Heard County Board of Education, Franklin, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2002

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HEARD COUNTY BOARD OF EDUCATION
-TABLE OF CONTENTS-

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

EXHIBITS

GENERAL-PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

6

D NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

7

ADDmONAL FINANCIAL INFORMATION

COMBINING AND INDNIDUAL FUND STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

18

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

20

CAPITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

22

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

24

I

FIDUCIARY FUND TYPE

STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUND

26

SCHEDULES

1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

27

2 SCHEDULE OF STATE REVENUE

29

3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

31

HEARD 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

32

5

BY SITE

33

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 CIRCULAR A-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

Ru,;;sELL W. HtNTO~
STATE AUDITOR (404) 656 2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street. S W., Suite 214 Atlanta, Georgia 30334-8400
February 28, 2003

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Heard 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 Heard County Board of Education, as of and for the year ended June 30, 2002, as listed in the table of contents. These general-purpose financial statements are the responsibility ofthe Heard 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 with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in the notes to the general-purpose financial statements, the Board of Education's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:

2002ARL-13

* The general-purpose financial statements of the Board of Education did not contain a General Fixed Assets Account Group to account for property and equipment owned by the Board of Education which should be included to conform to generally accepted accounting principles.
* School activity accounts maintained at the individual schools are not included in the
general-purpose financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general-purpose financial statements.
* The Board of Education did not recognize as expenditures, in the year ended
June 30, 2002, a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 2002. Also funds received, subsequent to June 30, 2002, 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, 2001, were improperly recorded in the year ended June 30, 2002. 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 Heard County Board ofEducation as of June 30, 2002, 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 Government Auditing Standards, we have also issued our report dated February 28, 2003, on our consideration ofthe Heard County Board ofEducation's internal control over :financial reporting and our tests ofits compliance with certain provisions oflaws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements ofthe Heard County Board ofEducation taken as a whole. The accompanying combining and individual fund statements (Exhibits E through I) and the financial schedules (Schedules 1 through 5), which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office ofManagement and Budget Circular A-133, Audits ofStates, Local Governments, and NonProfit Organizations, are presented for purposes ofadditional analysis and are not a required part of the general-purpose financial statements. Such information has been subjected to the auditing
2002ARL-13

procedures applied in the audit ofthe general-purpose financial statements and in our opinion, except for the effects ofthe matters referred to in the third paragraph, such information is fairly stated, in all material respects, in relation to the general-purpose financial statements taken as a whole.
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,
~W~~

RWH:as 2002ARL-13

State Auditor

HEARD COUNTY BOARD OF EDUCATION

- - - - - - - - - - - - - - - - - - - - - --------- --- - ---- - - - - - - - - - - - - - - - - - - - -
HEARD COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP
JUNE 30. 2002

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

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$ 3.027,659 01 $ 220,347 46 $

331,762 23

110,735 05

96,469.07

8,894.18 4,899 99

Total Assets

$ 3,138,394.06 $ 330,610.70 $==3=3=1=,7=62==23...

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salaries Payable Expired Grant Balances Payable Contracts Payable Retamages Payable Funds Held for Others Capital Lease Agreements General Obhgat1on Bonds Payable
Total Liab1lit1es
FUND EQUITY
Fund Balances Reserved For Debt Service For Inventories
Food
Donated Commodities Purchased Food For Purpose of Bond Issue Unreserved Undes1gnated
Total Fund Equity

$

43,154.54

182,084.35

$

3,616.00 328,146.23

$ 225,238.89 $

331.762.23

$

8,89418

4,89999

$ 3,138,394.06

91,577.64 $

0.00

$ 3,138,394.06 $ 105,371.81 $

000

Total Liabilities and Fund Equity

$ 3,138,394.06 $

The notes to the general-purpose financial statements are an Integral part of this statement. -2-

330,610.70 $

331,762.23

EXHIBIT"A"

DEBT SERVICE
FUND

FIDUCIARY FUND TYPE AGENCY FUND

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS

(Memorandum Only)

