Hancock County Board of Education, Sparta, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2008

HANCOCK COUNTY BOARD OF EDUCATION
SPARTA# GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30# 2008
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

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

8

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

9

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

25

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

26

3 SCHEDULE OF STATE REVENUE

28

HANCOCK COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

29

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

31

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 CIRCULARA-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

HANCOCK COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
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
September 11, 2009

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe 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 ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) ofthe Hancock County Board of Education, as of and for the year ended June 30, 2008, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Hancock County Board ofEducation'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 of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Hancock County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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.

2008ARL-11

In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position ofthe governmental activities, each major fund, and the aggregate remaining fund information ofthe Hancock County Board ofEducation, as ofJune 30, 2008, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The Hancock County Board ofEducation has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not to be part of, the basic financial statements.
In accordance with Government Auditing Standards, we have also issued our report dated September 11, 2009, on our consideration of the Hancock County Board of Education's internal control over financial reporting and on 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 25, 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 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the 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, 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,
--ij---00 ~-~ : sell W. Hinton, CPA, CGFM State Auditor
RWH:as 2008ARL-11

HANCOCK COUNTY BOARD OF EDUCATION

HANCOCK COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2008
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Short-Term Debt Contracts Payable Retainages Payable Deposits and Deferred Revenues Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Bus Replacement Continuation of Federal Programs Debt Service Capital Projects Unrestricted (Deficit)
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

163,323.26

240,169.27

1,129,692.69 1, 192,370.54
234,084.95 653,550.00
35,786.19 298,784.22 13,384,428.15

$ ===1=7;;;;,3=32:a;,,,;,;18=9=.2=7

$

93,694.35

1,528,602.12

80,140.35

1,153,200.00

170,771.66

276,323.46

122,110.44

390,000.00 1,865,000.00

$

5,679,842.38

$

11,428,212.37

167,364.74 201,166.63
41,846.25 34,254.59 -220,497.69

$

11,652,346.89

$ ===1=7!=,3=32:a;,,,;,;18=9=.2=7

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

HANCOCK COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2008

GOVERNMENTAL ACTIVITIES
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 Operations of Non-Instructional Services Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$

8,918,928.66 $

827,345.71 566,828.10 252,758.57 914,066.34 916,231.36 547,252.54 1,017,508.05 1,275,969.18 347,337.73 168,095.63

897,181.76 96,232.50

$ 16,745,736.13 $

270,255.00
50,059.46 320,314.46

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

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

6,316,386.53 $

600,596.39 248,652.86 167,284.99 669,863.32 446,127.93 27,476.40 531,680.84 570,380.00
8,812.30 35,033.30

925,328.04

$ 10,547,622.90 $

315,598.00 $
67,969.00 171,259.06 554,826.06 $

-2,016,689.13
-226,749.32 -318,175.24
-85,473.58 -244,203.02 -470, 103.43 -519,776.14 -485,827.21 -637,620.18 -167,266.37 -133,062.33
78,205.74 -96,232.50
-5,322,972. 71

$

4,988,676.01

534,825.82 25,789.73 191,520.00 32,435.75
1,028,327.29

$

6,801,574.60

$

1,478,601.89

10,173,745.00

$ ===1=1,.6.5.=2=,3=4=6=.8=9

-3-

HANCOCK COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2008

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government lnterfund Other Inventories

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 19,894.91 $ 143,428.35 $ 240,169.27

339,654.65 876,772.54 234,084.95 260,000.00 653,550.00
35,786.19

84,000.34 315,598.00

0.00 $

163,323.26 240,169.27
423,654.99 1,192,370.54
234,084.95 260,000.00 653,550.00 35,786.19

Total Assets

$ 2,419,743.24 $ 783,195.96 $

0.00 $ ===3'=20=2=,9=3=9.=20=

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Accounts Payable - lnterfund Salaries and Benefits Payable Payroll Withholdings Payable Short-Term Debt Contracts Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Bus Replacement Continuation of Federal Programs Debt Service Capital Projects
Unreserved Undesignated Reported in: General Fund (Deficit)
Total Fund Balances

$ 93,694.35 $
1,528,602.12 80,140.35
1,153,200.00
122,110.44

260,000.00
170,771.66 276,323.46

$ 2,977,747.26 $ 707,095.12

$ 167,364.74 201,166.63 $

41,846.25 $ 34,254.59

-926,535.39 $ -558,004.02 $

76,100.84 $

$

93,694.35

260,000.00

1,528,602.12

80,140.35

1,153,200.00

170,771.66

276,323.46

122110.44

$

3,684,842.38

$ 0.00
0.00 $

167,364.74 201,166.63 41,846.25
34,254.59
-926,535.39
-481,903.18

Total Liabilities and Fund Balances

$ 2,419,743.24 $ 783,195.96 $

0.00 $ ===3'=20=2=,9=3=9.=20=

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

HANCOCK COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2008

EXHIBIT" "

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable
Net Assets of Governmental Activities (Exhibit "A")

$ -481,903.18

$ 162,776.99 136,007.23 159,612.95
19,201,805.52 2,247,085.82 -8,224,076.14

13,683,212.37

706,037.70

-2,255,000.00 $ 11,652,346.89

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

HANCOCK COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2008

EXHIBIT"E"

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
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES}
Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 4,883,033.31 25,789.73 $
7,558,885.50 3,248,226.40
320,314.46 3,294.88
1,028,327.29

$ 534,825.82 315,598.00
29,140.87

$ 17,067,871.57 $ 879,564.69 $

0.00 $

4,883,033.31 560,615.55
7,874,483.50 3,248,226.40
320,314.46 32,435.75
1,028,327.29

0.00 $ 17,947,436.26

$ 8,669,619.16

$ 8,669,619.16

827,345.71 566,828.10 252,758.57 910,351.78 916,231.36 543,655.26 $ 979,474.50 1,190,343.49 342,818.57 168,095.63 890,822.78

112.10 4,128,590.93

827,345.71 566,828.10 252,758.57 910,351.78 916,231.36 543,767.36 979,474.50 1,190,343.49 342,818.57 168,095.63 890,822.78 4,128,590.93

$ 380,000.00 96,232.50

380,000.00 96,232.50

$ 16,258,344.91 $ 4,128,703.03 $ 476,232.50 $ 20,863,280.44

$ 809,526.66 $ -3,249, 138.34 $ -476,232.50 $ -2,915,844.18

$ 977,376.68 $ 476,232.50 $ 1,453,609.18

$ -977,376.68

-476,232.50

-1,453,609.18

$ -977,376.68 $ 501,144.18 $ 476,232.50 $

0.00

$ -167,850.02 $ -2,747,994.16 $

0.00 $ -2,915,844.18

-390, 154.00 2,824,095.00

0.00

2,433,941.00

$ -558,004.02 $ 1a,100.84 $===o=.o=o $ -481,903.18

The notes to the basic financial statements are an integral part of this statement. -6-

HANCOCK COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2008

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Some of the Capital Assets acquired this year were purchased with e-rate funds. In Governmental Funds, these assets, as well as the associated revenue, are not recognized, but in the Statement of Activities, the contribution of e-rate funds is recognized as a capital contribution.
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Bond Principal Retirements
Change in Net Assets of Governmental Activities (Exhibit "B")

$ -2,915,844.18

$ 4,245,912.45 -508,368.14

3,737,544.31

171,259.06 105,642.70

380,000.00 $=====1..4...1..8..1,6=0=1=.8===9

The notes to the basic financial statements are an integral part of this statement. -7-

HANCOCK COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2008
ASSETS Cash and Cash Equivalents
LIABILITIES Cash Overdraft Funds Held for Others
Total Liabilities

EXHIBIT"G"

AGENCY FUNDS
$ =======o=.o=o

$

61,691.21

-61,691.21

$ ========O=.O=O

The notes to the basic financial statements are an integral part of this statement. -8-

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

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 District-wide financial statements, fund financial statements and notes to the basic financial statements of the Hancock County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement ofActivities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. 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:
-9-

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation ofmajor capital facilities.
Debt Service Fund accounts for taxes (sales) legally restricted for the payment ofgeneral longterm principal, interest and paying agent's fees.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various student club and class accounts.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
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, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds.
- 10 -

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
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. Official Code of Georgia Annotated Section 45-8-14 authorize the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
- 11 -

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(8) Obligations of other political subdivisions of the State of Georgia.

