Hart County Board of Education, Hartwell, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2001

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HART 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 EXPENDI1URES 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, EXPENDI1URES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDI1URES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

6

D NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

7

ADDIDONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

20

F

COMBINING STATEMENT OF REVENUES, EXPENDI1URES

AND CHANGES IN FUND BALANCES

22

CAPITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

24

H

COMBINING STATEMENT OF REVENUES, EXPENDI1URES

AND CHANGES IN FUND BALANCES

26

DEBT SERVICE FUND

I

COMBINING BALANCE SHEET

28

J

COMBINING STATEMENT OF REVENUES, EXPENDfTIJRES

AND CHANGES IN FUND BALANCES

29

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

HART COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS-

SECTION I

FINANCIAL

ADDIDONAL FINANCIAL INFORMATION

SCHEDULES

ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

4

BY PROGRAM

5

BY SITE

Page
34 35

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 WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-133

SECTION ill 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

w. RUSSELL

HINTON

STATE AUDITOR

(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street. S W., Suite 214 Atlanta, Georgia 30334-8400
May 2, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Hart 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 Hart County Board of Education, as of and for the year ended June 30, 2001, as listed in thetable of contents. These general-purpose financial st?tements are the responsibility ofthe Hart County Board ofEducation's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit.
Except as discussed in the following paragraph, 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. Those standards require that'we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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 opinion.
We did not observe the talcing of either the Federal donated commodities inventory or purchased foods inventory at June 30, 2001, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures.

2001ARL-13

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:
* 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 Board of Education did not recognize as expenditures, in the year ended
June 30, 2001, a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 2001. Also funds received, subsequent to June 30, 2001, 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, 2000, were improperly recorded in the year ended June 30, 2001. 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 of such adjustments, if any, on the Special Revenue Fund, as might have been determined to be necessary had we been able to satisfy ourselves as to the accuracy of the food service inventories as discussed in the third paragraph, and 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 Hart County Board of Education as of June 30, 2001, and the results of its operations for the year then ended, in conformitywith accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated May 2, 2002, on our consideration of the Hart 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.
2001ARL-13

Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements ofthe Hart County Board ofEducation taken as a whole. The accompanying combining statements (Exhibits E through J) and the financial schedules (Schedules 1 through 5), which includes the Schedule ofExpenditures ofFederal Awards as required byU. 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 effect of adjustments, if any, on the Special Revenue Fund, as might have been determined to be necessary had we been able to sa~isfy ourselves as to the accuracy of the food service inventories as discussed in the third paragraph, and except for the effects of the matters referred to in the fourth paragraph, such information is fairly stated, in all material respects, in relation to the general-purpose financial statements taken as a whole.
A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated Section 506-24.
Respectfully submitted,
RWH:gp 2001ARL-13

HART COUNTY BOARD OF EDUCATION

------------------------------
HART COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 2001

ASSETS
Cash and Cash Equivalents
Investments
Accounts Receivable
lnventones 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

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$

81,210.37 $

517,919.28 $

574,133.30

8,915,888.76

5,430,756.28

299,297.09

93,883.29

1,128,884 60

28,709.62 8,106.23

Total Assets

$ 9,2961396.22 $ 648,61842 $ 7, 133.774.18

LIABILITIE AND FUND EQUITY
LIABILITIES
Accounts Payable Salanes Payable Expired Grant Balances Payable Contracts Payable Retalnages Payable Deferred Revenue Capital Lease Agreements General Obl1gatJon Bonds Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Other Programs For Debt Service For Expired Grant Balances/Questioned Costs For Inventories Food Donated Commodrtles Purchased Food For Purpose of Bond Issue For State Capital Outlay Projects Unreserved Undes1gnated
Total Fund Equity

$

49,852.14

183,730.00

$

2,190.02

$

350,698.95

460,750.15

8,728.36

$

2,190 02 $ 242,310.50 $

811449.10

$

18,814.50

$
9,275,391.70 $ 9,294,206.20 $

28,709.62 8,106.23 $
369,492.07 406,307.92 $

5,972,431.94 349,89314
0.00
6,322,325.08

Total UablhtJes and Fund Equity

$ 91296,396 22 $

The notes to the general-purpose financial statements are an Integral part of this statement.

-2-

648.61842 $ 7,133.774.18

EXHIBIT"A"

DEBT SERVICE
FUND

$

154,890 99

1,748,225.64

418,789.98

ACCOUNT GROUP
GENERAL LONG-TERM
DEBT

TOTALS

(Memorandum OnM

JUNE 30, 2001

JUNE 30, 2000

$ 1,328,153.94 $ 1,694,880.76

16,094,870.68

15,899,246.02

1,940,854.96

966,113.20

$ 2,321,906.61

28,709.62 8,106.23
2,321,906.61

40,080.16 7,690.92
1,626,596.69

7,288,093.39 13841.10

7,288,093.39 13,841.10

9,443,403.31 167,106.86

$ 213211906.61 $ 9,6231841.10 $ 2910241536.53 $ 2918451117.92

$

49,852.14 $

46,312.27

183,730.00

169,281.92

2,190.02

8,280.03

350,698.95

54,041.31

460,750.15

8,728.36

$

13,841.10

13,841.10

167,106.86

9,610,000.00

9,610,000.00

11,070,000.00

$ 9,623,841.10 $ 10,679,790.72 $ 11,515,022.39

$ 2,321,906.61
0.00 $ 2,321,906 61

$

2,174.31

$ 2,321,906.61

1,626,596.69

18,814 50

18,814.50

28,709.62 8,106.23
5,972,431.94 349,893.14

40,080.16 7,690.92
8,980,912.18 115,358.62

9,644,883.77

7,538,468.15

$ 18,344,745.81 $ 18,330,095.53

$ 2,3211906.61 $ 9,6231841.10 $ 29,0241536.53 $ 29,8451117.92

-3 -

HART COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30. 2001

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educa!Jonal Media Services General Administration School Administration Business Administrallon Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation
Capital Outlay Debt Service
Pnncipal Interest Paying Agent Fees
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES}
Accrued Interest on Bonds Sold 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
Food Inventory - Net Change In Period Donated Commodities Purchased Food

