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

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;-FOR THE:FiSCAL YEAR ENDED;JLJNE 30/2001'





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EXHIBIT "A"

DEBT SERVICE
FUND

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS

(Memorandum Onl}'.)

JUNE 30, 2001

JUNE 30, 2000

$

2,834 45

$ 1,265,200.98 $ 1,030,552.01

987,851 56

1,357,571 64

2,434.93

665,226.22

909,205.82

24,82549 12,207.18

19,786.87 6,898 44

$

5,269.38

5,269.38

6,099.45

3,049,730 62 78,862.23
373,032 12

3,049,730 62 78,862.23
373,032.12

3,368,900 55 388,853.42

s

5,269 38 s

3,506,894.35 $ 6,462,205.78 $ 7,087,868.20

$

66,428.27 $

110,714.45

191,739.70

203,190.29

56,565 17

78,407.60

70,167.00

39,322.48

58,087.00

39,908 00

$

78,862.23

78,862.23

373,032.12

373,032 12

388,853 42

3,055,000.00

3,055,000.00

3,375,000.00

s

3,506,894.35 $ 3,949,881 49 $ 4,235,396.24

s

5,269.38

0.00

$

5,269.38

$

2,907.26

$

5,269.38

6,09945

5,548.58

1,261.36

24,825.49 12,207.18 1,257,047.97

19,786.87 6,898.44 967,335.26 61,284.70

1,207,425 69

1,786,898.62

$ 2,512,324.29 $ 2,852,471.96

$

5,269.38 $

3,506,894.35 $ 6,462,205.78 $ 7,087,868.20

-3 -

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

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Adm1rnstrat1on School Administration Business Adm1rnstrat1on Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation
Capital Outlay Debt Service
Principal Interest Paying Agent Fees
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES}
Capital Leases Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commod1t1es Purchased Food

GENERAL FUND

SPECIAL REVENUE
FUND

$ 13,460,188 05 $ 12,049 00
3,274,070 80 147 494.92
$ 16,893,802 77 $

756,385.25 1,885,095 18
365,229 91
3,006,710.34

$ 12,287,357.55 $
428,250.11 273,523.03 402,847.86 445,958.48 1,312,487.01 142,705.05 1,181,664.43 897,678 49
32,962.97 34,084.29 19,998 42 91,197.65
53,883.07 23,938 02

1,451,281 43
75,618.11 72,522 79
154,081.05 3,064.72 1,332 45
920.63
20,899.99 1,187,272.48

$ 17,628,536 43 $ $ -734,733.66 $

2,966,993.65 39 716 69

$

116,924.00

$

-8,627.80

$

108,296.20 $

8,627.80 8,627.80

$ -626,437.46 $ 1,314,384.96

48,344 49 453,367.59

5,038.62 5 308 74

-FUND BALANCE JUNE 30

$

687,947 50 $

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

512,059 44

EXHIBIT"B"

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTALS

(Memorandum Only) YEAR ENDED

JUNE 30, 2001

JUNE 30, 2000

s

162,744 50

816,378.81 $ 44,259.29
s 1,023,382 60 $

$
489,498.72 333.86

14,379,317.80 $ 1,897,144.18 4,579,948 33 557,317 98

13,651,263 68 1,938,270 16 4,538,504 29 573,397.02

489,832 58 $ 21,413,728.29 $ 20.701 ,435.15

$ 13,738,638 98 $ 12,268,453 00

s

794,954.59

503,868.22 346,045.82 402,847.86 600,039.53 1,315,551 73 144,037.50 1,181,664.43 898,599.12
32,962.97 54,984.28 1,207,270 90 886,152.24

687,732.02 493,380.66 379,120.41 622,569 54 1,205,953 76
93,778.25 1,086,109.16
860,656.95 1,302.35
55,279.22 1,146,484.85 1,043,266.89

$

320,000.00

168,660.00

2,002.65

373,883 07 192,598.02
2,002 65

320,027.28 205,749.41
1,888.29

s

s 794 954 59

490,662 65 $. 21,881.147.32 $ 20,471,752 04

s

228,428 01 $

-830 07 $

-467 419 03 $

229,68311

$

228,428.01 $

1,078,619 96

$

116,924.00

8,627.80 $

64,370.43

-8,627.80

-64 370.43

$

116,924.00 $

0.00

-830 07 $ 6,099 45

-350,495.03 $ 2,852,471.96

229,683.11 2,627,291.84

5,038.62 5 308 74

-5,597.32 109433

$ 1 307 047.97 S

5,269.38 $ 2,512,324.29 $ 2,852.471.96

-5-

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

EXHIBIT"C"

GENERAL FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

REVENUES
State Funds Federal Funds Taxes Other Funds

s 12,935,411.00 $ 13,460,188 05

12,04900

3,564,503 00

3,274,070 80

85,500 00

147 494 92

Total Revenues EXPENDITURES

$ 16,585,414 00 $ 16,893,802 77

Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Admin1strat1on School Admin1strat1on Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation
Capital Outlay Debt Service

$ 11,914,404 00 $ 12,287,357 55

393,386 00 272,794 00 403,763 00 432,414 00 1,243,927 00 103,643 00 1,068,934.00 869,966 00
41,010 00 34,600 00
92,700 00

428,250 11 273,523 03 402,847 86 445,95848 1,312,487 01 142,705 05 1,181,664 43 897,678 49
32,962 97 34,084 29 19,998 42 91,197.65 77 821 09

Total Expenditures

$ 16,871,541.00 $ 17,628,536 43

Excess of Revenues over (under) Expenditures $ -286,127 00 $ -734,733 66

OTHER FINANCING SOURCES (USES)

