Lee County Board of Education, Leesburg, Georgia, report on audit of the financial statements for fiscal year ended June 30, 2002

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LEE 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

ADDITIONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

20

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

22

CAPITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

24

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

26

SCHEDULES

I SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

28

2 SCHEDULE OF STATE REVENUE

30

3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

33

ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

4

BYPROGRAM

5

BYSITE

I

34

35

LEE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTIONil COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCEWITHGOVERNMENTAUDITINGSTANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-133
SECTION ID 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

Russi,:1.1. W. H1NTON
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Wa~hmgton Street. S.W, Suite~ 14 Atlanta, Georgia 30334-8400
September 13, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Lee 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 financial statements ofthe Lee County Board of Education, as of and for the year ended June 30, 2002, as listed in the table of contents. These general-purpose financial statements are the responsibility of the Lee County Board of Education's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Audnmg Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in the notes to the general-purpose financial statements, the Board of Education's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:

2002ARL-13

* The general-purpose financial statements of the Board of Education did not contain a
General Fixed Assets Account Group to account for property and equipment owned by the Board of Education which should be included to conform to generally accepted accounting principles.
* School activity accounts maintained at the individual schools are not included in the general-purpose financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general-p~ose financial statements.
The aggregate effects on the general-purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects on the general-purpose financial statements of the matters referred to in the preceding paragraph, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe Lee County Board ofEducation as of June 30, 2002, and the results of its operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated September 13, 2002, on our consideration ofthe Lee County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements of the Lee County Board of Education taken as a whole. The accompanying combining statements (Exhibits E through H) and the financial schedules (Schedules 1 through S), which includes the Schedule ofExpenditures ofFederal Awards as required by U.S. Office ofManagement and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the general-purpose financial 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 of the matters referred to in the third paragraph, such information is fairly stated, in all material respects, in relation to the general-purpose financial statements taken as a whole.
2002ARL-13

A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated Section 506-24.
. Respectfully s u b m ~ ~ ~ . _ _

RWH:as 2002ARL-13

Ru sell W. Hinton State Auditor

LEE COUNTY BOARD OF EDUCATION

------------ ----------
LEE COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30. 2002

ASSETS
Cash and Cash Equivalents
Investments
Accounts Receivable
lnventones
Food
Donated Commodities Purchased Food
Amount Available :n Debt SeMce Fund
Amount to be Provided In Future Years For Payment of Bond Debi

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$ 2,398,955.03 $ 378,580 28 $

73,580 68

650,352 84

1,270,101.66

3,117,561.10

172,118 74

412,609 46

29,282 83 14,527.48

Total Assets

$ 6,166,868 97 $ 594,509 33 $ 1,756,291.80

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salanes Payable Expired Grant Balances Payable Contracts Payable Reta:nages Payable Deferred Revenue General Obhgalion Bonds Payable
Total Llabillt:es
FUND EQUITY
Fund Balances Reserved For Debt Serv:ce For lnventones Food Donated Commod:hes Purchased Food For SPLOST ProJects Unreserved Undes:gnated
Total Fund Equ:ty

$

839,154 04 $

2,958,758 66

512.44

64,101 64 $ 258,838 06

61,371 04

191,425 14
3,752.20 583,174 84

$ 3,798,425 14 $ 384,310 74 $

778,352 18

$
$ 2,368,443 83 $ 2,368,443.83 $

29,282.83 14,527 48
$
166,388 28
210,198 59 $

977,939 62 000
977,939 62

Total Llab1hties and Fund Equ:ty

$

594,509 33 $ ==1="',7=5=6i,;;,2~91===80;.,

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

EXHIBIT "A"

DEBT SERVICE
FUND

ACCOUNT GROUP GENERAL LONG-TERM DEBT

TOTALS

(Memorandum Only)

JUNE 30. 2002

JUNE 30, 2001

$

178,29648

$ 3,029,412 47 $

232,968.64

128,291.74

2,048,746.24

8,018,165 92

43,243 76

3,745,533.06

3,983,271 49

$

349,831.98

7,630,168 02

29,282 83 14,527.48 349,831.98
7,630,168.02

15,271.05 12,024.25 330,852.93
7 974 147 07

$

349.831.98 $

7,980.000.00 $ 16.847,502.08 $ 20.566,701.35

$

26,729.90

$ 1,094,680.82

1,095,342.86

3,217,596.72

2,964,553.93

512.44

1,571.97

3,752.20

772,248 58

583,174 84

564,428 93

61,371.04

3,540.54

$

7,980,000 00

7,980,000 00

8,305.000 00

$

s 7,980,000.00 $ 12,941.088 06

13,733,416.71

$

349,831.98

0 00

$

349.831.98

$

349,831 98 $

330,852.93

29,282 83 14,527 48 977,939.62
2,534.832 11
$ 3,906.414 02 $

15,271 05 12,024 25 3,764,301 35
2,710,835 06
6,833.284 64

$

349,831.98 $

7,980,000 00 $ 16,847,502 08 $ 20,566,701 35

- 3-

LEE COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES
YEAR ENDED JUNE 30, 2002

