Audit report, Johnson County Board of Education, Wrightsville, Georgia, year ended June 30, 1999

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AUDIT REPORT JOHNSON COUNTY BOARD OF EDUCATION
WRIGHTSVILLE, GEORGIA YEAR ENDED JUNE 30, 1999
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

JOHNSON COUNTY BOARD OF EDUCATION
-TABLE OF CONTENTS-

SECTION!

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

EXHIBITS

GENERAL ]?URPOSE 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, EXPENDITIJRES 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

ADDIDONAL 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 EXPENDITURES OF FEDERAL AWARDS

16

2 SCHEDULE OF STATE REVENUE

18

3 SCHEDULE OF EXPENDITIJRES

LOTTERY PROGRAMS

19

ANALYSIS OF MINIMUM EXPENDITIJRE REQUIREMENTS

GENERAL FUND - QUALTIY BASIC EDUCATION PROGRAMS

4

OVERALL

21

5

BYPROGRAM

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 WTI1I GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WTI1I REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WTI1I 0MB CIRCULARA-133
SECTION ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTIONN FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION! FINANCIAL

w. RUSSELL HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 8, 2000

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members of the State Board ofEducation
and Superintc.J.dent and Members of the 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, 1999, 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 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 ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our 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.

99ARL-13

* 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, 1999, a portion of salaries and the corresponding employer's cost ofrelated benefits earned for contractual services completed prior to June 30, 1999. Also funds received, subsequent to June 30, 1999, 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, 1998, were improperly recorded in the year ended June 30, 1999. 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 effectr: on the gi;;:neral 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 ofthe Johnson County Board of Education as ofJune 30, 1999, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated May 8, 2000, on our consideration ofthe Johnson County Board ofEducation's internal control over financial reporting and our tests ofits compliance with certain provisions oflaws, regulations, contracts and grants.
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 1 through 5), which includes the Schedule of Expenditures of Federal Awards as required byU. S. Office of Management and Budget Circular A-133,
Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes ofadditional analysis and are not a required part ofthe general purpose financial statements. Such information has been
subjected to the auditing procedures applied in the audit ofthe general purpose financial 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.
99ARL-13

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 ofGe~rgia Annotated Section 50-6-24.
Respectfully submitted,

RWH:gp 99ARL-13

~w.~ Russell W. Hinton State Auditor

JOHNSON COUNTY BOARD OF EDUCATION

JOHNSON COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET ALL FUND TYPES JUNE 30. 1999

EXHIBIT"A"

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

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTALS (Memorandum Only) JUNE 301 1999 JUNE 301 1998

$ 815,546.26 $ 278,638.88 $ 1,094,185.14 $ 842,115.54

47,264.77

86,917.00

134,181.77

177,569.67

10,821.73 6,405.93

10,821.73 6,405.93

13,073.66 6,413.01

Total Assets

$ 862,811.03 $ 382,783.54 $ 1,245,594.57 $ 1,039,171.88

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salaries Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For.Bus Replacement Funds For Continuation of Federal Programs For Expired Grant Balances/Questioned Costs For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity

$ 31,962.93 $ 31,962.93 $ 30,049.53

108,191.14

108,191.14

100,907.69

$ 140,154.07 $ 140,154.07 $ 130,957.22

$ 43,634.15 $

$ 232.10

43,634.15 $ 232.10

45,392.11 631.26

10,821.73 6,405.93

10,821.73 6,405.93

13,073.66 6,413.01

819,176.88

225,169.71

1,044,346.59

842,704.62

$ 862,811.03 $ 242,629.47 $ 1.105,440.50 $ 908,214.66

Total Liabilities and Fund Equity

$ 862,811.03 $ 382,783.54 $ 1,245,594.57 $ 1,039,171.88

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

JOHNSON COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 1999

EXHIBIT B

GENERAL FUND

SPECIAL REVENUE
FUND

TOTALS {Memorandum Only}
YEAR ENDED JUNE 30, 1999 JUNE 30, 1998

REVENUES

State Funds Federal Funds Taxes Other Funds

$ 6,174,240.99 $ 379,644.60 $ 6,553,885.59 $ 6,125,472.61

1,504,441.23

1,504,441.23

1,324,452.37

1,235,860.82

1,235,860.82

1,202,772.41

68,807.44

138,467.13

207,274.57

205,948.65

Total Revenues EXPENDITURES

$ 7,478,909.25 $ 2,022,552.96 $ 9,501,462.21 $ 8,858,646.04

Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation
Capital Outlay

$ 4,726,795.81 $ 1,039,853.81 $ 5,766,649.62 $ 5,312,760.53

263,095.23 242,562.26 146,273.35 158,103.70 539,156.94
81,504.30 578,113.32 515,397.32
9,345.98
24,174.83

38,482.92 114,851.17
21,260.22 21,689.19
798.33 6,600.00
76,542.26 697,376.42

301,578.15 357,413.43 146,273.35 179,363.92 560,846.13
82,302.63 584,713.32 515,397.32
85,888.24 697,376.42
24;174.83

268,080.37 340,278.26 171,813.99 193,20723 516,653.08
82,117.79 591,960.17 478,439.67
1,120.52 28,091.96 629,902.23 122,068.97

Total Expenditures Excess of Revenues over (under) Expenditures

$ 7,284,523.04 $ 21017A54.32 $ 9,301,977.36 $ 8,736A94.77

$ 194,386.21 $

5,098.64 $ 199A84.85 $ 122,151.27

OTHER FINANCING SOURCES (USES}

Operating Transfers In Operating Transfers Out

$ 27,719.77 -27.719.77

Total Other Financing Sources (Uses)

$

0.00

Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses $ 194,386.21 $

5,098.64 $ 199,484.85 $ 122,15127

FUND BALANCE JULY 1

668,424.82

239,789.84

908,214.66

789,684.69

Food Inventory - Net Change in Period Donated Commodities Purchased Food

-2,251.93 -7.08

-2,251.93 -7.08

-3,100.80 -520.50

FUND BALANCE JUNE 30

$ 862,811.03 $ 242,629.47 $ 1,105,440.50 $ 908,214.66

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

JOHNSON COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - CNON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 1999

EXHIBIT "C"

GENERAL FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

REVENUES

State Funds Federal Funds Taxes Other Funds

$ 5,797,589.00 $ 6,174,240.99

1,166,000.00 22,400.00

1,235,860.82 68,807.44

Total Revenues

$ 6,985,989.00 $ 7,478,909.25

EXPENDITURES

Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation
Capital Outlay

$ 4,628,267.00 $ 4,726,795.81

280,710.00 218,556.00 174,885.00 158,443.00 512,030.00 106,235.00 540,370.00 482,244.00
14,000.00

263,095.23 242,562.26 146,273.35 158,103.70 539,156.94
81,504.30 578,113.32 515,397.32
9,345.98

24,174.83

Total Expenditures

$ 7,115,740.00 $ 7,284,523.04

Excess of Revenues over (under) Expenditures $ -129,751.00 $ 194,386.21

FUND BALANCE JULY 1, 1998

677,269.01

668,424.82

SPECIAL REVENUE FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

$ 364,353.22 $ 379,644.60
1,219,521.00 1,504,441.23

127,400.00

138,467.13

$ 1,711,274.22 $ 2,022,552.96

$ 929,608.78 $ 1,039,853.81

20,577.0Q 92,402.60

38,482.92 114,851.17

20,596.00 15,309.00
6,600.00

21,260.22 21,689.19
798.33 6,600.00

3,077.00 641,509.00

76,542.26 697,376.42

$ 1,729,679.38 $ 2,017,454.32

$ -18,405.16 $

5,098.64

221,574.00

220,303.17

FUND BALANCE JUNE 30, 1999

$ 547,518.01 $ 862,811.03

$ 203,168.84 $ 225,401.81

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

JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1999

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 ofits 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 s~arate accounting entity with a self-balancing set of accounts.