Other Sources

Other Uses

$

Total Other Financing Sources (Uses) $

$ -50,000 00
-50,000 00 $

116,924 00 -8,627.80
108,296 20

Excess of Revenues and Other Financing Sources

over (under) Expenditures and Other Financing

Uses

$

-336,127 00 $

-626,437 46

FUND BALANCE JULY 1, 2000

1,285,058 14

1,314,384 96

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

SPECIAL REVENUE FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

$ 722,047 00 $ 756,385.25 1,861,235 00 1,885,09518

349 469 00

365,229 91

$ 2,932,751 00 $ 3,006,710.34

$ 1,432,517 00 $ 1,451,281 43

59,200 00 55,757 00

75,618 11 72,522 79

160,789 00

154,081 05 3,064 72 1,332 45

92063

21,737 00 1,192,277.00

20,899 99 1,187,272 48

$ 2,922,277 00 $ 2,966,993 65 $ 10 474 00 $ 39,716 69

$

8,627 80

$

8,627 80

$ 10,474 00 $ 48,344 49

540,063.23

453,367 59

-64,320 92

5,038 62 5 308 74

FUND BALANCE JUNE 30, 2001

$ 948 931 14 $==6=8=7=,9=47=5=0=

$ 486,216 31 $ 512,059 44

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

PIERCE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Pierce County Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The School District is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
FUND ACCOUNTING
The School District uses funds and an account group to report on its financial position and the results 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. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the School District. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general-purpose financial statements.
The general-purpose financial statements account for all State, Federal, Taxes and Other funds under control of the School District, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for a11 or most of a School District's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources of the School District except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education.

-7-

PIERCE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 200 I

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and from the Federal government to accomplish specific educational objectives.
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.
DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account" for general obligation debt outstanding, capital lease obligations and material intergovernmental contract obligations.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements ofthese funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The School District considers receivables collected within sixty days after yearend to be available and therefore susceptible to accrual. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, local option sales taxes, intergovernmental grants and donations. Revenue for property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year the resources are received or susceptible to accrual. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
-8-

PIERCE COUNTY BOARD OF EDUCATION

EXHIBIT t'D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 200 I

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures are generally recognized when the related fund liability is incurred.
A departure from the above definitions is the accounting treatment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 2001, a substantial number of personnel of the School District were employed for a one hundred and ninety day period beginning in August 2000 and ending in early June 2001. Personnel contracts for this employment penod specify that compensation be paid in twelve equal monthly payments beginning in September 2000 and ending in August 2001. State grants to fund the State's share of these contracts were disbursed from the Georgia Department of Education to the School District in the same twelve months. As of June 30, 2001, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 2001, had not been made. Payments for these two months were made and recorded as expenditures by the School District subsequent to June 30, 2001. Also, the State's portion ofthe compensation paid in July and August 2001 was received and recorded as revenue in the fiscal year subsequent to June 30, 2001. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2000, were recorded in the year ended June 30, 2001. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.
BUDGET
The Pierce County Board ofEducation's budget is a complete financial plan for the School District's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe budget at any level. The budget for. all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.
The budget process begins when the School District's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial
-9-

PIERCE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code 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 ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(?) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State of Georgia,. Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Oblig.ations of other political subdivisions of the State of Georgia.
RECEIVABLES
Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general-purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

- 10 -

PIERCE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PROPERTY TAXES

The Pierce County Board of Commissioners fixed the property tax levy for the 2000 tax year (calendaryear)onFebruary27,2001 (levydate). TaxesweredueonJune 1,2001 (liendate). Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 2001. The Pierce 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 oftaxes collected to the School District. Property tax revenues during the fiscal year ended June 30, 2001 for maintenance and operations amounted to $3,255,250.85 and for school bonds amounted to $10,883.72.

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

School Operations

13.87 mills

SALES TAXES

Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes and debt service. Special Purpose Local Option Sales. Tax revenue during the fiscal year amounted to $1,294,993.81 and was recorded in the Capital Projects and Debt Service Funds. The State will terminate collection of this tax once an additional $1,886,126.36 has been collected or on June 30, 2002, .whichever occurs first.

INVENTORIES

FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.

COMPENSATED ABSENCES

Compensated absences represent obligations ofthe 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. No liability has been recorded in the individual funds for the current portion of this obligation as this amount is deemed immaterial to the general-purpose financial statements.

- 11 -

PIERCE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Additionally, the dollar value of accumulated compensated absences at June 30, which will be payable from future resources has not been recorded in the General Long-Term Debt Account Group as this liability is also deemed to be immaterial to the fair presentation ofthese financial statements.
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction ofmajor capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit ofthe government. The outstanding amount of these bonds is recorded in the General Long-Term Debt Account Group.
INTERFUND TRANSACTIONS
The School District has the following types of i~terfund transactions:
Reimbursements ofexpenditures initially made from a fund that are properly applicable to another fund are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.
Operating transfers are recorded for all interfund transactions other than reimbursements.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general-purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. lnterfund eliminations have not been made in the aggregation of this data.
Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum ofmoney 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 11 Opercent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the req1:1irement for security in the case ofoperating funds placed in demand deposit checking accounts.
- 12 -

PIERCE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

GENERAL-PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

D NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

ADDITIONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

CAPITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

DEBT SERVICE FUND

I

COMBINING BALANCE SHEET

J

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

SCHEDULES

l SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 2 SCHEDULE OF STATE REVENUE 3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

Page
2
4 6 7
20 22 24 26 28
29 30 32 33

PIERCE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 2: DEPOSITS AND INVESTMENTS
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 2001, the bank balances were $2,458,219.71. The amounts ofthe total bank balances are classified into three categories of credit risk:
Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.)
The School District's deposits are classified by risk category at June 30, 2001, as follows:

- 13 -

PIERCE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 2: DEPOSITS AND INVESTMENTS

Risk Category

Bank Balance

1

$ 207,571.88

2

2,077,400.54

3

173,247.29

Total

$ 2.458.219.71

CATEGORIZATION OF INVESTMENTS At June 30, 2001, the carrying value of the School District's total investments was $987,851.56 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State ofGeorgia, Office ofTreasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State ofGeorgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows:

The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the SEC as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to be a Rule 2a7 like pool. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value ofthe shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.

Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U.S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2001, was 39 days. The average investment duration for Fund 6 on June 30, 2001, was 6 months.

