Irwin County Board of Education, Ocilla, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2004

IRWIN COUNTY BOARD OF EDUCATION
OCILLA# GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30# 2004
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

IRWIN 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 AWARDS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

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 BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

7

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

8

F

RECONCILIATION 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

11

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

25

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

26

3 SCHEDULE OF STATE REVENUE

28

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

30

IRWIN COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

31

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133

SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

IRWIN COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
February 24, 2005

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Irwin County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Irwin County Board of Education, as of and for the year ended June 30, 2004, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Irwin County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opm1ons.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Irwin County Board of Education, as of June 30, 2004, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
2004ARL-11

The Irwin County Board ofEducation has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not to be part of, the basic financial statements.
In accordance with Government Auditing Standards, we have also issued our report dated February 24, 2005, on our consideration of the Irwin County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 25 is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Irwin County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code of Georgia Annotated section 506-24.
Respectfully submitted,
~~~~
Russell W. Hinton State Auditor
RWH:as 2004ARL-11

IRWIN COUNTY BOARD OF EDUCATION

IRWIN COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30. 2004
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable. Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries Payable Short-Term Debt Retainages Payable Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Bus Replacement Continuation of Federal Programs Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets
The notes to the basic financial statements are an integral part of this statement. -3-

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

966,759

92,322

127,586 1,163,455
541,779 6,766 2,691

5,580,342 1,301,920
961,850 13,401,409 2,156,638 -6 095 775

$ ===2=0=,2=07::!'=74=2=

$

275,194

1,286,888

299,664

122,191

103,258 18 880

$

2,106,075

$

16,891,478

92,720 2,691
82,165 1,032,613

$

18 101 667

$ ===2=0=,2=0=7=7,=42==

IRWIN COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30. 2004

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$

10,006,866 $

683,593 507,478 214,235 468,271 787,190
66,710 946,530 533,944
9,215 209,403

108,205 881,642
10 648

$

15,433,930 $

7,796
254,104 221,435 483 335

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

$

8,036,279 $

1,530,579 $

197,923 263,078 169,854 486,733 416,427
724 488,724 242,846
112 69,736

2,600
22,002 11,077
46,017 54,232

564,070

34,118 188,588

$

10,936,506 $

1,889,213 $

-432,212
-485,670 -241,800
-44,381 40,464 -359,686 -65,986 -411,789 -236,866 -9, 103 -139,667
180,017 92,451 -10,648
-2,124,876

$

2,932,647

6,764

523,584 31,316 10,235
1,015,554 7,877
495406

$

5,023,383

$

2,898,507

15,203,160

$ ===1=8=1=0='1=66=7=

-5-

IRWIN COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30. 2004

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Short-Term Debt Retainages Payable
Total Liabilities
FUND BALANCES
Reserved for: Bus Replacement Inventories Capital Projects Questioned Costs
Unreserved Designated for Canning Plant Operations Undesignated Reported in: General Fund
Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$ 1,186,813 92,322
374,838 $ 1,083,756
65,767 6,766 2 691

$
86,225 79,699 476,012

1,186,813 92,322
461,063 1,163,455
541,779 6,766 2 691

$ 2,812,953 $

641,936 $ ======3=,4=5=4'=88=9=

$

$

275,194

1,286,888

$ 1,562,082 $

220,054 $
299,664 122,191 641,909 $

220,054 275,194 1,286,888 299,664 122 191
2,203,991

$

92,720

2,691

82,138 $

44,086

1,605

1,027,631

$ 1,250,871 $

$ 27
27 $

92,720 2,691
82,165 44,086
1,605
1 027 631
1,250,898

$ 2,812,953 $

641 936 $ ===3=,4=5=4=,8=89=

The notes to the basic financial statements are an integral part of this statement. -6-

IRWIN COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30. 2004

EXHIBIT" "

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.
Long-Term Liabilities are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Capital Leases

$