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Current lnstructJon Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Admirnstrabon Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation Enterpnse Operations
Capital Outlay Debt Service
Pnncipal Interest Paying Agent Fees
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SQ!,!RCES (USES}
Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1
Food Inventory - Net Change m Penod Donated Commodities Purchased Food

GENERAL FUND

SPECIAL REVENUE
FUND

$ 22,434,215 24 $ 10,000 00
6,849,939 31 183,506 86
$ 29,477,661 41 $

874,520 75 1,957,753 68
921,887 14
3,754,161 57

$ 21,252,064 00 $
834,037 36 695,968.24 744,738 40 339,611.89 1,847,435 60 226,835 60 2,135,026 82 1,426,265 34
77,249.91 16,750.00 34,437 72
115,395 32

1,641,834 80 135,717.30 110,827 80 1,723.82
24,11716 15,16666
1,719,519 81 13,102.38

$ 29,745,816 20 $

$

-268 154 79 $

3,662,009 73 92,151 84

$

$

-2 623 55

$

-2 623 55 $

$

-270,778 34 $

2,639,222 17

2,623 55
2,623 55
94,775 39 98,908 19
14,011 78 2,503 23

FUND BALANCE JUNE 30

$

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

-4-

2,368,443 83 $ ==2=1=0=1,=9=8.=59==

EXHIBIT"B"

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTALS

(Memorandum Only)

YEAR ENDED

JUNE 30, 2002

JUNE 30 1 2001

$

365,088.90

2,246,520 98 $ 76 49914

$ 2,688,109 02 $

$
786,410.26 6,102.79

23,673,824 89 $ 1,967,753 68 9,882,870.55 1,187,995.93

27,505,590.56 1,533,717.83 9,068,705.63 1,478,803.74

792,513.05 $ 36,712,445.05 $ 39,586,817 76

$ 5,474,470 75 $
$ 5,474,470 75 $ $ -2,786,361 73 $

$ 22,893,898.80 $ 21,146,713 78

969,754.66 806,796 04 744,73840 341,335.71 1,847,435 60 226,835.60 2,159,143 98 1,441,432.00
77,249.91 16,750.00 1,753,957.53 13,102.38 5,589,866 07

979,867.34 693,533.93 733,395.71 328,406 69 1,763,200.94 231,768 03 1,989,440.38 1,588,439 65 100,293 78
16,750.00 1,829,846.95
7,518,631 67

325,000.00 447,050.00
148400

325,000 00 447,050.00
148400

280,000 00 458,930 00
2,279 00

773,534 00 $ 39,655,830.68 $ 39,661,497.85

18,979 05 $ -2,943,385.63 $

-74,680.09

$

2,623.55 $

580,31942

-2,623 55

-580,319.42

$

0 00 $

000

$ -2,786,361.73 $ 3,764,301 35

18,979 05 $ -2,943,385.63 $

330,852.93

6,833,284.64

-74,680 09 6,907,240 58

14,011 78 2,503 23

1,809 55 -1 085 40

$

977,939 62 $

349,831 98 $ 3,906,414 02 $ 6,833,284 64

-5-

LEE COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - INON-GAAP BASISl GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30 2002

EXHIBIT "C"

GENERAL FUND

BUDGET

ACTUAL

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues

$ 22,389,039 00 $ 22,434,215 24

10,000 00

6,535,000 00

6,849,939 31

210,000 00

183 506 86

$ 29,134,039 00 $ 29,477,661 41

EXPENDITURES

Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Admin1strat1on School Adm1mstrallon Business AdmImstrat1on Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation Enterpnse Operations
Capital Outlay
Total Expenditures

$ 21,376,439 59 $ 21,252,064 00

877,690 46 699,733 17 742,262 27 378,453 47 1,767,706 73 228,396 06 2,119,940 96 1,581,988 27
76,024 04 24,139 00 30,461 00

834,037 36 695,968 24 744,738 40 339,611 89 1,847,435 60 226,835 60 2,135,026 82 1,426,265 34
77,249 91 16,750 00 34,437 72

300,000 00

115,395 32

$ 30,203,235 02 $ 29,745,816 20

Excess of Revenues over (under) Expenditures

$ -1,069, 196 02 $ -268 154 79

QTHER EINANC!NG SOURCES IUSl;Sl
Other Sources Other Uses
Total Other Financing Sources (Uses)

