Polk School District Board of Education, Cedartown, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2002

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POLK SCHOOL DISTRICT BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

GENERAL-PURPOSE FINANCIAL STATEMENTS

COMBfNED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBfNED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES fN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

AND EXPENDABLE TRUST FUND

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

6

D NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

7

ADDITIONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

20

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES fN FUND BALANCES

22

CA PITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

24

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

26

SCHEDULES

I SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

28

2 SCHEDULE OF STATE REVENUE

30

3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

33

ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

4

BY PROGRAM

34

5

BY SITE

35

POLK SCHOOL DISTRICT BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

,.

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
July 23, 2003

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Polk School District 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 Polk School District Board of Education, as of and for the year ended June 30, 2002, as listed in the table of contents. These general-purpose financial statements are the responsibility of the Polk School District Board of Education's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit.
Except as discussed in the following paragraph, 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 of material 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.
We did not observe the taking of either the Federal donated commodities inventory or purchased foods inventory at June 30, 2002, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures.

2002ARL-13

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:
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, 2002, a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 2002. Also funds received, subsequent to June 30, 2002, 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, 2001, were improperly recorded in the year ended June 30, 2002. 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 of such adjustments, if any, on the Special Revenue Fund, as might have been determined to be necessary had we been able to satisfy ourselves as to the accuracy of the food service inventories as discussed in the third paragraph, and 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 Polk School District Board of Education as ofJune 30, 2002, 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 July 23, 2003, on our consideration of the Polk School District Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
2002ARL-13

Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements of the Polk School District Board of Education taken as a whole. The accompanying combining statements (Exhibits E through H) and the financial schedules (Schedules 1 through 5), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the general-purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe general-purpose financial statements and in our opinion, except for the effect ofadjustments, ifany, on the Special Revenue Fund, as might have been determined to be necessary had we been able to satisfy ourselves as to the accuracy ofthe food service inventories as discussed in the third paragraph, and except for the effects of the matters referred to in the fourth paragraph, such information is fairly stated, in all material respects, in relation to the general-purpose financial statements taken as a whole.
A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated Section 506-24.
~---Respectfully submitted,
~\A)~
RWH:as 2002ARL-13

POLK SCHOOL DISTRICT BOARD OF EDUCATION

POLK SCHOOL DISTRICT BOARD OF EDUCATION COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP
JUNE 30 2002

~
cash and Cash Equivalents
Investments
Accounts Receivable
lnventones Food Donated Commodll1es Purchased Food
Amount Available m Debt SeMCe Fund
Amount to be Provided m Future Years For Payment of Bond Debt Capital Lease Agreements

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$ 4,073,336 73 $

284,69548 $

17,869 19

1,740,952 52

422,938 11

583,485 87

468,96346

68,571 43 37,628 68

Total Assets
LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salanes Payable Expired Grant Balances Payable Contracts Payable Retamages Payable Deferred Revenue Capital Lease Agreements General Obhgat1on Bonds Payable
Total L1ab11Jbes
FUND EQUITY
Reserved For Debt Service For lnventones Food Donated Commod1t1es Purchased Food For Purpose of Bond Issue For State Cspital Outlay Pl'Ojeds
Unreserved Undesignated
Total Fund Equity

$ 4,496 274 84 $

9741381 46 $

2I221i785 11

$

422,083 53 $

136,190 13

8,676 80

389,195 95

16,000 00

$

180,000 00

1,000 00

$

430,760 33 $

542,386 08 $

180,000 00

$
$ 4,065,514 51 $ 4 065 514 51 $

68,571 43 37,62868
$
325,795 27 431,995 38 $

2,034,391 81 13,393 36
000
2,047,785 17

Total L1ab1ht18S and Fund Equity

$ 414961274 84 $

974 381 46 $ 2.221i785 11

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

EXHIBIT "A"

DEBT SERVICE
FUND

FIDUCIARY FUND TYPE EXPENDABLE TRUST FUND

s

15,037 37 $

14,850 90

1,639, 176 20

676,986 69

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS

(Memorandum Onl~l

JUNE 301 2002

JUNE 30, 2001

s 4,405,789 67 s 4,148,873 04

3,380,128 72

9,525,039 18

2,152,374 13

1,923,866 24

s

2,331,200 26

68,571 43 37,62868
2,331,200 26

41,188 80 36,143 90
2,276,721 59

7,928,799 74 2 813 810 76

7,928,799 74 2,813,810 76

11,088,278 41 2 671 475 77

$ 2,331,200 26 S

14 850 90 S

s s 1301381016

23,118130339

31i711,58693

$

4248

s

558,316 14 $

213,828 16

397,872 75

331,256 11

16,000 00

8,358 42

180,000 00

1,055,739 44

1,168,874 30

1,000 00

31,922 71

$

2,813,810 76

2,813,810 76

2,671,475 77

10,260,000 00

10,260,000 00

13,365,000 00

$

4248 s

s s 13,073,810 76

14,226,999 65

18,846,454 91

s 2,331,200 26

000 $ $ 2,331,200 26 $

14,80842 14 808 42

s 2,331,200 26 $ 2,276,721 59

68,57143 37,62868 2,034,391 81 13,393 36

41,188 80 36,143 90 5,915,665 70 306,808 72

4,406,118 20

4,288,603 31

s 8,891,303 74 $ 12,865,132 02

s 2,331,200 26 $

14 850 90 $

s s 13,073,810 76

23,118,303 39

31 i711 1586 93

- 3-

POLK SCHOOL DISTRICT BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUND
YEAR ENDED JUNE 30. 2002

