Ii %00 f\J _;1(, L3 q~l-~g AUDIT REPORT LAURENS COUNTY BOARD OF EDUCATION DUBLIN, GEORGIA YEAR ENDED JUNE 30, 1998 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS 254 WASHINGTON STREET ATLANTA, GEORGIA 30334-8400 LAURENS 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 EXHIBITS GENERAL PURPOSE FINANCIAL STATEMENTS COMBINED STATEMENTS - OVERVIEW A COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP 2 B COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES 4 C COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS 7 D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS 8 ADDmONAL FINANCIAL INFORMATION COMBINING STATEMENTS SPECIAL REVENUE FUND E COMBINING BALANCE SHEET 20 F COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 21 CAPITAL PROJECTS FUND G COMBINING BALANCE SHEET 22 H COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 23 DEBT SERVICE FUND I COMBINING BALANCE SHEET 24 J COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 25 SCHEDULES 1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION 26 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 27 3 SCHEDULE OF STATE REVENUE 29 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 30 LAURENS COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL ADDITIONAL FINANCIAL INFORMATION SCHEDULES 5 SCHEDULE OF EXPENDITURES LOTIERY PROGRAMS 31 ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS 6 OVERALL 33 7 BY PROGRAM 34 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 ill 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 April 19, 1999 Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board of Education and Superintendent and Members ofthe Laurens County Board of Education 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 fmancial statements of the Laurens 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 Laurens County Board of Education's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with 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 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 confonn to generally accepted accounting principles, these accounts should be-included in the general purpose fmancial 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 of Education 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 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 fmancial statements of the matters referred to in the preceding paragraph, the general purpose fmancial statements referred to above present fairly, in all material respects, the financial position of the Laurens County Board of Education as of June 30, 1998, 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 April 19, 1999, on our consideration of the Laurens County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. The year 2000 supplementary information on Schedule "1" is not a required part of the basic finan,cial statements but is supplementary information required by the Governmental Accounting. Standards Board. We have applied certain limited procedures, which consisted principally ofinquiries ofmanagement 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 Laurens County Board of Education is or will become ye1if 2000 compliant, that the Board's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Laurens County Board of Education does business are or will become year 2000 compliant. Our audit was performed for the purpose of forming an opinion on the general purpose financial statements of the Laurens County Board of Education taken as a whole. The accompanying combining statements (Exhibits E through J) and the financial schedules (Schedules 2 through 7), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-l33, Audits olStates, Local Governments, and Non-Profit Organizations, are present~d for purposes of additional analysis and are not a required part of the general purpose fmancial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and in our opinion, except for the effects ofthe matters referred to in the third paragraph, such information is farrly presented in all material respects in relation to the general purpose financial statements taken as a whole. 98ARL-l3B 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, RWH:gp .98ARL-13B Russell W. Hinton State Auditor LAURENS COUNTY BOARD OF EDUCAnON LAURENS COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 1998 ASSETS Cash and Cash Equivalents Investments Accounts Receivable Inventories Food Donated Commodities Purchased Food Amount Available in Debt Service Fund Amount to be Provided in Future Years For Payment of: Bond Debt Capital Lease Agreements GENERAL FUND GOVERNMENTAL FUND TYPES SPECIAL CAPITAL REVENUE PROJECTS FUND FUND $ 274,287,85 $ 1,022,023.26 10,433,736.21 $ 252,473.80 229,973.03 36,537.27 25,983.18 8,256.83 Total Assets $ 252,473.80 $ 538,500.89 $ 11.492,296.74 LIABILITIES AND FUND EQUITY LIABILITIES Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Capital Lease Agreements General Obligation Bonds Payable Total Liabilities FUND EQUITY Fund Balances Reserved For Bus Replacement Funds For Debt Service For Inventories Food Donated Commodities Purchased Food For Purpose of Bond Issue For State Capital Outlay Projects Unreserved Deficit Undesignated Total