Morgan County Board of Education, Madison, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2001

.. ,.... ~ ~ ' :'
',,,: . ~ ,
1-,, ''I

MORGAN COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS-

SECTION I

FINANCIAL

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

EXHIBITS

GENERAL-PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS-OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

AND EXPENDABLE TRUST FUNDS

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

7

D

STATEMENT OF REVENUES, EXPENSES AND

CHANGES IN FUND BALANCES

FIDUCIARY FUND TYPE - NONEXPENDABLE TRUST FUND

8

E

STATEMENT OF CASH FLOWS

FIDUCIARY FUND TYPE - NONEXPENDABLE TRUST FUND

9

F . NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

11

ADDIDONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

G

COMBINING BALANCE SHEET

22

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

24

CAPITAL PROJECTS FUND

I

COMBINING BALANCE SHEET

26

J

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

27

FIDUCIARY FUND TYPES

K

COMBINING BALANCE SHEET

28

L

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

EXPENDABLE TRUST FUNDS

30

MORGAN COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS-

SECTION I

FINANCIAL

ADDmONAL FINANCIAL INFORMATION

SCHEDULES

I SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

32

2 SCHEDULE OF STATE REVENUE

34

3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

35

ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALTIY BASIC EDUCATION PROGRAMS (QBE)

4

BY PROGRAM

36

5

BY SITE

37

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 ACCORDANCEWITHGOVERNMENTAUDITINGSTANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-133

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

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

SECTION I FINANCIAL

w. RUSSELL

HtNTON

STATE AUDITOR

(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
April 5, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Morgan County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general-purpose financial statements of the Morgan County Board of Education, as of and for the year ended June 30, 2001, as listed in the table of contents. These general-purpose financial statements are the responsibility of the Morgan County Board of Education's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government 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 op1mon.
As described in the notes to the general-purpose financial statements, the Board of Education's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:

2001ARL-13

* The general-purpose financial statements of the Board of Education did not contain a General Fixed Assets Account Group to account for property and equipment owned by the Board of Education which should be included to conform to generally accepted accounting principles.
* School activity accounts maintained at the individual schools are not included in the
general-purpose financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general-purpose financial statements.
The aggregate effects on the general-purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects on the general-purpose financial statements of the matters referred to in the preceding paragraph, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position of the Morgan County Board of Education as of June 30, 2001, and the results of its operations and the cash flows of its nonexpendable trust fund 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 April 5, 2002, on our consideration of the Morgan 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 Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements of the Morgan County Board of Education taken as a whole. The accompanying combining statements (Exhibits G through L) and the financial schedules (Schedules I 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 of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the general-purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe general-purpose financial statements and in our opinion, except for the effects ofthe matters referred to in the third paragraph, such information is fairly stated, in all material respects, in relation to the general-purpose financial statements taken as a whole.
2001ARL-13

A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated Section 506-24.
--- lh.4~ Respectfully submitted,
State Auditor
RWH:gp 2001ARL-13

MORGAN COUNTY BOARD OF EDUCATION

MORGAN COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET ALL FUND TYPES JUNE 30, 2001

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

GOVERNMENTAL FUND

SPECIAL

GENERAL

REVENUE

FUND

FUND

$ 3,807,928.82 $ 417,501.15

2,559,925.59

104,274.84

25,949.30 7,429.85

Total Assets

$ 6,367,854.41 $ _ _55=5...1,,=55_.1_4_

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salaries Payable Expired Grant Balances Payable Contracts Payable Retainages Payable Deferred Revenue
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Bus Replacement Funds For Continuation of Federal Programs For Endowment Corpus For Expired Grant Balances/Questioned Costs For Inventories Food Donated Commodities Purchased Food For SPLOST Projects Unreserved Undesignated
Total Fund Equity

$

489,188.93 $

1,702,147.00

44,949.23 174,445.49
4,534.90

$ 2,191,335.93 $

3,226.99 227,156.61

$

36,046.00

1,367.35

$ . 25,949.30 7,429.85

4,139.105.13 $ 4,176,518.48 $

294.619.38 327,998.53

Total Liabilities and Fund Equity

$ 6,367,854.41 $ -=-===--55;;;,,5.,.1..5.;;,;5._14..,.

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

EXHIBIT"A"

TYPES CAPITAL
PROJECTS FUND

$

838,501.72

FIDUCIARY FUND TYPES
TRUST FUNDS

TOTALS

{Memorandum Onl~}

JUNE 301 2001

JUNE 301 2000

$ 5,063,931.69 $ 3,605,014.56

$

8,641.73

8,641.73

8,151.87

38,097.69

2,702,298.12

2,900,912.48

25,949.30 7,429.85

20,022.11 6414.49

$

876,599.41 $

a,641.73 $ 11aoa,2so.69 $ 61540,515.51

$

534,138.16 $

579,003.66

1,876,592.49

1,847,985.63

4,534.90

79,149.96

162,637.01

3,226.99

$ 2,418,492.54 $ 2,668,776.26

$

$

876,599.41

0.00

$

876,599.41 $

$ 2,500.00

36,046.00 $
2,500.00 1,367.35

15,099.00 14,471.10 2,500.00
507.20

6,141.73 8 641.73 $

25,949.30 7,429.85
876,599.41
4,439,866.24
5,389,758.15 $

20,022.11 6,414.49
678,727.05
3,133,998.30
3,871,739.25

$

876,599.41 $

8 641.73 $ 7,808,250.69 $ 6,540,515.51 -3-

MORGAN COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS YEAR ENDED JUNE 30, 2001

REVENUES
State Funds Federal Funds Taxes Other Funds
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 Community Services Operations
Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commodities Purchased Food