The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration ofcredit risks, interest rate risks or foreign currency risks.

RECEIVABLES

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

PROPERTY TAXES

The Hancock County Board of Commissioners fixed the property tax levy for the 2007 tax digest year (calendar year) on October 24, 2007 (levy date). Taxes were due on December 31, 2007 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2007 tax digest are reported as revenue in the governmental funds for fiscal year 2008. 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, 2008, for maintenance and operations amounted to $4,717,999.63.

The tax millage rate levied for the 2007 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

16.9 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $534,825.82 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.

- 12 -

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value ofassets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works ofart. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.

Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment

All

NIA

$ 5,000.00

15 years

$ 5,000.00

40 years

$ 5,000.00 5 to 12 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

GENERAL OBLIGATION BONDS

The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities.

- 13 -

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

In the District-wide and fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. To conform to generally accepted accounting principles, bond premiums and discounts, as well as issuance costs, should be deferred and amortized over the life ofthe bonds using the straight-line method. The effect ofthis deviation is deemed to be immaterial to the fair presentation of the basic financial statements. General obligation bonds are direct obligations and pledge the full faith and credit ofthe government. The outstanding amount of these bonds is recorded in the Statement ofNet Assets.

NET ASSETS

The School District's net assets in the District-wide Statements are classified as follows:

Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.

Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.

DEFICIT FUND BALANCES

Funds reporting a deficit fund balance at June 30, 2008, are as follows:

Fund Type/Fund Name

Deficit Balances

Governmental Fund Type General Fund
Fiduciary Funds Agency Funds

$ 926,535.39 $ 61,691.21

The School District plans to eradicate the deficit through a reduction in spending and an increase in the millage rate.

- 14 -

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS
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 of insurance, 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 of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws 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 or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 2008, the bank balances were $637,345.79. The amounts of the total uninsured bank balances are classified into three categories of custodial credit risk:

- 15 -

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

Note 3: DEPOSITS AND INVESTMENTS

Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the School District's name.

The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2008, as follows:

Custodial Credit Risk Category

Bank Balance

1

$

0.00

2

435,820.70

3

0.00

Total

$ 435,820.70

CATEGORIZATION OF INVESTMENTS At June 30, 2008, the carrying value of the School District's total investments was $240,169.27, which is materially the same as fair value. This investment consisted entirely of funds invested in the Georgia Fund 1, formerly referred to as LGIP, administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office ofTreasury and Fiscal Services for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State ofGeorgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.state.ga. us/intemet/searchRpts.html.

The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2008, was 40 days.

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

- 16 -

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 5: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress
Total Capital Assets Not Being Depreciated
Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements
Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements
Total Capital Assets, Being Depreciated, Net
Governmental Activity Capital Assets - Net

Balances Julx 1, 2007

Increases

Decreases

Balances June 30, 2008

$ 162,776.99

$ 162,776.99

418,507.00 $ 136,007.23 $ 418,507.00

136,007.23

$ 581,283.99 $ 136,007.23 $ 418,507.00 $ 298,784.22

$14,815,920.01 $ 4,385,885.51

2,110,984.00

154,172.82 $

0.00

159,612.95

$ 19,201,805.52 18,071.00 2,247,085.82
159,612.95

6,271,050.00 1,462,729.00
0.00

360,222.05 142,825.66
5,320.43

18,071.00

6,631,272.05 1,587,483.66
5,320.43

$ 9,193,125.01 $ 4,191,303.14 $

0.00 $ 13,384,428.15

$ 9,774,409.00 $ 4,327,310.37 $ 418,507.00 $ 13.683.212 37

Current year depreciation expense by function is as follows:

Instruction Support Services
General Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services

$ 324,107.14

$

4,829.00

4,530.80

49,444.35

111,315.05

5,875.00

175,994.20 8,266.80

$ 508,368.14

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) and general obligation bond proceeds are restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2008, were as follows:

- 17 -

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 6: RESTRICTED ASSETS

District-wide Capital Projects

Bond

SPLOST

Proceeds

Restricted Cash and Cash Equivalents: Capital Acquisitions
Restricted Investments: Debt Services Capital Acquisitions

$ 143,428.35
$ 41,846.25 $ 198,323.02

Note 7: INTERFUND ASSETS AND LIABILITIES

Due to and due from other funds are recorded for interfund receivables and payables which arise from interfund transactions. Interfund balances at June 30, 2008, consisted of the following:

Due From Other Funds

Due To Other Funds

General Fund District-wide Capital Projects

$ 260,000.00 $ 260,000.00

$ 260,000.00 $ 260,000.00

Interfund balances are incurred to repay the General Fund for capital construction project expenditures with future SPLOST receipts.

Note 8: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2008, consisted of the following:

Transfer to

Transfers From

District-wide

General

Capital

Fund

Projects

District-wide Capital Projects
Debt Service Fund

$ 977,376.68 $ 476,232.50

Total

$ 977376.68 $ 476,232.50

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

Note 8: INTERFUND TRANSFERS

Transfers are used to (1) move SPLOST revenue to the Debt Service Fund for payment ofbonds and (2) move local funds from the General Fund to the Capital Projects Fund to cover capital construction project expenditures.

Note 9: 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 of God. 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.

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

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

2007 2008

Beginning ofYear Liability

Claims and Changes in Estimates

$

4,748.00 $ -1,286.00 $

$

3,462.00 $ 12,326.00 $

Claims Paid

End ofYear Liability

0.00 $ 15,788.00 $

3,462.00 0.00

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

Position Covered

Amount

Superintendent All Employees

$ 100,000.00 $ 50,000.00

Note 10: SHORT-TERM DEBT

The School District obtains temporary loans in advance of property 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 of Georgia 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.

- 19 -

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 10: SHORT-TERM DEBT

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

Beginning Balance

Issued

Redeemed

Ending Balance

Temporary Loans

$=~0-.0~0 $2,143,400.00 $990,200.00 $1,153,200.00

Note 11: LONG-TERM DEBT

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

Purpose

Interest Rates

Amount

General Government - Series 2005

3.15% - 4.10% $ 2,255,000.00

The changes in Long-Term Debt during the fiscal year ended June 30, 2008, were as follows:

G.O. Bonds

Balance Julx I, 2007

Governmental Funds

Additions

Deductions

Balance June 30, 2008

Due Within One Year

$ 2,635,QQQ,QQ $

QQQ $ 38Q QQ0.Q0 $ 2,255,QQQ,QQ $ 32Q,QQQ,QQ

At June 30, 2008, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

General Obligation

Debt

Principal

Interest

2009 2010 2011 2012 2013 2014 - 2016

$ 390,000.00 $ 405,000.00 420,000.00 195,000.00 200,000.00 645,000.00

83,692.50 70,432.50 56,257.50 40,927.50 33,615.00 52,555.00

Total Principal and Interest Note 12: ON-BEHALF PAYMENTS

$ 2,255,000.00 $ 337,480.00

The School District has recognized revenues and costs in the amount of $395,885.83 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

- 20 -

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

Note 12: ON-BEHALF PAYMENTS
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance ofNon-Certified Personnel In the amount of $393,224.42
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $334.41
Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of$2,327.00
Note 13: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
Note 14: POSTEMPLOYMENT BENEFITS
Georgia Retiree Health Benefit Fund
Plan Description. The School District contributes to the Georgia Retiree Health Benefit Fund ("GRHBF"), a cost-sharing multiple-employer defined benefit postemployment healthcare plan administered by the Department ofCommunity Health. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries. Pursuant to Title 45, Chapter 18 ofthe Official Code ofGeorgia Annotated, the authority to establish and amend the benefit provisions ofthe plan is assigned to the Board of Community Health. The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department ofCommunity Health at 2 Peachtree Street, Atlanta, Georgia 30303.

