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' : - I I ,, I , ,,', HARALSON COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS- SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS EXHIBITS GENERAL-PURPOSE FINANCIAL STATEMENTS COMBINED STATEMENTS - OVERVIEW A COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP 2 B COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES 4 C COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS 7 D NOJ'ES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS 8 ADDmONAL FINANCIAL INFORMATION COMBINING STATEMENTS SPECIAL REVENUE FUND E COMBINING BALANCE SHEET 22 F COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 24 CAPITAL PROJECTS FUND G COMBINING BALANCE SHEET 26 H COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 28 SCHEDULES 1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 30 2 SCHEDULE OF STATE REVENUE 32 3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 33 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) 4 BY PROGRAM 34 5 BY SITE 35 HARALSON COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS- SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCEWITHGOVERNMENTAUDITINGSTANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 SECTION ID AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTIONN FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL w. '11JSSELL HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 WJi.hmgton Street. S W., Suite 214 Atlanta, Georgia 30334-8400 March 19, 2003 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Haralson County Board of Education INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying general-purpose financial statements of the Haralson County Board of Education, as of and for the year ended June 30, 2002, as listed in the table of contents. These general-purpose financial statements are the responsibility ofthe Haralson County Board of Education's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to :financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our op1ruon. As described in the notes to the general-purpose financial statements, the Board of Education's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows: 2002ARL-13 * The general-purpose financial statements of the Board of Education did not contain a General Fixed Assets Account Group to account for property and equipment owned by the Board of Education which should be included to conform to generally accepted accounting principles. * School activity accounts maintained at the individual schools are not included in the general-purpose financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general-purpose financial statements. The aggregate effects on the general-purpose financial statements of these variances or omissions have not been determined, but are believed to be material. In our opinion, except for the effects on the general-purpose financial statements of the matters referred to in the preceding paragraph, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position of the Haralson County Board of Education as ofJune 30, 2002, and the results ofits operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated March 19, 2003, on our consideration of the Haralson County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements of the Haralson County Board of Education taken as a whole. The accompanying combining statements (Exhibits E through H) and the financial schedules (Schedules 1 through 5), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the general-purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe general-purpose financial statements and in our opinion, except for the effects ofthe matters referred to in the third paragraph, such information is fairly stated, in all material respects, in relation to the general-purpose financial statements taken as a whole. 2002ARL-13 A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated Section 50- 6-24. sub:4J-..k Respectfully RWH:gp 2002ARL-13 ell W. Hinton HARALSON COUNTY BOARD OF EDUCATION HARAbSON !:;OUNTY BOARD OF EDUCATIQN COMBINED BALANCE SHEET ~bl F!JNQ D'.EE AND ACCOUNT GROUP JUNE 30. 2002 ASSETS Cash and Cash Equivalents Investments Accounts Receivable lnventones Food Donated Commodities Purchased Food Amount Available m Debt Service Fund Amount to be ProVlded In Future Years For Payment of. Bond Debt Capital Lease Agreements GENERAL FUND GOVERNMENTAL FUND TYPES SPECIAL CAPITAL REVENUE PROJECTS FUND FUND $ 2,021,61077 $ 371,294.12 25,000 00 $ 8,749,465 13 2,256,060.18 395,149.63 813,880 65 32,011.75 16,260.79 Total Assets ~t:m bl8~1LIIIES E!.!~Q EQ!.!ID'. LII\BILITIES Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Contracts Payable Retamages Payable Deferred Revenue Capital Lease Agreements General Obligation Bonds Payable Total Liabilities EUND EQ!.!ITY Fund Balances Reserved For Debt SeMce For Expired Grant Balances/Questioned Costs For Inventories Food Donated Commodities Purchased Food For PUl'J)Ose of Bond Issue For SPLOST Projects Unreserved Undesignated Total Fund Equity $ 4,302,670.95 $ 814,716.29 $ 9,563,345.78 $ 629,522.67 $ 1,940,568.72 $ 74,746.19 259,886.99 286.95 4,627.07 284,752.37 83,761.60 $ 2,570,091.39 $ 334,920.13 $ 373141 04 $ $ 1,732,579.56 $ 1,732,579.56 $ 32,011.75 16,260.79 $ 431,523.62 479,796.16 $ 5,511,841.00 3,678,363.74 000 9,190,204.74 Total Liabilities and Fund Equity $ 4,302,670.95 $ 814,716.29 $ 9,563,345.78 The notes to the general-purpose finanaal statements are an integral part of this statement. -2- EXHIBIT"A" DEBT SERVICE FUND ACCOUNT GROUP GENERAL LONG-TERM DEBT TOTALS {Memorandum OnM JUNE 30, 2002 JUNE 30, 2001 $ 2,392,904.89 $ 856,826 59 $ 91,971 40 8,866,436.53 3,602,108 49 3,465,090.46 3,346,027.55 $ 91,971.40 32,011.75 16,260.79 91,971.40 28,743.47 15,603.27 6,208,028.60 21 231.47 6,208,028.60 21,231.47 39,661.03 $ 91 971.40 $ 61321,231 47 $ 21,093,935.89 $ 7,888,970 40 $ 4,627.07 $ 68,912.62 704,268.86 625,997.36 2,200,455.71 2,169,717.72 93,713.48 284,752.37 197,01047 83,761.60 37,545.90 286.95 7,679.66 $ 21,231.47 21,231.47 39,661.03 6,300,000.00 6,300,000.00 $ 6,321,231.47 $ 9,599,384.03 $ 3,240,238.24 $ 91,971.40 000 $ 91 97140 $ 91,971.40 $ 5,726.15 32,011.75 16,260.79 5,511,841.00 3,678,363.74 2,164,103.18 $ 11,494,551.86 $ 28,743.47 15,603.27 2,580,142.69 2,018,516.58 4,648,732 16 $ 91 971.40 $ 6,321.231 47 $ 21.093,935.89 $ 71888,970 40 -3- ---------------------- HARALSON COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 2002 REVENUES State Funds Federal Funds Ta>ces Other Funds Total Revenues EXPENDITURES Current lnstrudlon Support