Peach County Board of Education, Fort Valley, Georgia, annual financial report for the fiscal year ended 2014 June 30 (including independent auditor's reports)

PEACH COUNTY BOARD OF EDUCATION
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED
JUNE 30, 2014

PEACH COUNTY BOARD OF EDUCATION
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2014
TABLE OF CONTENTS
FINANCIAL SECTION
Independent Auditor's Report .............................................................................................................................................. 1 3 Basic Financial Statements:
Government-wide Financial Statements: Statement of Net Position ............................................................................................................................................. 4 Statement of Activities .................................................................................................................................................. 5
Fund Financial Statements: Balance Sheet Governmental Funds ........................................................................................................................ 6 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds .......................................................................................................................... 7 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ............................................................ 8 Statement of Fiduciary Assets and Liabilities Fiduciary Fund ............................................................................. 9
Notes to Financial Statements..................................................................................................................................... 10 32 Required Supplementary Information:
General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual .................................................................................................................. 33
Supplementary Information: Schedule of State Revenue .......................................................................................................................................... 34 Schedule of Approved Local Option Sales Tax Projects.......................................................................................... 35 Schedule of Quality Basic Education Programs (QBE) Allotments and Expenditures by Program General Fund ...................................................................................................... 36
COMPLIANCE SECTION
Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards.....................................................................37 and 38
Independent Auditor's Report on Compliance for Each Major Program and On Internal Control Over Compliance Required By OMB Circular A-133 ............................................................................................ 39 41
Schedule of Expenditures of Federal Awards..................................................................................................................... 42 Notes to Schedule of Expenditures of Federal Awards ...................................................................................................... 43 Schedule of Findings and Questioned Costs ............................................................................................................... 44 46 Schedule of Prior Year Findings .......................................................................................................................................... 47

FINANCIAL SECTION

INDEPENDENT AUDITOR'S REPORT
To the Superintendent and Members of the Peach County Board of Education
Fort Valley, Georgia
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Peach County Board of Education as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the Peach County Board of Education's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and the fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
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 of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
300 MULBERRY STREET, SUITE 300 POST OFFICE BOX 1877 MACON, GEORGIA 31202-1877 478-464-8000 FAX 478-464-8051 www.mjcpa.com MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Peach County Board of Education as of June 30, 2014, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Management has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. Accounting principles generally accepted in the United States of America require that the General Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
2

Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Peach County Board of Education's basic financial statements. The schedule of state revenue, the schedule of approved local option sales tax projects, as required by the Official Code of Georgia 48-8-121, the schedule of Quality Basic Education programs allotments and expenditures by program General Fund, and the schedule of schedule of expenditures of federal awards, as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The schedule of state revenue, the schedule of approved local option sales tax projects, the schedule of Quality Basic Education programs allotments and expenditures by program General Fund, and the schedule of expenditures of federal awards (collectively "the supplementary information") are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated September 28, 2016, on our consideration of the Peach County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Peach County Board of Education's internal control over financial reporting and compliance.
Macon, Georgia September 28, 2016
3

BASIC FINANCIAL STATEMENTS

PEACH COUNTY BOARD OF EDUCATION
STATEMENT OF NET POSITION JUNE 30, 2014
ASSETS
Cash and cash equivalents Investments Receivables:
Taxes Intergovernmental:
State Federal Inventory Capital assets (nondepreciable) Capital assets (net of accumulated depreciation) Total assets
DEFERRED OUTFLOWS
Deferred loss on refunding Total deferred outflows
LIABILITIES
Accounts payable Salaries and benefits payable Accrued interest payable Bonds payable due within one year Bonds payable due in more than one year Compensated absences, due in less than one year Compensated absences, due in more than one year
Total liabilities
NET POSITION
Net investment in capital assets Restricted for:
Capital projects Debt service Unrestricted
Total net position
The accompanying notes are an integral part of these financial statements.

Governmental Activities

$

1,301,480

6,371,185

1,558,211

2,190,950 489,261 49,357
1,111,366 36,691,141 49,762,951

122,996 122,996

134,023 4,008,345
131,802 3,893,904 5,559,609
108,165 19,088
13,854,936

28,471,990
3,059 4,387,734 3,168,228 $ 36,031,011

4

PEACH COUNTY BOARD OF EDUCATION
STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Functions/Programs

Expenses

Governmental activities:

Instruction

$ 18,606,952

Support services:

Pupil services

922,009

Improvement of instructional

services

1,174,753

Educational media services

530,750

General administration

943,274

School administration

1,957,510

Business administration

280,500

Maintenance and operation of plant

4,605,133

Student transportation services

2,171,739

Central support services

191,699

Other support services

681,400

Enterprise operations

239,201

Food service operations

2,258,989

Interest on long-term debt

259,703

Total governmental activities

34,823,612

Charges for Services

Program Revenues Operating Grants and
Contributions

Capital Grants and Contributions

$

217,300 $ 13,568,307 $

-

-

270,141

-

286,631 503,931

971,374 491,584 813,559 1,014,956
2,414 1,178,934
521,060 3,623
169,398 -
1,754,683 -
20,760,033

76,220 76,220

Net (Expense) Revenue and
Changes in Net Position Governmental
Activities
$ (4,821,345)
(651,868)
(203,379) (39,166)
(129,715) (942,554) (278,086) (3,426,199) (1,574,459) (188,076) (512,002) (239,201) (217,675) (259,703) (13,483,428)

General revenues: Taxes: Property taxes, levied for maintenance and operations Sales taxes, levied for debt service Intangible taxes Transfer taxes Railroad equipment tax Grants and contributions not restricted to specific programs Unrestricted investment earnings Miscellaneous Total general revenues Change in net position
Net position, beginning of year Net position, end of year
The accompanying notes are an integral part of these financial statements.

