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JEFFERSON COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS - Page SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY JNFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AW ARDS EXHIBITS GENERAL-PURPOSE FINANCIAL STATEMENTS COMBINED STATEMENTS-OVERVIEW A COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP 2 B COMBJNED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES JN FUND BALANCES ALL GOVERNMENTAL FUND TYPES 4 C COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES JN FUND BALANCES - BUDGET AND ACTUAL (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS 6 D NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS 7 ADDITIONAL FINANCIAL INFORMATION COMBINJNG AND INDIVIDUAL FUND STATEMENTS SPECIAL REVENUE FUND E COMBINING BALANCE SHEET 20 F COMBlNING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES lN FUND BALANCES 22 CAPITAL PROJECTS FUND G COMBlNING BALANCE SHEET 24 H COMBINlNG STATEMENT OF REVENUES, EXPENDITURES AND CHANGES lN FUND BALANCES 26 DEBT SERVICE FUND I COMBlNING BALANCE SHEET 28 J COMBlNING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES lN FUND BALANCES 29 K FIDUCIARY FUND TYPE STATEMENT OF CHANGES lN ASSETS AND LIABILITIES AGENCY FUND 30 JEFFERSON COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL ADDITIONAL FINANCIAL INFORMATION SCHEDULES I SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 31 2 SCHEDULE OF STATE REVENUE 33 3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 35 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) 4 BY PROGRAM 36 5 BY SITE 37 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 SECTION 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 SECTION I FINANCIAL RUSSELL W. HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, SW Suite 214 Atlanta, Georgia 30334-8400 August 11, 2003 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Jefferson County Board of Education fNDEPENDENT AUDITOR'S COMBfNED REPORT ON GENERAL-PURPOSE FfNANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying general-purpose financial statements of the Jefferson County Board of Education, as of and for the year ended June 30, 2002, as listed in the table of contents. These general-purpose financial statements are the responsibility of the Jefferson County Board of Education's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in the notes to the general-purpose financial statements, the Board of Education's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows: 2002ARL-13 The general-purpose financial statements of the Board of Education did not contain a General Fixed Assets Account Group to account for property and equipment owned by the Board of Education which should be included to conform to generally accepted accounting principles. School activity accounts maintained at the individual schools are not included in the general-purpose financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general-purpose financial statements. The Board of Education did not recognize as expenditures, in the year ended June 30, 2002, a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 2002. Also funds received, subsequent to June 30, 2002, from the Georgia Department of Education for the State's share of these unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2001, were improperly recorded in the year ended June 30, 2002. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed. The aggregate effects on the general-purpose financial statements of these variances or omissions have not been determined, but are believed to be material. In our opinion, except for the effects on the general-purpose financial statements of the matters referred to in the preceding paragraph, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position of the Jefferson County Board of Education as ofJune 30, 2002, and the results of its operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated August 11, 2003, on our consideration of the Jefferson County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements of the Jefferson County Board of Education taken as a whole. The accompanying combining and individual fund statements (Exhibits E through K) and the financial schedules (Schedules 1 through 5), which includes the Schedule ofExpenditures ofFederal 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 ofthe general-purpose financial statements. Such information has been subjected to the 2002ARL-13 auditing procedures applied in the audit of the general-purpose financial statements and in our opinion, except for the effects of the matters referred to in the third paragraph, such information is fairly stated, in all material respects, in relation to the general-purpose financial statements taken as a whole. A copy of this report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated Section 506-24. Respectfully submitted, RWH:as 2002ARL-13 JEFFERSON COUNTY BOARD OF EDUCATION JEFFERSON COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP JUNE 30. 2002 ASSETS Cash and Cash Equivalents Investments Accounts Receivable lnventones Food Donated Commod1t1es Purchased Food Amount Available m Debt Service Fund Amount to be Provided m Future Years For Payment of Bond Debt GENERAL FUND GOVERNMENTAL FUND TYPES SPECIAL CAPITAL REVENUE PROJECTS FUND FUND $ 672,261 86 $ 1,453,466 11 $ 4,090,366 96 5,028,396 28 203,424 46 224,50003 290,296 77 14,082 30 8,885 00 Total Assets $ 4,293,791 42 $ 919,729 19 $ 6,772,159 16 LIABILITIES AND FUND EQUITY LIABILITIES Cash Overdraft Accounts Payable Salanes Payable Expired Grant Balances Payable Deferred Revenue Funds Held for Others General Obhgaton Bonds Payable Total Llab1ht1es FUND EQUITY Fund Balances Reserved For Bus Replacement Funds For Debt Service For Inventories Food Donated Commodrt1es Purchased Food For Purpose of Bond Issue For SPLOST Protects Unreserved Undesignated Total Fund Equity Total L1ab1lrt1es and Fund Equity $ 255,281 18 19,428 03 $ 66,613 51 284,638 08 7,228 81 13.183 00 9,358 42 $ 281,938 02 $ 373,793 01 $ 1,151 00 $ 14,082 30 8,885 00 $ 5,039,920 67 1,555,975 72 4 010,702 40 5221968 88 176,262 77 $ 4,011,853 40 $ 545,936 18 $ 6,772,159 16 $ 429379142 $ 919,72919 $ 6,772,15916 The notes to the general-purpose