Services Pupil Services Improvement of lnstructlonal Services Educational Media Services General Administration School Administrabon Business Admimstrat1on Maintenance and Operation of Plant Student Transportabon Services Central Support Services Other Support Services Food Services Operation Capital Outlay Debt Service Principal Interest Total Expenditures Excess of Revenues over (under) Expenditures OT!::IEB EIMANClt:m SQURCES !!.!E~l Accrued Interest on Bonds Sold Proceeds from General Obhgatlon Bonds Par Value Operabng Transfers In Operabng Transfers Out Total Other Financing Sources (Uses) Excess of Revenues and Other Finanong Sources over (under) Expenditures and Other F1nanong Uses FUND BALANCE JULY 1 Food Inventory - Net Change in Period Donated Commodities Purchased Food GENERAL FUND SPECIAL REVENUE FUND $ 16,396,497.49 $ 4,927,297.60 367,431.72 $ 21,691,226 81 $ 953,245.73 2,419,338 83 495,022.12 3,867,606.68 $ 15,356,424.63 $ 388,139.64 348,234.99 529,329.58 235,062.20 1,284,547.54 478,492.34 1,510,664.85 1,197,050.76 8,79000 1,892,825.71 341,399.98 92,247.67 47,312.56 18,651.86 50,554 82 17,628 83 1,386,TT8.97 13,961.79 1 241 46 $ 21,351,939.78 $ $ 339,287.03 $ 4,467.n 397.27 3,852,265.44 15,341.24 $ $ -217,909.80 $ -217,909.80 $ s 121,3TT.23 $ 1,611,202.33 3,141.98 3141.98 18,483.22 457,387.14 3,268.28 657.52 FUND BALANCE JUNE 30 $ 1,732,579 56 $=_4..,7=9=-,7=96.,...1,..6.,. The notes to the general-purpose finanoal statements are an integral part of this statement. -4- EXHIBIT"B" CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTALS (Memorandum Only) YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 549,487.62 1,587,819.79 184,548.01 $ $ 2,321,855 42 $ $ 955.69 17,899,230.84 $ 2,419,338.83 6,515,117.39 1,047,957.54 16,995,389.51 2,121,620.56 6,217,905.86 1,199,674.82 955.69 $ 27,881,644.60 $ 26,534,590.75 $ $ 113,0TT.16 2,030,430.82 $ 2,143,507 98 $ $ 178 347 44 $ 0.00 $ 17,249,250.34 $ 16,180,479.28 729,539.62 440,482.66 529,329.58 282,374.76 1,284,547.54 591,569.50 1,529,316.71 1,247,605.58 8,790.00 17,628.83 1,386,TT8.97 2,030,430.82 621,576.61 451,323.17 519,963.n 258,875.08 1,362,014.40 497,010.80 1,539,484.04 1,337,135.60 9,048.82 3,315.08 1,392,349.69 1,925,546.63 18,429 56 1,638.73 22,970.75 2,888.07 0.00 $ 27,347,713.20 $ 26,123,981.79 955.69 $ 533,931.40 $ 410,608.96 $ $ 6,300,000.00 214,767.82 -83,053 21 $ 6,431,714.61 $ $ 6,610,062.05 $ 2,580,142.69 7,962.50 $ 83,053.21 91,015.71 $ 7,962.50 6,300,000.00 300,963.01 $ -300,963 01 6,307,962.50 $ 70,750.42 -70,75042 0.00 91,971.40 $ 0.00 6,841,893.90 $ 4,648,732.16 410,608.96 4,240,449.56 3,268.28 657.52 2,965.57 -5,291.93 $ 9,1901204.74 $ 911971.40 $ 11,494,551.86 $ 41648?32.16 -5- HARALSON COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL INON-GAAP BASIS} GENERAL AND SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30. 2002 EXHIBIT"C" GENERAL FUND BUDGET ACTUAL REVENUES State Funds Federal Funds Taxes Other Funds $ 15,761,913 00 $ 16,396,497 49 4,668,000 00 117 100 00 4,927,297.60 367 431 72 Total Revenues $ 20,547,013 00 $ 21,691,226 81 EXPENDITURES Current Instruction Support SeMCes Pupil SeMces Improvement of lnstructlonal SeMces Educabonal Media SeMceS General Adm1nistrabon School Admin1strabon Business Adm1nistrabon Maintenance and Operation of Plant Student Transportabon SeMces Central Support SelVIC8S Other Support Serv1ces Food Services Operallon Caprtal Outlay Debt Service Total Expenditures Excess of Revenues over (under) Expendrtures $ 14,904,246.06 $ 15,356,424 63 262,617 88 381,070 86 499,388 09 216,531.19 1,366,606 60 247,972 32 1,705,169.86 1,033,520 64 8,812.50 388,13964 348,234 99 529,329.58 235,062 20 1,284,547.54 478,492 34 1,510,664 85 1,197,050.76 8,790.00 69,700 00 15,203 25 $ 20,695,636 00 $ 21,351,939 78 s $ -1481623 00 3391287.03 OTHER Fl~NCING SQUBCES !USES} Other Sources Other Uses \. Total Other Financing Sources (Uses) $ -217,909 80 $ -217,909 80 Excess of Revenues and Other Financing Sources s over (under) Expenditures and Other Financing Uses -148,623.00 s 121,377.23 FUND BALANCE JULY l 2001 1,898,720 38 1,611,202 33 AdJustments Food Inventory - Net Change 1n Penod Donated Commod1bes Purchased Food FUND BALANCE JUNE 30 2002 s s 1.7501001 38 1.7321579 56 SPECIAL REVENUE FUND BUDGET ACTUAL $ 802,760 80 $ 953,245 73 1,698,391 00 2,419,338 83 533.929 00 495,022 12 $ 3,035.080 80 $ 3,867,606 68 $ 2,084,668 47 $ 1,892,825 71 287,763 72 114,279 00 341,399.98 92,247 67 67,607 00 47,312.56 15,255 00 45,552.80 18,651 86 50,554 82 843,583.00 17,628.83 1,386,778 97 4 865 04 $ 3,458,708 99 $ 3,852,265 44 s $ -423,628 19 15 341.24 s 3,141.98 s 3 141 98 s -423,628 19 $ 18,483.22 417,938.19 457,387.14 29,218.33 3,268 28 657.52 s 231528 33 S 479 796 16 The notes to the general:Purpose financial statements are an integral part of this statement -7- HARALSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2002 Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTIN,G ENTITY The Haralson 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 School District 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. FUND ACCOUNTING The School District uses funds and an account group to report on its financial position and the results ofits operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources. General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the School District. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types. Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general-purpose financial statements. The general-purpose financial statements account for all State, Federal, Taxes and Other funds under control of the School District, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows: GOVERNMENTAL FUND TYPES - are used to account for all or most of the School District's educational activities. Governmental Fund Types include: GENERAL FUND - the fund used to account for all financial resources of the School District except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education. -8- HARALSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and from the Federal government to accomplish specific educational objectives. CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities. DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees. ACCOUNT GROUP GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debt outstanding and capital lease obligations. BASIS OF ACCOUNTING The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements ofthese funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources. Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group. Governmental funds are accounted for using the modified accrual basis ofaccounting under which: Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The School District considers receivables collected within sixty days after yearend to be available. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, local option sales taxes, intergovernmental grants and donations. Revenue for property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year the resources are received or susceptible to accrual. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. -9- HARALSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures are generally recognized when the related fund liability is incurred. A substantial number of personnel of the School District were employed for a one hundred and ninety day period beginning in August 2001 and ending in early June 2002. Employment contracts for these employment periods typically specify that compensation be paid in twelve equal monthly payments beginning in September 2001 and ending in August 2002. State grants to fund the State's share of these contracts are disbursed to the School District in the same twelve month period. In accordance with generally accepted accounting principles, salary and fringe benefit expenditures and the related revenue from the State to fund these contracts are recorded in the fiscal period covered by these financial statements. BUDGET The Haralson County Board of Education's budget is a complete financial plan for the School District's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles. The budget process begins when the School District's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end. CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations. 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 - 10- HARALSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2002 Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 and 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: (I) 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 ofGeorgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions ofthe State of Georgia. RECEIVABLES Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general-purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The Haralson County Board of Commissioners fixed the property tax levy for the 2001 tax digest year (calendar year) on October 5, 2001 (levy date). Taxes were due on December 31, 2001 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2001 tax digest are reported as revenue in fiscal year 2002. The Haralson County Tax Commissioner bills and collects the property taxes for the School District, withholds .25% oftaxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues during the fiscal year ended June 30, 2002 for maintenance and operations amounted to $4,927,297.60. - 11 - HARALSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The tax millage rate levied for the 2001 tax year (calendar year) for the Haralson County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value): School Operations ll...8l mills SALES TAXES Special Purpose Local Option Sales Tax revenue during the year amounted to $1,587,819.79 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. INVENTORIES FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time ofpurchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component ofnet current assets. COMPENSATED ABSENCES Compensated absences represent obligations ofthe School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion of this obligation as this amount is deemed immaterial to the general-purpose financial statements. Additionally, the dollar value of accumulated compensated absences at June 30, which will be payable from future resources has not been recorded in the General Long-Term Debt Account Group as this liability is also deemed to be immaterial to the fair presentation ofthese financial statements. GENERAL OBLIGATION BONDS The School District issues general obligation bonds to provide funds for the acquisition and construction ofmajor capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. 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 General Long-Term Debt Account Group. - 12 - HARALSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INTERFUND TRANSACTIONS The School District has the following types of interfund transactions: Reimbursements ofexpenditures initially made from a fund that are properly applicable to another fund are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed. Operating transfers are recorded for all interfund transactions other than reimbursements. MEMORANDUM ONLY -TOTAL COLUMNS Total columns on the general-purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results ofoperations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. lnterfund eliminations have not been made in the aggregation of this data. Note 2: 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 ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts. Acceptable security for deposits consists of any one of or any combination of the following: (1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or ofthe State of Georgia, - 13 - ---------------------- ----------------- - ---- HARALSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO TIIE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 2: DEPOSITS AND INVESTMENTS (4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, (5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose, (6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and (7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. CATEGORIZATION OF DEPOSITS At June 30, 2002, the bank balances were $3,438,733.53. Theamountsofthetotal bank balances are classified into three categories of credit risk: Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name. Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name. Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.) The School District's deposits are classified by risk category at June 30, 2002, as follows: Risk Category Bank Balance 1 $ 200,000.00 2 462,771.42 3 2,775,962.11 Total $ 3.438.733.53 - 14 - HARALSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO 1HE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2002 Note 2: DEPOSITS AND INVESTMENTS CATEGORIZATION OF INVESTMENTS Investments are classified as to risk by the three categories described below: Category 1 - Insured or registered, or securities held by the School District or the School District's agent in the School District's name. Category 2 - Uninsured or unregistered, with securities held by the counterparty's trust department or agent in the School District's name. Category 3 - Uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent but not in the School District's name. At June 30, 2002, the carrying value of the School District's total investments was $8,841,436.53 which is materially the same as fair value. The investments are classified as to risk categories as follows: Type of Investment U. S. Government Risk Categories 2 3 Carrying Amount Fair Value $ 94 0274) $ ooo $.