Fund Equity $ 579,662.18 53,269.32 $ 100,350,65 354,467.54 $ 632,931,50 $ 454,818.19 $ 3,738.04 $ -384,195.74 0.00 $ 380,457.70 $ 25,983.18 8,256,83 $ 11,419,835.74 72,461.00 49,442.69 0.00 83,682.70 $ 11.492,296.74 Total Liabilities and Fund Equity $ 252,473.80 $ The notes to the general purpose financial statements are an integral part of this statement. -2- 538,500.89 $ 11 ,492,296.74 EXHIBIT "A" DEBT SERVICE FUND ACCOUNT GROUP GENERAL LONG-TERM DEBT TOTALS (Memorandum Only) JUNE 30,1998 JUNE 30,1997 $ 888,621.29 $ 2,184,932.40 $ 160,699.78 10,433,736.21 556,292.68 1,075,276.78 249,455.54 $ 1,444,913.97 25,983.18 8,256.83 1,444,913.97 14,025.04 6,362.22 91,518.04 14,325,086.03 319,937.21 14,325,086.03 319,937.21 4,258,481.96 324,119.49 $ 1,444,913.97 $ 16,089,937.21 $ 29,818,122.61 $ 5,104,662.07 $ 579,662.18 $ 200,349.51 153,619.97 93,378.99 354,467.54 304,256.42 3.36 $ 319,937.21 319,937.21 324,119.49 15,770,000.00 15,770,000.00 4,350,000.00 $ 16,089,937.21 $ 17,177,686.90 $ 5,272,107.77 $ 1,444,913.97 0.00 $ 1,444,913.97 $ 3,738.04 $ 1,444,913.97 30,719.86 91,518.04 25,983.18 8,256.83 11,419,835.74 72,461.00 -384,195.74 49,442.69 $ 12,640,435.71 $ 14,025.04 6,362.22 -310,070.86 0.00 -167,445.70 $ 1,444,913.97 $ 16,089,937.21 $ 29,818,122.61 $ 5,104,662.07 -3- LAURENS COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 1998 EXHIBIT"B" CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTALS (Memorandum Only) YEAR ENDED JUNE 30, 1998 JUNE 30, 1997 $ 20,728,994.64 $ 19,537,146.48 3,042,013.35 2,585,276.78 $ 1,652,258.11 8,030,953.37 6,624,845.57 $ 221,383.98 8,992.82 980.470.50 573,190.60 $ 221,383.98 $ 1,661,250.93 $ 32,782,431.86 $ 29,320.459.43 $ 20,084,184.25 $ 18,445,628.50 $ 205,994.74 113,092.50 1,542,040.85 522.466.15 529,149.44 632,672.92 1,764,586.59 365,415.13 1,978,460.78 1,638,030.02 58,920.17 17,768.10 1,838,142.94 1,601.78 241,604.07 1,411,992.79 565,329.53 492,072.21 533,747.88 1,587,278.26 160,243.95 1,660,120.52 1,765,133.99 31,137.00 55,591.67 1,790,875.89 1,370.46 2,476,967.16 $ 170,000.00 204,672.50 247,467.88 233,476.38 214,070.59 286,165.58 $ 319,087.24 $ 374,672.50 $ 31,695,987.45 $ 31,4n,725.98 $ -97,703.26 $ 1,286,578.43 $ 1,086,444.41 $ -2,157,266.55 $ $ 11,590,000.00 $ 11 ,590,000.00 $ 44,298.65 $ 44,298.65 22,518.85 11,590,000.00 73,285.60 $ 22,518.85 -22,518.85 66,817.50 $ 11 ,707,584.25 $ 46,629.40 1,068,805.32 -1,068,805.32 46,629.40 $ 11,492,296.74 $ 0.00 1,353,395.93 $ 12,794,028.66 $ 91,518.04 -167,445.70 -2,110,637.15 1,939,076.43 11,958.14 1,894.61 1,811.45 2,303.57 $ 11,492,296.74 $ 1,444,913.97 $ 12,640.435.71 $==-=16;,;701:,44==:5.=70== -5- The notes to the general purpose financial statements are an integral part of this statement. -7- LAURENS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The Laurens 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 and an account group to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available fmancial resources. 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 fmancial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general purpose financial statements. The generalpurpose 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 and the account group 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 ofspecific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department ofEducation and from the Federal government to accomplish specific educational objectives. -8- LAURENS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities. DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees. ACCOUNT GROUP GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debtoutstanding and material capital lease obligations. 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 (Le., revenues and other financing sources) and decreases (Le., expenditures and other financing uses) in net current assets. Their reported fu:nd balance is considered a measure of available spendable resources. Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group. 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 determined and "available" means collectible within the curren,t period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual,are property taxes, local option sales 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 - 9- LAURENS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES to the Board in the same twelve months. As of June 30, 1998, compensation under these employment contracts had been earned, but two of the twelve monthly payinents, 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 ofthe 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. BUDGET The Laurens County Board of Education'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 budgC?t 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. CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financi~ institutions. Georgia Laws authorize the Board to deposit its funds in one or more solvent banks, i,nsured :federal savings and loan associations, or insured State chartered building and loan associations. INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the Board in nonparticipating interest-earning contracts (such as certificates of depQsit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year - 10- LAURENS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Board to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia. RECEIVABLES Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receiva1;>les 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 Laurens County Board ofCommissioners fixed the property tax levy for the 1997 tax year (calendar year) on October 1, 1997 (levy date). Taxes were due on December 1, 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 Laurens County Tax Commissioner bills and collects the property taxes for the Board of Education, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the Board. - 11 - LAURENS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Tax millage rates levied for the 1997 tax year (calendar year) for the Laurens County Board ofEducation were as follows (a mill equals $1 per thousand dollars of assessed value): School Operations School Bonds 13.57 mills ~mills 14.13 mills SALES TAXES Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes and debt service. Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $1,383,299.91 and was recorded in the Debt Service Fund. The State will terminate collection ofthis tax once an additional $19,960,350.09 has been collected or on December 31, 2002 whichever occurs first. 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 (weighted average). 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 offund balance which indicates that these amounts do not constitute "available spendable resources" even though they are ~ component of net current assets. GENE~ OBLIGATION BONDS The Board issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond premiums and discounts~ as well as issuance costs, are recognized in the financial statements during the year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the General Long-Term Debt Account Group. INTERFUND TRANSACTIONS The Board has the following types of interfund transactions: - 12- LAURENS COUNTY BOARD OF EDUCATION EXHIBIT "D" . NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 3D. 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reimbursements of expenditures initially made from a fund that are.properly applicable to another fund, are recorded as expenditures in the reimbursing fun~ 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 of this data. DEFICIT FUND BALANCES Funds reporting a deficit fund balance position at June 30, 1998, are as follows: Fund Type/Fund Name Deficit Balance Governmental Fund Type General Fund $ 384,195.74 The Laurens County Board ofEducation has adopted a Deficit Financing Elimination Plan. Note 2: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee 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 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, - 13- LAURENS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 2: DEPOSITS AND INVESTMENTS (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 of the State of Georgia, (5) Bonds of any 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 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 $7,722,556.97. 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 $ 1,288,117.16 2 5,557,735.30 3 876,704.51 Total $ 7.722.556.97 - 14- LAURENS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30,1998 Note 2: DEPOSITS AND INVESTMENTS CATEGORIZATION OF INVESTMENTS At June 30, 1998, the carrying value ofthe Board's total investments was $7,983,068.24 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the Board did not own any specific identifiable securities in the pool. The investment policy ofthe State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (primary Liquidity Portfolio) does not provide for investment in derivatives or siinilar investments. A description of the Primary Liquidity Portfolio is as follows: The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. However, Georgia Fund 1 operates in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to be a 2a-7 like pool. The pool is not registered with the SEC as an investment company. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and determines participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist offunds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund. Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. Fund 6 maintains a duration ofapproximately one year. The weighted average maturity for Georgia Fund 1 on June 30, 1998 was 29 days. The average investment duration for Fund 6 on June 30, 1998 was .96 years. 