- 21 -

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

Note 14: POSTEMPLOYMENT BENEFITS

Funding Policy. The contribution requirements of plan members and participating employers are established and may be amended by the Board of Community Health. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) of the cost of health insurance coverage.

Participating employers are statutorily required to contribute in accordance with the employer contribution rate established by the Board of Community Health. This contribution rate is established to fund both the active and retired employee health insurance plans based on projected pay-as-you-go financing requirements. The employer contribution rates for the combined active and retiree plans for the fiscal year ended June 30, 2008, were as follows:

Teachers Non-Certificated Employees

18.534% of state-based salaries $162.72 per month

The School District's contribution to the health insurance plans for the fiscal year ended June 30, 2008, was $1,017,673.96, which equaled the required contribution.

Note 15: 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 ofGeorgia (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 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

- 22-

HANCOCK COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

Note 15: RETIREMENT PLANS
Fiscal Year
2008 2007 2006

Percentage Contributed
100% 100% 100%

Required Contribution
$ 717,703.05 $ 682,903.00 $ 631,621.00

- 23 -

(This page left intentionally blank)

HANCOCK COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2008

SCHEDULE "1"

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
Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES}
Other Sources Other Uses
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

$ 5,172,716.61 $ 5,172,716.61 $ 4,883,033.31

25,789.73

6,837,631.00

6,869,753.00

7,558,885.50

1,585,463.00

1,711,449.00

3,248,226.40

320,314.46

2,000.00

2,000.00

3,294.88

135,000.00

135,000.00

1,028,327.29

$ 13,732,810.61 $ 13,890,918.61 $ 17,067,871.57

$ 8,415,057.18 $ 8,280,793.73 $ 8,669,619.16

811,674.00 408,794.00 229,361.00 805,013.60 941,202.00 472,221.00 748,800.00 1,430,924.00 281,622.00 201,412.83
61,729.00 15 159.00

803,629.00 444,785.67 229,361.00 797,035.93 941,202.00 472,221.00 742,856.00 1,515,559.00 281,622.00 244,025.66
66,023.00 15159.00

827,345.71 566,828.10 252,758.57 910,351.78 916,231.36 543,655.26 979,474.50 1,190,343.49 342,818.57 168,095.63 890,822.78

$ 14,822,969.61 $ 14,834,272.99 $ 16,258,344.91

$ -1,090, 159.00 $

-943,354.38 $

809,526.66

$

3,000.00 $

-8 000.00

$

-5 000.00 $

$ -1,095, 159.00 $

-941, 178.53

3,000.00 -8 500.00 $ -5 500.00 $ -948,854.38 $ -918,681.86 736,831.50

-977,376.68 -977 376.68 -167,850.02 -390,154.00

Fund Balances - Ending

$ -2,036,337.53 $ -1130 704.74 $==-,;;;55;;,;8~,0~0~4-;;;,02~

Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual

(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.

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.

-25-

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2008

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 Summer Food Service Program For Children
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 Career and Technical Education - Basic Grants to States Education for Homeless Children and Youth Improving Teacher Quality State Grants Rural Education Safe and Drug-Free Schools and Communities - State Grants State Grants for Innovative Programs Title I Grants to Local Educational Agencies
Total U.S. Department of Education
Health and Human Services, U. S. Department of Direct Head Start
Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program

Total Federal Financial Assistance N/A = Not Available

- 26 -

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

. 10.553 . 10.555 . 10.559

N/A N/A $ N/A
$

(2) 693,050.49
(2)
693,050.49

10.550

N/A $

48,507.57 741,558.06

94.004

N/A $

1 682.80

. 84.027 . 84.173

N/A $
N/A
$

291,199.16 9 457.00
300,656.16

84.048 84.196 84.367 84.358 84.186
. 84.298 84.010

N/A

19,408.20

N/A

44,286.47

N/A

145,428.00

N/A

45,258.00

N/A

5,649.15

N/A

2,514.42

N/A

655,885.64

$ 1,219,086.04

93.600

$ 1,192,955.36

$

55 180.57

$ =~3,!=2=10;;i,,4,;;;6;;;2;,;;;.8~3

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2008

SCHEDULE "2"

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 ($232,034.33) and the Summer Food Service Program for Children ($17,419.28) were not maintained separately and are included in the 2008 National School Lunch Program.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Hancock County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 27 -

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2008

SCHEDULE "3"

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 Mid-term Adjustment Hold-Harmless Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Georgia Communities in Schools Dropout Prevention Graduation Coaches Health Insurance Middle School Math and Remediation and Intervention Grant Preschool Handicapped Program Teachers' Retirement
Georgia State Financing and Investment Commission Capital Outlay Grants
Office of Treasury and Fiscal Services Public School Employees Retirement

See notes to the basic financial statements.

-28-

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$ 206,499.82

$

206,499.82

347,707.00 44,816.00
849,168.00 113,472.00 387,354.00 84,886.00 714,033.00 609,284.00 252,474.00
42,122.00 208,657.00 675,973.00
86,599.00 102,647.00 182,228.00 136,961.00 54,109.00 130,391.00 39,395.00
26,356.00
326,561.00 331,169.00 326,164.00
344,461.00 67,969.00 12,000.00 41,490.00
142,629.00 191,520.00
44,498.00 26,997.85 -127,038.00
35,000.00 84,192.00 393,224.42
1,413.00 18,842.00
334.41

347,707.00 44,816.00
849,168.00 113,472.00 387,354.00 84,886.00 714,033.00 609,284.00 252,474.00
42,122.00 208,657.00 675,973.00
86,599.00 102,647.00 182,228.00 136,961.00 54,109.00 130,391.00 39,395.00
26,356.00
326,561.00 331,169.00 326,164.00
344,461.00 67,969.00 12,000.00 41,490.00
142,629.00 191,520.00
44,498.00 26,997.85 -127,038.00
35,000.00 84,192.00 393,224.42
1,413.00 18,842.00
334.41

$ 315,598.00 2,327.00

315,598.00 2,327.00

$ 7,558,885.50 $ 315,598.00 $ 7,874,483.50

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2008

SCHEDULE "4"

PROJECT
Renovating, extending, repairing and equipping M.E. Lewis Elementary School, including the acquisition and construction of a ten (10) classroom addition; (ii) acquiring, constructing and equipping new athletic facilities for the School District; (iii) acquiring any property necessary therefore, both real and personal; and (iv) paying costs incident to accomplishing the foregoing.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

$ 3,000,000.00 $ 4,796,755.43 $ 4,224,823.43 $ 571,932.00 Ongoing

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the project. Includes all cost from project inception to completion.
(3) The voters of Hancock County approved the imposition of a 1% sales tax to fund the above project and retire associated debt. Amounts expended for this project may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project.