JUNE 301 2002

JUNE 301 2001

$ 2,226,641.92 $

41,994 58

$ 5,848,405.20 $ 7,140,860 14

1,600,000.00

496,089 58

703,293 70

818,830.29

$

2,722,731.50

8,894.18 4,899.99
2,722,731.50

11,992.15 4,480 71
1,906,781.68

2,207,268 50 15 151 65

2,207,268.50 15 151.65

4,423,218.32 79 772.43

$ 2,722,731.50 $

41,994 58 $

4,945,151.65 $ 11,510,644.72 $ 15,985,935.72

$

43,154.54 $

43,156.91

182,084.35

157,452.50

85.79

3,616.00

336,211.97

328,146.23

94,023.55

$

41,994.58

41,994.58

27,102.73

$

15,151.65

15,151.65

79,772.43

4,930,000.00

4,930,000.00

6,330,000 00

$

41,994.58 $

4,945,151.65 $ 5,544,147.35 $ 7,067,805.88

$ 2,722,731.50
000 $ 2,722,731.50

$ 2,722,731.50 $ 1,906,781.68

8,894.18 4,899.99

11,992.15 4,480 71
3,601,206.56

3,229,971.70

3,393,668 74

$ 5,966,497.37 $ 8,918,129 84

$ 2,722,731.50 $

41,994.58 $

4,945,151 65 $ 11,510,644.72 $ 15,985,935.72

-3-

HEARD COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30. 2002

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Mecha Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Food Services Operation
Capital Outlay Debt Service
Pnncipal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES CUSES}
Capital Leases Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Fmancmg Sources over (under) Expenditures and Other Fmancmg Uses
FUND BALANCE JULY 1
Food Inventory - Net Change m Period Donated Commod1bes Purchased Food

GENERAL FUND

SPECIAL REVENUE
FUND

$ 8,424,241.38 $
4,054,175.33 141 970 73
$ 12,620,387 44 $

619,468 77 1,275,573 38
285,242 87
2,180,285 02

$ 8,229,679.73 $

361,140 08 97,797.71
336,645.94 285,271.71 873,230.44
72,247.81 852,779 01 580,801.06
14,957.75

256,950.11

64,620.78 7 93649

$ 12,034,058.62 $

$

586,328.82 $

1,191,155 99 71,293 41 38,962.93 77.89 48,305.76
16,723.24 781,727.90
2,148,247.12 32,037.90

$

0.76 $

-782,063 79

$ -782,063.03 $

$ -195,734.21 $ 3,334,128 27

0.03 -0 76 -0.73
32,037.17 76,013.33
-3,097.97 419.28

FUND BALANCE JUNE 30

s_____ $ 311381394.06

10_5.13._,7.:..1~81.:...

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 2002

JUNE 30, 2001

$ 2,979,487.80

$ 12,023,197.95 $ 8,733,599.07

1,275,573.38

1,065,953.23

$ 2,484,702.97

6,538,878 30

5,833,468.27

27,743.65

16,881.85

471,839.10

776,184.53

$ 3,007,231 45 $ 2,501,584.82 $ 20,309,488 73 $ 16,409,205.10

$ 7,390,501.77 $
$ 7,390,501.77 $ $ -4,383,270.32 $

$ 9,420,835.72 $ 8,563,465.67

432,433.49 136,760.64 336,723.83 333,577 47 873,230.44 72,247.81 852,779.01 597,524.30
14,957.75 781,727.90 7,647,451.88

415,896.15 138,588.96 335,795.77 305,448.92 860,601.11 79,397.44 815,852.15 580,923.18
14,784.50 774,101.51 4,045,531.60

1,400,000.00 285,63500

1,464,620.78 293,571.49

857,392.57 435,073.63

1,685,635.00 $ 23,258,442.51 $ 18,222,853.16

815,949.82 $ -2,948,953.78 $ -1,813,648.06

$

782,063.76

$

782,063 76

$

$

782,064.55

-782,064.55

$

0.00 $

137,165.00 1.81 -1.81
137,165.00

$ -3,601,206.56 $ 3,601,206.56

815,949.82 $ -2,948,953.78 $ -1,676,483.06

1,906,781 68

8,918,129.84

10,593,934.10

-3,097.97 419.28

216.68 46212

$

000 $

-5-

HEARD COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL INON-GAAP BASIS> GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30 2002

EXHIBIT "C"

GENERAL FUND

BUDGET

ACTUAL

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues

$ 9,915,078 00 $ 8,424,241 38

3,961,295 00 148.958 00

4,054,175 33 141 970 73

s $ 14,025,331 00

12,620,387 44

EXPENDITURES

Current lnstructson Support SerYlces Pupil Sel'VIC8S Improvement of lnstructtonal Sel'Vlces Educational Media Services General Admm1strabon School Adm1mstration Business Adm1mstrat1on Maintenance and Operation of Plant Student Transportabon Services Central Support Sel'VIC8S Food Sel'VIC8S Operation
Capital Outlay Debt Service
Total Expenditures

$ 8,626,679 00 $ 8,229,679 73

394,000 00 108,182 00 352,599 00 307,000 00 926,000 00
75,000 00 926,000 00 659,00000
15,000 00

361,140.08 97,797 71
336,645 94 285,271 71 873,23044
72,247.81 852,779 01 580,801 06
14,957.75

370,00000

256,950 11 72,557 27

s $ 12,759.460 00

12,034,058 62

Excess of Revenues over (under) Expenditures

$ 1,265,871 00 $

586,328.82

OT}jER FINANCING SOURCES !USES}
Other Sources Other Uses
Total Other F1nanang Sources (Uses)

s

076

-782,063 79

s -782.063 03

Excess of Revenues and Other F1nanang Sources
over (under) Expenditures end Other F1nanang Uses