- 14 -

PIERCE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 3: NON-MONETARY TRANSACTIONS

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

Note 4: RISK MANAGEMENT

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

The School District has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and job related illness or injuries to employees. The School District has neither significantly reduced coverage for these risksnor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.

The School District has elected to self-insure for all losses related to natural disaster. The School District has not experienced any losses related to this risk in the past three years.

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the same fund that the employee's salary and benefits were paid. Claims are accounted for with expenditure 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:

2000 2001

Begmning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

$

0.00 $

1,538.00 $

1,538.00 $

0.00

$

0.00 $

5,073.00 $

4 005.00 $

1,068.00

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

Position Covered

Amount

Superintendent Each Administrator

$ 50,000.00 $ 1,000.00

- 15 -

PIERCE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 5: GENERAL LONG-TERM DEBT

CAPITAL LEASES The Pierce County Board of Education has entered into various lease agreements as lessee for equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value ofthe future minimum lease payments as ofthe date oftheir inception.

INTERGOVERNMENTAL CONTRACT The Pierce County Board of Education entered into an intergovernmental contract with the City of Blackshear to construct water and sewer facilities for educational sites. The principal amount of $441,429.85 and interest at the annual rate of 5.16% will be paid over a twenty year period.

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

Purpose

Interest Rates

Amount

General Government - Series 1977 General Government - Series 1993

5.50% - 6.25% 3.00% - 5.50%

$ 350,000.00 2,705,000.00

$ 3,055,000.00

The changes in General Long-Term Debt during the fiscal year ended June 30, 2001, were as follows:

Balance July 1, 2000
Addit10ns Capital Leases
Deductions Debt Retired
Balance June 30, 2001

Capital Leases

Intergovernmental Contract

General Obhgatlon
Bonds

Total

$

0.00 $ 388,853.42 $3,375,000.00 $3,763,853.42

116,924.00

116,924.00

38,061.77

15,821.30

320,000.00 373,883.07

$ 78,862.23 $ 3:Z3 Q32.12 $3,Q55,QQQ,QQ $3,506,824.35

At June 30, 2001, payments due by fiscal year which includes principal and interest for these items are as follows:

- 16 -

PIERCE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 5: GENERAL LONG-TERM DEBT

Fiscal Year Ended June 30

Capital Leases

Intergovernmental Contract

General Obhgat1on
Bonds

Total Debt

2002 2003 2004 2005 2006 2007 - 2011 2012 - 2016 2017 - 2021

$ 42,305.65 $ 35,515.44 $ 486,038.75 $ 563,859.84

42,305.63

35,515.44

429,182.50 507,003.57

35,515 44

273,040.00 308,555.44

35,515.44

271,098.75 306,614.19

35,51544

273,535.00 309,050.44

177,577.20 1,370,560.25 1,548,137.45

177,577.20 1,103,025.00 1,280,602.20

5,855.87

5,855.87

Total Pnnc1pal and Interest $ 84,611.28 $ 538,587.47 $4,2Q6,480,25 $4,822,672 Q0

Deduct: Imputed Interest

5,749.05

165,555.35

Net Present Value of Future
M1mmum Lease Payments $ :zg 862.23 $ 373,032.12

Note 6: SHORT-TERM DEBT

The School District issues tax anticipation notes 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 are received by the School District. Article IX, Section V, Paragraph V of the Constitution ofthe State ofGeorgia limits the aggregate amount ofshort-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred.

Beginning Balance

Additions

Payments

Ending Balance

Tax Ant1c1pat1on Notes $==="'0-,0..0. $2,2so,ooo.oo $2.2so,ooo.oo $====='0""".0,.,,,0

Note 7: ON-BEHALF PAYMENTS

The School District has recognized revenues and expenditures in the amount of $301,076.64 for health insurance and retirement contributions paid on the School pistrict's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $229,104.34

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $25,853.30

- 17 -

PIERCE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO Ti-IE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 200 I

Note 7: ON-BEHALF PAYMENTS

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $46,119.00 .

Note 8: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2001, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

LW00/99S-713-007

$ 160,432.52 $ 82,912.80

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

Note 9: CONTINGENT LIABILITIES

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

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

Note 10: SUBSEQUENT EVENTS

On March 19, 2002, the voters of Pierce County voted in favor of a Special Purpose Local Option Sales Tax Referendum for education purposes. The imposition ofthe tax approved by the voters, as stated in part on the Official Ballot of Pierce County, is as follows:

"Shall a one percent educational sales and use tax be imposed in the Pierce County School Distric.t for a period oftime not to exceed twenty consecutive calendar quarters commencing upon the termination ofthe one percent sales and use tax for educational purposes currently in effect and for the raising of not more than $8,000,000 for the purpose of reducing the aggregate principal amount ofPierce County School District General Obligation Bonds, Series 1993 and providing funds to pay or to be applied toward all or a portion of the cost of

- 18 -

PIERCE COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 200 I

Note 10: SUBSEQUENT EVENTS

additions, renovations and improvements at existing School System facilities; system-wide technology improvements; acquiring, constructing, and equipping a new Board of Education Office, at a total maximum cost of $6,615,937?"

Note 11: ACCUMULATED EMPLOYEES' LEAVE

Employees retiring under the Teachers Retirement System of Georgia will be eligible for buy-back of all unused leave up to 100 days at $15.00 per day. The employee must have a minimum of five consecutive years of employment with the Pierce County School System, contiguous with retirement, in order to qualify.