See notes to the basic financial statements.

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HANCOCK COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2008

SCHEDULE "5"

DESCRIPTION
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 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 Gifted Student - Category VI Remedial Education Program Alternative Education Program
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES OPERATIONS

TOTAL

$

437,765.00 $ 408,169.36 $

46,535.00

58,868.60

1,014,146.00

563,629.54

133,212.00

292,290.99

475,733.00

713,319.34

260.50 $
748.05 116.80 260.50

408,429.86 58,868.60
564,377.59 292,407.79 713,579.84

102,674.00 886,812.00 757,516.00 303,379.00 1,321,836.00
195,721.00 151,800.00
67 833.00

111,954.34 1,320,878.54 1,240,289.02
328,405.54
62,140.77 368,517.10 351,943.54
1,709.44 122,514.85

116.80 8,618.04 9,408.59 17,718.52
324.07 41,527.48

112,071.14 1,329,496.58 1,249,697.61
346,124.06
62,140.77 368,517.10 351,943.54
2,033.51 164,042.33

$

5,894,962.00 $ 5,944,630.97 $

79,099.35 $ 6,023,730.32

157,779.00 31,930.00

186,110.69

50,300.00

236,410.69 44 070.76

TOTAL QBE FORMULA FUNDS

$

6,084,671.00 $ 6,130,741.66 $ 129,399.35 $ 6,304,211.77

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment.

See notes to the basic financial statements.

- 31 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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
September 11, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members ofthe 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 the governmental activities, each major fund, and the aggregate remaining fund information ofHancock County Board ofEducation as ofand for the year ended June 30, 2008, which collectively comprise Hancock County Board of Education's basic financial statements and have issued our report thereon dated September 11, 2009. 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 as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the Hancock County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness ofthe Hancock County Board of Education's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies.
2008YB-40

A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Hancock County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement ofthe Hancock County Board ofEducation's financial statements that is more than inconsequential will not be prevented or detected by the Hancock County Board ofEducation's internal control. We consider items FS-6701-08-01, FS-6701-08-02, FS-6701-08-03, FS-6701-08-04, FS-6701-08-05, FS-6701-08-06, FS-6701-08-07 and FS-6701-08-08 in the accompanying Schedule ofFindings and Questioned Costs to be significant deficiencies in internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Hancock County Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, of the significant deficiencies described above, we consider items FS-6701-08-01, FS-6701-08-03, FS6701-08-06, FS-6701-08-07 and FS-6701-08-08 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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of Hancock County Board of Education in a separate letter dated September 11, 2009.
Hancock County Board ofEducation's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Hancock County Board of Education's response and, accordingly, we express no opinion on it.
2008YB-40

This report is intended solely for the information and use ofmanagement, members ofthe Hancock County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:as 2008YB-40

ell W. Hinton, CPA, CGFM State Auditor

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
September 11, 2009

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
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, 2008. Hancock County Board ofEducation's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Hancock County Board of Education's management. Our responsibility is to express an opinion on Hancock County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Hancock County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the

2008SA-40

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.
In our opinion, the Hancock County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 2008. The results of our auditing procedures disclosed instances ofnoncompliance with those requirements, which are described in the accompanying Schedule of Findings and Questioned Costs as items FA-6701-08-02 and FA-6701-08-04.
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, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Hancock County Board of Education's internal control over compliance.
Our consideration of the internal control over compliance was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in the Board's internal control that might be significant deficiencies or material weaknesses as defined below. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be significant deficiencies.
A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type ofcompliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement ofa Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. We consider the deficiencies in internal control over compliance described in the accompanying Schedule ofFindings and Questioned Costs as items FA6701-08-01, FA-6701-08-02, FA-6701-08-03 and FA-6701-08-04 to be significant deficiencies.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control. We do not consider any ofthe deficiencies described in the accompanying Schedule ofFindings and Questioned Costs to be material weaknesses.
2008SA-40

Hancock County Board ofEducation's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Hancock County Board of Education's response and, accordingly, we express no opinion on it.

This report is intended solely for the information and use ofmanagement, members ofthe Hancock County Board of Education, others within the entity, 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,

.

~ ~-~:::t;._

Russell W. Hinton, CPA, CGFM State Auditor

RWH:as 2008SA-40

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, 2008

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FS-6701-03-06 Further Action Not Warranted

(1)

FS-6701-03-07 Further Action Not Warranted

(1)

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-6701-05-09 Previously Reported Corrective Action Implemented

FS-6701-05-11 Partially Resolved - See Corrective Action/Responses

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

FS-6701-06-03 Further Action Not Warranted

FS-6701-06-04 Further Action Not Warranted

FS-6701-06-08 Partially Resolved - See Corrective Action/Responses

FS-6701-06-10 Unresolved - See Corrective Action/Responses

FS-6701-06-11 Further Action Not Warranted

FS-6701-07-01 Partially Resolved - See Corrective Action/Responses

FS-6701-07-02 Partially Resolved - See Corrective Action/Responses

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

FS-6701-07-04 Partially Resolved - See Corrective Action/Responses

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

FS-6701-07-06 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

EXPENDITURES/LIABILITIES/DISBURSEMENTS Undocumented/Improper Corporate Credit Card Expenditures Amount: $34,367 Finding Control Number: FS-6701-04-09

The Board ofEducation will review these expenditures to determine ifthis amount needs to be refunded.

- 1-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
EMPLOYEE COMPENSATION Payroll Sample Exceptions Finding Control Number: FS-6701-04-10
The Board ofEducation will review these expenditures to determine ifthis amount needs to be refunded.
GENERAL LEDGER Failure to Refund Unexpended Funds Amount: $34,226 Finding Control Number: FS-6701-04-13
Hancock County School System paid $177,998 to Georgia Department ofEducation (GDOE) for various refunds ofunexpended funds. There is $34,000 that has not been refunded because Mrs. Rhonda Metts, Financial Review Administrator of GDOE, told me to hold it until she got in touch with appropriate department to determine if this should be paid back.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Undocumented/Improper Corporate Credit Card Expenditures Amount: $2,291 Finding Control Number: FS-6701-05-11
The Board of Education at its next regular Board meeting will resolve this issue. The next Board of Education meeting will be on August 3, 2009.
GENERAL LEDGER Failure to Refund Unexpended Funds Amount: $97,460 Finding Control Number: FS-6701-05-13
Hancock County School System contacted Mrs. Rhonda Metts, Financial Review Administrator of GDOE, and she told me to hold this until she got in touch with appropriate department to determine pay back.
-2 -

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Follow Statewide Travel Regulations Amount: $1,573 Finding Control Number: FS-6701-06-08
The Hancock County School District has implemented controls to prevent this from happening in the future. The Board of Education will meet on August 3, 2009 to resolve this issue.
GENERAL LEDGER Failure to Refund Unexpended Funds Amount: $226 Finding Control Number: FS-6701-06-10
Hancock County School System contacted Mrs. Rhonda Metts, Financial Review Administrator of GDOE, and she told me to hold this until she got in touch with appropriate department to determine pay back.
CASH AND CASH EQUIVALENTS Inadequate Separation of Duties Finding Control Number: FS-6701-07-01
This is being done but it is difficult to do it each month because ofso many duties, it is hard to keep up with all of them.
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Finding Control Number: FS-6701-07-02
School Activity funds are being reported and recorded in general ledger. The new financial system (CSI plus) will be used in fiscal year 2009 to record daily transactions.
-3-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES BUDGET PREPARATION/EXECUTION Deficit Fund Balance Finding Control Number: FS-6701-07-03 Hancock County School District is doing everything possible to have a surplus. The economy has not been helping this goal. The Hancock County School System came very close to having a surplus in fiscal year 2008. There should be a surplus in fiscal year 2009. GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number: FS-6701-07-04 Hancock County School System has been reviewing the journal entries and we should have this resolved in fiscal year 2009. CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-6701-07-05 The plan is to have a person trained and able to handle the fixed assets ofthe School System. FINANCIAL REPORTING Inadequate Controls over Financial Reporting Finding Control Number: FS-6701-07-06 The plan is to hire an independent CPA firm to do the financial statements for fiscal year 2009. This helps ensure the accuracy and preparation in accordance with generally accepted accounting principles.
-4-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FA-6701-03-01 Further Action Not Warranted

