McIntosh County Board of Education, Darien, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2008

MCINTOSH COUNTY BOARD OF EDUCATION
DARIEN, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

MCINTOSH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

9

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

10

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

25

MCINTOSH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

26

3 SCHEDULE OF STATE REVENUE

27

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

28

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

29

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133

SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 24, 2009

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe McIntosh County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) ofthe McIntosh County Board of Education, as of and for the year ended June 30, 2008, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe McIntosh County Board ofEducation's management. Our responsibility is to express opinions on these 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 Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the McIntosh County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 opinions.
In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position ofthe governmental activities, each major fund, and the aggregate
2008ARL-11

remaining fund information of the McIntosh County Board of Education, as of June 30, 2008, and the respective changes in financial position thereof 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 March 24, 2009, on our consideration of the McIntosh County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through viii and page 25 respectively, are not a required part ofthe basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States ofAmerica. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the McIntosh County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
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,
~ tJ. :tf::1;.
Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2008ARL-11

MCINTOSH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
The discussion and analysis of McIntosh County Board of Education's financial performance provides an overall review of the School District's financial activities for the fiscal year ended June 30, 2008. The intent of this discussion and analysis is to look at the School District's financial performance as a whole. Readers should also review the financial statements and the notes to the basic financial statements to enhance their understanding of the School District's financial performance.
FINANCIAL HIGHLIGHTS
Key financial highlights for 2008 are as follows:
General Fund revenues accounted for $17,834,308.36 or 91.21 % of all revenues. The District-wide capital projects and debt service accounted for $1,719,811.04 or the remaining 8.79% ofrevenues.
The School District had $18.457-million in expenses related to governmental activities; only $10.930 million of these expenses were offset by program specific charges for services, grants, or contnbutions.
Among major funds, the General Fund had $17,834,308.36 in revenues and $17,649,363.69 in expenditures. The General Fund's ending balance increased by $184,944.67.
USING THE BASIC FINANCIAL STATEMENTS
This annual report consists of a series of financial statements and notes to these statements. These statements are organized so the reader can understand the McIntosh County Board of Education as a financial whole, or as an entire operating entity.
The Statement ofNet Assets and Statement ofActivities provide information about the activities of the whole School District, presenting both an aggregate view of the School District's finances and a longer-term view of those finances. Fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the shortterm as well as what remains for future spending. The fund financial statements also look at the School District's most significant funds. In the case ofthe McIntosh County Board ofEducation, the General Fund is by far the most significant fund.
REPORTING THE BOARD AS A WHOLE
Statement ofNet Assets and the Statement ofActivities
While this document contains the large number of funds used by the School District to provide programs and activities for the schools, the view of the School District as a whole looks at all financial transactions and asks the question, "How did we do financially during 2008?" The Statement ofNet Assets and the Statement of Activities answers this question. These statements
-i-

MCINTOSH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
include all assets and liabilities using the economic resources focus and accrual basis of accounting similar to the accounting used by most private-sector companies. These basis of accounting takes into account all of the current year's revenues and expenses regardless of when the cash is received or paid.
These two statements report the School District's net assets and changes in those assets. This change in net assets is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the result of many factors, some financial, some not. Nonfinancial factors include the School District's property tax base, facility conditions, required educational programs and other factors.
In the Statement of Net Assets and the Statement of Activities, the School District has one distinct type ofactivity:
Governmental Activities - All of the School District's programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, food service, after school programs, principal's accounts and various others.
REPORTING THE SCHOOL DISTRICT'S MOST SIGNIFICANT FUNDS
Fund Financial Statements
Fund financial reports provide detailed information about the School District's major funds. The School District uses many funds to account for a multitude of financial transactions. However, these fund financial statements focus on the School District's most significant funds. The School District's major governmental funds are the General Fund, Capital Projects Fund and Debt Service Fund.
Governmental Funds: Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out ofthose funds and the balances left at yearend available for spending in future periods. These funds are reported using the current financial resources measurement focus and the modified accrual accounting method, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are adequate financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement ofNet Assets and the Statement of Activities) and governmental/unds is reconciled in the financial statements.
-11-

MCINTOSH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008

Fiduciary Funds: The School District is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.
THE SCHOOL DISTRICT AS A WHOLE
The perspective ofthe statement ofnet assets is ofthe School District as a whole.
Table 1 provides a summary of the School District's net assets for fiscal year 2008 and comparison to fiscal year 2007.
Table 2 shows the changes in net assets for fiscal year 2008 and comparison to fiscal year 2007.
Figure A shows the funding sources for revenues. 44% of the School District's revenues are derived from State grants. Property Taxes make up 31 % ofthe total funding, while an additional 11 % is earned from the county's local option sales tax.