General Fixed Assets are recorded as expenditures in the various funds at the time ofpurchase. 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 ofthese 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 ofEducation and from the Federal government to accomplish specific educational objectives.

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JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1999

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 generally are included on the balance sheet. Operating statements of these 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.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined 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 1999, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1998 and ending in early June 1999. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1998 and ending in August 1999. State grants to fund the State's share ofthese contracts were disbursed from the Georgia Department of Education to the Board in the same twelve months. As of June 30, 1999, compensation under these employment contracts had been earned, but two ofthe twelve monthly payments, due for July and August 1999, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30, 1999. Also, the State's portion of the compensation paid in July and August 1999 was received and recorded as revenue in the fiscal year subsequent to June 30, 1999. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1998, were recorded in the year ended June 30, 1999. 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.
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
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JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1999

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, :function and object. The legal level ofbudget 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 of general circulation in thelocality. 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 budgt:.t. 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, 1998

$ 239,789.84

Adjustments Inventori.es - July 1, 1998 Food Donated Commodities Purchased Foods

-13,073.66 -6.413,01

Fund Balance July 1, 1998 (Budget Basis)

$ 220,303.17

Excess ofRevenues over (under) Expenditures FUND BALANCE JUNE 30, 1999 (Budget Basis)

5,098,64 $ 2251401.81

CASH AND CASH EQUIVALENTS

COMPOSIDON OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financial 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.

-8-

JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1999

Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 Johnson County Board ofCommissioners fixed the property tax levy for the 1998 tax year (calendar year) on September 14, 1998 (levy date). Taxes were due on December 31, 1998. The lien date for property taxes was January I, 1998. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1999. 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 1998 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.

INTERFUND TRANSACTIONS

The Board has the following types ofinterfund 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.

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JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

ruNE 30, 1999

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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
COLLATERALIZA1iON 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 ofinsurance, or by collateral. The aggregate of the face 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 ofdeposit insurance. OCGA Section 45-8-11(b) 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 any one ofor any combination ofthe 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 ofindebtedness or other direct obligations ofthe United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates ofindebtedness or other obligations ofthe counties or municipalities ofthe State of Georgia,
(5) Bonds ofany public authority created by the laws ofthe State ofGeorgia, 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 ofindebtedness, 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

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JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1999

Note 2: DEPOSITS

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, 1999, the bank bl:l,lances were $1,998,126.43. The amounts of the total bank balances are classified into three categories of credit risk:

Category I - 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, 1999, as follows:

Risk Categozy
I 2 3
Total
Note 3: NON-MONETARY TRANSACTIONS

Bank Balance
$ 200,000.00 0.00
1,798,126.43
$ 1.998.126.43

The Board receives food commodities from the United States Department ofAgriculture (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 Board is exposed to various risks ofloss 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.

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JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1999

Note 4: RISK MANAGEMENT

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 ofthat loss can be reasonably estimated.

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

1998 1999

Beginning ofYear Liability

Claims and Changes in Estimates

$

Q,QQ $

S,416.lJ $

$

O,QQ $

lf?2.4Q $

Claims Paid

EndofYear Liability

S.416,lJ $

O,QO

lf?2.4Q $

Q,QQ

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

Position Covered

Amount

Superintendent

$ 100,000.00

Note 5: ON-BEHALF PAYMENTS
The Board has recognized revenues and expenditures in the amount of$146,381.71 for health insurance and retirement contributions paid on the Board's behalfby the following State Agencies.