(1)

FA-6701-03-02 Further Action Not Warranted

(1)

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

FA-6701-04-02 Partially Resolved - See Corrective Action/Responses

FA-6701-04-03 Partially Resolved - See Corrective Action/Responses

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

FA-6701-04-07 Partially Resolved - See Corrective Action/Responses

FA-6701-04-08 Further Action Not Warranted

(2)

FA-6701-05-01 Partially Resolved - See Corrective Action/Responses

FA-6701-05-03 Partially Resolved - See Corrective Action/Responses

FA-6701-05-04 Partially Resolved - See Corrective Action/Responses

FA-6701-05-05 Previously Reported Corrective Action Implemented

FA-6701-05-06 Partially Resolved - See Corrective Action/Responses

FA-6701-05-07 Partially Resolved - See Corrective Action/Responses

FA-6701-05-09 Partially Resolved - See Corrective Action/Responses

FA-6701-06-01 Partially Resolved - See Corrective Action/Responses

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

FA-6701-06-03 Partially Resolved - See Corrective Action/Responses

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

FA-6701-06-05 Partially Resolved - See Corrective Action/Responses

FA-6701-06-08 Partially Resolved - See Corrective Action/Responses

FA-6701-06-09 Partially Resolved - See Corrective Action/Responses

FA-6701-06-10 Partially Resolved - See Corrective Action/Responses

FA-6701-06-13 Partially Resolved - See Corrective Action/Responses

FA-6701-06-14 Further Action Not Warranted

(2)

FA-6701-06-16 Partially Resolved - See Corrective Action/Responses

FA-6701-06-17 Further Action Not Warranted

(2)

FA-6701-07-01 Previously Reported Corrective Action Implemented

FA-6701-07-02 Further Action Not Warranted

(2)

-5-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
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.
(2) Findings/internal control deficiencies ofthis nature, that are not deemed significant deficiencies or material weaknesses and do not require reporting in the audit report in accordance with 0MB Circular A-133, will be communicated in a management letter.
CORRECTIVE ACTION/RESPONSES
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable Expenditures Amount: $5,188 Finding Control Number: FA-6701-04-01
The Food Service Director was terminated and credit card was canceled. Numerous letters were sent to the last known address but no response. Persons moved and have not been able to get a forwarding address.
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 ofthe 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. Also, the School District is currently waiting on a clearance letter from the Georgia Department ofEducation.
-6-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable Expenditures Amount: $5,543 Finding Control Number: FA-6701-04-03
This finding has been forwarded to Georgia Department of Education for resolution by the appropriate program manager. Until we get a resolution back in writing and a recommendation from the program manager, we are holding on this item.
CASH MANAGEMENT Excessive Cash Balances Amount: $159 Finding Control Number: FA-6701-04-04
The School District has corrected cash management so that this does not happen in the future. Also, we are waiting for a response from Georgia Department ofEducation to see ifrepayment is due.
OTHER-SINGLE AUDIT REPORTING PACKAGE Noncompliance with Audit Report Distribution and Corrective Action Requirements Finding Control Number: FA-6701-04-07
This apparently has not been done.
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Accounting/Internal Control Deficiencies Unallowable Expenditures Amount: $14,749 Finding Control Number: FA-6701-05-01
Mrs. Rhonda Metts, Financial Review Administrator ofGDOE, told me to hold it until she got in touch with appropriate department to determine ifthis should be paid back. The amount in question is $14,749.
-7-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008
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 Mrs. Rhonda Metts, Financial Review Administrator ofGDOE, told me to hold it until she got in touch with appropriate department to determine ifthis should be paid back. The amount in question is $442,545. ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable Expenditures Amount: $276 Finding Control Number: FA-6701-05-04
This finding has been forwarded to Georgia Department of Education for resolution by the appropriate program manager. Until we get a resolution back in writing and a recommendation from the program manager we are holding on this item. 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 ofGeorgia Department ofEducation.
-8-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
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 have a new policy in place for procurement of purchases.
OTHER- SINGLE AUDIT REPORTING PACKAGE Noncompliance with Audit Report Distribution and Corrective Action Plan Requirements Finding Control Number: FA-6701-05-09
This apparently has not been done.
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable/Unauthorized/Undocumented Expenditures Finding Control Number: FA-6701-06-01
The School District has implemented procedures to ensure that all costs are allowable under 0MB Circular A-87, approved by appropriate management, and properly documented. Also, we are awaiting a response from the Georgia Department ofEducation to see ifa refund is due.
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control Procedures over Payroll Amount: $243,972 Finding Control Number: FA-6701-06-02
We are currently waiting on a response from the Georgia Department of Education to determine if a refund of grant funds is appropriate.
-9-

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Amount: $135 Finding Control Number: FA-6701-06-03
We are still waiting on a response from the Georgia Department ofEducation to determine ifa refund of $135 is appropriate.
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control Procedures Amount: $74,690 Finding Control Number: FA-6701-06-04
The Board ofEducation implemented approved salary scales for classified employees. Each employee must file time sheets approved by supervisor before they can be paid.
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unauthorized/Undocumented Expenditures Amount: $1,290 Finding Control Number: FA-6701-06-05
Need clearance from Department of Health and Human Services.
CASH MANAGEMENT Excessive Cash Balances Amount: $1,355 Finding Control Number: FA-6701-06-08
The School District has implemented procedures to accurately forecast the cash needs ofthe program. In addition, we are currently waiting on a response from Georgia Department of Education to determine if a reclaim of the $1,355 is appropriate.
- 10 -

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES MATCHING, LEVEL OF EFFORT AND EARMARKING Failure to Meet Maintenance of Effort Requirements Amount: $ I 04 Finding Control Number: FA-6701-06-09 We are awaiting clearance from Georgia Department of Education. PERIOD OF AVAILABILITY Expenditures Outside of Grant Period Amount: $9,418 Finding Control Number: FA-6701-06-10 The School District is awaiting clearance from Georgia Department of Education. OTHER - SINGLE AUDIT REPORTING PACKAGE Noncompliance with Audit Report Distribution and Corrective Action Plan Requirements Finding Control Number: FA-6701-06-13 This apparently has not been done. REPORTING DE-0106 Report not Supported by the DE-0112 and DE-0118 Reports Amount: $174 Finding Control Number: FA-6701-06-16 Mrs. Rhonda Metts, Financial Review Administrator ofGDOE, told me to hold it until she got in touch with appropriate department to determine ifthis should be paid back. The amount in question is $174.
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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, 2008

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 unqualified.

2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Hancock County Board of Education disclosed financial statement significant deficiencies related to the following control categories.

Cash and Cash Equivalents Employee Compensation General Ledger Budget Preparation/Execution

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

Of the significant deficiencies described above, Cash and Cash Equivalents, Budget Preparation/Execution, General Ledger, Capital Assets, and Financial Reporting are considered to be material weaknesses.