financial statements are an integral part of this statement - 2- EXHIBIT"A" DEBT SERVICE FUND $ 474,806 02 FIDUCIARY FUND TYPE AGENCY FUND 159 39 $ 2,027 60 ACCOUNT GROUP GENERAL LONG-TERM DEBT TOTALS (Memorandum Onl~l JUNE 30, 2002 JUNE 30, 2001 $ 2,600,533 99 $ 2,350,251 28 9,118,763 24 4,365,393 11 720,408 25 682,615 98 $ 474,965 41 9,895,034 59 14,082 30 8,885 00 474,965 41 12,44241 9,308 18 452,944 50 9,895,034 59 5,912,055 50 $ 474,965 41 $ 2,027 60 $ 10,370,000 00 $ 22,832,672 78 $ 13,785,010 96 $ 2,027 60 $ 257,308 78 $ 469,366 77 86,041 54 150,041 53 284,638 08 270,404 68 20,411 81 173,945 63 9,358 42 15,717 94 4,007 38 $ 10,370,000 00 10,370,000 00 6,365,000 00 $ 2,027 60 $ 10,370,000 00 $ 11,027,758 63 $ 7,448,483 93 $ 474,965 41 0 00 $ 474,965 41 $ 1,15100 474,965 41 $ 452,944 50 14,082 30 8,885 00 5,039,920 67 1,555,975 72 12,44241 9,308 18 3,939 73 1,369,727 24 4,709,934 05 4,488,164 97 $ 11,804,914 15 $ 6,336,527 03 $ 474 965 41 $ 2 027 60 $ 10,370,000 00 $ 22,832,672 78 $ 13,785,010 96 -3- JEFFERSON COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30 2002 REVENUES State Funds Federal Funds Taxes Other Funds Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General AdmImstratIon School AdmmIstratIon Business AdmImstrat1on Maintenance and Operation of Plant Student Transportation SeMces Central Support Services Other Support Services Food Services Operation Capital Outlay Debt Service PnncIpal Interest Paying Agent Fees Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES Proceeds from General Obligation Bonds Par Value Excess of Revenues and Other Financing Sources over (under) Expenditures FUND BALANCE JULY 1 Food Inventory - Net Change in Penod Donated Commod1hes Purchased Food GENERAL FUND SPECIAL REVENUE FUND $ 15.470,970 10 $ 46,102 14 4,212,587 85 192,148 20 $ 19,921,808 29 $ 816,066 72 4,129,329 80 259,496 33 5,204,892 85 $ 13,370,195 97 $ 2,457,772 92 545,34346 352,501 15 475,215 77 438,669 55 1,341,064 24 204,445 35 1,840,507 40 1,084,701 65 86,921 73 342 82 87864 227,992 25 272,032 47 601 32 186,613 90 10,364 92 13,732 85 47,92064 29998 225,507 58 1,722,602 17 $ 19,740,787 73 $ $ 181,020 56 $ 5,165,441 00 39,451 85 $ 181,020 56 $ 3,830,832 84 39,451 85 505,267 62 1,639 89 -423 18 FUND BALANCE JUNE 30 $ 4,011,853 40 $ =====54==5==,9=36===-18.., The notes to the general-purpose financial statements are an integral part of this statement -4- EXHIBIT"B" CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTALS (Memorandum Only) YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 16,287,036 82 $ 16,031,00610 4,175,431 94 3,756,494 14 $ 189,597 15 $ 1,498,466 09 5,900,651 09 5,797,056 66 79,314 79 22,648 72 553,608 04 787,675 69 $ 268,911 94 $ 1,521,114 81 $ 26,916,727 89 $ 26,372,232 59 $ 15,827,968 89 $ 15,033,117 79 $ 105,200 00 19,415 00 773,335 71 624,533 62 475,817 09 625,283 45 1,351,429 16 309,645 35 1,854,240 25 1,132,622 29 87,221 71 225,850 40 1,723,480 81 19,415 00 763,74110 552,478 65 485,813 12 787,711 60 1,336,383 96 157,455 04 1,974,519 91 1,169,851 63 6,246 60 90,817 22 1,654,272 62 $ 1,195,000 00 422,233 75 1,480 00 1,195,000 00 422,233 75 1,480 00 1,170,000 00 353,863 75 1,445 00 $ 124 615 00 $ 1,618,713 75 $ 26,649,557 48 $ 25,537,717 99 $ 144,296 94 $ -97,598 94 $ 267,170 41 $ 834,514 60 5,080,380 15 119,61985 5,200,000 00 $ 5,224,677 09 $ 1,547,482 07 22,020 91 $ 452,944 50 5,467.170 41 $ 6,336,527 03 834,514.60 5,511,496 25 1,639 89 -423 18 -5,383 50 -4, 100 32 $ 6,772,159 16 $ 474,96541 $ 11,804,91415 $ 6,336,527 03 -5 - JEFFERSON COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - !NON-GAAP BASIS! GENERAL AND SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30 2002 EXHIBIT "C" GENERAL FUND BUDGET ACTUAL REVENUES State Funds Federal Funds Taxes Other Funds $ 14,866,692 44 $ 15,470,970 10 52,000 00 46,102 14 3,920,000 00 4,212,587 85 250,000 00 19214820 Total Revenues EXPENDITURES $ 19,088,692 44 $ 19,921,808 29 Current lnstrucllon Support Services Pupil Services Improvement of lnstrucilonal Services Educational Media Services General Adm1nIstrat1on School Adm1rnstrallon Business Admm1strabon Maintenance and Operabon of Plant Student Transportabon Services Central Support Services Other Support Services Food Services Operation Capital Outlay $ 13,380,349 85 $ 13,370,19597 470,710 00 345,152 87 471,327 00 387,953 00 1,368,10000 197,700 00 1,786,500 00 1,099,100 00 85,000 00 4,000 00 50,000 00 545,343 46 352,501 15 475,215 77 438,669 55 1,341,064 24 204,445 35 1,840,507 40 1,084,701 65 86,921 73 34282 87864 Total Expenditures $ 19,645,892 72 $ 19,740,787 73 Excess of Revenues over (under) Expenditures FUND BALANCE JULY 1 2001 $ -557,200 28 $ 181,020 56 19,663,968 88 3,830,832 84 Food Inventory - Net Change in Penod Donated Commod1t1es Purchased Food FUND BALANCE JUNE 30 2002 $ 19,106,76860 $ 4,011,853 40 SPECIAL REVENUE FUND BUDGET ACTUAL $ 1,444,053 51 $ 816,066 72 4,392,988 08 4,129,329 80 195 414 00 259,496 33 $ 6,032,455 59 $ 5,204,892 85 $ 2,946,196 50 $ 2,457,772 92 287,121 54 336,763 58 2,450 00 243,339 11 14,337 00 227,992 25 272,032 47 601 32 186,613 90 10,364 92 21,393 10 61,459 00 281,410 00 1,781,731 60 13,732 85 47,920 64 299 98 225,507 58 1,722,602 17 $ 5,976,201 43 $ 5,165,441 00 $ 56,254 16 $ 39,451 85 -371,738 93 505,267 62 1,639 89 -423 18 $ -315,484 77 $ 545,936 18 The notes to the general-purpose finanaal statements are an integral part of this statement -6- JEFFERSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The Jefferson County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The School District is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity. FUND ACCOUNTING The School District uses funds and an account group to report on its financial position and the results 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. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources. General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the School District. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types. Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general-purpose financial statements. The general-purpose financial statements account for all State, Federal, Taxes and Other funds under control of the School District, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows: GOVERNMENTAL FUND TYPES - are used to account for all or most of the School District's educational activities. Governmental Fund Types include: GENERAL FUND - the fund used to account for all financial resources of the School District except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education. -7- JEFFERSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and from the Federal government to accomplish specific educational objectives. CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities. DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees. FIDUCIARY FUND TYPE - the fund used to account for assets held by a government unit in a trustee capacity or as an agent for individuals, private organizations, other government units and/or other funds. This fund includes: AGENCY FUND - the fund used to account for assets held in a fiduciary capacity for other funds, governments, or individuals. ACCOUNT GROUP GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debt outstanding. BASIS OF ACCOUNTING The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements ofthese funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources. Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group. Agency funds are purely custodial in nature and do not involve measurement ofresults ofoperations. Governmental funds are accounted for using the modified accrual basis ofaccounting under which: Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of -8- JEFFERSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES the current period. The School District considers receivables collected within sixty days after yearend to be available. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, local option sales taxes, intergovernmental grants and donations. Revenue for property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year the resources are received or susceptible to accrual. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Expenditures are generally recognized when the related fund liability is incurred. A departure from the above definitions is the accounting treatment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 2002, a substantial number of personnel of the School District were employed for a one hundred and ninety day period beginning in August 2001 and ending in early June 2002. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 200 I and ending in August 2002. State grants to fund the State's share of these contracts were disbursed from the Georgia Department of Education to the School District in the same twelve months. As of June 30, 2002, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 2002, had not been made. Payments for these two months were made and recorded as expenditures by the School District subsequent to June 30, 2002. Also, the State's portion of the compensation paid in July and August 2002 was received and recorded as revenue in the fiscal year subsequent to June 30, 2002. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2001. were recorded in the year ended June 30, 2002. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed. Agency funds are accounted for using the modified accrual basis ofaccounting in recognizing assets and liabilities. BUDGET The Jefferson County Board of Education's budget is a complete financial plan for the School District's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the fund level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles. The budget process begins when the School District's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised -9- JEFFERSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES at least once in a newspaper of general circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end. CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand. demand deposits and short-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 of deposit) 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 and in selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and - 10 - JEFFERSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (8) Obligations of other political subdivisions of the State of Georgia. RECEIVABLES Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general-purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The Jefferson County Board of Commissioners fixed the property tax levy for the 2001 tax digest year (calendar year) on October 29. 2001 (levy date). Taxes were due on January 25, 2002 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2001 tax digest are reported as revenue in fiscal year 2002. The Jefferson County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance oftaxes collected to the School District. Property tax revenues during the fiscal year ended June 30, 2002 for maintenance and operations amounted to $4,184,605.67 and for school bonds amounted to $1,432.34. The tax millage rate levied for the 2001 tax year (calendar year) for the Jefferson County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value): School Operations 12.88 mills SALES TAXES Special Purpose Local Option Sales Tax revenue during the year amounted to $1,686,630.90 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. INVENTORIES FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets. - 11 - --- ---------------- JEFFERSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES COMPENSATED ABSENCES Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion of this obligation as this amount is deemed immaterial to the general-purpose financial statements. Additionally, the dollar value of accumulated compensated absences at June 30, which will be payable from future resources has not been recorded in the General Long-Term Debt Account Group as this liability is also deemed to be immaterial to the fair presentation ofthese financial statements. GENERAL OBLIGATION BONDS The School District issues general obligation bonds to provide funds for the acquisition and construction ofmajor capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit ofthe government. The outstanding amount of these bonds is recorded in the General Long-Term Debt Account Group. INTERFUND TRANSACTIONS The School District has the following type of interfund transactions: Reimbursements of expenditures