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$ 11,418,909.38 $ 37,914.61
7,739,475.05 5161110.84
$ 19,712,409.88 $

349,955.68 1,473,620.26
$ 334,399.57
2,157,975.51 $

1,212,245.58 41,328.01
112531573.59

$ 13,146,279.26 $
491,497.70 292,360.94 398,615.10 300,625.29 1,251,963.89 318,806.88 1,364,730.35 737,839.46
39,889.69 55,894.98
$ 18,398,503.54 $
$ 1,313,906.34 $

948,157.09
131,681.03 70,819.77
1,366.55 33.60
10,497.15
15,046.00
979,008.55 2,095.57 $
2,158,705.31 $
-729.80 $

11055, 701.23 1,055,701.23
197,872.36

$

1,263.28 $

-14,620.39

$

-13.357.11 $

14,620.39 $
14,620.39 $

-11263.28 -1,263.28

$ 1,300,549.23 $ 2,875,969.25

13,890.59 $ 307,165.39

196,609.08 679,990.33

1,015.36 5,927.19

FUND BALANCE JUNE 30

$ 4,176,518.48 $

s 3211998.53 _..,..8;..7~6d1.5:~99_,.;;.41:...

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

EXHIBIT"B"

TOTAL

FIDUCIARY FUND TYPE EXPENDABLE TRUST FUNDS

TOTALS

(Memorandum Only)

YEAR ENDED

JUNE 301 2001

JUNE 30, 2000

$ 11,768,865.06 1,511,534.87 8,951,720.63 891,838.42 $
$ 23,123,958.98 $

$ 124.40

11,768,865.06 $ 1,511,534.87 8,951,720.63 891,962.82

11,259,716.68 1,484,652.53 9,341,409.94 657,082.29

124.40 $ 23,124,083.38 $ 22,742,861.44

$ 14,094,436.35
623,178.73 $ 363,180.71 398,615.10 301,991.84 1,251,997.49 329,304.03 1,364,730.35 752,885.46
39,889.69 1,034,903.53
2,095.57 1,055,701.23
$ 21,612,910.08 $
$ 1,511,048.90 $

$ 14,094,436.35 $ 13,003,592.65

522.49

623,701.22 363,180.71 398,615.10 301,991.84 1,251,997.49 329,304.03 1,364,730.35 752,885.46
39,889.69 1,034,903.53
2,095.57 1,055.701.23

967,986.22 682,179.24 379,808.43 177,992.07 1,276,774.05 296,677.55 1,325,989.09 751,999.49
39,707.23
1,001,228.62 2,812.51
2,020,979.98

522.49 $ 21,613.432.57 $ 21,927.727.13

-398.09 $ 1,510,650.81 $

815,134.31

$

15,883.67

-15,883.67

$

0.00

$ 1,511,048.90 $ .3,863, 124.97

1,015.36 5,927.19

$

15,883.67 $

29,875.28

-15,883.67

-29,875.28

$

0.00 $

0.00

-398.09 $ 1,171.54

1,510,650.81 $ 3,864,296.51

815,134.31 3,053,027.33

1,015.36 5,927.19

-6,842.56 2,977.43

$ 5,381.116.42 $

773.45 $ 51381 1889.87 $ -5-

MORGAN COUNlY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30. 2001

EXHIBIT"C"

GENERAL FUND

ACTUAL

(BUDGET

BUDGET

BASIS}

REVENUES

State Funds Federal Funds Taxes Other Funds

$ 10,673,448.00 $ 11,418,909.38

37,914.61

7,353,TT2.00

7,739,475.05

133,400.00

516,110.84

Total Revenues

$ 18,160,620.00 $ 19,712,409.88

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 Community Services Operations

$ 12,936,198.00 $ 13,146.279.26

510,432.00 84,201.00
401,623.00 327,800.00 1,337,403.00 314,023.00 1,412,073.00 746,850.00
1,500.00 38,885.00

491,497.70 292,360.94 398,615.10 300,625.29 1,251,963.89 318,806.88 1,364,730.35 737,839.46
39,889.69 55,894.98

Total Expenditures

$ 18,11 o,988.oo $ 18,398,503.54

Excess of Revenues over (under) Expenditures

$

49,632.00 $ 1,313,906.34

OTHER FINANCING SOURCES (USES}

Other Sources Other Uses
Total Other Financing Sources (Uses)

$ $ -49,632.00
$ -49,632.00 $

1,263.28 -14,620.39
-13,357.11

Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Firnmcing Uses
FUND BALANCE JULY 1, 2000
Adjustments

$

0.00 $ 1,300,549.23

3,385,151.71

2,875,969.25

6966.04

FUND BALANCE JUNE 30, 2001

$ 31392,117.75 $ 4,176,518.48

SPECIAL REVENUE FUND

ACTUAL

(BUDGET

BUDGET

BASIS}

$

0.00 $ 349,955.68

1,473,620.26

334,399.57

$

0.00 $ 2,157,975.51

$

0.00 $ 948,157.09

131,681.03 70,819.TT

1,366.55 33.60
10,497.15

15,046.00

979,008.55 2,095.57

$

0.00 $ 2, 158,705.31

$

0.00 $

-729.80

$ 49,632.00 $ 14,620.39 $ 49,632.00 $ 14,620.39

$ 49,632.00 $ 13,890.59

892,466.69

287,143.28

140,318.83

$ 11082,417.52 $ 3011033.87

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

MORGAN.COUNTY,BARD OF EDUCATION
STATEMENT O~,:REVENW~StEPEl\iS.Es1"i(f..ib~GRANGES IN FUND BALANCES
FIDUCIAR:Y'i=.tiflirfTY.BEj:'.'~J"Gr!'.JE,XRE~IDABtE TRUST FUND
..,. ': 'yEAR..ENDE~NE 30, 2001

EXHIBIT "D"

OPERATING REVENUES Donations
OPERATING EXPENSES Current Support Services Pupil Services Operating Income (Loss)
NONOPERATING REVENUES Interest Earned Net Income (Loss)
FUND BALANCE JULY 1
FUND BALANCE JUNE 30

ENDOWMENT FUND
JAMESW. HOLLIS
SCHOLARSHIP .FUND

TOTALS

(Memorandum Only.)