Georgia Department ofEducation Paid to the State Merit System ofPersonnel Administration For Health Insurance ofNon-Certified Personnel In the amount of$105,799.14

Paid to the Teachers Retirement System ofGeorgia For Teachers Retirement System {TRS) Employer's Cost In the amount of$10,577.57

Office ofTreasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of$30,005.00

-12-

JOHNSON COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1999

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 11.95% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year
1999 1998 1997

Percentage
Contributed
100% 100% 100%

Required
Contribution
$ 599,843.15 $ 549,410.31 $ 523,433.18

- 13 -

JOHNSON COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 1999

EXHIBIT"E"

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

SCHOOL FOOD
SERVICES FUND

LOTTERY

FEDERAL

TOTALS

PROGRAMS PROGRAMS JUNE 30, 1999 JUNE 30, 1998

$ 231,646.64 $ 45,754.70 $ 1,237.54 $ 278,638.88 $ 199,009.09

86,917.00

86,917.00

152,941.02

10,821.73 6,405.93

10,821.73 6,405.93

13,073.66 6,413.01

Total Assets

$ 248,874.30 $ 45,754.7'1) $ 88,154.54 $ 382,783.54 $ 371,436.78

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

$ 2,476.93 $ 10,087.10 $ 19,398.90 $

41000.00

351667.60

68,523.54

$ 61476.93 $ 45,754.70 $ 87,922.44 $

$ 31,962.93 1081191.14
1401154.07 $

689.72 30,049.53 100,907.69
1311646.94

$ 10,821.73 6,405.93
2251169.71 $
$ 2421397.37 $

$

232.10 $

232.10

0.00 0.00 $

0.00 232.10 $

10,821.73 $ 6,405.93
2251169.71
2421629.47 $

13,073.66 6,413.01
2201303.17
239z789.84

Total Liabilities and Fund Equity

$ 248,874.30 $ 45,754.70 $ 88,154.54 $ 382,783.54 $ 3711436.78

See notes to the general purpose financial statements.

-14-

JOHNSON COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30. 1999

EXHIBIT"F"

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

FEDERAL PROGRAMS

TOTALS YEAR ENDED JUNE 30, 1999 JUNE 30, 1998

REVENUES

State Funds Federal Funds Other Funds

$ 45,022.00 $ 334,622.60

$

517,790.23

$ 986,651.00

138,467.13

379,644.60 $ 1,504,44123
138,467.13

400,279.88 1,324,452.37
115,258.75

Total Revenues

$ 701,279.36 $ 334,622.60 $ 986,651.00 $ 2,022,552.96 $ 1,839,991.00

EXPENDITURES

Current Instruction Support Services Pupil Services Improvement of Instructional Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation

$ 288,719.31 $ 751,134.50 $ 1,039,853.81 $ 1,016,442.20

$ 696,412.82

21,064.15 17,275.54
6,600.00 963.60

17,418.77 114,851.17 21,260.22
4,413.65 798.33
76,542.26

38,482.92 114,851.17 21,260.22
21,689.19 798.33
6,600.00
76,542.26 697,376.42

15,273.93 108,667.77
19,257.67 17,127.54
10,400.00 9,784.33
16,325.01 629,902.23

Total Expenditures

$ 6961412.82 $ 334,622.60 $ 986,418.90 $ 2,017,454.32 $ 1,843,180.68

Excess of Revenues over (under) Expenditures

$ 4,866.54 $

0.00 $

232.10 $

5,098.64 $

-3,189.68

OTHER FINANCING SOURCES

Operating Transfers In

27?19.77

Excess of Revenues and Other Financing Sources

over (under) Expenditures

$

4,866.54 $

0.00 $

232.10 $

5,098.64 $

24,530.09

FUND BALANCE JULY 1

239,789.84

0.00

0.00

239,789.84

218,881.05

Food Inventory - Net Change in Period Donated Commodities Purchased Food

-2,251.93 -7.08

-2,251.93 -7.08

-3,100.80 -520.50

FUND BALANCE JUNE 30

$ 242,397.37 $

0.00 $

232.10 $ 242,629.47 $ 239,789.84

See notes to the general purpose financial statements.