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 at their Federally assigned value. See Note 1 - Inventories 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. - 15 - LAURENS COUNTY BOARD OF EDUCATION EXHIBIT "0" . NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 4: RISK MANAGEMENT The Board participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994 to develop and administer a plan to reduce risk of loss on account ofgeneral liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The Board pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery, general liability (including coverage for sexual harassment, molestation and abuse) and automobile risks. Payment of excess insurance for the system varies byline of coverage. The Board is self-insured with regard to unemployment compensation claims. The Board accounts for claims within the same fund that the employee's salary and benefits were paid. Claims are accounted for 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 ofYear Liability Claims and Changes in Estimates $ 1.772.00 $ $ 0.00 $ 519.68 $ 0.00 $ Claims Paid End ofYear Liability 2,291.68 $ 0.00 0.00 $ 0.00 The Board participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July 1, 1992 to develop, implement, and administer a program of workers' compenSation self-insurance for its member organizations. The Board pays an annual premium to the Fund for its general insurance coverage.. Additional insurance coverage is provided through an agreement by the Fund with the United States Fidelity and Guaranty Company to provide coverage for potential losses sustained by the Fund in excess of $350,000.00 loss per occurrence, up to the statutory limit. Also, should losses within the retained limit of $350,000.00 aggregate to more than seventy-five percent (75%) of the standard experience rated premium during the policy term, the policy with the United States Fidelity and Guaranty Company will pay the next $1,000,000.00 ofloss.. The Board has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount Superintendent Employees' Blanket Bond $ 50,000.00 $ 50,00Q"p0. - 16- LAURENS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 5: GENERAL LONG-TERM DEBT CAPITAL LEASES The Laurens County Board ofEducation has entered into various lease agreements as lessee for land and land improvements and equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value ofthe future minimum lease payments as ofthe date oftheir inception. GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: Purpose Interest Rates Amount General Government - Series 1995 General Government - Series 1997 General Government - Series 1998 3.90% - 5.20% 4.00% - 4.35% 3.75% - 4.05% $ -4,180,000.00 5,000,000.00 6.590,000.00 $15,770,000.00 The changes in General Long-Term Debt during the fiscal year ended June 30, 1998, were as follows: Capital Leases General Obligation Bonds Total Balance July 1, 1997 $ 324,119.49 $ 4,350,000.00 $ 4,674,119.49 Additions 73,285.60 11,590,000.00 11,663,285.60 Deductions Payments 77.467.88 170,000.00 247.467.88 Balance June 30, 1998 $ 319.937,21 $1.5.770,000.00 $16.089,937.21 At,June 30, 1998, payments due by fiscal year which includes principal and interest for these items are as follows: - 17 - LAURENS COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 5: GENERAL LONG-TERM DEBT Fiscal Year Ended June 30 Capital Leases General Obligation Bonds Total Debt 1999 2000 2001 2002 2003 2004 - 2008 2009 - 2013 $ 106,271.76 94,857.76 89,262.56 78,576.50 $ 1,122,393.54 2,281,307.50 3,831,267.50 4,149,525.00 4,302,492.50 2,517,897.50 1,056,745.00 $ 1,228,665.30 2,376,165.26 3,920,530.06 4,228,101.50 4,302,492.50 2,517,897.50 1,056,745.00 Total Principal and Interest $ 368,968.58 $19.261 ,628.54 $19,630,597.12 Deduct: Imputed Interest 49,031.37 Net Present Value of Future Minimum Lease Payments $ 319.937.21 Note 6: ON-BEHALF PAYMENTS The Board has recognized revenues and expenditures in the amount of$441,575.67 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies. Georgia Department ofEducation Paid to the State Merit System of Personnel Administration For Health Insurance ofNon-Certified Personnel In the amount of$352,910.13 Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of$23,722.54 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 $64,943.00 - 18 - LAURENS COUNTY BOARD OF EDUCATION EXHmIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1998 Note 7: 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 fmancial position. Note 8: 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 defmed 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 of Trustees 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 1998 1997 1996 Percentage Contributed 100% 100% 100% Required " Contribution $ 2,074,991.79 $ 1,886,714.18 $ 1,732,764.80 - 19- ASSETS Cash and Cash Equivalents Accounts Receivable Inventories Food Donated Commodities Purchased Food Total Assets LAURENS COUNlY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 1998 EXHIBIT"E" SCHOOL FOOD SERVICES FUND LOTTERY PROGRAMS FEDERAL TOTALS PROGRAMS JUNE 30,1998 JUNE 30, 1997 $ 139,203,23 $ 121,838,10 $ 13,246,52 $ 274,287,85 $ 154,693.70 10,133.04 219,839.99 229,973.03 153,560.83 25,983,18 8,256,83 25,983.18 8,256,83 14,025.04 6,362.22 $ 183,576,28 $ 121,838,10 $ 233,086.51 $ 538,500,89 $ 328,641.79 See notes to the general purpose financial statements. -20- LAURENS COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES SPECIAL REVENUE FUND YEAR ENDED JUNE 30.1998 EXHIBIT"P FUND BALANCE JUNE 30 $ 83,682.70 $ 0.00 $ 0.00 $ 83,682.70 $ -144,433.50 See notes to the general purpose financial statements. - 21 - LAURENS COUNTY BOARD OF-EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 1998 EXHIBIT"G" ASSETS Cash and Cash Equivalents Investments Accounts Receivable BOND PROCEEDS $ 949,562,26 $ 10,433,736.21 36.537.27 LOTIERY PROJECT TOTALS JUNE 30.1998 JUNE 30. 