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

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REPORT ON AUDIT

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HENRY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AW ARDS

REQUIRED SUPPLEMEN f ARY INFORMATION

MANAGl:MENTS DISCUSSION AND ANALYSIS

EXHIBll S

BASIC FINANCIAL STATEMENTS

DISTRICl -WIDE FINANCIAL STATtMENTS

A

STATEMENT OF NET ASSETS

3

B

STATEMENT OF ACTIVITIES

4

fUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

6

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BAI ANCE SHEET

TO THE STATEMENT OF NET ASSETS

7

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNME~TALFUNDS

8

F

RLCONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

9

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

10

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

II

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURCS AND CHANGES

IN ~UND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

28

HENRY COUNTY BOARD OF EDUCATION - fABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULFS

SUPPLEMENTARY INFORMATION

2 SCI IEDU LE OF EXPENDITURES OF fEDERAL AWARDS

29

J SCHEDULE OF STATE REVENUE

JI

4 SCHEDULE OF APPROVED LOCAL OPTION SALES rAX PROJECTS

33

ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

5

BY PROGRAM

34

6

BY SITE

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 OMR CIRCULAR A-133

SECTION Ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED cos rs

SECf!ON IV
FINDINGS AND QUESTIONED cos rs
SCH[DULE OF FINDINGS AND QUl:STIONED COSTS

SECTION I FINANCIAL

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S 1Al E ALJOITQFI
(40,,&) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 WJ-.hmgton Street, SW Suite 214
AIIJnlJ, Gcorg,j 30134-8400
June 3. 2003

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Supenntendent and Members of the Henry County Board of Education
INDEPENDENT AUDI I OR'S COMBINED REPORT ON BASIC FINANCIAL SI ATEM[NTS AND SUPPLEMENTARY INFORMATION - SCHEDUl E OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen
We have audned the accompanying financial statement, of the governmental act1v111es. each maJor fund, and the aggregate remaining fund information (Ei.hib1ts A through II) of the Henry County Board of Education, as of and for the year ended June 30. 2002. which collectively compnse the Board's basic financial ,tatements as listed in the table of contents These financial ,tatements are the respons1b1hty of the Henry County Board of Education', management Our respons1b1hty 1~ to exprc,s opinions on these financial statements based on our audit
We conducted our audit in accordance with auditing standards generally accepted in the Umted States of Amenca and the standards apphcable to financial audits contained in Government Auditing Standards. issued by the Comptroller General of the Umted States Those standards reqmre that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmatenal m1s,tatcmcnt An audit includes exarmmng. on a test basis. evidence supporting the amounts and disclosure, in the financial statements An audit also includes assessing the accounting pnnc1ples used and s1gmficant estimates made by management, a, well as evaluating the overall financial statement presentation We believe that our audit provide~ a reasonable bas1, for our op1mons
In our opinion, the linanc1al statement, referred to above present faITly. in all matenal re,pects, the respective pus1t1on of the governmental act1v11!e,. each maJor fund. and the aggregate remaining fund information of the Henry County Board of Fducat10n. as ot June 30. 2002. and the re,pecuve changes in financial pos1t1on thereof for the year then ended in conformity with accounl!ng pnnc1ples generally accepted in the Umted States of Amenca
2002-34ARL-11

As discussed in Note 2 to the basic financial statements, during fiscal year 2002, the Board completed a comprehensive inventory of its capital assets for mclus10n in the basic financial Matement,. the Board consohdated ns ind1v1dual school acuv1ty accounts for inclusion in the basic financial statements and the Board changed its method of accounting for the salaries of cenain tenmonth employees from a cash basis to a basis that 1s generally accepted. These changes are in accordance wnh generally accepted accounting principles
As Je~cribed in Note 2, the Henry Count} Board of Education has implemented a new financial reporting model as reqwred by prov1s1ons of Governmental Accounting Standards Board Statement No 34. Basic Fmancral Statements - and Management's Drfcusvwn and Ana(v~,s - fiJr State and Luca/ Governments. as of June 30, 2002
In accordance with Government Auditing Standards, we have also issued our report dated June 3. 2003, on our cons1dera11on of the Henry County Board of Education's internal control over financial rcponing and our tests of its compliance wnh certam prov1s1ons of laws. regulauons, contracts and grant, That report 1s an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conJuncuon with this report in considering the results of our audit
Management's D1scuss1on and Analysis and the Schedule of Revenues, Expenditures and Changes in I und Balances - Budget and Actual. as presented on pages I through 1x and page 28 respecuvely, are not a reqmrcd part of the basic financial statements but are supplementary mformauon required by the Governmental Accounting Standards Board We have applied certain hm1ted procedures, which consisted pnnc1pally of inqumes of management regarding the methods of mea~urement and presentation of the reqmred supplementary mformauon However, we did not audit the informat10n and exprc,s no op1mon on 1t
Our audit wa~ conducted for the purpose of formmg opinions on the financial statements that collect1vely comprise the Henry County Board of Education's basic financial ~tatements The accompanying supplementary mformat1on which consist of Schedules 2 through 6, which includes the Schedule of Expenditures of Federal Awards as reqmred by U S Office of Management and Budget Circular A-133, A11d11s o_(States. local Governmentf, and Non-Profit Orgamzatwn.1, are not a reqmred part of the basic financial statements Such mformatwn has been sub_1ected to the auditing procedures applied in the audit of the basic financial statements. and in our opm1on. 1s fairly stated. m all material respects, m relatwn to the basic financial statements taken as a whole
2002-34ARL- l l

A copy ofth1s report has been filed as a permanent record m the office of the State Auditor and made avmlablc to the press ofthe State, as provided for by Offic1al Code of Georgia Annotated section 506-24
Respectfully submitted,
1Al.;Jd1

RWHgp 2002-34ARL-I I

State Auditor

HENRY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002
INTRODUCTION
Our d1scuss1on and analysis of the Henry County School D1stnct's financial perfonnance provides an overview of the School D1stnct's financial act1vll1es for the fiscal year ended June 30, 2002 The intent of this d1scuss10n and, analys1~ 1s to look at th~ School D1stnct's financial perfonnance as a whole; readers should also review the notes to the basic financial statements and financial statements to enhance their understanding of the School D1stnct's financial perfonnance
FINANCIAL HIGHLIGHTS
Key financial h1ghhghts for 2002 are as follows
The School D1stnct implemented GASB 34 for 2002 Due to this being the 1mplementat1on year, many compansons are not available that will be available for 2003
On the distnct-v.1de financial statements, the assets of the School D1stnct exceeded habihues by $155 I m1lhon Ofth1s amount, $10 m1lhon is unrcstncted and 1s available for spending at the School D1stnct's discretion
The School D1stnct had $187.3 m1lhon in expenses relating to governmental act1v111es. only $124 3 milhon of these expenses are offset by program specific charges for services, grants and contnbut10ns General revenues (pnmanly property and sales taxes) of $102 million were adequate to provide for these programs
As stated above, general revenues accounted for $102 million or 45% of all revenues totaling $226 2 m1lhon Program specific revenues in the fonn of charges for services, grants and contnbut1ons accounted for the rest
OVERVIEW OF THE FINANCIAL STATEMENTS
llus report consists of several parts including management's discussion and analysis, the basic financial statements and required supplementary infonnauon The basic financial statements include two levels of statements that present different views of the School Distnct These include the d1strict-w1de andfundfinanc,al statements
The d1stnct-w1de financial statements include the Statement of Net Assets and Statement of Acllwlles These statements provide infonnallon about the act1v111es of the School D1stnct prco;cnting both short-term and long-term infonnanon about the School D1stnct~ overall financial status

HENRY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002
The fund financial statements focus on ind1v1dual part~ of the School D1stnct. reporting the School D1stnct's operat10n in more detail The Governmental Fund1 Matemcnb d1,clo,c how basic ,erv1ces are financed in the short-term as well as what remains for future spending The Fzducwry Funds statement provides information about the financial relat10nsh1ps in which the School D1stnct acts solely as a tru<rtce or agent for the benefit of others The fund financial statements reflect the School District's most s1gmficant funds In the case of the Henry County School D1stnct. the General Fund. D1stnct-wide Capital ProJect, Funds. and Debt Service Funds are the most s1gmficant funds
I he financial statements also include notes that explain some of the information in the statement, and provide more detailed data The statements are followed by a section of required supplementary informat10n that further explain, and supports the financial ,tatement, Add111onally, other supplementary information (not reqmred) 1s also presented that further supplements understanding of the financial statements
District-Wide Statements
I he d1stnct-w1de financial statements are ba,1cally a consohdat1on of all of the D1stnct's operating fund, into one column called gmernmental actlVlfle~ In reviewing the d1stnct-w1de financial statements. a reader might ask the question, arc we in a better financial po,1t1on than la,t year'' fhc Statement of Net Assets and the Statement of Act1v11Ies provides the b~1s for an,wering this quesuon These financial statements include all D1stnct's anets and liabtlmes and use, the accrual bavzs of accvuntmg s1m1lar to the accounting used by mo~t private-sector companies This bas1, of accounting takes into account all of the current year's revenue, and expenses regardless of when cash 1s received or paid
These two statements report the School D1stnct's net assets and any changes m those assets The change in net assets is important because 1t tells the reader that. for the School D1stnct as a whole. the jinancwl pos1110n of the School D1stnct has improved or diminished The causes of this change may be the results of many factors, including those not under the School D1,tnct', control, such as the property tax base, facility cond1t1ons. reqmred educat10nal programs and other factors
The Statement of Net Assets and the Statement of Activities reflects the School D1stnct's governmental act1v1t1es
Fund Financial Statements
The School D1stnct uses many funds to account for a multitude of financial transact10ns dunng the fiscal year However, the fund financial statements presented in this report provide detail information about only the School District's s1gmficant or major funds
II

HENRY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002
Governmental Fund:, Most of the School Distnct's act1v1t1es are reported m governmental funds. which focus on how money flows mto and out of those funds and the balances left at year-end available for spendmg m future penods These funds arc reported usmg the modified accrual method of accounting which measures cash and all other financial assets that can readily be converted to ca~h The governmental fund ~tatements provide a detailed short-term view of the School D1stnct's general government operatwns and the basic services 1t provides Governmental fund mformation helps determme whether there are more or fewer financial resources that can be spent in the near future to finance educatwnal programs. The differences between governmental achv1t1es (reported m the Statement of Net Assets and the Statement of Act1v1t1es) and governmental funds are reconciled w1thm the financial statements Fiduciary Funds The School D1stnct is the trustee, or fiduuary. for assets that belong to others. such as school clubs and organizations withm the pnnc1pals' accounts The School Distnct 1s responsible for ensurmg that the assets reported m these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these acttv1Ues from the d1stnct-w1de financial statements becau~ 1t cannot use the~e ~sets to finance its operatwns
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE Recall that the Statement of Net Assets provides the perspective of the School District as a whole Table I provides a summary of the School D1stnct's net assets for this fiscal year Since this 1s the first year the School District has prepared financial statements following GASB Statement 34. net asset compansons to fiseal year 2001 are not available
Ill

HENRY COUNT-YBOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002

Table I Net Assets (in Thousands)

Governmental Act1v1t1es Fiscal Year 2002

Assets Current and Other Assets Capital Assets. Net

$132,872 230,408

Total Assets

$363.280

Liabilities Current and Other Liab1ht1es Long-Term L1ab1ht1es

$ 25,603 182.611

Total Liabilities

$208.214

Net Assets Invested m Capital Assets, Net of Related Debt Rcstncted Unrestncted

$ 104.070 40.990 10.006

Total Net Assets

$155.066

Table 2 shows the Changes m Net Assets for this fiscal year Smee this 1s the first year the School D1stnct has prepared financial statements following GASB Statement 34, revenue and expense compansons to fiscal year 200 I are not available