-15-

JOHNSON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 1999

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program 1999 Grant National School Lunch Program 1999 Grant
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food and Nutrition Program Food Distribution Program (1)
Total U.S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Flow Through 1999 Grant Preschool 1999 Grant Capacity Building Improvement 1999 Grant
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Title!
Grants to Local Educational Agencies
1999 Grant Titlell
Eisenhower Professional Development 1999 Grant
Title Ill Technology Uteracy Challenge Fund Grants 1999 Grant
Title VI Innovative Education Program Strategies 1999 Grant
Goals2000 State and Local Education Systemic Improvement Grants 1999 Grant

CFDA NUMBER

PASS-
THROUGH ENTITY ID NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

10.553 10.555

N/A $ N/A
$

160,347.52 324,153.55 $ 484,501.07 $

(2) 663,123.66 (3) 663,123.66

10.550

N/A
$

33,289.16 517,790.23 $

33,289.16 696,412.82

84.027 84.173 84.173

NIA $ NIA NIA
s

88,230.00 $ 25,484.00 4,796.00 118,510.00 $

88,230.00 25,484.00 4,796.00 118,510.00

84.010

NIA

84.281

NIA

84.318

NIA

84.298

NIA

84~276

NIA

410,353.00 38,500.00 75,000.00 12,165.00

410,353.00 38,500.00 75,000.00 12,165.00

142,695.00

142,695.00

-16-

JOHNSON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 1999

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Education, U. S. Department of Other Programs Pass-Through From Georgia Department of Education Safe and Drug-Free Schools 1999 Grant Vocational Education - Basic Grants to States High School Program Basic Grant 1999 Grant
TotalU. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

84.186

N/A

$

152,000.00 $

151,767.90

84.048

NIA $

37,428.00 986,651.00 $

37,428.00 986,418.90

Total Federal Financial Assistance

$ 1,504,441.23 $

N/A = Not Available

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 School Breakfast Program were not maintained separately and are included in the 1999 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 acaual basis of accounting which is the basis of accounting used in the presentation of the general purpose financial statements.

1,682,831.72

See notes to the general purpose financial statements.

-17-

JOHNSON COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 1999

SCHEDULE "2"

AGENCY/FUNDING
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 Specialist Local Fair Share Educational Equalization Funding Grant Food Services Vocational Education Other State Programs Alternative Program Apprenticeship Program At-Risk Summer School Program Environmental Science Program Health Insurance Innovative Programs Preschool Handicapped Program Remedial Summer School Program Student Records Teachers" Retirement Lottery Programs Assistive Technology Computers in the Classroom
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACTS Education, Georgia Department of Reading First Program Georgia"s Reading Challenge
OTHER Georgia Council for the Arts Georgia Challenge Grant
See notes to the general purpose financial statements.

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$ 2,983,672.00 572,524.00 155,130.00 128,907.00 35,884.00 846,684.00
259,102.00 87,718.00 201,752.00 114,374.00
229,835.00 88,353.00 11,342.00 28,842.00
-429,367.00 452,979.00
$ 52,128.00
35,400.00 2,000.00 7,973.91
500.00 105,799.14
5,000.00 22,119.00
3,763.87 1,027.50 10,5TT.57

$
45,022.00
4,731.22 27,255.00

2,983,672.00 572,524.00 155,130.00 128,907.00 35,884.00 846,684.00
259,102.00 87,718.00
201,752.00 114,374.00 229,835.00 88,353.00 11,342.00 28,842.00 -429,367.00 452,979.00 45,022.00 52,128.00
35,400.00 2,000.00 7,973.91 500.00
105,799.14 5,000.00
22,119.00 3,763.87 1,027.50 10,5TT.57
4,731.22 27,255.00

302,636.38

302,636.38

30,005.00

30,005.00

25,616.00 93,600.00

25,616.00 93,600.00

11,000.00

11,000.00

$ 6,174,240.99 $

379,644.60 $ 6,553,885.59

-18-

JOHNSON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS YEAR ENDED JUNE 30, 1999

SCHEDULE 3

EXPENDITURES
Current Instruction Support Services Pupil Services School Administration Maintenance and Operation of Plant Food Services Operation

ASSISTIVE TECHNOLOGY

COMPUTERS INTHE
CLASSROOM

PRE-KINDERGARTEN PROGRAM

TOTAL

$

4,731.22 $ 27,255.00 $

256,733.09 $ 288,719.31

21,064.15 17,275.54
6,600.00 963.60

21,064.15 17,275.54
6,600.00 963.60

Total Expenditures

$

4,731.22 $ 27,255.00 $

302,636.38 $ 334,622.60

RECAP:
Salaries and Benefits Pre-Kindergarten Program
Other Expenditures Assistive Technology Computers in the Classroom Pre-Kindergarten Program

$ 285,446.74
4,731.22 27,255.00 17,189.64

$ 334,622.60

See notes to the general purpose financial statements.