Employees who terminate employment (in good standing) with the Pierce County School System may apply for buy-back of unused leave, at $7.50 per day, in excess of 45 days not to exceed 100 -days. The employee must have a minimum of five consecutive years of employment with the Pierce County School System, contiguous to voluntary termination, in order to qualify. See Note 1 Compensated Absences

Note 12: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The r~quired employer contribution rate is 11.29% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2001 2000 1999

100% 100% 100%

$1,310,940.75 $ 1,210,102.61 $ 1,177,498.70

- 19 -

PIERCE COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30. 2001

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

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

200,391.89 $

66,197.36

204,036.17

25.89

24,825.49 12 207.18

Total Assets

$

441,486.62 $ ===6=6=1,=97==36=

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salaries Payable Expired Grant Balances Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity
Total Liabilities and Fund Equity
See notes to the general-purpose financial statements.
- 20-

$

2,435.99 $

14,846.10

36,027.62

50,218.70

1,132.56

$

38,463.61 $

66197.36

$

24,825.49

12,207.18

365,990.34 $

0.00

$

403,023.01 $

0.00

$

441,486.62 $ ===6=6=1=97==36=

EXHIBIT"E"

FEDERAL PROGRAMS

OTHER PROGRAMS

TOTALS

JUNE 301 2001

JUNE 30, 2000

$

83,944.65 $

98,539.44 $

449,073.34 $

593,686.58

204,036.17

129,278.79

104,184.74

13,871.75

118,082.38

36,941.09

24,825.49 12,207.18

19,786.87 6,898.44

$

188,129.39 $

112411.19 $

808,224.56 $ ==7=8=6=,5=9=1.=77=

$

29,940.90 $

102,755.88

55,432.61

$

188,129.39 $

637.26 $ 2,737.50
3 374.76 $

47,860.25 $ 191,739.70 56,565.17
296,165.12 $

51,626.29 203,190.29
78,407.60
333,224.18

$

2,907.26

$

24,825.49

12,207.18

19,786.87 6,898.44

$

0.00 $

109,036.43

475,026.77

423,775.02

$

0.00 $

109,036.43 $

512,059.44 $

453,367.59

$

188,129.39 $

112411.19 $

808,224.56 $ =====7=8=6=5=91=.7=7=

- 21 -

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

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Operating Transfers In
Excess of Revenues and Other Financing Sources over (under) Expenditures
FUND BALANCE JULY 1
Food Inventory - Net Change in Period Donated Commodities Purchased Food
FUND BALANCE JUNE 30
See notes to the general-purpose financial statements.
- 22 -

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

95,866 00 $

803,817.70

365,229.91

$ 1,264,913.61 $

572,464.25 572,464.25

$

$ 1,187,272.48

$ 1,187,272.48 $

$

77,641.13 $

474,386.02
62,742.61 6,180.79
23,731.98 3,064.72 1,332.45
920.63 105.05
572,464.25
0.00

$

77,641.13 $

0.00

315,034.52

0.00

5,038.62 5 308.74

$ 403,023.01 $ ====o=.o=o=

PIERCE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

ADDITIONAL FINANCIAL INFORMATION

SCHEDULES

ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

4

BY PROGRAM

34

5

BY SITE

35

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

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

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

EXHIBIT "F"

FEDERAL PROGRAMS

OTHER PROGRAMS

TOTALS

YEAR ENDED

JUNE 30, 2001

JUNE 30, 2000

$ $ 1,081,277 48
$ 1,081,277.48 $

88,055.00 $ 88,055.00 $

756,385.25 $ 1,885,095.18
365,229.91
3,006,710.34 $

899,722.68 1,926,009.16
386,625.00
3,212,356.84

$

887,025.15 $

12,875.50 33,140.08 130,349.07

20,794.94

$ 1,084,184.74 $

$

-2,907.26 $

89,870.26 $ 33,201.92
123,072.18 $ -35,017.18 $

1,451,281.43 $
75,618.11 72,522.79 154,081.05
3,064.72 1,332.45
920.63 20,899.99 1,187,272.48
2,966,993.65 $
39,716.69 $

1,584,998.81
81,147.12 144,935.44 162,734.11
1,924.98 512.18
23,043.59 14,000.00 21,225.15 1,146,484.85
3,181,006.23
31,350.61

8,627.80

8,627.80

14 370.43

$

-2,907.26 $

-26,389.38 $

48,344.49 $

45,721.04

2,907.26

135,425.81

453,367.59

412,149.54

5,038.62 5 308.74

-5,597.32 1 094.33

$

0.00 $

109,036.43 $

512,059.44 $ ==4=5=3=,3=67==59=

- 23 -

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

ASSETS Cash and Cash Equivalents Investments Accounts Receivable

REGULAR

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$

50,000.00 $

128,254.00

Total Assets

$

so,000.00 $ ===1=2~s.=254~.o=o=

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Contracts Payable Retarnages Payable
Total L1abiht1es
FUND EQUITY
Fund Balances Reserved For SPLOST ProJects For State Capital Outlay Projects Unreserved Undesignated
Total Fund Equity

$

70,167.00

58,087.00

$

128,254.00

$

50,000.00 $

0.00

$

50,000.00 $

0.00

Total Liabilities and Fund Equity

$

50,000.00 $ ===1=2=8!:,2=54==00=

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

EXHIBIT"G"

SPECIAL PURPOSE LOCAL OPTION SALES TAX

$

239,294.33 $

779,535.56

238,218.08

LOTTERY PROJECT

TOTALS

JUNE 30, 2001

JUNE 30, 2000

0.00 $

417,548.33 $

214,143.47.

779,535.56

735,276.27

238,218.08

212,390.70

$ 1,257,047.97 $

0.00 $ 1,435,301.97 $ 1 161 810.44

$

$

70,167.00

58,087.00

$

128,254.00 $

3,960.00 39,322.48 39,908.00
83 190.48

$ 1,257,047.97

$ 1,257,047.97 $

967,335.26 61,284.70

0.00 $ _ _ _ _'"'-0.--'-00-'--

50,000.00

50,000.00

$ 1,257,047.97 $

0.00 $ 1,307,047.97 $ 1,078,619.96

1,257,047.97 $

0.00 $ 1,435,301.97 $ 1,161,810.44

- 25 -

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

REVENUES
State Funds Taxes Other Funds
Total Revenues EXPENDITURES
Capital Outlay Land and Land Improvements Building and Building Improvements Equipment Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1
FUND BALANCE JUNE 30