IV

HENRY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002

Table 2 Change in Net Assets
(in Thousands)
Revenues Program 'Revenues Charges for Services and Sales Operating Grants and Contnbutmns Capital Grants and Contnbuttons
Total Program Revenues
General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Service Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax Intangible Recording Tax Real Estate Alcoholic Beveral!cs Grants and Contributions not Restricted to Specific Programs Investment Eamm~ M 1scellaneous
l otal General Revenues
Total Revenues
Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Admin1strat1on School Admm1strat1on Business Admm1strat1on Maintenance and Operation of Plant Student Transportation Services Central Support Service, Other Support Services Operations ofNon-lnstruct1onal Services l,,nterpnse Operations Community Services Food Services Interest on Short-1 erm and Long-Term Debt
I otal Expenses
Increase m Net Assets

Governmental Act1v1t1cs Fiscal Year 2002
$ 6,973 95,869 21,444
$124,286
$ 58,833 10,822 26
18,498 2,866
616 512
4,167 1,317 4,289
$101,946
$226,232
$123,407
3,609 3,774 3,776 1,156 10,901 1,877 12,928 7,464
802 243
1,324 2.312 7,039 6,683
$187,295
$..JB,2lZ

V

HENRY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002

Governmental Activities
The Statement of Act1v11ies shows the cost of program services and the charges for services and grants offsetting these services Table 3 shows, for governmental activities. the total cost of services and the net cost of services It identifies the cost of the~e services supported by tax revenue and unrestnctcd State entitlements Smee this 1s the first year the School D1stnct has prepared financial statements following GASB Statement 34, cost of service comparisons for fiscal year 200 I arc not available.

Table 3 Gonrnmental Actnrities
(in Thousands)

Total Cost of Services Fiscal Year 2002

Net Cost of Services Fiscal Year 2002

Instruction Support Services
Pupil Services Improvement of Instruclional Services Educational Media Services General Admm1stralion School Adm1mstrat10n Business Adm1mstrat10n Maintenance and Operalion of Plant Student Transportat10n Services Central Support Services Other Support Services Operat10ns of Non-Instructional Services Enterpnse Operations Commumty Services Food Services Interest on Short-Term and Long-Term Debt

$123.407
3,609 3,774 3,776 I ,156 I 0,901 1,877 12.928 7,464
802 243
I ,324 2,312 7.039 6,683

$ 33,389
2,557 2.644 1.544 -1 ,663 5,965 1.877 6,213 2,922
802 241
1,324 -497 -992 6,683

Total Expenses

SJ8Z.~2:i

$ QJ.QQ2

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS
The School D1stnct's governmental funds are accounted for usmg the modified accrual bas1~ of accounting The governmental funds had total revenues and other financing sources of $292.4 m1lhon and total expenditures and other financing uses of $251 6 mil hon
VI

HENRY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002
General Fund Budgeting Highlights The School D1stnct's budget 1s prepared according to Georgia Law lbe mo\t s1gmficant budgeted fund is the General Fund During the course of fiscal year 2002. the School D1stnct amended its genernl fund budget a~ needed The School District uses site-based budgeting as a pan of the budget process The budgeting systems arc designed to control total site budget~ hut provide flex1b1hty for site management For the General Fund, the actual revenues of $175 3 m1lhon was over the final budgeted amounts of $163 5 m1lhon by $11 8 m1lhon This difference (actual vs final budget) was due pnmanly to an increase in state revenues over final budget of $6 I million and miscellaneous revenues over final budget of $3 9 m1lhon. The miscellaneous revenues over final budget were due to the inclusion of the pnnc1pals' accounts in our financial statements, but not in the hudget The actual expenditures of $175 5 m1lhon exceeded the final budgeted amount of $163 3 m1ll10n by $12.2 million Tlus difference was due in pan to our school principals' accounts not being included in the budget process General Fund revenues were less than expenditures by $ I99 thousand
CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At fiscal year ended June 30, 2002, the School D1stnct had $230 4 m1lhon invested in capital assets. all in governmental act1v1t1es Table 4 reflects a summary of these balances net of accumulated dcprec1a11on Since this 1s the first year the School D1stnct has prepared financial statements following GASB Statement 34, capital assets compansons to fiscal year 200 I are not avrulable
Vil

HENRY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002

Table 4 Capital Assets (Net of Depreciation, in Thousands)

Governmental Acllv1Ucs Fiscal Year 2002

Land Construction m Progress Land Improvements Bmldmgs and Improvements Equipment

$ 12.820 49,764 8.455 147,080 12,289

Total

$230,408

Due to the ongoing gro'w1h m the county, the School D1stnct has numerous con,truct10n projects mcludmg new bmldmgs, add1t1ons and renovauons

Debt
At fo,cal year ended June 30, 2002, the School D1stnct had $178 5 m1lhon m bonds outstandmg, and $4 I m1lhon m other long-term debt. Table 5 summanzes the School D1,tnct's debt which mcludcs general obhgat10n bonds, premium on bonds sold and compensated absences out,tandmg

Table 5 Debt at June 30 (in Thousands)
Bonds and Notes Payable Premium on Ronds Sold Compensated Absences Total

Governmental Activities Fiscal Year 2002
$178.465 3.471 675
$J,82,61 I

VIit

HENRY COUNTI' BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002
At June 30. 2002, the School D1stnct's assigned bond ratings were "AaJ" and "AA-" as determined by Moody's Investors Services, Inc and Standard and Poor's Rating Services
CURRENT ISSUES Currently known facts, dec1,1ons or cond1t10ns that arc expected to have a s1gmficant effect on financial pos1t1ons or results of operations
Economic Slowdown - State funding for educal!on has been stagnant and as a result _more pressure 1s being placed on the local school d1stncts to pnontlze its educational programs and provide add111onaJ local funding Addmonal cost, to the D1stnct will be reqmred v..1th the continued 1mplementa11on of House 8111 1187, which mandate~ lower teacher to student rat10s, requmng add1t1onal teachers and addmonal classrooms Despite these challenges. the Henry County School D1stnct 1s strong financially and we remain opt1m1st1c about the ab1hty of the School D1stnct to max1m1ze all of the financial resources to provide a quality educauon to our students
Capital Improvements - The School D1sll1ct plans capital improvements a~ future capital needs anse due to increased student population and fac1hty repair and maintenance needs Specific capnal expenditure plans are formalized in conJunctlon \\1th ind1v1dual general obhgat1on bond issues and anticipated annual receipts of capual outlay funds from the State of Georgia Department of Educat10n The School D1stnct regularly monitors anticipated capital outlay needs
CONTACTING THE SCHOOL DISTRICT'S FINA1'"CIAL MANAGEMENT This financial report 1s designed to provide our citizen's, taxpayers, mvestors and creditors with a general overview of the School D1stnct's finances and to show the School D1stnct's accountab1hty for the money II receives If you have questions about this report or need addit10nal financial informat10n contact Mr Jeff Alhe. Assistant Comptroller for the Ilenry County School System. 396 Tomlinson Street, McDonough, Georgia 30253 You may also email your questions to Mr Alhe atJalhe@henry 1,.)2 ga us
IX

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HENRY COUNTY BOARD OF EDUCATION

HENRY COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS
JUNE 30 2002
ASSETS
Cash and Cash Equ1va)ents
Investments Accounts Receivable Net
Taxes State Government Federal Government Other lnventones Caprtal Assets Land ConstnJCOOn ,n Progress Land Improvements Buildings Equipment Less Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salanes Payable Expired Grant Balances Payable Contracts Payable Reta1nages Payable Deposits and Defemtd Revenues Long-Term LJab1lrtJes
Due Wrttun One Year Due 1n More Than One Year
Total L1ab1hbes
NET ASSETS
Invested in Caprtal Assets, Net of Releted Debt Restncted lo,
ConMuatJOn of Federal Programs Debt Serv,ce Csp,tal Pro,ects Unrestncted
Total Net Assets
Total L1ab1lrt1es and Net Assets
The notes to the basic financial statements are an integral part of this statement -3 -

EXHIBIT"A"

GOVERNMENTAL ACTIVmEs

$

31 267,832 65

74,800,130 94

8,003,767 57 18,431,66046
69,082 04 65 304 37 234,48943

12 820,033 00 49,764,316 19 14,659,133 37 175,103159 32 20,761,601 70 -42,700,544 99

$ 36312791966 25

$

5,705,786 05

14,935 234 17

209,55327

1,141,140 79

3,529,587 43

82,155 94

27,738,424 30 154,872,590 66

$ 208,214,472 61

$ 104,069,301 10
1,338,952 17 23,623,140 41 16,027,858 38 10 006 241 58
$ 155,065,493 64

$ 36312791966 25

HENRY COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30. 2002

EXPENSES

CHARGES FOR SERVICES

GOVERNMENTAL ACTIVITIES

lnstruc:tJon Support SeMces
Pupil Services Improvement of lnstruc:tJonal Services Educabonal Media Services General Adm1mstrat10n School Admm1strat1on Business Adm1mstrabon Maintenance and Operabon of Plant Student Transportabon Services Central Support Services Other Support Services Operations of Non-lnstrucitonal Services Enterpnse Operations Community Services Food Services Interest on Short-Term and Long-Term Debt

$ 123.407.611 63 $
3.608.825 88 3.773.720 22 3.776,031 00 1.155.67017 10,900,847 84 1.877,619 61 12,928,270 82 7,464.415 91
801,860 91 242,850 25
1,324,402 90 2,311,778 36 7,039,076 31 6,682,741 83

257,939 26
68,207 43 2,809,049 95 3,837,871 39

Total Governmental Activrt,es

1871295,723 64 $

6,9731068 03

General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Railroad Cars Sales Taxes Special Purpose Local Opbon Sales Tax For Debt Services Intangible Recording Tax Real Estate Alcoholtc Beverages Grants and Contrlbubons not Restricted to Specific Programs Investment Earnings Miscellaneous

Total General Revenues

Change m Net Assets

Net Assets - Beginning of Year

Inventory - Net Change m Penod

Net Assets - End of Year

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

EXHIBIT "B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES AND
CHANGES IN NET ASSETS

$

74,287,479 26 $

15,472,883 45 $

-33,389,309 66

1,051,91965 707,841 18
2,231,576 00 2,526,867 65 3,858,766 00
6,600,151 00 1,546,269 17
2,000 00

421,738 00
292,135 33 1,076,501 82
47,256 00 2,996,209 83

-2,556,906 23 -2,644, 141 04 -1,544,455 00 1,663,332 81 -5,965,580 02 -1,8TT,619 61 -6,212,656 39 -2,921,936 91
-801,860 91 -240,850 25

3,055,871 02

1,137,969 96

-1,324,402 90 497,271 59 992,636 06
-6,682,741 83

$

95,868,740 93 $

21 444 694 39 $

-63,009,220 29

$

58,833,426 57

10,821,687 14

25,964 24

18,497,851 30 2,865,860 26 615,723 26 512,17690 4,167,355 94 1,317,219 46 4 288 643 79

$

101,945,908 86

$

38,936,688 57

116,079,558 96

49 24611

$

1ssps5:493 64

-5-

HENRY COUNTY BOARD OF EDUCATION
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30 2002