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 Adm1mstrabon School Administration Business Admmlstrabon Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support SeMces Food Services Operabon Community Services Operations
Capital OuUay Debt Service
Pnncipal Interest Paying Agent Fees
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES}
Gaprtal Leases Operabng Transfers In Operabng 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 Commodlbes Purchased Food

GENERAL FUND

GOVERNMENTAL FUND

SPECIAL REVENUE

CAPITAL PROJECTS

FUND

FUND

$ 32,700,346.12 $
9,045,167.11 535,080 33
$ 42,280,593 56 $

1,160,95744 $ 4,467,719 60
604,999.09
6,233,676 13 $

383,408 46
189,683 03 573,091 49

$ 30,467,526 48 $
895,75663 649,843.93 1,044,939 34 452,364.65 2,813,856.76 419,331 45 3,382,003.03 1,445,296.90
27,37445
124,564 69
222,740 01 147,800 52

2,817,385 41
293,502 06 327,004 67
13,306 35 179,574.85
4,973 87
27,293.13 48,644 06
209,274.66 2,407,034 82
$

5,087,808 89

$ 42,093,398 84 $

$

187,194.72 $

6,327,993 88 $ 5,087,808 89 -94 317 75 $ -4,514 717 40

$

365,075 00

$

-291,682 05

s

73,392.95 $

3,801.23 $

287,880 82

3,801 23 $

287,880.82

$

260,587 67 $

3,804,926 84

-90,516 52 $ -4,226,836 58

493,644 49

6,274,621 75

27,382 63 148478

FUND BALANCE JUNE 30

$ 4,065,514.51 $

431,995 38 $ 2,047,785 17

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

EXHIBIT "B"

TYPES DEBT
SERVICE FUND

TOTAL

FIDUCIARY FUND TYPE EXPENDABLE TRUST FUND

TOTALS

(Memorandum Only) YEAR ENDED

JUNE 30, 2002

JUNE 30, 2001

$ 34,244,712 02

4,467,719.60

$ 3,733,837 93

12,TT9,005.04

45,898 38

1,375,660 83 $

$ 3,779,736.31 $ 52,867,097 49 $

$ 3,350 00

34,244,712 02 $ 4,467,719 60 12,779,005 04 1,379,010 83

37,430,667 60 3,730,444.60
12,172,437.83 1,934,133 85

3,350 00 $ 52,870,447 49 $ 55,267,683 88

$ 33,284,911 89

1,189,25869 $ 976,84860
1,058,245 69 631,939 50
2,818,830 63 419,331 45
3,409,296 16 1,493,940 96
27,374 45 209,274 66 2,407,034 82 124,56469 5,087,808 89

$ 3,105,000.00 614,460 00 5,797 64

3,327,740 01 762,260 52 5,797 64

$ 3,725,257 64 $ 57,234,459 25 $

$

54,478 67 $ -4,367,361 76 $

$ 33,284,911 89 $ 30,777,585.28

3,758 93

1,193,017 62 976,84860
1,058,245.69 631,939 50
2,818,830 63 419,331 45
3,409,296 16 1,493,940 96
27,37445 209,27466 2,407,034 82 124,564 69 5,087,808 89

1,057,458 68 767,762 61
1,029,527 91 662,102.85
2,613,132 71 372,582 77
5,564,219 12 1,718,48867
68,618 39 54,556 42 2,184,518 03 96,304 20 17,064,919 88

3,327,740.01 762,260 52 5 797 64

3,106,551 23 775,268 71 4,662 50

3,758.93 $ 57,238,218 18 $ 67,918,259 96

-408 93 $ -4,367,770 69 $ -12,650,576 08

$

365,075 00

291,682 05

-291,682 05

$

365,075.00

$

54,47867 $ -4,002,286 76 $

2,276,721 59

12,849,914 67

27,382 63 1,484 78

$

365,075 00 $ 2,813,027 00

291,682 05

-291,682 05

$

365,075 00 $ 2,813,027 00

-408 93 $ -4,002,695 69 $ -9,837,549 08

15,217 35

12,865,132 02

22,708,955 75

27,382 63 1,484 78

-9,459.26 3,184 61

$ 2,331,200 26 $ 8,876,495 32 $

14,808.42 $ 8,891,303 74 $ 12,865,132 02

- 5-

POLK SCHOOL DISTRICT 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 2002

EXHIBIT "C"

GENERAL FUND

BUDGET

ACTUAL

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues

$ 31,755,854 28 $ 32,700,346 12

8,267,045 00 212,395 00

9,045,167 11 535,080 33

$ 40,235,294 28 $ 42,280,593 56

EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educattonal Media Services General Adm1mstrallon School Adm1mstration BuS&ness Administration Maintenance and Operatton of Plant Student Transportation Services Central Support Sel'VIC8s Other Support Sel'VIC8s Food Services Operation Community Services Operations
Caprtal Outlay Debt Service
Total Expenditures
Excess of Revenues over (under) Expendrtures