11,369,684 3,516,607 91,317 29,390 24,728 919,680 6,522 342,334
16,300,262 2,816,834
33,214,177 $ 36,031,011

5

PEACH COUNTY BOARD OF EDUCATION
BALANCE SHEET GOVERNMENTAL FUNDS
JUNE 30, 2014

ASSETS

General

District-wide Capital
Projects

Debt Service

Total Governmental
Funds

Cash and cash equivalents Investments Receivables:
Taxes Intergovernmental:
State Federal Inventory
Total assets

$

1,024,064 $

2,438,228

1,245,989

2,190,950

489,261

49,357

$

7,437,849 $

48 $ 3,011
-
3,059 $

277,368 $ 3,929,946
312,222
4,519,536 $

1,301,480 6,371,185
1,558,211
2,190,950 489,261 49,357
11,960,444

LIABILITIES, DEFERRED INFLOWS, AND FUND BALANCES

LIABILITIES Accounts payable Salaries and benefits payable
Total liabilities

$

134,023 $

4,008,345

4,142,368

- $ -

- $ -

DEFERRED INFLOWS Unavailable revenue - property taxes
Total deferred inflows

665,957 665,957

-

-

-

-

FUND BALANCES Nonspendable: Inventory Restricted for:
Capital projects Debt service Assigned for student activities Unassigned
Total fund balances
Total liabilities, deferred inflows, and fund balances

49,357
278,264 2,301,903
2,629,524

$

7,437,849 $

-
3,059 -
3,059
3,059 $

-
4,519,536
4,519,536
4,519,536

Amounts reported for governmental activities in the statement of net position are different because:

Capital assets used in governmental activities are not financial resources and are not reported in the funds.

Cost

64,997,016

Less accumulated depreciation

(27,194,509)

Other long-term assets are not available to pay for current-period expenditures and are deferred in the funds. Property taxes

Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds.

Bonds

(9,251,000)

Bond premium

(202,513)

Loss on bond refunding

122,996

Accrued interest

(131,802)

Compensated absences

(127,253)

Net position of governmental activities

$

The accompanying notes are an integral part of these financial statements.

134,023 4,008,345 4,142,368
665,957 665,957
49,357 3,059
4,519,536 278,264
2,301,903 7,152,119
37,802,507 665,957
(9,589,572) 36,031,011

6

PEACH COUNTY BOARD OF EDUCATION
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2014

REVENUES Property taxes Sales taxes Other taxes State funds Federal funds Charges for services Investment earnings Miscellaneous Total revenues

General

District - Wide Capital Projects

Debt Service

Total Governmental
Funds

$

11,222,582 $

120,707

24,728

16,952,878

4,954,888

503,931

2,679

342,334

34,124,727

- $ 10 10

- $ 3,516,607
3,833 3,520,440

11,222,582 3,637,314 24,728
16,952,878 4,954,888 503,931 6,522 342,334 37,645,177

EXPENDITURES Current: Instruction Support services: Pupil services Improvement of instructional services Educational media services General administration School administration Business administration Maintenance and operation of plant Student transportation services Central support services Other support services Enterprise operations Food services operation Debt service: Principal retirement Interest and fees Total expenditures

18,391,625
922,009 1,173,984
530,750 958,832 1,962,794 281,366 2,722,086 2,014,679 189,975 685,469 239,201 2,233,174
164,486 7,574
32,478,004

-

-

18,391,625

-

-

922,009

-

-

1,173,984

-

-

530,750

-

-

958,832

-

-

1,962,794

-

-

281,366

-

-

2,722,086

-

-

2,014,679

-

-

189,975

-

-

685,469

-

-

239,201

-

-

2,233,174

-

3,756,000

3,920,486

-

403,799

411,373

-

4,159,799

36,637,803

Net change in fund balances

1,646,723

10

(639,359)

1,007,374

FUND BALANCE, beginning of year

982,801

3,049

5,158,895

6,144,745

FUND BALANCE, end of year

$

2,629,524 $

3,059 $

4,519,536 $

7,152,119

The accompanying notes are an integral part of these financial statements.

7

PEACH COUNTY BOARD OF EDUCATION
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Amounts reported for governmental activities in the statement of activities are different because:

Net change in fund balances - total governmental funds

$

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. The net effect of the amount by which depreciation exceeded capital outlay is to decrease net position.

1,007,374

Capital outlay Depreciation expense

76,220 (2,363,549)

(2,287,329)

Net effect of various miscellaneous transactions involving capital assets (sales, trade-ins, donations, etc.) is to decrease net position.

(8,618)

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the

funds.

Property taxes

147,102

Grants

(151,833)

(4,731)

Issuance of long-term debt provides current financial resources to governmental funds, while repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. This amount is the net effect of these differences in the treatment of long-term debt and related items.

Principal payments - bonds Principal payments - capital leases Loss on refunding amortization expense Bond premium

3,756,000 164,486 (30,750) 127,904

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.

Change in compensated absences Change in accrued interest

37,982 54,516

$

The accompanying notes are an integral part of these financial statements.

4,017,640
92,498 2,816,834

8

PEACH COUNTY BOARD OF EDUCATION
STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES FIDUCIARY FUND JUNE 30, 2014

Cash Funds held for others

ASSETS LIABILITIES

The accompanying notes are an integral part of these financial statements.