1,250,898

$

5,580,342

1,301,920

961,850

13,401,409

2,156,638

-6,095,775

17,306,384

-333,477

-122,138

Net Assets of Governmental Activities (Exhibit "A")

$ 18,101,667

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

IRWIN COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2004

EXHIBIT"E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Capital Leases Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$ 3,339,994

$

41,551 $ 523,584

10,134,593

163,699

1,871,699

1,423,593

483,335

7,185

692

495,206

200

$ 16,373,563 $ 2,111,768 $

3,339,994 565,135
10,298,292 3,295,292 483,335 7,877 495,406
18,485,331

$ 9,733,068 $

71,161 $

651,419 506,898 214,235 461,539 784,718
66,688 881,340 438,460
9,215 209,403 100,591 839,553
37,000

32,174 1,822 22
54,920
2,585,549

101,532 10 648

$ 15,046,307 $ 2,745,648 $

$ 1,327,256 $ -633,880 $

9,804,229
683,593 506,898 214,235 463,361 784,718
66,710 936,260 438,460
9,215 209,403 100,591 839,553 2,622,549
101,532 10648
17,791,955
693 376

$

37,000

$

$ 315,561

-315,561

$

-278,561 $

315,561 $

$ 1,048,695 $ -318,319 $

202,176

318,346

37,000 315,561 -315,561
37 000
730,376
520,522

Fund Balances - Ending

$ 1,250,871 $

The notes to the basic financial statements are an integral part of this statement. -8-

27 $ ====1-=,2=5,,.0,,;;,89=8=

IRWIN 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. 2004

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")

$

Amounts reported for Governmental Activities in the Statement of Activities are different because:

Capital Outlays are reported as expenditures in Governmental Funds. However. in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:

Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense

$ 2,740,130 -483,637

Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.

Some of the Capital Assets acquired this year were purchased with e-rate funds. In Governmental Funds, these assets, as well as, the associated revenue are not recognized, but in the Statement of Activities, the contribution of e-rate funds is recognized as a capital contribution.

Some of the Capital Assets acquired this year were financed with capital leases. In Governmental Funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Assets, the lease obligation is reported as a Long-Term Liability.

Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:

Capital Lease Payments

730,376
2,256,493 -400,583 247,689 -37,000 101 532

Change in Net Assets of Governmental Activities (Exhibit "B")

$ =====2=,8=9=8=,5=07=

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

IRWIN COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2004
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT"G"
AGENCY FUNDS
$ ===52='=64=8=
$ ===52='=64=8=

The notes to the basic financial statements are an integral part of this statement. - 10 -

IRWIN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT"H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Irwin County Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Irwin County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function 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 function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
- 11 -

IRWIN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax proceeds, grants from Georgia State Financing and Investment Commission and grants from the Georgia Department of Education to be used for the acquisition, construction or renovation of major capital facilities.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within 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 liability is incurred, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral long-term liabilities and acquisitions under capital leases are reported as other financing sources.

- 12 -

IRWIN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
( 1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,

- 13 -

IRWIN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(7) Repurchase agreements, and

(8) Obligations of other political subdivisions of the State of Georgia.

RECEIVABLES

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

PROPERTY TAXES

The Irwin County Board of Commissioners fixed the property tax levy for the 2003 tax digest year (calendar year) on September 3, 2003 (levy date). Taxes were due on December 20, 2003 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2003 tax digest are reported as revenue in the governmental funds for fiscal year 2004. The Irwin County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2004, for maintenance and operations amounted to $3,333,230.

The tax millage rate levied for the 2003 tax year (calendar year) for the Irwin County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

16.69 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $523,584 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

INVENTORIES

FOOD INVENTORIES On the basic financial statements, inventories of donated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when

- 14 -