initially made from a fund that are properly applicable to another fund are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed. MEMORANDUM ONLY -TOTAL COLUMNS Total columns on the general-purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Note 2: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than - 12 - JEFFERSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 2: DEPOSITS AND INVESTMENTS 110 percent of the public funds being secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts. Acceptable security for deposits consists of any one of or any combination of the following: ( 1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (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, 2002, the bank balances were $3,863,838.03. The amounts ofthe total bank balances are classified into three categories of credit risk: - 13 - JEFFERSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 2: DEPOSITS AND INVESTMENTS Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name. Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name. Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.) The School District's deposits are classified by risk category at June 30, 2002, as follows: Risk Category Bank Balance 1 $ 739,167.42 2 1,875,820.58 3 1,248,850.03 Total $ 3,863,838.03 CATEGORIZATION OF INVESTMENTS At June 30, 2002, the carrying value of the School District's total investments was $9,118,763.24 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State ofGeorgia, Office ofTreasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows: The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the SEC as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to be a Rule 2a7 like pool. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($ 1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value ofthe shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund. - 14 - JEFFERSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FrNANCIAL STATEMENTS JUNE 30, 2002 Note 2: DEPOSITS AND INVESTMENTS Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U.S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2002, was 0.12 years. The average investment duration for Fund 6 on June 30, 2002, was 0.75 years. Note 3: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories Note 4: RISK MANAGEMENT The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction 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 of loss associated with torts, assets, errors or omissions and acts ofGod. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years. The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenditure and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: Beginning of Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability 2001 2002 $ 3,538.26 $ 9,172.39 $ 4,816.75 $ 7,893.90 $ 7,893.90 $ 0.00 $ 7,893.90 $ 0.00 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 United States Fidelity and Guaranty Company to provide coverage for potential losses sustained by the Trust in excess of $350,000.00 loss per occurrence, up to $2,000,000.00. - 15 - JEFFERSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 4: RISK MANAGEMENT The School District has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount Superintendent Each Employee $ 30,000.00 $ 10,000.00 Note 5: OPERATING LEASES Jefferson County Board of Education has entered into various leases as lessee for office equipment. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2002, amounted to $41,832.00. Future minimum lease payments for these leases are as follows: Year Ending Amount 2003 2004 $ 21,224.00 910.00 Total $ 22,134.00 Note 6: GENERAL LONG-TERM DEBT GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: Purpose Interest Rates Amount General Government - Series 1993 General Government - Series 1997 General Government - Series 2001 3. 10% - 5.45% 4.625% - 4.80% 3.60% $ 4,870,000.00 300,000.00 5.200,000.00 $10,370,000.00 The changes in General Long-Term Debt during the fiscal year ended June 30, 2002, were as follows: - 16 - JEFFERSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 6: GENERAL LONG-TERM DEBT General Obligation Bonds Balance July 1. 2001 $ 6,365,000.00 Additions G.O. Bonds 5,200,000.00 Deductions Debt Retired 1,195,000.00 Balance June 30, 2002 $10,370,000.00 At June 30, 2002, payments due by fiscal year which includes principal and interest for these items are as follows: Fiscal Year Ended June 30 General Obligation Bonds 2003 2004 2005 2006 2007 2008 - 2012 2013-2017 2018 - 2019 $ 528,162.50 1,207,537.50 1,512,735.00 1,705,513.75 1,864,451.25 3,575,212.50 2,302,868.75 933,913.75 Total Principal and Interest $13,630,32.5.....Q_Q Note 7: ON-BEHALF PAYMENTS The School District has recognized revenues and expenditures in the amount of $270,556.98 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 $228,926.98 - 17 - JEFFERSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 7: 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 $41,630.00 Note 8: CONTINGENT LIABILITIES Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. Note 9: ACCUMULATED EMPLOYEES' LEAVE The School District's administrative staff and other full-time employees earn .83 days per month of annual leave and 11 month employees earn .45 days per month. Annual leave may be accumulated to a maximum of20 days. When an employee retires from the Jefferson County Board ofEducation, that employee shall be paid, at their current rate of pay, for up to twenty (20) days of accumulated leave. See Note 1 - Compensated Absences Note 10: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school districts are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes mqnthly 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: - I8 - JEFFERSON COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 10: RETIREMENT PLANS Fiscal Year 2002 2001 2000 Percentage Contributed 100% 100% 100% Required Contribution $ 1,256,078.44 $1,437,433.90 $ 1,435,334.23 - 19 - JEFFERSON COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 2002 ASSETS Cash and Cash Equivalents Accounts Receivable lnventones Food Donated Commodities Purchased Food SCHOOL FOOD SERVICES FUND LOTTERY PROGRAMS $ 590,886 28 $ 76,544 28 6,001.20 14,082 30 8,885.00 Total Assets LIABILITIES AND FUND