Agency Fund

$

96,639

$

96,639

9

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014
Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY Reporting Entity The Peach County Board of Education (the "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 Peach County Board of Education. District-wide Statements The Statement of Net Position and the Statement of Activities display information about the financial activities of the 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 of the 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.
10

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
The General Fund is the School District's primary operating fund. It accounts for and reports all financial resources of the School District, except those resources required to be accounted for in another fund.
The District-wide Capital Projects Fund accounts for and reports financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds, and grants from Georgia State Financing and Investment Commission that are restricted, committed, or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.
The Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (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 type:
Agency Funds account for assets held by the School District as an agent for various funds, governments or individuals.
Basis of Accounting
The basis of accounting determines when transactions are reported in the financial statements. The District-wide governmental activities and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Agency funds have no measurement focus; however, they use 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.
11

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of Accounting (Continued)
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.
Compensated absences and special termination benefit amounts earned during the year are not reported in the basic financial statements. To conform to generally accepted accounting principles, the amounts earned for compensated absences and special termination benefits should be reported in the basic financial statements.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. 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 60 days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general longterm debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net position 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.
The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education (QBE) Formula Earnings program. State of Georgia law defines the formula driven grant that determines the cost of an academic school year and the State of Georgia's share in this cost. Generally, teachers are contracted for the school year (July 1 June 30) and paid over a 12-month contract period, generally September 1 through August 31. In accordance with the requirements of the enabling legislation of the QBE program, the State of Georgia reimburses the School System over the same 12-month period in which teachers are paid, funding the academic school year expenditures. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued as the State of Georgia has only postponed the final payment of their share of the cost until the subsequent appropriations for cash management purposes. By June 30 of each year, the State of Georgia has a signed appropriation that includes this final amount, which represents the State of Georgia's intent to fund this final payment. Based on guidance in Government Accounting Standards Board (GASB) Statement No. 33, paragraph 74, the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, and the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.
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PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash and Cash Equivalents
Composition of Deposits - Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured chartered building and loan associations.
Investments
Composition of Investments - Investments made by the School District in nonparticipating interestearning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year 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:
(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 bankers' acceptances, (6) The local government investment pool (Georgia Fund 1) administered by the State of
Georgia, Office of the State Treasurer, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.
Receivables
Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, state or other grants for expenditures made, but not reimbursed, and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met.
13

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property Taxes
The Peach County Board of Commissioners adopted the property tax levy for the 2013 tax digest year (calendar year) on July 31, 2013, (levy date) based on property values as of January 1, 2013. Taxes were due on December 20, 2013, (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2013 tax digest are reported as revenue in the governmental funds for fiscal year 2014. The Peach County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District.
Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2014, for maintenance and operations amounted to $10,590,793.
Tax millage rates levied for the 2013 tax year (calendar year) for the Audit - Peach County Board of Education Audit - Peach County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

17.000 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amount to $631,789 during the fiscal year ended June 30, 2014.
Sales Taxes
Education Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $3,516,607 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.
Inventories
Food Inventories - On the basic financial statements, inventories of donated food commodities used in the preparation of meals 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.

14

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Capital Assets

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

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

Land Construction in Progress Land Improvements Buildings and Improvements Intangible Assets Equipment

Capitalization Policy
All All $ 10,000 10,000 100,000 10,000

Estimated Useful Life
N/A N/A 20 to 80 Years 10 to 80 Years Assigned individually 3 to 14 Years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets, which are amortized.

Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets.

Compensated Absences

Members of the Teachers' Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual school districts. Otherwise, sick leave does not vest with the employee, and no liability is reported in the School District's financial statements.

15

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Compensated Absences (Continued)
Vacation leave of 12 days is awarded on a fiscal year basis to all full time personnel employed on a 12- month basis. The Superintendent is awarded 15 days on a fiscal year basis. No other employees are eligible to earn vacation leave. Vacation leave not utilized during the (calendar/fiscal) year may be carried over to the next fiscal year, providing such vacation leave does not exceed 20 days.
General Obligation Bonds
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts are deferred and amortized over the life of the bonds using the straight line method, which is not materially different from the effective interest method. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued.
In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year the bonds are issued. Premiums received on debt issuances are reported as other financial sources while discounts on bond issuances are reported as other financial uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Position.
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position and/or governmental funds balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. The School District has only one item that qualifies for reporting in this category. A deferred loss on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunding or refunded debt.
In addition to liabilities, the statement of net position and/or governmental funds balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, represents an acquisition of resources that applies to future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time. The School District has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and grants and these amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available.
16

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net Position
The School District's Net Position in the District-wide Statements is classified as follows:
Net Investment in Capital Assets - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets.
Restricted Net Position - This represents resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted Net Position - Unrestricted net position represents resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
Fund Balances
The School District's fund balances are classified as follows:
Nonspendable Amounts that are not in spendable form (e.g., inventory and prepaid items) or are legally or contractually required to be maintained intact (e.g., permanent fund principal).
Restricted Constraints placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.
Committed Amounts that can only be used for the specific purposes determined by a formal action of the Board. The Board of Education is the School District's highest level of decisionmaking authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned Amounts intended to be used by the School District for specific purposes. Intent can be expressed by the Board of Education or by a designee to whom the Board of Education delegates authority. In governmental funds other than the General Fund, assigned fund balance represents the amount that is not restricted or committed. This indicates the resources in other governmental funds are, at a minimum, intended to be used for the purpose of that fund.
17

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fund Balances (Continued)

Unassigned All amounts not contained in other classifications and the residual classification of the General Fund only. Unassigned amounts are available for any legal purpose.

The responsibility for designating funds to specific classification is as follows:

Committed Fund Balance The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Funds should be committed prior to the end of the fiscal year, although the exact amount may be determined in the subsequent fiscal year.

Assigned Fund Balance The Board of Education has authorized the Superintendent as the official authorized to assign fund balance to a specific purpose in accordance with the School District's policy.

