Submitted in a Timely Manner Nonmaterial Noncompliance Finding Control Number: FS-6701-06-14

Condition:

The detailed listing of salary and travel made to employees was not submitted to the Georgia Department of Audits and Accounts in a timely manner.

Criteria:

O.C.G.A. 50-6-27 states in part: "Each ... local board of education is required and directed to submit to the state auditor, in a format prescribed by the state auditor, a listing ofall personnel ofsuch ... local board ofeducation showing name, title or functional area, salary, and travel expense for each individual."

Questioned Cost: NIA

Information:

The detailed listing ofsalary and travel made to employees was submitted to the Georgia Department of Audits and Accounts on January 30, 2007; however, the School District was notified by the Georgia Department of Audits and Accounts that the listing, as submitted, was incomplete and instructed the School District to resubmit a complete listing of salaries and travel made to employees. A corrected listing was not submitted by the School District as of the end of field work date of March 6, 2007.

Cause:

Management failed to comply with the due date of August 15, 2006, as established by the Georgia Department of Audits and Accounts.

Effect:

The detailed listing ofsalary and travel made to employees was not available for audit and as a result, we were unable to reconcile the listing to the School District's general ledger.

- 17 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Detail Listing of Salary and Travel Not Submitted in a Timely Manner Nonmaterial Noncompliance Finding Control Number: FS-6701-06-14

Recommendation:

Administrative procedures should be implemented to ensure that the detailed listing ofsalaries and travel is submitted to the Georgia Department ofAudits and Accounts by the established due date.

CAPITAL ASSETS Failure to Maintain Capital Assets and Report Depreciation Cost Reportable Condition - Material Weakness Material Noncompliance Finding Control Number: FS-6701-06-15

Condition:

This is a repeat finding (FS-6701-05-16 and FS-6701-04-17) from the years ended June 30, 2005, and 2004, respectively. The School District failed to report District-wide Capital Assets records and depreciation cost within its basic financial statements at June 30, 2006, as required by generally accepted accounting principles and Georgia Department of Education.

Criteria:

Chapter 37 Fixed Assets of the Financial Management for Georgia Local Units of Administration indicates that School Districts must establish fixed asset policies, define system requirements, implement a fixed asset system and maintain fixed asset inventory records.

Questioned Cost: NIA

Information:

Capital asset records were incomplete and did not provide a detailed and accurate listing of assets.

Cause:

The School District failed to properly maintain its capital assets records in accordance with the School District's approved capital assets policy.

Effect:

This condition results in the basic financial statements ofthe School District being incomplete and not in accordance with generally accepted accounting principles.

- 18 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CAPITAL ASSETS Failure to Maintain Capital Assets and Report Depreciation Cost Reportable Condition - Material Weakness Material Noncompliance Finding Control Number: FS-6701-06-15

Recommendation:

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 by generally accepted accounting principles.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable/Unauthorized/Undocumented Expenditures Reportable Condition - Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-06-01

Condition:

This is a repeat finding (FA-6701-05-01) from the year ended June 30, 2005. A review of expenditures charged to the Title I Grants to Local Educational Agencies (84.010) program revealed that costs were not adequately documented to ensure compliance with grant requirements.

Criteria:

Provisions of the 0MB Circular A-87, Cost Principles for Determining Allowable Costs, require that "to be allowable under Federal awards, costs must be... authorized or not prohibited under state or local laws or regulations" and "supported by underlying documentation."

Questioned Cost: $38,918

Information:

A review ofthirty expenditures for the Title I program revealed the following deficiencies:
Twelve vouchers totaling $38,918 could not be located. One voucher in the amount of $450 contained inadequate
documentation to determine if the expenditure was allowable. Ten vouchers had no indication of administrative approval prior to
purchase.

- 19 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable/Unauthorized/Undocumented Expenditures Reportable Condition - Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-06-01

Twelve vouchers contained no evidence of receipt. A travel expense for Pre-Kindergarten program in the amount of$104
was charged to Title I. See Finding Control Number: FA-6701-0609.

Cause:

Management failed to implement appropriate internal controls to monitor compliance with Federal guidelines to ensure that expenditures charged to the Federal Program were allowable, approved, and properly documented.

Effect:

Failure to ensure that program costs are allowable, approved, and properly documented results in material noncompliance with the requirements ofthe Federal grant.

Recommendation:

The School District should implement procedures to ensure that all costs are allowable under 0MB Circular A-87, approved by appropriate management, and properly documented. In addition, the Georgia Department ofEducation should review this matter to determine if a reclaim of grant funds is appropriate.

- 20-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control Procedures over Payroll Reportable Condition - Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-06-02

Condition:

This is a repeat finding (FA-6701-05-03, FA-6701-04-02, and FA-6701-0301) from the years ending June 30, 2005, 2004, and 2003, respectively. A review ofemployee compensation for the Title I Grants to Local Educational Agencies (CFDA 84.010) program revealed that control procedures were not in place to adequately monitor payments to employees and e~sure employees are paid in accordance with approved salary scales or other applicable approved documentation.

Criteria:

Provisions of the 0MB Circular A-87, Cost Principles for Determining Allowable Costs, require that "to be allowable under Federal awards, costs must be ... adequately documented" and "charges to Federal awards for salaries and wages... will be based on payrolls documented in accordance with generally accepted practice ofthe governmental unit and approved by a responsible official of the governmental unit."

Questioned Cost: $243,972

Information:

The following deficiencies were noted: The School District was unable to provide documentation to support salaries of$1,139 paid to the two Title I program employees tested. $242,833 in salaries were paid from Title I to employees that were not listed as Title I employees.

Cause:

Management failed to implement internal controls for monitoring compliance with Federal guidelines to ensure that employee compensation payments charged to the Title I program were for allowable program purposes.

Effect:

Failure to monitor payments to employees and ensure employees are paid in accordance with approved salary scales results in material noncompliance with the requirements of the Federal grant.

- 21 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control Procedures Reportable Condition - Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-06-02

Recommendation:

The School District should implement procedures to ensure that all costs are allowable under 0MB Circular A-87, approved by appropriate management, and properly documented. In addition, the Georgia Department ofEducation should review this matter to determine if a reclaim of grant funds is appropriate.