YEAR ENDED

JUNE 301 2001

JUNE 301 :woo

$ :,:-. ..1.., 750.00 $

750.00 $

0.00

$

750.00 $

750.00 ~

500.00

$

0.00 $

0.00 $

-500.00

$

425.54 $

425.54 $

415.84

$

425.54 $

425.54' $

-84.16

7 442.74

7 442.74

7,526.90

$

7,868.28 $

. 7;868.28 $ =======7="'4=4=2=.7=4

The notes to the general-purpose financial statements are an integral part of this statement. -8-

MORGAN COUNTY BOARD OF EDUCATION STATEMENT OF CASH FLOWS
FIDUCIARY FUND TYPE - NONEXPENDABLE TRUST FUND YEAR ENDED JUNE 30, 2001

EXHIBIT"E"

Cash Flows from Operating Activities: Cash Paid for Scholarships Donations
Net Cash Provided (Used) by Operating Activities
Cash Flows from Investing Activities: Interest Received on Investments Purchase of Investments Sale of Investments
. Net Cash Provided by Investment Activities
Net Increase (Decrease) in Cash
Cash and Cash Equivalents - July 1

ENDOWMENT FUND
JAMESW. HOLLIS
SCHOLARSHIP FUND

TOTALS

{Memorandum Onl~) YEAR ENDED

JUNE 301 2001

JUNE 30, 2000

$

-750.00 $

-750.00 $

-500.00

750.00

750.00

$

0.00 $

0.00 $

-500.00

$

425.54 $

425.54 $

415.84

-7,868.28

-7,868.28

-7,442.74

7 442.74

7 442.74

7,526.90

$

0.00 $

0.00 $

500.00

$

0.00 $

0.00 $

0.00

0.00

0.00

0.00

Cash and Cash Equivalents - June 30

$

0.00 $

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

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

MORGAN COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO TIIE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Morgan 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 School District is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
FUND ACCOUNTING
The School District uses funds 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.
General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the School District. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general-purpose financial statements.
The general-purpose financial statements account for all State, Federal, Taxes and Other funds under control of the School District, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most of a School District's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources of the School District except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education.
SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and from the Federal government to accomplish specific educational objectives.
- 11 -

MORGAN COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.
FIDUCIARY FUND TYPES - the funds used to account for assets held by a government unit in a trustee capacity or as an agent for individuals, private organizations, other government units and/or other funds. These funds include:
NONEXPENDABLETRUSTFUND James W. Hollis Scholarship Fund - the fund used to account for an endowment ofwhich the corpus is to be invested and preserved intact with the resultant income to be used to provide scholarship aid to a graduating senior ofthe Morgan County School System.
EXPENDABLE TRUST FUNDS Fannie Mae Elder Memorial Fund - the fund used to account for proceeds or income used to provide a scholarship to a deserving student in accordance with provisions ofthe trust agreement.
Sara Cook Library Fund - the fund used to account for the principal and earnings which may be expended to buy textbooks for the Morgan County School System.
Thomas Prior and Mattie Peacock, Jr., Scholarship Fund - the fund used to account for awards of scholarship aid to graduating seniors of the Morgan County School System.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is detennined by its measurement focus. All governmental and expendable trust funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements ofthese funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds.
All nonexpendable trust funds are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and liabilities associated with the operation ofthese funds are included on the balance sheet. Operating statements present increases (e.g., revenues) and decreases (e.g., expenses) in net total assets.
Governmental and expendable trust funds are accounted for using the modified accrual basis of accounting under which:
- 12 -

MORGAN COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO TIIE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 200 I

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The School District considers receivables collected within sixty days after yearend to be available and therefore susceptible to accrual. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, local option sales taxes, intergovernmental grants and donations. Revenue for property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year the resources are received or susceptible to accrual. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
Expenditures are generally recognized when the related fund liability is incurred.
A substantial number of personnel of the School District were employed for a one hundred and ninety day period beginning in August 2000 and ending in early June 2001. Employment contracts for these employment periods typically specify that compensation be paid in twelve equal monthly payments beginning in September 2000 and ending in August 2001. In accordance with generally accepted accounting principles, salary and fringe benefit expenditures are recorded in the fiscal period covered by these financial statements.
The accrual basis ofaccounting, as required by generally accepted accounting principles, is utilized by nonexpendable trust funds. Under the accrual basis ofaccounting, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred.
BUDGET
The Morgan County Board of Education's budget is a complete financial plan for the School District's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.
The budget process begins when the School District's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Ed:ucation Act, OCGA Section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.