It is the goal of the School District to achieve and maintain a committed, assigned, and unassigned fund balance in the General Fund at fiscal year end not to exceed 15% of the total budget of the subsequent fiscal year, net of any committed fund balance for capital expenditures and assigned fund balances "to cover unanticipated deficiencies in revenue or unanticipated expenditures", in compliance with Official Code of Georgia Annotated Section 20-2-167(a)5. If the unassigned fund balance at fiscal year end falls below the goal, the School District shall develop a restoration plan to achieve and maintain the minimum fund balance.

When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.

Deficit Fund Balances

The fund reporting a deficit at June 30, 2014, is as follows:

Fund Type/Fund Name
General Fund School Food Services

Deficit Balance

$

550,448

18

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Deficit Fund Balances (Continued)
The School District's plan to eliminate this deficit is as follows:
Reduce the number of school nutrition workers, Provide more training on relevant topics for all school food service employees, Continue Community Eligibility Program to increase reimbursements, Continue Seamless Summer feeding and add after-school snacks to increase
reimbursements, and Continue to review and evaluate operations to determine other cost saving measures.
Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
Note 3: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America.
The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated 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.
19

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014
Note 3: BUDGETARY DATA (CONTINUED)
The Superintendent is authorized by the Board to approve adjustments of no more than five percent of the amount budgeted for expenditures in any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any budget function for any fund is anticipated to be more than five percent of the budgeted amount, the Superintendent shall request Board approval for the budget amendment.
Under no circumstance is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board.
See Schedule 1 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for a detail of any over/under expenditures during the fiscal year under review.
Note 4: DEPOSITS
Collateralization of Deposits Official Code of Georgia Annotated (OCGA) Section 45-8-12, provides that there shall not be on deposit at any time in any depository for a time longer than 10 days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (OCGA 45-813.1), the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.
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.
20

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014

Note 4: DEPOSITS (CONTINUED)

Categorization of Deposits Custodial credit risk is the risk that in the event of bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2014, the School District had deposits with a carrying value of $1,426,555, which includes $28,436 in a certificate of deposit which is reported in investments and bank balances of $1,816,036. The bank balances insured by Federal Depository insurance were $250,000. The amounts exposed to custodial credit risk are classified into three categories as follows:

Category 1 Uncollateralized, Category 2 Cash collateralized with securities held by the pledging financial institution, or Category 3 Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the School District's name.
The School District's deposits by custodial credit risk category at June 30, 2014, are as follows:

Custodial Credit Risk Category
1 2 3

Bank Balance

$

-

-

1,566,036

$ 1,566,036

Categorization of Investments

At June 30, 2014, the School District had the following investments:

Investment Certificate of deposit
Georgia Fund One

Maturities July 12, 2015 62 day weighted average

Fair Value

$

28,436

6,342,749

$ 6,371,185

The Georgia Fund 1 (local government investment pool) administered by the State of Georgia, Office of the State Treasurer is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at www.audits.ga.gov/ SGD/CAFR.html.

21

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014
Note 4: DEPOSITS (CONTINUED) Categorization of Investments (Continued) The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAf rated investment pool by Standard & Poor's. The weighted average maturity for Georgia Fund 1 on June 30, 2014, was 62 days. Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investment will adversely affect the fair value of an investment. The School District does not have a formal policy for managing interest rate risk. Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk. Note 5: 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
22

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014

Note 6: CAPITAL ASSETS

The following is a summary of changes in the capital assets during the fiscal year:

Governmental activities:
Capital assets, not being depreciated: Land Total
Capital assets, being depreciated: Buildings and improvements Equipment Intangible assets Land improvements
Total
Less accumulated depreciation for: Buildings and improvements Equipment Intangible assets Land improvements Total
Total capital assets, being depreciated, net
Governmental activities capital assets, net

Beginning Balance

Increases

Decreases

Transfers

Ending Balance

$ 1,111,366 $ 1,111,366

- $ -

- $ -

56,042,741 7,457,987 320,728 460,906
64,282,362

76,220
-
76,220

(152,204) (320,728)
-
(472,932)

- $ 1,111,366

-

1,111,366

-

56,042,741

-

7,382,003

-

-

-

460,906

-

63,885,650

(19,051,035) (5,558,607) (309,237) (376,395)
(25,295,274)

(1,869,065) (491,611) (2,873) -
(2,363,549)

152,204 312,110
464,314

38,987,088

(2,287,329)

(8,618)

$ 40,098,454 $ (2,287,329) $ (8,618) $

7,962 -
(7,962) -

(20,928,062) (5,898,014) (368,433)
(27,194,509)

-

36,691,141

- $ 37,802,507

Current year depreciation expense by function is as follows:

Instruction Support Services
Maintenance and Operations Student Transportation
Support Services Food Services

$

219,210

$

1,881,460

233,280

2,873

2,117,613 26,726

Total Depreciation Expense

$

2,363,549

23

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014

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 of loss associated with torts, assets, errors or omissions. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.
The School District has elected to self-insure for all potential losses related to acts of God. 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 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.
Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2013

$

- $

57,012 $ (57,012) $

-

2014

$

- $

31,792 $ (31,792) $

-

24

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014

Note 7: RISK MANAGEMENT (CONTINUED)

The School District participates in the Georgia Education Workers' Compensation Trust (the "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 workers' compensation insurance coverage. Specific excess of loss insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1,000,000 loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2 million. The Trust covers the first $1 million of each Employers Liability claim with Safety National Casualty Company providing additional Employers Liability limits up to a $2 million per occurrence maximum. Safety National Casualty Company also provides $2 million in aggregate coverage to the Trust, attaching at 110% of the loss fund and based on the Fund's annual normal premium.