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable/Unauthorized/Undocumented Expenditures Reportable Condition U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6701-06-03

Condition:

This is a repeat finding (FA-6701-05-02 andFA-6701-04-01) from the years ending June 30, 2005, and 2004, respectively. A review of expenditures charged to the Child Nutrition Cluster (CFDA 10.553 and 10.555) program revealed that costs were not adequately documented to ensure compliance with grant requirements.

Criteria:

Provisions of the 0MB Circular A-87, Cost Principles for Determining Allowable Costs, require that "to be allowable under Federal awards, costs must be... authorized or not prohibited under state or local laws or regulations" and "supported by underlying documentation."

Questioned Cost: $135

Information:

A review of thirty expenditure vouchers for the Child Nutrition Cluster (CFDA 10.553 and 10.555) revealed the following deficiencies:

- 22-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable/Unauthorized/Undocumented Expenditures Reportable Condition U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6701-06-03

Twenty-three vouchers had no indication of administrative approval prior to payment.
Twenty-seven vouchers had no indication of administrative approval prior to purchase.
One voucher had inadequate documentation to determine if the expenditure of $87 was allowable.
One invoice was overpaid in the amount of $48.

Cause:

Management failed to monitor compliance with Federal guidelines to ensure that expenditures charged to the Federal Program were allowable, approved, and properly documented.

Effect:

Failure to ensure that expenditures are allowable, approved, and properly documented can result in noncompliance with the requirements of the Federal grant.

Recommendation:

The School District should implement procedures to ensure that all costs are allowable under 0MB Circular A-87, approved by appropriate management, and properly documented. In addition, the Georgia Department ofEducation should review this matter to determine if a reclaim of grant funds is appropriate.

- 23 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control Procedures Reportable Condition - Material Weakness Material Noncompliance U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6701-06-04

Condition:

This is a repeat finding (FA-6701-05-03) from the year ended June 30, 2005. A review of employee compensation for the Child Nutrition Cluster (CFDA 10.553 and 10.555) program revealed that control procedures were not in place to adequately monitor payments to employees and ensure employees are paid in accordance with approved salary scales or other applicable approved documentation.

Criteria:

Provisions of the 0MB Circular A-87, Cost Principles for Determining Allowable Costs, require that "to be allowable under Federal awards, costs must be... adequately documented" and "charges to Federal awards for salaries and wages ... will be based on payrolls documented in accordance with generally accepted practice ofthe governmental unit and approved by a responsible official of the governmental unit."

Questioned Cost: $74,690

Information:

The School District was unable to provide pay scales or other documentation to support salaries of $74,690 charged to the Child Nutrition Cluster.

Cause:

Management failed to implement internal controls for monitoring compliance with Federal guidelines to ensure that employee compensation payments charged to the Child Nutrition Cluster program were allowable, approved, and properly documented.

Effect:

Failure to monitor payments to employees and ensure employees are paid in accordance with approved salary scales results in material noncompliance with the requirements of the Federal grant.

-24-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control Procedures Reportable Condition - Material Weakness Material Noncompliance U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6701-06-04

Recommendation:

The School District should implement procedures to ensure that all costs are allowable under 0MB Circular A-87, approved by appropriate management, and properly documented. In addition, the Georgia Department ofEducation should review this matter to determine if a reclaim of grant funds is appropriate.

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unauthorized/Undocumented Expenditures Reportable Condition U.S. Department ofHealth and Human Services Head Start (CFDA 93.600) Finding Control Number: FA-6701-06-05

Condition:

This is a repeat finding (FA-6701-05-05) from the year ended June 30, 2005. A review ofexpenditures charged to the Head Start (CFDA 93 .600) program revealed that costs were not adequately documented to ensure compliance with grant requirements.

Criteria:

Provisions of the 0MB Circular A-87, Cost Principles for Determining Allowable Costs, require that "to be allowable under Federal awards, costs must be... authorized or not prohibited under state or local laws or regulations" and "supported by underlying documentation".

Questioned Cost: $1,290

Information:

A review ofthirty-two expenditures for Head Start (CFDA 93 .600) revealed the following deficiencies:
Two vouchers totaling $1,290 were not provided. Two vouchers had no indication of administrative approval prior to
purchase.

- 25 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unauthorized/Undocumented Expenditures Reportable Condition U. S. Department of Health and Human Services Head Start (CFDA 93.600) Finding Control Number: FA-6701-06-05

Cause:

Management failed to monitor compliance with Federal guidelines to ensure that expenditures charged to the Federal Program were allowable, approved and properly documented.

Effect:

Failure to ensure that program costs are allowable, approved, and properly documented can result in material noncompliance with the requirements of the Federal grants.

Recommendation:

The School District should implement procedures to ensure that all costs are allowable under 0MB Circular A-87, approved by appropriate management, and properly documented. The School District should contact the U. S. Department of Health and Human Services to determine the amount of refund for the undocumented expenditures.

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Undocumented Expenditures Reportable Condition U.S. Department of Health and Human Services Head Start (CFDA 93.600) Finding Control Number: FA-6701-06-06

Condition:

This is a repeat finding (FA-6701-05-05) from the year ended June 30, 2005. A review of employee compensation for the Head Start (CFDA 93.600) program revealed that salary payments were not adequately documented and were not properly calculated.

Criteria:

Provisions of the 0MB Circular A-87, Cost Principles for Determining Allowable Costs, require that "to be allowable under Federal awards, costs must be... adequately documented" and "charges to Federal awards for salaries and wages... will be based on payrolls documented in accordance with generally accepted practice ofthe governmental unit and approved by a responsible official of the governmental unit."

-26-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Undocumented Expenditures Reportable Condition U. S. Department of Health and Human Services Head Start (CFDA 93.600) Finding Control Number: FA-6701-06-06

Questioned Cost: NIA

Information:

The School District was unable to provide documentation to support additional compensation of $218 paid to a Head Start program employee. Two employees were underpaid in the amount of$50 and $254, respectively based on the documentation provided.

Cause:

Management failed to monitor compliance with Federal guidelines to ensure that employee compensation payments charged to the Head Start program were documented and for allowable program purposes.

Effect:

Failure to document payments to employees and ensure employees are paid in accordance with approved salary scales can result in material noncompliance with the requirements of the Federal grant.

Recommendation:

The School District should implement procedures to ensure that all costs are allowable under 0MB Circular A-87, approved by appropriate management, and properly documented.