1997 72,461,00 $ 1,022,023.26 $ 0.00 10,433,736.21 36.537.27 Total Assets $ 11,419,835.74 $ 72,461.00 $ 11,492.296.74 $========0',;;;;00= FUND EQUITY Fund Balances Reserved For Purposes of Bond Issue For State Capital Outlay Projects Unreserved Undesignated $ 11,419,835.74 $ $ 11,419,835.74 72,461.00 72,461.00 0.00 _ _ _---:o~.o:::.::o:... 0.00 $ O:..:.:.:OO~ Total Fund Equity $ 11.419.835.74 $ 72.461.00 $ 11,492,296.74 $========0.:=00",= See notes to the general purpose financial statements. - 22- LAURENS COUNTY BOARD OF EDUCATION . COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES . CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 1998 EXHIBIT"H" FUND BALANCE JUNE 30 $ 11,419,835,74 $ 72,461.00 $ 11.492,296.74 $======0'=00= See notes to the general purpose financial statements. - 23- LAURENS COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET DEBT SERVICE FUND JUNE 30, 1998 EXHIBIT "I" ASSETS Cash and Cash Equivalents Accounts Receivable PROPERTY TAXES FOR BOND DEBT SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS JUNE 30, 1998 JUNE 30, 1997 $ 504,13 $ 888,117,16 $ 888,621,29 $ 87,132.19 10.113.51 546,179.17 556,292.68 4,385,85 Total Assets $ 10.617.64 $ 1,434,296.33 $ 1,444,913,97 $ ===9:=.15,5.1.8.:=.0;;,,:4= FUND EQUITY Fund Balances Reserved For Debt Service Unreserved Undesignated $ 10,617,64 $ 1,434,296,33 $ 1,444,913,97 $ 91,518,04 0.00 0,00 0,00 0.00 Total Fund Equity $ 10,617.64 $ 1,434,296,33 $ 1.444,913,97 $ =====9:=1=,5;,;,1=8,.0.4.== See.notes to the general purpose financial statements. - 24- LAURENS COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BAlANCES DEBT SERVICE FUND YEAR ENDED JUNE 30,1998 EXHIBIT"J" PROPERTY TAXES FOR BOND DEBT SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS YEAR ENDED JUNE 30,1998 JUNE 30, 1997 REVENUES Taxes Other Funds $ 268,958,20 $ 1,383,299.91 $ 1,652,258.11 $ 339,609,22 2,295.05 6,697.77 8,992.82. 3,198.58 Total Revenues $ 271,253:25 $ 1,389,997.68 $ 1,661 ,250.93 $ 342,807,80 EXPENDITURES Debt Service Principal Interest $ 170,000.00 $ 204,672.50 0.00 $ 170,000,00 $ 204,672.50 150,000.00 263,153.13 Total Expenditures $ 374,672.50 $ 0.00 $ 374,672.50 $ 413,153.13 Excess of Revenues over (under) Expenditures $ -103,419.25 $ 1,389,997.68 $ 1,286,578.43 $ -70,345.33 OTHER FINANCING SOURCES Accrued Interest on Bonds Sold Operating Transfers In $ 44,298.65 $ 44,298.65 $ 22,518.85 22,518.85 $ 145,000.00 .Total Other Financing Sources $ 22,518.85 $ 44,298.65 $ 66,817.50 $ 145,000.00 Excess of Revenues and Other Financing Sources over (under) Expenditures $ -80,900.40 $ 1,434,296.33 .$ 1,353,395.93 $ 74,654.67 FUND BAlANCE JULY 1 91,518.04 0.00 91,518.04 16,863.37 FUND BAlANCE JUNE 30 $ ====__ 10,617.64 $ 1,434,296,33 $ 1,444,913.97 $ ;;,;;9.1..;,5=18=.04=== See notes to the general purpose financial statements. 25 - LAURENS COUNTY BOARD OF EDUCATION SCHEDULE "1" SCHEDULE OF REOUIRED SUPPLEMENTARY INFORMATION YEAR 2000 DISCLOSURES YEAR ENDED JUNE 30. 1998 At June 30, 1998, the Laurens County Board of Education 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. 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. ValidationlTesting 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 Board's financial accounting software (GENESIS) and hardware (Wang VS) is 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. - 26- LAURENS COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 1998 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Agriculture, U. S, Department of Direct Summer School Food Services Program for Children 1998 Grant 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) Total U. S, Department of AgriCUlture Education, U. S. Department of Pass-Through From First District Regional Educational Service Agency d/b/a Live Oak Migrant Education Agency Elementary and Secondary Education Act Title I Migrant Education Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Title I Grants to Local Educational Agencies 1998 Grant Title /I Eisenhower Professional Development 1998 Grant Title VI Innovative Education Program Strategies 1998 Grant Goals 2000 State and Local Education Systemic Improvement Grant 1998 Grant Individuals with Disabilities Education Act .Part B - Special Education Flow Through 1998 Grant Preschool 1998 Grant Severely Emotionally Disturbed 1998 Grant Safe and Drug-Free Schools 1998 Grant Vocational Education - Basic Grants to States High School Program Basic Grant 1998 Grant Tech-Prep Education 1998 Grant Total U. S, Department of Education CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD * 10,559 $ 35,594,27 (2) * 10.553 * 10,555 10,550 N/A 385,145.10 (2) N/A 899,053,37 $ 1,700,323.76 (3) N/A 136,740,55 136,740,55 $ 1,456,533,29 $ 1,837,064,31 84,011 N/A $ 17,424.57 $ 17,424.57 84,010 NlA 84.281 N/A 84.298 N/A 855,715,66 42,213.71 30,178,00 855,715.66 42,213.71 30,178,00 82.276 N/A 202,649.70 202,649.70 * 84.027 N/A * 84.173 N/A * 84,027 N/A 84.186 N/A 187,292,00 19,053.60 124,161.99 25,658.49 187,292.00 19,053.60 124,161,99 25,658.49 84.048 84.243 N/A 47,633.90 47,633,90 NlA 5,000.00 5,000,00 $ 1,556,981.62 $ 1,556,981,62 -27 - LAURENS COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30. 