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

Position Covered Superintendent Finance Director

Amount $ 50,000 $ 50,000

Note 8: OPERATING LEASES

Peach 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, 2014, for governmental funds amounted to $113,679. Future minimum lease payments for these leases are as follows:

Fiscal Year Ended June 30
2015 2016 Total

Principal $ 25,024
2,576 $ 27,600

25

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014

Note 9: SHORTTERM DEBT

Tax Anticipation Note

The School District issued a tax anticipation note in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections were received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred. The maturity date of the loan was December 31, 2013. One draw totaling $500,000 was required to meet the cash flow needs of the School District. The note was repaid on December 20, 2013.

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

Beginning Balance

Increases

Decreases

Ending Balance

Tax Anticipation Note $

- $ 500,000 $ (500,000) $

-

Note 10: LONGTERM LIABILITIES
Capital Leases
The Peach County Board of Education has entered into various lease agreements as lessee for buses. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception. All leases were paid in full as of June 30, 2014.
Compensated Absences
Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences.

26

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014

Note 10: LONGTERM LIABILITIES (CONTINUED)

General Obligation Bonds Outstanding

General obligation bonds currently outstanding are as follows:

Purpose General Government - Refunding - Series 2008A General Government - Series 2011

Interest Rates 3.279%
2.000% - 4.000%

Amount $ 3,636,000
5,615,000 $ 9,251,000

Changes in Long-Term Liabilities

The changes in long-term liabilities during the fiscal year ended June 30, 2014, were as follows:

Beginning Balance

Increases

Decreases

Ending Balance

Due Within One Year

General Obligation Bonds Less: Deferred Amounts
Premium General Obligation Bonds, Net
Capital Leases Compensated Absences
Total

$ 13,007,000
330,417 13,337,417
164,486 165,235 $ 13,667,138

$

-

-
142,815
$ 142,815

$ (3,756,000) $ 9,251,000

(127,904) (3,883,904)
(164,486) (180,797)
$ (4,229,187)

202,513 9,453,513
127,253
$ 9,580,766

$ 3,766,000
127,904 3,893,904
108,165 $ 4,002,069

Scheduled Maturities of Long-Term Liabilities

At June 30, 2014, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30
2015 2016 2017 2018
Total Principal and Interest

General Obligation Bonds

Principal

Interest

Premium

$ 3,766,000 3,904,000 1,062,000 519,000

$ 316,324 200,510 51,841 17,018

$ 127,904 74,609 -

$ 9,251,000

$ 585,693

$ 202,513

27

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014

Note 11: ONBEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $2,060,480 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies:

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Certificated Personnel In the amount of $1,938,720
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $22,113
Office of the State Treasurer Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $99,647

Note 12: SIGNIFICANT COMMITMENTS

On December 1, 2012, the School District entered into an agreement with Duram School Services, L.P. for the transportation of pupils. The term of this agreement shall be December 1, 2012 through June 30, 2018.

The following is an analysis of the significant outstanding service contract executed by the School District as of June 30, 2014.

Service Transportation of Pupils

Unearned Executed Contracts
$ 5,626,140

Note 13: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.

28

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014
Note 14: OTHER POST EMPLOYMENT BENEFITS
Georgia School Personnel Employees Post-employment Health Benefit Fund
Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit postemployment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Insurance Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012, pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the state provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years.
The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2014:
29

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014

Note 14: OTHER POST EMPLOYMENT BENEFITS (CONTINUED)

Georgia School Personnel Employees Post-employment Health Benefit Fund (Continued)

For certificated teachers, librarians and regional educational service agencies and certain other eligible participants:

Period July 2013 - June 2014
For non-certificated school personnel:

Contribution Rate $945 per member per month

Period July 2013 - June 2014

Contribution Rate $596.20 per member per month

No additional contribution was required by the Board for fiscal year 2014 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other postemployment benefits and are subject to appropriation.
Currently the state is requiring that local Boards of Education pay only on active employees. The School District's contribution to the health insurance plans for the fiscal years ended June 30, 2014, 2013, 2012 was $3,415,912, $3,465,059, and $3,372,907, respectively, which equaled the required contribution. Currently the State of Georgia has been making the remaining contributions to fund the pay-as-you-go financing on behalf of all local Boards of Education (see Note 1 for discussion of on-behalf payments).
Note 15: RETIREMENT PLAN
Teachers Retirement System of Georgia (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio state employees is ultimately responsible for the administration of TRS. 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.

30

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014
Note 15: RETIREMENT PLAN (CONTINUED)
Teachers Retirement System of Georgia (TRS) (Continued)
On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRPB-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRPB-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by state statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.
Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by state law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2014, were 6.00% of annual salary. Employer contributions required for fiscal year 2014 were 12.28% of annual salary as required by the June 30, 2011, actuarial valuation. The employer contribution rate will increase to 13.15% effective July 1, 2014.
31

PEACH COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014

Note 15: RETIREMENT PLAN (CONTINUED)

Teachers Retirement System of Georgia (TRS) (Continued)

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year
2014 2013 2012

Percentage Contributed
100% 100% 100%

Required Contribution
$ 2,140,097 2,085,978 1,998,341

Public School Employees' Retirement System (PSERS)
Bus drivers, lunchroom personnel, and maintenance and custodial personnel are members of the Public School Employee's Retirement System of Georgia (PSERS). The PSERS is funded by contributions from employees and the State of Georgia. The School District makes no contribution to this plan. See Note 11: On-behalf payments for information on the contributions made by the State of Georgia on behalf of the School District's employees.
Note 16: NEW ACCOUNTING PRONOUNCEMENT
In fiscal year 2015, the School District will adopt Governmental Account Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this Statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. Implementation of this statement will require the School District to record a liability for its proportionate share of the Net Pension Liability of pension plans in which it is a member. The School District's Net Pension Liability as of June 30, 2015, is $21,355,722.