-27 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES Failure to Document Indirect Cost Plan Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-06-07

Condition:

The School District failed to maintain documentation to support the Indirect Cost Plan for the Title I Grants to Local Educational Agencies (CFDA 84.010).

Criteria:

As provided in the consolidated grant application and required by 34 CFR 76.730, the School District assured the Georgia Department ofEducation that records would be kept and information provided as may be required for audit purposes.

Questioned Cost: NIA

Information:

The School District failed, for audit purposes, to provide complete documentation to support expense categories of cost pools and methods of allocating indirect costs to ensure the restricted indirect cost rate was correctly applied.

Cause:

The School District did not have adequate procedures in place to ensure maintenance ofappropriate documentation to support the Indirect Cost Plan.

Effect:

Failure to ensure that the approved Indirect Cost Plan is followed can result in noncompliance with the requirements of the Federal grant.

Recommendation:

The School District should implement procedures to ensure that documentation is maintained for audit purposes in compliance with the requirements of the consolidated grant application and 34 CFR 76.730.

- 28-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

CASH MANAGEMENT Excessive Cash Balances Failure to Refund Interest Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-06-08

Condition:

This is a repeat finding (FA-6701-05-06, FA-6701-04-04, and FA-6701-0302) from the years ending June 30, 2005, 2004, and 2003, respectively. A review of cash management procedures for the Title I Grants to Local Educational Agencies (CFDA 84.010) program disclosed that cash draws were made in advance of immediate cash needs, resulting in the accumulation of excessive cash balances.

Criteria:

In accordance with 34 CFR 80.21 interest earned on advances by local government grantees is required to be submitted promptly to the Federal grantor agency. Up to $100 per year may be kept for administrative expenses.

Questioned Cost: $1,355

Information:

The Title I program had an average cash balance that was $24,249 over the allowed amount with excessive cash balances in seven months. In addition, the School District earned $1,355 in interest revenue which was not refunded to the Georgia Department of Education.

Cause:

The School District failed to accurately forecast the cash needs of the program.

Effect:

Failure to monitor the cash needs of the program can result in material noncompliance with the requirements of the Federal grant.

Recommendation:

The School District should implement procedures to accurately forecast the cash needs ofthe program. In addition, procedures should be implemented to minimize the time elapsing between the transfer of funds from the Georgia Department of Education and disbursement of such funds by the School District. The Georgia Department ofEducation should review this matter to determine if a refund of funds is necessary for the excess interest proceeds.

- 29 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

MATCHING, LEVEL OF EFFORT AND EARMARKING Failure to Meet Maintenance of Effort Requirements Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-06-09

Condition:

This is a repeat finding (FA-6701-05-07) from the year ended June 30, 2005. The Title I Grants to Local Educational Agencies (CFDA 84.010) program funds were used to provide services that the School District was required to make available under another Federal, State, or Local law.

Criteria:

Title I Part A, Section 1120A (b) states, in part, that "in no case may an LEA use Federal program funds to supplant funds from non-Federal sources."

Questioned Cost: $104

Information:

Title I funds were used to provide travel reimbursements for the PreKindergarten program.

Cause:

Management failed to monitor compliance with Federal guidelines to ensure that Federal funds were used to supplement and not supplant other funding sources.

Effect:

Failure to monitor expenditures for compliance with supplement and not supplant guidelines can result in noncompliance with the requirements ofthe Federal grant.

Recommendation:

The School District should review the Federal compliance procedures in place and design procedures which enhance monitoring ofcompliance with Federal requirements. The Georgia Department ofEducation should review this matter to determine if a reclaim of grant funds is appropriate.

- 30-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

PERIOD OF AVAILABILITY Expenditures Outside of Grant Period Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-06-10

Condition:

An examination of transactions for the Title I Grants to Local Educational Agencies (CFDA 84.010) program revealed that expenditures were charged to the program before the start of the grant period.

Criteria:

0MB Circular A-110, Subpart C, Section 28 states, in part, "where a funding period is specified, a recipient may charge to the grant only allowable costs resulting from obligations incurred during the funding period... "

Questioned Cost: $9,418

Information:

A review of expenditures revealed that two expenditures with invoice dates before the approved grant period were charged to this program.

Cause:

Management failed to monitor compliance with Federal guidelines to ensure that expenditures were charged during the approved grant period.

Effect:

Failure to ensure expenditures are charged in the correct period can result in noncompliance with the requirements of the Federal grant.

Recommendation:

The School District should implement appropriate procedures to ensure that expenditures are charged during the approved grant period. The Georgia Department ofEducation should review this matter to determine ifa reclaim of funds is appropriate.

- 31 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

PROCUREMENT/SUSPENSION/DEBARMENT Failure to Implement Procurement Procedures Reportable Condition U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-06-11

Condition:

This is a repeat finding (FA-6701-05-07) from the year ended June 30, 2005. The School District did not have adequate procedures in place to ensure that the procurement process was implemented properly for the Title I Grants to Local Educational Agencies (CFDA 84.010) program.

Criteria:

The Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments Subpart C -Post-Award Requirements _.36 Procurement establishes procurement standards for subgrantees. Specifically," ...subgrantees will use their own procurement procedures which reflect applicable State and local laws and regulations".

Questioned Cost: NIA

Information:

Testing revealed that the School District was not following the State Procurement guidelines and there were numerous instances of voucher packages that did not contain the required documentation. See Finding Control Number: FA-6701-06-01.

Cause:

Management failed to monitor compliance with Federal guidelines over the School District's purchases and/or contracts procured with Federal funds.

Effect:

Failure to ensure that proper procurement procedures are followed can result in material noncompliance with the requirements of the Federal grant.

Recommendation: The School District should establish and implement procedures to ensure that acceptable procurement procedures are documented and followed.

- 32 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

PROCUREMENT/SUSPENSION/DEBARMENT Failure to Maintain Documentation Reportable Condition U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6701-06-12

Condition:

The School District could not provide adequate documentation for testing of compliance requirements related to procurement, suspension and debarment for the Child Nutrition Cluster (CFDA 10.553 and 10.555) programs.

Criteria:

Provisions in 7 CFR 3016.36(b) (9) require that: "Grantees and sub-grantees will maintain records sufficient to detail the significant history of a procurement. These records will include, but are not necessarily limited to the following: rationale for the method ofprocurement, selection ofcontract type, contractor selection or rejection, and the basis for the contract price".

