Monroe County Board of Education, Forsyth, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2003

MONROE COUNTY BOARD OF EDUCATION
FORSYTH, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

MONROE 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

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

3

B

STATEMENT OF ACTIVITIES

4

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

6

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

9

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

10

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

13

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

14

H

STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

15

I

NOTES TO THE BASIC FINANCIAL STATEMENTS

17

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

33

MONROE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

34

3 SCHEDULE OF STATE REVENUE

36

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

38

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

39

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND 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
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
April 2, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members ofthe Monroe 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 I) of the Monroe County Board of Education, as of and for the year ended June 30, 2003, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Monroe 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 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 op1mons.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective position ofthe governmental activities, each major fund, and the aggregate remaining fund information of the Monroe County Board of Education, as of June 30, 2003, and the respective changes in financial position thereoffor the year then ended in conformity with accounting principles generally accepted in the United States of America.
2003-34ARL-11

The Monroe County Board ofEducation has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not to be part of, the basic financial statements.
As discussed in Note 2 to the basic financial statements, during fiscal year 2003, the Board completed a comprehensive inventory of its capital assets for inclusion in the basic financial statements, consolidated its individual school activity accounts for inclusion in the basic financial statements and changed its method of accounting for the salaries of certain ten-month employees from a cash basis to a basis that is generally accepted. These changes are in accordance with generally accepted accounting principles.
As described in Note 2, the Monroe County Board of Education has implemented a new financial reporting model as required by provisions of Governrnental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2003.
In accordance with Governrnent Auditing Standards, we have also issued our report dated April 2, 2004, on our consideration of the Monroe County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Governrnent Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 33 is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. 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 Monroe 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.
2003-34ARL-l l

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.

------ w.4d Respectfully submitted,

~

RWH:as 2003-34ARL-11

State Auditor

MONROE COUNTY BOARD OF EDUCATION

MONROE COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30. 2003
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries Payable Contracts Payable Retainages Payable Deposits and Deferred Revenues Long-Term Liabilities
Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Capital Projects Permanent Funds Unrestricted
Total Net Assets
Total Liabilities and Net Assets
The notes to the basic financial statements are an integral part of this statement. -3-

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

1,736,798

14,575,044

1.555,632 2,529,592
385,450 419,732
74,283

782,770 1,034,004 2,935,790 25,837,259 3,675,273 -12,499,589

$ ===4=3=,0=4=2=,0=38=

$

2,596,301

2,530,376

713,416

156,025

69,707

8,000,000

$

14,065,825

$

20,340,268

1,052,214 5,608,830
27,917 1946984

$

28,976,213

$ ===4=3=,04=2=,0=38=

MONROE COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30. 2003

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 Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Debt Services For Capital Projects Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Changes in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$

20,727,204 $

639,022 692,729 473,615 614,873 1,590,681 433,110 2,394,663 2,074,564 196,766 131,846

1,360,625 146,201

$

31,475,899 $

48,474
506,686 555160

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

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

11,032,891 $

287,213 513,651

431,054 552,140

803,976 829,901
95,221

1,050,603

$

15,596,650 $

674,162 $
4,105 188,418
1,045 27,145 894 875 $

-8,971,677
-351,809 -179,078 -473,615 -183,819 -1,034,436 -433,110 -1,590,687 -1,056,245 -100,500 -131,846
223,809 -146 201
-14,429,214

$

11,396,054

1,830

15,822

648,117 3,520,328
234,821 69,220
253,317 111,680 750 442

$

17 001 631

$

2,572,417

26,403,796

$ ===2=8=,9=7=6'=2=13=

-5-

MONROE COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2003

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

$

1,371,780 $

352,386

3,155,686

11,404,083

260,738 1,634,717
385,450 419,732
74,283

1,123,753 894,875

Total Assets

$

7,302,386 $ 13,775,097

LIABILITIES AND FUND BALANCES
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Contracts Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Inventories Capital Projects Permanent Funds
Unreserved Undesignated Reported in: General Fund Capital Projects
Total Fund Balances

$

2,073,713 $

2,530,376

69707

522,588
713,416 156,025

$

4,673,796 $

1,392,029

$

977,931

74,283

$ 12,183,591

1,576,376

199 477

$

2,628,590 $ 12,383,068

Total Liabilities and Fund Balances

$

7,302,386 $ 13,775,097

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

EXHIBIT"C"

DEBT SERVICE
FUND

NONMAJOR GOVERNMENTAL
FUND

TOTAL

$

12,642 $

1,736,808

15,275

14,575,044

$

10

1,384,501 2,529,592
385,450 419,732
74283

$

10 $

21 917 $ ===2=1=,1..0...s....4...1...o....