$ 1,265,871 00 $

-195,734 21

FUNQ BAbANCE JULY l 200]

3,150,340 50

3,334,12827

AdJustments Food Inventory - Net Change in Penod
Donated Commodrtles Purchased Food

-1.24

EJ.INQ BALANCI;; JUN!;; 30 ~02

$ 414161210 26 $ 311381394 06

SPECIAL REVENUE FUND

BUDGET

ACTUAL

s 609,561 00 $ 619,468 77

1,424,450 00

1,275,573 38

268,689 00

285,242 87

s 2,302,700 00 $ 2.180.285 02

s s 1,245,382 00

1,191,155 99

79,937 00 65,897 00
95,661 00

71,293 41 38,962 93
77 89 48,305 76

36,800 00 779,023 00

16,723 24 781,727.90

s 2,302,700 00 $ 2,148,247 12

s

000 $

32,037 90

$

003

-0 76

$

-073

$

000 $

132,894 82

-4 76

32,03717 76,013.33
-3,097 97 41928

$ 1321890 06 $ 105 371 81

The notes to the general-purpose finanaal statements are an integral part of thlS statement. -6-

HEARD COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Heard 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 is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the School District. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general-purpose financial statements.
The general-purpose financial statements account for all State, Federal, Taxes and Other funds under control of the School District, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most of the School District's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources of the School District except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education.

-7-

HEARD COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and from the Federal government to accomplish specific educational objectives.
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.
DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees.
FIDUCIARY FUND TYPE - the fund used to account for assets held by a government unit in a trustee capacity or as an agent for individuals, private organizations, other government units and/or other funds. This fund includes:
AGENCY FUND - the fund used to account for assets held in a fiduciary capacity for other funds, governments, or individuals.
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.
Agency funds are purely custodial in nature and do not involve measurement ofresults ofoperations.
Governmental funds are accounted for using the modified accrual basis ofaccounting under which:

-8-

HEARD COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The School District considers receivables collected within sixty days after yearend to be available. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, local option sales taxes, intergovernmental grants and donations. Revenue for property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year the resources are received or susceptible to accrual. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
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 2002, a substantial number ofpersonnel ofthe School District were employed for a one hundred and ninety day period beginning in August 2001 and ending in early June 2002. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 2001 and ending in August 2002. State grants to fund the State's share of these contracts were disbursed from the Georgia Department of Education to the School District in the same twelve months. As of June 30, 2002, compensation under these employment contracts had been earned, but two ofthe twelve monthly payments, due for July and August 2002, had not been made. Payments for these two months were made and recorded as expenditures by the School District subsequent to June 30, 2002. Also, the State's portion ofthe compensation paid in July and August 2002 was received and recorded as revenue in the fiscal year subsequent to June 30, 2002. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2001, were recorded in the year ended June 30, 2002. 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.
Agency funds are accounted for using the modified accrual basis ofaccounting in recognizing assets and liabilities.
BUDGET
The Heard County Board ofEducation's budget is a complete financial plan for the School District's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.
-9-

--------------------

HEARD COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The budget process begins when the School District's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.

CASH AND CASH EQUIVALENTS

COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-tenn investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.

RECEIVABLES

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

PROPERTY TAXES

The Heard County Board of Commissioners fixed the property tax levy for the 2001 tax digest year (calendar year) on September 12, 2001 (levy date). Taxes were due on December 1, 2001 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2001 tax digest are reported as revenue in fiscal year 2002. The Heard 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 of taxes collected to the School District. Property tax revenues during the fiscal year ended June 30, 2002 for maintenance and operations amounted to $3,998,095.59.

The tax millage rate levied for the 2001 tax year (calendar year) for the Heard County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

15,174 mills

- 10-

HEARD COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SALES TAXES
Special Purpose Local Option Sales Tax revenue during the year amounted to $2,484,702.97 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.
INVENTORIES
FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time ofpurchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.
COMPENSATED ABSENCES
Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion of this obligation as this amount is deemed immaterial to the general-purpose financial statements.
Additionally, the dollar value of accumulated compensated absences at June 30, which will be payable from future resources has not been recorded in the General Long-Term Debt Account Group as this liability is also deemed to be immaterial to the fair presentation ofthese financial statements.
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction ofmajor capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit ofthe government. The outstanding amount ofthese bonds is recorded in the General Long-Term Debt Account Group.
INTERFUND TRANSACTIONS
The School District has the following types of interfund transactions:

- 11 -

HEARD COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
Note 2: DEPOSITS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance.
If a depository elects $.e pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe
securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or 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 ofthe State of Georgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose,
- 12 -

-

.