1998 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Justice, U. S. Department of Pass-Through From Govemor's Office of Planning and BUdget Children and Youth Coordinating Council CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD .. 16.540 N/A $ 28,498.44 $ _ _-=2:=l8,,-,,49:.::8~.44..;.. Total Federal Financial Assistance = N/A Not Available $ 3,042,013.35 $ Notes to the Schedule of Expenditures of Federal Awards (1) The amounts shown for the Food Distribution Program represents 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 Summer School Food Services Program for Children 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 expenditLires of Federal awards includes the Federal grant activity of the Laurens 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 financial statements. 3,422,544.37 See notes to the general purpose financial statements. -28 LAURENS COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 1998 SCHEDULE "3" AGENCYIFUNDING GRANTS Community Affairs, Georgia Department of Govemor's Emergency Funds (*) Local Assistance Grant 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 Limited English Speaking Middle School Incentive Program Special Instructional Assistance In-School Suspension Mid-term Adjustment 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 Health Insurance Mentor Teacher Program Preschool Handicapped Program PSATExams Remedial Summer School Program Severely Emotionally Disturbed 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 $ 10,000.00 20,028.00 $ 10,000.00 20,028.00 10,550,131.00 2,054,290.00 280,265.00 435,731.00 134,783.00 2,889,661.00 831,782.00 246,804.00 1,220.00 376,092.00 528,742.00 167,667.00 248,128.00 40,963.00 43,263.00 -2,066,353.00 933,476.00 $ 63,261.00 126,088.00 227,000.00 18,043.78 500.00 352,910.13 6,392.00 51,025.00 40.00 9,492.45 23,722.54 124,568.00 943,307.00 4,132.00 7,245.54 136,491.00 843,160.20 64,943.00 10,550,131.00 2,054,290.00 280,265.00 435,731.00 134,783.00 2,889,661.00 831,782.00 246,804.00 1,220.00 376,092.00 528,742.00 167,667.00 248,128.00 40,963.00 43,263.00 -2,066,353.00 933,476.00 124,568.00 63,261.00 126,088.00 227,000.00 18,043.78 500.00 352,91-0.13 6,392.00 51,025.00 40.00 9,492.45 943,307.00 23,722.54 4,132.00 7,245.54 136,491.00 843,160.20 64,943.00 $ 18,670.090.90 $ 2,058,903.74 $ 20,728,994.64 (*) Purchase books and materials for the East Laurens Middle School Accelerated Reader Program. See notes to the general purpose financial statements. - 29- LAURENS COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30. 1998 SCHEDULE "4" PROJECT Acquiring land, constructing and equipping two new elementary schools (Northwest and Southwest Laurens Elementary Schools); renovating, improving and adding to East Laurens High School; acquiring, constructing and equipping renovations to East Laurens Elementary School; making improvements to the physical education and athletic facilities at East Laurens and West Laurens High Schools; and retiring previously incurred general obligation debt ORIGINAL ESTIMATED COST (1) CURRENT ESTIMATED COST (2) AMOUNT EXPENDED IN CURRENT YEAR (3) AMOUNT EXPENDED IN PRIOR YEARS $ 21,343,650.00 $ 21.343,650.00 $ 113.092.50 $=======0='0=0= (1) The Board's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. (2) The Board's current estimate of total cost for the project. Includes all cost from project inception to completion. (3) The voters of Laurens County approved the imposition of a 1% sales tax to fund the above projects. Amounts expended for these projects may include sales tax proceeds. state. local property taxes and/or other funds over the life of the project. See notes to the general purpose financial statements. - 30- LAURENS COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES LOTIERY PROGRAMS YEAR ENDED JUNE 30,1998 SCHEDULE "5" EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional services Maintenance and Operation of Plant Other Support Services Food Services Operation ALTERNATIVE INSTRUCTIONAL TECHNOLOGY SCHOOL ASSISTIVE CLASSROOM PROGRAM - TECHNOLOGY TECHNOLOGY PRE-KINDERGARTEN PROGRAM TOTAL $ 4,132,00 $ 7,245,54 $ 136,491.00 $ 722,529.82 $ 870,398,36 60,116.23 3,279.08 55,414.62 741.82 1,078.63 60,116.23 3,279.08 55,414.62 741.82 1,078.63 Total Expenditures $ 4,132.00 $ 7,245.54 $ 136,491.00 $ 8..4..3...1.6.:;,;;o~.2;;;.0 $ 991,028.74 RECAP: Salaries and Benefits Pre-Kindergarten Program Other Expenditures Alternative School Program Instructional Technology Assistive Technology Classroom Technology Pre-Kindergarten Program $ 742,559.47 4,132.00 7,245.54 136,491.00 100,600.73 $ 991,028.74 See notes to the general purpose financial statements. - 31 - LAURENS COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS . YEAR ENDED JUNE 30, 1998 SCHEDULE "6" 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 $ 13,567,690,00 $ 491,586,00 $ 15,252,419,27 835,816,93 $ $ 16,088,236,20 748,724.09 -84,652,68 $ 16,003,583,52 $ 0,00 $=====O:=,O:=.O See notes to the general purpose financial statements. - 33 - LAURENS COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - BY PROGRAM GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30. 