$

10

$

10

$

10

2,596,301

2,530,376

713,416

156,025

69707

$

6,065,835

$

977,931

74,283

12,183,591

$

27,917

27,917

$

0

1,576,376 199477

$

0 $

27 917 $

15,039,575

$

10 $

27 917 $ ======2=1=,1=0=5=,4=1=0=

-7-

MONROE COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2003

EXHIBIT D 11 11

Total Fund Balances - Governmental Funds (Exhibit "C")

$ 15,039,575

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

$

782,770

1,034,004

2,935,790

25,837,259

3,675,273

-12,499,589

21,765,507

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.

171,131

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

-8,000,000

Net Assets of Governmental Activities (Exhibit "A")

$ 28,976,213

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

MONROE COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30. 2003

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 Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over {under) Expenditures
OTHER FINANCING SOURCES (USES}
Proceeds of Long-Term Capital-Related Debt Capitalized Interest
Total Other Financing Sources {Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Inventory - Net Change in Period

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

$ 11,289,969

304,041 $ 3,520,328

13,372,683

894,875

2,477,284

555,160

43,087

67,568

750,442

$ 28,792,666 $ 4,482,771

$ 18,383,917

639,022 692,729 473,615 614,873 1,576,304 356,136 $ 2,394,663 1,705,831 193,104 131,846 1,454,765
1,990

75,675 4,790,357

48,442 2 737

$ 28,669,974 $ 4,866,032

$

122,692 $ -383,261

$ 8,000,000

$ 8,000,000

$

122,692 $ 7,616,739

2,468,669

4,766,329

37,229

Fund Balances - Ending
The notes to the basic financial statements are an integral part of this statement. - 10 -

$ 2,628,590 $ 12,383,068

EXHIBIT"E"

DEBT SERVICE
FUND

NONMAJOR GOVERNMENTAL
FUND

TOTAL

$

390

648,117

676 $

$

649,183 $

$
349 349 $

11,290,359 4,472,486 14,267,558 2,477,284
555,160 111,680 750 442
33,924,969

$

$

1,299

595,000 6990

$

603,289 $

$

45,894 $

0 $
0 $ 349 $

18,383,917
639,022 692,729 473,615 614,873 1,576,304 433,110 2,394,663 1,705,831 193,104 131,846 1,454,765 4,792,347
643,442 9727
34,139,295
-214,326

$

-136 474

$

-136 474

$

-90,580 $

90,580

$
$ 349 $ 27,568

8,000,000 -136 474 7,863,526 7,649,200 7,353,146
37,229

$

0 $====2=7=9=1===7 $ 15,039,575

- 11 -

MONROE 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, 2003

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")

$ 7,649,200

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

$ 3,014,973 -932,828

2,082,145

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.

123,347

Bond proceeds provide current financial resources to Governmental Funds; however, issuing debt increases Long-Term Liabilities in the Statement of Net Assets. In the current period, proceeds were received from:

General Obligation Bonds Issued

-8,000,000

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

$ 595,000 48,442

643,442

Food Inventories are expensed on the District-Wide Statements using the consumption method while on the fund level Food Inventories are recorded as expenditures when purchased. In the current period this difference amounts to.

74,283

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

$ 2,572,417

The notes to the basic financial statements are an integral part of this statement. -13 -

MONROE COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2003

EXHIBIT"G"

ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Other

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

$

24,791

- - - - $ _ _2_6~,0_01_

Total Assets
LIABILITIES Cash Overdraft Funds Held for Others
Total Liabilities NET ASSETS Held in Trust for Private Purposes

$

24 791 $ =====26=,0=0=1=

$

17,676

8,325

$ _ _2_6~,0_01_

$ _ _ _24~79_1_

Total Liabilities and Net Assets

$

24,791 $ ===26=,0=0=1=

The notes to the basic financial statements are an integral part of this statement. - 14 -

MONROE COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2003

EXHIBIT"H"

REVENUES Contributions Donors Investment Earnings Interest Less Investment Expense Net Investment Earnings Total Revenues
EXPENSES Scholarships Change in Net Assets
Net Assets - Beginning
Net Assets - Ending

