HARRIS COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS - SECTION I FINANCIAL ADDmONAL FINANCIAL INFORMATION SCHEDULES ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS 4 OVERALL 5 BYPROGRAM Page 35 36 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 ACCORDANCE WfTII GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WfTII REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CON. TROL .OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 . SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL RUSSELL W. HINTON STATE AUDITOR {404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street. S.W., Suite 214 Ailanta, Georgia 30334-8400 . April 26, 2001 Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Harris 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 ofthe Harris County Board of Education, as of and for the year ended June 30, 2000, as listed in the table of contents. These general purpose financial statements are the responsibility ofthe Harris County Board ofEducation'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 \V~th 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 opm1on. As described in the notes to the general purpose financial statements, the Board's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows: 2000ARL-13A * The general purpose financial statements of the Board did not contain a General Fixed Assets Account Group to account for property and equipment owned by the Board which should be included io 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 Board did not recognize as expenditures, in the year ended June 30, 2000, a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 2000. Also funds received, subsequent to June 30, 2000, from the Georgia Department of Education for the State's share of these unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1999, were improperly recorded in the year ended June 30, 2000. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed. The aggregate effects on the general purpose financial statements of these variances or omissions have not been determined, but are believed to be material. In our opinion, except for the effects on the general purpose financial statements of the matters referred to in the preceding paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe Harris County Board ofEducation as of June 30, 2000, and the results of its operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance.with Governrnent Auditing Standards, we have also issued our report dated April 26, 2001, on our consideration ofthe Harris County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions oflaws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Governrnent 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 ofthe Harris County Board ofEducation taken as a whole. The accompanying combining statements (Exhibits E through J) and the financial schedules (Schedules I through 5), which includes the Schedule ofExpenditures ofFederal Awards as required by U. S. Office ofManagement and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and in our opinion, except for the effects of the matters referred to in the third paragraph, such information is fairly stated, in all material respects, in relation to the general purpose financial statements taken as a whole. 2000ARL-13A 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 ofGeorgia Annotated Section 506-24. Respectfully submitted, ~ ...QQ_ L{).~~ ~sell W. Hinton State Auditor RWH:jb 2000ARL-13A HARRIS COUNTY BOARD OF EDUCATION HARRIS COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP JUNE 30 2000 ASSETS Cash and Cash Equivalents Investments Accounts Receivable Inventories Food Donated Commodities Purchased Food Amount Available in Debt Service Fund Amount to be Provided in Future Years For Payment of: Bond Debt Capital Lease Agreements Total Assets GENERAL FUND GOVERNMENTAL FUND TYPES SPECIAL CAPITAL REVENUE PROJECTS FUND FUND $ 791,400.35 $ s 378,215.46 311,518.34 5,104,285.91 405,746.19 217,387.41 211,875.88 281,030.12 28,201.56 17,926.61 $ 6 113 073.67 $ 636 219.51 $ 998 294.65 LIABILITIES AND FUND EQUITY LIABILITIES Accounts Payable Salaries Payable . Expired Grant Balances Payable Contracts Payable Retainages Payable Deferred Revenue capital Lease Agreements General Obligation Bonds P_ayable Total Liabilities FUND EQUITY Fund Balances Reserved For Continuation of Federal Programs For Debt Service For Inventories Food Donated Commodities Purchased Food For Purpose of Bond Issue For SPLOST Projects For State Capital Outlay Projects Unreserved Undesignated Total Fund Equity $ 567,926.59 $ 94,022.62 257,682.72 12,071.83 61,029.48 $ 30,803.93 189,509.50 3,483.08 $ 579 998.42 $ 416 217.90 $ 220 313.43 $ 33,061.76 28,201.56 17,926.61 $ $ 5,533,075.25 $ 5 533 075.25 $ 140 811.68 220 001.61 $ 34,300.76 595,498.74 123,181.72 25 000.00 777 981.22 Total Liabilities and Fund Equity $ 6 113 073.67 $ The notes to the general purpose