$

-2 623 55

$

-2,623 55

Excess of Revenues and Other Financing Sources
over (under) Expenditures and Other Financing Uses $ -1,069,196 02 s

-270,778 34

FUND eAL8NCE JULY l 2001

2,702,882 68

2,639,222 17

AdJustments Food Inventory - Net Change in Penod
Donated Commod1t1es Purchased Food

9,058 36

EUNQ BALANCE JUt:11;; ~Q ioo2

$ 1,642,745 02 $ 2,3681443 83

SPECIAL REVENUE FUND

BUDGET

ACTUAL

$ 761,397 94 $ 874,520 75

1,919,947 00

1,957,753 68

982,000 00

921 887 14

$ 3,663,344 94 $ 3 754 161 57

$ 1,574,118 11 $ 1,641,834 80

146,752 46 74,973 98

135,717 30 110,827 80

1,522 00 20.410 00

1,723 82

5,218 93

24,117 16 15,16666

1,843,364 00

1,719,519 81 13,102 38

$ 3,666,359 48 $ 3,662,009 73

$

-3 014 54 $ 92 151 84

$

2,623 55

$

2,623 55

$

-3,014 54 $

102,189 89

94 62

94,775 39 98,908 19
14,011 78 2,503 23

$ 991269 97 $ 210 198 59

The notes to the general-purpose financial statements are an integral part of this statement - 7-

LEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Lee County Board of Education (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The School District is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
FUND ACCOUNTING
The School District uses funds and an account group to report on its financial position and the results 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 separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the School District. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general-purpose financial statements.
The general-purpose financial statements account for all State, Federal, Taxes and Other funds under control of the School District, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most of the School District's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources of the School District except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education.

- 8-

LEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and from the Federal government to accomplish specific educational objectives.
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.
DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debt outstanding.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement
focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements ofthese funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
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 of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The School District considers receivables collected within sixty days after yearend to be available. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, local option sales taxes, intergovernmental grants and donations. Revenue for property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year the resources are received or susceptible to accrual. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
-9-

------------------

LEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2002

Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Expenditures are generally recognized when the related fund liability is incurred.

A substantial number of personnel of the School District were employed for a one hundred and ninety day period beginning in August 2001 and ending in early June 2002. Employment contracts for these employment periods typically specify that compensation be paid in twelve equal monthly payments beginning in September 2001 and ending in August 2002. State grants to fund the State's share of these contracts are disbursed to the School District in the same twelve month period. In accordance with generally accepted accounting principles, salary and fringe benefit expenditures and the related revenue from the State to fund these contracts are recorded in the fiscal period covered by these financial statements.

BUDGET

The Lee County Board of Education's budget is a complete financial plan for the School District's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure of the 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 School District's administration prepares a tentative budget for

the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised

at least once in a newspaper of general circulation in the locality. At the next regular meeting of the

Board after advertisement, the Board receives comments on the tentative budget, makes revisions as

necessary and adopts a final school budget. This final budget is then submitted, in accordance with

provisions of the Quality Basic Education Act, OCGA Section 20-2-167(c), to the Georgia

Department of Education. The Board may increase or decrease the budget at any time during the

year. All unexpended budget authority lapses at fiscal year-end.



CASH AND CASH EQUIVALENTS

COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.

INVESTMENTS

COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported

- 10 -

LEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds and in selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions of the State of Georgia.
RECEIVABLES
Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general-purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The Lee County Board of Commissioners fixed the property tax levy for the 2001 tax digest year (calendar year) on October 25, 2001 (levy date). Taxes were due on December 31, 2001 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2001 tax digest are reported as revenue in fiscal year 2002. The Lee County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues during the fiscal year ended June 30, 2002 for maintenance and operations amounted to $6,795,813.14 and for school bonds amounted to $780,300.24.
- 11 -

LEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Tax millage rates levied for the 2001 tax year (calendar year) for the Lee County Board ofEducation were as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations School Bonds

13.970 mills 1.577 mills

15.547 mills

SALES TAXES

Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes. Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $2,246,5.20.98 and was recorded in the Capital Projects Fund. The state will terminate this tax once an additional $18,500,000.00 has been collected or on September 30, 2007, 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 (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 ofpurchase. 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.

GENERAL OBLIGATION BONDS

The School District issues general obligation bonds to provide funds for the acquisition and construction ofmajor capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit ofthe government. The outstanding amount of these bonds is recorded in the General Lon~-Term Debt Account Group.

INTERFUND TRANSACTIONS

The School District has the following types of interfund transactions:

Reimbursements ofexpenditures 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.

- 12 -

LEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 ofoperations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion. waive the requirement for security in the case ofoperating funds placed in demand deposit checkmg accounts.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
- 13 -

LEE COUNfY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 2: DEPOSITS AND INVESTMENTS

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS At June 30, 2002, the bank balances were $4,583,778.34. The amounts ofthe 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 School District or by the School District's agent in the School District's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.)