GENERAL FUND

SPECIAL REVENUE
FUND

$ 14,553,108.77 $
9,294,654.88 479,646.31
$ 24,327,409.96 $

261,581.49 2,168,928.24
515,013.55
2,945,523.28

$ 15,359,005.50 $
243,904.45 321,477.42 554,913.88 270,524.74 1,538,847.36 210,852.39 2,524,217.40 926,046.46 25,570.13 120,083.73
89,329.83
153,265.76 9,475.50

1,292,637.73
105,504.93 178,380.17
6,219.76 15,910.24
8,445.95 1,679.35
14.499.07 1,365,507.79

$ 22,347,514.55 $ $ 1,979,895.41 $

2,988,784.99 -43,261.71

$

175,371.00

$

175,371.00

$ 2,155,26641 $ 7,138,939.79

-43,261.71 460,524.86
-11,370.54 415.31

FUND BALANCE JUNE 30

$ 9,294,206.20 $ ===4=06--,3=0~7.=92=

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 301 2001

JUNE 301 2000

$ 3,177,30316

$ 17,991,993.42 $ 13,714,484.88

2, 168,928.24

1,942,817.31

$ 2,729,095.66

12,023,750.54

9,846,572.15

587,950.89

106,800.36

1,689,411.11

1,037,891.64

$ 3,765,254.05 $ 2,835,896.02 $ 33,874,083 31 $ 26,541,765.98

$

725.59

6,370,866.57 $
$ 6,371,592.16 $ $ -2,606,338 11 $

$ 16,651,643.23 $ 15,041,048.29

349,409.38 499,857.59 554,913.88 276,744.50 1,554,757.60 211,5TT.98 2,532,663.35 927,725.81
25,570.13 134,582.80 1,365,507.79 6,460,196.40

717,170.75 660,715.75 526,569.66 296,194.65 1,358,365.08 295,549.60 1,614,100.66 820,741.35
21,890.31 91,844.46 1,269,357.23 671,353.53

1,460,000.00 679,859.80 726.30

1,613,265.76 689,335.30 726.30

407,778.68 133,490.25
684.37

2,140,586.10 $ 33,848,477.80 $ 23,926,854.62

695,309.92 $

25,605.51 $ 2,614,911.36

$

17,031.98

9,000,000.00

$

175,371.00

540,112.00

I

$

-175,371.00

-175,371.00

-540, 112.00

$ -175,371.00

$

0.00 $ 9,017,031.98

$ -2,781,709.11 $ 9,104,034.19

695,309.92 $

25,605.51 $ 11,631,943.34

1,626,596.69

18,330,095.53

6,695,937.25

-11,370.54 415.31

3,112.82 -897.88

$ 6,322,325.08 $ 2,321,906.61 $ 18,344.745.81 $ 18.330,095.53

- 5.

HART COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30. 2001

EXHIBIT "C"

GENERAL FUND

ACTUAL

(BUDGET

BUDGET

BASIS!

REVENUES

State Funds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES

$ 14,008,625.00 $ 14,553,108 77

8,482.372 00 311,590.00

9,294,654.88 479,646 31

$ 22,802,587.00 $ 24,327,409.96

Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Adm1mstrat1on School Administration Business Administration Maintenance and Operabon of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operabon
Capital Outlay Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures

$ 16,049,789 00 $ 15,359,005 50

267,172.00 391,525.00 545,751.00 283,600 00 1,637,464.00 229,484.00 2,364,368 00 1,024,013.00
25,374 00 119,076.00

243,904 45 321,477 42 554,913.88 270,524 74 1,538,847.36 210,852.39 2,524,217 40 926,046.46
25,570.13 120,083 73

150,000.00

89,329 83 162,741 26

$ 23,087,616 00 $ 22,347,514 55

$ -285,029 00 $ 1,979,895.41

OTHER FINANCING QURCES Other Sources

175,371 00

175,371 00

Excess of Revenues and Other Fmancmg Sources

over (under) Expenditures

$ -109,658.00 $ 2,155,266.41

FUND BALANCE JULY 1. 2000

7,467, 183.00

7,138,939 79

Adjustments Food Inventory - Net Change in Penod
Donated Commodities Purchased Food

-537,573.00

FUND BALANCE JUNE 30. 2001

$ 6,819.952 00 $ 9,294,206.20

SPECIAL REVENUE FUND

ACTUAL

(BUDGET

BUDGET

BASIS!