financial statements are an integral part of this statement. -2 - 636 219.51 $ 998 294.65 EXHIBIT"A" DEBT SERVICE FUND $ 866,853.55 23,189.37 ACCOUNT GROUP GENERAL LONG-TERM DEBT TOTALS {Memorandum Onl:rl JUNE 30, 2000 JUNE 30 1999 $ 2,347,987.70 $ 1,661,156.39 5,510,032.10 5,594,495.40 733,482.78 739,590.32 $ 890,042.92 28,201.56 17,926.61 890,042.92 19,909.08 12,734.79 658,281.14 13,389,957.08 1915817.47 13,389,957.08 1915817.47 14,161,718.86 2 809 550.68 $ 890 042.92 $ 16 195 817.47 $ 24,833,448.22 $ 25 657 436.66 $ 661,949.21 $ 179,787.52 257,682.72 206,380.16 73,101.31 2,382.08 30,803.93 23,650.11 189,509.50 351,326.60 3,483.08 1,241.60 $ 1,915,817.47 1,915,817.47 2,809,550.68 14,280,000.00 14 280 000.00 14,820,000.00 $ 16 195 817.47 $ 17 412 347.22 $ 18 394 318.75 $ 890,042.92 0.00 $ 890 042.92 $ 33,061.76 $ 78,663.43 890,042.92 658,281.14 28,201.56 17,926.61 34,300.76 595,498.74 123.181.72 19,909.08 12,734.79 4,801.94 453,005.79 337,042.21 5,698,886.93 5,698,679.53 $ 7 421101.00 $ 7 263117.91 $ 890 042.92 $ 16195 817.47 $ 24,833,448.22 $ 25,657,436.66 .3. HARRIS COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30. 2000 REVENUES State Funds Federal Funds Taxes Other Funds Total Revenues EXPENDITURES Current Instruction Support Services ,; ' Pupil Services Improvement of Instructional Services EduC8tional 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 Community Services Operations Capital Outlay Debt Service Principal Interest Paying Agent Fees Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Operating Transfers In Operating Transfers Out Total Other Financing Sources (Uses) Excess of Revenues and Other Finan'Cing Sources over (under) Expenditures and Other Financing Uses FUND BALANCE JULY 1 Food Inventory - Net Change in Period Donated Commodities Purchased Food GENERAL FUND --. SPECIAL _REVENUE ., FUND $ 14,009,718,93 $ 39,874.00 8,171,725.07 510 855.75 $ 22,732,173.75 $ ' ,. $ 14,438,148.16 $ -i,159,551,01 489,077.81 723,741.22 419,916.01 1,465,389.47 268,627.50 1,480,952.94 1,439,861.70 134,506.35 53,624.55 3,067.03 120,858.58 192.726.78 287,977.74 54,663.55 1,069,077.24 1,736,755.09 811,537.90 3 617,370.23 1,492,460.94 132,805.66 52,687.58 22,238.50 100,919.53 4,888.50 21,905.55 20,377,12 29.424,32 1,651,936.30 115,959.51 16,644.34 $ 22,732,690.40 $ $ -516.65 $ 3,662,247.85 -44 877.62 $ $ -14 371.43 $ -14 371.43 $ $ -14,888.08 $ 5,547,963.33 14,371.43 14 371.43 -30,506.19 237,023.50 8,292.48 5,191.82 FUND BALANCE JUNE 30 $ 5,533,075.25 $ ==--'2=2=0''=0=01...6..1.. The notes to the general purpose financial statements are an integral part of this statement. . 4. EXHIBIT "B" CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTALS (Memorandum Only) YEAR ENDED JUNE 30, 2000 JUNE 30, 1999 $ 193,458.10 $ 15,272,254.27 $ 14,653,501.75 1,776,629.09 1,642,183.01 1,020,176.98 $ 1,534,942.39 10,726,844.44 10,124,711.21 60 330.59 33 833.11 1416557.35 1,361,723.26 $ 1,273,965.67 $ 1,568,775.50 $ 29,192,285.15 $ 27,782,119.23 $ 15,930,609.10 $ 14,981,874.82 $ 778,301.47 1,292,356.67 541,765.39 745,979.72 520,835.54 1,470,277.97 268,627.50 1,502,858.49 1,460,238.82 134,506.35 83,048.87 1,655,003.33 120,858.58 971,028.25 1,098,461.39 464,463.21 656,190.99 445,020.11 1,362,947.53 285,089.67 1,368,659.18 1,333,462.92 97,475.41 67,255.60 1,531,589.28 113,237.51 6,243,161.55 489,795.96 $ 47,736.96 540,000.00 792,182.50 4 831.22 1,433,733.21 911,227.35 4'831.22 2,013,305.99 972,714.99 3 235.85 $ 1,315,834.39 $ 1,337,013.72 $ 29,047,786.36 $ 33,038,146.00 $ -41 868.72 $ 231 761.78 $ 144 498.79 $ -5,256,026.77 $ 14,371.43 $ 369,140.41 -14 371.43 -369 140.41 $ 0.00 $ 0.00 $ -41,868.72 $ 231,761.78 $ 144,498.79 $ -5,256,026.77 819,849.94 658,281.14 7,263,117.91 12,508,777.81 8,292.48 5191.82 6,568.64 3 798.23 $ 777,981.22 $ 890,042.92 $ l'.,421 101.00 $ --=7,,,,2=6"'3..,1,-'1,;.,;7,;;;9,:.1 -5- HARRIS CQLJNTY BOARD QF EDUCATION COMBINED STATEMENT OF REVENUES EXPENDITURES ANO CHANGES IN FUND BALANCES BUDGET ANO ACTUAL - fNON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS YEAR ENOEQ JUNE 30 2000 EXHIBIT "C" GENERAL FUND ACTUAL (BUDGET BUDGET BASIS! REVENUES State Funds Federal Funds Taxes Other Funds Total Revenues $ 13,571,091.00 $ 14,009,718.93 39,874.00 7,732,685.00 8,171,725.07 217 000.00 510 855.75 s $ 21,520,776.00 22,732,173.75 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 Community Services Operations Capital Outlay Debt Service $ 14,329,646.20 $ 14,438,148.16 1,107,547.00 578,342.00 778,790.00 393,520.00 1,529,931.00 310,273.00 1,674,461.00 1.452,856.00 1_37,157.00 66,550.00 60,000.00 224,342.00 1,159,551.01 489,077.81 723,741.22 419,916.01 1,465,389.47 268,627.50 1,480,952.94 1,439.861.70 134,506.35 53,624.55 3,067.03 120,858.58 192,726.78 342 641.29 Total Expenditures $ 22,643,415.20 $ 22,732,690.40 Excess of Revenues over (under) Expenditures $ -1 122,639.20 $ -516.65 OTHER FINANCING SOURCES (USES) Other Sources Other Uses $ -14 371.43 Total Other Financing Sources (Uses) $ -14 371.43 Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses FUND BALANCE JULY 1 1999 $ -1,122,639.20 $ 5,838,008.97 -14,888.08 5,547,963.33 Adjustments 0.30 Food Inventory - Net Change in Period Donated Commodities . Purchased Food SPECIAL REVENUE FUND ACTUAL (BUDGET BUDGET BASIS) $ 1,023,144.00 $ 1,069,077.24 1,584,288.00 1,736,755.09 712 400.00 811 537.90 s $ 3,319,832.00 3,617,370.23 $ 1,405,248.73 $ 1,492,460.94 118,611.00 31,440.00 22,244.00 . 