Questioned Cost: NIA

Information:

The School District could provide only partial information on two vendors in regards to bids, contracts, and suspension and debarment.

Cause:

Management failed to monitor compliance with Federal requirements in regards to the School District's purchases and/or contracts procured with Federal funds.

Effect:

Failure to monitor procedures related to procurement, suspension and debarment can result in noncompliance with Federal grant requirements.

Recommendation:

The School District should establish and implement procedures to ensure that required documentation related to procurement, suspension and debarment is maintained as required.

- 33 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

OTHER - SINGLE AUDIT REPORTING PACKAGE Noncompliance with Audit Report Distribution and Corrective Action Plan Requirements Nonmaterial Noncompliance Finding Control Number: FA-6701-06-13

Condition:

This is a repeat finding (FA-6701-05-09 and FA-6701-04-07) from the years ended June 30, 2005, and 2004, respectively. TheSchool District failed to comply with reporting requirements of 0MB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations.

Criteria:

According to provisions of 0MB Circular A-133, the School District is responsible for providing a copy ofthe audit report and corrective action plan to pass-through organizations "when the schedule offindings and questioned costs disclosed audit findings relating to Federal awards that the pass-through entity provided or the summary schedule ofprior audit findings reported the status of any audit findings relating to Federal awards that the pass-through entity provided".

Questioned Cost: NIA

Information:

The School District failed to provide documentation that a copy ofthe fiscal year 2005 audit report and corrective action plan was forwarded to Bright From the Start: Georgia Department of Early Care and Learning.

Cause:

Management failed to monitor compliance with Federal guidelines to ensure that the audit reports and corrective action plans were properly distributed.

Effect:

Failure to comply with reporting directives can result in noncompliance with Federal requirements.

Recommendation:

The School District should implement procedures to ensure that all reporting requirements ofCircular A-133 are met. To fulfill the reporting requirements for the fiscal year 2005 audit, the School District should provide a copy of the audit report and corrective action plan to the Bright From the Start: Georgia Department of Early Care and Learning.

- 34 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

REPORTING Failure to File Accurate Completion Report Nonmaterial Noncompliance U. S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-06-14

Condition:

This is a repeat finding (FA-6701-05-10) from the year ended June 30, 2005. The School District failed to file an accurate completion report for the Title I Grants to Local Educational Agencies (CFDA 84.010) program.

Criteria:

The instructions provided by the Georgia Department ofEducation mandate that financial management systems provide for accurate, complete and current disclosure for the financial results of each grant program.

Questioned Cost: NIA

Information:

A review of the School District's accounting records revealed that the completion report was not supported by the total expenditures for this program as indicated below:

Expenditures per General Ledger

Expenditures per Completion Report

Variance

$ 708,288

$ 707,376

$ 912

Cause:

Management neglected the specific requirements imposed by the Georgia Department of Education.

Effect:

Failure to accurately report expenditures may result in the School District being required to fund these expenditures from local revenues when Federal funds are available.

Recommendation:

Appropriate procedures should be implemented to ensure that accurate completion reports are submitted to the Georgia Department of Education. The School District should submit a corrected completion report to the Georgia Department ofEducation and the Georgia Department ofEducation should review this matter to determine if the School District is entitled to additional funds.

- 35 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

REPORTING Failure to Refund Unexpended Grants Reportable Condition U.S. Department of Education Through Georgia Department of Education Special Education - Grants to States (CFDA 84.027) State Grants for Innovative Programs (84.298) Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-06-15

Condition:

The School District failed to refund unearned grant balances to the Georgia Department of Education.

Criteria:

The instructions provided by the Georgia Departmei;it ofEducation mandate that financial management systems provide for accurate, complete and current disclosure for the financial results of each grant program.

Questioned Cost: $4,890

Information:

A review ofthe School District's accounting records revealed unearned grant balances for the Federal programs as indicated below:

Program

Amount

Special Education Grants to States (Capacity Building)
State Grants for Innovative Programs Title I Grants to Local Educational Agencies

$ 98 $ 4,020 $ 772

Cause:

This condition occurred because personnel submitted Federal program completion reports that over reported the amount ofexpenditures incurred by the School District.

Effect:

Failure to refund unearned grant balances may result m material noncompliance with the requirements of the Federal grants.

Recommendation:

Appropriate procedures should be implemented to ensure that unexpended grant balances are refunded to the Georgia Department of Education. The School District should refund the unearned Federal grant funds of$4,890 to the Georgia Department of Education.

- 36 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

REPORTING DE-0106 Report not Supported by the DE-0112 and DE-0118 Reports Nonmaterial Noncompliance U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6701-06-16

Condition:

This is a repeat finding (FA-6701-05-08 and FA-6701-04-06) from the years ending June 30, 2005, and 2004, respectively. A review of the School District's DE-0106 reports submitted to the Georgia Department ofEducation disclosed that they did not agree with the DE-0112 and DE-118 Participation Reports for the Child Nutrition Cluster (CFDA 10.553 and 10.555) programs.

Criteria:

Provisions in 7 CFR 210.7(c) require that the School District "base claims for reimbursement on lunch counts, taken daily at the point of service, which correctly identify the number of free, reduced price and paid lunches served to eligible children" and "correctly record, consolidate and report those lunch and supplement counts on the Claim for Reimbursement. .. "

Questioned Cost: $174

Information:

The DE-0106 reports submitted for the month ofNovember 2005 disclosed meal counts that did not agree with the number of meals served on the DE0112 and DE-0118 - Participation Reports.

Cause:

These deficiencies are a result of management's failure to monitor compliance with Federal guidelines to ensure reimbursement requests are accurate.

Effect:

Failure to ensure that reimbursement requests accurately report the number of meals served can result in noncompliance with requirements of the Federal grant.

Recommendation:

Management should become familiar with the Federal regulations for the Child Nutrition Cluster program in order to develop procedures to provide accurate reporting of meals served. The Georgia Department of Education should review the reports submitted by the School District to determine the accuracy of all reimbursement requests for the year under review and determine if a refund is necessary.