$ 166,559 00 $ 261,581 49 1,772,763 00 2,168,928.24

420,170 00

515,013 55

$ 2,359,492.00 $ 2,945,523.28

$ 1,237,871 00 $ 1,292,637 73

120,162 00 281,797.00
4,324 00 1,650 00 6,175.00

105,504.93 178,380 17
6,219 76 15,910.24

5,000.00

8,445.95 1,679.35

12,477 00 1,293,541.00

14,499.07 1,365,507.79

$ 2,962,997 00 $ 2,988,784 99 $ -603,505.00 $ -43,261.71

$ -603,505 00 $ -43,261.71

462,939 00

460,524.86

-15,942 00

-11,370 54 415 31

$ -156,508 00 $ 406,307 92

The notes to the general-purpose financial statements are an integral part of this statement -6-

HART COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING .ENTITY
The Hart County Board ofEducation (School District) was established under the laws ofthe 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 i's 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 a 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.

-7-

HART COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

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 payingagent 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 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. The School District considers receivables collected within sixty days after yearend to be available and therefore 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.
-8-

HART COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO TIIE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures are generally recognized when the related fund liability is incurred.
A departure from the above definitions is the accounting treatment 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 2001, a substantial number ofpersonnel ofthe School District were employed for a one hundred and ninety day period beginning in August 2000 and ending in early June 2001. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 2000 and ending in August 2001. State grants to fund the State's share of these contracts were disbursed from the Georgia Department of Education to the School District in the same twelve months. As of June 30, 2001, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 2001, had not been made. Payments for these two months were made and recorded as expenditures by the School District subsequent to June 30, 2001. Also, the State's portion ofthe compensation paid in July and August 2001 was received and recorded as revenue in the fiscal year subsequent to June 30, 2001. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2000, were recorded in the year ended June 30, 2001. 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.
BUDGET
The Hart 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 of the 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 of general circulation in the locality. At the next regular meeting of the 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
-9-

--------

HART COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

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

-10-

HART COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PROPERTY TAXES

The Hart County Board ofCommissioners fixed the property tax levy for the 2000 tax year (calendar year) on September 29, 2000 (levy date). Taxes were due on December 20, 2000 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 2001. The Hart County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance oftaxes collected to the School District. Property tax revenues during the fiscal year ended June 30, 2001 for maintenance and operations amounted to $9,235,949.96 and for school bonds amounted to $416,711.16.

Tax millage rates levied for the 2000 tax year (calendar year) for the Hart County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations School Bonds

14.34 mills .62 mills

1A.2Qmills

SALES TAXES

Special Purpose Local Option Sales Tax 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 $2,312,384.50 and was recorded in the Debt Service Fund. The State will terminate collection of this tax once an additional $7,649,731.55 has been collected or on December 31, 2005, whichever occurs first.

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 of net current assets.

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

- 11 -

HART COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
recognized in the financial statements during the year bonds are issued. In 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-Terin Debt Account Group.
INTERFUND TRANSACTIONS
The School District has the following types of interfund transactions:
Reimbursements of expenditures 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.
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 of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 11 Opercent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case 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,
- 12 -

-HART COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 2: DEPOSITS AND INVESTMENTS

(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,

(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,

(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,

(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS , At June 30, 2001, the bank balances were $8,966,066.93. The amounts ofthe total bank balances are
classified into three categories of credit risk:

Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name.
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, 2001, as follows:

Risk Category

Bank Balance

1

$ 651,630.17

2

8,004,627.94

3

309,808.82

Total

$ 8.966.066,93

- 13 -

HART COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 200 I

Note 2: DEPOSITS AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS At June 30, 2001, the carrying value of the School District's total investments was $10,872,532.68 which is materially the same as fair value. The investments are classified as to risk categories as follows:

Type of Investment

Carrying Amount

Fair Value

Not Subject to Categorization Requirements Local Government Investment Pools Mutual Funds

$10,657,750.83 $10,657,750.83 214.781.85 214.781.85

Total Investments

$I0.872.532.68 $10,872.532.68

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 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 ofthe Primary Liquidity Portfolio is as follows:

The Primary Liquidity Portfolio consists of Georgia Fund 1, 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 ofcapital, 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 $1.00pershare. 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.

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

- 14 -

HART COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO TIIE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 2: DEPOSITS AND INVESTMENTS

weighted average maturity for Georgia Fund 1 on June 30, 2001, was 39 days. The average investment duration for Fund 6 on June 30, 2001, was 6 months.

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 ofassets; errors or omissions; job related illness or injuries to employees; natural disaster and unemployment compensation.

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 natural disaster. The School District has not experienced any losses related to this risk 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:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2000 2001

$

0.00 $

588.00 $

588.00 $

0.00

$

0.00 $

2,601.00 $

2,601.00 $

0.00

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

Position Covered

Amount

All Employees

$ 50,000.00

- 15 -

HART COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO TIIE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 200 I

Note 5: GENERAL LONG-TERM DEBT

CAPITAL LEASES The Hart County Board of Education has entered into various lease agreements as lessee for buses and equipment. 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 Rates

Amount

General Government - Refunding - Series 1993 2.50% - 5.25%

General Government - Series 1999

4.25% -4.75%

$ 1,810,000.00 7,800,000.00

$ 9,610,000.00

The changes in General Long-Term Debt during the fiscal year ended June 30, 2001, were as follows:

Capital Leases

General Obligation
Bonds

Total

Balance July 1, 2000

$ 167,106.86 $11,070,000.00 $11,237,106.86

Deductions Debt Retired

153,265.76 1,460,000.00 1,613,265.76

Balance June 30, 2001

$ 13-8~1.lQ $ 9,610,000.00 $ 9,623,841.10

At June 30, 2001, payments due by fiscal year which includes principal and interest for these items are as follows:

- 16 -

HART COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO TIIE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 5: GENERAL LONG-TERM DEBT

Fiscal Year Ended June 30

Capital Leases

General Obligation
Bonds

Total Debt

2002 2003 2004 2005 2006 2007 - 2011

$ 13,166.93 $ 2,172,433.75 $ 2,185,600.68

1,259.50 2,473,125.00 2,474,384.50

2,472,425.00 2,472,425.00

2,719,178.75 2,719,178.75

347,050.00

347,050.00

700.062.50

700.062.50

Total Principal and Interest $ 14,426.43 $10,884,275.00 $10.898.701.43

Deduct: Imputed Interest

585.33

Net Present Value of Future Minimum Lease Payments $ 13,841.10

Note 6: ON-BEHALF PAYMENTS

The School District has recognized revenues and expenditures in the amount of $330,199.35 for health insurance and retirement contributions paid on the School District's behalfby the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $246,977.72

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $23,696.63

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 $59,525.00

Note 7: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2001, together with funding available:

- 17 -

HART COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 7: SIGNIFICANT COMMITMENTS

Project

Unearned Executed Contracts

Funding Available From State

01 G/00S-673-027 01 /00S-673-004 0l/00S-673-035

$ 109,237.37 5,805,254.29 5,190,189.28

$ 27,291.10 1,656,415.74

$11.104.680.94 $ 1,683,706.84

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.

The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the general-purpose financial statements.

Note 9: SUBSEQUENT EVENTS

In the subsequent fiscal year, the School District entered into a multi-year installment purchase agreement with the Georgia School Boards Association in the amount of$2,765,000.00 to acquire, construct and equip a new vocational building and a new athletic facility.

Note 10: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

- 18 -

HART COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 200 I

Note 10: RETIREMENT PLANS

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.29% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2001 2000 1999

100% 100% 100%

$1,548,578.53 $ 1,474,966.11 $ 1,479,197.81

- 19 -

HART COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30. 2001

ASSETS Cash and Cash Equivalents Accounts Receivable Inventories
Food Donated Commodities Purchased Food
Total Assets

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

429.827.92 $

0.00

9,414.59

28.709.62 8 1106.23

$

476,058.36 $ = = =......o==oo=

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Deferred Revenue
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Other P1ograms For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity

$

14,369.86

55,380.58

$

69.750.44

$

28,709.62

8,106.23

369,492.07 $

0.00

,$

406,307.92 $

0.00

Total Liabilities and Fund Equity
See notes to the general-purpose financial statements. -20-

$

476,058.36 $-===-==0==00==

EXHIBIT "E"

FEDERAL
PROGRAMS

OTHER
PROGRAMS

TOTALS

JUNE 30, 2001

JUNE 30, 2000

$

79,363.00 $

8,728.36 $

517,919.28 $

485,085.04

84,468.70

93,883.29

278,033.11

28,709.62 8,106.23

40,080.16 7,690.92

$

163,831.70 $

8,728.36 $

648,618.42 $==-=8=1=0=,8=89==23=

$

35,482.28

128,349.42

$

$

163,831.70 $

$
8,728.36 8,728.36 $

$ 49,852.14 183,730.00
8,728.36
242,310.50 $

126,490.15 46,312.27 169,281.92
8,280.03
350,364.37

$

2,174.31

$

28,709.62

8,106.23

40,080.16 7,690.92

$

0.00 $

0.00

369,492.07

410,579.47

$

0.00 $

0.00 $

406,307.92 $

460,524.86

$

163,831.70 $

8,728.36 $

648,618.42 $ --=====8=1=0==,8..,89=.2=3=

- 21 -

HART COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2001

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 School Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation
Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
FUND BALANCE JULY 1
Food Inventory- Net Change in Period Donated Commodities Purchased Food
FUND BALANCE JUNE 30

SCHOOL FOOD
SERVICES. FUND

LOTTERY PROGRAMS

$

97,328.00 $

712,078.84

515,013.55

$ 1,324,420.39 $

70,818.85 70,818.85

$

70,818.85

$ 1,365,507.79

$ 1,365,507.79 $

$

-41,087.40 $

458,350.55

-11,370.54 415.31

70,818.85 0.00 0.00

$ 406,307.92 $ =====o=.o=o=

See notes to the general-purpose financial statements.
- 22-

EXHIBIT"F"

FEDERAL
PROGRAMS

OTHER PROGRAMS

TOTALS

YEAR ENDED

JUNE 301 2001

JUNE 30, 2000

$ $ 1,456,849.40
$ 1,456,849.~0 $

93,434.64 $ 93 434.64 $

261,581.49 $ 2,168,928.24
515,013.55
2,945,523.28 $

288,555.57 1,942,817.31
452,235.19
2,683,608.07

$ 1,152,225.60 $
105,504.93 160,810.45
6,219.76 15,910.24
1,679.35 14,499.07

$ 1,456,849.40 $

$

0.00 $

0.00

69,593.28 $ 17,569.72 8,445.95
95,608.95 $ -2, 174.31 $ 2,174.31

1,292,637.73 $
105,504.93 178,380.17
6,219.76 15,910.24 8,445.95
1,679.35 14,499.07 1,365,507.79
2,988,784.99 $
-43,261.71 $
460,524.86

