Audit report, Johnson County Board of Education, Wrightsville, Georgia, year ended June 30, 1998

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AUDIT REPORT JOHNSON COUNTY BOARD OF EDUCATION
WRIGHTSVILLE, GEORGIA YEAR ENDED JUNE 30, 1998
"'--------------------
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

JOHNSON COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXlllBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND.

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

3

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS.

5

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

6

ADDITIONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

14

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

15

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

16

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

17

3 SCHEDULE OF STATE REVENUE

19

4 SCHEDULE OF EXPENDITURES

LOTTERY PROGRAMS

20

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

5

OVERALL

21

6

BY PROGRAM

22

JOHNSON COUNTY BOARD OF EDUCATION TABLE OF CONTENTS
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 INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB 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, S.W., Suite 214 Atlanta, Georgia 30334-8400
June 17, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe Johnson County Board ofEducation

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

Ladies and Gentlemen:

We have audited the accompanying general purpose financial statements of the Johnson County Board of Education, as of and for the year ended June 30, 1998, as listed in the table of contents. These general purpose financial statements are the responsibility ofthe Johnson County Board ofEducation's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards 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 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'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:
* The general purpose financial statements of the Board did not contain a General Fixed Assets
Account Group to account for property and equipment owned by the Board which should be included to conform to generally accepted accounting principles.

98ARL-13B

* 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 did not recognize as expenditures, in the year ended June 30, 1998, a portion of salaries
and the corresponding employer's cost ofrelated benefits earned for contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department ofEducation for the State's share ofthese 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, 1997, were improperly recorded in the year ended June 30, 1998. 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 ofthese variances or omissions have not been detennined, but are believed to be material.
In our opinion, except for the effects on the general purpose fmancial 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 Johnson County Board of Education as of June 30, 1998, and the results of its operations for the year then ended, in confonnity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated June 17, 1999, on our consideration of the Johnson County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.
The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally ofinquiries of management regarding the methods ofmeasurement and presentation ofthe supplementary information. However we did not audit the information and do not express an opinion on it. In addition, we do not provide assurance that Johnson County Board of Education is or will become year 2000 compliant, that the Board's year 2000 remedi~tion efforts will be successful in whole or in part, cir that parties with which Johnson County Board of Education does business are or will become year 2000 compliant.
Our audit was performed for the purpose offorming an opinion on the general purpose financial statements of the Johnson County Board of Education taken as a whole. The accompanying combining statements (Exhibits E and F) and the financial schedules (Schedules 2 through 6), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits o/States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose fmancial statements and in our opinion, except for the effects ofthe matters referred to in the third paragraph, such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.
98ARL-13B

A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,
~w.;H~
Russell W. Hinton State Auditor
RWH:jb 98ARL-13B

JOHNSON COUNTY BOARD OF EDUCATION

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

The notes to the general purpose financial statements are an integral part of this statement. -3-

The notes to the general purpose financialstatements are an integral part of this statement. -5-

JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Johnson County Board ofEducation (Board) 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 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 Board is a primary government and consists of all the organizations that compose its legal entity.
FUND ACCOUNTING
The Board 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.
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 Board. 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 ofthe Board, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most ofa Board's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources ofthe Board 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.
SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources 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.

- 6-

JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 g~nerally are included on the balance sheet. Operating statements of these funds present increases (Le., revenues and other financing sources) and decreases (Le., 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.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (Le., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be detennined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are property taxes, intergovernmental grants and investment income.
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 1998, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1997 and ending in early June 1998. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1997 and ending in August 1998. State grants to fund the State's share ofthese contracts were disbursed from the Georgia Department ofEducation to the Board in the same twelve months. As of June 30, 1998, compensation under these employment contracts had been earned, but two ofthe twelve monthly payments, due for July and August 1998, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30, 1998. Also, the State's portion of the compensation paid in July and August 1998 was received and recorded as revenue in the fiscal year subsequent to June 30, 1998. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were recorded in the year ended June 30, 1998. 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.