REGULAR

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$

162,744.50

$

0.00

$

0.00 $

162 744.50

$

0.00 $

1,701.45

758,351.25

25,785.75

$

0.00 $

785,838 45

$

0.00 $

-623,093.95

$

561,809.25

$

561,809.25

$

0.00 $

-61,284.70

50,000.00

61,284.70

$

50,000.00 $ =====0=.0= 0

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

EXHIBIT"H"

SPECIAL PURPOSE LOCAL OPTION SALES TAX

LOTTERY PROJECT

TOTALS

YEAR ENDED

JUNE 30, 2001

JUNE 30, 2000

$

$

816,378.81

44,259.29

$

860,638 10 $

0.00 $ 0.00 $

162,744.50 $ 816,378.81
44,259.29
1,023,382.60 $

436,430.75 708,887.86
37 045.07
1,182,363.68

$

1,397.50

$

$

1 397.50 $

$

859,240.60 $

$ 1,132.00 6 586.64
7 718.64 $
-7 718.64 $

3,098.95 759,483.25 $
32,372.39
794,954.59 $
228,428.01 $

948,200.95 95,065.94
1,043,266.89
139,096.79

$

$

-569,527.89

$

-569,527.89 $

$

289,712.71 $

967,335 26

7,718.64 $ 7 718.64 $

569,527.89 $ -569,527.89
0.00 $

216,657.00 -166,657.00
50,000.00

0.00 $ 0.00

228,428.01 $ 1,078,619.96

189,096.79 889,523.17

$ 1,257,047.97 $

0.00 $ 1,307,047.97 $ 1,078,619.96

- 27 -

PIERCE COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET DEBT SERVICE FUND JUNE 30, 2001

EXHIBIT"!"

ASSETS Cash and C;:tsh Equivalents Accounts Receivable

PROPERTY TAXES FOR BOND DEBT

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

JUNE 30, 2001

JUNE 30, 2000

$

2,834.45 $

0 00 $

2,834 45 $

6,099 45

2,434.93

2,434 93

Total Assets

$

5,269.38 $

0.00 $

5,269.38 $ =====6'=09=9=.4=5=

FUND EQUITY
Fund Balances Reserved For Debt ServJce Unreserved Undes1gnated

$

5,269.38

$

o.oo $ ___--'o=.o=o'-

5,269.38 $ 0 00

6,099.45 0.00

Total Fund Equity

$

5,269.38 $

0.00 $

5,269 38 $ ======6'=09=9=4=5=

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

PIERCE COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
DEBT SERVICE FUND YEAR ENDED JUNE 30. 2001

EXHIBIT "J"

PROPERTY TAXES FOR BOND DEBT

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS YEAR ENDED JUNE 30, 2001 JUNE 30, 2000

REVENUES
Taxes Other Funds
Total Revenues

s $ 10,883.72
333.86
$ 11,217.58 $

478,615.00 $
s 478,615 00

s 489,498.72
333.86
s 489,832 58

472,470.13 418 15
472,888.28

EXPENDITURES

Debt Service Principal Interest Paying Agent Fees
Total Expenditures

$ $ 10,045 00
2,002.65
s 12,047.65 $

320,000.00 $ 158,615 00
478,615 00 $

320,000.00 $ 168,660.00
2,002 65
490,662.65 $

305,000.00 185,261.25
1,888.29
492,149 54

Excess of Revenues over (under) Expenditures

$

-830 07 $

0.00 $

-830.07 $

-19,261.26

OTHER FINANCING SOURCES (USES}

Operating Transfers In Operating Transfers Out

$

24,501.25

-24,501.25

Total Other Financing Sources (Uses)

$

0.00

Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses $

-830.07 $

0.00 $

s -830.07

-19,261.26

FUND BALANCE JULY 1

6,099.45

0 00

6,099.45

25,360 71

FUND BALANCE JUNE 30

$ 5,269.38 $

0.00 $

5,269.38 $ ===6=,0=99=.4=5=

See notes to the general-purpose financial statements.

- 29-

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

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

Agriculture, U S Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program National School Lunch Program

. 10.553 . 10.555

Total Child Nutrition Cluster

Other Programs Pass-Through From Georgia Department of Educatton Food and Nutrition Program Food D1stnbut1on Program (1) Pass-Through From Office of School Readiness Food and Nutrition Program Child and Adult Care Food Program

10.550 10 558

Total U. S Department of Agriculture

Educatron, U S. Department of Special Education Cluster Pass-Through From Georgia Department of Education lnd1v1duals with D1sab1ht1es Education Act Part B - Special Education Capacity Building Improvement Grant Flow Through Preschool

. 84 027
. 84.027 . 84.173

Total Special Education Cluster

Other Programs Pass-Through From Georgia Department of Education Elementary and Secondary Educatton Act Tltlel Grants to Local Educational Agencies Title II Eisenhower Professional Development Title VI Innovative Education Program Strategies Class Size Reduction Vocational Education - Basic Grants to States High School Program Basic Grant Pass-Through From Semen County Board of Education d/b/a Southern Pine Migrant Education Agency Elementary and Secondary Education Act Title I Migrant Education Pass-Through From Okefenokee Regional Educational Service Agency Safe and Drug-Free Schools and Communities

84.010 84.281 84.298 84.340 84.048
84.011 84.186

Total U S. Department of Education

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

NIA $ 163,231.63

(2)

NIA

555,809 60 $ 1,121.489.86 (3)

$ 719,041.23 $ 1,121.489 86

NIA

65,782.62

65,782.62

NIA

18,993.85

(2l

$ 803,817.70 $ 1,187,272.48

NIA $ 7,489 00 $

NIA

265,103.14

NIA

28,184.80

$ 300,776.94 $

7,489.00 265,103.14 28,184.80
300,776 94

NIA

592,112.55

592,112.55

NIA

17,010.00

19,917.26

NIA

22,119.00

22,119.00

NIA

85,684.30

85,684.30

NIA

43,640.00

43,640.00

NIA

19,934 69

19,934.69

NIA

12,049.00

12,049.00

$ 1,093,326 48 $ 1,096,233.74

Total Federal Financial Assistance
NIA = Not Available

- 30

$ 1,897,144.18 $ 2,283,506.22

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

SCHEDULE "1"