The School District's deposits are classified by risk category at June 30, 2002, as follows:

Risk Category

Bank Balance

1

$ 278,296.48

2

4,305,481.86

3

0.00

Total

$4,583,778.34

CATEGORIZATION OF INVESTMENTS At June 30, 2002, the carrying value of the School District's total investments was $2,048,746.24 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State ofGeorgia, Office ofTreasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy ofthe State ofGeorgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows:

- 14 -

LEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 2: DEPOSITS AND INVESTMENTS
The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the SEC as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to be a Rule 2a7 like pool. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value ofthe shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.
Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U.S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2002, was 0.12 years. The average investment duration for Fund 6 on June 30, 2002, was 0.75 years.
Note 3: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories
Note 4: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.
The School District has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions, job related illness or injuries to employees. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.
The School District has elected to self-insure for all losses related to acts ofGod. The School District has not experienced any losses related to this risk in the past three years.

- 15 -

LEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO TIIE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2002

Note 4: RISK MANAGEMENT

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

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

2001 2002

Beginning of Year Ltabihty

Claims and Changes m Estimates

$

0.00 $

2.110.21 $

$

0.00 $

0.00 $

Claims Paid

End of Year Liability

2,110.21 $

0.00

0.00 $

0.00

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

Position Covered

Amount

Superintendent Each Principal

$ 50,000.00 $ 25,000.00

Note 5: GENERAL LONG-TERM DEBT

GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

Amount

General Government - Series 1995

4.50% - 5.85% $ 5,985,000.00

General Government - Refunding - Series 1994 3.00% - 5.00%

1,995,000.00

$ 7,980,000.00

Voters have authorized $4,200,000.00 in general obligation debt for construction of a new middle school, parking areas and grounds, and to provide furnishings, equipment and fixtures for said building, and the payment of expenses incident thereto which was not issued as of June 30, 2002.

The changes in General Long-Term Debt during the fiscal year ended June 30, 2002, were as follows:

- 16 -

LEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 5: GENERAL LONG-TERM DEBT

General Obligation
Bonds

Balance July 1, 2001

$ 8,305,000.00

Deductions Debt Retired

325,000.00

Balance June 30, 2002

$ 7,980,000.00

At June 30, 2002, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

General Obligation
Bonds

2003 2004 2005 2006 2007 2008 - 2012 2013 - 2015

$ 797,825.00 831,227.50 866,827.50 864,007.50 869,727.50
4,475,655.00 2,850,370.00

Total Principal and Interest

$11,555,640.00

Note 6: ON-BEHALF PAYMENTS

The School District has recognized revenues and expenditures in the amount of $323,692.34 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $272,455.34

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 0($51,237.00

- 17 -

LEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO TIIE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2002

Note 7: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction orrenovation contracts executed by the School District as of June 30, 2002, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

00/99S-688-087

$ 58,395.31 $ 272,463.60

The amounts described in this note are not reflected in the general-purpose financial statements.

Note 8: CONTINGENT LIABILITIES

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

The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the general-purpose financial statements.

Note 9: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

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

- 18 -

LEE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 9: RETIREMENT PLANS
Fiscal Year
2002 2001 2000

Percentage Contributed
100% 100% 100%

Required Contribution
$ I,790,240.52 $ 2,031,581.47 $ 1,893,895.83

- 19 -

--------------------------- ----
LEE COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPEC~LREVENUEFUND JUNE 30, 2002

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

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

230,560.22 $

70,028.98

23,460.00

29,282.83 141527.48

Total Assets

$

2971830.53 $ =-=i=7=0=,0=2=8.=98===

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Deferred Revenue
Total Liabilities
FUND EQUITY
Fund Balances Reserved For lnventones Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity
Total Liabilities and Fund Equity

$

13,294.52 $

13,334.54

74,337.42

50,584.30

6110.14

$

87 631.94 $

70 028 98

$

29,282.83

14,527.48

166,388.28 $

$

210,198.59 $

0.00 0.00

$

2971830 53 $ ===7=0,!,:10=28==98=

See notes to the general-purpose financial statements. - 20 -

EXHIBIT"E"