32

REQUIRED SUPPLEMENTARY INFORMATION

PEACH COUNTY BOARD OF EDUCATION
GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2014

REVENUES Property taxes Sales taxes Other taxes State funds Federal funds Charges for services Investment earnings Miscellaneous
Total revenues EXPENDITURES Current:
Instruction Support services: Pupil services Improvement of instructional services Educational media services General administration School administration Business administration Maintenance and operation of plant Student transportation services Central support services Other support services Enterprise operations Food services operations Debt service: Principal retirement Interest and fiscal charges Total expenditures

Budget Original

Final

Actual

Variance With Final Budget

$ 10,506,000 $ 10,506,000 $ 11,222,582 $

130,000

130,000

120,707

-

-

24,728

16,414,127

16,539,967

16,952,878

5,321,598

5,405,700

4,954,888

532,500

532,500

503,931

2,000

2,000

2,679

105,000

105,000

342,334

33,011,225

33,221,167

34,124,727

716,582 (9,293) 24,728
412,911 (450,812)
(28,569) 679
237,334 903,560

18,657,424
894,054 1,311,550
486,274 924,580 2,036,745 284,805 2,844,184 2,091,080 205,688 590,880
2,625,267
32,952,531

18,653,783
909,054 1,262,013
486,274 924,580 2,022,302 284,805 2,844,185 2,167,300 205,688 608,483
2,628,267
32,996,734

18,391,625
922,009 1,173,984
530,750 958,832 1,962,794 281,366 2,722,086 2,014,679 189,975 685,469 239,201 2,233,174
164,486 7,574
32,478,004

262,158
(12,955) 88,029 (44,476) (34,252) 59,508
3,439 122,099 152,621
15,713 (76,986) (239,201) 395,093
(164,486) (7,574)
518,730

Net change in fund balance

58,694

224,433

1,646,723

1,422,290

FUND BALANCE, beginning of year

982,801

982,801

982,801

-

FUND BALANCE, end of year

$

1,041,495 $ 1,207,234 $ 2,629,524 $

1,422,290

Note 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 ($432,502) or expenditures ($437,301) of the various school activity accounts.
(2) The accompanying schedule of revenues, expenditures and changes in fund balances, budget and actual, is presented on the modified accrual basis of accounting, which is the basis of accounting used in the presentation of the fund financial statements.

33

SUPPLEMENTARY INFORMATION

PEACH COUNTY BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE FOR THE FISCAL YEAR ENDED JUNE 30, 2014

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 Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Program for Intellectually Gifted Students - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Principal Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Pupil Transportation State Bonds Nursing Services Vocational Supervisors Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Math and Science Supplements Preschool Handicapped Program Teachers' Retirement Technology to Support Digital Learning Bonds Virtual Schools Grant
Office of the State Treasurer Public School Employees Retirement

Governmental Fund Types General Fund
$ 1,392,828 33,246
3,109,099 137,953
1,370,499 127,543
2,358,559 1,727,445
696,982 2,149,975
447,933 513,305 159,071 266,222 413,807 127,926
75,203 1,689
488,118 854,908 952,317
498,404 76,220 74,354 13,367
919,680 55,657 52,264
(2,367,293)
27,826 56,089 22,113 18,922
1,000
99,647

$ 16,952,878
(1) Payments to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District in the amount of $1,938,720 are included as part of the Quality Basic Education revenue allotments above.

34

PEACH COUNTY BOARD OF EDUCATION
SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Project

Original Estimated Cost (1)

Current Estimated Costs (2)

Expended In Current Year (3)

Expended In Prior Years (3)

Total Completion
Cost

Project Status

(1-2) Retire prior debt service of Series 2008A

and 2008B bonds - principal and interest

$

(2-2) Replace 10 units for A/C and HVAC

controls at PCHS, BES, and FVMS (3-2) Install white boards in all classrooms at BES, BMS,

FVMS, and PCHS (4-2) Continue technology upgrades e.g. cabling, Smart

Boards, video distribution equipment, etc. (5-2) Install fireproof ceiling tiles and equipment upgrades

in kitchens at PCHS, FVMS, BMS, and BES (6-2) Install camera system at FVMS, BMS, BES, and

two new schools (7-2) Build impaired ramp at PCHS auditorium entrance (8-2) Repair roofs at FVMS, PCHS, BES and HES

(9-2) Provide playground equipment at all elementary schools (10-2) Renovate PCHS track (11-2) Repair gym floor at BES (12-2) Build tennis courts at PCHS (13-2) Resurface asphalt at all schools and visitors parking

access at PCHS (14-2) Build restrooms, dressing rooms, and concession

between track and tennis courts at PCHS (15-2) Build restrooms, dressing rooms, and concession

at soccer field at PCHS (16-2) Renovate old HES to house 9th Grade Academy (17-2) Replace roof awnings between old HES and old gym (18-2) paying expenses incident to accomplishing the

foregoing; including the costs of issuance of up to $10,000,000 in Bonds
$

11,086,399 $ 13,200,000 $ 3,102,149 $ 4,360,816 $ 7,462,965

1,246,585

7,639,239

-

7,639,239

7,639,239 Completed

66,000

66,000

-

-

-

2,500,000

2,500,000

-

-

-

700,000

700,000

-

-

-

400,000

400,000

-

-

-

500,000

500,000

-

-

-

750,000

750,000

-

-

-

200,000

200,000

-

-

-

200,000

200,000

-

-

-

80,000

80,000

-

-

-

350,000

350,000

-

-

-

400,000

400,000

-

-

-

85,000

85,000

-

-

-

40,000

40,000

-

-

-

85,000

85,000

-

-

-

150,000

150,000

-

-

-

965,116 19,804,100

965,116

222,650

431,766

654,416

$ 28,310,355 $ 3,324,799 $ 12,431,821 $ 15,756,620

N/A - Not applicable (1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. (2) The School District's current estimate of total cost for the project(s). Includes all cost from project inception to completion. (3) The voters of Peach 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 project. (4) As of June 30, 2014, there were no excess proceeds which were not yet expended.