Notes to the Schedule of Expenditures of Federal Awards
(1) The amounts shown for the Food D1stnbut1on Program represents the Federally assigned value of nonmonetary assistance for donated commod1t1es received and/or consumed by the system dunng the current fiscal year.
(2) Expenditures for the Child and Adult Care Food Program and the School Breakfast Program were not maintained separately and are included in the 2001 National School Lunch Program
(3) Expenditures for this program include State, and/or Other Funds Expenditures are not maintained by fund source.
MaJor Programs are 1dent1fied by an asterisk (*) in front of the CFDA number
The School D1stnct did not provide Federal Assistance to any Subreap1ent
The accompanying schedule of expenditures of Federal awards includes the Federal grant act1v1ty of the Pierce County Board of Education and 1s presented on the modified accrual basis of accounting which 1s the basis of accounting used 1n the presentation of the general-purpose finanaal statements

See notes to the general-purpose finanaal statements.

- 31 -

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

SCHEDULE "2"

AGENCY/FUNDING
GRANTS Education. Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Middle School (6-8) Program High School General Education (912) Program Vocational Laboratory (9-12) Program Students with D1sab1ht1es Category I Category II Category Ill Category IV Gifted Student - Category VI Remedial Education Program Alternallve Education Program Media Center Program Staff and Professional Development Indirect Cost Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Principal Supplements Vocational Supervisors Migrant Education Mid-term AdJustment Hold-Harmless Education Equalization Funding Grant Food Services Vocational Education Other State Programs At-Risk Summer School Program Health Insurance Mentor Teachers PayforPertormance Preschool Handicapped Program Remedial Summer School Special Education Low Incidence Grant Teachers' Retirement Lottery Programs Computers 1n the Classroom
Georgia State Financing and Investment Comm1ss1on Reimbursement on Construction Proiects
Office of the Governor Abstinence Education Enhancement Sexuality Education
Office of School Readiness Pre-Kindergarten Program
.Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACTS Education, Georgia Department of Georgia's Reading Challenge Reading First Program

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

TOTAL

$ 375.425 00 376,866 00
1,592,283 00 633,994 00
1,017,199 00 1,731,707 00 1,295,009 00
582,168 00
16,955 00 218,050 00 597,441 00
29,329.00 147,366 00 145,423 00 130,786 00 287,033 00 78,053.00 1,802,943 00

403,466 00 113,555 00 77,308 00
12,795 00 21,729 00
1,538 00 5,248 00 1,212,951.00
$ 66,039 00

95,866 00

4,918 70 229,104.34
3,260 00 96,000 00 38,914 00
5,527.71 6,990 00 25,853.30

64,987 00

$ 375.425 00 376,866 00
1,592,283 00 633,994 00
1,017,199 00 1,731,70700 1,295,009 00
582,168 00
16,955 00 218,050 00 597,441 00
29,329 00 147,366.00 145,423 00 130,786 00 287,033.00 78,053 00 1,802,943 00
403,466 00 113,555 00 77,308 00
12,795 00 21,729 00
1,538 00 5,248 00 1,212,951 00 95,866.00 66,039.00
4,918 70 229,104 34
3,260 00 96,000 00 38,914 00
5,527 71 6,990 00 25,853 30
64,987 00

$ 162,744 50
4,780 00 36,367 00
507,477 25
46,119 00

162,744 50
4,780 00 36,367 00
507,477 25
46,11900

30,842 00

46 908 00

30,842 00 46 908 00

See notes to the general-purpose financial statements

$ 13,460,188 05 $ 756,385 25 $ 162,744 50 $ 14,379,317 80 - 32 -

SECTION I FINANCIAL

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

SCHEDULE "3"

PROJECT
Retirement of and the reduction of certain outstanding general obligation debts
Renovation, construction, improvement, retrofitting and technology equipping at Pierce County High School, Pierce County Middle School, Patterson Elementary School and Blackshear Elementary School

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEAR (3)

PROJECT STATUS

$ 2,784,168.00 $ 2,784,168.00 $ 478,615.00 $ 1,413,834 68 Ongorng

3,615,832 00 3,615,832.00

794,954.59 1,623,794.51 Ongorng

$ 6,400,000 00 $ 6,400,000.00 $ 1,273,569.59 $ 3,037,629 19

(1) The School D1stnct's ongrnal cost estimate as specified in the resolution calling for the ImposItIon of the Local Option Sales Tax.
(2) The School Drstnct's current estimate of total cost for the pro1ects. Includes all cost from project InceptIon to completion.
(3) The voters of Pierce County approved the ImposItIon of a 1% sales tax to fund the above proJects. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the hfe of the proiects

See notes to the general-purp9se financial statements.

33

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

SCHEDULE "4"

DESCRIPTION

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Primary Grades (1-3) Program

Primary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with D1sab1ht1es

Category II

Category Ill

Category IV

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

410,565 00 $ 412,140 00 1,741,319 00 693,336 00 1,112,408 00 1,893,794.00 1,416,221 00 636,659 00 942,438 00
161,15900 159,034 00 143,027 00

426,245 16 $ 525,292 09 1,667,297 03 953,090 03 1,075,232 02 1,863,405 06 1,565,353 66 669,054 03
190,782.56 802,255.58 119,283 49 195,411 33 252,047 54 177,315 76

32,474 83 $ 2,217 98 114,149 39 3,800 44 74,275 29 151,899 89 101,092 99 108,675 57
27 72 2,337 02
127 12 6,669 44 2,748 23
668 73

458,719 99 527,510 07 1,781,446 42 956,890 47 1,149,507 31 2,015,304 95 1,666,446 65 777,729 60
190,810 28 804,592.60 119,41061 202,080 77 254,795 77 177,984 49

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

9,722,100.00 $ 10,482,065 34 $ 601,164 64 $ 11,083,229.98

Media Center Program Staff and Professional Development

313,898.00 85,359.00

324,854.93 28,73549

65,524 80 56,716 51

390,379 73 85,452 00

TOTAL QBE FORMULA FUNDS

$

10,121,357 00 $ 10,835,655 76 $ 723,405 95 $ 11,559,061 71

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

See notes to the general-purpose financial statements

34

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

SCHEDULE "5"