===0~02c10 $ 94,027.41 $ 94,027.41 Local Government Investment Pools 8,747,409.12 8,747,409.12 Total Investments $ 8 84) 436 53 $ 8 84) 436 53 The carrying amounts shown above includes amounts maintained in an investment pool by the State ofGeorgia, Office ofTreasury and Fiscal Services in which the School District owns no identifiable securities. The investment policy oft.he State ofGeorgia, Office ofTreasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio and Extended Tenn Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows: The Primary Liquidity Portfolio consists ofGeorgia Fund I, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the Securities and Exchange Commission as an investment company but does operate Georgia Fund I in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to be a 2a-7 like pool. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds ofGeorgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund. - 15 - HARALSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 2: DEPOSITS AND INVESTMENTS Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U.S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2002, was 0.12 years. The average investment duration for Fund 6 on June 30, 2002, was 0.75 years. The Extended Term Portfolios consist ofFund 3 "Georgia Extended Asset Pool", Fund 7, Fund 8 and Fund 9. The Georgia Extended Asset Pool is a variable net asset value investment pool which follows Standard and Poor's criteria for AMfrated funds. The pool is not registered with the SEC as an investment company. The pool's primary objective is the prudent management ofpublic funds on behalfofthe State ofGeorgia and local governments seeking income higher than money market rates. Net Asset Value (NAV) is calculated daily to determine current share price. NAV is calculated by talcing the closing fair value of securities owned plus other assets and subtracting liabilities. The remainder is then divided by the total number ofshares outstanding to compute NAV per share (current share price). The pool distributes earnings (net ofmanagement fees) on a monthly basis and determines participant's shares sold and redeemed based on the current share price, which at June 30, 2002, was at $2.02 per share. The Office of Treasury and Fiscal Services has hired a third party bank, Investors Bank and Trust, to perform custody and valuation services to include calculation ofthe NAV. Pooled cash and cash equivalents and investments are reported at fair value. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist offunds from local governments, operating and trust funds of State agencies, and current operating funds of the State's General Fund. Investments in the Georgia Extended Asset Pool consist generally ofsecurities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, bankers' acceptances and repurchase agreements. The weighted average maturity at June 30, 2002 was 1.31 years. Investments in Fund 7 consist generally of repurchase agreements and certain U.S. Government Securities. The average investment duration for Fund 7 on June 30, 2002 was 1.39 years. Investments in Fund 8 consist generally of repurchase agreements and certain U. S. Government Securities, which include mortgage-backed securities such as collateralized mortgage obligations and adjustable rate mortgages. Investments in Fund 8 are transacted by an external investment management firm under direction ofinvestment advisory agreements executed between the Office and the investment management firm. The agreement directs the investment firm to utilize the Merrill Lynch 1-3 year Treasury Index in managing the average duration of the overall portfolio, excluding cash, to within plus or minus 6 months ofthe duration ofthe Index. The average investment duration for Fund 8 on June 30, 2002 was 1.59 years. In addition, the investment advisory agreements place limitations on individual security purchases and holdings as follows: - 16 - HARALSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 2: DEPOSITS AND INVESTMENTS 1) Limits the duration of any security at the time ofpurchase to a maximum offive (5) years. 2) Requires any mortgage-backed security, at the time of purchase and periodically, thereafter, to pass a "stress test" which provides for a duration profile not to exceed 7 years given an instantaneous and permanent interest yield increase of 300 basis points. 3) With the exception ofU. S. Treasury securities, limits individual security investments to no more than the greater of$5 million or 10% ofthe separate portfolio's total investments. 4) Prohibits investments in interest only strips, principal only strips, inverse floaters, and Z tranche securities. Investments in Fund 9 consist of repurchase agreements and certain U.S. Government securities with an average investment duration of 1.69 years at June 30, 2002. Note 3: 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 1 - Inventories Note 4: 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; unemployment compensation and dental claims. The School District has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and job related illness or injuries to employees. 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 has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to these risks in 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 expenditure 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: - 17 - ------ HARALSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 4: RISK MANAGEMENT Begmnmg of Year Liability Claims and Changes m Estimates Claims Paid End of Year L1ab1hty 2001 2002 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 2,094.00 $ 2,094.00 $ 0.00 The School District is self-insured with regards to dental claims. The School District accounts for claims within the General Fund with expenditures and liabilities being reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. Changes in the dental claims liability during the last two fiscal years are as follows: Beginmng of Year Liabihty Claims and Changes m Estimates Claims Paid End of Year Liability 2001 2002 $ 0.00 $ 124,970.18 $ 124,970.18 $ 0.00 $ 0.00 $ 185,099.56 $ 185,099.56 $ 0.00 The School District has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount Superintendent Director of Business Services Each Principal Vocational Director $ 100,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 Note 5: GENERAL LONG-TERM DEBT CAPITAL LEASES The Haralson County Board of Education has entered into various lease agreements as lessee for portable classrooms. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception. GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: Purpose Interest Rate Amount General Government - Series 2002 3.5% $ 6,300,000.00 - 18 - HARALSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 5: GENERAL LONG-TERM DEBT The changes in General Long-Term Debt during the fiscal year ended June 30, 2002, were as follows: Capital Leases General Obligation Bonds Total Balance July 1, 2001 $ 39,661.03 $ 0.00 $ 39,661.03 Additions G.O. Bonds 6,300,000.00 6,300,000.00 Deductions Debt Retired 18,429.56 18,429.56 Balance June 30, 2002 $ 21,231.47 $6,300,000.00 $ 6.321.231.47 At June 30, 2002, payments due by fiscal year which includes principal and interest for these items are as follows: Fiscal Year Ended June 30 Capital Leases General Obligation Bonds Total Debt 2003 2004 2005 2006 2007 2008 $ 21,892.68 $ 202,125.00 $ 224,017.68 1,173,525.00 1,173,525.00 1,282,037.50 1,282,037.50 1,380,562.50 1,380,562.50 1,484,012.50 1,484,012.50 1,582,212.50 1,582,212.50 Total Principal and Interest $ 21,892.68 $ 7,104,475.00 $ 7,126,367.68 Deduct: Imputed Interest 661.21 Net Present Value of Future Minimum Lease Payments $ 21,231.47 Note 6: ON-BEHALF PAYMENTS The School District has recognized revenues and expenditures in the amount of $317,309.67 for health insurance and retirement contributions paid on the School District's behalfby the following State Agencies. - 19 - HARALSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 6: ON-BEHALF PAYMENTS Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-C~rtified Personnel In the amount of $275,679.67 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 $41,630.00 Note 7: SIGNIFICANT COMMITMENTS The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as ofJune 30, 2002, together with funding available: Project Unearned Executed Contracts Funding Available From State GSFIC SA0lS-671-049 Buchanan Elementary West Haralson Elementary $ 5,024,243.60 2,547,696.57 1,965,577.87 $ 1,980,922.38 $ 9.537.518,04 $ 1.980.922.38 The amounts described in this note are not reflected in the general-purpose financial statements. Note 8: CONTINGENT LIABILITIES Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. Note 9: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) TRS PLAN DESCRJPTION Substantially all teachers, administrative and clerical personnel employed by local school districts 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 -20- HARALSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 9: RETIREMENT PLANS survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 2002 2001 2000 100% 100% 100% $ 1,306,075.61 $ 1,483,023.63 $ 1,399,251.81 - 21 - ----- -- - -------------- HARALSON COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 2002 ASSETS Cash and Cash Equivalents Accounts Receivable Inventories Food Donated Commodities Purchased Food SCHOOL FOOD SERVICES FUND LOTTERY PROGRAMS $ 509,714.98 $ 101,685.07 549.58 11,374.01 32,011.75 16.260.79 Total Assets LIABILITIES AND FUND EQUITY LIABILITIES Cash Overdraft Accounts Payable Salaries Payable Deferred Revenue Total Liabilities FUND EQUITY Fund Balances Reserved For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated Total Fund Equity Total Liabilities and Fund Equity $ 558.537.10 $ =-1=1=30.5..9==08_,, $ 16,481.64 $ 25,345.34 62,259.30 87,713.74 $ 78.740.94 $ 113.059.08 $ 32,011.75 16,260.79 \ 431.523.62 $ 0.00 $ 479.796.16 $ 0.00 $ 558,537.10 $=-1=1=3=,0=59==08= See notes to the general--purpose financial statements. -22- EXHIBIT"E" FEDERAL PROGRAMS TOTALS JUNE 30, 2002 JUNE 30, 2001 $ 611,400.05 $ 553,219.00 $ 383,226.04 395,149.63 397,231.90 32,011.75 16,260.79 28,743.47 15,603.27 $ 383,226.04 $ 1,054,822.22 $ ==9=94===7'=97==64= $ 240,105.93 $ 240,105.93 $ 224,654.54 32,919.21 74,746.19 68,159.79 109,913.95 259,886.99 236,916.51 286.95 286.95 7,679.66 $ 383,226.04 $ 575.026.06 $ 537.410.50 $ $ ___----'o=.o=o'- $ 0.00 $ 32,011.75 $ 16,260.79 28,743.47 15,603.27 431.523.62 413.040.40 479.796.16 $ _ _4_5_7._.3_87_._14_ $ 1,054,822.22 $ -==9=94===,7=97=.64= -23- ---------------- HARALSON COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2002 REVENUES State Funds Federal Funds Other Funds Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration Maintenance and Operation of Plant Student Transporta~on Services Other Support Services Food Services Operation Debt Service Principal Interest Total Expenditures Excess of Revenues over {under) Expenditures OTHER FINANCING SOURCES Operating Transfers In Excess of Revenues and Other Financing Sources over {under) Expenditures FUND BALANCE JULY 1 Food Inventory - Net Change in Period Donated Commodities Purchased Food FUND BALANCE JUNE 30 See notes to the general-purpose financial statements. - 24- SCHOOL FOOD SERVICES FUND LOTTERY PROGRAMS $ 105,588.00 $ 804,652.07 495,022.12 $ 1,405,262.19 $ 847,657.73 847,657.73 $ $ 1,386,778.97 $ 1,386,778.97 $ $ 18,483.22 $ 713,720.83 98,163.18 1,334.85 1,921.97 18,651.86 9,000.00 4,467.77 397.27 847,657.73 0.00 $ 18,483.22 $ 457,387.14 3,268.28 657.52 0.00 0.00 $ 479,796.16 $ =-====0==00= EXHIBIT"F" FEDERAL PROGRAMS TOTALS YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 953,245.73 $ 808,286.41 $ 1,614,686.76 2,419,338.83 2,121,620.56 495,022.12 514,027.50 $ 1,614,686.76 $ 3,867,606.68 $ 3,443,934.47 $ 1,179,104.88 $ 1,892,825.71 $ 1,621,885.21 243,236.80 90,912.82 45,390.59 41,554.82 17,628.83 341,399.98 92,247.67 47,312.56 18,651.86 50,554.82 17,628.83 1,386,778.97 324,637.80 64,537.37 3,092.81 21,495.11 14,188.75 42,569.66 3,315.08 1,392,349.69 4,467.77 397.27 3,931.67 34.47 $ 1,617,828.74 $ 3,852,265.44 $ 3,492,037.62 $ -3,141.98 $ 15,341.24 $ -48,103.15 3,141.98 3,141.98 70,750.42 $ 0.00 $ 18,483.22 $ 22,647.27 0.00 457,387.14 437,066.23 3,268.28 657.52 2,965.57 -5,291.93 $ 0.00 $ 479,796.16 $-====-4,..5_7_,3=87_._14.... -25- - - - - - - - - - - - -- -- - - - - - - - - - - - -- --- HARALSON COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 2002 ASSETS Cash and Cash Equivalents Investments Accounts Receivable BOND PROCEEDS GEORGIA STATE FINANCING AND INVESTMENT COMMISSION $ 