FEDERAL
PROGRAMS

TOTALS

JUNE 30, 2002

JUNE 30, 2001

$

77,991.08 $

378,580.28 $

227,893.15

148,658.74

172,118.74

140,531.97

29,282.83 14,527.48

15,271.05 12,024.25

$

226,649.82 $

594,509.33 $ ==3=9=5=7,=20..,..=42=

$

3,436.38

$

37,472.58 $

64,101.64

56,240.73

133,916.34

258,838.06

233,594.58

55,260.90

61 371.04

3,540.54

$

226,649 82 $

384,310.74 $

296,812.23

$

s _ _ _ _o_.o_o_

$

0.00 $

29,282.83 $ 14,527.48

15,271 05 12,024.25

166,388.28

71,612.89

210,198.59 $ _ _-"9""'"8""'",9_0_8=.-'19~

$

226,649.82 $

594,509.33 $ ====3=9=5'=7=20=.4=2=

- 21 -

LEE COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2002

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services General Administration Maintenance and Operation of Plant Student Transportation Services Food Services Operation Enterprise Operations
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Operating Transfers In
Excess of Revenues and Other Financing Sources over (under) Expenditures
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commodities Purchased Food
FUND BALANCE JUNE 30

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

144,760.00 $

756,756.89

921,887.14

$ 1,823,404.03 $

729,760.75 729,760.75

$

$ 1,715,526.26 13,102 38

$ 1,728,628.64 $

$

94,775.39 $

635,955.21
48,010.41 2,714 62
24,117.16 14,969.80
3,993.55
729,760.75
0.00

$

94,775.39 $

0.00

98,908.19

0.00

14,011.78 2,503.23

$

210,198.59 $====0===00....

See notes to the general-purpose financial statements. - 22 -

EXHIBIT "F"

FEDERAL PROGRAMS

TOTALS

YEAR ENDED

JUNE 30, 2002

JUNE 301 2001

$

874,520.75 $

$ 1,200,996.79

1,957,753.68

921,887.14

$ 1,200,996.79 $ 3,754,161.57 $

702,641.03 1,533,717.83
914,016.62
3,150,375 48

$ 1,005,879.59 $ 1,641,834.80 $

87,706.89 108,113.18
1,723.82
196.86

135,717.30 110,827.80
1,723.82 24,117.16 15,166.66 1,719,519.81 13,102.38

$ 1,203,620.34 $ 3,662,009.73 $

$

-2,623.55 $

92,151.84 $

1,181,739.01
159,950.11 58,311.57
1,532.80
115.66 1,770,936.66
3, 172,585.81
-22,210.33

2,623.55

2,623.55

5 319 42

$

0.00 $

94,775.39 $

-16,890.91

0.00

98,908.19

115,074.95

14,011.78 2,503 23

1,809.55 -1 085.40

$

0.00 $

21 o, 198.59 $ ===9=8=,90=8=.1=9=

- 23 -

LEE COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 2002

ASSETS Cash and Cash Equivalents Investments Accounts Receivable

REGULAR

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$

0.00

$

849,384 01

Total Assets

$

0.00 $=====8=4=9,3=84====01==

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Contracts Payable Retamages Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For SPLOST ProJects Unreserved Undes1gnated
Total Fund Equity

$

71,031 83

191,425 14

3,752 20

583,174 84

$

849 384 01

$

000 $

0 00

$

0.00 $

0 00

Total Liabilities and Fund Equity

$

0.00 $ ==8=:4=9,!:I3=8=4=0=1

See notes to the general-purpose financial statements. - 24 -

EXHIBIT"G"

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

JUNE 301 2002

JUNE 301 2001

$

144,612.51 $

144,612.51 $

8,237.41

420,717.65

1,270,101.66

4,728,339.14

412,609.46

412,609.46

364,402.31

$

977,939.62 $ 1,827,323.63 $ 5,100,978.86

$

71,031.83

191,425.14

3,752.20 $

772,248.58

583,174.84

564A28.93

$

849,384.01 $ 1,336,677.51

$

977,939.62 $

977,939.62 $ 3,764,301.35

0.00

0.00

0.00

$

977,939.62 $

977,939.62 $ 3}64,301.35

$

977,939.62 $ 1,827,323.63 $ 5,100,978.86

- 25 -

----- - ----- -------
LEE COUN"TY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDED JUNE 30. 2002

REVENUES
State Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Capital Outlay Land and Land Improvements Building and Building Improvements Equipment
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1

REGULAR

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$

365,088.90

$

0.00

$

0.00 $

365,088 90

$

95,637.75

$

26,716.00

4,590,220.53

38,531.20

723,365.27

$

65,247.20 $ 5,409,223.55

$

-65,247.20 $ -5,044, 134.65

$

65,247.20 $ 5,044,134.65

$

65,247.20 $ 5,044,134 65

$

0.00 $

0.00

0.00

000

FUND BALANCE JUNE 30

$

o.oo $ =-=====o=oo===

See notes to the general-purpose financial statements. - 26 -

EXHIBIT"H"