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

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE QBE PROGRAM COSTS

$

2,421,621.00 $

2,939,872.83

2,249,547.00

2,424,919.32

3,535,422.00

4,065,358.09

1,372,483.00

1,653,079.74

143,027.00

$

9,722,100.00 $ 11,083,229.98

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

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Rt''i'>HL \\'. H1r-. ror-.
STATE AUDITOR (404) 656-2170

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Wa~hmgton Street. SW.. Suite 214 Atlanta, Georgia 30334-8400
April 15, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Pierce County Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements ofPierce County Board ofEducation as ofand for the year ended June 30, 2001, and have issued our report thereon dated April 15, 2002. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general-purpose financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether Pierce County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, provi~ing an opimon on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Pierce County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal
2001YB-40

control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation tliat we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Pierce County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-7131-01-01 and FS-7131-01-02.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, of the reportable conditions described above, item FS-7131-01-02 is considered to be a material weakness.
This report is intended solely for the information and use ofthe management, members ofthe Pierce County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
4 ~ Respectfully submi:;

RWH:gp 2001YB-40

State Auditor

RLl'i!.1-.LI. \V. H,r. ION
STATE AUDITOR
14041 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 WJ~hmg1on S1ree1. SW. Su11c 214 Atlanta. Georgia 30334-8400
April 15, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Pierce County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance ofPierce County Board ofEducation with the types ofcompliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2001. Pierce County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule ofFindings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Pierce County Board of Education's management. Our responsibility is to express an opinion on Pierce County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A133, Audzts of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Pierce County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Pierce County Board of Education's compliance with those requirements.
2001SA-40

In our opinion, the Pierce County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2001.
Internal Control Over Compliance
The management of Pierce County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Pierce County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
We noted a certain matter involving the internal control over compliance and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over compliance that, in our judgment, could adversely affect the Pierce County Board of Education's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FA-7131-01-01.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level of risk that noncompliance with the applicable requirements oflaws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe the reportable condition described above is not a material weakness.
This report is intended solely for the information and use ofthe management, members ofthe Pierce County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
-::?~8J(&_ tt:-41~
RJsell W. Hinton State Auditor
RWH:gp 2001SA-40

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

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

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7131-99-02 FS-7131-00-01

Further Action Not Warranted Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-7131-00-01

Due to staffing limitations and budgeting considerations prohibiting the employment of additional administrative staff, the School District decided not to pursue the recording of general fixed assets in the financial statements. However, the School District is aware of GASB's Statement 34 and shall work toward meeting compliance in the first fiscal year beginning after June 15, 2002.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-7131-00-01

Previously Reported Corrective Action Implemented

Ru'i-"EI.L \\'. H1r-;ToN STATE AUDITOR
1404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Wa~hmg1on S1rce1. S W .. Su11c 214 Allanla, Georgia 30334-8400
April 15, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Pierce County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general-purpose financial statements ofthe Pierce County Board of Education, as of and for the year ended June 30, 2001, as listed in the table of contents. These general-purpose financial statements are the responsibility ofthe Pierce County Board ofEducation's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable as,surance about whether the financial statements are free ofmaterial misstatement. An audit includes examining; on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in the notes to the general-purpose financial statements, the Board of Education's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:

2001ARL-13

SECTION IV FINDINGS AND QUESTIONED COSTS

PIERCE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 2001

I SUMMARY OF AUDITOR'S RESULTS

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

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

Cash and Cash Equivalents Revenues/Receivables/Receipts

General Fixed Assets

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

3. Noncompliance Material to the Financial Statements The audit ofthe Pierce County Board ofEducation disclosed no instances ofnoncompliance that were deemed to be material to the financial statements.

4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Pierce County Board ofEducation disclosed a reportable condition in internal control over major programs for the following compliance requirement.

Cash Management

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

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

6. Audit Findings Required to be Reported by Section .5 IO(a) of 0MB Circular A-133 The Pierce County Board of Education's audit disclosed an audit finding required to be reported by section .510(a) ofOMB Circular A-133. This audit finding is i11:cluded in section IV of this report.

7. Major Programs Federal awards audited as major programs are as follows: I 0.553 Food and Nutrition Program - Food Services - School Breakfast Program I0.555 Food and Nutrition Program - Food Services - National School Lunch Program 84.027 Individuals with Disabilities Education Act - Part B - Special Education Capacity Building Improvement Grant

-I -

PIERCE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 2001
I SUMMARY OF AUDITOR'S RESULTS
7. Major Programs 84.027. Individuals with Disabilities Education Act - Part B - Special Education Flow Through 84.1 73 Individuals with Disabilities Education Act - Part B - Special Education Preschool
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk Auditee The Pierce County Board of Education qualified as a low risk auditee based on a waiver granted by the U.S. Department of Education.
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUNALENTS REVENUES/RECEIVABLES/RECEIPTS Inadequate Separation of Duties Reportable Condition Finding Control Number: FS-7131-01-01
The internal policies and procedures ofthe Pierce County Board ofEducation were not sufficient to provide for adequate separation of employee duties relati\'e to cash and cash equivalents and revenues/receivables/ receipts. The following deficiencies were noted:
(1) The cash receipts and deposit preparation functions were not separated from the general ledger posting function, nor was the bank reconciliation function separated from the general ledger posting function.
(2) Bank reconciliations were not reviewed by an individual not directly associated with cash operations.
Separation of duties involving key accounting functions is the basis for achieving an adequate system ofinternal control. These deficiencies were the result ofmanagement's decision to limit the number of administrative staffmade responsible for accounting functions. Management should periodically review this decision to determine if employee duties can be reassigned to achieve a higher degree of internal control with existing staff.
-2-

PIERCE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUNALENTS REVENUES/RECENABLES/RECEIPTS Inadequate Separation of Duties Reportable Condition Finding Control Number: FS-7131-01-01

Management's Response:

The Pierce County School System concurs with the finding of inadequate separation of duties. To remedy this situation, management has reassigned employees duties as follows:

1) Receptionist

Receipts all Cash

2) Payroll Clerk

Receipts all Checks

3) Bookkeeper

Reconcile Bank Statement

4) Nutrition Bookkeeper

Makes Deposits

5) Assistant Superintendent of Finance

Reviews Journal Entries and Bank Statements

6) Board

Reviews Financial Statement and written checks at regular monthly meetings.