$ 30,100,688 28 $ 30,467,526 48

1,008,088 00 668,425 00
1,065,006 00 462,710 00
2,733,145 00 438,691 00
3,516,194 00 1,419,183 00
24,925 00

895,756 63 649,843 93 1,044,939 34 452,364 65 2,813,856 76 419,331 45 3,382,003 03 1,445,296 90
27,374 45

293,07000

124,564 69 370,540 53

$ 41,730,125 28 $ 42,093,398 84

$ -1,494,831 00 $

187,194 72

OTHER Fl~t:ICING SOURCES {USES\

Other Sources Other Uses

$

365,075 00

-291,682 05

Total Other F1nanang Sources (Uses)

$

73,392 95

Excess of Revenues and Other Finanang Sources over (under) Expenditures and Other Financing Uses $ -1,494,831 00 $

260,58767

FUND BALAt:ICE JUNE 30 2001

3,452,441 54

3,804,926 84

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

-462 57

FUND BALANCE JUNE 30 2002

$ 1 957 147 97 $ 4,0651514 51

SPECIAL REVENUE FUND

BUDGET

ACTUAL

$ 1,011,720 00 $ 1,160,957 44

4,640,906 56

4,467,719 60

597,500 00

604,999 09

$ 6,250,126 56 $ 6,233,676 13

$ 2,866,042 33 $ 2,817,385 41

298,505 00 376,36214
202,487 20 3,313 00

293,502 06 327,004 67
13,306 35 179,574 85
4,973 87

38,541 00

27,293 13 48,644 06

243,030 98 2,290,214 00

209,274 66 2,407,034 82

$ 6,318,495 65 $ 6,327,993 88 $ -68,369 09 $ -94 317 75

$

3,801 23

$

3,801 23

$ -68,369 09 $ -90,516 52

482,166 32

493,644 49

26,58945

27,382 63 1 484 78

$ 4401386 68 $ 4311995 38

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

POLK SCHOOL DISTRICT BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Polk School District 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 1,1I1its, 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 all or most of the 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-

POLK SCHOOL DISTRICT BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

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.
FIDUCIARY FUND TYPE - the fund used to account for assets held by a government unit in a trustee capacity. This fund includes:
EXPENDABLE TRUST FUND Student Special Needs Fund - the fund used to account for contributions and expenditures of private funds which are designated to be used for the purpose of clothing and medical needs for disadvantaged students at the superintendent's discretion.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debt outstanding and capital lease obligations.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental and expendable trust funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these 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 and expendable trust funds are accounted for using the modified accrual basis of accounting under which:

- 8-

POLK SCHOOL DISTRICT BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The School District considers receivables collected within sixty days after yearend to be available. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, local option sales taxes, intergovernmental grants and donations. Revenue for property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year the resources are received or susceptible to accrual. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
Expenditures are generally recognized when the related fund liability is incurred.
A 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 2002, a substantial number ofpersonnel ofthe School District were employed for a one hundred and ninety day period beginning in August 2001 and ending in early June 2002. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 2001 and ending in August 2002. 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, 2002, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 2002, had not been made. Payments for these two months were made and recorded as expenditures by the School District subsequent to June 30, 2002. Also, the State's portion of the compensation paid in July and August 2002 was received and recorded as revenue in the fiscal year subsequent to June 30, 2002. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2001, were recorded in the year ended June 30, 2002. 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 Polk School District Board of Education's budget is a complete financial plan for the School District's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.
The budget process begins when the School District's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised
-9-

POLK SCHOOL DISTRICT BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 AN~ 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. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds and in selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,

POLK SCHOOL DISTRICT BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(7) Repurchase agreements, and

(8) Obligations 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.

PROPERTY TAXES

The Polk County Board of Commissioners fixed the property tax levy for the 2001 tax digest year (calendar year) on September 24, 2001 (levy date). Taxes were due on December 1, 2001 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 200 I tax digest are reported as revenue in fiscal year 2002. The Polk County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes collected as a fee for tax co1lection and remits the balance of taxes collected to the School District. Property tax revenues during the fiscal year ended June 30, 2002 for maintenance and operations amounted to $9,009,031.33.

The tax millage rate levied for the 2001 tax year (calendar year) for the Polk School District Board of Education was as follows (a mill equals $ I per thousand dollars of assessed value):

School Operations

14.139 mills

SALES TAXES

Special Purpose Local Option Sales Tax revenue during the year amounted to $3,733,837.93 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 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

- 11 -

POLK SCHOOL DISTRICT BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 ba]ance which indicates that these amounts do not constitute "available spendab]e resources" even though they are a component of net current assets.
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 re]ates on]y to vesting accwnu]ating 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.
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-Tenn 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 bond~ is recorded in the General Long-Term Debt Account Group.
INTERFUND TRANSACTIONS
The School District has the following types of interfund transactions:
Reimbursements ofexpenditures initia1ly made from a fund that are properly app1icab1e 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 colwnns on the general-purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these colwnns do not present financial position or results ofoperations in conformity with general]y accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
- 12 -

POLK SCHOOL DISTRICT BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

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 of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 2002, the bank balances were $6,454,009.54. The amounts ofthe total bank balances are classified into three categories of credit risk:

- 13 -

POLK SCHOOL DISTRICT BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 2: DEPOSITS AND INVESTMENTS

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, 2002, as follows:

Risk Category

Bank Balance

1

$ 135,656.56

2

134,352.98

3

6. 184.000.00

Total

$ 6.454.009.54

CATEGORIZATION OF INVESTMENTS At June 30, 2002, the carrying value of the School District's total investments was $3,380,128.72 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State ofGeorgia, Office ofTreasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy ofthe State ofGeorgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows:

The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which folJows 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.