PRIVATE PURPOSE TRUSTS

$

100

$

262

42

$

220

$

320

$

500

$

-180

24 971

$ ===24::!'=79=1=

The notes to the basic financial statements are an integral part of this statement. - 15 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Monroe 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 Monroe 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 of internal 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 of goods 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. All remaining governmental funds are aggregated and reported as nonmajor funds.
- 17 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

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 Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
The School District reports the following fiduciary fund types:
Private - Purpose Trust fund reports trust arrangements under which principal and income may be expended to provide scholarships for students who attend Mary Persons High School.
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 of when 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
- 18 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral 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.
For fiscal year 2003, the School District changed its method of accounting for the final two payments on one hundred and ninety day contracts and for the related revenue due from the State to fund these contracts. Adjustments have been made in the fiscal year 2003 financial statements to record costs for salaries and fringe benefits earned by employees through June 30, 2003, (even though paid in July and August 2003) and the related revenue due from the State to fund these contracts. Adjustments were also made for the similar salaries, benefits and related State revenues earned in fiscal year 2002 and recorded in fiscal year 2003.
The net effect of the above accounting treatment results in the accompanying financial statements reflecting costs for those salaries and benefits earned by employees during fiscal year 2003 and the related State revenue to fund these contracts. In addition, both the net assets and fund balance at July 1, 2002, have been restated for salaries and benefits earned by employees in fiscal year 2002 but not paid until July and August 2002 and for the related State revenue for these contracts. This change is in accordance with generally accepted accounting principles. See Restatement of Prior Year Fund Balance.
RESTATEMENT OF PRIOR YEAR FUND BALANCE - GENERAL FUND
In prior years, the financial activities ofthe School District's School Food Services Fund and Federal Programs were reported as Special Revenue Funds. These funds had a combined fund balance of $930,172 at July 1, 2002. For fiscal year 2003, these funds have been reported as part ofthe General Fund. In addition, governmental fund activity from the various school activity accounts, which were not reported in the prior year's financial statements, have been reported within the General Fund for fiscal year ended June 30, 2003. The governmental fund activity of the various school activity accounts had a fund balance of $238,151 at July 1, 2002. This change is in accordance with generally accepted accounting principles.

- 19 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General Fund Balance July 1, 2002

$ 2,651,407

Add Funds Consolidated with General Fund: School Food Services Fund Federal Programs School Activity Account - Governmental Activity

901,180 28,992
238,151

Add: State Revenue Related to July and August 2002 Salary Payments Earned by Employees in Fiscal Year 2002

1,510,051

Deduct: July and August 2002 Salary Payments Earned by Employees in Fiscal Year 2002

2,861,112

General Fund Balance July 1, 2002 (Restated)

$ 2,468.669

CHANGES IN ACCOUNTING PRINCIPLES

The Monroe County Board of Education has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2003.

The provisions of GASB Statement No. 34 require the inclusion of a Statement ofNet Assets. The elements comprising Net Assets - Beginning include the following:

General Fund (Restated) July 1, 2002 Capital Projects Fund Debt Service Fund Permanent Fund

$ 2,468,669 4,766,329 90,580 27,568

Governmental Funds (Restated) July 1, 2002 Capital Assets Accumulated Depreciation Property Tax Revenue Timing Differences Bonds and Notes Payable Capital Leases Payable Food Inventories Costing Differences

$ 7,353,146 31,250,123 -11,566,761 47,784 -595,000 -48,442 -37,054

Net Assets Beginning (See Exhibit "B")

$ 26,403,796

-20-

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 Board 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 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 ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. 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 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
- 21 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30. 2003

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 Monroe County Board ofCommissioners fixed the property tax levy for the 2002 tax digest year (calendar year) on November 12, 2002 (levy date). Taxes were due on January 21, 2003 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2002 tax digest are reported as revenue in the governmental funds for fiscal year 2003. The Monroe County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance oftaxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2003, for maintenance and operations amounted to $11,274,147 and for school bonds amounted to $390.

The tax millage rate levied for the 2002 tax year (calendar year) for the Monroe County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

11.98 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $4,168,445 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 district-wide 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.

-22-

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"!"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time ofpurchase. 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 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 of assets 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 of art.

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

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment

All

NIA

All

15 years

All

20 to 50 years

$

10,000 5 to 14 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. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement ofNet Assets.

Note 3: 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 ofmoney 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.