- 13 -

MORGAN COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual presents actual and budgeted data for the Special Revenue Fund. To facilitate comparison with the budget, the following adjustments have been made to fund balance as reflected on Exhibit "B" ofthis report:

Special Revenue
Fund

FUND BALANCE JULY 1, 2000

$ 307,165.39

Adjustments Inventories - July 1, 2000 Food Donated Commodities
Fund Balance July 1, 2000 (Budget Basis)
Excess ofRevenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JUNE 30, 2001 (Budget Basis)

-20,022.11 $ 287,143.28
13,890.59 $ 301.033.87

CASH AND CASH EQUIVALENTS

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

INVESTMENTS

COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year and equity investments are reported at fair value. The Official Code of Georgia 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 of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:

- 14 -

MORGAN COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO 1HE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(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 ofgrant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general-purpose :financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

PROPERTY TAXES

The Morgan County Board of Commissioners fixed the property tax levy for the 2000 tax year

(calendar year) on September 28, 2000 (levy date). Taxes were due on December 20, 2000 (lien

date). Taxes collected within the current fiscal year or within 60 days after year-end are reported as

revenue in fiscal year 2001. The Morgan 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 of taxes collected to the School District. Property tax revenues during the fiscal year

ended June 30, 2001 for maintenance and operations amounted to $7,565,781.68.



The tax millage rate levied for the 2000 tax year (calendar year) for the Morgan County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

16.0 mills

- 15 -

MORGAN COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SALES TAXES
Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes. Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $1,212,245.58 and was recorded in the Capital Projects Fund. The School District has received the maximum amount of sales tax authorized and collection of this sales tax was terminated.
INVENTORIES
FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time ofpurchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.
INTERFUND TRANSACTIONS
The School District has the following types of interfund transactions:
Reimbursements of expenditures/expenses initially made from a fund that are properly applicable to another fund are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed.
Operating transfers are recorded for all interfund transactions other than reimbursements.
MEMORANDUM ONLY -TOTAL COLUMNS
Total columns on the general-purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results ofoperations or cash flows in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code ofGeorgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face
- 16 -

MORGAN COUN1Y BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2001

Note 2: DEPOSITS AND INVESTMENTS
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. 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 p'rovided 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, 2001, the bank balances were $5,674,161.82. Theamountsofthetotal 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.
- 17 -

MORGAN COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO TIIE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 2: DEPOSITS AND INVESTMENTS

Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.)

The School District's deposits are classified by risk category at June 30, 2001, as follows:

Risk Category

Bank Balance

1

$ 107,868.28

2

5,566,293.54

3

0.00

Total

$ 5,674,161.82

CATEGORIZATION OF INVESTMENTS At June 30, 2001, the fair value ofthe School District's total investments was $773 .45 and this entire amount consisted ofpreferred stock which was insured or registered, or securities held by the School District or the School District's agent in the School District's name.

Note 3: NON-MONETARY TRANSACTIONS

The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories

Note 4: RISK MANAGEMENT

The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction ofassets; errors or omissions; job related illness or injuries to employees; natural disaster and unemployment compensation.

The School District has obtained commercial insurance for risk ofloss associated with assets and job related illness or injuries to employees. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.

The School District 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

- 18 -

MORGAN COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 4: RISK MANAGEMENT

the system with other companies according to their specialty for property, boiler and machinery, general liability (including coverage for sexual harassment, molestation and abuse) and automobile risks. Payment of excess insurance for the system varies by line of coverage.

The School District has elected to self-insure for all losses related to natural disaster. The School District has not experienced any losses related to this risk in 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 expenditure and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated.

The School District has not incurred any unemployment compensation claims liability during the last two fiscal years.

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

Position Covered

Amount

Superintendent Each Principal

$ 20,000.00 $ 2,500.00

Note 5: ON-BEHALF PAYMENTS

The School District has recognized revenues and expenditures in the amount of $231,416.71 for health insurance and retirement contributions paid on the School District's behalfby the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance ofNon-Certified Personnel In the amount of $191,732.71

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 $39,684.00

Note 6: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2001:

- 19 -

MORGAN COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2001

Note 6: SIGNIFICANT COMMITMENTS

Project

Unearned Executed Contracts

Morgan County Middle School Project

$ 38,474.96

The amount described in this note is not reflected in the general-purpose financial statements.

Note 7: CONTINGENT LIABILITIES

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

Note 8: SUBSEQUENT EVENTS

On March 19, 2002, the voters ofMorgan County voted in favor ofa Special Purpose Local Option Sales Tax referendum (commencing upon the expiration ofthe current 1 percent sales and use tax). The imposition ofthe tax approved by the voters as stated on the Official Ballot ofMorgan County is as follows:

"Shall a special one percent (1 %) sales and use tax be imposed for educational purposes in Morgan County for a period of time not to exceed five (5) years for the purpose of:

(1) Renovating, modernizing, equipping, and improving the existing facilities at the Morgan County Primary School, which costs shall not exceed the sum of $663,000.00;

(2) Constructing new facilities, and renovating, modernizing, equipping, and improving existing facilities at the Morgan County Elementary School, which costs shall not exceed the sum of$893,000.00;

(3) Constructing new facilities, and renovating, modernizing, equipping, and improving existing facilities at the Morgan County Middle School, which costs shall riot exceed the sum of$3,688,000.00;

(4) Renovating, modernizing, expanding, equipping, and improving existing facilities at the Morgan County High School, which costs shall not exceed the sum of $2,528,000.00; and

-20-

MORGAN COUNTY BOARD OF EDUCATION

EXHIBIT "F"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2001

Note 8: SUBSEQUENT EVENTS

(5) Renovating, modernizing, equipping and improving facilities at the Board of Education Central Office, plus purchasing school buses with an extended useful life, which costs shall not exceed the sum of $505,000.00."