Total current year expenditures from above $ 3,324,799

Principal paid during FY 2014, Series 2011 Bonds

835,000

Total expenditures of the Debt Service Fund $ 4,159,799

See notes to the basic financial statements.

35

PEACH COUNTY BOARD OF EDUCATION
SCHEDULE OF QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES BY PROGRAM GENERAL FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Description

Allotments From Georgia Department of
Education (1) & (2)

Eligible QBE Program Costs

Salaries

Operations

Total

Direct Instructional Funds:

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 I

Category II

Category III

Category IV

Category V

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

1,639,924 $ 56,158
3,675,009 169,338
1,659,463 149,443
2,804,611 2,066,209
820,151 2,539,701
517,490 585,415 192,611 306,886

1,294,937 $ 76
2,991,660 76
1,653,528 116,258
2,671,183 2,680,135
720,832 -
91,739 128,086 1,110,489
12,382 550,391 733,094
233,404 180,004

49,025 $ -
72,496 -
53,041 -
79,518 86,888 70,008
2,342 4,440 -

1,343,962 76
3,064,156 76
1,706,569 116,258
2,750,701 2,767,023
790,840 -
91,739 128,086 1,110,489
12,382 550,391 735,436
237,844 180,004

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

17,182,409

15,168,274

417,758

15,586,032

Media Center Program Staff and Professional Development

491,531 89,236

486,253 -

-

486,253

-

61,095

TOTAL QBE FORMULA FUNDS

$ 17,763,176 $ 15,654,527 $ 417,758 $ 16,133,380

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the state amended budget adjustment. (3) Allotments do not include the State Health payments made by GDOE to the Department of Community Health for the certified employees.

36

COMPLIANCE SECTION

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT
OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Superintendent and Members of the Peach County Board of Education
Fort Valley, Georgia
We have audited, 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, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Peach County Board of Education as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the Peach County Board of Education's basic financial statements and have issued our report thereon dated September 28, 2016.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Peach County Board of Education's internal control over financial reporting ("internal control") to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Peach County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Peach County Board of Education's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, we did identify a certain deficiency in internal control, described in the accompanying schedule of findings and questioned costs as item 2014-001, that we consider to be a material weakness.
300 MULBERRY STREET, SUITE 300 POST OFFICE BOX 1877 MACON, GEORGIA 31202-1877 478-464-8000 FAX 478-464-8051 www.mjcpa.com MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

Compliance and Other Matters As part of obtaining reasonable assurance about whether the Peach County Board of Education's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Peach County Board of Education's Response to Finding Peach County Board of Education's response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. Peach County Board of Education's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Macon, Georgia September 28, 2016
38

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY
OMB CIRCULAR A-133
To the Superintendent and Members of the Peach County Board of Education
Fort Valley, Georgia
Report on Compliance for Each Major Federal Program
We have audited the Peach County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the Peach County Board of Education's major federal programs for the year ended June 30, 2014. The Peach County Board of Education's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the Peach County Board of Education's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance 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 of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Peach 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 on compliance for each major federal program. However, our audit does not provide a legal determination of the Peach County Board of Education's compliance.
300 MULBERRY STREET, SUITE 300 POST OFFICE BOX 1877 MACON, GEORGIA 31202-1877 478-464-8000 FAX 478-464-8051 www.mjcpa.com MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

Opinion on Each Major Federal Program
In our opinion, the Peach County Board of Education complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2014.
Report on Internal Control Over Compliance
Management of the Peach County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Peach County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Peach County Board of Education's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, we identified a certain deficiency in internal control over compliance, as described in the accompanying schedule of findings and questioned costs as item 2014-002, to be a significant deficiency.
40

The Peach County Board of Education's response to the internal control over compliance finding identified in our audit is described in the accompanying schedule of findings and questioned costs. The Peach County Board of Education's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on it. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Macon, Georgia September 28, 2016
41

PEACH COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Funding Agency Program/Grant
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program Total Child Nutrition Cluster
Fresh Fruit & Vegetables
Total U.S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Title I Grants to Local Education Agencies ARRA - Race to the Top English Language Acquisition Grants Improving Teacher Quality State Grants Migrant Education Rural Education Career & Technical Education - Basic Grants to States
Total U. S. Department of Education
Commerce, U. S. Department of Direct National Institute of Standards and Technology ARRA - Measurement and Engineering Research and Standards
Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program Total Expenditures of Federal Awards
N/A = Not Available

CFDA Number

PassThrough
Entity ID
Number

Expenditures In Period

10.553 10.555
10.582

N/A

$

383,434

N/A

1,249,622

1,633,056

N/A

26,430

1,659,486

84.027

N/A

84.173

N/A

84.010

N/A

84.395

N/A

84.365

N/A

84.367

N/A

84.011

N/A

84.358

N/A

84.048

N/A

746,095 25,509
771,604
1,501,541 417,328 33,245 230,011 16,407 77,764 45,695
3,093,595

11.609

70NANB14H200

2,000

12.unknown

N/A

51,596

$

4,806,677

42

PEACH COUNTY BOARD OF EDUCATION
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

NOTE 1.
NOTE 2. NOTE 3.