EXHIBIT "C-

~
Cash and Cash Equrvaleflts Investments Accounts Recelvab'8 Net
Taxes State Government Federal Government Other Inventories
Total Assets

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECT
FUNDS

DEBT SERVICE
FUNDS

TOTAL

$ 5 3-40,947 66 $ 14 588,001 09 $ 1133888410 $ 31 267 832 85

10,133,492 88

56 109,725 01

8 556 913 05

74,800,130 94

2,067 765 07 12 180 139 00
69 082 04 65,304 37 23-4 469 43

6,251,521 46

3 750 148 41

581791348 1843166046
69 082 04 65,304 37 23-4 469 43

$ 30,091,220 45 $ 76 949 247 56 $ 23,s.!5,945 56 $ 130,686,413 57

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Selanes Payable Exp1red Grant Balances Payable Contrads Payable Reta1na,ges Payable Deposrts and Deferred Revenue
Total l.Jablhtles
FUND BALANCES
Reserved for Contlnuatron of Federal Programs
Debt Service lnventortes
CaPdal Pro,ects Unreserved
De81(J08ted for Sett~nsurance Undesignated Reported In
General Fund
Total Fund Balances
Total UabUrhes and Fund Balances

$ 4 539 352 04 $ 14 935 23-4 17 209,553 27
8215594

1 166 43-4 01
1,14114079 3 529,58743

$ 19,786,295 42 $ 5,637,162 23

s 5 705 786 05
14 935 23-4 17 209 553 27
1 141140 79 3 529 587 43
82 155 94
$ 25,603,457 65

$ 1 104,462 74

$ 110446274

$ 23 645 945 56

23 645 945 56

23-4 469 43

23-4 469 43

$ 71112 085 33

7111208533

647,556 73

547,556 73

8 438 416 13

643641613

$ 10,324,925 03 $ 71,112,08533 $ 23,645,945 56 $ 105,082 955 92

s 3010911220 45 $ 76,949?47 56 $ 23 645 945 56 S 130,686,413 57

The notes to the basic financial statements are an Integral part of this statement 6

HENRY COUNTY BOARD OF EDUCATION
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30 2002

EXHIBIT "D"

Total Fund Balances - Governmental Funds (ExhabI1 "C1
Amounts reported for Governmental Ad1vrties m the Statement of Net Assets are different because
Caprtal Assets used m Governmental Activities are not finanoal resources and therefore ere not reported m the funds These assets consist of
Land Construcbon m Progress Land Improvements Bu1khngs Equipment Accumulated DepreC1Bt1on
Total Capital Assets
Some of the School Dtstnct's property tax revenues will be colloc:ted after year end but are not available soon enough to pay for the current penod"s expenditures
Long-Term L1abllrties, including Bonds Payable, are not due and payable m the current penod and therefore are not reported as hab1hbes m the funds Long-Term Liab1lrttes et year-end consist of Bonds and Notes Payable Compensated Absences Unamortized Bond Prermum
Total Long-Tenn LiabUtties

S 105 082 955 92

S 12,820,033 00
49,764,31619 14,659,133 37 175,103159 32 20,761 601 70 -42 700 544 99

230,407,698 59

2 185,854 09

S -178,465,000 00
-674 567 06 -3 471 447 90

-18261101496

Net Assets of Governmental ActMtles (Exhabrt "A1

S 155,065,493 64

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

HENRY COUNTY BOARD Of EDUCATION
STATEMENT Of REVENUES EXPENOiTURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30 2002

EXHIBIT "E"

REVENUES
Property Taxes Sales Taxes State Fund& Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenue&
EXPENOiTURES
Current lnstructJon Support Services Pupd Servk:es Improvement of ln&tructJonal Serw:es Educational Media SeMCeS General Adm1nl8tratl0n School Adm1mstrabon Business Admmlslratlon Maintenance and OperabOn of Plant Student Transportation Servtces Central Support Services Other Support SeMces Ente,prise Operations Community ServlC8S Food SeMces Operation
Capttal Ou11ay OebtSeMCBS
Pnncipel Interest
Total Expenditures
Excess of Revenues over (under) Expenchtures
OlliER FINe,NCl!fil SOUR!,ES (Ul,ESl
Acaued Interest on Bonds Sold Proceeds of Long-Tenn Gaptta~Relatod Oeb1 Premiums on Bonds Sold Transfers In Transfefs Out
Total Other Financing Source& (Uses)
Net Change 111 Fund Balances
Fund Balances - Beglmlng
Inventory - Net Change in Period

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECT
FUNDS

DEBT SERVlCE FUNDS

TOTAL

s 56,706,875 71

s s 10,848,423 28

69 555 296 99

3 466 617 64
94 569 265 40 s 1997211039

19 024,994 08

22,491,611 72 114 561 395 79

6 919 395 47

6,919,395 47

8,973,066 03

6 973 066 03

394 872 20

662 240 28

240 107 00

1 317,219 46

4.287.643 79

21 000 00

4 268 643 79

s s s s 175.317 758 24

20 675 350 65 30,113,524 36 226,106,633 25

s 117,705 989 03

s 117 705 969 03

3,802 981 45 3 764 769 05 3,776,031 00 1 037 316 14 10 456 342 96
839 606 49 $ 13125 076 41 7,864 725 45
793 010 08 242,850 25 1 324,402 90 2 312,941 31 7.066-69 1 762 351 79

1,427,949 01 42,493,131 27

3,602,981 45 3,764,769 05 3,778,031 00 1,037 316 14 10 456,342 98 2 287 555 50 13 125 076 41 7 864 725 45
793 010 08 242,850 25 1,324,402 90 2 312,941 31 7 066 464 69 44 275 463 06

s 23 010 000 00
6,682,741 63

23,010,000 00 6 662 741 63

s s s s 175,516,639 00 43,921,080 28 29,692,741 63 24913066111

s

s s -199 080 76 -23,245,729 63

420 762 53 $ -23.024,027 86

s s 60,000 000 00
359115300
-2 472 907 47

17949861 S 2 472,907 47

179 498 61 60,000,000 00
359115300 2 472 90747 -2 472 90747

s s 61118 245 53

2 652 406 08 s 63 770 651 61

s

s -199,080 76

37 872 515 90 s 3 073 166 61 s 40 746 623 75

10 474,759 66

33,239,569 43 20,572,756 95

64,287,086 06

49 246 11

4924611

Fund Balances - Ending

s 10.324.925 03 S 7111208533 S 23,645,945 56 $ 105,082:955 92

The notes to the ba$1C financial statements are an integral part of thll statement 8.

HENRY COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
JUNE 30 2002

EXHIBIT "F"

Total Net Change 1n Fund Balances - Governmental Funds (Extubrt. "E1
Amounts reported for Govemmentat ActMbes m the Statement of Act1vrties are different because
Capdel Outlays are reported as expenditures m Governmental Funds However
,n the Statement of Actlvrues the cost of Gaprtal Assets IS alk>c:ated over
t~tr est1mated usefut hves as deprecation expense In the current period these amounts are
Capital Outlay DepreC&llhon Expense
Excess of Gaprtal OuUay over Depreciatton Expense
Because some property taxes will not be coRected for several months after the Schoof Otstnct's fiscal year ends they are not consk:lered evadable revenues
Bond proceeds provide current financial resources to Governmental Funds, however, 1ssumg debt l:naeases Long-Term Llablllttes m the Statement of Net Assets In the current penod, proceeds were recerved from
General Obhgellon Bonds Issued "1cluchng a premium of$ 3,591 153 00
Repayment of Lang-Term Debt tS reported as an expendrture In Governmental Funds but the repayment reduces Long-Tenn Laabllrties m the Statement of
Net Assets tn the current year, this amount cons1sts of
Bond Pnnclpal Retirements
Some rtems reported m the Statement of AdNlhes do not require the use of current financial resources end therefore are not reported es expenditures in Governmental Foods These actMtles cor1S1st of
Increase m Compensated Absences Amortization of Bond Premrum
Total addlllonel expenditures

$ 40 746,623 75

S 43 675,349 25 -5 066 073 73

38 609 275 52

125 TTB 96

-63,591 153 00

23,010,000 00

-83 541 76 11970510

36 163 34

Change "' Net Assets of Goverrmental AclMtJea (Exh1b1t "B")

S 38,936,688 57

The notes to the basic financial statements are an integral part of this statement . 9.

HENRY COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
JUNE 30 2002
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS
$ 448 979 78
$ 448 979 78

The notes to the bas,c financial statements are an integral part of this statement - 10 -

HENRY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note I DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
Ibc Henry 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 Supenntendent appomted by the Board The Board 1s organized as a separate legal entity and has the power to levy taxes and issue bonds Its budget 1s not subJect to approval by any other entity Accordmgly. the School D1stnct 1s a pnmary government and consists of all the organizat10ns that compose its legal cn!Ity
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively compnsed of the D1stnct-w1de financial statements. fund financial statements and notes to the basic financial statement~ of the Henry County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofAcllvities display information about the financial act1v1ues of the overall School D1stnct. except for fiduciary activities Ehmma!Jons have been made to mm1m1ze the double countmg of mtcrnal act1v1t1es Governmental activities generally are financed through taxes, mtergovcrnmental revenues. and other nonexchange transact10ns
The Statement of Act1v1ties presents a comparison between direct expense~ and program revenues for each funcllon of the School District's governmental activities
Direct expenses are those that are specifically associated with a program or function and. therefore. are clearly identifiable to a particular funct10n Induect expenses (expenses of the School D1stnct related to the admm1strat1on and support of the School D1stnct's programs, such as office and maintenance personnel and accountmg) are not allocated to programs
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grnnts and contnbut10ns that are restricted to meetmg the operational or capital requirements of a particular program Revenues that are not classified as program revenues. mcludmg all taxes. are presented as general revenues
Fund Financial Statements: The fund financial statements provide mformallon about the School Distnct's funds. mcludmg the fiduciary funds Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements 1s on maJor governmental funds. each displayed m a separate column

- II -

HENRY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School D1stnct reports the following major governmental funds
General Fund is the School D1stnct"s pnmary operatmg fund. It accounts for all financial
resources of the School District, except those resources required to be accounted for m another fund
D1strict-w1de Capital ProJects Fund accounts for financial resources mcluding Bond Proceed, and grants from Georgia State Fmancmg and Investment Commission to be used for the acquis1t10n. construction or renovallon of maJor capital fac1lit1cs
Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term pnncipal, interest and paying agent's fees
The School District reports the follov;mg fiduciary fund type
Agency funds account for assets held by the School D1stnct as an agent for vanous funds. governments or mdiv1duals
BASIS OF ACCOUNTING
The basis ofaccountmg determmes when transact10ns are reported on the financial statements The D1stnct-w1de governmental and fiduciary fund financial statements are reported usmg the economic resources measurement focus and the accrual basis of accountmg. Revenues are recorded when earned and expenses are recorded at the time hab1h1Ies are mcurred, regardless of when the related cash flows take place Nonexchange transactions. m which the School District gives (or receive,) value without directly rece1vmg (or g1vmg) equal value m exchange, mclude property taxes. sales taxes, grants and donations On an accrual basis. revenue from property taxes is recognized m the fiscal year for wluch the taxes are levied Revenue from sales taxes is recognized m the fiscal year m which the underlymg transact10n (sale) takes place Revenue from grants and donauons 1s recognized m the fiscal year in which all ehgib1lity requirements have been satisfied.
The Board uses funds to report on its financial position and the results of its operations fund accountmg is designed to demonstrate legal compliance and to aid financial management by segregatmg transactions related to certain governmental functions or activities A fund is a separate accountmg entity with a self-balancmg set of accounts
Governmental funds are reported usmg the current financial resources measurement focus and the modified accrual basis ofaccountmg Under this method. revenues are recogruzed when measurable and available The School D1stnct considers all revenues reported in the governmental funds to be available 1f they are collected withm sixty days after year-end Property taxes. sales taxes and interest are considered to be susceptible to accrual Expenditures are recorded when the related fund hab1hty 1s mcurred, except for pnnc1pal and mterest on general long-term debt, claims and
- 12 -