IRWIN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time ofpurchase. On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated 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 materially extend the useful lives ofthe assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art.

Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment

Any Amount

$

5,000

$

5,000

$

5,000

NIA 15 to 80 years 20 to 80 years 3 to 30 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

Note 3: DEPOSITS

COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.

- 15 -

IRWIN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 3: DEPOSITS
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 2004, the bank balances were $3,174,861. The amounts of the total bank balances are classified into three categories of credit risk:
Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.)
The School District's deposits are classified by risk category at June 30, 2004, as follows:

- 16 -

IRWIN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT"H"

Note 3: DEPOSITS

Risk Category

Bank Balance

1

$ 292,322

2

2,645,329

3

237,210

Total

$ 3,174.861

Note 4: NON-MONETARY TRANSACTIONS

The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

Note 5: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

Balances July 1, 2003

Increases

Decreases

Balances June 30, 2004

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress

$ 5,580,342 54 949 $ 1,301,920 $

$ 5,580,342

54 949

1,301,920

Total Capital Assets Not Being Depreciated $ 5,635,291 $ 1,301,920 $

54 949 $ 6,882,262

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 12,016,514 $ 1,863,051 961,850

1,384,895 355,953 $

$ 13,401,409

62,366

2,156,638

961,850

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

4,307,463 888,596 478 445

299,621 145,208 38,808

62,366

4,607,084 971,438 517,253

Total Capital Assets, Being Depreciated, Net $ 9,166,911 $ 1,257,211 $

0 $ 10,424,122

Governmental Activity Capital Assets - Net $ 14,802.202 $ 2,559.131 $

54 949 $ 17,306.384

Capital assets being acquired under capital leases as of June 30, 2004, are as follows:

- 17 -

IRWIN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT"H"

Note 5: CAPITAL ASSETS
Equipment Less: Accumulated Depreciation

Governmental Funds
$ 442,843 81,552

Current year depreciation expense by function is as follows:

Instruction

Support Services

Improvements of Instructional Services

$

General Administration

School Administration

Maintenance and Operation of Plant

Student Transportation Services

Enterprise Operations

Food Services

$====3==61=,2=9==1

$
550 4,654 2,343 9,734 95,484

323,763
112,765 7,217 39,892

$====4=83-,6=3===7

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) are reported as restricted assets in the Statement of Net Assets because their use is limited by applicable statutory provisions. Restricted assets at June 30, 2004, were as follows:

District-wide Capital Projects SPLOST

Restricted Cash and Cash Equivalents: Capital Acquisitions

$===l=l4~3-,0-7~3

Note 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2004, consisted of the following:

- 18 -

IRWIN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT"H"

Note 7: INTERFUND TRANSFERS

Transfer to

Transfers From General Fund

District-wide Capital Projects

$===-=3=15=,5=6~1

Transfers are used to move property tax revenues collected by the General Fund to the District-wide Capital Projects Fund as supplemental funding source for capital construction projects.

Note 8: RISK MANAGEMENT

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

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

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

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

2003 2004

$

0 $

18 742 $

13,525 $

5 217

$

5 217 $

2 851 $

6 599 $

1 469

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $400,000 loss per occurrence, up to $2,000,000.

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

- 19 -

IRWIN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 8: RISK MANAGEMENT

Position Covered

Amount

Superintendent Each Principal Each Lunchroom Manager Each Employee

$ 100,000

$

10,000

$

1,000

$ 100,000

Note 9: SHORT-TERM DEBT

The School District obtains temporary loans in advance of Special Purpose Local Option Sales Tax collections, depositing the proceeds in its Capital Projects Fund. This short-term debt is to provide cash for construction and renovations until Special Purpose Local Option Sales Tax collections are received by the School District. Article IX, Section V, Paragraph V ofthe Constitution ofthe State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires 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 is as follows:

Beginning Balance

Issued

Redeemed

Ending Balance

Temporary Loans
Note 10: LONG-TERM DEBT

$======""0$ 665.664 $ 366,000 $ 299.664

CAPITAL LEASES The Irwin County Board ofEducation has entered into various lease agreements as lessee for school buses and equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception.