Note 9: RETJREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school districts are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department .ofAudits 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 11.29% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2001 2000 1999

100% 100% 100%

$ 1,317,174.34 $ 1,257,231.53 $1,231,178.86

- 21 -

MORGAN COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 2001

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

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

358,163.78 $

26,342.96

140.00

7,147.27

25,949.30 71429.85

Total Assets

$

391,682.93 $ ===33=,4=9=0-=23==

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salaries Payable Expired Grant Balances Payable Deferred Revenue
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity
Total Liabilities and Fund Equity

$

13,021.65 $

5,470.15

50,662.75

28,020.08

$

63,684.40 $

33,490.23

$

25,949.30

7,429.85

2941619.38 $

0.00

$

3271998.53 $

0.00

$

391,682.93 $ ===3=3=,4=9=0.=23==

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

EXHIBIT"G"

FEDERAL PROGRAMS

TOTALS

JUNE 30, 2001

JUNE 30, 2000

$

32,994.41 $

417,501.15 $

466,685.61

96,987.57

104,274.84

33,318.25

25,949.30 7.429.85

20,022.11 6 414.49

$

129,981.98 $

555, 155.14 $ ====5=2=6=.4=40=.4==6=

$

26,457.43 $

44,949.23 $

59,031.38

95,762.66

174,445.49

160,243.69

4,534.90

4,534.90

3,226.99

3,226.99

$

129,981.98 $

227,156.61 $

219,275.07

$

14,471.10

$

25,949.30

7,429.85

20,022.11 6,414.49

$

0.00

294,619.38

266,257.69

$

0.00 $

327,998.53 $

307,165.39

$

129,981.98 $

555.155.14 $ ===5=2=6=,44==0=.4==6=

-23 -

MORGAN COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2001

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

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

83,330.00 $

589,640.67

334,399.57

$ 1,007,37024 $

266,625.68 266,625.68

$

241,639.62

28,427.87

$

979,008.55

33.60 1,566.32

$

979,008.55 $

271,667.41

$

28,361.69 $

-5,041.73

$

28,361.69 $

292,694.29

1,015.36 5,927.19

5 041.73
0.00 0.00

$

327,998.53 $ ====0==00=

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

EXHIBIT"H"

FEDERAL PROGRAMS

TOTALS

YEAR ENDED

JUNE 30, 2001

JUNE 30, 2000

$

349,955.68 $

414,900.56

$

883,979.59

1,473,620.26

1,449,411.78

334,399.57

268,243.98

$

883,979.59 $ 2,157,975.51 $ 2, 1321556.32

$

706,517.47 $

948,157.09 $ 1,010,693.56

103,253.16 70,819.77 1,366.55
10,497.15 13,479.68
21095.57

131,681.03 70,819.77 1,366.55 33.60 10,497.15 15,046.00
979,008.55 21095.57

93,828.38 125,182.59
10,050.75 302.19
11,924.88 7,352.15
980,009.74 1 437.49

$

9081029.35 $ 2,158,705.31 $ 2,240,781.73

$

-24,049.76 $

-729.80 $ -108,225.41

91578.66

14,620.39

29,875.28

$

-14,471.10 $

13,890.59 $

-78,350.13

14,471.10

307,165.39

389,380.65

1,015.36 5,927.19

-6,842.56 2,977.43

$

0.00 $

3271998.53 $ ==3=0=7==1'==65==.3==9=

-25-

MORGAN COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 2001

EXHIBIT"!"

ASSETS Cash and Cash Equivalents Accounts Receivable

REGULAR

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS JUNE 30, 2001 JUNE 30, 2000

$

0.00 $

838,501.72 $ 838,501.72 $ 527,608.90

38,097.69

38,097.69

394,376.10

Total Assets

$

0.00 $

876,599.41 $ 876,599.41 $ 921,985.00

LIABILITIES AND FUND EQUITY

LIABILITIES

Accounts Payable Contracts Payable Retainages Payable

Total Liabilities

FUND EQUITY

Fund Balances

Reserved

For SPLOST Projects

Unreserved

Undesignated

$

Total Fund Equity

$

$

207.70

79,149.96

162,637.01

$ 241,994.67

$ 0.00 0.00 $

876,599.41 $ 0.00
876,599.41 $

876,599.41 $ 0.00
876,599.41 $

678,727.05 1,263.28
679,990.33

Total Liabilities and Fund Equity

$

0.00 $

876,599.41 $ 876,599.41 $ 921,985.00

See notes to the general-purpose financial statements.

-26-

MORGAN COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 2001

EXHIBIT "J"

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

REGULAR

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS YEAR ENDED JUNE 30, 2001 JUNE 301 2000

$

0.00 $ 1,212,245.58 $ 1,212,245.58 $ 2,322,239.59

41,328.01

41,328.01

13,509.94

$

0.00 $ 1,253,573.59 $ 1,253,573.59 $ 2,335.749.53

$

0.00 $ 749,759.30 $ 749,759.30 $ 1,895,410.43

305,941.93

305,941.93

125,569.55

$

0.00 $ 1,055.701.23 $ 1,055.701.23 $ 2,020,979.98

$

0.00 $ 197,872.36 $ 197,872.36 $ 314,769.55

-\263.28

-1,263.28

$ -1,263.28 $ 1,263.28

197,872.36 $ 678.727.05

196,609.08 $ 679,990.33

314,769.55 365,220.78

FUND BALANCE JUNE 30

$

0.00 $ 876,599.41 $ 876,599.41 $ 679,990.33

See notes to the general-purpose financial statements.

-27-

MORGAN COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET FIDUCIARY FUND TYPES JUNE 30, 2001

ASSETS Cash and Cash Equivalents Investments

NON EXPENDABLE TRUST FUND
JAMESW. HOLLIS
SCHOLARSHIP FUND

FANNIE MAE ELDER
MEMORIAL FUND

$

0.00

$ _ _ _ _7.:..,i,=.86:,:8:.::.2:.:8:..

Total Assets

$

7,868.28 $====0.=00....