-19-

JOHNSON COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS
YEAR ENDED JUNE 30.1999

SCHEDULE "4"

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

$

3,840,233.00 $

120,426.00

$

3,771,978.18

157,742.26 $ _ _....;1;.;:;.3.:.<1,.;_;16;.;;.0.;..;..7~0

$

3,929,720.44

-43,548.38 $ _ _.=,3~,8.=..:86:.!..,1.;.;.7.=2:.:;.06:;,.

$

o.oo $ _ _ _ _==o==.o=o

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, 1999

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 11 (*) category 111 (*) category IV (*) Sub-Total - Regular
r) category VI (Gifted)
Total Special Education Programs REMEDIAL EDUQATIQN PRQGRAM (*l
Total Fourteei:i Weighted Programs MEDIA QENTER PROGRAMS
Salaries Operations
Total Media Center Programs
Total Fourteen Weighted and Media Center Programs

ALLOTMENTS FROM GEORGIA DEPARTMENT OF

REQUIRED

ORIGINAL

%

ORIGINAL

MID-TERM

$

330,470.00

$

297,423.00 $

835,158.00

751,642.20

$ 1,165,628.00 90 $ 1,049,065.20 $

338,289.00 90

304,460.10

679,680.00 90

611,712.00

387,621.00 90

348,858.90

162,453.00 90

146,207.70

250,001.00 90

225,000.90

$ 2,983,672.00

$ 2,685,304.80 $

0.00 0.00
0.00

$

497,239.00

$

447,515.10 $

0.00

$

497,239.00 90 $

447,515.10 $

75,285.00 90

67,756.50

$

572,524.00

$

515,271.60 $

$

155,130.00 90 $

139,617.00 $

$ 3,711,326.00

$ 3,340,193.40 $

$

102,448.00 90 $

26,459.00 100

92,203.20 $
26,459.00

$

128,907.00

$

118,662.20 $

$ 3,840,233.00

$ 3,458,855.60 $

0.00
0.00 0.00 0.00
0.00 0.00
0.00

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

$

11,317.00

24,567.00

$

11,317.00 $

24,567.00

0.00 0.00

$

35,884.00 100 $

----- 35,884.00 $

0.00

- 22 -

SCHEDULE 5

EDUCATION TOTAL
REQUIRED

ACTUAL EXPENDITURES

SALARIES

OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$

297,423.00 $

290,140.44 $

1,462.42 $

291,602.86

751,642.20

745,296.98

12,229.74

757,526.72

$ 1,049,065.20 $ 1,035,437.42 $

13,692.16 $ 1,049,129.58 $

0.00

304,460.10

299,972.86

5,176.14

305,149.00

0.00

611,712.00

648,490.87

5,394.35

653,885.22

0.00

348,858.90

410,814.53

26,203.01

437,017.54

0.00

146,207.70

212,499.37

6,378.86

218,878.23

0.00

225,000.90

263,090.79

14,884.48

277,975.27

0.00

$ 2,685,304.80 $ 2,870,305.84 $

71,729.00 $ 2,942,034.84

$

447,515.10

$

189,481.75 $ 269,903.36
63,733.66

14,083.33 $ 20,598.47 21,561.04

203,565.08 290,501.83 85,294.70

$

447,515.10 $

523,118.77 $

56,242.84 $

579,361.61

0.00

67,756.50

75,750.03

3,054.61

78,804.64

0.00

$

515,271.60 $

598,868.80 $

59,297.45 $

658,166.25

$

139,617.00 $

156,929.72 $

134.25 $

157,063.97

0.00

$ 3,340,193.40 $ 3,626,104.36 $

131,160.70 $ 3,757,265.06

$

92,203.20 $

145,873.82

$

145,873.82

0.00

26,459.00

$

26,581.56

26,581.56

0.00

$

118,662.20 $

145,873.82 $

26,581.56 $

172,455.38

$ 3,458,855.60 $ 3,771,978.18 $

157,742.26 $ 3,929,720.44 $

0.00

$

11,317.00

24,567.00

s_ _ _3ss..,84_,..o.o..