The changes in Long-Term Debt during the fiscal year ended June 30, 2004, were as follows:

- 20 -

IRWIN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT"H"

Note 10: LONG-TERM DEBT

Governmental Funds Capital Leases

Balance July 1, 2003

$ 186,670

Additions Capital Leases

37,000

Deductions Debt Retired

101,532

Balance June 30, 2004
Portion of Long-Term Debt Due within One Year

$======1"='22-,1=3==8 $_ _1~03~,2_5_8

At June 30, 2004, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

Cagital Leases

Princigal

Interest

2005

$ 103,257 $

6,302

2006

18,881

793

Total Principal and Interest

$ 122,138 $

7 095

Note 11: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $115,018 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $113,995

- 21 -

IRWIN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "H"

Note 11: ON-BEHALF PAYMENTS

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $1,023

Note 12: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2004, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

Irwin County Alternative School

$ 236,076 $==1="93='=,3=""9==9

The amounts described in this note are not reflected in the basic financial statements.

Note 13: SIGNIFICANT CONTINGENT LIABILITIES

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

Note 14: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

- 22 -

IRWIN COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT"H"

Note 14: RETIREMENT PLANS
Fiscal Year
2004 2003 2002

Percentage Contributed
100% 100% 100%

Required Contribution
$ 832,059 $ 855,295 $ 839,583

- 23 -

IRWIN COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30. 2004

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Capital Outlay Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES}
Other Sources Other Uses
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

$

3.115,000 $

3,115,000 $

3,339,994

6,558

6,558

41,551

9,720,270

9,974,271

10,134,593

1,895,370

2,087,748

1,871,699

234,679

234,679

483,335

51,333

51,333

7,185

66 609

74 890

495 206

$

15 089 819 $

15 544 479 $

16,373,563

$

10,011,879 $

10,197,923 $

9,733,068

610,146 601,432 209,988 433,611 811,723
57,013 856,978 479,671
8,913 171,528
4,000 830,857

606,604 550,363 209,988 449,186 824,644
57,013 842,040 478,260
8,913 179,604
832,607

651,419 506,898 214,235 461,539 784,718
66,688 881,340 438,460
9,215 209,403 100,591
839,553 37,000
112 180

$

15087739 $

15237145 $

15 046 307

$

2 080 $

307 334 $

1327256

$

37,000

-315 561

$

-278 561

$

2,080 $

307,334 $

1,048,695

407,384

407,384

202,176

12 962

12 962

Fund Balances - Ending

$

422 426 $

727 680 $

1 250 871

Notes to the Schedule of Revenues Exgenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.
See notes to the basic financial statements.
- 25 -

IRWIN COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2004

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U.S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Direct Rural Business Enterprise Grants Pass-Through From Georgia Department of Education Food Donation (1)
Total U.S. Department of Agriculture
Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Enhancing Education Through Technology Program Improving Teacher Quality State Grants Rural Education Safe and Drug-Free Schools and Communities School Renovation - Schools State Grants for Innovative Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States Pass-Through From Abraham Baldwin Agricultural College Gaining Early Awareness and Readiness for Undergraduate Programs Pass-Through From Coastal Plains Regional Educational Service Agency d/b/a Southern Pine Migrant Education Agency Migrant Education
Total U.S. Department of Education
Health and Human Services, U. S. Department of Pass-Through From Georgia Department of Human Resources Block Grants for Prevention and Treatment of Substance Abuse Medical Assistance Program
Total U.S. Department of Health and Human Services
Total Federal Financial Assistance
N/A = Not Available

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

N/A

N/A

$

$

(2) 675,825
675,825

10.769 10.550

N/A $

43,463 43 117 762 405

84.027 84.173

N/A $
N/A
$

286,669 53 339
340,008

84.318 84.367 84.358 84.186 * 84.352 84.298 84.010 84.048
84.334
84.011

N/A N/A N/A N/A N/A N/A N/A N/A
N/A
N/A
$

61,918 140,588
50,065 16,929 1,423,766 13,563 576,478 32,846
21,469
20 957
2,698,587

93.959 93.778

N/A $ NIA
$

15,000 24 700
39 700

$====3'=50=0=,6=9=2

- 26 -

IRWIN COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2004

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($109,839) were not maintained separately and are included in the 2004 National School Lunch Program.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Irwin County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 27 -

IRWIN COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2004

SCHEDULE "3"

AGENCY/FUNDING

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program