180,973.65 5,330,867.35 - - - - - - $ ___5_4__9_,._4_8_7_ _.6_2_ Total Assets $ 5,511,841.00 $ ===54=9==.4=87=.6:m2... LIABILITIES AND FUND EQUITY LIABILITIES Cash Overdraft Contracts Payable Retainages Payable Total Liabilities FUND EQUITY Fund Balances Reserved For Purposes of Bond Issue For SPLOST Projects Unreserved Undesignated Total Fund Equity $ 180,973.65 284,752.37 83,761.60 $ 549,487.62 $ 5,511,841.00 0.00 $ 0.00 $ 5,511,841.00 $ 0.00 Total Liabilities and Fund Equity $ 5,511,841.00 $ ==-====54=9=,4=87=.6=2= See notes to the general-purpose financial statements. -26- EXHIBIT"G" SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS JUNE 30, 2002 JUNE 30, 2001 $ 180,973.65 $ 160,069.72 $ 3,418,597.78 8,749,465.13 2,277, 108.49 264.393.03 813,880.65 606.503.19 $ 3.682,990.81 $ 9,744.319 43 $ 3.043,681.40 $ 4,627.07 $ 185,600.72 $ 228,982.34 284,752.37 197,010.47 83.761.60 37.545.90 $ 4,627.07 $ 554.114.69 $ 463.538.71 $ 5,511,841.00 $ 3,678,363.74 3,678,363.74 $ 2,580,142.69 0.00 0.00 0.00 $ 31678,363.74 $ 911901204.74 $ 2,5801142.69 $ 3.682,990.81 $ 9,744,319.43 $ 3,043,681.40 - 27- --- -------------------- HARALSON COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 2002 REVENUES State Funds Taxes Other Funds Total Revenues EXPENDITURES Current Support Services Business Administration Capital Outlay Land and Land Improvements Building and Building Improvements Equipment Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Proceeds from General Obligation Bonds Par Value Operating Transfers In Operating Transfers Out Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses FUND BALANCE JULY 1 FUND BALANCE JUNE 30 BOND PROCEEDS GEORGIA STATE FINANCING AND INVESTMENT COMMISSION $ $ 122,764.92 $ 122,764.92 $ 549,487.62 549,487.62 $ 113,0TT.16 $ 218,590.33 1,237,914.92 $ 113,0TT.16 $ 1,456,505.25 $ 9,687.76 $ -907,017.63 $ 6,300,000.00 $ -797,846.76 $ 5,502,153.24 $ $ 5,511,841.00 $ 0.00 907,017.63 907,017.63 0.00 0.00 $ s,s11.841.oo $-======-=o=.o=o... See notes to the general-purpose financial statements. -28- EXHIBIT"H" SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS YEAR ENDED JUNE 30, 2002 JUNE 301 2001 $ 549,487.62 $ 328,993.63 $ 1,587,819.79 1,587,819.79 1,601,045.81 61,783.09 184,548.01 121,962.34 $ 1,649,602.88 $ 2,321,855.42 $ 2,052,001.78 $ 113,0TT.16 $ 174,962.21 346,213.72 52,749.64 393,552.54 $ 1,584,128.64 52,749.64 22,782.00 1,389,109.25 3,142.10 $ 573,925.57 $ 2,143,507.98 $ 1,415,033.35 $ 1,075,STT.31 $ 178 347.44 $ 636,968.43 $ 6,300,000.00 $ 22,543.74 929,561.37 $ 646,857.18 -797,846.76 -646,857.18 $ 22,543.74 $ 6,431,714.61 $ 0.00 $ 1,098,221.05 $ 6,610,062.05 $ 636,968.43 2,580,142.69 2,580,142.69 1,943,174.26 $ 3,678,363.74 $ 9,190,204.74 $ 2,580,142.69 -29- HARALSON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30. 2002 SCHEDULE "1" FUNDING AGENCY PROGRAM/GRANT CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD Agnculture, U. S. Department of Child Nutnt1on Cluster Pass-Through From Georgia Department of Education Food and Nutnt1on Program Food Services School Breakfast Program National School Lunch Program . 10.553 . 10.555 NIA $ 171,324.22 (2) NIA 547,234.60 $ 1,300,685.72 (3) Total Child Nutrition Cluster $ 718,558.82 $ 1,300,685.72 Other Programs Pass-Through From Georgia Department of Educatton Food and Nutrition Program Food D1stribut1on Program (1) 10.550 NIA 86,093.25 86,093.25 Total U.S. Department of Agnculture $ 804,652.07 $ 1,386,n8.97 Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Ad Part B - Speaal Education Flow Through Preschool Capacity Bu1ld1ng Improvement . 84.027 . 84.173 . 84.027 NIA $ 392,476.82 $ NIA 59,305.00 NIA 13,901.03 392,476.82 59,305.00 13,901.03 Total Special Educatson Cluster $ 465,682.85 $ 465,682.85 Other Programs Pass-Through From Georgia Department of f'ducation Elementary and Secondary Education Act Title I Grants to Local Educational Agencies 84.010 NIA Tlllell Eisenhower Professional Development 84.281 NIA Title Ill Technology Literacy Challenge 84.318 NIA Title VI lnnovatJve Educabon Program Strategies 84.298 NIA Class SIZB Redud1on 84.340 NIA Vocational Educabon - Basic Grants to States High School Program Basic Grant 84.048 NIA Pass-Through From Hall County Board of Educabon d/b/a Piedmont Migrant Educabon Agency Elementary and Secondary Education Act Tlllel Migrant Educallon 84.011 NIA 706,844.35 26,691.00 115,727.29 25,47042 104,268.32 42,134.51 60,000.53 706,844.35 26,691.00 115,727.29 25,47042 104,268.32 42,134.51 61,660.25 (3) Total U. S. Department of Education $ 1,546,819.27 $ 1,548,478.99 Jusbce, U. S. Department of Pass-Through From Children and Youth Coordinating Council Truancy Prevention and Early lntervenllon 16.540 NIA $ 37,175.00 $ 37,175.00 - 30- HARALSON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30. 2002 SCHEDULE "1" FUNDING AGENCY PROGRAM/GRANT Labor, U S Department of Pass-Through From Coosa Valley Regional Development Center Workforce Investment Ad Youth Acttv1t1es 01-01-2~05W CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD 17259 NIA $ 30,692 49 $ 32174 75 (3) Total Federal Fmanaal Assistance NIA= Not Available s s__ 2i419133s.s3 3_10_04_._60_1_1_1 Notes to the Schedule of ExpendRures of Federal Awards (1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities receJVed and/or consumed by the system during the cunent fiscal year. (2) Expenditures for the School Breakfast Program were not maintained separately and are mduded m the 2002 Nallonal School Lunch Program (3) Expenditures for this program indude State, and/or Other Funds. Expenditures are not maintained by fund source. r> Ma1or Programs are identified by an asterisk in front of the CFDA number. The School Distnd did not provide Federal Assistance to any Subreciplent The accompanying schedule of expenditures of Federal awards indudes the Federal grant adlvity of the Haralson County Board of Educabon and Is presented on the modified acaual basis of accounting wtuch is the basis of accounting used 1n the presentabon of the general-purpose financial statements. See notes to the general-purpose finanaal statements. - 31 - HARALSON COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2002 SCHEDULE "2" AGENCY/FUNDING GRANTS Community Affairs, Georgia Department of Governor's Emergency Funds (1) Local Assistance Grant Educallon, Georgia Department of Quality Basic Educatton Direct lnstructJonal Cost Kindergarten Program Kindergarten Program - Earty tnterven!Jon Program Pnmary Grades (1-3) Program Pnmary Grades - Earty lntervenbon (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades (4-5) Program Earty