- 23 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 3: DEPOSITS AND INVESTMENTS
If a 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 checking 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
(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, 2003, the bank balances were $3,320,761. The amounts of the total bank balances are classified into three categories of credit risk:
Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the 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.)
- 24-

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 3: DEPOSITS AND INVESTMENTS

The School District's deposits are classified by risk category at June 30, 2003, as follows:

Risk Category

Bank Balance

1

$ 369,363

2

1,233,955

3

1,717,443

Total

$ 3,320.761

CATEGORIZATION OF INVESTMENTS At June 30, 2003, the carrying value of the School District's total investments was $14,473,362 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:

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. 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 daily and reported to the rating agency to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed at the pool's share price, $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist 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, 2003, was 30 days. The average investment duration for Fund 6 on June 30, 2003, was 0.39 years.

- 25 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

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:

Balances July 1, 2002

Increases

Balances Decreases June 30, 2003

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress

$ 641,840 $ 140,930

$ 782,770

207,514

2,213,300 $ 1,386,810

1,034,004

Total Capital Assets Not Being Depreciated $ 849,354 $ 2,354,230 $ 1,386,810 $ 1,816,774

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 24,355,695 $ 3,251,269 2,793,805

1,481,564 $ 424,004 141,985

0 $ 25,837,259 3,675,273 2,935,790

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

7,190,228 2,210,086 2,166,447

609,224 230,968
92,636

7,799,452 2,441,054 2,259,083

Total Capital Assets, Being Depreciated, Net $ 18,834,008 $ 1,114,725 $

0 $ 19,948,733

Governmental Activity Capital Assets - Net $ 19,683,362 $ 3,468,255 $ 1,386,810 $ 21,765,507

Current year depreciation expense by function is as follows:

Instruction Support Services
School Administration Student Transportation Services Central Support Services Food Services

$ 702,754

$

4,279

196,409

1,090

201,778 28,296

$ 932f828

- 26-

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) and general obligation bond proceeds are reported as restricted assets in the Statement ofNet Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2003, were as follows:

District-wide Capital Projects

Bond

SPLOST

Proceeds

Restricted Cash and Cash Equivalents: Capital Acquisitions
Restricted Investments: Capital Acquisitions

$ 700,307 $ 4,135,922 $

7,268,161

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 Board's insurance coverage in any of the past three years.

The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members ofthe system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse) and automobile risks. Payment of excess insurance for the system varies by line of coverage.

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 liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

-27 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 7: RISK MANAGEMENT

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

2002 2003

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

EndofYear Liability

$

0 $

4 346 $

4 346 $

0

$

0 $

3 150 $

3,150 $

0

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 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 $400,000 loss per occurrence, up to $2,000,000.

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

Position Covered

Amount

Superintendent All Employees

$

50,000

$ 100,000

Note 8: OPERATING LEASES

Monroe County Board of Education has entered into various leases as lessee for copiers. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2003, for governmental funds amounted to $17,664. Future minimum lease payments for these leases are as follows:

Year Ending

Governmental Funds

2004

$

17,664

2005

17,664

2006

17,664

2007

11,776

Total

$==6==4-,7==6==8

- 28 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 9: LONG-TERM DEBT

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

Purpose

Interest Rate

Amount

General Government - Series 2003

2.48%

$ 8,000,000

The changes in Long-Term Debt during the fiscal year ended June 30, 2003, were as follows:

Governmental Funds

General

Capital

Obligation

Leases

Bonds

Total

Balance July 1, 2002

$

48,442 $ 595,000 $ 643,442

Additions G.O. Bonds

8,000,000

8,000,000

Deductions Debt Retired

48 442

595,000

643,442

Balance June 30, 2003

$======0 $ 8,000,000 $ 8,000,000

Portion of Long-Term Debt

Due within One Year

$_ _ _~0 $

0 $

0

At June 30, 2003, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

General Obligation

Debt

Principal

Interest

2004 2005 2006 2007 2008 2009 - 2010

$
$ 1,515,000 1,550,000 1,595,000 3,340,000

137,227 198,400 179,614 141,608 102,610 83,576

Total Principal and Interest

$ 8,000,000 $ 843,035

- 29 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 10: ON-BEHALF PAYMENTS

The Board has recognized revenues and costs in the amount of $293,581 for health insurance and retirement contributions paid on the Board'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 $246,238

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 $47,343

Note 11: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2003, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

New Monroe Elementary School, 03/02S-702-019, 03G/02S-702-032 and SAO 1S-702-019
Agri-Science Lab Modification Hubbard Middle School Conversion and
Primary School Addition Mary Persons High School Gymnasium

$ 8,263,057 $ 2,292,714 71,732
2,897,983 570,916

$ 11,803.688 $ 2,292.714

The amounts described in this note are 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.