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

4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Hancock County Board of Education disclosed significant deficiencies in internal control over major programs for the following compliance requirements.

Activities Allowed or Unallowed Allowable Costs/Cost Principles Reporting

Period of Availability of Federal Funds Procurement and Suspension and Debarment

None of the significant deficiencies described above are considered to be material weaknesses.

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

6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The Hancock County Board of Education's audit disclosed audit findings required to be reported by section .510(a) 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, 2008

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 10.559 Summer Food Service Program for Children 84.010 Title I Grants to Local Educational Agencies 84.027 Special Education - Grants to States 84.173 Special Education - Preschool Grants

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.

9. Low Risk Auditee The Hancock County Board of Education did not qualify as a low risk auditee as defined by Section .530 of 0MB Circular A-133.

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Material Weakness Finding Control Number: FS-6701-08-01

Condition:

This is a repeat finding (FS-6701-07-01, FS-6701-06-03, FS-6701-05-03 and FS-6701-04-03) from the years ended June 30, 2007, June 30, 2006, June 30, 2005 and June 30, 2004, respectively. The accounting procedures of the School District were insufficient to provide adequate internal control procedures over the Cash and Cash Equivalents function.

Criteria:

The School District's management is responsible for designing and maintaining internal controls over Cash and Cash Equivalents.

Questioned Cost: NIA

Information:

Cash and Cash Equivalents Bank accounts were not properly reconciled to the general ledger resulting in unidentified variances for the Operating, Payroll and Head Start accounts. No administrative review was performed to determine that bank reconciliations were correct and that all required adjustments had been made.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Material Weakness Finding Control Number: FS-6701-08-01

The Project fund account was not recorded on the School District's general ledger.

Cause:

These deficiencies were a result of management's failure to ensure that internal control policies and procedures were established, implemented and functioning as intended with regard to Cash and Cash Equivalents.

Effect:

The lack of adequate control over cash increases the risk for theft, fraud, or misuse of School District resources that may result in errors and/or irregularities which would 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 ensure that all bank accounts are recorded in the School District's accounting records.

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Significant Deficiency Finding Control Number: FS-6701-08-02

Condition:

This is a repeat finding (FS-6701-07-02) from the year ended June 30, 2007. The accounting procedures ofthe School District were insufficient to provide adequate separation of duties and internal controls over school activity accounts.

Criteria:

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

Questioned Cost: NIA

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Significant Deficiency Finding Control Number: FS-6701-08-02

Information:

Cash and Cash Equivalents Bank reconciliations were not properly reconciled. Listings of outstanding checks and deposits provided for the elementary school account were not accurate. The Alternative School and a Middle School account were not recorded on the general ledger. No administrative review was performed to determine that bank reconciliations were correct and that all required adjustments had been made.

Revenues/Receivables/Receipts Deposit preparation was not separated from the record keeping function. None of the tested receipts were supported by adequate documentation to determine if receipts were deposited in a timely manner or properly recorded.

Expenditures/Liabilities/Disbursements Numerous vouchers had no documentation indicating approval prior to purchase. Numerous vouchers had no evidence of receipt, did not have a purchase order or other supporting documentation. Several vouchers were not provided for our review. Several instances were noted where sales tax was paid.

Cause:

The deficiencies were a result ofmanagement's failure to ensure that internal controls were established, implemented, and functioning at the school level and to assign responsibilities to achieve appropriate separation ofduties and utilize management oversight of the incompatible activities to properly safeguard assets.

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, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Significant Deficiency Finding Control Number: FS-6701-08-02

Recommendation:

The School District should revise and monitor controls to provide reasonable assurance that transactions are processed according to established procedures and 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, and implement procedures to ensure that expenditure of schools activity accounts are properly documented and approved prior to payment.

BUDGET PREPARATION/EXECUTION Deficit Fund Balance Failure to Adopt a Balanced Budget Material Weakness Finding Control Number: FS-6701-08-03

Condition:

This is a repeat finding (FS-6701-07-03, FS-6701-06-04, FS-6701-05-04 and FS-6701-04-04) from the years ended June 30, 2007, June 30, 2006, June 30, 2005 and June 30, 2004, respectively. At June 30, 2008, the General Fund and Agency Funds of the Hancock County Board of Education reported deficit fund balances. In addition, the School District failed to adopt a balanced budget for the General Fund.

Criteria:

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

Chapter 32 of the Financial Management for Georgia Local Units of Administration (FMGLUA) state in part: "The budget must be balanced for all budgeted funds. Total anticipated revenues should equal total estimated expenditures. In the event anticipated revenues are insufficient to fund anticipated essential expenditures, a portion ofunreserved fund balance from

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

BUDGET PREPARATION/EXECUTION Deficit Fund Balance Failure to Adopt a Balanced Budget Material Weakness Finding Control Number: FS-6701-08-03

previous years must be used to fund the shortfall. In the event there is insufficient unreserved fund balance from previous years to fund anticipated expenditures, then such expenditures must be reduced to equal anticipated revenues plus available unreserved fund balance".

Questioned Cost: NIA

Information:

The School District's General Fund reported a deficit fund balance in the amount of $926,535.39. In addition, Agency Funds reported a deficit of $61,691.21.

Cause:

The School District's original and final budgets for the General Fund budgeted deficit fund balances in the amounts of $2,036,337.53 and $1,130,704.74, respectively.

Effect:

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

Recommendation:

The School District should establish policies and procedures designed to ensure that expenditures do not exceed availability of resources, so that in future periods the School District does not report a deficit fund balance. In addition, appropriate procedures should be implemented to ensure that the adopted budget for each budgeted fund is balanced as required.

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls Significant Deficiency Finding Control Number: FS-6701-08-04

Condition:

The accounting procedures ofthe School District were insufficient to provide for adequate internal controls over the expenditure process.

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.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls Significant Deficiency Finding Control Number: FS-6701-08-04

Questioned Cost: NIA

Information:

A review of vouchers revealed the following deficiencies: Several vouchers had no documentation indicating approval prior to purchase. Several vouchers had no invoice or other supporting documentation. Vouchers were identified as not being recorded in the correct period, resulting in a misstatement of $9,787.23. Several vouchers were not provided for our review. Several instances were noted where sales tax was paid. An unallowable expenditure to post bail for an employee that was incarcerated was identified. The employee later reimbursed the School District.

Cause:

Management failed to adequately monitor and implement procedures to ensure that appropriate internal controls were established, implemented and functioning.

Effect:

The lack of adequate control over expenditures may result in misstatements which would not be detected in a timely manner.

Recommendation:

The School District should develop and implement procedures sufficient to ensure that all expenditures are properly approved, adequately documented, allowable in accordance with State and local procurement policies, and are recorded in the proper accounting period.

EMPLOYEE COMPENSATION Inadequate Internal Controls Significant Deficiency Finding Control Number: FS-6701-08-05

Condition:

The School District failed to implement procedures to ensure that salary payments were accurately calculated and documented. In addition, the School District failed to ensure that leave records were maintained accurately.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EMPLOYEE COMPENSATION Inadequate Internal Controls Significant Deficiency Finding Control Number: FS-6701-08-05

Criteria:

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

Questioned Cost: NIA

Information:

Based on our testing of employees' payroll records, the following deficiencies were noted:
We identified salary overpayments of$1,119.24 and underpayments of$204.80 resulting from management's failure to maintain adequate documentation for employees receiving pay for additional work performed.
Several employees' leave records were not maintained properly. Documentation was not maintained to support several employees'
payroll withholdings. Several instances were noted where salary amounts were incorrectly
recorded on the general ledger.