HENRY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"H"

Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Judgments. and compensated absences. which are recognized as expenditures to the extent they have matured Capital asset acqu1s111ons are reported as expenditures m governmental funds Proceeds of general long-term hab1hlles and acqmsn10ns under capital leases are reported as other financmg sources
The School D1stnct funds certam programs by a combination of specific cost-reimbursement grants, categoncal grants, and general revenues. Thus, when program costs are incurred. there are both restricted and unrestncted net assets available to finance the program It is the School D1stnct's pohcy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues
For fiscal year 2002, the School D1stnct changed its method of accountmg for the final two payments on one hundred and mnety day contracts and for the related revenue due from the State to fund these contracts. Adjustments have been made in the fiscal year 2002 financial statements to record costs for salanes and fnnge benefits earned by employees through June 30, 2002, (even though paid m July and August 2002) and the related revenue due from the State to fund the~ contracts Adjustments were also made for the similar salanes. benefits and related State revenues earned m fiscal year 200 I and recorded m fiscal year 2002
The net effect of the above accounting treatment results in the accompanymg financial statement~ reflectmg costs for those salanes and benefits earned by employees dunng fiscal year 2002 and the related State revenue to fund these contracts In add1t10n, both the net assets and fund balance at July I, 2001, have been restated for salaries and benefits earned by employees m fiscal year2001 but not paid unlll July and August 2001 and for the related State revenue for these contracts This change 1s in accordance with generally accepted accountJng pnnc1ples See Restatement of Pnor Year Fund Balance
RESTATEMENT OF PRIOR YEAR FUND BALANCE - GENERAL FUND
In pnor years. the financial activities of the School D1stnct's School Food Services Fund, Lottery Programs and Federal Programs were reported as Special Revenue Funds. These funds had a combmed fund balance of $1.283,563 48 at July I. 2001 For fiscal year 2002. these funds have been reported as part of the General Fund In add111on, governmental fund activity from the \ar10us school act1v1ty accounts, which were not reported m the pnor year's financial statements, have been reported within the GeneraJ Fund for fiscal year ended June 30, 2002 The governmental fund activity ofthe vanous school activity accounts had a fund balance of$l ,0l 5,505 46 at July I, 2001 This change 1~ m accordance with generally accepted accountmg pnnc1ples

- 13 -

HENRY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"H"

Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General Fund Balance July I, 2001

$ 13,746,742.41

Add Funds Consolidated with General Fund. School Food Services Fund School Activity Account - Governmental Act1v1ty

1,283,563 48 1,0 I5.505 46

Add: State Revenue Related to July and August 200 I Salary Payments Earned by Employees m Fiscal Year 2001

10,511,022 00

Deduct: July and August 200 I Salary Payments Earned by Employees m Fiscal Year 2001

16,082,073 67

General Fund Balance July l, 2001 (Restated) CHANGES IN ACCOUNTING PRINCIPLES

$ I0,474.759,68

The Henry County Board ofEducat10n has implemented a new financial reporting model as reqwred by provisions of Governmental Accounting Standards Board Statement No 34, Basic Fmancwl S1a1emenls - and Managemenl'~ Discussion and Analysis - for S/ale and Local Governmenls, as of June 30, 2002

The prov1s1ons of GASB Statement No 34 require the mclus1on of a Statement ofNet Assets The elements compnsmg Net Assets - Beginning include the following.

General Fund (Restated) July l, 2001 Capital Proiects Fund Debt Service Fund

$ 10.474,759.68 33,239,569.43 20.572.756 95

Governmental Funds (Restated) July 1, 200 I Capllal Asset~ Accumulated Deprec1at1on Property Tax Revenue T1mmg Differences Bonds and Notes Payable Compensated Absences

$ 64,287,086.06 229.432,894 33 -37,634,471 26 2,060,075 13 -141,475,000 00 -591,025 30

Net Assets Begmnmg (See Exhibit "B")

$ I I 6.079.558.96

- 14 -

HENRY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"H"

Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of cash on hand. demand deposits and short-term mvestments with ongmal matunues of three months or less from the date of acqms1tlon m authorized financial mst1tut10ns Georgia Laws OCGA 45-8-14 authorize the Board to deposit Its funds m one or more solvent banks or msurcd Federal savmgs and loan associations
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District m nonpartic1patmg mterest-earnmg contracts (such as certificates of deposit) and repurchase agreements are reported at cost Part1c1pating intercst-cammg contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating mterest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value The Official Code of Georgia Annotated Secllon 36-83-4 authorizes the School D1stnct to invest its fund, In selectmg among opllon~ for investment or among mstttut10nal bids for deposits, the highest rate ofreturn ~hall be the obJecllve. given eqmvalent cond1t10ns of safety and liqmdity Funds may be invested m the followmg
(I) Obhgat10ns issued by the State of Georgia or by other states,
(2) Obhgat1ons issued by the United States government.
(3) Obhgat10ns fully msured or guaranteed by the Umted States government or a Umted States government agency,
(4) Obhgauons of any corporation of the Umted State, 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) Obhgallons of other pohtlcal subdiv1s10ns of the State of Georgia

- 15 -

HENRY COUN fY BOARD OF EDUCATION NOTES TO I HE BASIC f INANCIAI STATEMENTS
JUNE 30, 2002

EXHIDIT"H"

Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

RECEIVABLES

Receivables consist of amounts due from property and sales taxes. grant reimbursements due on federal, State or other grants for cxpendllures made but not reimbursed and other receivable, disclosed from information available Receivables are recorded when either the asset or revenue recogmuon cntena has been met Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollect1ble rccc1vables

PROPERTY TAXES

fhe Henry County Board ofComm1ss10ners fixed the property tax levy for the 2001 tax digest year (calendar year) on September 10, 2001 (levy date) Taxes were due on December 20. 2001 (hen date) Taxes collected within the current fiscal year or within 60 days after year-end on the 2001 tax digest are reported as revenue m the governmental funds for fiscal year 2002 The Henry County Tax Commis,1oner bills and collects the property taxes for the School Distnct. withholds 2 5% of taxe, collected as a fee for tax collecuon and remits the balance of taxes collected to the School D1stnct Property tax revenues. at the fund reporting level, during the fiscal year ended June 30. 2002. for maintenance and operations amounted to $58.684,842 46 and for school bonds amounted to SI 0.844.492 29

Tax millage rates levied for the 2001 tax year (calendar year) for the Henry Count) Board of Educauon were as follows (a mill equals$ I per thousand dollars of assessed value)

School Operauons School Bonds

17 15 mills 3 06 mills

20.2 I mill~

SALES TAXES

Special Purpose Local Option Sales Tax revenue, at the fund reporting level, during the year amount to $18,497.851 30 and 1s to be used for capital outlay for educa!Ional purposes or debt service This ,ale, tax was authonzed by local referendum and the sales tax must be re-authonzed at lea~t every live years

INVENTORIES

1-OOD INVENTORIES On the d1stnct-w1de financial statements. inventones of donated food commod111es used in the preparation of meals are reported at their Federally assigned value and purchased foods inventones are reported at cost (fir>t-in. first-out) The School D1stnct uses the purchases method to account for inventone, whereby expenditures are recorded at the time of purchase or when received To

- 16 -

HENRY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

conform to generally accepted accountmg pnnc1ples, all food mvcntones should be accounted for usmg the consumpt10n method whereby an asset 1s recorded when foods are purchased/received and expenses are recorded at the !tme the food items are consumed The effect of this dev1at10n 1s deemed to be tmmatenal to the fair presentation of the basic financial statements

On the fund statements, mventones of governmental funds are reported at cost (first-m. first-out) The School D1stnct u<;es the purchases method to account for mventones whereby expenditures are recorded at the time of purchase or when received

CAPITAL ASSETS

Capital a~sets purchased, mcludmg capital outlay costs, are recorded as expenditures m the fund financial statements at the lime of purchase On the D1stnct-W1de financial statements, all purchased capital assets are valued at cost where h1stoncal record, are available and at e,umated lustoncal co,t based on appraisals or deflated current replacement cost where no h1stoncal records exist Donated capital assets are recorded at fair market value on the date donated. Disposals are deleted at depreciated recorded cost The cost of normal maintenance and repairs that do not add to the value of assets or matenally extend the useful lives of the assets 1s not cap1tal1J:cd Depreciat10n 1s computed usmg the stnught-line method The School D1stnct does not cap1tal1ze boo!,. collections or works of art

Cap1tal1zat10n thresholds and estimated useful hves of capital assets reported m the D1stnct-wide statements are as follows

Capitalization Policy

Estimated Useful Life

Land Land Improvements Bmldmgs and Improvements Equipment

ALL $ 5,000 00 $ 100,000 00 $ 5,000 00

NIA IO to 20 years 20 to 60 years 5 to 25 years

Deprec1at10n 1s used to allocate the actual or estimated h1stoncal cost of all capital assets over esumated useful hves

GENERAL OBLIGATION BONDS

The School D1stnct issues general obligat10n bonds to provide funds for the acqu1s1tion and construct10n of maJor capital fac1ht1es Bond issuance costs are recogmzed m the financial statement~ dunng the fiscal year bonds are issued. In add111on, general obhgat10n bond, have been issued to refund ex1stmg general obligat10n bonds General obligat10n bond, are direct obhgallons and pledge the full faith and credit of the government The outstandmg amount of these bonds 1s recorded m the Statement of Net Assets

- 17 -

HENRY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"H"

Note 3 DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Otlic1al Code of Georgia Annotated (OCGA) Sect10n 45-8-12 provides that there shall not be on deposit at any time many depository for a time longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee ofmsurance, orby collateral The aggregate ofthe face value of ~uch surety bond and the market value of secunties pledged shall be equal to not less than 110 percent of the pubhc funds bcmg secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13 I) the aggregate of the market value ofthe secuntlcs pledged to secure a pool ofpubhc funds shall be not less than 110 percent ofthe daily pool balance OCGA Section 45-8-11 (b) provides an officer holdmg pubhc funds may. m lus discretion, waive the reqmrement for secunty m the case ofoperatmg funds placed in demand deposit checking accounts
Acceptable secunty for deposits consists of any one of or any combinat10n of the folloy,mg
(I) Surety bond signed by a surety company duly quahfied and authonzed to transact busmess w1thm the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporat10n,
(3) Bonds. bills, notes, certificates of mdebtedness or other direct obhgat10ns ofthc Umted States or of the Stale of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligat10ns of the counties or mumc1paht1es of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, prov1dmg that the statute that created the authonty authonzed the use of the bonds for this purpose,
(6) Industnal revenue bonds and bonds of development authontles created by the laws of the State of Georgia, and
(7) Bonds. b11ls, notes, certificates of mdebtedness, or other obhgat1ons of a subs1d1ary corporation of the United States government. which are fully guaranteed by the Umted States government both as to pnnc1pal and mterest or debt obligations issued by the Federal Land Bank. the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bani for Cooperatives. the Farm Credit Banks, the Federal Home Loan Mortgage Associallon. and the Federal National Mortgage Assoc1at10n
CA fEGORIZATION OF DEPOSITS At June 30, 2002, the bank balances were $40.901.916 80. The amounts of the total bank balance~ are classified mto three categories of credit risk-

- I8 -

HENRY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 3 DEPOSITS AND INVESTMENTS

Category I - Cash that 1s insured (e.g., federal dcposllory insurance) or collaterahzed with secunlles held by the School D1stnct or by the School D1stnct's agent in the School Distnct's name.
Category 2 - Cash collateralized with securities held by the pledging financial institut10n's trust department or agent in the School D1stnct's name
Category 3 - Uncollateralized deposits (This includes any bank balance that 1s collateralized \\,1th secunt1es held by the pledging financial instnutlon. or by 1u. trust department or agent but not in the School D1stnct's name.)