- 14 -

POLK SCHOOL DISTRICT BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 2: DEPOSITS AND INVESTMENTS

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, 2002, was 0.12 years. The average investment duration for Fund 6 on June 30, 2002, was 0.75 years.

Note 3: NON-MONETARY TRANSACTIONS

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

Note 4: RISK MANAGEMENT

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

The School District has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and acts ofGod. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.,

The School District has established a limited risk management program for workers' compensation claims. The School District accounts for claims within the General Fund and School Food Services Fund with expenditures and liabilities being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. An excess coverage insurance policy covers individual claims in excess of $1,000,000.00 loss per occurrence, up to the statutory limit.

Changes in the workers' 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

2001 2002

$

0.00 $

0.00 $

0.00 $

0.00

$

0.00 $

8,533.42 $

8,533.42 $

0.00

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund and Schoo) Food Services Fund. Claims are accounted for with expenditures and liabilities being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

- 15 -

POLK SCHOOL DISTRICT BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 4: RISK MANAGEMENT

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

2001 2002

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

$

0.00 $

80.00 $

80.00 $

0.00

$

0.00 $

5,396.00 $

5,396.00 $

0.00

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

Position Covered

Amount

Superintendent All Other Employees

$ 50,000.00 $ 50,000.00

Note 5: GENERAL LONG-TERM DEBT

CAPITAL LEASES The Polk School District Board ofEducation has entered into various lease agreements as lessee for mobile classrooms and heating and air conditioning 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 of the date of their inception.

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

Purpose

Interest Rates

Amount

General Government - Series 1998 General Government - Series 2000

3.85% - 4.00% 5.00% - 5.25%

$ 3,250,000.00 7,010,000.00

$ I0.260.000.00

The changes in General Long-Term Debt during the fiscal year ended June 30, 2002, were as follows:

- 16 -

POLK SCHOOL DISTRICT BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2002

Note 5: GENERAL LONG-TERM DEBT

Capital Leases

General Obligation
Bonds

Total

Balance July 1, 2001

$2,671,475.77 $13,365,000.00 $16,036,475.77

Additions Capital Leases

365,075.00

365,075.00

Deductions Debt Retired

222,740.01 3.105,000.00 3,327,740.01

Balance June 30, 2002

$2,813,810.76 $10.260.000,00 $13.073.810.76

At June 30, 2002, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

Capital Leases

General Obligation
Bonds

Total Debt

2003 2004 2005 2006 2007 2008 - 2011

$ 451,129.89 451,129.89 451,129.89 451,129.90 451,129.90
1,235,135.13

$ 3,741,812.50 2,551,812.50 2,581,837.50 2,609,250.00

$ 4,192,942.39 3,002,942.39 3,032,967.39 3,060,379.90 451,129.90 1,235,135.13

Total Principal and Interest $3,490,784.60 $11,484,712.50 $14,975,497.10

Deduct: Imputed Interest

676,973.84

Net Present Value of Future Minimum Lease Payments $2,813,810.76

Note 6: ON-BEHALF PAYMENTS

The School District has recognized revenues and expenditures in the amount of $429,818.57 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

- 17 -

POLK SCHOOL DISTRICT BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 6: ON-BEHALF PAYMENTS
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $364,348.57
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$65,470.00
Note 7: CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
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 8: ACCUMULATED EMPLOYEES' LEAVE
All twelve-month employees are eligible for annual vacation earned at the rate of. 833 days for each full calendar month employed up to a maximum often (10) days. Twelve-month employees with fifteen (15) or more years of service with the School District are eligible for five (5) additional vacation days annually. Upon approval ofthe employee's supervisor, all unused vacation days may be carried forward into the next employment year. Upon retirement or termination ofemployment, employees will be paid at the current rate of pay for unused earned vacation up to the maximum which may be earned during a single year. See Note 1 - Compensated Absences
Note 9: 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.
- 18 -

POLK SCHOOL DISTRICT BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2002

Note 9: RETIREMENT PLANS

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2002 2001 2000

100% 100% 100%

$ 2,678,414.47 $ 3,029,663.80 $ 2,882,770.59

- 19 -

POLK SCHOOL DISTRICT BOAaD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 2002

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

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

429,542.84 $

71,713.05

8,181.70

37,675.03

68,571.43 37.628.68

Total Assets

$

543,924.65 $ ==1=0=9=,3=88==08=

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Deferred Revenue
Total Liab1lit1es
FUND EQUITY
Fund Balances Reserved For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity

$

13,945 84 $

17,428.28

97,983.43

75,959.80

16,000.00

$

111,929 27 $

109,388.08

$

68,571 43

37,628 68

325,795.27 $

0.00

$

431,995.38 $

0.00

Total Liabilities and Fund Equity
See notes to the general-purpose financial statements. - 20-

$

543,924.65 $ ==1=0=9=,38=8==08=

EXHIBIT "E"