. -7-

JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUDGET

The Johnson County Board ofEducation's budget is a complete financial plan for the Board's fiscal year and

is based upon estimates of expenditures together with probable funding sources. There is no statutory

prohibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is

prepared by fund, function and object. The legal level of budget control was established by the Board at the

aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted

accounting principles.

.

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

The Statement ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual presents actual and budgeted data for the General Fund and Special Revenue Fund. To facilitate comparison with the budget, the following adjustments have been made to fund balance as reflected on Exhibit "B" of this report:

Special Revenue
Fund

FUND BALANCE JULY 1, 1997

$ 218,881.05

Adjustments Inventories - July 1, 1997 Food Donated Commodities Purchased Foods

-16,174.46 -6.933.51

Fund Balance July 1, 1997 (Budget Basis)

$ 195,773.08

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

24.530.09

FUND BALANCE JUNE 30, 1998 (Budget Basis)

$ 220.303.17

- 8-

JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

COMPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits in authorized fmancial institutions. Georgia Laws authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.

RECEIVABLES

Receivables C/onsist 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 Johnson County Board ofCommissioners fixed the property tax levy for the 1997 tax year (calendar year) on September 15, 1997 (levy date). Taxes were due on December 20, 1997. The lien date for property taxes was January 1, 1997. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1998. The Johnson County Tax Commissioner bills and collects the property taxes for the Board of Education, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance oftaxes collected to the Board.

The tax millage rate levied for the 1997 tax year (calendar year) for the Johnson County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

~mills

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.

-9-

JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTERFUND TRANSACTIONS
The Board ~as the following types 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.
Operating transfers are recorded for all interfund transactions other than reimbursements.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results 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 ofthis data.
Note 2: DEPOSITS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guaranteeofinsurance, or by collateral. The aggregate of the "race value of such surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone 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 ofthe counties or municipalities ofthe State of Georgia,

- 10-

JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 2: DEPOSITS

(5) Bonds of any public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose,

(6) Industrial revenue bonds and bonds of development authorities created by the laws ofthe 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 and 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, 1998, the bank balances were $1,447,079.05. 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 Board or by the Board's agent in the Board's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Board'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 Board's name.)

The Board's deposits are classified by risk category at June 30, 1998, as follows:

Risk Category

Bank Balance

1

$ 200,000.00

2

0.00

3

1.247,079.05

Total

$ 1.447.079.05

Note 3: NON-MONETARY TRANSACTIONS

The Board receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded aftheir Federally assigned value. See Note 1 - Inventories

- 11 -

JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 4: RISK MANAGEMENT

The Board 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; natural disaster and unemployment compensation.

The Board has obtained commercial insurance for risk of loss associated with torts, assets, errors or omissions, job related illness or injuries to employees and natural disaster. However, the errors or omissions policy excludes coverage for discrimination. The Board has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any ofthe past three years.

The Board is self-insured with regard to unemployment compensation claims. The Board 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 of that loss can be reasonably estimated.

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

1997 1998

Beginning of Year Liability

Claims and
Changes i,n
Estimates

$

0.00 $

126.03 $

$

0.00 $

5.416.13 $

Claims Paid

End ofYear Liability

126.03 $

0.00

5.416.13 $

0.00

The Board has purchased a surety bond to provide additional insurance coverage as follows:

Position Covered

Amount

Superintendent

$ 100,000.00

Note 5: ON-BEHALFPAYMENTS

The Board has recognized revenues and expenditures in the amount of$142,485.32 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies.

Georgia Department of Education Paid to the State Merit System of Personnel Administration For Health Insurance ofNon-Certified Personnel In the amount of$108,335.20

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $8,463. 12

- 12-

JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 5: 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 $25,687.00

Note 6: 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 Board believes that such disallowances, if any, will be immaterial to its overall financial position.