- 30 -

MONROE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "I"

Note 12: SIGNIFICANT CONTINGENT LIABILITIES

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: 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 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2003 2002 2001

100% 100% 100%

$ 1,446,086 $ 1,380,101 $ 1,590,699

- 31 -

MONROE COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2003

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 Food Services Operation
Capital Outlay Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Other Sources Other Uses
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Inventory - Net Change in Period

NONAPPROPRIATED BUDGETS

ORIGINAL (1}

FINAL (1}

ACTUAL AMOUNTS

$

11,848,174 $

11,848,174 $

11,289,969

140,000

140,000

304,041

12,632,848

12,632,848

13,372,683

2,234,012

2,110,757

2,477,284

504,221

504,221

555,160

43,990

43,990

43,087

101 300

101 300

750 442

$

27,504,545 $

27,381,290 $

28,792,666

$

17,670,181 $

17,556,856 $

18,383,917

487,554 544,610 449,222 533,219 1,580,652 315,385 2,099,307 1,748,668 264,124 126,985 1,547,847

486,772 836,869 449,222 557,888 1,583,557 315,385 2,114,307 1,748,668 264,124
94,559 1,547,847

639,022 692,729 473,615 614,873 1,576,304 356,136 2,394,663 1,705,831 193,104 131,846 1,454,765
1,990 51179

$

27,367,754 $

27,556,054 $

28,669,974

$

136 791 $

-174 764 $

122,692

$

127,209 $

127,209

-264,000

-264,000

$

-136 791 $

-136 791

$

0 $

-311,555 $

122,692

3,029,930

3,029,930

2,468,669

40 249

40249

37 229

Fund Balances - Ending

$

3070179 $

2,758,624 $ ==~2;,i,;,6;;;;2~8,~59~0~

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. See notes to the basic financial statements.
- 33-

MONROE COUNTY BOARD OF EDUCAITON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2003

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food and Nutrition Program Food Distribution Program (1) Pass-Through From Office of School Readiness Food and Nutrition Program Child and Adult Care Food Program
Total U.S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Flow Through Preschool Capacity Building Improvement
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Title I Grants to Local Educational Agencies School Improvement Title II Enhancing Education Through Technology Improving Teacher Quality TiUeV Innovative Education Program Strategies Title VI Rural and Low Income Schools Vocational Education - Basic Grants to States High School Program Basic Grant
Total U.S. Department of Education
Total Federal Financial Assistance
N/A = Not Available
- 34-

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555

N/A N/A $
$

(2) 1,241,295
1,241,295

10.550 10.558

N/A
N/A $

103,796
{2} 1,345,091

84.027 84.173 84.027

N/A $ N/A
N/A
$

480,510 37,819 5495
523,824

* 84.010 * 84.010
84.318 84.367 84.298 84.358
84.048

N/A
NIA
N/A NIA
N/A N/A
N/A $

678,692 7,523
22,855 177,379 23,207 74,924
44 343 1,552,747

$ ===2=,8=97..;,8=3=8

MONROE COUNTY BOARD OF EDUCAITON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2003

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) The amount shown for the Food Distribution 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 Child and Adult Care Food Program ($6,349) and the School Breakfast Program ($223,412) were not maintained separately and are included in the 2003 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 Monroe 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 basic financial statements.

See notes to the basic financial statements.

- 35 -

MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2003

SCHEDULE "3"

AGENCY/FUNDING

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

GRANTS

Education, Georgia Department of

Quality Basic Education

Direct Instructional Cost

Kindergarten Program

$

670,503

$

Kindergarten Program - Early Intervention Program

100,424

Primary Grades (1-3) Program

1,856,424

Primary Grades - Early Intervention (1-3) Program

174,476

Upper Elementary Grades (4-5) Program

917,920

Upper Elementary Grades - Early Intervention (4-5) Program

221,478

Middle Grades (6-8) Program

1,783,426

High School General Education (9-12) Program

1,484,146

Vocational Laboratory (9-12) Program

373,739

Students with Disabilities

Category I

1,399,375

Category II

5,161

Category Ill

28,762

Category IV

4,660

CategoryV

10,492

Gifted Student - Category VI

155,519

Remedial Education Program

60,559

Alternative Education Program

135,187

English Speakers of Other Languages (ESOL)