The School D1stnct's depo~its are classified by nsk category at June 30, 2002. as follows

Risk Categorv

Bank Balance

1

$ 2,835.03 I 3 I

2

38.010,496 75

3

56,388 74

Total

$1Q,901,9!6.80

CATEGORIZATION OF INVESTMENTS At June 30, 2002. the carrying value of the School Distnct's total investments was $74,800.130 94 which 1s matenally the same as fair value. Thi~ investment consisted entirely of funds invested in the Local Government Investment Pool adm1mstered by the State ofGeorgia, Office ofTreasury and Fiscal Services which are not required to be categonzed since the School D1stnct did not own any specific identifiable securities in the pool. The investment pohcy of the State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (Pnmary Liquidny Portfolio) does not provide for investment in denvatlves or smular investments A descnpt10n ofthe Pnmary L1qmdity Portfolio 1s as follows

The Primary L1qmd1ty Portfolio consists of Georgia Fund I, which 1s a combination local and state government investment pool. and Fund 6 Georgia Fund I is a stable net asset value investment pool which follows Standard and Poor's cntena for AAAm rated money market funds The pool 1s not registered with the SEC 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 Rule 2a7 like pool The pool's pnmary objectives are safety of capital. investment income, hqu1d1ty and diversification while mamtaimng principal ($1 .00 per share value). Net asset value is calculated weekly to ensure stability The pool d1stnbutes earnings (net of management fees) on a monthly basis and values part1c1pant's share~ sold and redeemed based on $1 00 per share Pooled cash and cash eqmvalents and investments are reported at cost which approximates fa1r value The pool d= not issue any legally bindmg guarantees to support the value of the shares. Part1c1pat10n in the pool 1s voluntary and deposits consist of funds from local governments, operating and trust funds of Georgia's state agenc1c~. colleges and umvers1tlcs, and current operating funds of the State of Georgia's General f- und

- 19 -

HENRY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

FXHIBIT"H"

Note 3 DEPOSITS AND INVESTMENTS

Investments in Georgia Fund I and Fund 6 are duected toward short-tenn instruments such as U S Treasury obligations. securities issued or guaranteed as to pnnc1pal and interest by the U. S Government or any of its agencies or 1nstrumentahlles. banker's acceptances and repurchase agreements The weighted average matunty of Georgia Fund I may not exceed 60 days The weighted average matunty for Georgia Fund I on June 30. 2002. was O 12 years The average investment duration for Fund 6 on June 30. 2002. was O75 years.

Note 4 NON-MONETARY TRANSACTIONS

The School D1stnct receives food commod1t1es from the United States Department of Agnculture (USDA) for school breakfast and lunch programs These commodities are recorded at their Federally assigned value See Note 1 - Inventories

Note 5 CAPITAL ASSETS

The following 1s a summary of changes in the Capital Assets dunng the fiscal year:

Governmental Act1v1t1C!, Capital Assets Not Bemg Dcprcc1atcd
Land Conslrm.tmn m Progress
I otal CepuI Assets Not Bemg Deprec1eted
Capital Assets lkmg Dcprec1eted Bu1ldmg!, and Improvements Equipment Land Improvements
Less \u:umulated Dcprcc1a11on for Bu1ldmgs and Improvements Equipment I and lmprovement!I
Tot.1I Capnlll As-..cts. Hem~ Dcprcc1eted, Net
Go\.cmmcntal AL11v1t) Capital .\.s.'iCtS - "'let

Halances
Jut, 1, 2001

lncrcases

_P-ecrcascs

Balances June '.\Q :!002

s 9,995,078 00 S 2,824,955 00

S 12820,03300

(4,013,890 82 37 885,778 69 S 2,135,153 32 49,764 316 19

S 24,008 968 82 $40,7(0,733 69 S 2 (35,353 ]2 S 62,584,349 I9

s Sl72.499.14I 00 S 2604,01832
18,265,651 14 2 495 950 56
14 659,133 37

000 $175,103 159 32 20,761 601 70 14,659,133 37

25, I09,058 24 7,051,213 99 S.474,199 03

2,914,613 34
1421.94573
729 514 66

28,023,671 58 8,473,159 72 6,203,7(3 69

s $167,789,454 25 s D 895.I5

000 S167 823 349 40

5121 Z2B1~1m S40.Z~~ 6~8,a; S i IJ~ J~J 3~ SUJ!AO'Z,_~

Current year dcprec1at1on expense by funct10n 1s as follows

- 20-

HENRY COUNTY BOARD OF EDUCATION NOfES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "H"

Note 5 CAPITAL ASSEfS

lnstrucnon Support Services
General Admm1strat1on School Admm1stranon Mamtenance and Operat10n of Plant Student Transportallon Services Food Services

$3,764,922.76

$ 74,090 70 273,019 94 11.984 96 653.446 02

1,012,541.62 288,609 35

$ 5.066.073,73

Note 6 RESTRICTED ASSETS

Bond proceeds and grants from Georgia State Fmancmg and Investment Comm1ss1on to be used for the acqutsinon, construcnon or renovation of maJor capital fac1httes and Special Purpose Local Opnon Sales Tax (SPLOST) and property tax levied specially for the retuement ofoutstandmg bond pnnc1pal. interest and paymg agent's fees (Debt Service Funds) are reported as restncted assets m the Statement of Net Assets because their use ts hmtted by apphcable bond covenants or statutory provisions Restncted assets at June 30, 2002, were as follows

Restricted Cash and Cash Equivalents Debt Services Capital Acqu1s1t1ons
Restncted Investments Debt Services Capital Acqu1s111ons

Capital Prmects

Georgia State

Financing and

Bond

Investment

Proceeds

Comm1ss1on

Debt Service Funds

$11,338,884 I0 $ 1,092,209 62 $13,495,791 47

$56,109,725 01

$ 8,556,913 05

Note 7 RISK MANAGEMENT

The School D1stnct ts exposed to vanous nsks of loss related to torts, theft of. damage to. and destrucnon of assets, errors or om1ss1ons, Job related illness or mJunes to employees. acts of God and unemployment compensation

The School District has obtained commercial m~urance for nsk ofloss associated with torts, assets, errors or om1ss1ons and acts of God The School D1stnct has neither s1gmficantly reduced coverage for these nsks nor incurred losses (settlement~) winch exceeded the Board's msurance coverage m any of the past three years

- 21 -

HENRY COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL Sl A fEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 7 RISK MANAGEMENT

The School Distnct has estabhshed a limited nsk management program for workers' compensation claims In connection with this program, a self-insurance reserve has been established within the General Fund by the School Distnct The School D1stnct accounts for claims within the General Fund. The General Fund contnbutes a budgeted amount of $250,000.00 and the School Food Services Fund contnbutes actual amounts paid dunng the year. The School D1stnct accounts for claims with expenditure and hab1hty being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated These losses include an estimate of claims that have been incurred but not reported if any. An excess coverage insurance pohcy covers ind1v1dual claims in excess of $250,000 00 loss per occurrence, up to the statutory hm1t

Changes in the workers' compensation claims hab1hty during the last two fiscal years are as follows

2001 2002

Begmnmg of Year Lrnb1hty

Claims and Changes m Estimates

Claims Paid

End of Year L1ab1hty

$

0 00 $ 289,502 97 $ 289,502 97 $

0 00

$

0 00 $ 405 017 94 $ 405 017 94 $

0 00

The School District 1s self-insured with regard to unemployment compensation claims The School District accounts for claims within the General Fund with expenses/expenditures and hab1hty being reported when it 1s probable that a loss has occurred, and the amount of that loss can be reasonably estimated

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

2001 2002

Begmnmg of Year L1ab1hty

Claims and Changes m Estimates

Claims Paid

End of Year L1ab1hty

$

0 00 $

4 244 00 $

4 244 00 $

000

$

0.00 $

7,232 78 $

7,232 78 $

000

The School District has purchased surety bonds to provide add1t1onal msurance coverage as follows

Position Covered

Amount

Supenntendent All Other Employee;

$ I00,000.00 $ 50,000 00

- 22 -

HENRY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"H"

Note 8. SHORT-TERM DEBT

The School D1stnct issues tax anllc1pallon notes m advance of property tax collect10ns. depos1tmg the proceeds m its General Fund This short-term debt 1s to provide cash for opcrallons unlll property tax collecllons are received by the School District Article IX, Section V. Paragraph V of the Constitution ofthe State of Georgia hmlts the aggregate amount of short-term debt to 75 percent of the total gross mcome from taxes collected in the preceding year and reqmres all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred

Short-term debt activity for the fiscal year 1s as follows

Tax Anllc1pa11on Notes

Begmnmg Balance

Issued

Redeemed

Endmg Balance

$_ __.,0,.,,0'--"Q $J.Q.290.000.Q0 $) Q.QQ0.000 00 $._ _aaaa,Oc.,OOcs.

Note 9 LONG-TERM DEBT

COMPENSATED ABSENCES Compensated absences represent obligations of the School D1stnct relating to employees' rights to receive compensation for future absences based upon service already rendered This obhgat10n relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated The School District uses the vesting method to compute compensated absences

GENERAL OBLIGAfION DEBT OUTSTANDING General Obhgat10n Bonds currently outstanding are as follows

Purpose

Interest Rates

Amount

General Government - Series 2002

4 50%- 5 00%

General Government - Refunding - Series 2001 3 70%- 5 125%

General Government - Senes 2000

5 00%- 5.75%

General Government - Senes 1999

360%-400%

General Government - Series 1997

4 50%- 5 00%

General Government - Senes 1992A

5 60%-6 45%

General Government - Refunding - Senes 1992B 3 75%- 6 30%

$ 60,000,000 00 38,120,000.00 30.825,000.00 12,940,000.00 7,125,000 00 25,7 I5,000 00 3,740,000 00

$1_78.465.000,00

The changes in Long-Term Debt dunng the fiscal year ended June 30, 2002, were as follows

- 23 -

HENRY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note9 LONG-TERM DEBT

Balance July I. 2001
Retroactive Restatement of Pnor Year Balances
Balance July I, 2001
Restated
Add1t1ons Annual I eave Earned
G 0. Bonds
Lnamort1zed Bond Premium
Dcduct1ons
Annual Leave Ut1hzcd Debt Retired
Bond Premrnm Amortized
Balance June 30, 2002
Portion of Long-Tenn Debt
Due w1thm One Year