Note 7: 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 Board who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.81% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

1998

100%

$ 549,410.31

1997

100%

$ 523,433.18

1996

100%

$ 488,863.32

- 13-

JOHNSON COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30. 1998

EXHIBIT"E"

ASSETS Cash and Cash Equivalents Accounts Receivable Inventories
Food Donated Commodities Purchased Food
Total Assets

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

FEDERAL PROGRAMS

TOTALS JUNE 30,1998 JUNE 30, 1997

$ 158,858.25 $

40,150.84

$ 199,009.09 $ 239,700.21

68,049.35

$

84,891.67

152,941.02

74,540.88

13,073.66 6,413.01

.13,073.66 6,413.01

16,174.46 6,933.51

$ 246,394.27 $

40,150.84 $

84,891.67 $ 371,436.78 $ 337,349.06

LIABILITIES AND FUND EqUITY

LIABILITIES

Cash Overdraft

Accounts Payable

$

Salaries Payable

Total Liabilities

$

FUND EqUITY

Fund Balances

Reserved

For Continuation of Federal Programs

For Inventories

Food

Donated Commodities

$

Purchased Food

Unreserved

Undesignated

Total Fund Equity

$

2,304.43 $ 4,300.00 6.604.43 $
13,073.66 6,413.01 220,303.17 $ 239,789.84 $

$ 8,892.08 31,258.76 40,150.84 $
0.00 $ 0.00 $

689.72 $ 18,853.02 65,348.93
84,891.67 $

689.72 30,049.53 $ 100,907.69
131,646.94 $

27,413.06 91,054.95
118,468.01

$

6,382.84

$
0.00 0.00 $

13,073.66 6,413.01
220,303.17
239,789.84 $

16,174.46 6,933.51
189,390.24
218,881.05

Total Liabilities and Fund Equity

$ 246,394.27 $

40,150.84 $

84,891.67 $ 371,436.78 $ 337,349.06

See notes to the general purpose financial statements.

-14 -

See notes to the general purpose financial.statements.

-15-

JOHNSON COUNTY BOARD OF EDUCATION

SCHEDULE "1"

SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

YEAR ENDED JUNE 30. 1998

At June 30, 1998, the Johnson County Board ofEducation had no outstanding contractual commitments for the purpose ofmaking computer systems and other electronic equipment year 2000 compliant. The year 2000 issue is the result of shortcomings in many electronic data processing systems and other equipment that make operations beyond year 1999 troublesome. The year 2000 issue is ofprimary concern for the Board's financial accounting system, student infonnation system, instructional technology, HVAC controls and fuel pumping station. The following stages have been identified as necessary to implement a year 2000 compliant systems.
Awareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 Issue.
Assessment Stage - The actual process of identifying all of its systems and individual components of the systems to check for compliance.
Remediation Stage - When changes are made to systems and equipment.
Validationffesting Stage - The process of ensuring that the changes made to systems and equipment will produce a year 2000 compliant system.
It will be necessary for the Board to progress through all,four of these stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected. As of June 30, 1998, the financial accounting system was determined to be at the Awareness Stage, the student information system, instructional technology, HVAC controls and fuel pumping station were determined to be at the Validationffesting Stage.
The Board's financial accounting software (GENESIS) and hardware (Wang VS) are owned by the State (Georgia Department ofEducation). These systems have been determined to be critical to the Board's ability to successfully conduct operations. As ofJune 30, 1998, the State had not contracted for the remediation of either the Wang VS operating system or the GENESIS accounting software. In the subsequent period, the Georgia Department of Education remediated the Wang VS operating system and the updated operating system was installed at all GENESIS sites as of December 9, 1998. The Georgia Department of Education has remediated the GENESIS software and conducted tests at nine pilot sites. The remediated GENESIS software has been provided to all boards of education currently utilizing the GENESIS accounting software.