FEDERAL PROGRAMS

TOTALS

JUNE 30, 2002

JUNE 30, 2001

$

501,255.89 $

575,830.93

$

537,629.14

583,485.87

494,218.50

68,571.43 37,628.68

41,188.80 36,143.90

$

537,629.14 $ 1,190,941.87 $ 1,147,382.13

$

216,560 41 $

216,560.41 $

183,939.77

104,816.01

136,190 13

116,521.72

215,252 72

389,195 95

313,793 61

16,000.00

7,559.83

1,000.00

1,000.00

31,922.71

$

537,629.14 $

758,946.49 $

653,737.64

$
$ _ _ _ _0.;;_;'.;;;..00~
s $ _ _ _ _0.;....c..ooe,_

68,571.43 $ 37,628.68

41,188 80 36,143.90

325,795 27

416,311 79

431,995.38 $ _ _4_;9_3._,644_4_9~

$

537,629.14 $ 1,190,941.87 $ 1,147,382.13

- 21 -

POLK SCHOOL DISTRICT BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2002

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current lnstrudion Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School 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 Transfer 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

$

201,650.00 $

1,508,419.90

604,999.09

$ 2,315,068.99 $

959,307 44 959,307.44

$

$ 2,405,585.51

$ 2,405,585.51 $

$

-90,516.52 $

856,434.13
44,436.50 4,127.46
18,559.56
27,293.13 6,764.37 242.98 1,449.31
959,307 44
0.00

$

-90,516.52 $

0.00

493,644.49

0.00

27,382 63 1,484.78

$

431,995.38 $ = = = = =0.0=0

EXHIBIT"F"

FEDERAL PROGRAMS

TOTALS

YEAR ENDED

JUNE 30, 2002

JUNE 30, 2001

$ 1,160,957.44 $

841,639.91

$ 2,959,299.70

4,467,719.60

3,730,444.60

604,999 09

622,113.15

$ 2,959,299.70 $ 6,233,676.13 $ 5,194,197.66

$ 1,960,951 28 $ 2,817,385.41 $ 2,402,752.37

249,065 56 322,877 21
13,306.35 161,015.29
4,973.87
41,879.69 209,031.68

293,502.06 327,004.67
13,306.35 179,574.85
4,973.87 27,293.13 48,644.06 209,274.66 2,407,034.82

156,511.37 140,740.73
17,359.19 173,426.79
7,026.70 13,466.48 32,822.51 54,556.42 2,184,518.03

$ 2,963,100.93 $ 6,327,993.88 $ 5,183, 180.59

$

-3,801.23 $

-94,317 75 $

11,017.07

3,801.23

3,801.23

$

0.00 $

-90,516.52 $

11,017.07

0.00

493,644.49

488,902.07

27,382.63 148478

-9,459.26 3,184.61

$

0.00 $

431,995.38 $

493,644.49

- 23 -

POLK SCHOOL DISTRICT BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 2002

ASSETS Cash and Cash Equivalents Investments Accounts Receivable
Total Assets
LIABILITIES AND FUND EQUITY LIABILITIES
Cash Overdraft Accounts Payable Contracts Payable Retainages Payable
Total L1abilit1es FUND EQUITY
Fund Balances Reserved For Purpose of Bond Issue For State Capital Outlay Projects Unreserved Undesignated Total Fund Equity
Total Liabilities and Fund Equity

REGULAR

BOND PROCEEDS

$

0.00 $

400,645.35

1,633,746.46

$

0.00 $ 2,034,391.81

$ 2,034,391.81

$ _ _ _ _0.;.;.;.00.;.._

$

000 $

0.00
2,034,391.81

$

0.00 $ 2,034,391.81

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

EXHIBIT"G"

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

TOTALS

JUNE 30, 2002

JUNE 30, 2001

$

400,645.35 $

795,743.85

$

107,206.06

1,740,952.52

7,859,157.62

468,96346

468,963.46

3771200 60

$

576,169 52 $ 2,610,561 33 $ 9,032,102.07

$

382,77616 $

382,776.16 $

530,221.62

2,644.96

180,000.00

180,000.00

1,055,739.44

1,168,874.30

$

562,776.16 $

562,776.16 $ 2,757,480.32

$ 2,034,391.81 $ 5,915,665.70

$

13,393.36

13,393.36

306,808.72

0.00

0.00

52,147.33

$

131393.36 $ 21047,785.17 $ 6,274,621.75

$

576,169.52 $ 2,610,561.33 $ 91032,102.07

- 25-

POLK SCHOOL DISTRICT BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 2002

REVENUES State Funds 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

BOND PROCEEDS

$

617.19 $

88,793.73

$

617.19 $

88,793.73

$

50,672.79 $ 825,549.84

289,972.55

181,983.84

19,159.20

$

340,645.34 $ 1,026,692.88

$ -340,028.15 $ -937,899.15

$

287,880 82

$ -2,943,374.74

$

287,880.82 $ -2,943,374.74

$

-52,147.33 $ -3,881,273.89

52,147.33

5,915,665.70

$====0==00= $ 2,034,39181

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

EXHIBIT "H"