Qovem~!]l!!I F!;!n~

Compensated

General
0bhgallon

Unamortized
Bond

Absences

Bonds

Prcmmm

lot11l

S 1,658,093 30 Sl41.475,000 00 s

000 S143. 133,093 30

-1,067,068 00

-1,Q27,Q28 QQ

s 591 025 30 S141.475,000 00 s

000 S142,066 02SJO

569,235 02

569,235 02

60,000,000 00

60,000,000 00

3,591,153 00 3,591,153 00

485,693 26 23,0 IO 000 00

485 693 26 23,0IO 000 00 112.zos 1Q 112,7Q~.IQ

s 6Z~ ~Z g~ SJZ~~~J&QgQ S_.l HI 4'12..20 SIB, ~I I UI~ 21;1

s ~ 12l 7Q S 26,580,000 00 s 718,2JQ,2Q S ~Z,7l8,424 3Q

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

Fiscal Year Ended June 30

General Obligation

Debt

Pnncipal

Interest

Unamortized Bond
Premium

2003 2004 2005 2006 2007 2008 - 2012 2013 -2017

$ 26,580,000.00 20,090,000 00 22,375,000 00 29,465,000.00 21,275,000 00 48, I00,000.00 I0,580,000 00

$ 8,223,560 43 7,471,540.01 6,521.451 26 5,402,248 76 3,908,676 26 8,804,390 64 815,250 01

$ 718,230 60 718,230 60 718,230 60 718,230 60 598,525 50

Total Pnncipal and Interest $11B,4~~.QQQ,QQ $~1.1:H,l IZ,JZ $ J,:l:Zl ,!liZ 2Q

Note JO PRIOR YEAR DEFEASEMENT OF DEBT

In fiscal year 200 I, the School D1stnct defeased certam general obhgauon bonds by placmg the proceeds of new bonds in an trrcvocable trust to provide for all future debt service payments on the old bonds Accordingly, the trust account assets and the liab1hty for the defeased bonds are not included m the School D1stnct's baste financial statements At June 30, 2002, $35,935,000 00 of bonds are outstanding and are considered defeased

- 24 -

HENRY COUNTY BOARD OF EDUCATION NOTES TO THf. BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"H"

Note 11 ON-BEHALF PAYMENTS

The Board has recognized revenues and costs in the amount of $1.428, 123 94 for health insurance and retirement contribullons paid on the Board's behalf by the following State Agencies.

Gi:org1a Department of Educallon Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of$ I.234,915 94

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Rellrement (PSERS) Employer's Cost In the amount of$ 193,208.00

Note 12 SIGNIFICANT COMMITMENTS

The followmg 1s an analysis ofs1grufican1 outstanding construct10n or renovat10n contracts executed by the School D1stnct as of June 30, 2002

Unearned Executed Contracts

OJ G/00S-675-029 Lottery 02G/01S-675-027 Lottery SA0J S-675-021 GSFIC SA0IS-675-022 GSFIC SA0lS-675-023 GSFIC
SAO IS-675-024 GSFIC SAO IS-675-025 GSFIC
Dutchtown High School Eagles Landing High Softball Field Improvements Hampton Elementary Renovations Henry County Middle Gym McDonough Pnmary Renovations Mamtcnance Bmlding Red Oak Elementary Stockbridge Elementary Renovat10ns Henry County High Track end Athlellc Field Renoval!ons

$ 51,006 60 5.421,750 32 4,673.325 19 1,403,173 97 168,767 53 11,177 09 751.579 48
22,938.747 50 216.269 49 85,998 80 38.135 50 99,743 68 920,540 61
8,395.317 30 41,145 51
265.378 00

$45.482.056,57 The amounts descnbcd in this note are not reflected in the basic financial statements

- 25 -

--- -------
HENRY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"H"

Note 13 CONTINGENT LIABILITIES
Amounts received or receivable pnnc1pally from the Federal government are subject to audit and review by grantor agencies. This could result m requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School D1stnct believes that such d1sallowances, 1f any, will be urunatenal tons overall financial position
The School D1stnct 1s a defendant in various legal proceedmgs pertaming to matters mc1dental to the performance of routme School Distnct operat10ns The ultimate d1spos1t1on of these proceedings 1s not presently determmable, but 1s not believed to be matenal to the basic financial statements
Note 14 ACCUMULATED EMPLOYEES' LEAVE
The School District's personnel pohc1es provide for payments to employees for accumulated leave at retirement or termination of employment as follows See Note 9 - Compensated Absences
Vacation Leave Twelve month emplo)ees earn 10 days of vacat10n leave per year and may accrue a maximum of 20 days Upon retirement or termination of employment, twelve month employees will be compensated at their current daily rate for any accrued unused vacation leave up to the maximum accumulation
Note 15 RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
TRS PLAN DESCRIPTION Substantially all teachers, admm1strat1ve and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS). which 1s a cost-shanng multiple employer defined benefit pens10n plan. TRS provides service retirement, disability retirement and survivors benefits for its members m accordance with State statute The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtamed from the Georgia Department of Audits and Accounts
TRS CONTRIBUTIONS REQUIRED AND MADE Employees of the School District who are covered by TRS are required by State statute to contnbute 5% of their gross earnmgs to TRS The School District makes monthly employer contnbut10ns to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their mdependent actuary The reqmred employer contnbut10n rate 1s 9 24% and employer contnbutlons for the current fiscal year and the preceding two fiscal years are as follows

- 26 -

HENRY COUNTY BOARD OF EDUCATlON NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 15 RETIREMENT PLANS
Fiscal Year 2002 2001 2000

Percentage Contnbuted
100% 100% 100%

Reqmred Contnbution
$8,707,647 17 $9,059,133 09 $ 7.980,880 82

- 27 -

HENRY COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES. EXPENDTTURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30 2002

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federel Funds Charges for Services Investment Eam1ngs Mrscellaneous
Totsl Revenues
EXPENDITURES
Current lnstrucllon Support Services Pupil Services Improvement of lnstruct1onal Services Educsbonal Media Services General Adm1nistrab0n School Adm1n1stra1.Jon Business AdmmtStration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Communrty Services Food Services Operabon
Capital Outlay
Total Expenditures
Excess of Revenues over (under} Expendrt.ures
Fund Balances - Beginning
Inventory - Net Change 1n Penod
Fund Balances - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

ACTUAL AMOUNTS

$ 58 638,745 14 $ 58,638,74514 $ 58 706,875 71

1575,00000

1 575,000 00

3,466,617 64

88 509 TT242

88 509,772 42

94,589,285 40

6,366,998 41

6,366,998 41

6,919,395 47

7,677,860 00

7,6TT,86000

6,973,068 03

425,00000

42500000

394,87220

324 724 80

324 72480

4 267.643 79

$ 163,518, 1()0 77 $ 163,518.100 77 $ 175 317 758 24

$ 109,752,616 07 $ 109,752,616 07 $ 117,705,98903

3,046,368 36 3,431,643 68 3,779,722 74
684,35363 9,926,131 04
623,383 01 12,320,682 79
6,864,668 76 736,36683 213,202 00
2,269,530 59 6,366,775 26 3,285,328 15

3,046 368 36 3,431,643 68 3,779,722 74
684,35363 9,926,131 04
623,383 01 12,320,682 79
6,864,668 76 736,36683 213,202 00
2,269,530 59 6,366,775 26 3,285,328 15

3,602,961 45 3,764,769 05 3,776 031 00 1,037 316 14 10,456 342 96
83960649 13,125 076 41
7,664 725 45 793 010 08 242 850 25
1,324 402 90 2,312 941 31 7,088,464 69 1 782 351 79

$ 163,300,772 91 $ 163 300 772 91 $ 175,516,839 00

$

217 327 86 $

21732786 $

-199,080 76

13,858,373 90

13,858,373 90

10,474,759 68

000

000

4924611

$ 14 075 701 76 $ 14 015 101 16 $ 11 3241925 03

See notes to the basic financial statements

-28-

HENRY COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDIJURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30 2002

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agncutture U S Department of Ch1kl Nutntion Cluster Pass-Through From Georgia Department of Education Fcod and Nutrttlon Program Food Services ' School Breakfast Program National School Lunch Program
Total Child NutntlOTl Cluster
Other Programs Pass-Through From Georgia Department of ~ducatlon Food and Nutnbon Program Food D!stnbut,on Program (1) Fresh Produce Program (1)
Total U S Department of Agnculture
Educat,on U S Department of Speaal Education Cluster Pass-Through From Georgia Department of Education lndNtduals with OISabilfbes Education Ad Part B Speaal Education Flow Through Preschool Capaoty Bu1ldmg Improvement
Total Speaal Educatton Cluster
Other Programs Pass-Through From Georgia Department of Education Elementary and Secondary Educabon Act Tltlel Grants to Local EducatJonal Agenaes Tlttell Eisenhower Professional Development TltleVI Innovative Education Program Strategies Class Size Redudk:m Safe and Drug-Free Sdlools and CommurutJes Vocational Education - Basic Grants to States Hrgh School Program Basic Grant
Total U S Department of Educabon
Defense U S Department of Direct Department of the Navy R O T C Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REl(.ENUE IN PERIOD

EXPENDITURES IN PERIOD

10 553 10 555

NIA

s 292 77644

(2)

NIA

s 1,767,288 41

6,432,325 39 (3)

s 2 060 064 85 $

6,432,325 39

10 550 10 550

NIA

428 981 14

428,981 14

NIA

58,519 03

58 519 03

s s 2,547,565 02

6,919,625 56

64 027 64 173 64 027

NIA

s s 2 016 950 86

2 016,950 86

N/A

8931500

89 422 83 (3)

NIA

46,095 00

46 905 44 (3)

s s 2,152 360 86

2 153 27913

64 010 64 281 84 298 84 340 84 186
84048

NIA

1,304 029 37

1 304,029 37

NIA

37 96860

37 968 60

NIA

91 029 00

124 105 90 (3)

NIA

284,773 00

293,875 67 (3)

NIA

110,946 00

115 757 00 (3)

NIA

124,607 00

124 607 00

s s 4,105,713 83

415362267

s 28611662

(4)

Total Federal Flnandal Assistance NIA= Not AvaUable

S 619191395 47 $ 11 07344823

- 29 -

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

SCHEDULE "2"

Notes to the Schedule of Exoenchtures of Federal Awards
(1) The amounts shown for the Food Olsbibutlon Program end the Fresh Produce Program represents the Federally assigned value of nonmonetary assistance for donated commodities recetved and/or consumed by the School Dtstnd during the current fiscal year
(2) ExpendttLreS for !he School Breakfast Program _,, not maintained separately and are Included In !he 2002 Nabonal School Lunch Program
(3) Expenchti.res for this program nclucle Stale and/or Other Funds Expenchtures are not maintained by fund source -
<> Expenditures on this program were not maintained by fund source
MaJor Programs are tdenttfled by an estensk (*) m front of the CFOA numbef
The School Dtstnct did not provide Federal Asststance to any Subreaptent
The accompany,ng schedule of expenditures of Federal awards lndudes the Federal grant act,vrty or the Henry County Board of Education end IS presented on the modified acaual basis of accoun~ng wtuch IS me oasis of accounting used In the presentation of the fl.n:I flnanaal statements

See notes to the baste ftnanetal statements

. 30-

HENRY COUNTY BOARD OF EDUCATION SCHEDULE Of STATE RE\IENUE YEAR ENDED JUNE 30 2002

SCHEDULE "3"