See notes to the general purpose financial statements. - 16-

JOHNSON COUNlY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 1998

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

Agriculture, U. S. Depart'!1ent of Pass-Through from Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program 1998 Grant National School Lunch Program 1998 Grant Food Distribution Program (1) Pass-Through from Office of School Readiness Food and Nutrition Program Child and Adult Care Food Program 1998 Contract

* 10,553
. 10,555
10.550
10,558

Total U. S. Department of Agriculture

Education, U, S, Department of Pass-Through from Georgia Department of Education Elementary and Secondary Education Act TItle I Grants to Local Educational Agencies 1998 Grant TrtleJl Eisenhower Professional Development 1998 Grant TrtleVl Innovative Education Program Strategies 1998 Grant Goals 2000 State and Local Education Systemic Improvement Grants 1997 Grant 1998 Grant Individuals with Disabilities Education Act Part B - Special Education Flow Through 1998 Grant Preschool 1998 Grant Safe and Drug-Free Schools 1997 Grant 1998 Grant Vocational Education - Basic Grants to States High School Program Basic Grant 1998 Grant Tech-Prep Education 1998 Grant

84.010
84.281
84.298
84.276 84.276
84.027 84.173 84.186 84.186
84.048 84.243

Total U. S. Department of Education

PASSTHROUGH
ENTITY IDNUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

N/A

$ 151,895,57

(2)

N/A

308,433.22 $

592,732,93 (3)

N/A

36,748.59

36,748.59

N/A

4,448.32

(2)

$ 501,525.70 $

629,481.52

N/A

$ 392,421.00 $

392,421.00

N/A

17,500,00

17,500.00

NlA

11,585.00

11,585.00

NlA

80,000.00

85,741.84

N/A

127,500.00

145,715.84 (3)

NlA

76,132,00

76,132.00

N/A

33,119,00

33,119.00

NlA

-641.00

NlA

56,319.67

56,319.67

NlA

23,991,00

33,494.93 (3)

N/A

5,000.00

5,000.00

$ 822,926.67 $

857,029.28

Total Federal Financial Assistance N/A = Not Available

-17-

$ 1,324,452.37 $ 1,486,510.80

JOHNSON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 1998

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) The amounts shown for the Food Distribution Program represent the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.
(2) Expenditures for the Child and Adult Care Food Program and the School Breakfast Program were not maintained separately and are included in the 1998 National School Lunch Program.
(3) Expenditures for this program include State, and/or Other Funds. Expenditures are not maintained by fund source.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The Board did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Johnson County Board of Education and is presented on the modified accrual basis of accounting which is the same basis of accounting used in the presentation of the general purpose fin~ncial statements.

See notes to the general purpose financial statements.

-18-

JOHNSON COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30,1998

SCHEDULE "3"

AGENCYIFUNDING
GRANTS Education, Georgia Department of Quality Basic Education General and Career Education Programs Special Education Programs Remedial Education Program Media Center Programs Staff Development Programs Indirect Cost Pupil Transportation RegUlar Bus Replacement Sparsity Grant Middle School Incentive Program Special Instructional Assistance In-School Suspension Counselors Grades 4 and 5 Technology Training Local Fair Share Educational Equalization Funding Grant Food Services Vocational Education Other State Programs Ad Valorem Tax Adjustment Alternative Program At-Risk Summer School Program Environmental Science Program Gifted Technology Health Insurance Innovative Programs Mentoring Program Preschool Handicapped Program Remedial Summer School Program Teachers'Retirement Lottery Programs Alternative School Program Instructional Technology Assistive Technology Classroom Technology
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$ 2,835,050.00 520,074.00 148,990.00 119,639.00 37,629.00 830,192.00
256,232.00 78,160,00 220,386,00 110,627.00 162,484.00 81,676.00 11,719.00 28,842.00
-426,178.00 384,574.00
$ 44,264.00
30,756.00 48,757.00
8,294.75 1,000.00 10,000.00 108,335.20 5,000.00 9,500.00 20,750.00 4,289.66 8,463.12
25,687.00