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

TOTALS

YEAR ENDED

JUNE 30, 2002

JUNE 30, 2001

$

383,408.46 $

383,408.46 $ 5,331,240.29

100,272.11

189,683 03

810,446.68

$

483,680.57 $

573,091 49 $ 6,141,686.97

$

434,957.31 $ 1,311,179.94 $

907,96510

2,002,721.61

2,474,678.00

15,979,800.57

1,282,791.75

1,301,950.95

47,638.95

$ 3,720,470 67 $ 5,087,808 89 $ 16,935,404 62

$ -3,236,790.10 $ -4,514,717 40 $ -10,793,717.65

$ 2,943,374.74 $ 3,231,255.56 $ 11,199,063.82

-2,943,374.74

-11, 199,063.82

$ 2,943,374.74 $

287,880.82 $ _ _ _ _o_._oo_

$

-293,415.36 $ -4,226,836.58 $ -10,793,717.65

306,808.72

6,274,621.75

17,068,339.40

$

13,393.36 $ 2,047,78517 $ 6,274,621.75

- 27 -

POLK SCHOOL DISTRICT BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2002

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

Agnculture, U S Department of Child Nutnt1on Cluster Pass-Through From Georgia Department of Education Food and Nutnt1on Program Food Services School Breakfast Program National School Lunch Program

. 10 553 . 10 555

NIA $ 314,521 41

(2)

NIA

1,021,764.13 $ 2,233,451 15 (3)

Total Child Nutnlion Cluster

$ 1,336,285 54 $ 2,233,451 15

Other Programs Pass-Through From Georgia Department of Education Food and Nutnt1on Program Food Distribution Program (1) Pass-Through From Office of School Readiness Food and Nutnt1on Program Summer Food Service Program for Children
Total U S Department of Agnculture

10 550
. 10.558

NIA

160,545 81

160,545.81

NIA

11,588 55

11,588.55

s 1,508,41990 $ 2,405,585.51

Education, U. S Department of Special Educabon Cluster Pass-Through From Georgia Department of Educabon lnd1v1duals wrth D1sab1hbes Education Act Part B - Special Education Flow Through Preschool Capaaty Building Improvement

84027 84173 84.027

NIA $ 625,633.82 $

NIA

71,935 78

NIA

5,150 76

625,633 82 71,935 78 5,150.76

Total Special Education Cluster

$ 702,720.36 $

702,720 36

Other Programs Pass-Through From Georgia Department of Education Comprehensive School Reform Demonstration Pro1ect Elementary and Secondary Educabon Act Title I Accountability Grants Grants to Local Educational Agencies Trtlell Eisenhower Profess,orial Development Title Ill Technology Literacy Challenge Fund Grants TllleVI Innovative Education Program Strategies Class Size Reducbon Safe and Drug-Free Schools and Communities Vocational Educabon - Basic Grants to States High School Program Basic Grant

84 332
84348 84010 84281 84 318 84 298 84 340 84.186
84 048

NJA

105,000.00

105,000.00

NIA

214,691 85

214,691 85

NJA

1,401,681.36

1,401,681 36

N/A

43,069 93

43,06993

NIA

125,900 00

125,900 00

NJA

44,074 00

44,074 00

NIA

206,656 00

206,656 00

NIA

27,511 00

27,511.00

NIA

68,569 00

72,370.23 (3)

- 28 -

POLK SCHOOL DISTRICT BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2002

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Education, U S Department of Other Programs Pass-Through From Hall County Board of Educalton d/b/a Piedmont Migrant Education Agency Elementary and Secondary Education Act Tltlel Migrant Educatton
Total U S Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

84 011

NIA

$ 19,426 20 $

19,426 20

$ 2,959,299 70 $

2,963,100 93

Total Federal Financial Assistance NIA= Not Available

$ 4,467,719 60 $===5,=36=8=,6;.;;86...,,,;44==,

Notes to the Schedule of Expenditures of Federal Awards

(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary

assistance for donated commodities received and/or consumed by the system dunng the current fiscal year.

(2) Expenditures for the School Breakfast Program were not marntarned

separately and are induded rn the 2002 National School Lunch Program

(3) Expenditures for this program rndude State, and/or Other Funds

'

Expenditures are not marntarned by fund source

MaJor Programs are Identified by an astensk (*) In front of the CFDA number

The School D1Stnct drd not provide Federal Assistance to any Subreciprent

The accompanying schedule of expendrtures of Federal awards rndudes the Federal grant activity of the Polk School District Board of Education and rs presented on the modified accrual basis of accounltng which 1s the basis of accounltng used rn the presentation of the general-purpose finanaal statements

See notes to the general-purpose financial statements

- 29 -

POLK SCHOOL DISTRICT BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE
YEAR ENDED JUNE 30 2002

SCHEDULE "2''

AGENCY/EUNDING

GOVERNMENTAL FUND TYPES

SPEC~L

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

TOTAL

GRANTS Community Affairs, Georgia Department of Governor's Emergency Funds

$

33,500 00

$

33,500 00

Educabon, Georgia Department of Quality Basic Education Direct lnstrucbonal Cost Kindergarten Program Kindergarten Program - Early Intervention Program Pnmary Grades (1-3) Program Pnmary 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 Educabon (9-12) Program Vocational Laboratory (9-12) Program Students with D1sab11ibes Category I Category II Category Ill Category IV Gifted Student - Category VI Remedial Education Program Altemabve Educabon Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Add1t1onal Instruction Staff and Professional Development Indirect Cost Categoncal Grants Pupil Transportabon Regular Bus Replacement Spal'Slty Nursing Services Pnncipal Supplement Vocabonal Supervisors Educabon Equalization Funding Grant Food Services Other State Programs Agnculture Construction Related Equipment Environmental Science Program Extended Day Technology/Career Health Insurance Mentor Teachers Post Secondary Opbon - Spnng Preschool Handicapped Program Special Educabon Low Incidence Grant 4-8 Statewide After School Program K-3 Statewide Reading Program Vocabonal Construction Related Equipment Lottery Programs AssIs1lve Technology Computers In the Classroom Vocational Technology Program