1,041,500.45
90,906.03 280,846.80
4,154.78 5,912.38
3,272.56 11,568.88 1,269,357.23 4 879.43
2,712,398.54
-28,790.47
487,100.39

-11,370.54 415.31

3,112.82 -897.88

$

0.00 $

0.00 $

406,307.92 $-==4==6=0=,5-24=.8=6=

23-

HART COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 2001

ASSETS Cash and Cash Equivalents Investments Accounts Receivable
Total Assets
LIABILITIES AND FUND EQUITY LIABILITIES
Contracts Payable Retainages Payable
Total Liabilities FUND EQUITY
Fund Balances Reserved For Purposes of Bond Issue For State Capital Outlay Projects Unreserved Undesignated Total Fund Equity
Total Liabilities and Fund Equity

REGULAR

BOND PROCEEDS

$

0.00 $

277,715.36

5,430,756.28

263,960.30

$

0.00 $ 5,972.431.94

$ 5,972,431.94

$ _ _ _ _...;;;o.;.;.o;..;:o_

$

0.00 $

0.00 5,972,431.94

$

o.oo, $ 5,972,431.94

See notes to the general-purpose financial statements. -24-

EXHIBIT"G"

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

LOTTERY PROJECT

TOTALS

JUNE 30, 2001

JUNE 30, 2000

$

184,180.84 $

112,237.10 $

574,133.30 $

858,501.57

5,430,756.28

8,299,573.93

864.924.30

1.128.884.60

$

112,237.10 $ 7,133,774.18 $ 9,158,075.50

$

350,698.95

$

350,698.95 $

54,041.31

348,513.05 $ _ _1__1=21=2_3_1.;....1...oa...

460,750.1'5

$

699,212.00 $

112,237.10 $

811,449.10 $

54,041.31

$

349,893.14

$ 5,972,431.94 $ 8,980,912.18

349,893.14

115,358.62

o.oo $ ____o=._o_oa...

0.00

7,763.39

$

349,893.14 $ _ _ _ _o=._o_o_c,_ $ 6,322,325.08 $ 9,104,034.19

$

1,049,105.14 $

112,237.10 $ 7.133,774.18 $ 9,158,075.50

- 25-

HART COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 2001

REVENUES
State Funds Other Funds
Total Revenues
EXPENDITURES
Current Support Services Business Administration
Capital Outlay Land and Land Improvements Building and Building Improvements
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

REGULAR

BOND PROCEEDS

$

1,005.16 $

586,945.73

$

1 005.16 $

586,945.73

$

0.00 $

725.59

1,217.00

$

0.00 $

1,942.59

$

1,005.16 $

585,003.14

$

-8,768.55 $ -3,593.483.38

$

-8,768.55 $ -3,593.483.38

$

-7,763.39 $ -3,008,480.24

7,763.39

8,980,912.18

$

0.00 $ 5,972,431.94

See notes to the general-purpose financial statements. - 26 -

EXHIBIT "H"

GEORGIA STATE FINANCING AND
INVESTMENT
COMMISSION

LOTTERY PROJECT

TOTALS

YEAR ENDED

JUNE 30, 2001

JUNE 301 2000

$ 2,931,683.26 $ $ 2,931,683.26 $

245,619.90 $ 245,619.90 $

3,177,303.16 587,950.89 $
3,765,254.05 $

186,302.94 186,302.94

-$

725.59 $

$ 4,000,672.74 $ 2,368,976.83

6,370,866.57

$ 4,000,672.74 $ 2,368,976.83 $ 6,371,592.16 $

$ -1,068,989.48 $ -2, 123,356.93 $ -2,606,338.11 $

129,456.13 391,827.85 273,196.25 794,480.23 -608, 177.29

$ 9,000,000.00

$ 1,303,524.00 $ 2,123,356.93 $ 3,426,880.93

780,382.72

-3,602,251.93

-240,270.72

$ 1,303,524.00 $ 2,123,356.93 $ -175,371.00 $ 9,540,112.00

$

234,534.52 $

115,358.62

0.00 $ -2,781,709.11 $

0.00

9,104,034.19

8,931,934.71 172,099.48

$

349,893.14 $ ====--===0==00..,, $ 6,322,325.08 $ 9,104,034.19

-27-

HART COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET DEBT SERVICE FUND JUNE 30, 2001

EXHIBIT "I"

ASSETS Cash and Cash Equivalents Investments Accounts Receivable

PROPERTY TAXES FOR BOND DEBT

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

JUNE 30, 2001

JUNE 30, 2000

$ 154,890.99

$

154,890.99 $

113,702.67

487,641.99 $ 1,260,583.65

1,748,225.64

1,078,361.01

13,893.08

404,896.90

418,789.98

434,533.01

Total Assets

$ 656,426.06 $ 1,665,480.55 $ 2,321,906.61 $ 1,626,596.69

FUND EQUITY
Fund Balances Reserved For Debt Service Unreserved Undesignated

$ 656,426.06 $ 0.00

1,665,480.55 $ 2,321,906.61 $ 1,626,596.69

0.00

0.00

0.00

Total Fund Equity

$ 656,426.06 $ 1,665,480.55 $ 2,321,906.61 $ 1,626,596.69

See notes to the general-purpose financial statements. - 28-

HART COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
DEBT SERVICE FUND YEAR ENDED JUNE 30, 2001