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

YEAR ENDED

JUNE 30, 2002

JUNE 301 2001

$

365,088.90 $ 4,299,429.50

$ 2,246,520.98

2,246,520.98

1,749,325.86

76 499.14

76,499.14

242,763.31

$ 2,323,020.12 $ 2,688,109.02 $ 6,291,518.67

$

95,637.75 $

32,500.00

4,616,936.53

7, 112,864.68

$

0.00

761,896.47

$

0.00 $ 5,474,470.75 $ 7,145,364.68

$ 2,323,020.12 $ -2,786,361.73 $

-853,846.01

$ 5,109,381.85 $ 4,219,765.01

$ -5, 109,381.85

-5, 109,381.85

-3,644, 765.01

$ -5,109,381.85 $

0.00 $

575,000.00

$ -2,786,361.73 $ -2,786,361.73 $

3,764,301.35

3,764,301.35

-278,846.01 4,043,147.36

$

977,939 62 $

977,939 62 $ 3,764,301 35

- 27

LEE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2002

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Agnculture. U. S. Department of Child Nutnllon Cluster Pass-Through From Georgia Department of Educallon Food and Nutrition Program Food Services School Breakfast Program Nallonal School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Educallon Food and Nutnllon Program Food D1str1bution Program (1)
Total U. S Department of Agnwlture
Educallon, U S Department of Special Educallon Cluster Pass-Through From Georgia Department of Educallon lndlViduals with DISSbihlles Educallon Ad Part B - Special Educallon Flow Through Preschool Capaaty Building Improvement
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Educabon Elementary and Secondary Educallon Ad Title I Grants to Local Educational Agencies Trtlell Eisenhower Professional Development Trtlelll Technology Literacy Challenge Fund Grants TIile VI lnnovallve Educallon Program Strategies Class Size Reduction Vocallonal Educallon - Basic Grants to States High School Program Basic Grant Pass-Through From Southwest Georgia Regional Educational Sel'Vlce Agency Safe and Drug Free Schools
Total U S Department of Education
Defense, U. S Department of Direct Department of the Navy R O T.C Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

. 10.553
. 10.555

NIA $ 128,669 08

NIA

51904542 $

$ 647,714 50 $

(2) 1,606,483 87 (3)
1,606,483 87

10.550

NIA

109,042.39

$ 756,756 89 $

109,042 39 1,715,526 26

. 84027
. 84173 . 84173

NIA $ 325,915 76 $

NIA

21,286 29

NIA

7 332 00

$ 354,534 05 $

325,915 76 21,286 29 7,332 00
354,534 05

84 010 84 281 84 318 84.298 84 340
84048
84186

NIA

513,924 83

513,924.83

NIA

18,618 97

18,618 97

NIA

82,027 67

82, 138 99 (3)

NIA

25,180 00

25,180.00

NIA

108,929.00

111,441 23 (3)

NIA

52,737 00

52,737 00

NIA

10,000 00

$ 1,165,951 52 $

10,000 00 1,168,57507

$

45 045 27 $

45 045 27

Total Federal Financial Assistance NIA= Nol Available

- 28-

$ 1,967,753 68 $

2,929,146 60

LEE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2002

SCHEDULE "1"

Notes to the Schedule of Expenditures of Federal Awards
(1) The amounts shown for the Food D1stnbullon Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School D1stnd dunng the current fiscal year
(2) Expenditures for the School Breakfast Program were not ma1nta1ned separately and are included in the 2002 Nabonal 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 School D1str1d did not provide Federal Assistance to any Subreap1ent
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Lee County Board of Education and 1s presented on the modified acaual baS1s of accounting which 1s the basis of accounbng used In the presentation of the general-purpose financial statements.

See notes to the general-purpose finanaal statements

- 29-

LEE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE BE\/ENUE YEAR ENDED JUNE 30 2002

SCHEDULE 2

AGENCY/FUNDING

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

TOTAL

GRANTS

Educalion, Georgia Department of

Quality Basic Education

Direct lnstrucboraal Cost

Kindergarten Program

$

Kindergarten Program Early lntervenbon Program

Primary Grades (1-3) Program

Pnmary Grades - Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Upper Elementary Grades (4-5) Early Intervention Program

Mtddle Grades (6-8) Program

Middle SChool (6-8) Program

High School General EducatJon (9-12) Program

Vocabonal Laboratory (9-12) Program

Students with D1sab1lrt1es

Category I

Category II

Category Ill

Category N

CategoryV

Supplemental Speech

Gifted Student - Category VI

Remedial Educabon Program

Media Center Program

Staff and Professional Development

Indirect Cost

Central Adm1mstrabon

School Adm1mstra!Jon

Facility Maintenance and Operabons

Categorical Grants

Pupil Transporta!Jon

Regular

Bus Replacement

Sparsity

Twenty Days Add1t1onal tnstrucbon

Nursing Services

Pnnclpal Supplements

Vocational Supervisors

Mtd-term AdJustment Hold-Harmless

Deferred Summer Salaries (Pnor Year)