EQUITY LIABILITIES Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Deferred Revenue Total Liabilities FUND EQUITY Fund Balances Reserved For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated Total Fund Equity $ 619,854 78 $ ===7=6,5=44=2=8 $ 6,415.41 $ 17,243 84 69,832 30 59,30044 $ 76,247 71 $ 76,544.28 $ 14,082.30 8,885 00 520,639.77 $ $ 543,607 07 $ 000 000 Total Liabilities and Fund Equity See notes to the general-purpose financial statements - 20 - $ 619,854 78 $ ======76=,=5=44=-2=8= EXHIBIT"E" FEDERAL PROGRAMS OTHER PROGRAMS TOTALS JUNE 30, 2002 JUNE 30, 2001 $ 4,601 03 $ 230 27 $ 672,261 86 $ 716,958 71 218,498 83 224,500.03 192,098 22 14,082.30 8,885 00 12,442 41 9,308.18 $ 223,099 86 $ 230 27 $ 919,72919 $ 930,807.52 ============= $ 42,954.26 155,505 34 13,183 00 9,358 42 $ 221,001 02 $ 5,417.37 $ 66,613 51 64,120.34 284,638 08 270,40468 13,18300 69,879 57 9,358 42 15,717.94 $ 373,793 01 $ 425,539 90 $ 14,082 30 $ 12,442 41 8,885 00 9,308 18 $ 2,098.84 $ _ _ _....;;2...;..30~27_ 522,968 88 483,517.03 $ 2,098.84 $ 230.27 $ 545,936 18 $ _ _50:....::...::.5=,2c::.67.:........::..:62~ $ 223,099.86 $ 230.27 $ 919,729 19 $ ==9=3=0=,8=0=7=52= - 21 - JEFFERSON COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2002 REVENUES State Funds Federal Funds Other Funds Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Maintenance and Operation of Plant Student Transportation Services Central Support SeN1ces Other Support Services Food Services Operation Total Expenditures Excess of Revenues over (under) Expenditures FUND BALANCE JULY 1 Food Inventory - Net Change in Period Donated Commod1t1es Purchased Food FUND BALANCE JUNE 30 SCHOOL FOOD SERVICES FUND LOTTERY PROGRAMS $ 130,401 85 $ 1,440,835.54 189,801 30 $ 1,761,038 69 $ 685,664.87 685,664 87 $ $ 113.40 1,722,463 93 $ 1,722,577.33 $ $ 38,461.36 $ 503,929 00 527,086.37 61,633 64 4,169.45 34,498 15 13,171 87 14,796 36 30,309.03 685,664 87 0.00 000 1,639 89 -423 18 $ 543,607 07 $ =====0=00= See notes to the general-purpose financial statements. - 22 - EXHIBIT"F" FEDERAL PROGRAMS OTHER PROGRAMS TOTALS YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 2,688,494.26 67,695.03 $ $ 2,756,189.29 $ $ 2,000 00 2,000.00 $ 816,066 72 $ 4,129,329.80 259,496 33 5,204,892 85 $ 887,724 84 3,709,546.72 253,759.60 4,851,031 16 $ 1,930,686 55 164,588.88 $ 267,863 02 601 32 152,001.86 10,364.92 248.11 33,124 28 29998 195,198.55 138 24 $ 2,755,115 71 $ $ 1,073.58 $ 1,025 26 $ 1,769.73 049 312.87 2,083 09 $ -83.09 $ 313.36 2,457,772.92 $ 227,992 25 272,032.47 601.32 186,613.90 10,364.92 13,732 85 47,920 64 29998 225,507.58 1,722,602.17 5,165,441.00 $ 39,451.85 $ 505,267.62 2,314,736 32 254,233.86 240,787 50 848.91 190,319.80 5,186.10 51,416.22 34,664 97 90,713 22 1,653,565 17 4,836,472.07 14,559.09 500,192.35 1,639 89 -423 18 -5,383 50 -4,100 32 $ 2,098.84 $====2=3=0.=27= $ 545,936 18 $ 505,267.62 - 23 - JEFFERSON COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 2002 ASSETS Cash and Cash Equivalents Investments Accounts Receivable Due from Other Funds Total Assets LIABILITIES AND FUND EQUITY LIABILITIES Due to Other Funds FUND EQUITY Fund Balances Reserved For Purpose of Bond Issue For SPLOST Projects Unreserved Undes1gnated Total Fund Equity Total Llabihties and Fund Equity REGULAR BOND PROCEEDS $ 176,262 77 $ 11,524 39 5,028,396 28 $ 176,262 77 $ 5,039,920 67 $ 5,039,920 67 $ _ _1_7_6_.2__62_77_ $ 176,262.77 $ 0.00 5,039,920 67 $ 176,262 77 $ 5,039,920 67 See notes to the general-purpose finanetal statements - 24- EXHIBIT"G" SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS JUNE 30, 2002 JUNE 30, 2001 $ 1,265,678 95 $ 1,453,466 11 $ 1,186,209 29 5,028,396.28 57,672 22 290,296.77 290,296 77 303,600 56 100,000 00 $ 1,555,975.72 $ 6,772,159.16 $ 1,647,482.07 $ 100,000 00 $ 5,039,920 67 $ 3,939 73 $ 1,555,975.72 1,555,975.72 1,369,727.24 000 176,262 77 173,81510 $ 1,555,975.72 $ 6,772,159.16 $ 1,547,482.07 $ 1,555,97572 $ 6,772,159.16 $ 1,647,482.07 - 25 - JEFFERSON COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES CAPITAL PROJECTS FUND YEAR ENDED JUNE 30. 2002 REVENUES Taxes Other Funds Total Revenues EXPENDITURES Current Support Services Business Adm1mstrat1on Capital Outlay Building and Building Improvements Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES Proceeds from General Obligation Bonds Par Value Excess of Revenues and Other Financing Sources over (under) Expenditures FUND BALANCE JULY 1 FUND BALANCE JUNE 30 REGULAR BOND PROCEEDS $ 2,447.67 $ 60,815 79 $ 2,447.67 $ 60,815 79 $ 0.00 $ 105,200.00 15 00 $ 0.00 $ 105,215 00 $ 2,447 67 $ -44,399 21 5,080,380 15 $ 2,447 67 $ 5,035,980 94 173 81510 3,939 73 $ 176,262 77 $ 5,039,920 67 See notes to the general-purpose financial statements. - 26 - EXHIBIT"H" SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 189,597 15 $ 189,59715 $ 213,118.23 16,051 33 79,314 79 52,403 44 $ 205,648 48 $ 268,911.94 $ _ _2_6_5-,5_2_1._67_ $ $ _ _ _1_9,_,4_00_0_0_ $ 19,400 00 $ $ 186,248 48 $ 105,200 00 $ 0.00 19,415 00 124,615 00 $ _ _ _ _0_._00_ 144,296 94 $ 265,521 67 5,080,380.15 $ 186,248 48 $ 5,224,677.09 $ 265,521 67 1,369,727.24 1,547,482.07 1,281,960 40 $ 1,555,975 72 $ 6,772,15916 $ 1,547,482 07 - 27 - JEFFERSON COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET DEBT SERVICE FUND JUNE 30. 2002 EXHIBIT"!" ASSETS Cash and Cash Equivalents Accounts Receivable Total Assets FUND EQUITY Fund Balances Reserved For Debt Service Unreserved Undes,gnated Total Fund Equity PROPERTY TAXES FOR BOND DEBT SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS JUNE 30, 2002 JUNE 30, 2001 $ 462,098 24 $ 12,707 78 $ 474,806 02 $ 452,50065 159 39 159 39 443 85 $ 462,257 63 $ 12,707 78 $ 474,965 41 $ ==-4=52=,9=44=50= $ 462,257 63 $ 000 12,707 78 $ 000 474,96541 $ 000 452,944 50 000 $ 462,257 63 $ 12,707.78 $ 474,965 41 $ ====4=52=,9=4=4-5=0= See notes to the general-purpose finanaal statements - 28- JEFFERSON COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES DEBT SERVICE FUND YEAR ENDED JUNE 30. 