- 37 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Fiscal Requirements of Schoolwide Program Not Fully Implemented Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (84.010) Finding Control Number: FA-6701-06-17

Condition:

This is a repeat finding (FA-6701-05-11 and FA-6701-04-09) from the years ending June 30, 2005, and 2004, respectively. During the year under review, the School District identified all of its schools as participating in a schoolwide program. While Federal provisions prescribe that multiple funding sources (Federal, State, or Local) are required to support a schoolwide program, we noted that the Title I program (CFDA No. 84.010) was identified as the only funding source supporting the schoolwide program concept at the participating schools and, in contrast with Federal requirements, the School District arbitrarily charged the Title I fund with schoolwide expenditures.

Criteria:

In accordance with provisions ofU. S. Department ofEducation Instructions and 0MB Circular A-133, Compliance Supplement provisions, eligible schools are able to use their Title I, Part A funds, in combination with other Federal, State and local funds, in order to upgrade the entire educational program of the school and to raise academic achievements for all students. By combining funds from Title I and other eligible U. S. Department of Education funded programs in support of a schoolwide program, U. S. Department of Education Instructions provide that specific schoolwide program costs lose their identity but only in those circumstances when funds are combined in a schoolwide program.

In line with 0MB Circular A-87 requirements, schoolwide expenditures should be charged to those Federal funding sources supporting the schoolwide program in a reasonable manner. If there is only one Federal funding source, then costs should be charged to the Federal program based on the specific benefits derived from that cost. When more than one Federal program supports a schoolwide program, then schoolwide program expenditures may be allocated to specific Federal funds in proportion to the different Federal funds provided in support of the schoolwide program. To distribute such costs, provisions ofOMB Circular A-87, Attachment E, F.3 state that a cost allocation plan should be developed, documented, and maintained for audit.

- 38 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Fiscal Requirements of Schoolwide Program Not Fully Implemented Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (84.010) Finding Control Number: FA-6701-06-17

Questioned Cost: NIA

Information:

The School District identified all of its schools as participating in a schoolwide program. While Federal provisions prescribe that multiple funding sources (Federal, State, or Local) are required to support a schoolwide program, we noted that the Title I program (CFDA No. 84.010) was identified as the only funding source supporting the schoolwide program concept at the participating schools and, in contrast with Federal requirements, the School District arbitrarily charged the Title I fund with schoolwide expenditures.

Cause:

School District personnel were not fully aware ofthese requirements and the School District believed that schoolwide program expenditures lose their identity and therefore any schoolwide program cost could be charged to the Title l program.

Effect:

Failure to appropriately allocate costs can result in noncompliance with requirements of the Federal grant.

Recommendation:

The School District should implement procedures to ( 1) charge costs to the Federal program based on the specific benefits derived from that cost or (2) identify other Federal funding sources for the schoolwide program, combine such funds as prescribed by the U.S. Department of Education, and in line with 0MB Circular A-87 provisions, allocate such schoolwide program costs to the respective Federal funds in a reasonable manner. The School District should seek additional guidance from the Georgia Department of Education to implement procedures for combining and allocating schoolwide program expenditures.

- 39 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Failure to Invite Private Schools/Parents and Community Members to Participate Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-06-18

Condition:

The School District could not provide documentation of contact with appropriate private school officials or with parents or other interested community members to determine whether they intended to participate in the planning, design and implementation of the Title I Grants to Local Educational Agencies (CFDA 84.010) program.

Criteria:

Provisions of Section 321 of Public Law 106-554 and U.S. Department of Education publications require that local School Districts must provide parents, educators and interested community members an opportunity to consult and comment on the use of funds.

Questioned Cost: NIA

Information:

The School District could not provide documentation that parents, educators and interested community members were provided an opportunity to consult and comment on the use of funds for the Title I Grants to Local Educational Agencies program as required by provisions of Section 321 of Public Law 106-554 and U.S. Department of Education requirements.

Cause:

The School District failed to monitor the program requirements as set forth in guidelines issued by the Georgia Department of Education.

Effect:

Eligible private schools, parents and other interested community members were not able to take advantage ofthe opportunity to participate in the Title I Grants to Local Educational Agencies program.

Recommendation:

Procedures should be implemented to ensure that all eligible private schools are given the opportunity to participate in the program, as required. In addition, appropriate procedures should be established to ensure that the parental and community involvement provisions provided in the approved application are followed.

- 40-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Deficiencies over the Verification Process Nonmaterial Noncompliance U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6701-06-19

Condition:

A review of the School District's verification process of free and reducedprice meal applications for the Child Nutrition Cluster (CFDA 10.553 and 10.555) revealed a deficiency related to the termination of benefits.

Criteria:

The U. S. Department ofAgriculture's Eligibility Guidance for School Meals Manual FNS-274 Part 7 and 7 CFR 245.6a state, "Ifverification efforts fail to confirm eligibility for free or reduced price benefits or should the household fail to cooperate with verification efforts, the school or School Food Authority shall reduce or terminate benefits, as applicable ....."

Questioned Cost: NIA

Information:

The School District failed to reduce or terminate benefits based on the results ofthe verification process.

Cause:

Management failed to implement appropriate procedures to ensure compliance with Federal guidelines regarding the verification process for free and reduced-price meal applications.

Effect:

Failure to ensure the verification process is complete can result m noncompliance with the requirements of the Federal grant.

Recommendation: Procedures should be implemented to ensure that the verification process is complete and is performed in accordance with program requirements.

- 41 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Failure to Perform Review of After School Care Program Nonmaterial Noncompliance U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6701-06-20

Condition:

The School District failed to perform required reviews of its After School Care Program for the Child Nutrition Cluster (CFDA 10.553 and 10.555) program.

Criteria:

Provisions in 7 CFR 210.9(c)(7) state, in part, as follows: "Those school food authorities with eligible schools that elect to serve meal supplements during after school care programs, shall agree to: Review each after school care program two times a year; the first review shall be made during the first four weeks that the school is in operation each school year, except that an after school care program operating year round shall be reviewed during the first four weeks ofits initial year of operation, once more during its first year of operation, and twice each year thereafter."

Questioned Cost: NIA

Information:

A review of the School District's records revealed that reviews of the After School Care Program were not performed as required.

Cause:

Management failed to implement procedures to ensure that reviews of its After School Care Program are performed in accordance with Federal guidelines.

Effect:

Failure to ensure that reviews of the After School Care Program are performed can result in noncompliance with the requirements ofthe Federal grant.