AGENCY/FUN PING
GRANTS Educabon Georgia Department of Oua1rty Basic Education Direct lnstrudional Cost Kindergarten Program Kindergarten Program Ear1y lnterventon Program Pnmary Grades (1-3) Program Pnmary Grades ' Earty lntervenbon (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades Earty Intervention (4 5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Ectucafion (9-12) Program Vocabonal Laboratory (9-12) Program Studon1> with Olsabolmes category I Category II Category Ill Catego,ylV Category V Grfted Sb.Jdent Category VI Rernediat Educabon Program Altema1fve Educabon Program English Speak.era of Other Languages (ESOL) MedLB Center Program 20 Daya of Addrbonal lnstrucbon Staff and Professlonal Development lrdrl!d Cost Central Aclmll1strabon School Admnlstrabon Faolrty Maintenance and OperabOns Categoncal Grants Pupil Transportal.Jon Regul!lr Bus ReplaCement Nursmg Services Pnoopel Supplements Vocational SupeMSOrS Education EquallzatiOn Funding Grant Food Services VocabonBI Education Other State Programs Apprenticeship Program Health Insurance Indirect Cost - Schools of Excellence K-3 Stat8Wlde Reading Program Mentor TeacherS Outdoor Classrooms State Grant Posl Secondafy ()plJon - Spnng Prnchool Handicapped Program 4-8 Statewtde After School Program Lottery Programs Assl:stlve Technology Computers Ll'I the Classroom Excepbonal Growth-Capital Outiay
Georgia State Financing and Investment Commlasion Re,nD.Jraement on CoostructJon Pro,ec:ts
Office of Treasury and Fiscal 5eMces Public School Employees Retrrement
OTHER Community Affairs Georgia Department o1' Local Assistance Grant

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

s 8 223 288 00
324 938 00 14 938 301 00
1 022,022 00 7 765 803 00
803 263 00 36 220 00
12 870 710 00 10 845 180 00
2 012 781 00
1 038 532 00 1160 683 00 5,839 445 00 1 28178200
64 651 00 2 025 91300
245 316 00 957 174 00 180 292 00 2 231 576 00 769,014 00 42173800
2 45g 847 00 3 754 580 00
e eoo 151 oo

s 8 223,288 00
324,938 00 14 938 301 00
1 022 022 00 7 765 803 00
803 283 00 36 220 00
12 870 710 00 1084518000 2 012 781 00
1 038 532 00 1 160,683 00 5 839 445 00 1 281 782 DO
64 651 00 2,025 913 00
245 318 00 957,174 00 190 292 00 2 23157600 769 014 00 42173800
2 459 847 DO 3 754 580 00 6,800,151 00

1 5'4601300 419 710 00 489,947 00 104 186 00 g1 534 00
2 739 232 00 508 308 00 168 003 DO

45 000 00 1 234 015 94
2,000 00 253 89-5 88 48,807 00
75000 S 741 00 233,773 00 190 101 80

32 988 00
595 025 00
s

8 429 996 00

1 546 013 00 419 710 DO 489 "47 00 104 186 00 91 534 00
2 739 232 00 508 306 00 168 063 00
45 000 00 1 234,915 EM
2 000 00 253 895 88 "'8,807 00
750 00 5 741 00 233,773 00 190 107 60
32 888 00 595 025 00 8 429 998 00

115421143lil 193 208 00

11 54211,4 39 193 20a DO

3 125 00

3.125 00

See notes to the baSIC t\nanoal statements

S 9458928540 $ 1997211039 $ 11456139579 31

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

SCHEDULE 4

PROJECT
The cost of acqumng constructl:ng and eqUll)pmg three,_ elemen1ary schools, two new mtddle schools and one new high school acquInng land for future sdlools, adding to renovating, replacing repa1nng Improving and equ,pp,ng exisbng schools buildings and other buHdlngs and fadhbes uaeful or deslrable In connecbOn therewith and acqulnng any necessa,y property therefor, both real and peraonel
The COS1 of acqu,nng conslructlng eind equlJ)P1ng five , _ elemenlary schools two new middle schools and one new high school, acqulnng land to, future schools adding to renovabng replaong repamng rmprovmg and eqUJppmg e>dstlng school& buildings and other bu.Jlchngs and faallbes useful or desirable In connection therewith and acqumng any necessary property therefor, both real and peraonal

ORIGINAL ESTIMATED
COST (1l

CURRENT ESTIMATED COSTS(2l

AMOUNT EXPENDED IN CURRENT YEAR (3! (4l

AMOUNT EXPENDED
IN PRIOR YEARS (3) (4)

PROJECT STATUS

S 95,000,000 00 S 100,081 093 88 S 6 916 454 99 S 92,515 545 57 Ongoing

130,000,000 00 129,595,926 00 2,820,492 72

OngomQ

S 225,000.000 00 S 229,677,019 88 $ 9 736 94771 $ 92,515,545 57

( 1) The SChool D1stncrs original cost estimate as specified In the resohrtlon calmg for the imposdton of the Local Opbon
Sales Tax

(2) The School Dlstr1ct's current esbma1e of total oost for the projects Includes ell cost from project mcept,on to complebon

(3) The voters of Henry County approved the lmposrnon of a 1% sales tax to fund the above protects and retire
assoaa1ed deb1 Amoun1s expended to, these J)rOteclS may Include salos tax proceeds state local property taxes and/or other funds over the IH'e of the pn:)f8dg

() In addibon to the expenditures &hown atx>ve the SChoof OIStnct has Incurred Interest to provide advance fUldlng for the above proj8dS as folkJws

Pnor Year-a

S 828889166

Current Year

1,491.225 00

Total

s em91866

See notes to the baslC finanaal statements

- 33 -

HENRY COUNTY BOARD OF EDUCATION GENERAL FUND QUALITY BASIC EDUCATION PROGRAM COBEl
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30 2002

SCHEDULE "5"

DESCRIPTION
Dued lnstrucbOnal Programs Krndergarten Program Kindergarten Program-Early lmerverruon Program Pnmary Grades (1-3) Program Pnmery Gradea-Eerty lntorvenbon (1-3) Program Upper Elementary Grades (,._5) Program Upper Elementary Grades-Early lnlerven\lOn (,._5) Program Mlcldle Grades (EHi) Program Middle School (EHi) Program H,gh School General Educabon (9-12) Program Voca11onal L.abOratOry (9-12) Program Students with l),sablhbes Category I Ca\egory II category Ill Category IV CategoryV Gifted Student - Category VI Remedtal Education Program Attema11ve Educe11on Program EngllSh Speakers or Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff end Professional Development

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION ( 1)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

s

6 997213 00 s 6229,552 BB s 26.7B0 S. s 6476 33H2

365 061 00

302284 91

5 775 46

JOB 0.0 37

17,226 462 00 19 393,267 BB

706 602 57

20 101 690 45

1 165,535 00

115663567

16 692 41

1,175 526 26

8 958,879 00 10 395 4a. 13

507 078 93

10 90H8306

617,134 00 42,112 00
14,784 730 00 12 506 007 00
2,311103 00 10 703 657 00
2 349 300 00 296,492 00
1,098,886 00 214 555 00

566 670 96 41,831 44 16,282 027 BB 15 849,716 90 2 218,823 27
180,799 27 176,559 24 9,406 124 18 879,969 22
10,678 36 2,0.S 269 78
297,566 73 975 067 85 441 112 38

9109 40 3,321 55 746,935 0. 1 102 0.5 97 482 100 34
174 35 235 481 46
69578
43 107 35 7 515 32 16 72000
33 0.2 15

575,760 36 45,152 99 17 028,962 92 16 951 762 87 2 700 923 61
180 973 62 412 0.0 70 940881996 879 969 22
10,678 36 2,091 377 11
305,062 05 991,787 85 474 1S. 53

s

79,837 146 00 s 86 SS.,563 11 s 4,169 178 82 s 91 023 741 73

2,5n 95300 93 667 00

2 843,819 39 139 495 77

1,079 179 38 388 583 38

3 722 798 77 508 079 15

TOTAL QBE FORMULA FUNDS

s

82 703,988 00 S 89 837,678 27 S 5 616 941 38 S 95,2S. 619 65

(1) Comprised or Sta1e Funds plus Local Fr,e M,D Shere

See notes to the basic finanoal statements

HENRY COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE}
ALLOTMENTS AND EXPENDITURES - BY SITE
YEAR ENDED JUNE 30. 2002

SCHEDULE "6"

SITE
Ola Elementary School Union Grove High School Cotton Indian Elementary School Wesley Lakes Elementary School Patnck Henry High School Pate's Creek Elementary School Pleasant Grove Elementary School Mount Carmel Elementary School East Lake Elementary School Oakland Elementary School Austin Road Elementary School Stockbndge High School Hickory Flat Elementary School Eagle's Landing High School Eagle's Landing Middle School Ausbn Road Middle School Luella Middle School Union Grove Middle School Fairview Elementary School McDonough Pnmary School Hampton Elementary School McDonough Elementary School Henderson Elementary School Smith-Barnes Elementary School Henry County High School Stockbndge Elementary School Henry County Middle School Locust Grove Elementary School Stockbndge Middle School Central Office (Altema1ive Education Program) Other Aux1hary Fac1lrty
TOTAL
(1) Compnsed of State Funds plus Local Five Mill Share

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE QBE PROGRAM COSTS

$

3.324,683 00 $

3,455,805 75

3,653,430 00

4,242,647 31

1.865,246 00

2,163,487 26

2,838,505 00

3,302,370 19

580,229 00

1,276,544 52

2,689,760 00

2,886.210 82

2,257,424 00

2,834, 116 38

2,158,707 00

2,402,213 89

3,700,657 00

3,667,050 63

2,625,886 00

2,792.331 95

2,077,856 00

2 355,207 37

4,628,893 00

5,901,374 95

3,050,199 00

3,353,934 76

5,249,996 00

6,656,205 73

4,035,458 00

4,666.153 38

2,429,706 00

3,168,315 75

3,154,81400

3,559, 136 52

3,620,959 00

3,723,053 30

2,058,659 00

2,541,888 75

1,603,210 00

2,014,533 60

2,627,491 00

3,045,441 51

1,310,353 00

1,515,545 10

6459

1.274,190 00

1,540,965 90

4,797,680 00

6 004,470 60

2,649,329 00

2,913,017 07

3,375,614 00

3,400,635 19

2,744,972 00

3,025,781 10

2,154,354 00

2,400,088 77

1,098,886 00

476,947 56

-261,798 47

$

79,637,146 00 $ 911023,741 73

See no1es to the basic financial statements

- 35 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPOR IS

R, "" I W. H"T"' STAlLAUOITQn '"" 651j 2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 WJ,hrngwn Strce:t S W, Suite 214 At!Jnla, Genrg1J 1(1114-8400
June 3. 2003

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Henry County Board of Education
REPORT ON COMPLIANCE AND ON INTER.NAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen
We have audited the financial statements of Henry County Board of Educat10n a~ of and for the year ended June 30. 2002. and have issued our report thereon dated June 3. 2003 We conducted our audit m accordance with aud1tmg standards generally accepted m the Umted States of Amenca and the standards applicable to financial audits contamed in Government Aud1tmg Standards, issued by the Comptroller General of the Umted States
Compliance
As part of obtainmg reasonable assurance about whether Henry County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certam prov1s10ns oflaws. regulations. contracts and grants. noncompliance with which could have a direct and matenal effect on the determinat10n of financial statement amounts. l lowever. providing an opm10n on complrancc with those provisions was not an objective ofour audit. and accordmgly. we do not expres~ ~uch an op1mon. The results ofour tests disclosed no instances of noncomphancc that are required to be reported under Government Auditing Standards
Internal Control Over Fmancial Reportmg
In plannmg and pcrformmg our audit, we considered Henry County Board of Educat10n's mlernal control over financial rcportmg m order lo determine our aud1tmg procedures for the purpose of expressmg our opm1on on the financial statements and not to provide assurance on the internal control over financial rcportmg However. we noted a ccrtam matter involvmg the internal control over financial reporting and Its operation that we consider lo be a reportable cond1t10n Reportable
2002YB-41

cond1t10ns mvolve matters commg to our attent10n relating to sigruficant defic1enc1es in the design or operation of the mternal control over financial reportmg that. m ourJudgment. could adversely affect Hen!') County Board of Education's ability to record, process, summarize and report financial data cons1~tent with assertions of management m the financial statements The reportable condition 1s de;cribed m the accompanymg Schedule of Fmdmgs and Questioned Cost; as Item FS-6751-02-01.
A material weakness 1s a cond1t10n m which the design or operation of one or more of the mtemal control components docs not reduce to a rclauvely low level the risk that misstatements m amounts that would be material m relation to the financial statements being audited may occur and not be detected wnhm a timely period by employees m the normal course of performmg their ru,;1gned functions. Our cons1derat10n of the internal control over financrnl reportmg would not necessarily disclose all matters m the mtcmal control that might be reportable conditions and. accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknes~s However, we consider item FS-6751-02-01 to be a material weakness
This report 1s mtendcd solely for the mformation and use of the management, members ofthe Henry County Board ofl:ducation, Federal awardmg agencies and pass-through entities and 1s not mtcndcd to be and should not be used by anyone other than these specified parties
---.Respectfully submitted.