Sources of Revenue for Fiscal Year 2008 3'

44% 10%

State Funds Federal Funds Property Tax Sales Tax Charges for Services
Other

As shown in Figure B, Instruction comprised 52% of governmental program expenses. Administration and Other Services (5%) consist of the central office, business, community services and other operations ofthe School District.

- iii -

MCINTOSH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
Fiscal Year 2008 Expenditures
lnSll'UCtion
Pupil Services Dlmprovement of ln&truction DEducational M e<ia SchOol Administration Administration & Other Services Maintenance and Operations Student Transportation Food Services Debt Service aCapital Projects
GOVERNMENTAL ACTIVITIES
The Statement of Activities (Exhibit "B") shows the cost ofprogram services and the charges for services and grants offsetting those services. Although program revenues make up a majority of the funding, the School District is equally dependent upon tax revenues for governmental activities. Forty seven and one/half percent of instruction activities are supported through taxes and other general revenues excluding special purpose local option sales tax, and for all governmental activities general revenue support is 52.5%.
THE SCHOOL DISTRICT'S FUNDS
The School District's governmental funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues and other financing sources of $19,908,882.00 and expenditures and other financing uses of $20,014,873.89. There was a decrease in the fund balance totaling $460,754.49 for the governmental funds as a whole. The General Fund had an increase of$184,944.67.
GENERAL FUND BUDGETING HIGHLIGHTS
The School District's budget is prepared in accordance with Georgia Law. The most significant budgeted fund is the General Fund. During the course of fiscal year 2008, the School District amended its General Fund budget as needed. The School District used site-based budgeting. The budgeting systems are designed to tightly control total site budgets but provide flexibility for site management.
For the General Fund, the final budgeted revenues exceeded the original budgeted amount of $15,410,357.00 by $1,431,595.40. This difference was due mainly to an increase in State revenues budgeted of $347,197.40, an increase in Federal revenues of $1,366,896.00 and a decrease in property tax revenues of $290,569.00. The actual revenues of $17,834,308.36 were more than the budgeted amount by $992,355.96.
- IV -

MCINTOSH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
The final budgeted expenditures $17,100,644.00 exceeded the original budgeted amount of $15,515,692.00 by $1,584,952.00. This difference was due mainly to an increase in State and Federally funded grant expenditures. The difference in the budgeted and actual ending fund balances is the result ofan increase in State revenues. CAPITAL ASSETS At the end of fiscal year 2008, the School District had $19,579,228.30 invested in capital assets, net of depreciation. Table 3 provides a summary of Capital Assets for fiscal year 2008 and comparison to fiscal year 2007. The overall capital assets increased in fiscal year 2008 by a modest $346,605.00. DEBT At June 30, 2008, the McIntosh County Board of Education had general obligation bonds outstanding in the amount of$2,365,000.00 and outstanding capital leases of$283,810.08. CURRENT ISSUES The McIntosh County School System consists of three campuses (four schools) located in McIntosh County, with an estimated population of 11,248. Current enrollment is approximately 2,000 students in grades PK-12. Among Georgia's 159 counties, McIntosh's median household income is 73% ofthe Georgia median household income. The unemployment rate was 4.2% in 2006. The School District and local government are the largest employers located in the county. Many of the county residents continue to work outside ofthe county. As of 2005, the per capita income was $21,801.00. About 11.1% of the county's adult population has college degrees ranging from professional to doctorate degrees.
-v-

MCINTOSH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008

Table 1 Net Assets

Governmental Activities

Fiscal

Fiscal

Year2008

Year2007

Assets Current and Other Assets Capital Assets, Net

$ 7,560,451 $ 6,723,081

19,579,228

19,232,623

Total Assets

$ 27,139,679 $ 25,955,704

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 1,853,099 $ 2,072,025

2,648,810

3,505,000

Total Liabilities

$ 4,501,909 $ 5,577,025

Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted

$ 17,051,187 2,287,686 3,298,897

$ 15,863,760 2,674,538 1,840,381

Total Net Assets

$ 22.637.770 $ 20.378.679

- Vl -

MCINTOSH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008

Table 2 Change in Net Assets

Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions

Governmental Activities

Fiscal

Fiscal

Year2008

Year 2007

$

194,345

10,703,353

32,748

$

220,754

10,570,314

123,361

Total Program Revenues

$ 10,930,446 $ 10,914,429

General Revenues:

Taxes

Property Taxes

For Maintenance and Operations

$

Sales Taxes

Special Purpose Local Option Sales Tax

For Debt Service

For Capital Projects

Other Taxes

Investment Earnings

Miscellaneous

7,163,959 $
1,243,576 450,000 398,319 42,123 487,984

4,061,237
1,247,641 450,000 290,528 42,908 425,371

Total General Revenues

$ 9,785,961 $ 6,517,685

Total Revenues

$ 20,716,407 $ 17,432,114

Program Expenses Instruction Support Services Pupil Services
Improvement oflnstructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation ofPlant Student Transportation Services Central Support Services Other Support Services Operations ofNon-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt

$ 10,854,693 $ 10,146,750

718,301 774,704 298,810 484,105 1,209,680 193,764 1,501,298 819,848
7,266 133,789

557,602 428,529 269,744 511,021 982,409 201,295 1,395,115 706,047
1,967 150,300

202,739 63,165
1,125,150 70,004

253,269 62,671
959,634 96,687

Total Expenses

$ 18,457,316 $ 16,723,040

Increase in Net Assets

$ 2.259.091 $

7091074

-vu-

MCINTOSH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008

Table 3 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2008

Year 2007

Land Construction in Progress Buildings and Building Improvements Equipment Land Improvements

$ 242,125 $ 242,125

153,612

2,563,125

17,534,233

15,149,024

1,052,241

683,716

597,017

594,633

Total

$ 19.579.228 $ 19.232.623

CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the funds it receives. If you have any questions about this report or need additional financial information, contact Debra H. Vickers, Fiscal Officer of the McIntosh County Board of Education, 200 Pine Street, Darien, Georgia 31305. You may also email your questions to dvickers@mcintosh.k12.ga.us.

- Vlll -

MCINTOSH COUNTY BOARD OF EDUCATION

MCINTOSH COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2008
ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Interest Taxes State Government Federal Government Local Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Deposits and Deferred Revenues Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Bus Replacement Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

4,551,917.48

3,375.88 1,546,998.45 1,051,034.86
273,836.62 110,001.08
179.92 23,106.66 395,736.67 19, 183,491.63

$ =====2.1.,.=1=39=,6=7=9=.2=5

$

87,014.90

1,672,842.25

76,817.00

11,625.00

4,800.00

1,235,952.52 1,412,857.56

$

4,501,909.23

$

17,051,186.58

32,748.00 86,958.75 1,893,623.61 274,356.03 3,298,897.05

$

22,637,770.02

$ =====2=7,=13=9=,6=7=9.=25=

The notes to the basic financial statements are an integral part of this statement. - 1-

MCINTOSH COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2008

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Debi Services For Capital Projects Other Taxes Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$ 10,854,692.63
718,300.75 774,703.73 298,810.08 484,105.14 1,209,680.38 193,764.10 1,501,298.29 819,847.74
7,266.28 133,789.37
202,739.04 $ 63,164.95
1,125,150.00 70,003.72
$ 18,457,316.20 $

58,220.20 136,124.66
194,344.86

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

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

6,976,652.55

157,805.93 274,065.88 223,247.29 555,539.71 598,157.17
3,996.00 585,212.39 326,679.70 $
11.26 110,684.97

4.91 50,000.00 841,295.25

$

10,703,353.01 $

$ 32,748.00 32 748.00 $

-3,878,040.08
-560,494.82 -500,637.85 -75,562.79
71,434.57 -611,523.21 -189,768.10 -916,085.90 -460,420.04
-7,255.02 -23, 104.40
-144,513.93 -13,164.95
-147,730.09 -70 003.72
-7,526,870.33

$

7,163,959.38

1,243,575.94 450,000.00 398,318.66 42,123.39 487 983.59

$

9,785,960.96

$

2,259,090.63

20,378,679.39

$ ===22=-,6=3=7,..,7=7=0-=02=

-3 -

MCINTOSH COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2008

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Interest Taxes State Government Federal Government Local Other Inventories

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 2,469,348.58 $
3,375.88 97,717.29 1,051,034.86 273,836.62 110,001.08
179.92 23,106.66

486,212.14 $ 1,596,356.76 $ 297,266.85

4,551,917.48
3,375.88 394,984.14 1,051,034.86 273,836.62 110,001.08
179.92 23,106.66

Total Assets

$ 4,028,600.89 $ 486,212.14 $ 1,893,623.61 $===6,..,40.,.8..,,4=3=6.=64=

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Bus Replacement Continuation of Federal Programs Debt Service Inventories Capital Projects
Unreserved Designated for Student Activities Undesignated Reported in: General Fund
Total Fund Balances