$

20,813.00 $ 20,813.00

15,071.00

15,071.00

$

35,884.00 $

35,884.oo s________o_.o_o

23

SECTION IT COMPLIANCE AND INTERNAL CONTROL REPORTS

w. RUSSELL HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 8, 2000

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board of Education
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, 1999, and have issued our report thereon dated May 8, 2000. 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 of the 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 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 of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Johnson 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 control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its
99YB-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 of Findings and Questioned Costs as items FS-6831-99-01 and FS-6831-99-02.
A material weakness is a condition in which the design or operation of one or more ofthe 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 ofperforming 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 wealmesses. However, both of the reportable conditions described above are also considered to be material weaknesses.
This report is intended solely for the information and use ofmanagement, members ofthe Johnson County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

RWH:gp 99YB-40

State Auditor

RussELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 8, 2000

Honorable Roy E. Barnes, Governor Members of the General Assembly Members ofthe State Board of Education
and Superintendent and Members of the Johnson County Board ofEducation
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAfOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITHOMB 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 (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1999. Johnson County Board ofEducation's major Federal programs are identified in 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 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 of the United States; and 0MB Circular A-133,Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance 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 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 ofEducation's compliance with those requirements.

99SA-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 ofits major Federal programs for the year ended June 30, 1999.
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 perfomring 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 detemrine 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 of the internal control over compliance would not necessarily disclose all matters ir. 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 solely for the information and use ofmanagement, members ofthe Johnson County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

RWH:gp 99SA-10

State Auditor

SECTIONID 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 COSTS
YEAR ENDED JUNE 30, 1999

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

6831-96-01 FS-6831-97-01 FS-6831-97-02 FS-6831-98-01 FS-6831-98-02

Previously Reported Corrective Action hnplemented Further Action Not Warranted Further Action Not Warranted Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORREC f lVE ACTION/RESPONSES

CASH AND CASH EQUNALENTS GENERAL LEDGER Inadequate Separation ofDuties Finding Control Number: FS-6831-98-01

There are only two people in the central office at Johnson County Board of Education. We generally rotate duties so that no person does the same duties at all times. We realize that we should have better internal control, but financial concerns prevent us from hiring additional personnel.

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6831-98-02

The Johnson County Board ofEducation has decided not to pursue the recording ofgeneral fixed assets on the financial statements due to current staff limitations and budgetary considerations prohibiting the hiring of additional administrative staff.

SECTIONIV FINDINGS AND QUESTIONED COSTS

JOHNSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED mNE 30, 1999

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 of Education disclosed financial statement reportable conditions related to the following control categories.

Cash and Cash Equivalents General Fixed Assets

General Ledger

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

3. Noncompliance Material to the Financial Statements The audit ofthe 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 ofReport 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 Required to be Reported by Section .5to(a) 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 Pro~ams 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 84.010 Elementary and SecondaryEducation Act - Title I - Grants to Local Educational Agencies

8. ~ e "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 did not qualify as a low risk auditee as defined by Section
.530 ofOMB Circular A-133.

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JOHNSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1999
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUNALENTS GENERAL LEDGER Inadequate Separation ofDuties Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6831-99-01
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 supported by adequate documentation and/or explanations. In addition, journal entries are not reviewed and approved by someone independent of journal entry preparation and posting.
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 ofduties 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-6831-99-02
The Johnson 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 of the 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 ofa 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 no,t 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.
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JOHNSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1999 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.
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