HEARD COUNTY BOARD OF EDUCATION

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

EXHIBIT "D"

Note 2: DEPOSITS

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

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

CATEGORIZATION OF DEPOSITS At June 30, 2002, the bank balances were $6,975,396.30. 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, 2002, as follows:

Risk Category

Bank Balance

1

$ 2,326,641.92

2

0.00

3

4,648,754.38

Total

$ 6,975 396 30

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

- 13 -

HEARD COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 4: RISK MANAGEMENT

The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God; unemployment compensation and dental claims.

The School District has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions, job related illness or injuries to employees and acts ofGod. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which
exceeded the School District's insurance coverage in any of the past three years.

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. The School District has not incurred any liabilities for unemployment compensation during the last two fiscal years.

The School District is self-insured with regard to dental claims. The School District accounts for claims with expenditures and liability being reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated.

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

2001 2002

Beginning ofYear Liability

Claims and Changes in Estimates

Claims Paid

EndofYear Liability

$

0.00 $ 119,978.00 $ 92,875.27 $ 27,102.73

$ 27,102.73 $ 106,861.53 $ 91,969.68 $ 41,994.58

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

Position Covered

Amount

Superintendent All Other Employees

$ 50,000.00 $ 5,000.00

Note 5: GENERAL LONG-TERM DEBT

CAPITAL LEASES The Heard County Board ofEducation has entered into various lease agreements as lessee for mobile classroom units. 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.

- 14-

HEARD COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 5: GENERAL LONG-TERM DEBT

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

Purpose

Interest Rates

Amount

General Government - Series 1999

4.20% - 4.65% $ 4 930 000 00

The changes in General Long-Tenn Debt during the fiscal year ended June 30, 2002, were as follows:

Capital Leases

General Obligation
Bonds

Total

Balance July I, 2001

$ 79,772.43 $ 6,330,000.00 $ 6,409,772.43

Deductions Debt Retired

64,620.78 1,400,000.00 1,464,620.78

Balance June 30, 2002

$ 1~ l 51 ~5 $ 4 230 000,00 $ 4 24~ 151.65

At June 30, 2002, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

Capital Leases

General Obligation
Bonds

Total Debt

2003 2004 2005

$ 16,210.60 $1,704,735.00 $ 1,720,945.60 1,708,875.00 1,708,875.00 1,988,350.00 1,988,350.00

Total Principal and Interest $ 16,210.60 $ 5 40126000 $ 5 418 170 60

Deduct: Imputed Interest

1,058.95

Net Present Value ofFuture Minimum Lease Payments $ 15 151 ~5

- 15 -

- - - - - - - - - - - - - - - - - - - - - - - - - - ------- ----------

HEARD COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2002

Note 6: ON-BEHALF PAYMENTS

The School District has recognized revenues and expenditures in the amount of $153,212.29 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 $135,421.29

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 $17,791.00

Note 7: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2002, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

01-00S-67 4-005

$ ~S2 28.72 $ 165 273 2~

The amounts described in this note are not reflected in the general-pwpose financial statements.

Note 8: CONTINGENT LIABILITIES

Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.

Note 9: ACCUMULATED EMPLOYEES' LEAVE

Certified salaried and hourly twelve-month employees ofthe Heard County Board ofEducation earn .8333 days of annual leave per month with a maximum accumulation of twenty days. These employees may be compensated for up to ten days of annual leave at their current rate of pay upon retirement or termination of employment. See Note 1 - Compensated Absences

- 16 -

HEARD COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATElvlENTS

JUNE 30. 2002

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.

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 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2002 2001 2000

100% 100% 100%

$ 763,151.05 $ 875,020.26 $ 832,061.72

- 17 -

- - ------------
HEARD COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 2002

ASSETS
Cash and Cash Equivalents
Accounts Receivable
Inventories Food Donated Commodities Purchased Food
Total Assets
LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable
Total Liabilities
FUND EQUITY Fund Balances Reserved For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated Total Fund Equity
Total Liabilities and Fund Equity

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

151,370.04 $

76,823.12

8,894.18 4.899.99

$

165,164.21 $ ===7=6=,8=23==12=

$

10,331.29 $

15,762.04

49,461.11

61,061.08

$

59,792.40 $

76,823.12

$

8,894.18

4,899.99

91,577.64 $

$

105,371.81 $

0.00 0.00

$

165,164.21 $ ==--===7=6=,8=23===12,...