Deferred Summer Salaries {Current Year)

Educabon Equahza!Jon Funding Grant

Food Services

Vocabonat Education

Other State Programs

Altema!Jve Program

Apprenbcesh1p Program

Health Insurance

K-3 Statewide Reading Program

4-8 Statewide After School Program

Outdoor Classrooms

Preschool Handicapped Program

Post Secondary Options

Specaal Education Low Incidence Grant

Lottery Programs

Ass1Stive Technology

Computers in the Classroom

1,152,433 00 174,433 00
3,025,358 00 372,95900
1,782,842 00 115,823 00 943,931 00
2,240,906 00 2,556,915 00
893,105 00
TT,370 00 272,231 00 775,089 00 110,297 00
75,009 00 359 00
409,245 00 55,504 00
503,799 00 85,749 00
655,578 00
900,874 00 1,412,419 00
805,745 00 221,360 00
20,000 00 160,085 00 115,671 00
20,431 00 35,265 00 46,795 00 -3, 146,634 00 2,739,270 00
1,946,984 00
$ 34,530 56
244,157 00 35,000 00
272,455 34 55,325 34 30,416 00 1,500 00 58,798 00 9,503 00 34,093 00

144,760 00
9,445 86 241,745 00

$ 1,152,433 00 174,433 00
3,025,358 00 372,959 00
1,782,842 00 115,823 00 943,931 00
2,240,906 00 2,556,915 00
893,105 00
77,370 00 272,231 00 775,069 00 110,297 00
75,009 00 359 00
409,245 00 55,504 00
503,799 00 65,749 00
655,578 00 900,874 00 1,412,419 00
805,745 00 221,360 00
20,000 00 160,085 00 115,671 00
20,431 00 35,265 00 46,795 00 -3, 146,634 00 2,739,270 00 1,946,984 00 144,760 00 34,530 56
244,157 00 35,000 00
272,455 34 55,325 34 30,416 00 1,500 00 58,798 00 9,503 00 34,093 00
9,445 86 241,745 00

Georgia State Financmg and Investment Comm1ss1on Reimbursement on Construction Proiects

$ 365,088 90

365,088 90

30

LEE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30 2002

SCHEDULE 2

AGENCY/FUNDING
GRANTS Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement
OTHER Community Affairs, Georgia Department of Local Assistance Grant

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

TOTAL

$ 478,569 89

$

51,237 00

478,569 89 51.237 00

50 000 00

50 000 00

s 22i4341215 24 s 874152015 s 3ss1088 00 s 231s13 1a24 as

See notes to the general-purpose financial statements

- 31 -

LEE COUNTY BOARD OF EDUCATION
SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30 2002

SCHEDULE 3

PROJECT
Construction of a new middle school, parking areas and grounds, and to provide furnishings, equipment and fixtures for said building, and the payment of expenses incident thereto

ORIGINAL ESTIMATED
COST (11

CURRENT ESTIMATED COSTS (21

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

oo $ 1215001000 $ 131001 I148 23 $ 514091223 55 $ 715911924 68 Ongoing

(1) The School D1stnct's onginal cost estimate as specified in the resolution calling for the 1mposrt1on of the Local Option Sales Tax
(2) The School D1stnct's current estimate of total cost for the project. Includes all cost from project inception to completion
(3) The voters of Lee County approved the 1mposrtJon of a 1% sales tax to fund the above project Amounts expended for this project may include sales tax proceeds, state, local property taxes and/or other funds over
the hfe of the project

See notes to the general-purpose financaal statements

33-

LEE COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM /QBE}
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30. 2002

SCHEDULE "4"

DESCRIPTION

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION {1l

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early lnterventJon Program

Pnmary Grades (1-3) Program

Pnmary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Upper Elementary Grades-Early lntervenbon (4-5)

Program

Middle Grades (6-8) Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with D1sablht1es

Category I

Category II

Category Ill

Category IV

Category V

Gifted Student - Category VI

Remedial Educabon Program

Alternative Education Program

1,283,863.00 $ 194,326 00
3,370,387.00 415,493 00
1,985,778 00

1,236,319.68 $ 257,349.05
3,805,491.28 510,720.35
2,256,275 40

129,422 00 1,051,582 00 2,496,472.00 2,848,520.00
994,960 00 1,459,794 00
455,917.00 61,834.00
272,002.00

224,044.42 1,080,502.02 2,510,792 59 3,206,135 90
887,818 30
107.68 422,26248 1,097,278 32
78,543 63 27,356.24 639,403.21 83,908.60 321,641.96

33,846 21 $ 1,726 34
136,815 54 7,012 15
83,926.75
935 84 36,303 74 112,930.37 216,569.97 67,316.01
5,613 96 21,172 04
1,403.97
6,469 72 582 61
93,572 48

