,A '\'2,oc 't I . :;?l, ~.5, . oos;l.oo;i_ :, ' . , ... _ , . 1. sTATE OF 'GEORGIA _, .. , >.DEPARTM.ENr6i= Auo1ts AND ACCOUNTS , J. ,, r 1 ..., !' J ,' '. \ ,-_"",I '. " ,, \.,' . ' '' ... J f I ' .' .:,,. t f' . ' . ' .. ' '>. pF C ' ' ,., , H~N~Y COUt;,JTY BqARD. EQ~CA!ION ;. ;MCDONQUGH,..GE_ORGIA- :, .i , -I- ' ' . I - ~ ' REPORT ON AUDIT '-, OF THE FINANCIAL STATEMENTS,,. , , ; FOR, THE. FISCAL. YEAR.ENDED JUNE 30; 2002 ', - : _. ' '. - -< -. - ''7 I ' .- ' S T ,. ,Ir, -' ... - ., 'Russell W. Hinton ._. State Au'ctltqr - .. ' .' ' ' ' ,.I''' ,_ ' ' .,- , ; 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 t1 ,,u L w. HI~ lllN 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 $226 2 m1lhon Program specific revenues in the fonn of charges for services, grants and contnbut1ons accounted for the rest OVERVIEW OF THE FINANCIAL STATEMENTS llus report consists of several parts including management's discussion and analysis, the basic financial statements and required supplementary infonnauon The basic financial statements include two levels of statements that present different views of the School Distnct These include the d1strict-w1de andfundfinanc,al statements The d1stnct-w1de financial statements include the Statement of Net Assets and Statement of Acllwlles These statements provide infonnallon about the act1v111es of the School D1stnct prco;cnting both short-term and long-term infonnanon about the School D1stnct~ overall financial status HENRY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002 The fund financial statements focus on ind1v1dual part~ of the School D1stnct. reporting the School D1stnct's operat10n in more detail The Governmental Fund1 Matemcnb d1,clo,c how basic ,erv1ces are financed in the short-term as well as what remains for future spending The Fzducwry Funds statement provides information about the financial relat10nsh1ps in which the School D1stnct acts solely as a truc:ated over t~tr est1mated usefut hves as deprecation expense In the current period these amounts are Capital Outlay DepreC&llhon Expense Excess of Gaprtal OuUay over Depreciatton Expense Because some property taxes will not be coRected for several months after the Schoof Otstnct's fiscal year ends they are not consk:lered evadable revenues Bond proceeds provide current financial resources to Governmental Funds, however, 1ssumg debt l:naeases Long-Term Llablllttes m the Statement of Net Assets In the current penod, proceeds were recerved from General Obhgellon Bonds Issued "1cluchng a premium of$ 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-