RWHgp 2002YB-4I

State Auditor

R11,,1-1 I \V. H1NTO,
::.TATE AUDlfOP !404) 656 2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 WJ..,hmgwn S1rcc1, S W. Suite '214
AtlJnto, GcorgtJ 30334-8400
June 3, 2003

Honorable Sonny Perdue. Governor Members of the General Assembly Members of the State Board of Education
and Supermtendent and Members of the Henry County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON !Nl ERNAL CONTROL OVCR COM Pl IANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen
Comphance
We have audited the comphance of Henry County Board ofEducal!on with the types ofcomphance reqmrements described m the US Office of Managemenl and Bud}!.el (0MB) Circular A-133 Comphance Supplemenl that are apphcablc to each of1ts ma1or Federal programs for the year ended June 30, 2002 Henry County Board of Education's ma1or Federal programs are 1dent1fied m the Summary of Auditor's Results Section of the accompanymg Schedule of Fmdmgs and Questioned Costs Comphance v.1th the requirements of laws, regulations, contracts and grants apphcable to each of tis maJor Federal programs 1s the rcspons1b1hty of Henry County Board of Education's management Our rcspons1b1hty 1s to express an opmion on Henry County Board of Education's comphance ba..ed on our audit
We conducted our audll of compliance m accordance v.1th aud!lmg standards generally accepted m the Umted States of America, the standards applicable to financial audits contamcd in Government Aud1tmg Standards. issued by the Comptroller General of the Umted States, and 0MB Circular A133. Audas of Statev, Local Governmenls. and Non-Profil Orgam=atwnv Those standards and 0MB Circular A-133 require that we plan and perform the aud!I to obtam reasonable assurance about whether noncomphance with the types ofcompliance requirements referred to above that could have a direct and material effect on a ma1or Federal prognun occurred An audit mcludes exammmg, on a test basis. evidence about the Henry County Board of Education's comphance with those requirements and perform mg such other procedure~ a~ we considered necessary m the circumstances We behevc that our audit provides a reasonable basts for our opm1on Our audit does not provide a legal dctcrmmatlon on Henry County Board of Educat10n~ comphance with those requ1remenb
2002SA-30

In our opinion, the Henry County Board of Education complied, in all matenal respects, with the requirements referred to above that are applicable to each of 1L~ maJor Federal programs for the year ended June 30, 2002
Internal Control Over Compliance
The management of Henry County Board of Educat10n 1s 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 Henry County Board ofEducation's internal control over comphance with requirements that could have a duect and material effect on a maJor Federal program in order to determine our auditing procedures for the purpose of expressing our op1mon on comphance and to test and report on internal control over compliance in accordance with 0MB Circular A-133
We noted a certain matter involving the internal control over comphance and tts operation that we consider to be a reportable cond1t10n Reportable cond1ttons involve matters coming to our attention relating to s1gmficant defic1enc1es in the design or operation of the internal control over compliance that, in our Judgment, could adversely affect the Henry County Board of Education's ability to administer a maJor Federal program in accordance with applicable reqmrements oflaws, regulations, contracts and grants The reportable condit10n 1s descnbed in the accompanying Schedule of Findings and Quest10ned Costs as item FA-6751-02-01
A matenal weakness 1s 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 of nsk that noncompliance with the applicable reqmrements oflaws, regulations, contract~ and grants that would be matenal in relation to a maJor Federal program being audited may occur and not be detected within a timely penod by employees in the normal course of performing theu assigned funct10ns Our con,1deratlon of the internal control over compliance would not necessanly disclose all matters in the internal control that might be reportable conditions and, accordmgly, would not necessanly disclose all reportable condltlons that are also considered to be matenal weaknesses However, we do not believe the reportable cond1t10n described above 1s a matenal weakness
This report is intended solely for the information and use ofthe management, members ofthe Henry County Board of Education, Federal awarding agencies and pass-through entittes and 1s not intended to be and should not be used by anyone other than these specified parties
Respectfully submitted,
w.~
Hinton State Auditor
RWHgp 2002SA-30

SECTION lll AUDITEE'S RESPONSE TO PRJOR YEAR FINDINGS AND QUESTIONED COSTS

HENRY COUNTY BOARD OF EDUCATION
AlJDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED cos rs
YEAR ENDED JUNE 30. 2002

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6751-00-0 I FS-6751-01-0 I

Further Act10n Not Warranted Further Acllon Not Warranted

SECTION IV FINDINGS AND QUESTIONED COSTS

HENRY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 2002

I SUMMARY OF AUDITOR'S RESULTS

Type of Report Issued on the Financial Statements lbe auditor's opin10n on the Henry County Board of Educat10n's financial statements was unqualified

2 Reportable Cond1t10ns in Internal Control Disclosed bv the Audit of the Financial Statcmen~ The audit report for the Henry County Board of Education disclosed financial statement reportable cond1t1ons related to the following control categones

Cash and Cash Equivalents Revenues/Rece1vables/Rece1pts

Expcnd1tures/Liab1l1t1es/Disbursements

All of the reportable conditions descnbed above are considered to be material weaknes~e~

3 Noncompliance Material to the Financial Statements The audit ofthe Henry County Board ofEducation disclosed no instances of noncompliance that were deemed to be material to the financial statements

4 Reportable Conditions in Internal Control Over Ma1or Programs The audit report for the Henry County Board of Education disclosed a reportable cond111on in internal control over maJor programs for the following compliance requirement

Cash Management

The reportable cond1t10n described above 1s not considered to be a material weakness

5 Type of Report Issued on Compliance for Ma1or Programs The audllor's opiruon on the Henry County Board ofEducallon's report on compliance with reqmrements applicable to rnaJor programs was unqualified

6. Audit Findmgs Required to be Reported bv Section .51 0(a) of 0MB Circular A 133 The Henry County Board of Educallon's audit disclosed an audit findmg reqmred to be reported by secllon 5 I0(a) ofOMB C1rcular A-133 llus audit finding 1s included in section JV of this report.

- 1-

HENRY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
SUMMARY OF AUDITOR'S RESULTS
7 Ma1or 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 lnd1v1duals with D1sab1hlles Education Act - Part B - Special Education Capacity Bmldmg Improvement 84 027 lnd1v1duals with D1sab1lit1es Education Act - Part B - Special Education Flow Through 84 173 Individuals with Disabilities Education Act - Part B - SpccrnJ Educat10n Preschool
8 Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $324,937 77
9 Low Risk Aud1tee The Henry County Board ofEducat10n qualified as a low nsk aud1tec as defined by Section .530 ofOMB Circular A-133
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Separation of Duties Reportable Cond1t10n - Material Weakness Findmg Control Number FS-6751-02-01
Our exarnmation of the pnnc1paJs' accounts disclosed weaknesses m internal control as discussed below
Cash and Cash Equivalents I) The bank reconc1hat1on function was not separated from the record keepmg and voucher payment functions
Revenues/Rece1vables/Rece1pts I) Deposit preparation was not separated from the record keepmg and cash custody funct10ns
2) Cash receipts for Athletic events were not reconciled to pre-numbered tickets sold
3l Based on a sample of 30 items, eleven receipts were not deposited to the bank account in a timely manner
-2-

HENRY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNF 30, 2002

II FINANCIAL STATEMENT FINDINGS AND QUES1 IONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABIIJTIES/DISBURSEMENTS Inadequate Separatton of Dut1e, Reportable Cond11ton - Malena! Weakness Finding Control Number FS-6751-02-01

4) Pre-numbered receipt bool.., wi:=re not used con~cut1vcly for the two school pnnc1pal accounts tested

Expend1tures/Liab1httes/D1sbursements I) The check wnting function was not separated from record keeping or processing of signed checks

2) Based on a sample of 50 items, twelve voucher packets included purchase orders dated and approved after the invmce date

These deficiencies were a result of management's dec1smn to hm1t the number ofadnumstrattve staff made responsible for accounting functtons and failure to ensure e,tabhshed controls were functmning as designed Management should implement procedures to ensure that the key accounting functions of custody, record l..eeping and authonzatton be segregated Add1t1onally, controls should be revised and monitored to provide reasonable assurance that transactmns arc proce,sed according to established procedures

Ill FEDERAL A WARD FINDINGS AND QUESTIONED COSTS

CASII MANAGEMENT Excessive Cash Balances Reportable Cond11ton Nomnatenal Noncompliance U S Department of Education Through Georgia Department ofEducatmn Amount $9,034.98 Finding Control Number FA-6751-02-01

----

A review of ca~h management procedures and internal controls for the Elementary and Secondary Educatmn Act - Title I - Grants to Local l:,ducat1onal Agencies (CFDA 84 010) and the Special l:,duLal1on Cluster (CFDA 84 027 and 84 173) program, disclosed that cash draw, were made in advance of1mmed1ate cash needs. resulting in the accumulallon of excessive cash balances Dunng fi,cal year 2002, the Title I program had an average cash balance of $285.848 85 with exces,1ve

-3-

HENRY COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND OUESTIONl,,D cos rs
YEAR ENDED JUNE 30, 2002
111 FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CASH MANAGEMENT Excess1ve Cash Balances Reportable Cond1t10n Nonmatenal Noncompliance U S Department of Education Through Georgia Department of Educatwn Amount $9,034 98 Finding Control Number FA-6751-02-01 ending monthly cash balances dunng mne out oftwelve months rhc Special Education Cluster had an average cash balance of $179,503 37 with excessive ending monthly cash balances dunng nine out of twelve months In accordance with A-102 Common Rule paragraph 21 (h)2(1), interest earned on advances by local government grantee~ is reqmred to be submitted promptly to the Federal grantor agency Up to $ I00 00 per year may be kept for admin1~trauve expenses The Title I program earned interest amounting to $5,247 18 ofwh1ch $5,147 18 should have been submitted to the Georgia Department of Education. The Special Education Cluster earned interest amounting to $3,987 80 of which $3.887 80 should have been submmed to the Georgia Department of Education The interest earned on the~ programs was recorded in the School D1stnct's General Fund Management should become familiar with the Federal regulations for the Title I and Special Education Cluster programs in order to develop adequate control procedures designed to provide for the achievement of compliance obJcct1ves In add1t10n, excessive interest earnings totaling $9,034 98 ~hould be refunded to the Georgia Department of Education
-4-