lntervenbon Program Middle School (6-8) Program Htgh School General Education (8-12) Program Vocabonal Laboratory (8-12) Program Students wtth D1sablhbes CslegOl'f I Category II Category Ill category rv Gifted Student - Category VI Remedial Educabon Program AJtematMt Educabon Program Media Center Program Twenty Day Addrtlonal Instruction Staff and Professional Development Indirect Cost Cetegoncal Grants Pupil Transportabon Regular Bus Replacement Sparsity Nursing Services Prinapal Supplements Vocabonal SupeMSOrS Migrant Education Deferred Summer Salaries (Prior Year') Deferred Summer Salaries (Current Year) Educabon Equalizabon Funding Grant Food 5eMces VocabOnal Educabon Other State Programs Health Insurance Mentor Teachers Preschool Handicapped Program Special Education Low lnadence Grant Statewrde After School Program Statewide Reading Program Lottery Programs Assisbve Technology Computers In the Classroom Georgia State Financing and Investment Commiss1011 Reimbursement on Construcbon Projects Office of School Readiness Pre-Kindergarten Program Office of Treasury and FISCSI Services Public School Employees Rebrernent GOVERNMENTAL FUND TYPES SPECIAL CAPITAL GENERAL REVENUE PROJECTS FUND FUND FUND TOTAL $ 16,000 00 25,000 00 $ 16,000 00 25,000 00 809,001 00 185,100 00 1,807,012 00 535,180 00 1,010,538 00 289,842 00 1,972,046 00 1,372,539 00 532,507.00 45,82700 397,480 00 1,287,307 00 419,093.00 161,848 00 105,876 00 141,389 00 324,186 00 97,311.00 64,882 00 2,080,567.00 588,732.00 171,247.00 35,889 00 83,915 00 15,216 00 22,574.00 795.00 -2,006,148 02 1,951,365 00 1,389,825 00 $ 105,588 00 28,410 11 275,679 67 1,683 00 42,40600 7,043 00 38,172.00 48,134 73 9,667.00 88,125 00 809,001 00 185,100 00 1,807,012 00 535,180 00 1,010,538 00 289,842 00 1,972,046 00 1,372,539 00 532,507 00 45,827 00 397,480 00 1,287,307 00 419,093 00 181,848 00 105,676 00 141,389 00 324,186 00 97,311.00 64,882 00 2,060.567.00 588,732 00 171,247 00 35,889 00 83,915 00 15,218 00 22,574 00 795.00 -2,006, 148.02 1,951,385.00 1,389,625 00 105,588.00 28,410 11 275,67967 1,683 00 42,40600 7,043 00 38,172 00 48,134 73 9,667 00 88,125 00 $ 549,487 62 749,885.73 41,630 00 549,487 62 749,865 73 41,630 00 $ 1613961497 49 s 9531245 73 s 549A87 62 s 1118991230 84 (1) The purpose of the funds are to purchase technological Instruments and athlebc equipment for Haralson County High School See notes to the general-purpose financial statements -32- HARALSON COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30. 2002 SCHEDULE "3" PROJECT ORIGINAL ESTIMATED COST(1) CURRENT ESTIMATED COSTS(2) AMOUNT EXPENDED IN CURRENT YEAR (3) AMOUNT EXPENDED IN PRIOR YEARS (3) PROJECT STATUS Adding to, renovabng, repainng, equipping, improving existing school buildings and facihbes useful or desirable in connectJon therewith. including classroom add1bons, acqulnng system-wide technology, acquinng and constructing a bus garage, central office and maintenance shop and acquinng the necessary property therefor, both real and personal and srtes tor future schools $ 10,000,000 00 $ 10,000,000 00 S 573,925 57 $ 5,045,997 46 Ongoing The acquIsrtlon, construction and equipping of school buildings, the addrtJon to and the renovation, repair, improvement and equipping of, eXJstmg school buildings, the acquIsr1Jon, construction, furnishing and equipping of a new Tallapoosa pnmary school, the acquisition of system-wide technology Improvements, the acquIsr1Jon and construction of a bus garage and the acquisition of the necessary property for such schools, both real and personal and for future school Sites 12,200,000 00 15 500 000.00 1 1 1,456.505 25 Ongoing (1) The School Dastrict's onglnal cost estimate as specified in the resolution callmg tor the imposition of the Local Option Sales Tax. (2) The School D1stnct's current estimate of total cost tor the projects Includes all cost from pro,ect lncepllOn to complebon (3) The voters of Haralson County approved the imposition of a 1% sales tax to fund the above pl'OjeCls and retire assoaated debl Amounts expended for these pl'OjeCls may Include sales tax proceeds, state, local property taxes and/or other funds over the life of the proJects See notes to the general-purpose financial statements - 33- HARALSON COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES~ BY PROGRAM YEAR ENDED JUNE 30. 2002 SCHEDULE "4" DESCRIPTION ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) ELIGIBLE QBE PROGRAM COSTS SALARIES OPERATIONS TOTAL Direct Instructional Programs Kindergarten Program $ Kindergarten Program-Early Intervention Program Pnmary Grades (1-3) Program Primary Grades-Early lntervenbon (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early lntervenbon (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Dtsabllllles Category I Category II Category Ill Category IV Gifted Student - Category VI Remedial Education Program AHemative Education Program TOTAL DIRECT INSTRUCTIONAL PROGRAMS $ 904,274 00 $ 206,898.00 2,019,817.00 598,207.00 1,126,438.00 810,371.15 $ 280,338.51 2,135,819.25 752,061.87 1,239,762.49 43,747 33 $ 2,115.n 96,293 72 13,510.66 26,57610 854,118 48 282,454.28 2,232,112.97 765,572.53 1,266,338.59 327,082.00 2,204,287.00 1,534,178.00 595,218.00 2,402,870.00 180,682.00 118,121.00 158,040.00 175,739.27 2,451,058.93 1,846,389.79 623,337.13 21,937.65 434,287.48 1,354,680.08 260,831.11 198,813.29 77,040.89 174,982.07 12,376,112.00 $ 12,637,450.96 $ 9,805.24 94,657.45 71,732.22 188,366.32 185,544.51 2,545,716.38 1,718,122.01 811,70345 594.01 7,081 45 25,863 89 7,677.45 2,767.22 51973.n 22,531.66 441,368.93 1,380,543.97 268,508.56 201,580 51 77,040.89 180,955.84 596,762.60 $ 13,234,213.56 Media Center Program Staff and Professional Development 362,365.00 72,523.00 445,500.53 41,425.69 70,414.55 36,629.97 515,915.08 78,055.66 TOTAL QBE FORMULA FUNDS $ 12,811,000 00 $ 13,124,3TT.18 $ 703,607.12 $ 13,8281184.30 (1) Comprised of State Funds plus Local Five MIii Share. See notes to the general-purpose financial statements - 34- HARALSON COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30, 2002 SCHEDULE "5" Buchanan Elementary School Haralson County Middle School Buchanan Primary School Haralson County High School West Haralson Elementary School Tallapoosa Primary School Haralson County/Bremen City CrossRoads Central Office (Alternative Education Program} TOTAL (1) Comprised of State Funds plus Local Five Mill Share. ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) ELIGIBLE QBE PROGRAM COSTS $ 1,701,345.00 $ 1,707,635.83 2,939,604.00 3,241,555.33 1,623,978.00 1,642,137.44 2,918,785.00 3,244,759.05 1,466, 126.00 1,532,307.81 1,568,234.00 1,756,245.08 109,573.02 158,040.00 $ 12,376,112.00 $ 13,234,213.56 See notes to the general-purpose financial statements. - 35- SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS l.ussnL W. HtNTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 WJ!>hmgton Street.SW. Suuc 214 Atlanta. Georgia 30334-8400 March 19, 2003 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members ofthe Haralson County Board of Education REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladies and Gentlemen: We have audited the financial statements of Haralson County Board of Education as of and for the year ended June 30, 2002, and have issued our report thereon dated March 19, 2003. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general-purpose financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether Haralson County Board of Education's financial statements are free of material misstatement, we perfonned tests of its compliance with certain provisions oflaws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the detennination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective ofour audit, and accordingly, we do not express such an opinion. The results ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered Haralson County Board ofEducation's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal 2002YB-41 control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Haralson County Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. The reportable condition is described in the accompanying Schedule ofFindings and Questioned Costs as item FS-6711-02-01. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we consider item FS-6711-02-01 to be a material weakness. This report is intended solely for the information and use of the management, members of the Haralson County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~~~~ ell W. Hinton State Auditor RWH:gp 2002YB-41 Rt 1'iSELI. '" Htr-.TON STATE AUDITOR (404) 656-2174 DEPART1\1ENT OF AUDITS AND ACCOUNTS 254 WJ~hmgton Street.SW. Sune 214 Atlanta, Georgia 30334-8400 March 19, 2003 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Haralson 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 Haralson 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, 2002. Haralson 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 Haralson County Board of Education's management. Our responsibility is to express an opinion on Haralson County Board of Education's compliance based on our audit. We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Haralson County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Haralson County Board ofEducation's compliance with those requirements. 2002SA-10 In our opinion, the Haralson County Board ofEducation complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2002. Internal Control Over Compliance The management of Haralson 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 Haralson County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133. Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level of risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course ofperforming their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the management, members of the Haralson County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. ----Respectfully submitted, RWH:gp 2002SA-10 State Auditor SECTION ID AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS HARALSON COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-6711-99-04 FS-6711-00-01 FS-6711-00-03 FS-6711-01-01 Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Further Action Not Warranted Unresolved - See Corrective Action/Responses CORRECTIVE ACTION/RESPONSES GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6711-01-01 A fixed asset accounting program was purchased and installed during the Fall of 2000. Training on the software has been conducted and work is currently being performed to create the database for which the system will use to value its fixed assets. An additional position was funded and filled to address this and other accounting duties during fiscal year 2003. SECTION IV FINDINGS AND QUESTIONED COSTS HARALSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the Haralson County Board ofEducation's financial statements was qualified for various departures from generally accepted accounting principles. 2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Haralson County Board ofEducation disclosed a financial statement reportable condition related to the following control category. General Fixed Assets The reportable condition described above is considered to be a material weakness. 3. Noncompliance Material to the Financial Statements The audit of the Haralson County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements. 4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Haralson County Board ofEducation did not disclose any reportable conditions in internal control over major programs. 5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Haralson 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) ofOMB Circular A-133 The Haralson County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133. 7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program 84.027 Individuals with Disabilities Education Act - Part B - Special Education Flow Through 84.027 Individuals with Disabilities Education Act - Part B - Special Education Capacity Building Improvement 84.173 Individuals with Disabilities Education Act - Part B - Special Education Preschool 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00. - 1- HARALSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR.ENDED JUNE 30, 2002 I SUMMARY OF AUDITOR'S RESULTS 9, Low Risk Aud1tee The Haralson County Board of Education did not qualify as a low nsk auditee as defined by Section .530 of 0MB Circular A-133. 11 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6711-02-01 The Haralson County Board of Education did not maintain a system-wide General Fixed Assets Account Group within the fo:r:mal accounting records as required by generally accepted accounting principals. This condition results in the general-purpose financial statements ofthe School District being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the School District to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the School District and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should b~ maintained ofall additions and deletions to the General Fixed Assets Account Group. ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. -2-