EXHIBIT "J"

REVENUES
Taxes Other Funds
Total Revenues
EXPENDITURES
Debt Service Principal Interest Paying Agent Fees
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURQl;S
Accrued Interest on Bonds Sold
Excess of Revenues and Other Financing Sources over (under) Expenditures

PROPERTY TAXES FOR BOND DEBT

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS YEAR ENDED JUNE 30, 2001 JUNE 301'2000

$ 416,711.16 $ 2,312,384.50 $ 2,729,095.66 $ 1,435,802.13

34,805.98

71,994.38

106,800.36

28,754.69

$ 451,517 14 $ 2,384,378.88 $ 2,835,896 02 $ 1,464,556.82

$ 260,000.00 $ 100,772.50 726.30

1,200,000.00 $ 579,087.30

1,460,000.00 $ 679,859.80 726.30

250,000.00 111,522.50
684.37

$ 361,498.80 $ $ 90,018.34 $

1I7791087.3Q $ 2,140,586.10 $ 362,206.87 605,291.58 $ 695,309.92 $ 1,102,349.95

17,031.98 $ 90,018.34 $ 605,291.58 $ 695,309.92 $ 1,119,381.93

FUND BALANCE JULY 1

566,407.72

1,060,188.97

1,626,596.69

507,214.76

FUND BALANCE JUNE 30

$ 656,426 06 $ 1.665,460.55 $ 2,321,906.61 $ 1,626,596.69

See notes to the general-purpose financal statements.

- 29-

HART COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30 2001

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

Agriculture, U S Department of Chlld Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program National School Lunch Program

10.553 10 555

NIA $ 195,513 18

(2)

NIA

457,554.93 $ 1,306,497 06 (3)

Total Child Nutrition Cluster

$ 653,068 11 $ 1,306,497 06

Other Programs

Pass-Through From Georgia Department of Education

Food and Nutrition Program

Food D1stribullon Program (1)

10 550

NIA

59,010.73

59,010 73

Total U S. Department of Agnculture

$ 712,078 84 $ 1,365,507 79

Education, U. S Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Capacity Building Improvement Flow Through Preschool

. 84173 . 84.027
. 84173

NIA $ 11,04900 $

NIA

309,607 93

NIA

29,406 00

11,049.00 309,607.93
29,406.00

Total Special Education Cluster

$ 350,062.93 $

350,062.93

Other Programs

Pass-Through From Georgia Department of Education

Comprehensive School Refonn Demonstration ProJect

84 332

NIA

Elementary and Secondary Education Act

Title I Grants to Local Educational Agencies

. 84 010

NIA

Titlell

Eisenhower Professional Development

84.281

NIA

Title Ill

Technology Literacy Challenge Fund Grants

84 318

NIA

T1UeVI

Innovative Educabon Program Strategies

84 298

NIA

Class Size Reduction

84 340

NIA

Goals 2000

State and Local Education Systemic Improvement

Grants

84.276

NIA

Vocational Education - Basic Grants to States

High School Program

Basic Grant

84048

NIA

63,916.43
647,296 00 16,425.00
125,00000 21,774 00 100,572.00
105,300 00
26,503 04

63,91643
647,296 00 16,425.00
125,000 00 21,774 00 100,572 00
105,300.00
26,503.04

Total U S. Department of Education

$ 1,456,849.40 $ 1,456,849 40

Total Federal Financial Assistance NIA = Nol Available

30-

s 2,168,928.24 s~.,,.;;,2,.,822-=,3-57.....,.1.9..

HART COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2001

SCHEDULE 1

Notes to the Schedule of Expenditures of Federal Awards
(1) The amounts shown for the Food Distnbution Program represents the Federally assigned value of nonmonetary assistance for donated commodilles received and/or consumed by the system during the current fiscal year
(2) Expenditures for the School Breakfast Program were not maintained separately and are included m the 2001 National School Lunch Program
(3) Expenditures for this program include State, and/or Other Funds Expenditures are not maintained by fund source.
Major Programs are idenllfied by an asterisk (") In front of the CFDA number
The School Distnct did not provide Federal Assistance to any Subrecip1ent.
The accompanying schedule of expenditures of Federal awards includes the Federal grant actJvity of the Hart County Board of Educallon and 1s presented on the modified accrual basis of accounting wtuch is the basis of accounllng used m the presentation of the general-purpose financial statements.

See notes to the general-purpose financial statements.

31

HART COUNTY BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE
YEAR ENDED JUNE 30 2001

SCHEDULE"'Z'

AGENCY/FUNDING
GRANTS Community Affairs, Georgia Department of Local Assistance Grant
Education, Georgia Department of Quality Basic Educabon Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Pnmary Grades (1-3) Program Pnmary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students w,th D1sabd1bes Category I Category 11 Category Ill Category IV Gifted Student - Category VI Remedial Educabon Program Altemallve Education Program Media Center Program Staff and Professional Development Indirect Cost Categoncal Grants Pupd Transportabon Regular Bus Replacement Nursing Services Pnncipal Supplements Vocational Supervisors Education Equahzabon Funding Grant FoodSeMC8S Vocational Education Other State Programs At-Risk Summer School Program Environmental Science Program Health Insurance lnnovatrve Programs Mentoring Program Preschool Handtcapped Program Remedial Summer School Special Education Low lnadence Grant Teachers' Rebrement Tu1t1on for the Multl-Handtcapped Lottery Programs Computers in the Classroom Exceptional Growth-Capital Outlay
Georgia State Financing and Investment Commission Reimbursement on Construcbon Pl'Oj8Cts
Office of Treasury and Fiscal ServtceS Public School Employees Retirement
CONTRACTS Education, Georgia Department of Georgia's Reading Challenge Reading First Program
Human Resources, Georgia Department of Children's Trust Fund-Second Step