2002 EXHIBIT "J" PROPERTY TAXES FOR BOND DEBT SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 REVENUES Taxes Other Funds $ 1,432 34 $ 1,497,033 75 $ 1,498,466 09 $ 1,526,431 03 22,090 51 558 21 22,648 72 23,856 55 Total Revenues $ 23,522 85 $ 1,497,591 96 $ 1,521,114 81 $ 1,550,287 58 EXPENDITURES Debt Service Principal Interest Paying Agent Fees $ 0 00 $ 1,195,000 00 $ 1,195,000 00 $ 1,170,000 00 422,233 75 422,233 75 353,863 75 1,480 00 1,480 00 144500 Total Expenditures $ 0 00 $ 1,618,713 75 $ 1,618,713 75 $ 1,525,308 75 Excess of Revenues over (under) Expenditures $ 23,522 85 $ -121, 121 79 $ -97,598 94 $ 24,978 83 OTHER FINANCING SOURCES Proceeds from General Obligation Bonds Par Value 119,619 85 119,619 85 Excess of Revenues and Other Financing Sources over (under) Expenditures $ 23,522 85 $ -1,501 94 $ 22,020 91 $ 24,978 83 FUND BALANCE JULY 1 438,734 78 14,209 72 452,944 50 427,965 67 FUND BALANCE JUNE 30 $ 462,257 63 $ 12,707 78 $ 474,965 41 $ 452,944 50 See notes to the general-purpose financial statements - 29- JEFFERSON COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FIDUCIARY FUND TYPE - AGENCY FUND YEAR ENDED JUNE 30, 2002 EXHIBIT"K" FAMILY CONNECTION ASSETS Accounts Receivable LIABILITIES Cash Overdraft Funds Held for Others BALANCE JULY 1, 2001 ADDITIONS DEDUCTIONS BALANCE JUNE 30, 2002 $ 12,065 85 $ 50,000.00 $ 60,038.25 $ ===-==2=,0=27=.6=0= $ 8,058.47 $ 50,000.00 $ 56,030.87 $ 4,007 38 4 007 38 2,027.60 000 $ 12,065.85 $ 50,000 00 $ 60,038.25 $ =====2,=02=7 =60= See notes to the general-purpose financial statements - 30 - JEFFERSON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2002 SCHEDULE "1" FUNDING AGENCY PROGRAM/GRANT CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD Agnculture, U S Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutntton Program Food Services School Breakfast Program Natrona! School Lunch Program Pass-Through From Office of School Readiness Food and Nutnllon Program Summer Food Service Program for Children 10 553 10 555 10559 NIA $ 315,842 37 (2) NIA 983,264 81 $ 1,594,005 81 (3) NIA 30,230 26 30,230 26 Total Child NutntJon Cluster $ 1,329,337 44 $ 1,624,236 07 Other Programs Pass-Through From Georgia Department of EducatJon Food and Nutnbon Program Food D1stnbutl0n Program (1) Pass-Through From Office of School Readiness Food and Nutnllon Program Child and Adult Care Food Program Total U S Department of Agnculture 10 550 10 558 NIA 98,227 86 98,227 86 NIA 13,270 24 !2! s 1,440,835 54 $ 1,722,463 93 Education, U S Department of Special Education Cluster Pass-Through From Georgia Department of EducatJon lnd1v1duals with D1sab1ht1es EducatJon Act Part B - Specllll EducatJon Capacity Building Improvement Grant Flow Through Preschool 84173 84 027 84173 NIA $ 11,879 00 $ NIA 475,063 03 NIA 45,539 93 11,879 00 475,063 03 45,539 93 Total Special Educallon Cluster $ 532,481 96 $ 532,481 96 Other Programs Direct 21st Century Community Leaming Centers Pass-Through From Georgia Department of EducatJon Elementary and Secondary Educallon Act Title I Accountability Grants Grants to Local Educallonal Agencies Trtlell Eisenhower Professional Development Title Ill Technology Literacy Challenge Fund Grants TltleVI Innovative Education Program Strategies Class Size Reduction Goals2000 State and Local Educabon Systemic Improvement Grants Safe and Drug-Free Schools and Communities Vocallonal Education - Basic Grants to States High School Program Basic Grant 84287 84 348 84 010 84 281 84 318 84298 84 340 84 276 84186 84 048 194,812 92 194,812 92 NIA 107,731 00 107,731 00 NIA 1,206,518 54 1,206,518 54 NIA 32,68598 32,685 98 NIA 128,000 00 128,000 00 NIA 36,269 99 36,269 99 NIA 176,296 05 176,296 05 NIA 49,850 00 49,850 00 NIA 13,158 18 13,15818 NIA 92,947 00 92,947 00 Total U S Department of Education $ 2,570,751 62 $ 2,570,751 62 - 31 - JEFFERSON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30. 2002 SCHEDULE "1" FUNDING AGENCY PROGRAM/GRANT CFDA NUMBER PASSTHROUGH ENTllY ID NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD Health and Human Services, U S Department of Direct Rural Health Outreach Program Pass-Through From Georgia Department of Human Resources Male Involvement Block Grants for Prevenbon and Treatment of Substance Abuse Grant-in-Aid 93 912 93 558 93.959 $ 40,492 64 $ NIA 30,000 00 N/A 47,250.00 40,492 64 30,000 00 47,250.00 Total U S Department of Health and Human Services $ 117,74264 $ 117,742 64 Defense, U S Department of Direct Department of the Navy R O T C Program $ 46,102 14 (4) Total Federal Financial AsStstance $ 4,175,431 94 $=-===4;,.;,4=10=,9=5=8=19= N/A = Not Available Notes to the Schedule of Expend]tures of Federal Awards (1) The amounts shown for the Food D1stnbullon Program represents the Federally assigned value of nonmonetary assistance for donated commod11tes received and/or consumed by the system dunng the current fiscal year (2) Expenditures for the Child and Adult Care Food Program and the School Breakfast Program were not maintained separately and are included in the 2002 National School Lunch Program (3) Expenditures for this program include State, and/or Other Funds Expenditures are not maintained by fund source (4) Expenditures on this program were not maintained by fund source MaJor Programs are 1denllfied by an asterisk (*) in front of the CFDA number The School D1stnct did not provide Federal Assistance to any Subrec1p,ent The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Jefferson County Board of Education and 1s presented on the modified acaual basis of accounting which 1s the basis of accounllng used in the presentallon of the general-purpose financial statements See notes to the general-purpose financial statements. - 32- JEFFERSON COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2002 SCHEDULE "2" AGENCY/FUNDING GRANTS Community Affairs, Georgia Department of Local Assistance Grants Educabon, Georgia Department of Quality Basic Educabon Direct lnstrucuonal Cost Kindergarten Program Kindergarten Program - Early Intervention Program Pnmary Grades (1-3) Program Primary Grades - Early lntervenllon (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early lntervenllon (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with D1sab1hbes Category II Category Ill Category IV Gifted Student - Category VI Remedial Education Program Alternative Education Program Media Center Program Staff and Professional Development 20 Days Add1t1onal lnstruebon Indirect Cost Categoncal Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Pnncipal Supplements