$ 84,369.15 $

2,645.75

$

1,672,842.25

76,817.00

11,625.00

4,800.00

$ 1,762,011.40 $ 91,087.75

$

$ 32,748.00 63,852.09
23,106.66 $
86,210.81
2,060,671.93
$ 2,266,589.49 $

$ $ 1,893,623.61 395,124.39
395,124.39 $ 1,893,623.61 $

87,014.90 1,672,842.25
76,817.00 11,625.00 4 800.00
1,853,099.15
32,748.00 63,852.09 1,893,623.61 23,106.66 395,124.39
86,210.81
2,060,671.93
4,555,337.49

Total Liabilities and Fund Balances

$ 4,028,600.89 $ 486,212.14 $ 1,893,623.61 $===6=,4=08..,,4.,.3=6=.6=4

The notes to the basic financial statements are an integral part of this statement. -4-

MCINTOSH COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2008

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable Capital Leases Payable
Total Long-Term Liabilities
Net Assets of Governmental Activities (Exhibit "A")

$ 4,555,337.49

$ 242,125.16 153,611.51
1,066,413.28 22,269,362.16
2,566,514.01 -6,718,797.82

19,579,228.30

1,152,014.31

$ -2,365,000.00 -283,810.08

-2,648,810.08

$ 22,637,770.02

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

MCINTOSH COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 20, 2008

EXHIBIT"E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Capital Outlay Debi Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Capital Leases
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 6,001,671.95

$ 6,001,671.95

398,318.66 $ 450,000.00 $ 1,243,575.94 2,091,894.60

8,687,228.93

8,687,228.93

2,048,872.08

2,048,872.08

194,344.86

194,344.86

15,888.29

10,612.92

15,622.18

42,123.39

487,983.59

487,983.59

$ 17,834,308.36 $ 460,612.92 $ 1,259,198.12 $ 19,554,119.40

$ 10,316,120.63 $ 91,439.99

$ 10,407,560.62

725,709.75 774,703.73 298,810.08 478,603.79 1,209,680.38 193,764.10 1,463,205.84 657,857.83
7,266.28 133,789.37 202,739.04 63,164.95 1,123,947.92

392,307.60 600,806.37

725,709.75 774,703.73 298,810.08 478,603.79 1,209,680.38 193,764.10 1,463,205.84 1,050, 165.43
7,266.28 133,789.37 202,739.04 63,164.95 1,123,947.92 600,806.37

70,952.52 $ 1,140,000.00 70,003.72

1,210,952.52 70,003.72

$ 17,649,363.69 $ 1,155,506.48 $ 1,210,003.72 $ 20,014,873.89

$ 184,944.67 $ -694,893.56 $ 49,194.40 $ -460,754.49

354,762.60

354,762.60

$ 184,944.67 $ -340,130.96 $ 49,194.40 $ -105,991.89

2,081,644.82

735,255.35 1,844,429.21

4,661,329.38

$ 2,266,589.49 $ 395,124.39 $ 1,893,623.61 $ 4,555,337.49

The notes to the basic financial statements are an integral part of this statement. -6 -

MCINTOSH COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2008

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.
Some of the Capital Assets acquired this year were financed with capital leases. In Governmental Funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Assets, the lease obligation is reported as a Long-Term Liability.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Bond Principal Retirements Capital Lease Payments
Total Long-Term Debt Repayments

$ -105,991.89

$ 938,114.17 -591,509.00

346,605.17

1,162,287.43

-354,762.60

$ 1,140,000.00 70,952.52

1,210,952.52

Change in Net Assets of Governmental Activities (Exhibit "B")

$ 2,259,090.63

The notes to the basic financial statements are an integral part of this statement. -7-

(This page left intentionally blank)

MCINTOSH COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2008
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT"G"
AGENCY FUNDS
$ =====9=,2=1===7=34=
$ =====9=,2=1===7=34=

The notes to the basic financial statements are an integral part of this statement. -9 -

MCINTOSH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The McIntosh County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The 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 School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the McIntosh County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting ofinternal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
- 10 -

MCINTOSH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) and Bond Proceeds to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (sales) legally restricted for the payment ofgeneral longterm principal, interest and paying agent's fees.
The School District reports the following fiduciary fund type.
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless ofwhen the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized
- 11 -

MCINTOSH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
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. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
RECEIVABLES
Receivables consist of amounts due from property and sales taxes, 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 basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The McIntosh County Board of Commissioners fixed the property tax levy for the 2007 tax digest year (calendar year) on October 10, 2007 (levy date). Taxes were due on December 31, 2007 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2007 tax digest are reported as revenue in the governmental funds for fiscal year 2008. The McIntosh 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, at the fund reporting level, during the fiscal year ended June 30, 2008, for maintenance and operations amounted to $6,001,671.95.