See notes to the general-purpose financial statements. - 18 -

EXHIBIT"E"

FEDERAL PROGRAMS

TOTALS

JUNE 30, 2002

JUNE 301 2001

$

228,193.16 $

183,030.75

$

96,469.07

96,469.07

71,276.11

8,894.18 4,899.99

11,992.15 4 480.71

$

96,469.07 $

338,456.40 $-==-=2=7=01:::::n:I=9...,.7..2....,

$

7,845.70 $

7,845.70 $

899.25

17,061.21

43,154.54

36,328.85

71,562.16

182,084.35

157,452.50

85.79

$

96,469.07 $

233,084.59 $

194,766.39

$

$ _ _ _ _o_.o_o_

$

0.00 $

8,894.18 $ 4,899.99

11,992.15 4,480.71

91,577.64

59,540.47

105,371.81 $ ____7_6..._,0_1.3.....3....3.__

$

338A56.4o $ =-=2..1._0.i.1...1.s._,.1,;,;;2...,

- 19 -

HEARD COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2002

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration Mi;lintenance and Operation of Plant Student Transportation Services Food Services Operation
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 Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commodities Purchased Food
FUND BALANCE JUNE 30
See notes to the general-purpose financial statements.
-20-

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

59,798.00 $

559,670.77

468,643.74

285,242.87

$

813,684.61 $

559,670.77

$

497,618.47

42,157.48 706.68

18,374.90

$

781,647.44

732.02 80.46

$

781,647.44 $

559,670.01

$

32,037.17 $

0.76

$ $

$

32,037.17 $

76,013.33

-3,097.97 419.28

-0.76 -0.76
0.00 0.00

$ 1051311.81 $ ==--==-=o=.oo==-

EXHIBIT"F"

FEDERAL
PROGRAMS

TOTALS

YEAR ENDED

JUNE 301 2002

JUNE 30, 2001

$

619,468.77 $

562,827.09

$

806,929.64

1,275,573.38

1,065,953.23

285,242.87

270,930.28

$

806,929.64 $ 2, 180,285.02 $ 1,899,710.60

$

693,537.52 $ 1,191,155.99 $

948,510.66

29,135.93 38,256.25
77.89 29,930.86
15,991.22

71,293.41 38,962.93
77.89 48,305.76
16,723.24 781,727.90

62,248.96 21,633.24 10,554.25 60,780.05
473.50 13,062.01 770,582.21

$

806,929.67 $ 2,148,247.12 $ 1,887,844.88

$

-0.03 $

32,037.90 $

11,865.72

$

0.03 $

0.03 $

2.24

-0.76

-0.43

$

0.03 $

-0.73 $

1.81

$

0.00 $

32,037.17 $

11,867.53

0.00

76,013.33

63,467.00

-3,097.97 419.28

216.68 462.12

$

0.00 $

105,371.81 $~,_...,7..,6!:::i,,0..,13..,..3...3. =

- 21 -

HEARD COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 2002

ASSETS Cash and Cash Equivalents Accounts Receivable

BOND PROCEEDS

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$

0.00 $

331,762.23

Total Assets
LIABILITIES AND FUND EQUITY LIABILITIES
Accounts Payable Contracts Payable Retainages Payable
Total Liabilities FUND EQUITY
Fund Balances Reserved For Purposes of Bond Issue Unreserved Undesignated Total Fund Equity
Total Liabilities and Fund Equity

$

0.00 $ _,......;3_3=1=7:'ii62i::::.2=3==

$

3,616.00

328,146.23

$

331,762.23

$

0.00 $

0.00

$

0.00 $

0.00

$

0.00 $ =-=3=3...,1..,,7:::::62==23...,

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

EXHIBIT"G"

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

JUNE 30, 2002

JUNE 30, 2001

$

0.00 $

331,762.23 $ 3,991,051.82

41,836.26

$

0.00 $

331,762.23 $ 4,032,888.08

$

1,446.00

$

3,616.00

336,211.97

328,146.23

94,023.55

$

331.762.23 $

431,681.52

$ 3,601,206.56

$

o.oo $ _ _ _ _o_._oo_

o.oo

$

s o.oo $ _ _ _ _0_._00_

3,so1,2os.ss

$

0.00 $

331,762.23 $ 4,032,888.08

-23-

HEARD COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 2002

REVENUES
State Funds Other Funds
Total Revenues
EXPENDITURES
Capital Outlay Equipment Land and Land Improvements Building and Building Improvements
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 Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1

BOND PROCEEDS

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$ 2,979,487.80

$

27,743.65

$

27,743.65 $ 2,979,487.80

$

516,445.00

$

0.00

6,872,324.03

$

0.00 $ 7,388,769.03

$

27,743.65 $ -4,409,281.23

$

782,063.76 $

-4,411,013.97

$ -3,628,950.21 $

4,409,281.23 4,409,281.23

$ -3,601,206.56 $

0.00

3,601,206.56

0.00

FUND BALANCE JUNE 30

$

o.oo $=--====-~=o=.o=o=

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

EXHIBIT"H"

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

YEAR ENDED

JUNE 30, 2002

JUNE 30, 2001

$
$ _____,;o=.o=o'-
$ _ _ ___,;o=.o=o'- $

2,979,487.80 $ 21 1743.65
3,001,231.45 $

268,661.26 201,586.90
470,248.16

$

516,445.00

$

476,827.90

$

1 732.74

6,874,056.77

3,356,307.83

$

1 732.74 $ 7,390,501.77 $ 3,833,135.73

$

-1 732.74 $ -4,383,270.32 $ -3,362,887.57

$

1,732.74 $ 5,193,077.73 $ 3,391,712.47

-4,411,013.97

-3,391, 712.47

$

1 732.74 $

782,063.76 $

0.00

$

0.00 $ -3,601,206.56 $ -3,362,887.57

0.00

3,601,206.56

6,964,094.13

$ ======o..o..o_ $

o.oo $ 3,601,200.56

- 25-

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- -- --
HEARD COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUND YEAR ENDED JUNE 30, 2002

EXHIBIT"!"