Recommendation: The School District should implement procedures to ensure compliance with Federal requirements regarding reviews of the After School Care Program.

-42 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Federal Reimbursement Transfers Not Timely Nonmaterial Noncompliance U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-6701-06-21

Condition:

This is a repeat finding (FA-6701-05-08 and FA-6701-04-06) from the years ending June 30, 2005, and 2004, respectively. The School District failed to follow Federal reimbursement payment procedures for the Child Nutrition Cluster (CFDA 10.553 and 10.555) program.

Criteria:

Provisions in USDA policy 210.14-06 state that "USDA funds should be entered into the School Food Service account as soon as possible on receipt" and "any interest on this USDA revenue must also be credited to the school food service account."

Questioned Cost: NIA

Information:

A test of Federal reimbursement payments revealed that in January, February, and March 2006, Federal reimbursements were held from six to sixteen days before being credited to the School Food Service account. In addition, no interest earned on the funds in question was credited to the school food service account.

Cause:

Management failed to implement procedures to ensure that Federal reimbursements are transferred to the School Food Service account in a timely manner.

Effect:

Failure to ensure that reimbursements are transferred in a timely manner can result in noncompliance with the requirements of the Federal grant.

Recommendation:

The School District should implement policies and procedures to ensure compliance with Federal requirements over the transfer of Federal reimbursements.