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

TOTAL

$ 6,271 64

$

6,271 64

$ 676,290 00 305,167 00
1,772,615 00 670,406 00
1,164,091 00 14,396 00
1,662,964 00 1,434,316 00
544,68900
99,693 00 432,48700 872,319 00 340,647.00 366,565 00
95,500 00 133,197 00 311,44700 83,30900 2,042,797 00
464,591 00 146,863 00 83,711 00 14,784 00 21,836 00 232,13800
23,669 00
4,67364 1,500 00 246,977 72 5,00000 7,499 97 41,257 73 5,414 99 14,81900 23,696 63 96,547 25

97,328 00
70,818 85 $ 245,619 90

676,290 00 305,16700 1,772,615 00 670,406 00 1,164,091 00
14,396 00 1,662,964 00 1,434,316 00
544,689 00
99,693 00 432,48700 872,319 00 340,64700 366,56500 95,50000 133,197 00 311,44700 83,309 00 2,042,797 00
464,591 00 146,863 00 83,711 00 14,784 00 21,836 00 232,138 00 97,328 00 23,669 00
4,673 64 1,500 00 246,977 72 5,000 00 7,499 97 41,257 73 5,414 99 14,819 00 23,69663 96,547 25
70,818 85 245,619 90

59,52500

2,931,683 26

2,931,683 26 59,525 00

34,22500 148484

87,16300

34,22500 87,163 00
148484

See notes to the generali)urpose financial statements

$ 14,553,10877 $ 261,58149 $ 3,177,30316 $ 17,991,99342 -32-

HART COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2001

SCHEDULE "3"

PROJECT
For the purpose of funding, m whole or in part, the acquislllon, construction, fum1shmg and equipping of two new elementary schools, parking areas and grounds, lndudlng the acquisillon of all necessary real and personal property; the acquisition, construction, furnishing and equipping of additional dassrooms, instructlonal and support space and the modificallon of exlsllng space at Hart County Middle School; the renovation and modification of existing school district fadlilles; the acquisition of any necessary personal property, indudmg computers and other technology; and the payment of expenses Incident thereto (collectively, the "Projects"), the maximum cost of such Projects not to exceed $11,000,000.00

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR(3)

AMOUNT EXPENDED
IN PRIOR YEARS(3)

PROJECT STATUS

$ 11,0001000.00 $ 18,6011562.61 $ 61948,736.87 $ 665,024.10 Ongomg

(1) The School District's original cost estimate as specified m the resolution calllng for the imposition of the Local Opllon Sales Tax.
(2) The School District's current estimate of total cost for the project. lnciudes all cost from proJect inception to complellon.
(3) The voters of Hart County approved the lmposillon of a 1% sales tax to fund the above project and rellre assoaated debt. Amounts expended for this project may lndude sales tax proceeds, state, local property taxes and/or other funds over the hfe of the project.

See notes to the general-purpose financial statements.

- 33-

HART COUNTY BOARD OF EDUCATION GENERAL FUND QUALITY BASIC EDUCATION PROGRAM IQBEl
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2001

SCHEDULE "4"

DESCRIPTION

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kmdergarten Program

$

Kindergarten Program-Early Intervention Program

Pnmary Grades (1-3) Program

Primary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Middle Grades (6-8) Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with D1sabiht1es

Category I

Category II

Category 111

Category IV

Gifted Student Category VI

Remedial Education Program

Alternative Education Program

814,611 00 $ 367,582.00 2,135,165 00 807,521.00 1,402,180 00
17,34000 2,003,087.00 1,727,674 00
656,093 00 2,102,078.00
441,537.00 115,033.00 160440 00

864,150 09 $ 250,158.22 2,312,044 51 607,628 49 1,770,360.93
8,665.11 2,190,148 33 1,880,022 70
592,008 25
39,036 29 416,659.27 1,345,760.83 103,425 83 517,767.55 136,897.55 147,402 18

10,141 41 $ 3,162 12 45,155 82 5,06615 27,645 16 41,242.95 9,861 37 140,026 43 122,996.68
2,297 25, 6,392.91 18,142 95 7,259.26 34,798 08 1,743 96 6,624 77

874,291.50 253,320 34 2,357,200 33 612,694 64 1,798,006 09
49,908.06 2,200,009.70 2,020,049.13
715,004.93
41,333.54 423,052 18 1,363,903.78 110,685.09 552,565 63 138,641.51 154,026.95

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$ 12,750,341 00 $ 13,182,136.13 $ 482,557.27 $ 13,664,693 40

Media Center Program Staff and Professional Development

375,145 00 100,350 00

481,368 68 61,562 98

65,019.05 42,882 36

546,387.73 104,445 34

TOTAL QBE FORMULA FUNDS

$ 13,225,836 00 $ 13,725,067 79 $ 590,458 68 $ 14,315,526 47

(1) Comprised of State Funds plus Local Five Mill Share

See notes to the general-purpose financial statements

- 34-

HART COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE).
ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30, 2001

SCHEDULE "5"