1,n7,3270o 296,141 00
4,231,81800 725,841 00
2,246,299 00
323,870 00 4,099,685 00 2,904,10300 1,254,389 00
249,92400 271,108 00 2,325,642 00 563,798 00 214,115 00 102,089 00 300,707 00 356,544 00 675,29000 207,53200 124,138 00 4,032,168 00

833,04200 248,nooo
20,000 00 145,440 00
28,922 00 48,85500 2,833,063 00
$

201,650 00

85,000 00 750 00
56,713 25 364,348 57
918 00 3,465 00 88,156 00 48,397 00 89,314 80 69,691 48 354,002 02

19,827 15 169,632 44
99,824 39

1,n7.327 oo 296,141 00
4,231,818 00 725,841 00
2,246,299 00
323,870 00 4,099,685 00 2,904,103 00 1,254,389 00
249,924 00 271,108 00 2,325,642 00 563,798 00 214,115 00 102,089 00 300,707 00 356,544 00 675,290 00 207,532 00 124,138 00 4,032,168 00
833,042.00 248,nooo
20,00000 145,440 00
28,922 00 48,855 00 2,833,063 00 201,650 00
85,000 00 750 00
56,713 25 364,348 57
918 00 3,465 00 88,156 00 48,397 00 69,314 80 89,691 48 354,002 02
19,827 15 169,632 44
99,824 39

Georgia State Financing and Investment Comm1SS1on Reimbursement on Construcllon ProJects

$ 383,408 46

383,408 46

- 30-

POLK SCHOOL DISTRICT BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2002

SCHEDULE"2"

AGENCY/FUNDING
GRANTS Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Rebrement

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

TOTAL

$ 670,02346

$

65470 00

$ 670,023 46 6547000

$ 32,700,346 12 $ 11160195744 $ 383 408 46 $ 34,244,712 02

See notes to the general-purpose financial statements

- 31 -

POLK SCHOOL DISTRICT BOARD OF EDUCATION
SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2002

SCHEDULE "3"

PROJECT
Funding the completion of the acqu1s1t1on, construction and equipping of a new Rockmart High School and a new Cedartown Middle School, and renovallons and additions to eX1stmg schools, including the acqu1slt1on of all necessary property

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED
IN PRIOR YEARS (3) (4)

PROJECT STATUS

$ 7,940,475 00 $ 7,118,586 52 $ 4,747,163 55 $ 540,842 43 Ongomg

(1) The School District's ongmal cost esllmate as specified m the resolullon calling for the 1mposlt1on of the Local Option Sales Tax

(2) The School D1stnct's current esllmate of total cost for the project Includes all cost from project inception to completion.

(3) The voters of Polk County approved the imposition of a 1% sales tax to fund the above project and rebre assoaated debt Amounts expended for this project may include sales tax proceeds, state, local property taxes and/or other funds over the hfe of the project

(4) In addrtton to the expenditures shown above, the School Dlstnct has incurred interest to provide advance funding for the above project as follows

PnorYears

$ 1,839,131 47

Current Year

614 460.00

Total

$ 2,453,591 47

See notes to the general-purpose finanaal statements

- 33-

POLK SCHOOL DISTRICT BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBEl
ALLOTMENTS ANDEXPENOITURES - BY PROGRAM YEAR ENDED JUNE 30. 2002

SCHEDULE "4"

DESCRIPTION

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct lnstructlonal Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Pnmary Grades (1-3) Program

Pnmary 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 Dlsab1lrt1es

Category I

Category II

Category Ill

Category IV

Category V

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

1,960.198 00 $ 326,612.00
4,667,235.00 800,524 00
2,472,442 00

1,611,651 73 $ 253,129 35
4,239,070 31 936,779 30
2,415,934 77

39,963 05 $ 3,892 98
201,726.88 25,718 83
110,465 07

1,651,614.78 257,022 33
4,440,797.19 962,49813
2,526,399.84

362,176 00 4,521,505 00 3,202,910.00 1,383,454 00 3,761,379 00
236,145 00 112,593.00 331,647.00 393,230 00

535,014 52 4,697,811 55 3,560,365 69 1,119,161.06
87,626 74 527,391 08 2,812,741.25 214,11315
260,909,.18 78,765.23
623,717 11 294,582 86

5,090 76 162,589 93 176,980.91 200,477.90
3,671.12 9,280 94 56,090.81 10,811 51
247 50 2,628.16
411.66 9,267.19 1,518 09

540,105 28 4,860,401 48 3,737,346 60 1,319,638 96
91,297 86 536,672 02 2,868.832 06 224,924 66
247 50 263,537 34
79,176 89 632,984 30 296,100 95