18,794

Media Center Program

263,481

20 Days Additional Instruction

89,863

Staff and Professional Development

52,547

Indirect Cost

Central Administration

351,182

School Administration

492,350

Facility Maintenance and Operations

779,181

Categorical Grants

Pupil Transportation

Regular

681,468

Bus Replacement

142,019

Sparsity

19,000

Nursing Services

84,425

Principal Supplements

14,267

Vocational Supervisors

18,419

Food Services

107,404

Vocational Education

12,984

Austerity Reduction

-386,343

Other State Programs

4-8 Statewide After School Program

30,039

K-3 Statewide Reading Program

42,064

Health Insurance

246,238

Mentor Teachers

4,980

National Teacher Certification

19,436

Post Secondary Options

3,048

Preschool Handicapped Program

33,688

Lottery Programs

Assistive Technology

9,166

Georgia State Financing and Investment Commission Reimbursement on Construction Projects

$

894,875

TOTAL
670,503 100,424 1,856,424 174,476 917,920 221,478 1,783,426 1,484,146 373,739
1,399,375 5,161
28,762 4,660
10,492 155,519
60,559 135,187
18,794 263,481
89,863 52,547
351,182 492,350 779,181
681,468 142,019
19,000 84,425 14,267 18,419 107,404 12,984 -386,343
30,039 42,064 246,238
4,980 19,436
3,048 33,688
9,166
894,875

- 36-

MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2003

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement
Middle Georgia Regional Educational Service Agency Drug Prevention
CONTRACT Education, Georgia Department of Academic Decathlon

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

768,435

47,343

16,454

$

768,435

47,343

16,454

28,500

28,500

$ 13,372,683 $

894,875 $=~14,;,_,2;;;6;,;.71,,;;,5,;;;;58:;,.

See notes to the basic financial statements.

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MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30. 2003

SCHEDULE "4"

PROJECT
Payments in full of the principal and interest due on the Monroe County School District's Series 1993 General Obligation Bonds from January 1, 2000 through and including final maturity of January 1, 2005
Acquisition, construction and equipping additional classrooms, instructional and support space, as well as remodeling, renovating, improving, furnishing and equipping existing school district facilities, including classrooms, instructional areas, support space, physical education and athletic facilities, administrative facilities and grounds, acquiring any necessary personal property, including computers and other technology and paying expenses incident thereto

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

$ 1,439,905 $ 1,439,905 $

603,289 $ 806,847 Completed

17,485,095 17,485,095

4,852,707

7,950,508 Completed

$ 18,925,000 $ 18,925,000 $ 5,455,996 $ 8,757,355

(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 projects. Includes all cost from project inception to completion.
(3) The voters of Monroe County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

See notes to the basic financial statements.

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MONROE COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2003

SCHEDULE "5"

DESCRIPTION

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

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 II

Category Ill

Category IV

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

943,772 $ 142,217 2,602,069 258,966 1,286,542

957,613 $ 113,946 2,592,082 280,905 1,468,147

299,500 2,488,572 2,107,623
531,900 1,983,813
217,352 82,932
190,622 22,872

167,553 2,433,368 2,361,344
567,258
1,228,026 419,961 82,227 246,803 66,503 333,006 57 792

10,791 $ 1,345
58,292 1,334
37,496
623 73,929 142,499 15,091
29,633 254
5,927 155
4,074 944

968,404 115,291 2,650,374 282,239 1,505,643
168,176 2,507,297 2,503,843
582,349
1,257,659 420,215 82,227 252,730 66,658 337,080 58 736

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

13,158,752 $ 13,376,534 $

382,387 $ 13,758,921

Media Center Program Staff and Professional Development

370,287 74659

393,741 16,959

52,892 69,553

446,633 86,512

TOTAL QBE FORMULA FUNDS

$

13,603,698 $ 13,787,234 $

504,832 $ ==1=4;,!;,2=9=2'=,0=66=

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State budget austerity reduction.

See notes to the basic financial statements.