Vocallonal Supervisors Mid-term AdJustment Hold-Harmless Education Equalization Funding Grant Food Services Vocational Education Other State Programs Apprenticeship Program Children's lntervenbon School Serv1ces-Medica1d Reimbursement Health Insurance Mentor Teachers Outdoor Classrooms Post Secondary Option- Spnng Preschool Handicapped Program Statewide Local Education Improvement 4-8 After School Program K-3 Reading Program Teachers' Retirement Lottery Programs Ass1st1ve Technology Computers in the Classroom Office of School Readiness Pre-Kindergarten Program Office of Treasury and Fiscal SeMces Public School Employees Retirement GOVERNMENTAL FUND TYPES SPECIAL GENERAL REVENUE FUND FUND TOTAL $ 40,000 00 $ 40,000 00 566,77800 260,449 00 1,461,486 00 821,666 00 900,281 00 369,141 00 1,791,015 00 1,395,538 00 644,429 00 397,860 00 680,056 00 114,043 00 79,379 00 70,967 00 138,772 00 301,047 00 60,242 00 93,226 00 2,023,275 00 536,280 00 157,954 00 20,000 00 82,638 00 14,301 00 27,853 00 211,467 00 1,125,100 00 $ 377,346 49 35,000 00 7,410 43 228,926 98 3,672 00 74645 39600 75,865 00 223,719 87 38,238 33 51,315 57 1,459 98 130,401 85 8,438 00 88,17500 589,051 87 4163000 566,778 00 260,449 00 1,461,486 00 821,666 00 900,281 00 369,141 00 1,791,01500 1,395,538 00 644,429 00 397,860 00 880,056 00 114,043 00 79,379 00 70,967 00 138,772 00 301,047 00 60,242 00 93,226 00 2,023,275 00 536,280 00 157,954 00 20,000 00 82,638 00 14 301 00 27.853 00 211,467 00 1,125,100 00 130,401 85 377,34649 35,000 00 7,410 43 228,926 98 3,672 00 746 45 39600 75,865 00 223,719 87 38,238 33 51,315 57 1,459 98 8,438 00 88,175 00 589,051 87 41,63000 See notes to the general-purpose financial statements $ 15 470 970 10 $ 816 066 72 $ 16,287,036 82 - 33 - JEFFERSON COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30 2002 SCHEDULE "3" PROJECT ORIGINAL ESTIMATED COST !1! CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR (3) AMOUNT EXPENDED IN PRIOR YEARS (3)!4) PROJECT STATUS LOUISVIiie Middle School - New heating and cooling equipment, renovabons to ex1sltng bu1ld1ng and wings and expanding, renovating and modifying exIstIng structures winng for computers, modernizing seventh grade restrooms and cafetena and resurfacmg the parking lot $ 1,636,536 00 $ 1,283,835 83 $ 1,283,835 83 Ongoing Wrens Middle School - Reroof Wing C, new healing and cooling equipment. renovations of Wing A, renovations of restrooms on Wings B and C, expansion, renovalton and modification of exIsltng structures, wmng for computers, new lights and ce1lIng In cafetena, painting and reroofing gymnasium 1,227,747 00 1,024,366 51 1,024,366 51 Ongoing Louisville Academy - Reroof existing buildings modernize the kitchen and cafetena, renovate existing wings, replace the telev1s1on d1stnbut1on system, construct a new physical education building, install wmng for computers, construct covered walkways, resurface paved areas and correct exIstIng drainage problems 1,166,981 00 825,390 06 825,390 06 Ongoing Caprtal expenditures related to the capital outlay pro1ects descnbed above 1nclud1ng removal of underground storage tanks and environmental clean up act1vItIes and purchase of related equipment 1,104,834 00 277,978 76 277,978 76 Ongoing Add1t1onally, all funds remaining after completion of these capital expendrtures plus interest earned will be used to retire existing bonded debt 2,154,925 00 5,949,703 75 $ 1,495,553 75 4,454,150 00 Ongoing To retire previously incurred general obhgalton debt of the School D1stnct 2,260,000 00 2,260,000 00 121,680 00 Ongoing Acqumng, constructing, and equipping renovations and improvements and other capital outlay proJects at Carver Elementary School, Louisville Academy, Louisville Middle School, Jefferson County High School, Wrens Elementary School, and Wrens Middle School and to purchase five new school buses 7,740,000 00 7,740,000 00 19,415 00 Ongoing $ 17,291,023 00 $ 19 361,274 91 $ 11636,648 75 $ 7,865t721 16 (1) The School D1stnct's ong1nal cost estimate as specified In the resolution calling for the ImposItIon of the Local Option Sales Tax (2) The School D1stnct's current estimate of total cost for the proJects Includes all cost from PIUJeCI incepllon to completion (3) The voters of Jefferson County approved the Impo51t10n of a 1% sales tax to fund the above prQJects Amounts expended for these proj8cts may include sales tax proceeds. state, local property taxes and/or other funds over the hfe of the proJects (4) In add11ton to the expendrtures shown above. the School D1stnct has incurred interest expense to proVJde advance funding for the above pro1ects as follows Pnor Years $ 670,547 92 See notes to the general-purpose financial statements - 35 - -------------------------- ------ -- --- JEFFERSON COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30. 2002 SCHEDULE "4" DESCRIPTION ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) ELIGIBLE QBE PROGRAM COSTS SALARIES OPERATIONS TOTAL Direct Instructional Programs Kindergarten Program $ Kindergarten Program-Early Intervention Program Pnmary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle School (6-8) Program Hrgh School General Education (9-12) Program Vocational Laboratory (9-12) Program Students wrth D1sab1hlles Category II Category 111 Category IV Gifted Student - Category VI Remedial Education Program Alternative Education Program 637,137 00 $ 292,782 00 1,642,914 00 923,667 00 1,012,041 00 849,462 97 $ 204,653 39 1,616,125 64 852,670 85 1,199,013 60 22,632 93 $ 5,16513 131,932 37 16,031 57 43,676 27 872,095 90 209,818 52 1,748,058 01 868,702 42 1,242,689 87 414,967 00 2,013,350 00 1,568,779 00 724,428 00 1,339,928 00 89,233 00 79,777 00 155,999 00 257,839 61 2,008,380 79 1,736,356 60 606,039 04 487,665 13 761,126 05 78,076 72 77,856 28 53,950 41 316,157 85 2,286 34 230,821 32 131,545 91 61,461 04 2,889 83 72,761 25 971 64 6,708 81 304 00 1,907 63 260,125 95 2,239,202 11 1,867,902 51 667,500 08 490,554 96 833,887 30 79,048 36 84,565 09 54,254 41 318,065 48 TOTAL DIRECT INSTRUCTIONAL PROGRAMS $ 10,895,002 00 $ 11,105,374 93 $ 731,096 04 $ 11,836,470 97 Media Center Program Staff and Professional Development 338,419 00 67,721 00 395,355_84 43,159 39 68,855 18 60,948 66 464,211 02 104,108 05 TOTAL QBE FORMULA FUNDS $ 11,301,142 00 $ 11,543,890 16 $ 860,899 88 $ 12,404,790 04 (1) Compnsed of State Funds plus Local Five Mill Share See notes to the general-purpose financial statements. - 36 - JEFFERSON COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30, 2002 SCHEDULE "5" SITE Jefferson County High School Lou1sv1lle Middle School Wrens Middle School Carver Elementary School Louisville Academy Wrens Elementary School Central Office (Alternative Education Program) TOTAL (1) Comprised of State Funds plus Local Five Mill Share. ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) ELIGIBLE QBE PROGRAM COSTS $ 2,963,497 00 $ 3,140,841 56 1,330,257 00 1,656,763 70 1,062,024.00 1,232,631 27 1,082,450 00 1,169,145 59 2, 124,039 00 2,252,583 63 2,176,736.00 2,380,205.24 155,999.00 4,299.98 $ 10,895,002 00 $ 11,836,470.97 See notes to the general-purpose financial statements. - 37 - SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS RUSSELi. W. HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 WJ~hmgton Street. S.W Suite 214 Atlanta, Georgia 30334-8400 August 11, 2003 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Jefferson County Board of Education REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladies and Gentlemen: We have audited the financial statements of Jefferson County Board of Education as of and for the year ended June 30, 2002, and have issued our report thereon dated August 11, 2003. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general-purpose financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether Jefferson County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered Jefferson County Board ofEducation's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal 2002YB-41 control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in ourjudgment, could adversely affect Jefferson 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 of Findings and Questioned Costs as item FS-6811-02-01. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we consider item FS-6811-02-01 to be a material weakness. This report is intended solely for the information and use of the management, members of the Jefferson County Board of Education, 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 submi:, -~~ RWH:as 2002YB-41 Ru ell W. Hinton State Auditor RUSSEi.i. W. HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Wa,;hmgton Street. S.W Suite 214 Atlant.i, Georg,.i 30334-8400 August 11. 2003 Honorable Sonny Perdue. Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Jefferson 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 Jefferson County Board of Education with the types of compliance requirements described in the U.S Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30. 2002. Jefferson County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Jefferson County Board of Education's management. Our responsibility is to express an opinion on Jefferson 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 Al 33, Audits of States, Local Governmenls, 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 Jefferson 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 detennination on Jefferson County Board of Education's compliance with those requirements. 2002SA-10 In our opinion, the Jefferson County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2002. Internal Control Over Compliance The management of Jefferson County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Jefferson 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. Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level of risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the management, members of the Jefferson County Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, RWH:as 2002SA-10 SECTION Ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS JEFFERSON COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 PRJOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-6811-00-01 FS-6811-01-01 FS-6811-01-02 Further Action Not Warranted Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses CORRECTIVE ACTION/RESPONSES GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6811-02-01 In the current period, August 1, 2002, to June 30, 2003, we have completed General Fixed Assets. SECTION IV FINDINGS AND QUESTIONED COSTS JEFFERSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the Jefferson County Board ofEducation's financial statements was qualified for various departures from generally accepted accounting principles. 2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Jefferson County Board of Education disclosed a financial statement reportable condition related to the following control category. General Fixed Assets The reportable condition described above is considered to be a material weakness. 3. Noncompliance Material to the Financial Statements The audit of the Jefferson County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements. 4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Jefferson County Board ofEducation did not disclose any reportable conditions in internal control over major programs. 5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Jefferson County Board of Education's report on compliance with requirements applicable to major programs was unqualified. 6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The Jefferson County Board of Education's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133. 7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program l 0.555 Food and Nutrition Program - Food Services - National School Lunch Program 10.559 Food and Nutrition Program - Summer Food Service Program for Children 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00. 9. Low Risk Auditee The Jefferson County Board of Education qualified as a low risk auditee as defined by Section .530 ofOMB Circular A-133. - 1- JEFFERSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6811-02-01 The Jefferson County Board of Education did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general-purpose financial statements ofthe School District being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the School District to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the School District and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. -2-