- 12 -

MCINTOSH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The tax millage rate levied for the 2007 tax year (calendar year) for the McIntosh County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

12.75 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,693,575.94 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

INVENTORIES

FOOD INVENTORIES On the basic financial statements, inventories of donated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value ofassets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works ofart. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.

Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:

- 13 -

MCINTOSH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment

$ 5,000.00

NIA

$ 5,000.00

20 years

$ 5,000.00

50 years

$ 5,000.00 5 to 20 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

GENERAL OBLIGATION BONDS

The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide and fund financial statements, the School District recognizes bond issuance costs during the fiscal year bonds are issued. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures. To conform to generally accepted accounting principles, bond issuance costs should be deferred and amortized over the life of the bonds using the straight-line method. The effect of this deviation is deemed to be immaterial to the fair presentation ofthe basic financial statements. 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 Statement of Net Assets.

NET ASSETS

The School District's net assets in the District-wide Statements are classified as follows:

Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.

Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.

- 14 -

MCINTOSH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 3: DEPOSITS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe 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. At June 30, 2008, $70,728.29 of deposits were not secured by surety bond, insurance or collateral as specified above. The School District is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the School District's deposits.
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 ofthe State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, notes, 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 or securities guaranteed 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.
At June 30, 2008, the bank balances were $5,067,750.98. The amounts of the total uninsured bank balances are classified into three categories of custodial credit risk:
- 15 -

MCINTOSH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 3: DEPOSITS

Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the School District's name.

The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2008, as follows:

Custodial Credit Risk Category

Bank Balance

1

$ 70,728.29

2

3,100,665.93

3

0.00

Total

$ 3!1712394.22

Note 4: 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 2 - Inventories

Note 5: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

- 16 -

MCINTOSH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 5: CAPITAL ASSETS

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress
Total Capital Assets Not Being Depreciated
Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements
Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements
Total Capital Assets, Being Depreciated, Net
Governmental Activity Capital Assets - Net

Balances July 1, 2007

Increases

Decreases

Balances June 30, 2008

$ 242,125.16

$ 242,125.16

2,563,125.42 $ 153,611.51 $ 2,563,125.42

153,611.51

$ 2,805,250.58 $ 153,611.51 $ 2,563,125.42 $ 395,736.67

$19,468,081.44 $ 2,801,280.72

2,242,708.21

510,234.80 $

1,030,300.72

36,112.56

$22,269,362.16 186,429.00 2,566,514.01
1,066,413.28

4,319,057.53 1,558,991.91
435,668.38

416,071.00 141,710.00 33,728.00

186,429.00

4,735,128.53 1,514,272.91
469,396.38

$ 16,427,372.55 $ 2,756,119.08 $

0.00 $19,183,491.63

$ 12,232,623 13 $ 2 2Q9,:Z3Q 59 $ 2,563,125.42 $ 12,579 228.3Q

Capital assets being acquired under capital leases as of June 30, 2008, are as follows:

Governmental Funds

Equipment Less: Accumulated Depreciation

$ 354,762.00 22,174.00

$ 332,588.00

Current year depreciation expense by function is as follows:

Instruction Support Services
General Administration Maintenance and Operation of Plant Student Transportation Services Food Services

$ 448,237.00

$

4,009.00

31,495.00

106,892.00

142,396.00 876.00

$ 591,509.00

- 17 -

MCINTOSH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) and general obligation bond proceeds are restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2008, were as follows:

District-wide Capital Projects

Bond

SPLOST

Proceeds

Debt Service Funds

Restricted Cash and Cash Equivalents: Debt Services Capital Acquisitions

$ 1,596,356.76 $ 361,228.75 $ 124,983.39

Note 7: 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 and acts ofGod. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liabilities 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:

2007 2008

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

$

0.00 $

7 109.74 $

7 109.74 $

0.00

$

0.00 $

7 434.00 $

7 434.00 $

0.00

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an

- 18 -

MCINTOSH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 7: RISK MANAGEMENT

annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $500,000.00 loss per occurrence, up to $2,000,000.00.