$

435,724

$

Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Principal Supplements Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs 4-8 Statewide After School Program K-3 Statewide Reading Program Alternative Program Agriculture Construction Related Equipment Apprenticeship Program Health Insurance Mentor Teachers National Teacher Certification Preschool Handicapped Program Special Education Low Incidence Grant Student Information System (Reporting) Lottery Program Student Information System (Conversion)

469,487 137,003 812,439 533,035 557,888 122,273 1,077,790 801,915 405,411
15,632 210,610 772,513 132,656 121,226 206,646
41,338 286
169,191 53,312 33,797
362,310 387,710 467,017
234,980 54,232 19,500 50,450 6,740
1,015,554 46,650
211,218 -398,981
13,579 21,980 81,360 175,000
1,900 113,995
2,018 9,907 53,608 7,536 16,365
20,456

- 28 -

TOTAL
435,724
469,487 137,003 812,439 533,035 557,888 122,273 1,077,790 801,915 405,411
15,632 210,610 772,513 132,656 121,226 206,646
41,338 286
169,191 53,312 33,797
362,310 387,710 467,017
234,980 54,232 19,500 50,450 6,740
1,015,554 46,650
211,218 -398,981
13,579 21,980 81,360 175,000
1,900 113,995
2,018 9,907 53,608 7,536 16,365
20,456

IRWIN COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2004

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Georgia State Financing and Investment Commission Reimbursement on Construction Projects
Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACT Human Resources. Georgia Department of Family Connection

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

163.699 $

163.699

$

1.023

1.023

48.314

48.314

$ 10,134,593 $

163,699 $ 10,298,292

See notes to the basic financial statements.

- 29 -

IRWIN COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2004

SCHEDULE "4"

PROJECT
Construction of a 400 seat auditorium at the middle/high school; addition of ten (10) classrooms at the middle/high school with the enlargement of the media center; purchase of six (6) school buses and pay off existing lease purchase agreement on all existing leased buses; repair, restoration, and renovation of restrooms, carpet, roof and other areas at the elementary school and the middle/high school; repair and renovation of old high school gym roof, bleachers, floor, and restrooms; and construction of football stadium at middle/high school and other athletic facilities

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS(3)

PROJECT STATUS

$ 2,997,000 $ 2,997,000 $ 1 196 724 $

852,150 Ongoing

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the project. Includes all cost from project inception to completion.
(3) The voters of Irwin County approved the imposition of a 1% sales tax to fund the above project. Amounts expended for this project may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project.

See notes to the basic financial statements.

- 30 -

IRWIN COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2004

SCHEDULE "5"

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

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2)

ELIGIBLE QBE PROGRAM COSTS

SALARIES OPERATIONS

TOTAL

$

505,624 $

550,061 $

3,640 $

553,701

152,810

133,232

626

133,858

921,542

704,059

27,782

731,841

544,408

539,038

771

539,809

617,049

655,732

15,698

671,430

139,925 1,183,393
892,339 437,787 1,338,095
230,530 42,987 89,813

111,790 1,344,702 1,425,828
445,254
23,167 169,451 751,597
14,661 11,371 232,893 38,356 100,028

431 10,802 24,266 29,451
20,604 17,192
64 1,887
3 940

112,221 1,355,504 1,450,094
474,705
23,167 190,055 768,789
14,661 11,435 234,780 38,356 103,968

$

7,096,302 $ 7,251,220 $

157,154 $

7,408,374

185,306 37,308

181,764

19,675 7,632

201,439 7,632

TOTAL QBE FORMULA FUNDS

$

7,318,916 $ 7,432,984 $

184,461 $ ===7,..,6=17=",4=4=5

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State budget austerity reduction.

See notes to the basic financial statements.

- 31 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
February 24, 2005

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Irwin County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Irwin County Board of Education as of and for the year ended June 30, 2004, which collectively comprise Irwin County Board ofEducation's basic financial statements and have issued our report thereon dated February 24, 2005. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Irwin County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide an opinion on the internal control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Irwin County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. The reportable condition is described in the accompanying Schedule ofFindings and Questioned Costs as item FS-6771-04-01.

2004YB-41

A material weakness is a reportable condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we consider item FS-6771-04-01 to be a material weakness.
Compliance and Other Matters