EMPLOYEE DENTAL PLAN ASSETS
Gash and Cash Equivalents
LIABILITIES Funds Held for Others

BALANCE JULY 1, 2001

ADDITIONS

DEDUCTIONS

BALANCE JUNE 30, 2002

$ 27,102 73 $ 106,861.53 $ 91,969 68 $

4199458

$ 27,102.73 $ 106,861.53 $ 91,969.68 $ ..,,_""""'41=,994====58:=,

See notes to the general-purpose finanaal statements.

- 26-

HEARD COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2002

SCHEDULE "1

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

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

. 10.553 . 10.555

NIA $ 95,073.80

NIA

324,136 87 $

(2) 737,628.47 (3)

Total Child Nutrition Cluster

$ 419,210.67 $

737,628 47

Other Programs

Pass-Through From Georgia Department of Educallon

Food and Nutrition Program

Food Distributton Program (1)

10.550

NIA

Pass-Through From Office of School Readiness

Food and Nutrition Program

Child and Adult Care Food Program

10.558

NIA

44,018.97 5,414.10

44,018.97 (2)

TotalU.S.DepartmentofAgriculture
Education, u. S Department of
Special Educallon Cluster Pass-Through From Georgia Department of Education lndlvlduals with Dtsablllties Educallon Act Part B - Special Educallon Flow Through Preschool Capacity Building Improvement
Total Special Education Cluster

84.027 84.173 64.027

$ 468,643.74 $

781,647.44

s NIA

208,233.00 $

NIA

35,460.00

NIA

4,322.00

s $ 246,015.00

208,233.03 (3) 35,460.00 4,322.00
246,015.03

Other Programs Pass-Through From Georgia Department of Education Elementary and Secondary Education Ad Tltle I Grants to Local Educallonal Agencies Tltle II Eisenhower Professional Development Tille VI Innovative Education Program Strategies Class Size Reductton Vocational Education - Basic Grants to States High School Program Basic Grant
Total U.S. Department of Education

84.010 64.281 84.298 64.340
84048

NIA

433,548.64

NIA

17,500.00

NIA

13,646.00

NIA

66,498.00

NIA

27,722.00

s 806,929.64 $

433,548.64 17,500.00 13,646.00 66,498.00
27,722.00 806,929.87

Total Federal Flnanclal Assistance
NIA ., Not Available

$ 1,275,573.38 $ 1,588,577.11

- 27-

- - - - - - - - - - - - - - - - - - -- - ----
HEARD COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2002

SCHEDULE "1"

Notes to the Schedule of Expendrtures of Federal Awards
(1) The amounts shown for the Food D1stnbullon Program represents the Federally assigned value of nonmonetary assistance for donated commod11Jes received and/or consumed by the system during the current fiscal year.
(2) Expenditures for the Child and Adult Care Food Program and the School Breakfast Program were not maintained separately and are included In the 2002 Nat.Jona! School Lunch Program
(3) Expenditures for thJS program include State, and/or Other Funds Expenditures are not maintained by fund source.
Major Programs are ldentrfied by an astensk (*) in front of the CFDA number.
The School D1stnct did not provide Federal Assistance to any Subreclpient.
The accompanying schedule of expenditures of Federal awards Includes the Federal grant acllVlty of the Heard County Board of Educallon and Is presented on the modified acaual basis of accounllng which JS the basis of accounting used In the presentallon of the general-purpose finanaal statements.

See notes to the general-purpose financial statemerrts.