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

Position Covered

Amount

Superintendent Each Principal

$ 100,000.00 $ 25,000.00

Note 8: SHORT-TERM DEBT

The School District issues tax anticipation notes and obtains temporary loans in advance ofproperty tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V ofthe Constitution ofthe State ofGeorgia limits the aggregate amount ofshort-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 ofthe calendar year in which the debt was incurred.

Short-term debt activity for the fiscal year is as follows:

Beginning Balance

Issued

Redeemed

Ending Balance

Tax Anticipation Notes $====o==.o==o $1.100,000.00 $1.100,000.00 $====o=.o==o

Note 9: LONG-TERM DEBT

CAPITAL LEASES The McIntosh County Board of Education entered into various lease agreements for buses. 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 Rate

Amount

General Government - Series 2004

2.38%

$ 2,365,000.00

- 19 -

MCINTOSH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 9: LONG-TERM DEBT

The changes in Long-Term Debt during the fiscal year ended June 30, 2008, were as follows:

Balance Julx 1, 2007

Governmental Funds

Additions

Deductions

Balance June 30, 2008

Due Within One Year

Capital Leases G.O. Bonds

$

0.00 $ 354,762.60 $ 70,952.52 $ 283,810.08 $ 70,952.52

3,505,000.00

1,140,000.00 2,365,000.00 1,165,000.00

$ 3,5Q5 QQQ QQ $ 354,162.fiQ $ l,21Q,252.52 $ 2,648,81Q Q8 $ 1,235,252.52

At June 30, 2008, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

CaQital Leases

PrinciQal

Interest

2009 2010 2011 2012

$ 70,952.52 $ 70,952.52 70,952.52 70,952.52

9,668.06 7,382.16 5,010.98 2,551.40

Total Principal and Interest

$ 283,810.08 $ 24,612.60

Fiscal Year Ended June 30

General Obligation

Debt

PrinciQal

Interest

2009 2010

$ 1,165,000.00 $ 1,200,000.00

42,423.50 14,280.00

Total Principal and Interest

$ 2,365,000.00 $ 56,703.50

Note 10: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $367,624.67 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 $365,420.67

- 20 -

MCINTOSH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 10: ON-BEHALF PAYMENTS

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $2,204.00

Note 11: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2008:

Project

Unearned Executed Contracts

Field House/Gym Addition

$ 676,855.42

The amount described in this note is not reflected in the basic financial statements.

Note 12: SIGNIFICANT 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 costs 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 basic financial statements.

Note 13: SUBSEQUENT EVENTS

On March 17, 2009, the voters ofMcIntosh County voted in favor ofa Special Purpose Local Option Sales Tax referendum for educational purposes. The imposition of the tax approved by voters, as stated on the Official Ballot of McIntosh County is as follows:

"Shall a one cent sales tax be imposed in the McIntosh County School District for a period of time not to exceed twenty consecutive calendar quarters and for the raising ofnot more than $14,000,000 for the purpose of acquiring, constructing, furnishing, and equipping the following capital outlay projects, including the acquisition of land: Phase I of a new elementary school, including classrooms, instruction and support space, equipment fields, grounds and parking: additional classrooms, a track facility at McIntosh County Academy

- 21 -

MCINTOSH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 13: SUBSEQUENT EVENTS

including parking, grounds, equipment and other external improvements; additional classrooms, instructional, and support spaces throughout the school district; school buses; renovations and remodeling for existing school district facilities and various items ofpersonal property, including computers and technology."

Note 14: POSTEMPLOYMENT BENEFITS

Georgia Retiree Health Benefit Fund

Plan Description. The School District contributes to the Georgia Retiree Health Benefit Fund ("GRHBF"), a cost-sharing multiple-employer defined benefit postemployment healthcare plan administered by the Department ofCommunity Health. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries. Pursuant to Title 45, Chapter 18 ofthe Official Code ofGeorgia Annotated, the authority to establish and amend the benefit provisions ofthe plan is assigned to the Board of Community Health. The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department ofCommunity Health at 2 Peachtree Street, Atlanta, Georgia 30303.

Funding Policy. The contribution requirements of plan members and participating employers are established and may be amended by the Board of Community Health. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) ofthe cost of health insurance coverage.

Participating employers are statutorily required to contribute in accordance with the employer contribution rate established by the Board of Community Health. This contribution rate is established to fund both the active and retired employee health insurance plans based on projected pay-as-you-go financing requirements. The employer contribution rates for the combined active and retiree plans for the fiscal year ended June 30, 2008, were as follows:

Teachers Non-Certificated Employees

18.534% of state-based salaries $162.72 per month

The School District's contribution to the health insurance plans for the fiscal year ended June 30, 2008, was $1,539,124.41, which equaled the required contribution.