As part ofobtaining reasonable assurance about whether Irwin County Board ofEducation's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of the management and members of the Irwin County Board of Education and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~w.<H~ Russell W. Hinton State Auditor
RWH:as 2004YB-41

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S. W., Suite 214 Atlanta, Georgia 30334-8400
February 24, 2005

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Irwin County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Irwin County Board of Education with the types of compliance requirements described in the US. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to its major Federal program for the year ended June 30, 2004. Irwin County Board of Education's major Federal program is identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements oflaws, regulations, contracts and grants applicable to its major Federal program is the responsibility of Irwin County Board of Education's management. Our responsibility is to express an opinion on Irwin County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Irwin County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Irwin County Board of Education's compliance with those requirements.
2004SA-65

As described in item FA-6771-04-01 in the accompanying Schedule of Findings and Questioned Costs, Irwin County Board of Education did not comply with requirements regarding Matching, Level ofEffort and Earmarking that are applicable to its School Renovation School Program (CFDA 84.352). Compliance with such requirements is necessary, in our opinion, for Irwin County Board of Education to comply with requirements applicable to that program.
In our opinion, except for the noncompliance described in the preceding paragraph, the Irwin County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to its major Federal program for the year ended June 30, 2004.
Internal Control Over Compliance
The management oflrwin County Board ofEducation is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Irwin County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
We noted a certain matter involving the internal control over compliance and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over compliance that, in our judgment, could adversely affect the Irwin County Board of Education's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FA-6771-04-01.
A material weakness is a reportable condition in which the design or operation of one or more ofthe internal control components does not reduce to a relatively low level ofrisk that noncompliance with the applicable requirements of laws, regulations, contracts and grants caused by error or fraud that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, the reportable condition noted above is also considered to be a material weakness.
2004SA-65

This report is intended solely for the information and use ofthe management, members ofthe Irwin County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~w::J~ Russell W. Hinton State Auditor
RWH:as 2004SA-65

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

IRWIN COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6771-03-01 FS-6771-03-02

Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-6771-03-01

Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

SPECIAL TESTS AND PROVISIONS Fiscal Requirements of School-wide Program Not Fully Implemented Finding Control Number: FA-6771-03-01

The Irwin County Board ofEducation has put procedures in place where other local, state and Federal funds are pooled together to support the Title I School-wide program for the program year fiscal year 2005.

Auditor's Note: The School District has implemented changes to resolve this finding in fiscal year 2005 and this finding will be shown as resolved in the fiscal year 2005 audit report.

SECTION IV FINDINGS AND QUESTIONED COSTS

IRWIN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2004
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the Irwin County Board of Education's financial statements was unqualified.
2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Irwin County Board of Education disclosed a financial statement reportable condition related to the following control categories.
Expenditures/Liabilities/Disbursements Revenues/Receivables/Receipts
The reportable condition described above is considered to be a material weakness.
3. Noncompliance Material to the Financial Statements The audit ofthe Irwin County Board ofEducation disclosed no instances ofnoncompliance that were deemed to be material to the financial statements.
4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Irwin County Board ofEducation disclosed a reportable condition in internal control over major programs for the following compliance requirement.
Matching, Level of Effort and Earmarking
The reportable condition described above is considered to be a material weakness.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Irwin County Board of Education's report on compliance with requirements applicable to major programs was qualified.