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-7131-01-02

The Pierce County Board of Education did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general-purpose financial statements ofthe School District being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the School District to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the School District and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained ofall additions and deletions to the General Fixed Assets Account Group.

-3-

PIERCE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 2001
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-7131-01-02
Management's Response:
Currently, due to staffing limitations and budgeting considerations prohibiting the employment of additional administrative staff, the Board decided not to pursue the recording of general fixed assets in the financial statements. However, the Board is aware of GASB's Statement 34 and shall work toward meeting compliance in the first fiscal year beginning after June 15, 2002.
ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CASH MANAGEMENT Excessive Cash Balances Reportable Condition Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department.of Education Amount: $5,548.58 Finding Control Number: FA-7131-01-01
A review of cash management procedures and internal controls for the Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies (CFDA 84.010) and the Special Education Cluster (CFDA 84.027 and 84.173) programs disclosed that cash draws were made in advance ofimmediate cash needs, resulting in the accumulation ofexcessive cash balances. During fiscal year 2001, the Title I program had an average cash balance of $90,526.38 with excessive endmg monthly cash balances in all twelve months. The Special Education Cluster had an average cash balance of $52,513.20 with excessive ending monthly cash balances in all twelve months.
In accordance with A-102 Common Rule paragraph 2 l(h)2(1), interest earned on advances by local . government grantees is required to be submitted promptly to the Federal grantor agency. Up to
$100.00 per year may be kept for administrative expenses. The Title I program earned interest amounting to $3,658.36 ofwhich $3,558.36 should have been submitted to the Georgia Department of Education. The Special Education Cluster earned interest amounting to $2,090.22 of which $1,990.22 should have been submitted to the Georgia Department ofEducation. The interest earned on these programs was recorded in the School District's General Fund.
-4-

PIERCE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CASH MANAGEMENT Excessive Cash Balances Reportable Condition Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Amount: $5,548.58 Finding Control Number: FA-7131-01-01 Management should become familiar with the Federal regulations for the Title I and Special Education Cluster programs in order to develop adequate control procedures designed to provide for the achievement of compliance objectives. In addition, excessive interest earnings totaling $5,548.58 should be refunded to the Georgia Department of Education. Management's Response: The Pierce County School System concurs with this finding in regards to excessive cash balances. Excessive interest earning totaling $5,548.58 has been returned to the Georgia Department of Education as ofMay 30, 2002. In accordance with Federal regulations the Board's bookkeeper will monitor each month's cash draws in order to eliminate the accumulation ofexcessive cash balances.
-5-

* The general-purpose financial statements of the Board of Education did not contain a General Fixed Assets Account Group to account for property and equipment owned by the Board of Education which should be included to conform to generally accepted accounting principles.
* School activity accounts maintained at the individual schools are not included in the general-purpose financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general-purpose financial statements.
* The Board of Education did not recognize as expenditures, in the year ended
June 30, 2001, a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 2001. Also funds received, subsequent to June 30, 2001, from the Georgia Department of Education for the State's share of these unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2000, were improperly recorded in th_e year ended June 30, 2001. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed.
The aggregate effects on the general-purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects on the general-purpose financial statements of the matters referred to in the preceding paragraph, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe Pierce County Board ofEducation as of June 30, 2001, and the results of its operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated April 15, 2002, on our consideration ofthe Pierce County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions oflaws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements ofthe Pierce County Board ofEducation taken as a whole. The accompanying combining statements (Exhibits E through J) and the financial schedules (Schedules 1 through 5), which includes the Schedule ofExpenditures ofFederal Awards as required by U.S. Office ofManagement and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the general-purpose financial statements. Such information has been subjected to the auditing procedures applied in the
2001ARL-13

audit of the general-purpose financial statements and in our opinion, except for the effects of the matters referred to in the third paragraph, such information is fairly stated, in all material respects, in relation to the general-purpose financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated Section 506-24.
Respectfully submitted,
-- w~~

RWH:gp 2001ARL-13

State Auditor

PIERCE COUNTY BOARD OF EDUCATION

PIERCE COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 2001

ASSETS
Cash and Cash Equivalents
Investments
Accounts Receivable
Inventories Food Donated Commod1t1es Purchased Food
Amount Available m Debt Service Fund
Amount to be Provided in Future Years For Payment of Bond Debt Capital Lease Agreements Intergovernmental Contract

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$

395,744.86 $ 449,073.34 $

417,548.33

4,279.83

204,036 17

779,535.56

306,490.83

118,082.38

238,218.08

24,825.49 12,207 18

Total Assets

$

706,515 52 $ 808,224.56 $

1,435,301.97

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salanes Payable Expired Grant Balances Payable Contracts Payable Retainages Payable Capital Lease Agreements Intergovernmental Contracts Payable General Obhgat1on Bonds Payable
Total Liab1ht1es
FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs For Debt Service For Expired Grant Balances/Questioned Costs For Inventories Food Donated Commod1t1es Purchased Food For SPLOST ProJects For State Capital Outlay Proiects Unreserved Undes1gnated
Total Fund Equity

$

18,568.02 $

47,860.25

191,739.70

56,565.17

$

70,167.00 58,087.00

$

18,568.02 $ 296,165.12 $

128,254.00

$

5,548 58

$

24,825 49

12,207.18

$

682,398.92

475,026 77

$

687,947.50 $ 512,05944 $

1,257,047.97
50,000.00 1,307,047 97

Total Liabilities and Fund Equity

$

706,515.52 $

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

-2 -

808,224.56 $

1,435,301.97