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

24,532,050 00 $ 24,268,764.88 $ 1,020,833.29 $ 25,289,598 17

Media Center Program Staff and Professional Development

744,771.00 136,911 00

887,614 15 27,272.74

146,317 63 129,257 79

1,033,931 78 156,530 53

TOTAL QBE FORMULA FUNDS

$

25,413,73200 $ 25,183,65177 $ 1,296,40871 $ 26,480,06048

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

See notes to the general-purpose flnanoal statements

- 34 -

POLK SCHOOL DISTRICT BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30, 2002

SCHEDULE "5"

SITE
Westside Elementary School Cherokee Elementary School Northside Elementary School Euharlee Kindergarten School Eastside Elementary School Cedar Hill Middle School Goodyear Elementary School Elm Street Middle School Purks Middle School Cedartown High School Rockmart High School Polk CrossRoads Academy Central Office (Alternative Education Program) Other Auxiliary Facilrty
TOTAL
(1) Comprised of State Funds plus Local Five Mill Share.

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE QBE PROGRAM COSTS

$

2,589,212.00 $

2,663,514.13

2,881,605.00

2,762,830.45

2,001,103 00

2,043, 156.82

926,180.00

844,344.93

2,108,047.00

2,138,679.16

2,094,743.00

1,971,932.84

1,748,070.00

1,897,179.36

2,424,900.00

2,474,550.96

1,676,812.00

1,761,130 69

3,341,636.00

3,472,794.24

2,408,095.00

2,744,041.21

383,741.80

331,647.00

5,876.62

125,824.96

$

24,532,050.00 $ 25,289,598 17

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

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
July 23, 2003

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Polk School District Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of Polk School District Board of Education as of and for the year ended June 30, 2002, and have issued our report thereon dated July 23, 2003. This report was qualified for a scope limitation and for various departures from generally accepted accounting principles, as identified in the auditor's report on the general-purpose financial statements. Except as discussed in the following paragraph, 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.
We did not observe the taking of either the Federal donated commodities inventory or the purchased foods inventory at June 30, 2002, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures.
Compliance
As part of obtaining reasonable assurance about whether Polk School District Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective ofour audit, and accordingly, we do not express such an opinion. The results ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.
2002YB-41

Internal Control Over Financial Reporting
In planning and performing our audit, we considered Polk School District 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 control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting 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 financial reporting that, in ourjudgment, could adversely affect Polk School District Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions ofmanagement in the financial statements. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FS-7151-0201.
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, we consider item FS-7151-02-01 to be a material weakness.
This report is intended solely for the information and use ofthe management, members of the Polk School District Board of Education, 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.
spectfully submitted,
w.~
RWH:as 2002YB-41

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
July 23, 2003

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Polk School District 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 of Polk School District Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2002. Polk School District 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. Compliance with the requirements oflaws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Polk School District Board of Education's management. Our responsibility is to express an opinion on Polk School District 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, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Polk School District Board of Education's compliance with those

2002SA-10

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 Polk School District Board of Education's compliance with those requirements.
In our opinion, the Polk School District 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, 2002.
Internal Control Over Compliance
The management of Polk School District 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 Polk School District Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level of risk that noncompliance with applicable requirements of laws, 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. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the management, members of the Polk School District Board of Education, 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.
spectfully submitted,
~~

RWH:as 2002SA-10

State Auditor

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

POLK SCHOOL DISTRICT BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 2002

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7151-00-01

Further Action Not Warranted

FS-7151-01-01

Unresolved - No Corrective Action Implemented

FS-7151-01-02

Unresolved - See Corrective Action/Responses

_,

CORRECTIVE ACTION/RESPONSES

EXPENDITURES/LIABILITIES/DISBURSEMENTS Contract Overpayment Amount: $50,839.39 Finding Control Number: FS-7151-01-01

This overpayment is currently in litigation.

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-7151-01-02

As a result of GASB No. 34, the School District along with selected School District's in the Northwest Georgia Regional Education Service Agency is sending out an RFP for the implementation and valuing of fixed assets and inventory for Polk School District. This RFP was sent out April 29, 2002, by the Northwest Georgia Regional Education Agency office. Valuation Advisory Group Inc. was selected to inventory the School District's fixed assets. Fixed assets will be included in the financial statements for the fiscal year ended 2003.

SECTION IV FINDINGS AND QUESTIONED COSTS

POLK SCHOOL DISTRICT BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the Polk School District Board ofEducation's financial statements was qualified for a scope limitation and 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 Polk School District Board of Education disclosed a financial statement reportable condition related to the following control category.
General Fixed Assets
The reportable condition described above is considered to be a material weakness.
3. Noncompliance Material to the Financial Statements The audit of the Polk School District Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.
4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Polk School District Board of Education did not disclose any reportable conditions in internal control over major programs.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Polk School District Board ofEducation's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .510(a) ofOMB Circular A-133 The Polk School District Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) of 0MB Circular A-133.
7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program 10.558 Food and Nutrition Program - Summer Food Service Program for Children
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk Auditee The Polk School District Board of Education qualified as a low risk auditee as defined by Section .530 ofOMB Circular A-133.
- 1-

POLK SCHOOL DISTRICT BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
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-7151-02-01 The Polk School District Board ofEducation 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 inventory ofland, 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 of all additions and deletions to the General Fixed Assets Account Group. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
-2-