6. Audit Findings Required to be Reported by Section .5 lO(a) of 0MB Circular A-133 The Irwin County Board of Education's audit disclosed an audit finding required to be reported by section .51 0(a) of 0MB Circular A-133. This audit finding is included in section IV of this report.
7. Major Program The Federal award audited as a major program is as follows: 84.352 School Renovation - Schools
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.
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IRWIN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2004
I SUMMARY OF AUDITOR'S RESULTS
9. Low Risk Auditee The Irwin County Board of Education qualified as a low risk auditee as defined by Section .530 ofOMB Circular A-133.
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Reimbursement Requests Not Supported by Adequate Documentation Reportable Condition - Material Weakness Questioned Costs: $70,366 Finding Control Number: FS-6771-04-01
Our examination of the School District's Capital Projects Fund for the year ended June 30, 2004, revealed an accounts receivable from the Georgia State Financing and Investment Commission (GSFIC) Low Wealth Capital Outlay Funds, Project 04LW-677-040, in the amount of$70,366 which appears to have been supported by altered invoices involving e-rate expenditures and incomplete documentation supporting other expenditures.
This condition occurred because management did not exercise proper judgment when submitting documentation supporting allowable expenditures for Low Wealth Capital Outlay Funds. The School District should implement procedures to ensure proper expenditure documentation is submitted to support reimbursements under approved grant awards. In addition, the School District should contact the Georgia Department ofEducation's Facilities Service Unit and provide additional documentation to support expenditures of Low Wealth Capital Outlay Funds.
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
MATCHING, LEVEL OF EFFORT AND EARMARKING Failure to Meet Supplement, Not Supplant, Requirements Reportable Condition - Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education Amount: $75,617 Finding Control Number: FA-6771-04-01
Our examination of the School Renovation Grants program (CFDA 84.352) revealed the School District did use School Renovation Grants funds to supplant State, local and other funds. 34 CFR section 300.230 requires that School Renovation Grants funds be used to supplement State, local and
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IRWIN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2004
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
MATCHING, LEVEL OF EFFORT AND EARMARKING Failure to Meet Supplement, Not Supplant, Requirements Reportable Condition - Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education Amount: $75,617 Finding Control Number: FA-6771-04-01
other Federal funds and not to supplant these funds. In addition, provisions of the Georgia Department ofEducation (GDOE) approved application state that funds are to be used to supplement and not supplant state and local funds. The following deficiencies were noted in relation to the School Renovation Grants program:
School Renovation Grants funds were used to pay for personnel salaries and benefits for positions not included in the program budget. This included the salary and benefits ofa school psychologist and two paraprofessionals.
The School District used School Renovation Grants funds to pay for salaries and benefits for two teaching positions which were funded in the prior year and subsequent to the grant period with state and local funds. The School District initially paid salaries and benefits for two teaching positions from September 2003 through June 2004. Upon becoming aware that School Renovation Grants funds could not be expended past December 31, 2003, a journal entry was executed to transfer expenditures from January 2004 through June 2004 to other state and local funding sources.
This situation occurred because management failed to follow requirements set forth by 34 CFR section 300.230 of Supplement, not Supplant. The School District should implement procedures to ensure program expenditures from Federal funds meet the Supplement, not Supplant, requirement as outlined in 34 CFR section 300.230. The Georgia Department of Education should review this matter to determine if a refund is appropriate.
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SECTIONV MANAGEMENT'S RESPONSES

IRWIN COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2004
Finding Control Number: FS-6771-04-01
The Irwin County Board of Education does not concur with this finding.
The Georgia State Financing and Investment Commission (GSFIC) Low Wealth Capital Outlay Funds, Project 04LW-677-040 expenditure for the Irwin County Board of Education portion ofthe network cabling project totaling $131,400 was approved by the GSFIC in the amount of$26,280. Additionally, the Georgia State Financing and Investment Commission (GSFIC) Low Wealth Capital Outlay Funds, Project 04LW-677-040 expenditure for the Irwin County Board of Education in the area of upgrade/enhancement of electrical to support technology was approved by the Georgia Department of Education Facilities Services Unit in the amount of $44,086 based on submitted invoices to the GSFIC.