FUND EQUITY
Fund Balances Reserved For Endowment Corpus Unreserved Undesignated
Total Fund Equity

$

2,500.00

5,368.28 $ ___..;o;.;.;.o;.;o_

$

7,868.28 $ ====o=.o=o=

See notes to the general-purpose financial statements. - 28 -

EXHIBIT"K"

EXPENDABLE TRUST FUNDS

THOMAS PRIOR

AND MATTIE

SARA COOK LIBRARY

PEACOCK, JR. SCHOLARSHIP

FUND

FUND

TOTALS

JUNE 301 2001

JUNE 301 2000

$

0.00 $

0.00 $

462.41

$ _ _ _ _7_73__.4_5_

8,641.73

8,151.87

$

773.45 $

0.00 $

8,641.73 $ ======8=,6=14==28==

$

2,500.00 $

2,500.00

$

773.45 $ _ _ _ _....;o""".o;;.;;;o'--

6141.73

6,114.28

$

773.45 $

0.00 $

8,641.73 $=====8=,6=14=.2=8=

-29-

MORGAN COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FIDUCIARY FUND TYPE - EXPENDABLE TRUST FUNDS YEAR ENDED JUNE 30, 2001

REVENUES Other Funds
EXPENDITURES Current Support Services Pupil Services
Excess of Revenues over (under) Expenditures FUND BALANCE JULY 1
FUND BALANCE JUNE 30

FANNIE MAE ELDER
MEMORIAL FUND

SARA COOK LIBRARY FUND

$

0.00 $

124.40

$

212.41 $

$

-212.41 $

212.41

60.08 64.32 709.13

$

0.00 $ = = = =77= 3.4= 5

See notes to the general-purpose financial statements. - 30-

EXHIBIT"L"

THOMAS PRIOR AND MATTIE PEACOCK, JR.
SCHOLARSHIP FUND

TOTALS

YEAR ENDED

JUNE 301 2001

JUNE 301 2000

$

0.00 $

124.40 $ _ _ _ _1_5._03__

$

250.00 $

522.49 $ _ _ _3__8__5.-"18__

$

-250.00 $

-398.09 $

-370.15

250.00

1171.54

1,541.69

$

0.00 $

773.45 $ ===1=1=7==1.5..4. =

- 31 -

MORGAN COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2001

SCHEDULE 1

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

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

. 10.553 . 10.555

NIA $ 125,413.49

NIA

4051266.99 $

(2) 920,048.36 (3)

Total Child Nutrition Cluster

$ 530,680.48 $

920,048.36

Other Programs

Pass-Through From Georgia Department of Education

Food and Nutrition Program Food Distribution Program (1)

10.550

N/A

Pass-Through From Office of Treasury and Fiscal

Services

National Forest Reserve Funds

10.665

NIA

58,960.19 32.32

58,960.19 (4)

Total U. S. Department of Agriculture

$ 589,672.99 $

979,008.55

Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Capacity Building Improvement Flow Through Preschool

. 84.027 . 84.027 . 84.173

NIA $ 13,463.36 $

NIA

272,294.91

NIA

25,192.56

13,463.36 272,294.91
25,192.56

Total Special Education Cluster

$ 310,950.83 $

310,950.83

Other Programs

Pass-Through From Georgia Department of Education

Elementary and Secondary Education Act

Title I

Grants to local Educational Agencies

84.010

NIA

Title II Eisenhower Professional Development

84.281

NIA

Title VI Innovative Education Program-Strategies

84.298

NIA

Class Size Reduction

84.340

NIA

Goals 2000

State and Local Education Systemic Improvement

Grants

84.276

NIA

Safe and Drug-Free Schools and Communities

84.186

NIA

Vocational Education - Basic Grants to States

High School Program

Basic Grant

84.048

NIA

374,232.99 10,120.16 23,210.69 53,730.00
30,000.00 11,403.30
39,322.05

374,232.99 16,086.46 25,763.27 (3) 53,730.00
33,077.62 11,403.30
39,322.05

Total U. S. Department of Education

$ 852,970.02 $

864,566.52

Health and Human Services, U. S. Department of Pass-Through From Office of the Governor Abstinence Education

93.235

NIA $ 31,009.57 $

43,462.83 (3)

- 32-

MORGAN COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2001

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

$ 37,882.29 $

103,981.61 (3)

Total Federal Financial Assistance

s s__ 1.s11,s34.87

1..,.9=9_1,.,.,o.1.9__s_1...

NIA = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.
(2) Expenditures for the School Breakfast Program were not maintained separately and are included in the 2001 National School Lunch Program.
(3) Expenditures for this program include State, and/or Other Funds. Expenditures are not maintained by fund source.
(4) Funds earned on this program do not require reporting of expenditures.

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 Morgan 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 general-purpose financial statements.

See notes to the general-purpose financial statements.

33-

MORGAN COUNTY BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE
YEAR ENDED JUNE 30. 2001

SCHEDULE "2"

AGENCY/FUNDING
GRANTS 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 Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student Category VI Remedial Education Program Alternative Education Program Special Education Supplemental Speech Media Center Program Staff and Professional Development Indirect Cost Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Principal Supplements Vocational Supervisors Deferred Summer Salaries (Prior Year) Deferred Summer Salaries (Current Year) Education Equalization Funding Grant Food Services Vocational Education Other State Programs Apprenticeship Program At-Risk Summer School Program Health Insurance Innovative Programs Mentoring Program Next Generation Schools PayforPenorrnanc:e Preschool Handicapped Program Remedial Summer School Lottery Programs Applied Technology Labs Computers In the Classroom Vocational Technology Program (High School)
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACTS Education, Georgia Department of Georgia's Reading Challenge Program Reading First Program
See notes to the general-purpose financial statements.