104,254.00 132,805.66 52,687.58 22,238.50 100,919.53 4,888.50 59,143.00 13,902.00 21,905.55 20,3TT.12 32,206.00 1,565,359.00 29,424.32 1,651,936.30 132 603.85 $ 3,352.407.73 $ 3,662,247.85 $ -32 575.73 $ -44 877.62 $ 14,371.43 $ 14 371.43 s -32,575.73 $ -30,506.19 236,750.91 237,023.50 -32,728.87 8,292.48 5 191.82 E!..!~D BALANC~ JU~E JO 2000 $ 4 715 370.07 $ 51533,075.25 s 171 446.31 $ 220 001.61 The notes to the general purpose financial statements are an integral part of this statement. -7- HARRIS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 2000 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The Harris County Board of Education (Board) was established under the laws of the Stafe 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. It_s budget is not subject to approval by any other entity. .. Accordingly. the Board is a primary government and consists of all the organizations that compose its legal entity. .. FUND ACCOUNTING The Board uses funds and an account group to report on its financial position and the results of its operations. F~nd accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related tci certain governmental functions or activities. A 0 fund is a separate accounting entity.with a self-balancing set of accounts. An account group is a financial repof!ing device desigri_ed to provide accountability for certain assets and liabilities that are - not recorde_d in. the funds because: they do ncit directly affect expendable available financial resources. . ) . . General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepte-d accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types. 0 Although "school activity ac~ciunts" are maintained at the indi~idual 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 he recorded in the general purpose financial statements. .. ' The general purpose financial statements account for all State, Federal, Taxes and Other funds under control of the Board, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the ~ccount group presented in this report are as follows: .. GOVERNMENTAL FUND TYPES - are used to account for all or most of a Board's educational activities. Governmental Fund Types include: GENERAL FUND - the fund used to account for all financial resources ofthe Board except those required to be accounted for in another fund. These transactions relate to resources obtained_ and used for services provided by a board of education. ' ,, - 8- HARRIS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 2000 Note I: 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 o_fthese funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources. Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group. Governmental funds are accounted for using the modified accrual basis of accounting under which: Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount 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. Those revenues considered susceptible to accrual are property taxes, local option sales taxes, intergovernmental grants and investment income. Expenditures are generally recognized when the related fund liability is incurred. A departure from the above definitions is the accounting tre<1tment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 2000, a substantial number of personnel of the Board were employed for a one hundred and ninety day -. 9 - . HARRIS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 2000 Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES "period beginning in late August 1999 and ending in' early June 2000. Personnel.contracts for this employment period specify thatcompensatiop be paid in twelve equal monthly payments beginning in September 1999. and ending in August 2000. State grants to fund the State"s share of these contracts were disbursed from the Georgia Department ofEducation to the Board in the same twelve months. As ofJune 30, 2000. compensation under these employment contracts had been earned, but - 'two of the twelve monthly payments, due for July and August 2000,'had not been made:: Payments for these two months were made and recordedas expenditures by the Board subsequent to June 30, 2000. Also, the State's portion ofthe compensation paid in July and August 2000 was received and recorded, as revenue in the fiscal yea1 subsequent to June 30, 2000. Conversely; the similar expenditures and related revenues for contractual services completed .prior to June 30, l 999;were recorded in the year ended June 30, 2000. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed. . T /" . .J . '' BUDGET 1 !.... The Harris County Board of Education's budget is a complete financial plan.for the Board's.fiscal year and is based upon estimates of expenditures together with prnbable funding sources. There is no-statutory proiiibition regarding overexj:,enditure of the budgetat:any level.. Thebudget 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. ' ; ; t . : ' '. u . , ,rr_ The budget process begihs when the Board's administration .prepares a tentative budget for the Board's approval. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper 'of general circulation iri the locality. Atthe,next regular meeting 'of the :,, Board after advertisement, the Board receives comments on the tentative budget, makesrevisions 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. ' , r:. ' )= , , 1 1;;',r CASH AND CASH EQUIVALENTS ' ~ . '.., ; .-r.. '. - I ,'.r- . . 1. , ., ", ... . , COMPOSITION OF DEPOSITS : ... . Cash and cash equivalents consist of deposits .in.authorized financial instituti,ms. , Georgia Laws OCGA 45-8-14 authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations,(or insured State chartered building and loan associat\ons. ,, 1 - ',. l1r _ .. '' - 10 - HARRIS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 2000 Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the Board in nonparticipating interest-earning contracts (such as certificates of deposit) 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 of Georgia Annotated Section 36-83-4 authorizes the Board to invest its funds. In selecting among options for investment or among institutional bids for deposits. the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (!) 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 administc:red by the State of Georgia, Office of Treasury and Fiscal Services-; (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the 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. - 11 - HARRIS COUNTY BOARD OF-EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 2000 . Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PROPERTY TAXES The Harris County Board of Commissioners fixed the property tax levyfor_ the 1999 tax year (calendaryear)on November 16, 1999 (levy date). Taxes were due pn February 29, 20Q0. The lien date for property taxes was January I, I999. Taxes collect~d within.the current fiscal year or within 60 days,after year:end are reported as revenue in .fiscal year 2000. The Harri~ County Tax Cpmmissioner bills and col_lects,th\! property taxes for th~ Board of Education, withho,lds 2.5% of taxes collected as a fee for tax collection lllld remits the bal_an_ce of_taxes collected to the Board. . . 1:. - 4' ' f . .. . < - Tax. millage rates -leviec!Jor the_ 1999 tax year (c,alendar year) for the Hap-is County Board of Education were as follows (a miH equals $I :per thousand dollars of assessed value): - School Operations School Bonds . I4.95 mills 1.50 mills ',,. 16.45 mills SALES TAXES Special Purpose Local Opti~n Sales Tlq[ is to be used _for capital outlay for educational purposes and debt service. Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $ I ,686,268.25 and was recorded in the Capital Projects and-Debt Service I:unds. The State will terminate collection of this tax once an additional $3,86 I ,255.81 has been collected or on September 30, 2_902, whichever occ4~s-first. .,._. ,; :r .. -; -, INVENTORIES r ' I FOOD INVENTORIES Inventories of donated food commodities .used in. the preparation, of meals are reported on the .Combined Balance.Sheet at their Federaliy assigned value. Purchased f~ods 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 tl!_e _t~me_of purchase.. TIie inv,~ntories n,:ported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund 'balance which indic~tes that tgese amounJ~ do not consti~te_;'available.spendabl~ r!=!sour~es': even thoughthey an,: a compol)~nt of net ,current asset~. , . ,, - 12 - HARRIS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 2000 Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES COMPENSATED ABSENCES Compensated absences represent obligations of the Board 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 Board issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. 