With the expenditure for network cabling ($26,280) and electrical upgrade/enhancement to support technology ($44,086) approved in the application, the total expenditure approvals of$70,366 met the award amount and provisions ofthe application. (Reference Georgia State Financing and Investment Commission (GSFIC) Low Wealth Capital Outlay Funds, Project 04LW-677-040.)
In summary, the application was amended and approved by the Georgia Department of Education Facilities Services Unit to include expenditures in excess of$70,366. There were no altered invoices involving e-rate expenditures rather multiple documentation of the invoicing process to support erate and GSFIC Low Wealth Capital Outlay Funds, Project 04LW-677-040 expenditures. Any misconstruction resulted in excess documentation. The School District for this project has simplified documentation process, clarified the application, and received all funding with GSFIC. Therefore, the finding issued does not apply. This finding has already been resolved and requires no additional action.
Finding Control Number: FA-6771-04-01
The Irwin County Board of Education does not concur with this finding.
The Irwin County Board of Education proceeded with the expenditures and classification of expenditures under the direction of the Georgia Department of Education.
Additionally, the definition of supplement is to add to or augment something that currently exists while supplant is defined as taking the place of something (Attorney General's Statement on Supplementation vs. SupplantationAdvisory Opinion 01-01). The expenditures for the IDEA grant were used in accordance with the objectives ofthe grant and furthermore added to and/or augmented an existing program. Therefore, the Irwin County Board of Education did use School Renovation Grants funds to supplement State, local and other funds in accordance with 34 CFR Section 300.230 et al.
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IRWIN COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2004
Finding Control Number: FA-6771-04-01
There is extensive documentation including financial records (fiscal year 2003), Board ofEducation minutes (March 10, 2003 and March 12, 2003), position non-renewal (March 6, 2003), and related evidence that align with the budget and objectives of the grant. Furthermore, evidence exists that indicate that the noted positions in question existed the previous year; however, two of those positions were not renewed for the fiscal year 2004 year. The grant award allowed the renewal of positions in question. Additionally, latitude was granted by the GDOE to include paraprofessionals (GDOE e-mail March 23, 2005).
The contract date (December 31, 2003) and expenditure date (June 30, 2004) were issued by the Georgia Department ofEducation (GDOE) in accordance with the operation ofthe grant and varied in the evidence. The GDOE obtained permission from the United States Department of Education for the grant dates. During the implementation of the grant, the GDOE was instructed that the expenditure date and contract date for disbursement of salaries were one and the same (EDGAR). Evidence of support is held by the GDOE. Upon the direction of the GDOE and approved in a 42 page fax of evidence, the expenditures were corrected as directed.
Evidence includes documents demonstrating expenditures applicable to the funding sources by which the IDEA grant was implemented. Evidence was presented to the Georgia Department of Audits and was not addressed.
The Irwin County Board ofEducation complied with all ofthe guidelines and requirements set forth by the Georgia Department of Education.
The Irwin County Board of Education has been in contact with the GDOE concerning this audit finding disclosure and continues to follow their guidance as the corrective action component.
Contact Person: Dr. Troy Davis, Superintendent Phone: (229) 468-7485 Fax Number (229) 468-7220 E-mail Address: tdavis@irwin.kl2.ga.us
Auditor's Reply to Management's Response:
Documentation revealing that Renovation funds were used to support salary ofpersonnel previously and currently funded with local, QBE or Title VI-B funds incurred prior to December 31, 2003 to meet EDGAR was presented in detail to the Irwin County Board of Education Superintendent on April 24, 2005. In our view, the use of Renovation program funds in this manner clearly was in nonconformity with supplement versus supplant requirements and 34 CFR 300.230. The Superintendent offered no rebuttal to our conclusions when presented to him at the April 24, 2005 meeting. Furthermore, we believe the approval ofparaprofessional positions for funding under this grant subsequent to its conclusion is unacceptable.
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