1998 STAFF DEVELOPMENT PROGRAMS Cost of Instruction Professional Development Total Staff Development Programs (*) Identifies Fourteen Weighted Programs, See notes to the general purpose financial statements, $ 39.099,00 95.684.00 $ 39.099,00 $ 95.684,00 855,00 0.00 $ 134,783,00 100 $ 134,783,00 $=====85..5..,0=0 - 34 - SCHEDULE "7" TOTAL REQUIRED ACTUAL EXPENDITURES SALARIES OPERATIONS TOTAL AMOUNT OF UNDEREXPENDITURE FOR REQUIRED ALLOTMENT $ 1,084,662.90 $ 1,243,898.45 $ 68,564.07 $ 1,312,462.52 2,672,119.70 2,880,676.18 155,889.03 3,036,565.21 $ 3,756,782.60 $ 4,124,574.63 $ 224,453.10 $ 4,349,027.73 $ 0.00 1,266,083.00 1,576,463.26 73,687.37 1,650,150.63 0.00 2,032.361.10 2,736,549.81 168.877.06 2,905,426.87 0.00 1,317,690.90 1,913,568.51 119,163.79 2.032,732.30 0.00 610,223.40 1,004,534.58 21,585.26 1,026,119.84 0.00 759,249.90 856,575.60 110,452.86 967.028.46 0.00 $ 9,742,390.90 $ 12,212,266.39 $ 718,219.44 $ 12,930,485.83 $ 1,643,286.60 $ 66,126.87 $ 550,016.69 1,019,676.23 283,247.48 4,811.26 $ 5,822.80 12,903.95 3,750.43 70,938.13 555,839.49 1,032,580.18 286,997.91 $ 1.643,286.60 $ 1,919,067.27 $ 27,288.44 $ 1,946,355.71 0.00 205,574.40 255.816.65 3,216.21 259,032.86 0.06 $ 1,848,861.00 $ 2,174,883.92 $ 30,504.65 $ 2,205,388.57 $ 252,238.50 $ 431,978.12 $ 0.00 $ 431.978.12 0.00 $ 11,843,490.40 $ 14.819,128.43 $ 748:724.09 $ 15,567,852.52 $ 319,396.50 $ 433,290.84 $ 433,290.84 0.00 72,761.40 $ 87,092.84 87,092.84 0.00 $ 392,157.90 $ 433,290.84 $ 87,092.84 $ 520,383.68 $ 12,235,648.30 $ 15.252,419.27 $ 835.816.93 $ 16,088.236.20 $ 0.00 $ 39,954.00 95,684.00 $ .........,;,;13;;;;;5~,63_8=.0~0 $ 90,727.09 $ 90,727.09 45,072.11 45,072.11 $ 135.799.20 $ 135,799.20 $ ...0.=:.0=0 - 35 - SECTIONll 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 April 19, 1999 Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board of Education and Superintendent and Members ofthe Laurens 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 ofLaurens County Board of Education as of and for the year ended June 30, 1998, and have issued our report thereon dated April 19, 1999. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose fmancial 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 Laurens County. Board of Education's financial . statements are free ofmaterial misstatement, we performed tests of its cempliance 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 Laurens County Board of Education's internal control over fmancial 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 fmancial 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 ourjudgement, could adversely affect Laurens County Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule of Findings and Questioned Costs as items FS-6871-98-01 and FS-6871-98-02. 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, all ofthe reportable conditions noted 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 of public record. _ Respectfully submitted, RWH:gp 98YB-40 Russell W. Hinton 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 April 19, 1999 Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofEducation and Superintendent and Members ofthe Laurens County Board of Education REPORT ON COMPLIANCE WITH REQUIREMENTS 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 LaUrens 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. Laurens County Board ofEducation's major Federal programs are identified in the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirem~nts of laws, regulations, contracts and grants applicable to each ofitsinajor Federal programs is the responsibility of Laurens County Board of Education's management. Our responsibility is to express an opinion on Laurens County Board ofEducation'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 includes examining, on a test basis, evidence about the Laurens 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 Laurens County Board of Education's compliance with those requirements. 98SA-40 Internal Control Over Compliance The management of Laurens 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 perfonning our audit, we considered Laurens 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 detennine 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-I33. We noted a certain matter involving the internal control over compliance and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over compliance that, in our judgement, could adversely affect the Laurens County Board of Education's ability to administer a major Federal program in accordance with applicable requirements of laws, regulations, contracts and grants.. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FA-687I-98-01. 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 ofrisk that noncompliance with applicable requirements oflaws, 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. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we do not believe the reportable condition described above is a material weakness. 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 of public record. Respectfully submitted, . <~4'OL L<9.