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SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
April2,2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Monroe 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 the governmental activities, each major fund, and the aggregate remaining fund information ofMonroe County Board ofEducation as of and for the year ended June 30, 2003, which collectively comprise Monroe County Board of Education's basic financial statements and have issued our report thereon dated April 2, 2004. 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 of obtaining reasonable assurance about whether Monroe 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 grants, noncompliance with which could have a direct and material effect on the determination offinancial 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 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 Monroe 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
2003-34YB-40

control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Monroe County Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-7021-03-02 and FS-7021-03-03.
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, ofthe reportable conditions described above, we consider item FS-7021-0302 to be a material weakness.
This report is intended solely for the information and use of the management, members of the Monroe 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 2003-34YB-40

State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
April 2, 2004

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members of the Monroe 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 ofMonroe County Board ofEducation with the types ofcompliance requirements described in the US. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2003. Monroe County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section ofthe 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 Monroe County Board of Education's management. Our responsibility is to express an opinion on Monroe 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 ofthe 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 Monroe 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 Monroe County Board of Education's compliance with those requirements.
2003SA-65

As described in item FA-7021-03-01 in the accompanying Schedule of Findings and Questioned Costs, Monroe County Board of Education did not comply with requirements regarding Activities Allowed/Unallowed and Allowable Costs/Cost Principles that are applicable to its Child Nutrition Cluster. Compliance with such requirements is necessary, in our opinion, for Monroe County Board of Education to comply with requirements applicable to that program.
In our opinion, except for the noncompliance described in the preceding paragraph, the Monroe 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, 2003.
Internal Control Over Compliance
The management of Monroe 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 Monroe 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.
We noted a certain matter involving the internal control over compliance and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over compliance that, in our judgment, could adversely affect the Monroe County Board of Education's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FA-7021-03-02.
A material weakness is a condition in which the design or operation of one or more ofthe internal control components does not reduce to a relatively low level of risk that noncompliance with the applicable requirements oflaws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. The reportable condition noted above is also considered to be a material weakness.
2003SA-65

This report is intended solely for the information and use of the management, members of the Monroe 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,
w:=tik

RWH:as 2003SA-65

State Auditor

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

MONROE COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7021-01-01 FS-7021-02-01 FS-7021-02-02

Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number: FS-7021-02-01

Most of the circumstances which led to this finding can be tied to the School District's conversion to a new system-wide financial software system in July of2002. As a part of the conversion, the School District went online with the new system after the fiscal year had ended but before closing its books for the new year. In hindsight, this greatly complicated the closeout process. The reconciliation ofbank statements to general ledger proved to be a difficult and time-consuming effort which was greatly complicated by the conversion ofdata to the new software system. In addition, although employees had been trained to operate the new system prior to its installation, the practical operation of the system was somewhat an additional learning process and, admittedly, errors were made and had to be corrected.

With a year's learning and practical experience behind it, with additional training (much of it on-the-job), and with enhancements and improvements made by the software vendor to make the system more applicable to Georgia education users, virtually all ofthe problems have been corrected and these will not be repeated.

- 1-

MONROE COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-7021-02-01

Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

ALLOWABLE COSTS/COST PRINCIPLES Inadequate Accounting Procedures Finding Control Number: FA-7021-02-01

The School District had reviewed this finding with the School Nutrition Director and Bookkeeping Staffand internal controls have been reviewed and revised. Necessary steps have been implemented and monitored to assure that such a finding is not repeated.

-2 -

SECTION IV FINDINGS AND QUESTIONED COSTS

MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Monroe County Board ofEducation's financial statements was unqualified.

2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Monroe County Board of Education disclosed financial statement reportable conditions related to the following control categories.

Cash and Cash Equivalents General Ledger

Expenditures/Liabilities/Disbursements

All of the control categories described above include reportable conditions which are considered to be material weaknesses.

3. Noncompliance Material to the Financial Statements The audit of the Monroe 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 Monroe County Board ofEducation disclosed a reportable condition in internal control over major programs for the following compliance requirement.

Allowable Costs/Cost Principles

The reportable condition described above is considered to be a material weakness.

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

6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The Monroe County Board of Education's audit disclosed audit findings required to be reported by section .510(a) of 0MB Circular A-133. These audit findings are included in section IV of this report.