-22 -

MCINTOSH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 15: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe 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 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$ 883,920.88 $ 815,488.30 $ 787,644.19

- 23 -

(This page left intentionally blank)

MCINTOSH COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2008

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1 l

FINAL (1)

ACTUAL AMOUNTS

$

6,452,314.00 $

6,161,745.00 $

6,001,671.95

250,000.00

250,000.00

398,318.66

7,728,964.00

8,076,161.40

8,687,228.93

758,000.00

2,124,896.00

2,048,872.08

198,401.00

198,401.00

194,344.86

11,071.00

11,071.00

15,888.29

11 607.00

19 678.00

487,983.59

$ 15,410,357.00 $ 16,841,952.40 $ 17,834,308.36

$

9,137,909.00 $

9,994,528.00 $ 10,316,120.63

443,177.00 497,709.00 295,609.00 361,980.00 1,147,665.00 172,642.00 1,663,785.00 674,693.00
3,500.00 9,888.00
1,107,135.00

514,526.00 815,543.00 295,609.00 501,978.00 1,157,475.00 172,642.00 1,663,785.00 680,469.00
9,500.00 137,454.00
50,000.00 1,107,135.00

725,709.75 774,703.73 298,810.08 478,603.79 1,209,680.38 193,764.10 1,463,205.84 657,857.83
7,266.28 133,789.37 202,739.04
63,164.95 1,123,947.92

$ 15,515,692.00 $ 17,100,644.00 $ 17,649,363.69

$

-105,335.00 $

-258,691.60 $

184,944.67

1,728,731.16

1,728,731.16

2,081,644.82

3 856.71

Fund Balances - Ending

$

1,623,396.16 $

1,473,896.27 $

2,266,589.49

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 25 -

MCINTOSH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2008

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U.S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1)
Total U.S. Department of Agriculture
Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Enhancing Education Through Technology Program Improving Teacher Quality State Grants State Grants for Innovative Programs Title I Grants to Local Educational Agencies
Total U.S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555

N/A

(2)

N/A $ 1,053,305.65

$

1,053,305.65

10.550

NIA

25,804.75

$

1,079,110.40

* 84.027 * 84.173
84.048 84.318 84.367 84.298 84.010

NIA $
N/A
$

299,266.38 18,435.85
317,702.23

N/A

25,499.00

N/A

68,128.92

N/A

162,856.28

N/A

3,678.00

N/A

682,263.34

$

1,260,127.77

Total Federal Financial Assistance
NIA = Not Available

$ ====2=,3=39=,2=3=8=.1=7

Notes to the Schedule of Expenditures of Federal Awards

(1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($233,357.48) were not maintained separately and are included in the 2008 National School Lunch Program.

Major Programs are identified by an asterisk(*) in front of the CFDA number.

The School District did not provide Federal Assistance to any Subrecipient.

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the McIntosh County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 26 -

MCINTOSH COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2008

AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Vocational Supervisors Food Services Vocational Education Amended Formula Adjustment Other State Programs Health Insurance High School Graduation Coaches Middle School Graduation Coaches Middle School Remediation and Intervention Grant Preschool Handicapped Program Virtual Schools State Grant
Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACT Human Resources, Georgia Department of Family Connection
OTHER Office of Planning and Budget Reach to Teach Grant

See notes to the basic financial statements.

- 27 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

478,956.82

441,292.00 47,521.00
1,131,547.00 120,215.00 545,201.00 45,906.00 938,110.00 851,618.00 296,653.00 965,481.00 75,222.00 266,341.00 72,461.00 21,894.00 165,391.00 52,634.00 32,726.00
312,082.00 407,689.00 429,818.00
300,313.00 32,748.00 20,000.00 50,452.00 8,663.00 52,492.00 77,865.44
-157,955.00
365,420.67 72,720.00 42,096.00 2,615.00 62,686.00 150.00
2,204.00
50,000.00
6 000.00
$ ===a..a.=. a1.,.,2=2=a=.9=3

MCINTOSH COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2008

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

The acquisition, construction, furnishing and equipping of a Fine Arts Center, including classrooms, instructional and support space and an Athletics Complex, including buildings and equipment, fields, grounds and parking at the New McIntosh County High School; completion of the New McIntosh County High School including all external improvements; including parking areas and grounds; furnishing and equipping classrooms, instructional and support spaces at the New McIntosh County High School; construction, equipping and furnishing additional classrooms, instructional and support spaces at other facilities within the School District; the acquisition and equipping of school buses; remodeling, renovating, furnishing and equipping existing School District facilities, including classrooms, instructional and support space; acquisition of land for future construction of schools; and acquiring any necessary personal property, including computers and technology

$ 8,000,000.00 $ 8,000,000.00 $ 1,225,510.20 $ 6,226,034.51

Ongoing

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the project. Includes all cost from project inception to completion.
(3) The voters of McIntosh County approved the imposition of a 1o/o sales tax to fund the above project and retire associated debt. Amounts expended for this project may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project.