Cause:

Management failed to establish and implement adequate internal controls to ensure compensation was calculated correctly and leave records were properly maintained.

Effect:

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

Recommendation:

The School District's management should develop and implement procedures to ensure that employees are accurately compensated for work performed, that employee leave records are accurate and that employees' salary is properly charged on the general ledger. In addition, management should monitor controls to ensure that transactions are processed according to established procedures. Also, the School District should review this matter to determine if a recovery or payment of funds is necessary.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-6701-08-06

Condition:

This is a repeat finding (FS-6701-07-04, FS-6701-06-11, FS-6701-05-14 and FS-6701-04-15) from the years ended June 30, 2007, June 30, 2006, June 30, 2005 and June 30, 2004, respectively. A review of internal 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 ofthe general ledgerjournal entry function.
Procedures were not in place to ensure documentation was available to support journal entries.

A review ofjournal entries revealed the following: Several journal entries could not be located for review. Journal entries not reviewed and approved by someone independent of the general ledger journal entry function were pervasive. Journal entries contained no supporting documentation.

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.

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.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-6701-08-06

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.

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Material Weakness Finding Control Number: FS-6701-08-07

Condition:

This is a repeat finding (FS-6701-07-05) from the year ended June 30, 2007. The School District failed to adequately maintain the capital assets records.

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:

A review ofthe School District's capital assets records noted deficiencies as discussed below:
The School District lacked proper internal controls to detect significant errors in a timely manner.
The balances on the general ledger did not agree with the subsidiary ledger and the appropriate balances were not submitted to Georgia Department of Education on the DE046 as required. Audit adjustments were necessary to record additions of $4,835,678.51, deletions of $436,578.00 and accumulated depreciation of $490,297.14 to the financial statements.
Assets were incorrectly recorded on the capital asset records resulting in the following misstatements: Building and Building Improvements $186,275.27, Equipment $89,908.58 and Construction in Progress $136,007.23.
Physical inspections ofinventory items revealed that a large number of assets were not tagged or were not located.

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Material Weakness Finding Control Number: FS-6701-08-07

The School District's formal Capital Assets policy does not include: (1) methods to establish and maintain a capital assets, (2) depreciation methods, and (3) estimated useful lives.
The School District does not have a policy and procedure in place to identify the possible impairment of assets. GASB 42 requires government entities to properly account for Impairment ofAssets and Insurance Recoveries.

Cause:

The School District failed to ensure adequate accounting procedures were in place to process, record and report capital assets and related activity.

Effect:

The failure ofthe School District to maintain a complete and accurate capital assets listing can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles.

Recommendation:

The School District should reassess internal control procedures related to capital assets to ensure that they are in place and operating effectively. An administrative review should be performed to ensure the accuracy of capital asset records and make appropriate adjustments to ensure that capital asset records and procedures for maintaining capital assets conform to generally accepted accounting principles.

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-6701-08-08

Condition:

This is a repeat finding (FS-6701-07-06) from fiscal year ended June 30, 2007. The School District did not have adequate controls in place to ensure that all required activity was included in the financial statement information presented for audit.

Criteria:

Chapter 22 Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements 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, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-6701-08-08

Questioned Cost: NIA

Information:

During the audit, the following correcting entries were proposed and accepted by the client to properly present the entity's financial statements:

Contracts and Retainages payables were not recorded. An audit adjustment was necessary to record Contracts payable of $170,771.76 and Retainages payable of $276,323.46.

July and August Special Purpose Local Option Sales Tax was not recorded. An audit adjustment of $84,000.34 was necessary to record this activity.

Accrued benefits for July and August were not recorded. An audit adjustment was necessary to record $219,308.33 in Salaries and Benefits Payable.

School Activity Accounts activity was not recorded in the General Fund. An audit adjustment was necessary to record Cash of $12,297.25, Beginning Fund Balance of$18,824.50, Revenues of$270,254.58 and Expenditures of $263,727.33.

School Activity Accounts activity was not recorded in the Agency Fund. An audit adjustment was necessary to record Cash and Funds Held for Others of $13,581.58.

Georgia State Financing and Investment Commission Revenue was recorded in the General Fund incorrectly instead of the Capital Projects Fund. An audit adjustment was necessary to reclassify revenue of$315,598.00 from the General Fund to the Capital Projects Fund.

Additions and deletions to capital assets were not recorded. An audit adjustment was necessary to record current year capital assets activity. See Finding Control Number FS-6701-08-07.

Cause:

The School District did not implement an adequate system ofinternal control over the financial reporting process.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-6701-08-08

Effect:

The School District did not comply with the requirements of the Georgia Department of Education regarding financial reporting. Numerous adjustments were necessary in order for the School District's financial statements to be in conformity with generally accepted accounting principles.

Recommendation:

The School District should implement controls over the financial statement reporting process to ensure that all required activity is included in the financial statement information.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES PROCUREMENT, SUSPENSION AND DEBARMENT Inadequate Internal Control Procedures Significant Deficiency U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-08-01

Condition:

A review of expenditures charged to the Title I Grants to Local Educational Agencies (CFDA 84.010) program revealed that the School District failed to implement internal control procedures to ensure expenditures were properly documented, authorized, and in compliance with grant requirements.

Criteria:

Provisions of 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: NIA

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES PROCUREMENT, SUSPENSION AND DEBARMENT Inadequate Internal Control Procedures Significant Deficiency U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-08-01

Information:

A review ofexpenditure vouchers for the Title I Grants to Local Educational Agencies (CFDA 84.010) revealed the following deficiencies:
Several voucher packages had no documentation indicating prior approval of the purchases nor did they include a purchase order.
Several vouchers did not have adequate supporting documentation, such as an invoice.
Numerous voucher packages did not have any documentation of receipt.

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 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 expenditures charged to the Federal program are allowable under 0MB Circular A-87, approved by appropriate management and properly documented.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES PERIOD OF AVAILABILITY PROCUREMENT, SUSPENSION AND DEBARMENT Inadequate Internal Control Procedures Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027 and 84.173) Finding Control Number: FA-6701-08-02

Condition:

A review of expenditures charged to the Special Education Cluster (CFDA 84.027 and 84.173) programs revealed that the School District failed to implement internal control procedures to ensure expenditures were properly documented, authorized, recorded in the correct period and in compliance with grant requirements.

Criteria:

Provisions of 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".

OMB's Compliance Supplement (CS), Part 3H, states in part: "Federal awards may specify a time period during which the non-Federal entity may use the Federal funds. Where a funding period is specified, a non-Federal entity may charge to the award only costs resulting from obligations incurred during the funding period... ".

Questioned Cost: $3,282.60

Information:

A review of expenditure vouchers for the Special Education Cluster (CFDA 84.027 and 84.173) revealed the following deficiencies:
Several voucher packages had no documentation indicating prior approval ofthe purchases.
Several voucher packages did not have adequate supporting documentation, such as an invoice.
Voucher packages did not have any documentation ofreceipt. Vouchers could not be located in a couple of instances.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES PERIOD OF AVAILABILITY PROCUREMENT, SUSPENSION AND DEBARMENT Inadequate Internal Control Procedures Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027 and 84.173) Finding Control Number: FA-6701-08-02

Vouchers totaling $3,282.60 were for charges incurred in the prior year but paid from current year grant funds. We also noted where one current year obligation was paid subsequent to the end of the grant period.
One instance was noted where sales tax was paid.

Cause:

Management failed to monitor compliance with Federal guidelines to ensure that expenditures charged to the Federal program were allowable, approved, recorded in the correct period and properly documented.