BASIS OF PRESENTATION
The Schedule of Expenditures of Federal Awards includes the federal grant activity of the Peach County Board of Education and is presented on the accrual basis of accounting.
The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in or used in the preparation of the financial statements.
DONATED COMMODITIES
The Child Nutrition Cluster includes $111,819 of non-cash expenditures in the form of donated food commodities.
SUBRECIPIENTS
The School District did not provide Federal Assistance to any subrecipients.

43

PEACH COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

A.

SUMMARY OF AUDIT RESULTS

Financial Statements Type of auditor's report issued
Internal control over financial reporting: Material weaknesses identified?

Significant deficiencies identified not considered to be material weaknesses?

Noncompliance material to financial statements noted?

Federal Awards Internal Control over major programs: Material weaknesses identified?
Significant deficiencies identified not considered to be material weaknesses?

Type of auditor's report issued on compliance for major programs
Any audit findings disclosed that are required to be reported in accordance with OMB Circular A-133, Section 510(a)?

Identification of major programs: CFDA Number

10.553 10.555
84.367
84.027 84.173 Dollar threshold used to distinguish between Type A and Type B programs: Auditee qualified as low-risk auditee?

Unmodified

X Yes

No

Yes X None reported Yes X No

Yes X No

X Yes

None reported

Unmodified

Yes X No

Name of Federal Program or Cluster
U.S. Department of Agriculture: Child Nutrition Cluster:
School Breakfast Program National School Lunch Program
U.S. Department of Education: Title II, Part A Improving Teacher Quality
Special Education Cluster: IDEA Flowthrough Grants to States IDEA Preschool Grants
$300,000 Yes X No

44

PEACH COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

B.

FINDINGS: FINANCIAL STATEMENT AUDIT

2014-001. Deficit Fund Balance School Nutrition Fund

Criteria: Chapter 25 Governmental Fund Deficits of the Financial Management for the Georgia Local Units of Administration states in part: "The seriousness of the fund balances deficits cannot be overstated. The Georgia Department of Education requires those LUAs with deficit governmental fund balances to meet certain reporting requirements". Additionally, O.C.G.A. 20-2-67, requires reporting of such deficits to the State of Georgia Board of Education and the local board of education.

Condition: During the year ended June 30, 2014, the School District reported deficit fund balance in the School Nutrition Fund of $550,448. The amount represents an increase from the prior year amount of $365,349.

Questioned Costs: Not applicable

Context: The School District's expenditures in the School Nutrition Fund exceeded its available resources.

Effect: Resources from the General Fund were needed to meet the obligations of the School Nutrition Fund.

Recommendation: We recommend the School District strengthen internal controls to ensure expenditures do not exceed available resources. We also recommend the School District take appropriate measures to eliminate the accumulated deficit.

Views of Responsible Officials and Planned Corrective Action: We concur with this finding. Management has implemented a plan to eliminate future deficit spending as well as to repay the General Fund for amounts paid on behalf of the School Nutrition Fund.

C.

FINDINGS: FEDERAL PROGRAMS AUDIT

2014-002. Internal Controls over Cash Reporting Child Nutrition Cluster, CFDA 10.553 and 10.555.

Criteria: Internal controls should be in place to ensure meal claims are accurate and supported by detailed meal counts.

Condition: During the year ended June 30, 2014, the School District submitted claims for meals which were not in agreement with the underlying meal count reports.

Questioned Costs: Not applicable

Context: In three of the four months selected for testing, the number of meals claimed for reimbursement did not agree with the underlying meal count reports. We addressed this matter with School District officials, who agreed the meal claims were inaccurate.

45

PEACH COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

C.

FINDINGS: FEDERAL PROGRAMS AUDIT (CONTINUED)

2014-002. Internal Controls over Reports Child Nutrition Cluster, CFDA 10.553 and 10.555. (Continued)

Effect: The School District did not have controls in place to ensure accurate meal claims.

Recommendation: We recommend the School District strengthen internal controls over meal claims to ensure meal claims are substantiated by underlying meal count reports.

Views of Responsible Officials and Planned Corrective Action: We concur with this finding. Management will strengthen internal controls to ensure meals claimed agree to meal count reports.

46

PEACH COUNTY BOARD OF EDUCATION
SCHEDULE OF PRIOR YEAR FINDINGS FOR THE FISCAL YEAR ENDED JUNE 30, 2014
FS-7111-13-01. Budget Preparation/Execution Criteria: Chapter 25 Governmental Fund Deficits of the Financial Management for the Georgia Local Units of Administration states in part: "The seriousness of the fund balances deficits cannot be overstated. The Georgia Department of Education requires those LUAs with deficit governmental fund balances to meet certain reporting requirements". The Department of Audits and Accounts is required to report all instances of budget deficits in accordance with the Official Code of Georgia Annotated 20-2-67(a), which states: "When an audit by the Department of Audits and Accounts finds and reports irregularities or budget deficits in the fund accounting information regarding a local school system or a school within the local school system, the Department of Audits and Accounts shall report the findings of irregularities or budget deficits to the State Board of Education and the local board of education." Condition: The School District reported a deficit fund balance of $365,349 in the School Food Service Fund. Auditee Reponse/Status: Unresolved. See current year finding 2014-001.
FA-7111-13-01. Cash Management Title II, Part A, CFDA 84.367 and Title VI-B, Special Education Cluster, CFDA 84.027 and 84.173
Criteria: In accordance with 34 CFR 80.21, when funds are advanced, School Districts must follow procedures to minimize the time elapsing between the transfer of funds from the Georgia Department of Education and disbursement. Condition: The School District maintained excessive cash balances for eleven months for the Special Education Cluster and twelve months for the Improving Teacher Quality State Grant program. The average monthly cash balance was in excess of 4% of the total cash receipts for both Federal programs. Auditee Reponse/Status: Resolved.
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