See notes to the basic financial statements.

-28 -

MCINTOSH COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2008

SCHEDULE "5"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category Ill Category IV Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

586,709.00 $ 569,014.73 $

23,001.59 $

592,016.32

64,079.00

89,063.75

550.66

89,614.41

1,449,659.00 1,384,361.08

69,040.80

1,453,401.88

174,232.00

288,565.56

796.45

289,362.01

709,981.00

709,117.82

29,993.37

739,111.19

57,922.00 1,257,754.00 1,135,401.00
378,807.00 1,236,527.00
91,343.00 299,263.00
97,592.00 25 670.00

152,337.80 1,301,315.79 1,411,185.61
348,714.02
167,290.30 192,422.79 659,604.66
84,371.12 304,199.22 262,529.74
25,688.73

1,074.58 76,353.04 75,913.65 40,679.76
84,916.66 537.55 419.13 272.93 533.07
2,544.70 -174.58

153,412.38 1,377,668.83 1,487,099.26
389,393.78
252,206.96 192,960.34 660,023.79
84,644.05 304,732.29 265,074.44
25514.15

$

7,564,939.00 $ 7,949,782.72 $ 406,453.36 $ 8,356,236.08

215,373.00 42 634.00

241,976.38 1,190.00

49,879.41 38,683.19

291,855.79 39 873.19

TOTAL QBE FORMULA FUNDS

$

7,822,946.00 $ 8,192,949.10 $ 495,015.96 $ 8,687,965.06

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment.

See notes to the basic financial statements.

- 29-

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 24, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the McIntosh County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information ofMcIntosh County Board ofEducation as ofand for the year ended June 30, 2008, which collectively comprise McIntosh County Board of Education's basic financial statements and have issued our report thereon dated March 24, 2009. 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 Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered McIntosh County Board ofEducation's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the McIntosh County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness ofthe McIntosh County Board of Education's internal control over financial reporting.
A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the McIntosh County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally
2008YB-10

accepted accounting principles such that there is more than a remote likelihood that a misstatement ofthe McIntosh County Board ofEducation's financial statements that is more than inconsequential will not be prevented or detected by the McIntosh County Board of Education's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the McIntosh County Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would rtot necessarily disclose all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether McIntosh County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, 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 or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of McIntosh County Board of Education in a separate letter dated March 24, 2009.
This report is intended solely for the information and use ofmanagement, members ofthe McIntosh County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:as 2008YB-10

Russell W. Hinton, CPA, CGFM State Auditor

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 24, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the McIntosh County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of McIntosh County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2008. McIntosh County Board ofEducation'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 ofits major Federal programs is the responsibility ofMcIntosh County Board of Education's management. Our responsibility is to express an opinion on McIntosh County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the McIntosh County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the

2008SA-10

circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on McIntosh County Board ofEducation's compliance with those requirements.
In our opinion, the McIntosh County Board ofEducation 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, 2008.
Internal Control Over Compliance
The management of McIntosh County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered McIntosh County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the McIntosh County Board of Education's internal control over compliance.
A control deficiency in an entity's internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type ofcompliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control.
Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
2008SA-10

This report is intended solely for the information and use ofmanagement, members ofthe McIntosh 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 submitted,

RWH:as 2008SA-10

Russell W. Hinton, CPA, CGFM State Auditor

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

MCINTOSH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

F A-6981-06-01

Previously Reported Corrective Action Implemented

SECTION IV FINDINGS AND QUESTIONED COSTS

MCINTOSH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the McIntosh County Board ofEducation's financial statements was unqualified.
2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the McIntosh County Board of Education did not disclose any significant deficiencies related to the financial statements.
3. Noncompliance Material to the Financial Statements The audit of the McIntosh County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.
4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the McIntosh County Board of Education did not disclose any significant deficiencies in internal control over major programs.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the McIntosh 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 McIntosh County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133.
7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 84.027 Special Education - Grants to States 84.173 Special Education - Preschool Grants
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk Auditee The McIntosh County Board of Education qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133.
- 1-

MCINTOSH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
-2 -