Effect:

Failure to ensure that program expenditures are allowable, approved, recorded in the correct period 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 expenditures charged to the Federal program are allowable under 0MB Circular A-87, approved by appropriate management, charged to the appropriate grant period and properly documented. Georgia Department of Education should review this matter to determine if a reclaim of funds is appropriate.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES Distribution of Personnel Charges not Supported by Personnel Activity Reports Significant Deficiency U.S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027 and 84.173) Finding Control Number: FA-6701-08-03

Condition:

A review of personal service costs charged to the Special Education Cluster (CFDA 84.027 and 84.173) program revealed that personnel activity reports had not been completed for several employees.

Criteria:

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

Questioned Cost: NIA

Information:

Personnel activity reports documenting actual time worked in the program were not prepared and approved by a responsible official for several Special Education employees.

Cause:

Management failed to implement appropriate procedures to ensure compliance with Federal guidelines regarding the distribution ofsalaries and wages being supported by personnel activity reports.

Effect:

Noncompliance with provisions of 0MB Circular A-87.

Recommendation:

The School District should implement procedures to ensure that salaries and wages paid from Federal award programs are allowable and properly documented in accordance with 0MB Circular A-87.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

REPORTING Failure to Refund Unexpended Grants Significant Deficiency Nonmaterial Noncompliance Corporation for National and Community Service Through Georgia Department of Education Learn and Serve America - School and Community Based Programs (CFDA 94.004) U.S. Department of Education Through Georgia Department of Education Career and Technical Education - Basic Grants to States (CFDA 84.048) Education for Homeless Children and Youth (CFDA 84.196) Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-08-04

Condition:

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

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: $8,294.08

Information:

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

Program

Amount

Career and Technical Education - Basic Grants to States
Education for Homeless Children and Youth Learn and Serve America - School and
Community Based Programs Title I Grants to Local Educational Agencies

$ 1,957.80 $ 1,829.03
$ 1,317.20 $ 3,190.05

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 results in noncompliance with the requirements of the Federal grants.

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

REPORTING Failure to Refund Unexpended Grants Significant Deficiency Nonmaterial Noncompliance Corporation for National and Community Service Through Georgia Department of Education Learn and Serve America - School and Community Based Programs (CFDA 94.004) U.S. Department of Education Through Georgia Department of Education Career and Technical Education - Basic Grants to States (CFDA 84.048) Education for Homeless Children and Youth (CFDA 84.196) Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-6701-08-04

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$8,294.08 to the Georgia Department of Education.

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SECTIONV MANAGEMENT'S RESPONSES

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2008

Finding Control Number: FS-6701-08-01

We concur with this finding. The School District has established procedures to ensure that cash is reviewed and reconciled to the general ledger on a monthly basis. The School District will ensure that all bank accounts are recorded in the School District's accounting records.

Contact Person: Telephone: Fax: Email:

Matthias Jones, Accountant (706) 444-5775 (706) 444-7026 mjones@hancock.kl2.ga.us

Finding Control Number: FS-6701-08-02

We concur with this finding. The School District has updated the monitoring controls to provide reasonable assurance that the transactions are processed according to established procedures and has implemented procedures to ensure that the key accounting functions ofcustody, record keeping and authorization are separated and/or utilized management oversight ofthese incompatible activities, and has implemented procedures to ensure that expenditure ofschools activity accounts are properly documented and approved prior to payment.

Contact Person: Telephone: Fax: Email:

Matthias Jones, Accountant (706) 444-5775 (706) 444-7026 mjones@hancock.kl2.ga.us

Finding Control Number: FS-6701-08-03

We concur with this finding. The School District has established policies and procedures designed to ensure that in future periods the School District does not report a deficit fund balance.

Contact Person: Telephone: Fax: Email:

Dr. Awanna Leslie, Superintendent (706) 444-5775 (706) 444-7026 aleslie@hancock.kl2.ga. us

Finding Control Number: FS-6701-08-04

We concur with this finding. The School District has developed and implemented procedures sufficient to ensure that all expenditures are properly approved, adequately documented, follow State and local procurement policies, and are recorded in the proper accounting period.

Contact Person: Telephone: Fax: Email:

Matthias Jones, Accountant (706) 444-5775 (706) 444-7026 mjones@hancock.kl2.ga.us

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2008

Finding Control Number: FS-6701-08-05

We concur with this finding. The School District's management has developed and implemented procedures to ensure that employees are accurately compensated for work performed, employee leave records are accurate and that employees' salary is properly charged on the general ledger. Management will monitor controls to ensure that transactions are processed according to established procedures.

Contact Person: Julie Scales, Payroll Coordinator

Telephone:

(706) 444-5775

Fax:

(706) 444-7026

Email:

j scales@hancock.kl2.ga.us

Finding Control Number: FS-6701-08-06

We concur with this finding. The School District has reviewed current internal control procedures to ensure that journal entries are properly approved, documented and posted in the accounting records.

Contact Person: Telephone: Fax: Email:

Matthias Jones, Accountant (706) 444-5775 (706) 444-7026 mjones@hancock.kl2.ga.us

Finding Control Number: FS-6701-08-07

We concur with this finding. The School District will reassess internal control procedures related to capital assets to ensure that they are in place and operating effectively. The Finance Director will perform an administrative review to ensure the accuracy of capital asset records and make appropriate adjustments to ensure that capital asset records and procedures for maintaining capital assets and conform to generally accepted accounting principles.

Contact Person: Telephone: Fax: Email:

Gloridine Walker, Inventory Control (706) 444-5775 (706) 444-7026 gwalker@hancock.kl2.ga.us

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2008

Finding Control Number: FS-6701-08-08

We concur with this finding. The School District has implemented controls over the financial statement reporting process to ensure that all required activity is included in the financial statement information.

Contact Person: Telephone: Fax: Email:

Matthias Jones, Accountant (706) 444-5775 (706) 444-7026 mjones@hancock.kl2.ga.us

Finding Control Number: FA-6701-08-01

We concur with this finding. The School District has implemented procedures to ensure that all expenditures charged to the Federal program are allowable under 0MB Circular A-87, approved by the program director and Superintendent and properly documented.

Contact Person: Telephone: Fax: Email:

Bettye Richardson, Title I Director (706) 444-5775 (706) 444-7026 brichardson@hancock.k12.ga. us

Finding Control Number: FA-6701-08-02

We concur with this finding. The School District has implemented procedures to ensure that all expenditures charged to the Federal program are allowable under 0MB Circular A-87, approved by the program director and Superintendent and properly documented.

Contact Person: Jeanette Giles, Special Education Director

Telephone:

(706) 444-5775

Fax:

(706) 444-7026

Email:

jgiles@hancock.k12.ga.us

Finding Control Number: FA-6701-08-03

We concur with this finding. The School District has implemented procedures to ensure that salaries and wages paid from Federal award programs are allowable and properly documented in accordance with 0MB Circular A-87.

Contact Person: Jeanette Giles, Special Education Director

Telephone:

(706) 444-5775

Fax:

(706) 444-7026

Email:

jgiles@hancock.k12.ga. us

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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2008

Finding Control Number: FA-6701-08-04

We concur with this finding. Appropriate procedures have been implemented to ensure that unexpended grant balances are refunded to the Georgia Department of Education. The School District will refund the unearned Federal grant funds of $8,294.08 to the Georgia Department of Education.

Contact Person: Telephone: Fax: Email:

Matthias Jones, Accountant (706) 444-5775 (706) 444-7026 mjones@hancock.kl2.ga.us

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