$
43,610.00
4,132.00 4,924.00 53,000.00

2,835,050.00 520,074.00 148,990.00 119,639.00 37,629.00 830,192.00
256,232.00 78,160.00
220,386.00 110,627.00 162,484.00 81,676.00 11,719.00 28,842.00 -426,178.00 384,574.00 43,610.00 44,264.00
30,756.00 48,757.00
8,294.75 1,000.00 10,000.00 108,335.20 5,000.00 9,500.00 20,750.00 4,289.66 8,463.12
4,.132.00
4,924.00 53,000.00

294,613.88

294,613.88

25,687,00

$ 5,725,192.73 $ See notes to the general purpose financial statements.
- 19-

400,279.88 $ 6,125,472.61

JOHNSON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS YEAR ENDED JUNE 30, 1998

SCHEDULE "4"

EXPENDITURES

ALTERNATIVE SCHOOL PROGRAM

INSTRUCTIONAL TECHNOLOGY

ASSISTIVE

CLASSROOM

TECHNOLOGY TECHNOLOGY

PRE-KINDERGARTEN PROGRAM

Current

Instruction

$

Support services

Pupil Services

SChool Administration

Maintenance and Operation of Plant

Student Transportation Services

Food services Operation

4,132,00 $

4,924,00 $

53,000,00 $

241,607,37 $
15,273,93 17,127,54 10,400,00 9,784,33
420,71

TOTAL
303,663,37
15,273,93 17,127.54 10,400.00 9,784,33
420,71

See notes to the general purpose financial statements.

- 20-

JOHNSON COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 1998

SCHEDULE "5"

Minimum Expenditure Requirements (Total Allotment) Expenditures on Combined Program Basis
Salaries Operations
Less: Expenditures for Media Center Programs in Excess of Total Media Allotment
Expenditures per Audit
Amount of Underexpenditure for Total Allotment

FOURTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS.

100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS

$

3,623,753,00 $

1.:.:0:.:J8'1:206=.0~0

$

3,540,440.19

131 ,497.79 $

$

3,671,937,98

1:.:::0:.:::J9,~70=2:.:.::.8:::.9

-9,451.33 $ _ _-=3.L:,6=62~,4.:.::8~6.:.:.6.=.5

$

0,00 $ ================0;;,;;,0=0

See notes to the general purpose financial statements. - 21 -

JOHNSON COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - BY PROGRAM
GENERAL FUND - qUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30,1998

GENERAL AND CAREER EDUCATION PROGRAMS Kindergarten (*) Grades 1 - 3 (*) Sub-Total- K-3 Grades 4 - 5 (*) Grades 6 - 8 (*) Grades 9 - 12 (*) High School Laboratories (*) Vocational Education Laboratories (*) Total General and Career Education Programs
SPECIAL EDUCATION PROGRAMS Regular Programs Category II (*) Category III (*) Category IV (*) Sub-Total - Regular category VI (Gifted) (*) Total Special Education Programs
REMEDIAL EDUCATION PROGRAM 0 Total Fourteen Weighted Programs
MEDIA CENTER PROGRAMS Salaries Operations Total Media Center Programs
. Total Fourteen Weighted and Media Center Programs'