-28-

HEARD COUNJ:Y BOARD OF EOUCAT\ON SCHEDULE Of STATE REVENUE YEAR ENDED JUNE 3Q 2002

SCHEDULE 2

AGENCY/fVNP\NG

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

TOTAL

GRANTS Community Affairs, Georgia Department of Local Assistance Grants

$ 40,000 00 $

40,00000

EduC8bon, Georgia Department of

Qualrly Basic Education

Dnct lnstructlonal Cost

Klnderganen Program

$ 539,517.00

Kindergarten Program - Early Intervention Program

83,04600

Primary Grades (1-3) Program

1,460,273 00

Primary Grades - Early Intervention (1-3) Program

20,70700

Upper Elementary Grades (4-5) Program

649,89900

Upper Elementary Grades (4-5) Program - Early Intervention Program

58,395.00

Middle Grades (6-8) Program

1,003,524 00

High School General Education (9-12) Program

604,15600

Vocatlonal Laboratory (9-12) Program

319,180.00

Students with Dlaablllles

Category I

17,044.00

Category II

146,654.00

category Ill

541,893.00

Categoly IV

57,009.00

CategoryV

5,53900

Glled Student Category VI

76,82900

Special Education llslenrte

24,13900

Special Education Supplemental Speech

4,72700

Remedial Education Program

61,964 00

Alternative Education Program

71,798 00

Media Center Program

189,79800

S1lff and Profeaalonal Oevebpment

32,748.00

Indirect Colla

Central Admlnlstratlan

332,612 00

Facllly Malntenance and Operations

521,32700

School Administration

405,487.00

Categorlcal Grant&

PupDTransporta11on

Regular

358,324.00

Bus Replacement

112,540.00

Sparsity - Alternative

35,88900

Sparsity - Regular

56,66400

Extended Day - Technology/Career

14,188.00

Nuru,g Services

67,539 00

Prlnctpal Supplements

8.279 00

Pol1 Secondary Option Spmg

69300

Vocational Supervisors

14,488 00

TW911ty Daya Addlllonal Instruction

57,271.00

EduC8bon Equallzatlon Funding Grart

210,139 00

Food Service&

$

Other State Programs Health Insurance

135,421.29

Mentor Teac:hera Na11Dnal Teacher CenlliCatlon Preschool Handicapped Program

61200 5,892.00 37,637.00

Lottery Programs

Aaall1Jve Technology

Compu1era In the Classroom

59,798.00
5,82000 49,950.00

539,517 00 83,04600
1,460,273 00 20,707 00
649,89900 58,395.00
1,003,524 00 604,15600 319,18000
17,044 00 146,654 00 541,693 00 57,009.00
5,53900 76,829 00 24,139.00 4,727.00 61,964.00 71,798 00 189,798 00 32,748.00
332,612 00 521,327.00 405,487 00
358,324.00 112,540 00 35,88900 56,66400
14,188 00 57,53900
8,27900 693.00
14,48800 57,271.00 210,139.00 59,798.00
135,421 29 61200
5,89200 37,637 00
5,82000 49,950.00

Natural Resources, Georgia Department of Georgia Underground Storage Tank Trust Fund

14,117.40

14,117.40

Georgia State Financing and lnvell1ment Commission Reimbursement on Construction Pro)ecla

2,939,487 110

2,939,487 80

Office of School Readiness Pre-Kildergarten Program

503,900.77

503,900n

Office of Treasury and Fllcal Services Public School Employees Retirement

17,791 00

17,791 00

-29

AGENCY/FUNDING
CONTRACTS Education, Georg111 Department of After School Programs . Read111g Frat Program

HEARD COUtflY BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE
YEAR ENDED JUNE-30 2002

SCHEDULE "2"

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

TOTAL

s 12,968 12
43,523 57

s

12,968 12

43,523 57

s s s 814241241 38 S 619 468 TT

219791487 BO

12,0231197 95

See notes to the g-,al-purpon lilanclal 118111ments

-30-

HEARD COUNTY BOARD OF EDUCATION
SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2002

SCHEDULE "3"

PROJECT
Construction and equIppIng of a new middle school, parlung areas and grounds, lnduding the a<X1u1sitlon of any necessary real property; the B<X!Ulsitlon, construction end equipping of additional dassroom, lnstruc:bonal, adm1rustrabve and support space and the remodeling, renovation, furnishing and equipping of such spaces at exisbng schOol dIstrid fealmes; the construc:bon and equipping of a new bus garage, lndudlng the a<X1uls1tion of any necessary real property; the a<X1uisltlon of any necessary personal property, lnduding computers and other technology; and the payment of expenses Incident thereto

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS(2)

AMOUNT EXPENDED IN CURRENT
YEAR(3)

AMOUNT EXPENDED IN PRIOR YEARS(3)

PROJECT STATUS

s $ 9,000,000.00 $ 91000,000.00

1,732.74 $ 410941500 56

Ongoing

(1) The School District's original cost esbmate as speafied In the resolution calling for the Imposition of the Local Option Sales Tax.
(2) The School District's a.1rrent estimate of total cost for the project Includes all cost from project lncepbon to completion.
(3) The voters of Heard County approved the Imposition of a 1% sales tax to fund the above project and rebre associated debt Amounts expended for these projects may Include sales tax proceeds. state, local property taxes and/or other funds over the life of the project.

See notes to the general-purpose financial statements.