~ Russell W. Hinton State Auditor . RWH:gp 98SA-40 SECTION ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS LAURENS COUNTYBOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS 6871-93-01 6871-93-02 FS-6871-97-01 FS-6871-97-02 Further Action Not Warranted Further Action Not Warranted Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses CORRECTIVE ACTIONIRESPONSES CASH AND CASH EQUIVALENTS GENERAL LEDGER Inadequate Separation ofDuties Finding Control Number: FS-6871-97-01 Due to current budgetary constraints, the Board is unable to hire the additional staffrequired to clear this finding. The Board feels it has provided for the most appropriate assignment ofduties with the number of personnel available to perform the accounting functions. With staff limitations, this finding cannot be totally resolved. GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6871-97-02 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 fmancial statements. SECTION IV FINDINGS AND QUESTIONED COSTS LAURENS COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND OUESTIONED 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 Laurens 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 ofthe Financial Statements The audit report for the Laurens 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 of the Laurens 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 Laurens County Board of Education disclosed a reportable condition in internal control over major programs for the following compliance requirements. Cash Management The reportable condition described above is not considered to be a material weakness. 5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Laurens 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 .5IOCa) ofOMB Circular A-133 The Laurens County Board of Education's audit disclosed an audit finding required to be reported by section .5IO(a}ofOMB Circular A-133. This audit finding is included in section ill of this report. 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 10.559 Summer School Food Services Program for Children 84.027 Individuals with Disabilities Education Act - Part B - Special Education - Flow Through 84.173 Individuals with Disabilities Education Act - Part B - Special Education - Preschool 84.027 Individuals with Disabilities Education Act - Part B - Special Education - Severely Emotionally Disturbed - 1- LAURENS COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998 I SUMMARY OF AUDITOR'S RESULTS 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00. 9. Low Risk Auditee The Laurens County Board of Education was audited as a low risk auditee based on a waiver granted by the U. S. Department of Education. n FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUlVALENTS GENERAL LEDGER Inadequate Control Procedures Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6871-98-01 The Board did not provide for adequate separation of duties in the performance of accounting functions and related procedures. The following deficiencies were noted: (1) The bank reconciliation function was not separated from the general ledger posting and check preparation functions. In addition, the bank reconciliations were not reviewed by an individual independent ofcash operations and the cash receipts function was not separated from the general ledger posting function for all funds. (2) Journal entries were not reviewed and approved by someone independent of the general ledger posting and maintenance functions. . These conditions were a result of management's decision to limit the number of administrative staff made responsible for accounting functions. Management should periodically review this decision to determine if employee duties can be reassigned to achieve a higher degree of internal control with existing staff. GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6871-98-02 The Laurens County Board of Education failed to 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 -2- LAURENS COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1998 IT FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6871-98-02 to establish accounting controls and procedures to provide for maintenance ofa General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owed 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. ill FEDERAL AWARD FINDINGS AND QUESTIONED CQSTS CASH MANAGEMENT Excessive Cash Balances Reportable Condition U. S. Department of Education Through Georgia Department ofEducation Finding Control Number:FA-6871-98-01 . A review of the cash management procedures for the Individuals with Disabilities Education Act, Part B Special Education Flow Through (CFDA 84.027) and Severely Emotionally Disturbed (CFDA 84.027) programs disclosed the cash draws utilizing the computerized DE Form 0147, "Monthly Report of Expenditures and Estimated Requirements from Grant FundslLotus Notes", were made in advance of immediate cash needs, resulting in the accumulation ofexcessive cash balances. The Flow Through program maintained excessive ending monthly cash balances in 7 months and had an excessive average monthly cash balance while the Severely Emotionally Disturbed program maintained excessive ending monthly cash balances in 6 months. Internal controls should be implemented to ensure that the Board minimizes the time elapsing between the transfer offunds from the Georgia Department of Education and disbursement of such funds by the Board. -3-