ALLOTMENTS FROM DEPARTMENT OF EDUCATION

REQUIRED

ORIGINAL ~

ORIGINAL

MID-TERM

$

313,830,00

$

282,447.00 $

0,00

748.739.00

673.865.10

$ 1.062.569,00 90 $

956,312.10 $

0.00

349.502,00 90

314,551.80

656,219.00 90

590,597.10

344.006.00 90

309.605.40

163,605.00 90

147,244.50

259.149.00 90

233.234.10

$ 2.835.050.00

$ 2.551.545.00 $

0.00

$

492;241,00

$

443,016.90 $

0.00

$

492,241.00 90 $

443.016.90 $

0.00

27.833.00 90

25.049.70

$

520.074.00

$

468.066.60 $

0.00

$

148,990.00 90 $

134.091.00 $

0.00

$ 3.504.114.00

$ 3.153.702.60 $

0.00

$

97.026.00 90 $

87,323.40 $

0.00

22.613.00 90

20,351.70

$

119,639.00

$

107,675.10 $

0.00

$ 3.623.753.00

$ 3.261,3n.70 $

0.00

STAFF DEVELOPMENT PROGRAMS Cost of Instruction Professional Development
Total Staff Development Programs (*) Identifies Fourteen Weighted Programs, See notes to the general purpose financial statements.

$

10,915.00

$

10,915.00 $

0.00

26.714.00

26,714.00

0.00

$

37,629.00 100 $

37.629.00 $ -=======-==,,0,;;;.0;:0

- 22 -

SCHEDULE "6"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES

OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$

282,447.00 $

252,456.90 $

2,856.70 $

255,313.60

673,865.10

685,390.49

15,881.27

701,271.76

$

956,312.10 $

937,847.39 $

18,737.97 $

956,585.36 $

0.00

314,551.80

320,743.82

1,624.14

322,367.96

0.00

590,597.10

670,226.32

20,655.20

690,881.52

0.00

309,605.40

363,999.90

10,729.81

374,729.71

0.00

147,244.50

234,124.50

4,128.28

238,252.78

0.00

233,234.10

238,042.10

17,123.59

255,165.69

0.00

$ 2,551,545.00 $ 2,764,984.03 $

72,998.99 $ 2,837,983.02

$

443,016.90

$

170,623.10 $ 283,447.21
55,106.78

13,463.14 $ 19,123.73
645.28

184,086.24 302,570.94
55,752.06

$

443,016.90 $

509,177.09 $

33,232.15 $

542,409.24

0.00

25,049.70

24,536.06

3,471.75

28,007.81

0.00

$

468,066.60 $

533,713.15 $

36,703.90 $

570,417.05

$

134,091.00 $

134,447.58 $

0.00 $

134,447.58

0.00

$ 3,153,702.60 $ 3,433,144.76 $

109,702.89 $ 3,542,847.65

$

87,323.40 $

107,295.43

$

107,295.43

0.00

20,351.70

$

21,794.90

21,794.90

0.00

$

107,675.10 $

107,295.43 $

21,794.90 $

129,090.33

$ 3,261,377.70 $ 3,540,440.19 $

131,497.79 $ 3,671,937.98 $

0.00

$

10,915.00

26,714.00

$===3=7',;;;62..9.=.0.0...

$

23,410.40 $

23,410.40

14,218.60

14,218.60

$

37,629.00 $

37,629.00 $ ......===_=-_..0.;;;;.0.0..

- 23 -

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
June 17, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Johnson County Board ofEducation
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 ofJohnson County Board ofEducation as of and for the year ended
June 30, 1998, and have issued our report thereon dated June 17, 1999. 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 generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States.
Compliance
As part of obtaining reasonable assurance about whether Johnson County Board of Education's financial statements are free ofmaterial misstatement, we performed tests ofits compliance with certain provisions of laws, regulations, contracts and grants, 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 ofour audit and accordingly, we do not express such an opinion. The results
of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and perfonning our audit, we considered Johnson County Board of Education's internal control over financial reporting in order to detennine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its
98YB-40

operation that we consider to be reportable conditions. 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 our judgement, could adversely affect Johnson County Board of Education's ability to . record, process, summarize and report financial data consistent with assertions ofmanagement in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-683 1-98-01 and FS-683 1-98-02.
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, both of the reportable conditions described above are also considered to be material weaknesses.
This report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended to limit the distribution ofthis report which is a matter ofpublic record.
Respectfully submitted,

RWH:jb 98YB-40

Russell W. Hinton State Auditor

RUSSELLW. HINTON
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
June 17, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Johnson County Board ofEducation
REPORT ON COMPLIANCE WITH REOUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Johnson County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1998. Johnson County Board ofEducation's major Federal programs are identified in the accompanying Schedule of Findings and QuestionedCosts. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Johnson County Board of Education's management. Our responsibility is to express an opinion on Johnson County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and OMB Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includ~s examining, on a test basis, evidence about the Johnson 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 Johnson County Board of Education's compliance with those requirements.