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-----=======-

HEARD COUNTY BOARD OF EDUCATION GENERAL FUND - QUAUTY BASIC EDUCATION PROGRAM {QBE!
ALLOTMENTS AND EXPENDITURES - BY PROGRAM
YEAR ENDED JUNE 30. 2002

SCHEDULE "4"

DESCRIPTION
Dlrecl Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Pnmary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Dlsabllltle& Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

638,943.00 $ 604,911.96 $

15,948.03 $

620,859 99

98,350 00

67,143.88

1,011.82

68,155.70

1,729,382.00 1,650,427.56

57,060.54

1,707,488.10

24,523 00

120,465.36

107.55

120,572 91

769,666.00

822,494.38

32,45562

854,950.00

69,156.00

79,066.03

1,085 32

80,151.35

1, 188,460.00 715,493.00 378,000.00 943,881.00
93,357.00 73,383.00 851029.00

1,107,165.10 986,774.26 350,640.52
57,179.17 173,825 41 550,470.27
62,880.71 57,349.83 146,627.31 95,483.36 961617.81

43,576.26 32,831.56 42,937.97
2,098.53 1,157.08 31,836.05
431.17 66845
72.92

1,150,741.36 1,019,605.82
393,578 49
59,277.70 174,982.49 582,306.32
62,880.71 57,781.00 147,295.76 95,483.36 96,690 73

$

s 6,807,623.00 $ 7,029,522.92

263,278.87 $ 7,292,801.79

224,775.00 38?82.00

271,939.51 821260.23

54,171.61 14,174.37

326,111 12 96,434.60

TOTAL QBE FORMULA FUNDS

s

7,071,180.00 $ 7,383,722.66 S 331,624.85 $ 7,715,347.51

(1) Comprised of State Funds plus Local Five MIH Share.

See notes to the general-purpose financial statements.

- 32-

HEARD COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30, 2002

SCHEDULE "5"

SITE Centralhatchee Elementary School Ephesus Elementary School Heard County Elementary School Heard County High 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

$

858,386.00 $

909,497.48

777,516.00

807,422.99

2,718,918.00

2,784,423.23

2,367,774.00

2,694,840.28

851029.00

961617.81

$

s 6,so1,623.oo ==----11=2=92_.=so=1=7.==9

See notes to the general-purpose financial statements. - 33-

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Ru!-.!-.EU. W. H1NTON
STATE AUDITOR
(404) 656.-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Wa!>hmgton Street. S.W., Suite 214 Atlanta, Georgia 30334-8400
February 28, 2003

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Heard 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 ofHeard County Board ofEducation as ofand for the year ended June 30, 2002, and have issued our report thereon dated February 28, 2003. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general-purpose financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether Heard County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective ofour audit, and accordingly, we do not express such an opinion. The results ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Heard 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
2002YB-41

control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Heard 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-6741-02-01.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we consider item FS-6741-02-01 to be a material weakness.
This report is intended solely for the information and use ofthe management, members ofthe Heard 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,
ttl.~
Rus 11 W. Hinton State Auditor
RWH:as 2002YB-41

Rus~1:.L1. V\'. H1NTON
STATE AUDITOR (404) 65~2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Wu\hmgton S1reel. S W., Su11c 214 Atlanta, Georgia 30334-8400
February 28, 2003

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Heard County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance ofHeard County Board ofEducation with the types ofcompliance 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, 2002. Heard County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section ofthe 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 Heard County Board of Education's management. Our responsibility is to express an opinion on Heard 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 Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Heard 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 Heard County Board ofEducation's compliance with those requirements.
2002SA-10

In our opinion, the Heard County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2002.
Internal Control Over Compliance
The management of Heard County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Heard 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 ofthe management, members ofthe Heard County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
-- ~ . . Respectfully submitted,
RWH:as 2002SA-10

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

HEARD COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 2002

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6741-00-02 FS-6741-01-01

Further Action Not Warranted Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6741-01-01

Due to current staffing limitations and budgetary considerations prohibiting the hiring of additional administrative staff, the School District has decided not to pursue the recording of general fixed assets on the financial statements.

SECTIONN FINDINGS AND QUESTIONED COSTS

HEARD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the Heard County Board of Education's financial statements was qualified for various departures from generally accepted accounting principles.
2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Heard County Board of Education disclosed a financial statement reportable condition related to the following control category.
General Fixed Assets
The reportable condition described above is considered to be a material weakness.
3. Noncompliance Material to the Financial Statements The audit ofthe Heard County Board ofEducation 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 Heard 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 Heard County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .510(a) ofOMB Circular A-133 The Heard County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133.
7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk Auditee The Heard County Board ofEducation qualified as a low risk auditee as defined by Section .530 ofOMB Circular A-133.
- 1-

HEARD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
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-6741-02-01 The Heard County Board of Education 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 ofthe School District being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the School District to establish accounting controls and procedures to provide for maintenance 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 may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained ofall additions and deletions to the General Fixed Assets Account Group. ID FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
-2 -