SITE
Hart County Middle School Hart County Alternative School Air Line Elementary School Mount Olivet Elementary School Eagle Grove Elementary School Nancy Hart Elementary School Hart County High School Hartwell Elementary School 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

$

2,919,915.00 $

2,964,480.53

100,250.00

159,034.27

1,055,655.00

1,125,290.44

1,228,011.00

1,343,692.03

1,044,255.00

1,092,522.72

965,839.00

1,058,244.56

2,890,940.00

3,406,017.98

2,385,036.00

2,330,461.62

160,440.00

184,949.25

$

12,750,341.00 $ 13,664,693.40

See notes to the general-purpose financial statements. - 35-

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Russi,:1.1. W. H1NTON
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, SW., Suite 214 Atlanta, Georgia 30334-8400
May 2, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Hart 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 ofHart County Board of Education as of and for the year ended June 30, 2001, and have issued our report thereon dated May 2, 2002. This report was qualified for a scope limitation and for various departures from generally accepted accounting principles, as identified in the auditor's report on the general-purpose financial statements. Except as discussed in the following paragraph, 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.
We did not observe the taking ofeither the Federal donated commodities inventory or the purchased foods inventory at June 30, 2001, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures.
Compliance
As part of obtaining reasonable assurance about whether Hart County Board ofEducation's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial 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.
2001YB-41

Internal Control Over Financial Reporting
In planning and performing our aud~t, we considered Hart County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted 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 Hart County Board of Education'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-6731-01-02.
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-6731-01-02 to be a material weakness.
This report is intended solely for the information and use of the management, members of the Hart 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,
~~
Ru sell W. Hinton State Auditor
RWH:gp 2001YB-41

RussEu. W. H1NTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S W., Suite 214 Atlanta, Georgia 30334-8400
May 2, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Hart 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 ofHart County Board ofEducation with the types of compliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2001. Hart County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule ofFindings 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 Hart County Board of Education's management. Our responsibility is to express an opinion on Hart County Board of Education's compliance based on our audit.
We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB CircuJar 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 tpat could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Hart 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 Hart County Board of Education's compliance with those requirements.
2001SA-10

In our opinion, the Hart County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 2001.
Internal Control Over Compliance
The management ofHart County Board ofEducation 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 Hart County Board ofEducation'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 Hart 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,
~.::k:
RWH:gp 2001SA-10

SECTION ID AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

HART COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 2001

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6731-99-01 FS-6731-00-01 FS-6731-00-02 FS-6731-00-03

Further Action Not Warranted Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

EXPENDITURES/LIABILITIES DISBURSEMENTS Failure to Meet Expenditure Requirements Amount: $18,814.50 Finding Control Number: FS-6731-00-02

The underexpenditure ofremedial funds did occur. In the future, the accounting director, remedial program supervisor and finance director will evaluate such expenditures periodically in order to prevent future occurrence of such.

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6731-00-03

It is the intent of the Hart County School System to employ, as soon as practical, the services of an outside agency to develop a system-wide Ge~eral Fixed Assets Account Group to include an inventory of land, buildings and equipment owned by the School District. Such program should include date acquired, acquisition cost, estimated replacement cost, location and description. After the program is established, detailed records will be maintained.

SECTION IV FINDINGS AND QUESTIONED COSTS

HART COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the Hart County Board of Education's financial statements was qualified for a scope limitation and 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 Hart County Board of Education disclosed a financial statement reportable condition related to th~ 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 ofthe Hart County Board of Education disclosed no instances ofnoncompliance that were deemed to be material to the financial statements.
4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Hart County Board of Education 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 Hart 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 .51 0(a} of 0MB Circular A-133 The Hart County Board of Education's audit did not disclose audit findings required to be reported by section .510(a) of 0MB Circular A-133.
7. Major Programs Federal awards audited as major programs are as follows: 84.010 Elementary and Secondary Education Act - Title I- Grants to Local Educational Agencies 84.027 Individuals with Disabilities Education Act - Part B - Special Education Flow Through 84.173 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-

HART COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 2001
I SUMMARY OF AUDITOR'S RESULTS
9. Low Risk Auditee The Hart County Board of Education qualified as a low risk auditee based on a waiver granted by the U.S. Department of Education.
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
BUDGET PREPARATION/EXECUTION Failure to Adopt a Balanced Budget Nonrnaterial Noncompliance Finding Control Number: FS-6731-01-01
An examination of the School District's Budget revealed that the School District failed to adopt a balanced budget for the Special Revenue Fund. Chapter 32 of the Financial Management for Georgia Local Units ofAdministration (FMGLUA) issued by the Georgia Department ofEducation states in part:
"The budget must be balanced for all budgeted funds. Total anticipated revenues should equal total estimated expenditures. In the event anticipated revenues are insufficient to fund anticipated expenditures, a portion of the unreserved fund balance from the previous years must be used to fund the shortfall. In the event there is insufficient unreserved fund balance from previous years to fund anticipated expenditures, then such expenditures must be reduced to equal anticipated revenues plus available fund balance."
This condition occurred because management neglected the specific limitations imposed upon the School District by the Georgia Department of Education. Appropriate procedures should be implemented by the School District to ensure that the adopted budget is balanced as required.
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6731-01-02
The Hart County Board ofEducation did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general-purpose financial statements of the 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 ofa 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
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HART COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001 II 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-6731-01-02 may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. ID FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
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