98SA-10

In our opinion, the Johnson 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, 1998.
Internal Control Over Compliance
The management of Johnson 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 Johnson County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133.
Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level ofrisk 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 for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended to limit the distribution ofthis report which is a matter ofpublic record.
Respectfully submitted,
~ 4A ..CAl ~.~-.:. Russell W. Hinton State Auditor
RWH:jb 98SA-I0

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

JOHNSON COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED CQSTS YEAR ENDED JUNE 30, 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

6831-93-02 6831-93-03 6831-96-01 FS-6831-97-01 FS-6831-97-02

Further Action Not Warranted Further Action Not Warranted Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

EXPENDITURESILIABILITIESIDISBURSEMENTS Failure to Meet Expenditure Requirements Amount: $631.26 Finding Control Number: 6831-96-01

This QBE underexpenditure of$631.26 for the StaffDevelopment Programs has been returned to the Georgia Department ofEducation through an increase in the Board's local fair share in FY 1999.

CASH AND CASH EQUIVALENTS Inadequate Separation ofDuties Finding Control Number: FS-6831-97-01

We separate duties as much as can be done in a two-person office. Duties are rotated between employees so that no person does the same duties all the time. Financial concerns prevent us from hiring additional personnel.

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6831-97-02

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

'.
SECTION IV FINDINGS AND QUESTIONED COSTS

JOHNSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Johnson 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 Johnson County Board ofEducation disclosed financial statement reportable conditions related to the following control categories.

Cash and Cash Equivalents General Fixed Assets

General Ledger

All ofthe reportable conditions described above are considered to be material weaknesses.

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

4., Reportable Conditions in Internal Control Over Major Programs The audit report for the Johnson County Board of Education did not disclose any reportable conditions in internal control over major programs.

5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Johnson County Board of Education's report on compliance with requirements applicable to major programs was unqualified.

6. Audit Findings Reguired to be Reported by Section .510Ca) ofOMB Circular A-133 The Johnson County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133.

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00

9. Low Risk Auditee The Johnson County Board of Education was audited as a low risk auditee based on a waiver granted by the U. S. Department of Education.

- 1-

JOHNSON COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 1998

IT FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS GENERAL LEDGER Inadequate Separation ofDuties Reportable Condition - Material Weakness Repeated from Prior Year Finding Control Number: FS-6831-98-01

A review ofthe Board's internal control policies and procedures noted deficiencies in providing for adequate internal control over the following functions and related procedures:



The Board has two employees who both alternately perform the general ledger, check preparation,

check signing and bank reconciliation functions. In addition, they both perform the deposit

preparation and deposit recording functions and all employee compensation functions.



Blank checks are accessible, without supervision, to both employees described above.



Bank reconciliations are not reviewed by an individual independent of cash operations.



Journal entries are not reviewed and approved by someone independent ofthe general ledger function.

These conditions were a result of management's decision to limit the number of administrative staff made responsible for accounting functions. The Board should review the accoUnting procedures in place, design procedures which would enhance segregation of duties relative to the above control categories and implement those procedures to strengthen the internal control over the accounting functions.

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated from Prior Year Finding Control Number: .FS-6831-98-02

The Johnson County Board ofEducation 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 Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Board to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group.

Subsidiary records should include an inventory of land, buildings and equipment owned by the Board 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.

- 2-

JOHNSON COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30. 1998
ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
-3-