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program 84.010 Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies 84.010 Elementary and Secondary Education Act - Title I -School Improvement

- 1-

MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
I SUMMARY OF AUDITOR'S RESULTS
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.
9. Low Risk Auditee The Monroe County Board of Education did not qualify as a low risk auditee as defined by Section .530 of 0MB Circular A-133.
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Uncollateralized Deposits Nonmaterial Noncompliance Finding Control Number: FS-7021-03-01
As of June 30, 2003, the School District failed to have its bank balances fully collateralized as required by the Official Code of Georgia Annotated Section 45-8-12, which states, in part, as follows:
"The collecting officer or officers holding public funds may not have on deposit at any one time in any depository for a time longer than ten days a sum of money belonging to the public body when such depository has not given bond to the public body as set forth in this code section. 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 of the public funds being secured after the deduction ofthe amount of deposit insurance"
This noncompliance occurred because of management's failure to adequately monitor the collateralization of balances at individual banks. The School District should implement adequate procedures to monitor the collateralization of bank balances to ensure compliance at all times with State laws governing deposits and investments.
CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-7021-03-02
Accounting procedures for Monroe County Board of Education were found to be deficient in the following control categories:
-2 -

MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-7021-03-02
Cash and Cash Equivalents
Bank reconciliations for the operating account were not properly completed for the year under review. Due to the poor condition of the accounting records, cash could not be properly reconciled from the bank statement balances to the general ledger.
Bank reconciliations for the School Nutrition account were not properly completed for the year under review. The reconciliation performed did not reconcile from the bank statement to the general ledger.
Expenditures/Liabilities/Disbursements
There was no documentation of review or approval for School Food Expenditures. Purchase orders, contracts, and invoices were attached to the voucher package without any approval prior to disbursements being made.
The deficiencies noted in the above control categories occurred because ofmanagement's failure to establish procedures to analyze and reconcile balances on the general ledger with supporting records and obtain approved documentation to support expenditures prior to the disbursement of funds.
The School District should implement appropriate procedures and controls to ensure that all bank statements are reconciled to the general ledger in a timely manner and ensure that reconciling items are identified and corrected promptly. The School District should review the accounting procedures in place, design procedures relative to the above control categories and implement procedures to strengthen the internal controls over the accounting functions.
GENERAL LEDGER Financial Statements Not Supported By Subsidiary Records Reportable Condition Finding Control Number: FS-7021-03-03
The School District's internal controls over the subsidiary records supporting various balance sheet accounts were determined to be insufficient. The School District could not provide a listing of Accounts Payables or Accounts Receivables as of June 30, 2003. In fiscal year 2002, the School
-3-

MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Financial Statements Not Supported By Subsidiary Records Reportable Condition Finding Control Number: FS-7021-03-03
District converted its financial software to a new system, this software did not have separate subsidiary ledgers.
This deficiency resulted from management's decision not to purchase separate Subsidiary Ledger software and their failure to establish procedures to provide and maintain subsidiary ledgers. The School District should establish appropriate internal controls over subsidiary ledgers in order to produce listings of Accounts Payable and Accounts Receivables.
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unallowable Expenditures U. S. Department of Agriculture Through Georgia Department of Education Material Noncompliance Questioned Costs: $70,231 Finding Control Number: FA-7021-03-01
Our review ofpersonnel costs charged to Child Nutrition Cluster Food (CFDA 10.553 and 10.555) included $70,231 for the School Food Director charged entirely to the Child Nutrition program. Through various inquiries it was determined that the Director had other duties assigned that were not associated with Child Nutrition and there was no documentation to verify the amount of time working on these other duties.
This deficiency occurred because of management's failure to establish procedures to ensure that personnel salaries are charged to the program that benefited from the services rendered. The School District should implement procedures to ensure that all personnel salary costs charged to Child Nutrition Cluster are for only those personnel whose time has been confirmed as expended on Child Nutrition program activities. The Georgia Department of Education should review this matter and determine if a reclaim of grant funds is appropriate.
-4 -

MONROE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ALLOWABLE COSTS/COST PRINCIPLES Inadequate Accounting Procedures Reportable Condition - Material Weakness U.S. Department of Agriculture Through Georgia Department of Education Finding Control Number: FA-7021-03-02 An examination of expenditures revealed there was no documentation of review or approval for Child Nutrition Cluster Food (CFDA 10.553 and 10.555) expenditures. Purchase orders, contracts, and invoices were attached to the voucher package without any approval prior to disbursements being made. This deficiency occurred because ofmanagement's failure to establish procedures to obtain approved documentation to support expenditures prior to the disbursement of funds. The School District should implement appropriate procedures and controls to ensure expenditures are approved prior to disbursement.
-5 -