- 43 -

SECTIONV MANAGEMENT'S RESPONSES

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-6701-06-01
We concur with this finding. Standard access controls will be implemented to ensure that accounting information system and School Lunchroom system limit access to only employees with a need for access for the performance oftheir job duties. We have implemented the use ofCSI, a new accounting software program, to limit employees' access to only the accounting functions necessary for the performance of the employees' duties.
Contact Person: Alfred Brown, Financial Officer Consultant Phone: (706) 444-5775 Ext. 125 Fax Number: (706) 444-7026 E-mail Address: alfred_brown@putnam.k12.ga.us
Finding Control Number: FS-6701-06-02
We concur with this finding. Hancock County School's technology department has designed and implemented policies and procedures for backup recovery, disaster recovery, and the security of information systems. The Hancock County Board of Education is in the process of reviewing the system's digital archiving policy.
Contact Person: Ernest Warren, Technology Specialist Phone: (706) 444-5775 Ext. 165 Fax Number: (706) 444-7026 E-mail Address: ewarren@hancock.kl2.ga.us
Finding Control Number: FS-6701-06-03
We concur with this finding. Members of the accounting staff have been assigned duties that will provide for adequate internal control over accounting functions. Management has achieved an adequate system of internal controls by separating the duties involving key accounting functions. Internal controls have been implemented to ensure that all bank accounts are reconciled and recorded to the general ledger.
Contact Person: Alfred Brown, Financial Officer Consultant Phone: (706) 444-5775 Ext. 125 Fax Number: (706) 444-7026 E-mail Address: alfred_brown@putnam.kl2.ga.us
Finding Control Number: FS-6701-06-04
We concur with this finding. The Hancock County School System will establish appropriate policies and procedures designed to ensure that our monthly expenditures do not exceed our monthly revenues. This will ensure that Hancock County Schools will not report a deficit in future periods.
Contact Person: Alfred Brown, Financial Officer Consultant Phone: (706) 444-5775 Ext. 125 Fax Number: (706) 444-7026 E-mail Address: alfred_brown@putnam.k12.ga.us
- 1-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-6701-06-05
We concur with this finding. The local Board of Education has implemented the necessary procedures to correct this matter. In addition to this, the local school board mails a copy of the Deficit Elimination 346 to the Georgia Superintendent of Finance, John Dunn, on a monthly basis.
Contact Person: Alfred Brown, Financial Officer Consultant Phone: (706) 444-5775 Ext. 125 Fax Number: (706) 444-7026 E-mail Address: alfred_brown@putnam.kl2.ga.us
Finding Control Number: FS-6701-06-06
We concur with this finding. Hancock County's financial department has established a control method through the use of CSI to correct this finding. We also hired an external evaluator to complete a report of Hancock County's fixed assets. We have resolved that the School Activity Accounts activity will be recorded in the School District's general ledger.
Contact Person: Alfred Brown, Financial Officer Consultant Phone: (706) 444-5775 Ext. 125 Fax Number: (706) 444-7026 E-mail Address: alfred_brown@putnam.kl2.ga.us
Finding Control Number: FS-6701-06-07
We concur with this finding. The Superintendent of Hancock County Schools has implemented a new policy requiring her signature, account codes, and an established need before any purchase orders are processed. We also have a new digital archiving system to help locate vouchers.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: a1eslie@hancock.k12.ga.us
Finding Control Number: FS-6701-06-08
We concur with this finding. The designated personnel in Hancock County's finance department will review all travel expenses and documentation to ensure that all travel expenditures adhere to state travel regulations. Any requests in excess of the allowable amount will not be approved.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: a1eslie@hancock.k12.ga.us
-2 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-6701-06-09
We concur with this finding. However, this documentation was not requested to verify that the present Superintendent received this payment during her term as principal. Moreover, the present Superintendent's salary was not adjusted until July 1, 2006, in compliance with the terms of her contract. School Superintendent, Dr. Awanna Leslie and Board of Education Members, have designed and implemented procedures to ensure that payments made to employees are based on an approved rate ofpay that is adequately documented on the employee's contract. Internal control has been implemented by the Hancock County School District to ensure that personnel files are properly maintained and all payments to employees are based on the State's approved salary schedule.
Contact Person: Mrs. Tina Behne, Human Resource Director Phone: (706) 444-5775 Ext. 155 Fax Number: (706) 444-7026 E-mail Address: tbehne@hancock.k12.ga.us
Finding Control Number: FS-6701-06-10
We concur with this finding. The Hancock County School District will implement procedures to ensure that approved grants are properly expended according to grant guidelines. In addition, the Hancock County School System will return the unearned Pre-Kindergarten Program funds to the Bright from the Start: Georgia Department of Early Care and Leaming.
Contact Person: Mr. Thomas McCain, Headstart/Pre-K Director Phone: (706) 444-5775 Ext. 240 Fax Number: (706) 444-7026 E-mail Address: tmccain@hancock.kl2.ga.us
Finding Control Number: FS-6701-06-11
We concur with this finding. Mr. Alfred Brown, an independent financial consultant, has been employed by the Hancock County Board of Education. Mr. Brown and/or Superintendent, Dr. Awanna Leslie, will review and approve all journal entries in the general ledger. The Hancock County School District has reviewed the structure of the Administrative Accounting Department. Internal controls have been implemented by the School District to ensure that all entries are posted, properly documented, and reviewed prior to being posted to the general ledger.
Contact Person: Alfred Brown, Financial Officer Consultant Phone: (706) 444-5775 Ext. 125 Fax Number: (706) 444-7026 E-mail Address: alfred_brown@putnam.kl2.ga.us
-3 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-6701-06-12
We concur with this finding. The Hancock County School System has established adequate ledger procedures to ensure that subsidiary records are reconciled with the general ledger. Additional administrative employees have been employed to maintain accounting functions.
Contact Person: Alfred Brown, Financial Officer Consultant Phone: (706) 444-5775 Ext. 125 Fax Number: (706) 444-7026 E-mail Address: alfred_brown@putnam.kl2.ga.us
Finding Control Number: FS-6701-06-13
We do not concur with this finding. However, the Hancock County School System will continue to submit the DE046 to the Georgia Department of Education as requested and in the future, we will endeavor to ensure that this report is submitted in a timely manner.
Contact Person: Alfred Brown, Financial Officer Consultant Phone: (706) 444-5775 Ext. 125 Fax Number: (706) 444-7026 E-mail Address: alfred_brown@putnam.kl2.ga.us
Finding Control Number: FS-6701-06-14
We concur with this finding. The Hancock County School System has implemented administrative procedures to ensure that the detailed listing of salaries and travel is submitted to the Georgia Department ofAudits and Accounts by the established due date. A corrected copy ofthis document was submitted to the Georgia Department of Audits and Accounts after March 6, 2007.
Contact Person: Alfred Brown, Financial Officer Consultant Phone: (706) 444-5775 Ext. 125 Fax Number: (706) 444-7026 E-mail Address: alfred_brown@putnam.kl2.ga.us
Finding Control Number: FS-6701-06-15
We concur with this finding. The Hancock County School District has established appropriate policies and procedures designed to ensure that Capital Assets and depreciation cost are reported within its basic financial statements as required by generally accepted accounting principles. We have employed F. Gregory Rhodes, CPA from the Valuation Advisory Group, Inc. to conduct an analysis of both capital and fixed assets.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: ales1ie@hancock.k12.ga.us
-4-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FA-6701-06-01
We concur with this finding. The digital archiving system that has been put in place has been established to locate all previously approved purchase orders. Superintendent of Schools, Dr. Awanna Leslie, has also implemented a process that requires her prior approval for all purchase orders. Each purchase order must have the appropriate account code before being approved. Hancock County Schools has also implemented procedures to ensure that all costs are allowable under 0MB Circular A-87.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.kl2.ga.us
Finding Control Number: FA-6701-06-02
We concur with this finding. In the future, the system will implement procedures to ensure that all costs are allowable under 0MB Circular A-87, which will state in part as follows:
Where employees work on multiple activities or cost objectives, a distribution of their salaries or wages will be supported by personnel activity reports or equivalent documentation and will meet the following standards:
a. They will reflect an after-the fact distribution of the actual activity of each employee.
b. They will account for the total activity for which the employee is compensated.
c. They will be prepared at least monthly and must coincide with one or more pay periods.
d. They will be signed by the employees.
Hancock County School System has implemented adequate internal controls over personal services expenditures for Federal Programs.
The Hancock County School System has implemented procedures to ensure that all personnel salary cost charged to Federal Programs are for only those whose time has been expended on those Federal Programs and will be supported by adequate time records. Once the information has been evaluated, the Georgia Department of Education will determine if a reclaim of grant funds is appropriate and the Hancock County Board of Education will respond to this reclaim.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.kl2.ga.us
-5-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FA-6701-06-03
We concur with this finding. In the future, the system will implement procedures to ensure that all costs are allowable under 0MB Circular A-87. Hancock County Board ofEducation will also work to ensure that all purchase orders have been approved by the appropriate management and properly documented accordingly. Once the information has been evaluated, the Georgia Department of Education will determine if a reclaim of the $13 5 funds is appropriate and the Hancock County Board of Education will respond to this reclaim.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.kl2.ga.us