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

639,604.00

54,400.00

1,677,901.00

219,251.00

797,897.00

1,397,816.00

1,127,605.00

526,264.00

15,268.00 269,256.00 798,853.00 178,015.00
59,850.00 136,441.00 81,731.00 112,288.00
2,519.00 248,760.00
67,942.00 1,564,078.00

444,579.00 120,881.00 74,940.00
12,590.00 22,157.00 -1,518,953.00 1,601,763.69 61,615.00
$ 29,826.00
35,000.00 3,036.99
191,732.71 5,000.00 5,379.00 74,250.13
110,000.00 40,232.00 5,602.86

39,684.00

$ 639,604.00 54,400.00
1,677,901.00 219,251.00 797,897.00
1,397,816.00 1, 127,605.00
526,264.00
15,268.00 269,256.00 798,853.00 178,015.00 59,850.00 136,441.00 81,731.00 112,288.00
2,519.00 248,760.00
67,942.00 1,564,078.00

83,330.00
40,250.00 61,794.00
7,951.94

444,579.00 120,881.00 74,940.00
12,590.00 22,157.00 -1,518,953.00 1,601,763.69 61,615.00 83,330.00 29,826.00
35,000.00 3,036.99
191,732.71 5,000.00 5,379.00
74,250.13 110,000.00 40,232.00
5,602.86
40,250.00 61,794.00
7,951.94

156,629.74

156,629.74

39,684.00

43,799.00 40,055.00

43,799.00 40,055.00

$ 11,418,909.38 $

349,955.68 $ 11,768,865.06

-34-

MORGAN COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2001

SCHEDULE "3"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS(2)

AMOUNT EXPENDED IN CURRENT YEAR (3)

AMOUNT EXPENDED IN PRIOR YEAR(3)

PROJECT STATUS

Morgan County Primary School facility construction, renovation, modernization, equipping and improvements

$ 2,370,000.00 $ 2,573,034.29

$ 2,573,034.29 Completed

Morgan County Elementary School new facility construction, renovation, modernizing, equipping and improvement

520,000.00

590,347.72

590,347.72 Completed

Morgan County Middle School renovation, modernizing, expansion, equipping and improvements

1,220,000.00 1,220,000.00 $ 401,811.83

672,359.12 On-going

Morgan County High School renovation, modernizing, expansion, equipping and improvement, plus purchasing equipment with an extended useful life

1,000,000.00 1,000,000.00

17,340.00

261,661.01 On-going

New Facility Construction for Morgan County school buses and J?Urchase of school buses with an extended useful life

7101000.00

710,000.00

6361549.40

On-going

$ 5,820,000.00 $ 6,093,382.01 $ 1,055,701.23 $ 4,097,402.14

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

See notes to the general-purpose financial statements.

35

MORGAN COUNlY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM {QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2001

SCHEDULE "4"

DESCRIPTION

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

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

Middle Grades (6-8) 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

CategoryV

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

792,940.00 $
67,441.00 2,080.153.00
271,813.00 989,181.00
1,732,922.00 1,397,932.00
652,428.00 1,641,116.00
169,151.00 101,325.00 139,208.00

762,044.93 $
100,900.74 1,933,310.95
557,767.04 982,278.65
-0.44 2,033,509.02 2,072,418.01
697,689.97
407,150.69 1,020,601.37
181,502.95 8,745.75
289,889.52 221,503.53 121,471.10

5,620.75 $
7,275.45 76,064.71 13,492.07 83,563.02
91,129.60 143,302.67
62,847.18
47.83 7,169.52 6,545.34 6,545.32 1,381.33 1,418.66 7,705.24

767,665.68 108,176.19 2,009,375.66 571,259.11 1,065,841.67
-0.44 2,124,638.62 2,215,720.68
760,537.15
407,198.52 1,027,770.89
188,048.29 15,291.07
291,270.85 222,922.19 129,176.34

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

10,035,610.00 $ 11,390,783.78 $ 514,108.69 $ 11,904,892.47

Media Center Program Staff and Professional Development

308,396.00 84,230.00

305,170.23 22,262.02

82,642.44 62,226.75

387,812.67 84,488.77

TOTAL QBE FORMULA FUNDS

10.428,236.00 $ 11,718,216.03 $ 658,977.88 $ 12,377,193.91

(1) Comprised of State Funds plus Local Five Mill Share.

See notes to the general-purpose financial statements.

- 36-

MORGAN COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY SITE
YEAR ENDED JUNE 30, 2001

SCHEDULE "5"

SITE Morgan County Elementary School Morgan County High School Morgan County Primary School Morgan County Middle School Morgan County CrossRoads Central Office (Alternative Education Program)
TOTAL
(1) Comprised of State Funds plus Local Five Mill Share.

ALLOTMENTS FROM GEORGIA DEPARTMENT OF
EDUCATION (1)

ELIGIBLE QBE PROGRAM COSTS

$

2,357,238.00 $ 2,448,204.85

2,577,803.00

3,527,632.53

2,748,098.00

3,110,917.41

2,213,263.00

2,688,961.34

129,176.34

139,208.00

$ 10,035,610.00 $ 11,904,892.47

See notes to the general-purpose financial statements.
- 37 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
April 5, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Morgan County Board ofEducation
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FlNANCIAL REPORT1NG BASED ON AN AUDIT OF FlNANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of Morgan County Board of Education as of and for the year ended June 30, 2001, and have issued our report thereon dated April 5, 2002. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general-purpose financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether Morgan 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, noncompliancewith 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 ofour audit, and accordingly, we do not express such an opinion. The results ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Morgan County Board ofEducation's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal
2001YB-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 Morgan 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-7041-01-01 and FS-7041-01-02.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, ofthe reportable conditions described above, we consider item FS-7041-0102 to be a material weakness.
This report is intended solely for the information and use of the management, members of the Morgan 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,
IN~
RWH:gp 2001YB-40

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 5, 2002 .