1,270,165 89 259,075 39
3,942,306.82 517,732.50
2,340,202.15
224,980 26 1,116,805.76 2,623,722 96 3,422,705 87
955,134 31
107 68 427,87644 1,118,450 36
79,947 60 27,356.24 645,872.93 84,491.21 415 214 44

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

17,020,350.00 $ 18,645,951 11 $ 826,197 70 $ 19,472,148 81

Media Center Program Staff and Professional Development

561,254.00 95,528 00

571,975.29 40 140 29

104,971 76 79,319 63

676,947 05 119 459.92

TOTAL QBE FORMULA FUNDS

$

17,677,13200 $ 19.258.06669 $ 1,010.48909 $ 20,268,55578

(1) Compnsed of State Funds plus Local Five MIii Share

See notes to the general-purpose financial statements

- 34 -

LEE COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30, 2002

SCHEDULE "5"

SITE
Lee County Primary School Lee County High School Kinchafoonee Primary School Lee County Middle School Twin Oaks Elementary School Lee County Elementary School Transitional Leaming Center Alternative Program Central Office (Alternative Education Program)
TOTAL
(1) Comprised of State Funds plus Local Five Mill Share

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE QBE PROGRAM COSTS

$

2,001,227.00 $

2,419,672.16

4,510,653.00

5,099,871.71

2,243,270.00

2,587,460.58

2,834,512.00

3,005,921.23

2,670,388.00

3,041,387.76

2,488,298.00

2,876,538.91

441,296.46

272,002.00

$

17,020,350.00 $ 19,472,148 81

See notes to the general-purpose financial statements. - 35 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Ru,;~Eu. \\'. Hu-. roN
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Wa~hrngton Street.SW. Suuc 114 Atlanta, Georgia 30334-8400
September 13, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Lee County Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of Lee County Board of Education as of and for the year ended June 30, 2002, and have issued our report thereon dated September 13, 2002. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general-purpose financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part ofobtaining reasonable assurance about whether Lee County Board ofEducation's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective ofour audit, and accordingly, we do not express such an opinion. The results ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Lee County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal
2002YB-41

control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Lee County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. The reportable condition is described in the accompanying Schedule ofFindings and Questioned Costs as item FS-6881-02-01.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we consider item FS-6881-02-01 to be a material weakness.
This report is intended solely for the information and use of the management, members of the Lee 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.
Re ectfully submitted,
~~~

RWH:as 2002YB-41

State Auditor

w. fo'iSELL

HINTON

STATE AUDITOR

(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Wa\hmgton Street. S W.. Su11e 214 Atlanta. Georgia 30334-8400
September 13, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Lee County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Lee County Board of Education with the types of compliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2002. Lee County Board 0f Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Lee County Board of Education's management. Our responsibility is to express an opinion on Lee County Board of Education's compliance based on our audit.
We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Lee 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 Lee County Board of Education's compliance with those requirements.
2002SA-10

In our opinion, the Lee County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2002.
Internal Control Over Compliance
The management ofLee County Board ofEducation is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Lee County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level of risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course ofperforming their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the management, members of the Lee County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully s u b ~ ~ ~
RWH:as 2002SA-10

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

LEE COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6881-00-01 FS-6881-01-01

Further Action Not Warranted Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-6881-01-01

Due to funding, we do not feel that the implementation of a General Fixed Assets Account Group is cost effective.

SECTION IV FINDINGS AND QUESTIONED COSTS

LEE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the Lee Co_unty Board of Education'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 Lee County Board of Education disclosed a financial statement reportable condition related to the following control category.
General Fixed Assets
The reportable condition described above is considered to be a material weakness.
3. Noncompliance Material to the Financial Statements The audit of the Lee County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.
4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Lee County Board of Education did not disclose any reportable conditions in internal control over major programs.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Lee County Board of Education's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .510{a) ofOMB Circular A-133 The Lee County Board of Education's audit did not disclose audit findings required to be reported by section .510(a) of 0MB Circular A-133.
7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program 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 84.173 Individuals with Disabilities Education Act - Part B - Special Education Capacity Building Improvement
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
- 1-

LEE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
I SUMMARY OF AUDITOR'S RESULTS 9. Low Risk Auditee
The Lee County Board of Education qualified as a low risk auditee as defined by Section .530 ofOMB Circular A-133. II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-6881-02-01 The Lee County Board ofEducation did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general-purpose financial statements of the School District being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the School District to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings, and equipment owned by the School District and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. Management's Response: A General Fixed Assets Account Group will be established in fiscal year 2003 to meet the requirements of GASB Statement 34. This finding should be resolved by June 30, 2003. ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
-2-