1n addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit ofthe government. The outstanding amount of these bonds is recorded in the General Long-Term Debt Account Group. INTERFUND TRANSACTIONS The Board has the following types of interfund transactions: Reimbursements 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. Interfund eliminations have not been made in the aggregation of this data. -.13 - HARRIS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES'TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 2000 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 of money which has not ' beensecured by surety bond. by guarantee of insurance. or by collateral.:The aggregate of the face " value of such surety bondand 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 inslitarice. If a depository elects the pooled method (OCGA45-8-13. l) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than I IO percent ofthe daily pool balance.: OCGA Section 45-8-11 (b) provides an officer holding public'funds may. in his discretion. waive the require_mentfor security in the case of operatingfunds placed fa demand deposit checking . ,accounts. J r Acceptable security for deposits consists of any one of or any ccimbinatiori of the following: , ,; (!),Surety bond signed by a surety company duly qualified and authorized to transact business , . within the State of Georgia; " . I <..-', . '~ r, ' , (2) -Insurance on:accciunts provided by the Federal Deposit Insurance Corporation; ,,. ,, I.'~' .:_:-1.r:.;l :11:: .,, :,,'.' ,-, (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, -~ , ,.r. , -. , (5) .,Bonds of any public authority created by the'lawso'rthe State of Georgia; providing that ~. ,J ithe statute that created the authority authorized the use of the bonds for-this JJUrpose. (6) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws of the State of Georgiii;and , " . ' ' . : ,.. , of (7) Bonds. bills, notes, certificates of indebtedness; or':Oiher obligations a subsidiary corporation of the United States government. which are fully guaranteed by the United ,.. : States government both as to principal and interest cir debt obligations issued by the Federal t,and,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 ;, . -: , Associaiion;:and the Federal National Mortgage Association. CATEGORIZATION OF DEPOSITS At June 30. 2000. the bank balances were $3,027,245.76. The amounts ofthe total bank balances are classified into three categories of credit risk: ,_ 14 - HARRJS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 2000 Note 2: DEPOSITS AND INVESTMENTS Category J - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the Board or by the Board's agent in the Board's name. Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Board's name. Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Board's name.) The Board's deposits are classified by risk category at June 30, 2000, as follows: Risk Category Bank Balance I $ 1,078,392.00 2 1,948,853.76 ,3 0.00 Total $ 3,027,245.76 CATEGORIZATION OF INVESTMENTS At June 30, 2000, the carrying value of the Board's total investments was $5,510,032.10 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the Board did not own any specific identifiable securities in the pool. The investment policy ofthe State ofGeorgia, Office ofTreasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description of the Primary Liquidity Portfolio is as follows: The Primary Liquidity Portfolio consists of Georgia Fund I, which is a combination local and state government investment pool, and Fund 6. Georgia Fund I 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 SEC as an investment company but does operate Georgia Fund I in a manner consistent with Rule 2a-7 of the Investment Company Act of 1940 and is considered to be a Rule 2a7 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 ofthe shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund. - 15 - HARRIS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 2000 Note 2: DEPOSITS AND INVESTMENTS Investments in Georgia Fund I and Fund 6 are directed toward short-term instruments such as U.S. TreasJiry 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 I may.not exceed 60 days. The weighted average maturity for Georgia Fund I on June 30, 2000, was 23 days. The' average .. :investment duration for.Fund 6 on June 30, 2000, ~as .80 year.' ,! ,!, , Note 3: NON-MONETARY TRANSACTIONS ._, 1:J . { ' ;, The Board receives food commoditi_es from the United States Department ofAgriculture (USDA) for Note school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See 1 - Inventories . Note 4: RISK1MANAGEMENT The Board isexposed to various risks ofloss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; natural disaster and unemployment compensation. The Board has.obtained commercial insurance for.risk ofloss associated with torts, assets, errors or omissions and,job related illness or injuries to employees. The Board has neither significantly -reduced coverage for the.e risks nor incurred ,_losses. (settlements) which exceeded .. the Board's ins_urance coverage i~ any of the past three years. , 1.,1 .,rr c., , - The _Board l).as elected ,to self-insure for all losses r_elated to.natural disaster. The Board has not experie_nced any losses relate!f to this risk in the past three,years. -:, . 1 ,11 , , l The Board is self-insured with regard to unemployment compensation claims. The Board accounts . for claims within the General Fund with expenditure and liability being reported when.it is probable 1 that a loss has occurred, and the amount of.that,loss can be reason