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Morgan 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 ofMorgan County Board ofEducation with the types ofcompliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2001. Morgan County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section ofthe accompanying Schedule ofFindings 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 Morgan County Board of Education's management. Our responsibility is to express an opinion on Morgan County Board ofEducation's compliance based on our audit.
We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States of America; 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 Morgan 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 Morgan County Board ofEducation's compliance with those requirements.
2001SA-30

In our opinion, the Morgan County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 2001.
Internal Control Over Compliance
The management of Morgan 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 Morgan 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 ofexpressing 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 Morgan 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-7041-01-01.
A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level of risk that noncompliance with 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. However, we do not believe the reportable condition described above is a material weakness.
This report is intended solely for the information and use of the management, members of the Morgan 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,
~~~
Ru ell W. Hinton State Auditor
RWH:gp 2001SA-30

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

MORGAN COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 2001

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7041-97-03 FS-7041-99-01 FS-7041-00-01

Unresolved - No Corrective Action Implemented Further Action Not Warranted Unresolved - No Corrective Action Implemented

CORRECTIVE ACTION/RESPONSES

EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Meet Expenditure Requirements Amount: $507.20 Finding Control Number: FS-7041-97-03

This underexpenditure will be returned to the Department ofEducation through an increase in the School District's Local Five Mill Share.

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS0:7041-00-01

The School District is awaiting software from the Georgia Department of Education that will add a general fixed assets module to Genesis.

SECTION IV FINDINGS AND QUESTIONED COSTS

MORGAN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED n.JNE 30, 2001

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Morgan County Board ofEducation's financial statements was qualified for various departures from generally accepted accounting principles.

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

Budget Preparation/Execution

General Fixed Assets

Of the reportable conditions described above, General Fixed Assets is considered to be a material weakness.

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

Cash Management

The reportable condition described above is not considered to be a material weakness.

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

6. Audit Findings Required to be Reported by Section .510{a} of 0MB Circular A-133 The Morgan County Board of Education's audit disclosed an audit finding required to be reported by section .5 lO(a) ofOMB Circular A-133. This audit finding is included in section N 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 84.027 Individuals with Disabilities Education Act - Part B - Special Education Capacity Building Improvement

- 1-

MORGAN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
I SUMMARY OF AUDITOR'S RESULTS
7. Major Programs 84.027 Individuals with Disabilities Education Act - Part B - Special Education Flow Through 84.173 Individuals with Disabilities Education Act - Part B - Special Education Preschool
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk Auditee The Morgan County Board of Education qualified as a low risk auditee based on a waiver granted by the U. S. Department of Education.
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
BUDGET PREPARATION/EXECUTION Failure to Budget for Revenues and Expenditures Reportable Condition Nonmaterial Noncompliance Finding Control Number: FS-7041-01-01
An examination ofthe School District's budget revealed that the School District failed to budget for revenues and expenditures in the Special Revenue Fund. Chapter 32 ofthe Financial Management for Georgia Local Units ofAdministration issued by the Georgia Department ofEducation states in part:
"School Boards must adopt annual operating budgets for all fund types that they maintain except some capital projects funds and trust and agency funds."
This condition occurred because management neglected to comply with guidelines imposed upon the School District by the Georgia Department of Education. Appropriate procedures should be implemented by the School District to ensure that annual operating budgets are adopted for all required fund types.
-2-

MORGAN COUNTY BOARD.OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 2001
Il FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-7041-01-02
The Morgan County Board of Education did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general-purpose financial statements ofthe School District being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the School District to establish accounting controls and procedures to provide for maintenance ofa General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the School District and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained ofall additions and deletions to the General Fixed Assets Account Group.
ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CASH MANAGEMENT Excessive Cash Balances Reportable Condition U.S. Department of Education Through Georgia Department ofEducation Amount: $860.15 Finding Control Number: FA-7041-01-01
A review of cash management procedures for the Special Education Cluster (CFDA 84.027 and 84.173) disclosed that cash draws were made in advance ofimmediate cash needs, resulting in the accumulation ofexcessive cash balances. During fiscal year 2001, the Special Education Cluster had an average cash balance of $13,709.87 and had excessive ending monthly cash balances in seven months.
In accordance with A-102 Common Rule paragraph 21(h)2i, interest earned on advances by local
government grantees is required to be submitted promptly to the Federal grantor agency. Up to $100 per year may be kept for administrative expenses. The Special Education Cluster Program earned interest amounting to $960.15 of which $860.15 should have been submitted to the Georgia Department of Education. The interest earned on these funds was recorded in the School District's General Fund.
-3-

.MORGAN eOUNTY..ROARD.OF EDUCATION
SCHEDULE OF FINE>INGS ANID tDUESTIONED COSTS
YEARENDED JUNE'.30; i0Ol

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

CASH MANAGEMENT Excessive Cash Balances Reportable Condition U.S. Department of Education Through Georgia Department of Education Amount: $860.15 Finding Control Number: FA-7041-01-0l

J\1an~gementshould become familiar with the Federal regulations for the Special Ed~c,ation Cluster,

be in order to dev.elpp adeq~at(: internal .control.procedures designed to provide for tfie. ~c.hi~vement of
complianC(? Qbjectives.. In addition,.excessive interest earning totaling $860.15 should'. refunded to

the Ge~rgia Department of Education.

.

.

.

-4-