Finding Control Number: FA-6701-06-04
We concur with this finding. In the future, the system will implement procedures to ensure that all costs are allowable under 0MB Circular A-87. Hancock County Board ofEducation will also work to ensure that all purchase orders have been approved by the appropriate management and properly documented accordingly. Once the information has been evaluated, the Georgia Department of Education will determine if a reclaim of the $74,690 funds is appropriate and the Hancock County Board of Education will respond to this reclaim.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.kl2.ga.us
Finding Control Number: FA-6701-06-05
We concur with this finding. In the future, the system will implement procedures to ensure that all costs are allowable under 0MB Circular A-87. Hancock County Board ofEducation will also work to ensure that all purchase orders have been approved by the appropriate management and properly documented accordingly. Once the information has been evaluated, the Georgia Department of Education will determine if a reclaim ofthe $1,290 is appropriate and the Hancock County Board of Education will respond to this reclaim.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.kl2.ga.us
-6 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FA-6701-06-06
We concur with this finding. The Hancock County School System has implemented policies and procedures that expenditures are approved and all personnel salary cost charged to the Federal Program will be supported by adequate time records and pay scales. Once the information has been evaluated, the Georgia Department of Education will determine if a reclaim of the $218 is appropriate and the Hancock County Board of Education will respond to this reclaim.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.kl2.ga.us
Finding Control Number: FA-6701-06-07
We do not concur with this finding. The Hancock County School System has implemented procedures to ensure that documentation is maintained for audit purposes in compliance with the requirements ofthe consolidated grant application and 34 CFR 76.730. The system's Indirect Cost Plan for Title I is readily available for review.
Contact Person: Mrs. Bettye Richardson, Assistant Superintendent Phone: (706) 444-5775 Ext. 178 Fax Number: (706) 444-7026 E-mail Address: brichardson@hancock.k12.ga.us
Finding Control Number: FA-6701-06-08
We concur with this finding. The Hancock County School System has implemented procedures to accurately forecast cash needs on the required Contract Expenditure Reports. The new procedures will accurately forecast cash needs based on actual expenditures incurred in order to minimize or eliminate the time elapsing between the transfer offunds from the Georgia Department ofEducation and the disbursement of such funds by the School District. Once the information has been evaluated, the Georgia Department of Education will determine if a reclaim of the $1,355 is appropriate and the Hancock County Board of Education will respond to this reclaim.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.kl2.ga.us
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FA-6701-06-09
We concur with this finding. The Hancock County School System has implemented procedures for adequate internal control over the Title I Grant. An accounting consultant has been employed to ensure that all allocations in the areas ofthe lower poverty areas and higher poverty areas for the K5 grade span are adequately allocated. Once the information has been evaluated, the Georgia Department of Education will determine if a reclaim of the $104 is appropriate and the Hancock County Board of Education will respond to this reclaim.
Contact Person: Mrs. Bettye Richardson, Assistant Superintendent Phone: (706) 444-5775 Ext. 178 Fax Number: (706) 444-7026 E-mail Address: brichardson@hancock.kl2.ga.us
Finding Control Number: FA-6701-06-10
We concur with this finding. The Hancock County School System will implement appropriate procedures to ensure that expenditures are charged during the approved grant period. Once the information has been evaluated, the Georgia Department ofEducation will determine ifa reclaim of the $9,418 is appropriate and the Hancock County Board of Education will respond to this reclaim.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.k12.ga.us
Finding Control Number: FA-6701-06-11
We concur with this finding. The Hancock County School System has implemented procedures for adequate internal control over the Title I Grants. An accounting consultant has been employed to ensure that all allocations for the K-5 grade span are adequately allocated.
The Hancock County School District has implemented procedures to ensure that the procurement process is implemented properly and that the State Procurement Policy is adhered to. The Hancock County School now has a School District approved policy. The School District reviews all internal controls for Federal compliance procedures, design procedures which enhance monitoring compliance with Federal guidelines and implements proper internal controls relative to Federal compliance requirements and procedures. We have also strengthened our internal control over Federal programs. Once the information has been evaluated, the Georgia Department ofEducation will determine if a reclaim of the grant funds is appropriate and the Hancock County Board of Education will respond to this reclaim.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: ales1ie@hancock.kl2.ga.us
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FA-6701-06-12
We concur with this finding. The Hancock County School System will establish and implement procedures to ensure that required documentation related to procurement, suspension and debarment is maintained as required. The Hancock County School System's nutrition director will be consulted to establish an adequate policy to correct this finding.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.kl2.ga.us
Finding Control Number: FA-6701-06-13
We concur with this finding. The Hancock County School System has implemented procedures to ensure that all requirements of Circular A-133 are met. Included are submissions of its Single Audit report and required related information to the applicable grantor organizations. To satisfy our reporting obligations for the fiscal year 2005 Single Audit Report, the Hancock County School System will provide a copy ofthe Corrective Action Plan to the Georgia Department of Education, Bright from the Start: Georgia Department ofEarly Care and Leaming, and the U. S. Department of Health and Human Services.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.kl2.ga.us
Finding Control Number: FA-6701-06-14
We do not concur with this finding. The appropriate procedures are in place to ensure that accurate completion reports are submitted to the Georgia Department of Education. The Hancock County School System submitted a correct completion report to the Georgia Department of Education in a timely manner. The Hancock County School System has not been notified from the appropriate personnel at the Georgia Department ofEducation that there were any problems with the fiscal year 2006 completion report.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.k12.ga.us
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FA-6701-06-15
We do not concur with this finding. Appropriate procedures are implemented to ensure that unexpended grant balances are refunded to the Georgia Department of Education. We received a letter of Deferred Revenue from John Dunn indicating that the unearned Federal grant funds in the amount of$4,890 has been received by the Georgia Department ofEducation as repayment from the Hancock County Board of Education.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.kl2.ga.us
Finding Control Number: FA-6701-06-16
We concur with this finding. The Hancock County School System has implemented internal controls for monitoring compliance with Federal guidelines. The School District has reviewed the internal controls for Federal compliance procedures in place, designed procedures which will enhance monitoring compliance with Federal guidelines and implemented proper internal controls relative to the findings of School Breakfast Program (CFDA No. 10.533), the Food Services National School Lunch Program (CFDA No. 10.555) and the Food Service - Seamless Summer Nutrition Program (CFDA No. 10.559).
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.k12.ga.us
Finding Control Number: FA-6701-06-17
We concur with this finding. The Hancock County School System has implemented procedures to ensure that if the Title I program continues to be the only funding source in support of our schoolwide program, only those cost that specifically relate to the Title I program will be charged to the Title I fund. The School District will seek the Georgia Department of Education's guidance in implementing fiscal procedures for combining and allocating schoolwide program expenditures to Federal programs.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.k12.ga.us
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FA-6701-06-18
We do not concur with this finding. The Hancock County School System has consulted with the appropriate private school officials to determine whether they intended to participate in the planning, design and implementation ofthe Title I Grants to Local Educational Agencies (CFDA No. 84.0 I0) program. Documentation of this consultation is on file and readily available for perusal.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.k12.ga.us
Finding Control Number: FA-6701-06-19
We concur with this finding. The Hancock County School System will implement procedures to ensure that the verification process is complete and is performed in accordance with program requirements.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.kl2.ga.us
Finding Control Number: FA-6701-06-20
We concur with this finding. The Hancock County School System will implement procedures to ensure compliance with Federal requirements regarding reviews of the after school care program.
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.kl2.ga.us
Finding Control Number: FA-6701-06-21
We concur with this finding. The Hancock County School System has implemented internal controls for monitoring compliance with Federal guidelines. The School District has reviewed the internal controls for Federal compliance procedures in place, designed procedures which will enhance monitoring compliance with Federal guidelines and implemented proper internal controls relative to the findings of the School Breakfast Program (CFDA No. 10.553), the Food Services National School Lunch Program (CFDA No. 10.555) and the Food Service - Seamless Summer Nutrition Program (CFDA No. 10.559).
Contact Person: Dr. Awanna Leslie, Superintendent Phone: (706) 444-5775 Ext. 236 Fax Number: (706) 444-7026 E-mail Address: aleslie@hancock.k12.ga.us
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