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

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

QUITMAN 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

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

7

D NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

8

ADDITIONAL FINANCIAL INFORMATION

COMBINING AND INDIVIDUAL FUND STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

20

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

22

CAPITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

24

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

26

DEBT SERVICE FUND

I

COMBINING BALANCE SHEET

28

J

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

29

K

FIDUCIARY FUND TYPE

STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUND

30

QUITMAN COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

ADDITIONAL FINANCIAL INFORMATION

SCHEDULES

1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

31

2 SCHEDULE OF STATE REVENUE

33

3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

34

4 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

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 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 2, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members ofthe Quitman County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general-purpose financial statements of the Quitman County Board of Education, as of and for the year ended June 30, 2003, as listed in the table of contents. These general-purpose financial statements are the responsibility of the Quitman County Board of Education's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opm1on.
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:

2003ARL-13

* The general-purpose financial statements of the Board of Education did not contain a General Fixed Assets Account Group to account for property and equipment owned by the Board of Education which should be included to conform to generally accepted accounting principles.
* School activity accounts maintained at the individual schools are not included in the general-purpose financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general-purpose financial statements.
The aggregate effect on the general-purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects on the general-purpose financial statements of the matters referred to in the preceding paragraph, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position of the Quitman County Board of Education as ofJune 30, 2003, and the results ofits 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 2, 2004, on our consideration of the Quitman County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements of the Quitman County Board of Education taken as a whole. The accompanying combining and individual fund statements (Exhibits E through K) and the financial schedules (Schedules 1 through 4), which includes the Schedule ofExpenditures ofFederal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part ofthe general-purpose financial statements. Such information has been subjected to the auditing procedures applied in the 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.
2003ARL-13

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

RWH:gp 2003ARL-13

State Auditor

QUITMAN COUNTY BOARD OF EDUCATION

QUITMAN COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 2003

ASSETS
Cash and Cash Equivalents
Investments
Accounts Receivable
Inventories Food Donated Commodities Purchased Food
Amount Available in Debt Service Fund
Amount to be Provided in Future Years For Payment of: Bond Debt Capital Lease Agreements
Total Assets

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$

212,388.34

$

314,797.50

773,152.07

109.05

210,447.09 $

260,924.00

33,076.66

639.04 1,974.00

$ 1,195,987.50 $

263,537.04 $

347,983.21

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Deferred Revenue Funds Held for Others Capital Lease Agreements General Obligation Bonds Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Bus Replacement Funds For Debt Service For Inventories Food Donated Commodities Purchased Food For Purpose of Bond Issue For SPLOST Project Unreserved Designated for Self-Insurance Undesignated
Total Fund Equity

$

120,516.09

$

59,353.25

26,991.63

162,312.06

62,733.42

$

221,665.31 $

210,241.14

$

35,636.00

$

639.04

1,974.00

$

231,488.93

115,873.22

20,798.96 917,887.23

50,682.86

621.06

$

974,322.19 $

53,295.90 $

347,983.21

Total Liabilities and Fund Equity

$ 1,195,987.50 $

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

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263,537.04 $

347,983.21

EXHIBIT"A"

DEBT SERVICE
FUND

FIDUCIARY FUND TYPE AGENCY FUND

$

148,057.98

239,458.72

5,825.62 $

21,999.91

ACCOUNT GROUP
GENERAL LONG-TERM
DEBT

TOTALS

(Memorandum Onl~

JUNE 30, 2003

JUNE 30, 2002

$

675,243.82 $

998,880.14

1,012,719.84

775,864.61

532,273.28

303,857.05

$

393,024.32

639.04 1,974.00
393,024.32

779.89 704.18
379,022.53

1,776,975.68 37,186.38

1,776,975.68 37,186.38

1,835,977.47

$

393,342.32 $

21,999.91 $ 2,207,186.38 $ 4,430,036.36 $ 4,295,085.87

$

20,428.69

$

140,944.78

$

318.00

86,662.88 $

142,591.00

225,045.48

204,559.23

5,717.30

632.20

1,571.22

1,571.22

250.00

$

37,186.38

37,186.38

2,170,000.00

2,170,000.00

2,215,000.00

$

318.00 $

21,999.91 $ 2,207, 186.38 $ 2,661,410.74 $ 2,568,749.73

$

393,024.32

0.00

$

393,024.32

$

35,636.00 $

62,502.35

393,024.32

379,022.53

639.04 1,974.00 231,488.93 115,873.22

779.89 704.18 233,835.54

20,798.96 969,191.15

21,030.60 1,028,461.05

$ 1,768,625.62 $ 1,726,336.14

$

393,342.32 $

21,999.91 $ 2,207,186.38 $ 4,430,036.36 $ 4,295,085.87

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QUITMAN COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 2003

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation
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 Commodities Purchased Food

GENERAL FUND

SPECIAL REVENUE
FUND

$ 1,743,727.73 $ 4,151.09
626,156.59 61,946.42

205,497.67 809,631.70
17,201.29

$ 2.435,981.83 $ 1,032,330.66

$ 1,494,759.59 $
32,665.19 82,861.02 32,957.50 302,025.79 129,542.10 50,662.56 161,855.11 253,845.11
240.00 13,599.00

501,088.51
52,182.11 105,504.02
32,359.71 21,438.19 26,922.74
2,557.36 7,154.53
84,055.75 203,205.03

19,372.62 385.84

$ 2,574,771.43 $ 1,036.467.95

$

-138,789.60 $

-4 137.29

$

56,559.00

$

-14,691.56

$

41 867.44 $

$

-96,922.16 $

1,071,244.35

14,691.56
14,691.56
10,554.27 41,612.66
-140.85 1,269.82

FUND BALANCE JUNE 30

$

974,322.19 $ ===53;;,i;,2=9=5.=90=

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

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EXHIBIT"B"

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTALS

(Memorandum Only)

YEAR ENDED

JUNE 30, 2003

JUNE 30, 2002

$

1,949,225.40 $ 1,762,428.30

813,782.79

440,845.30

$

115,873.22 $

165,885.13

907,914.94

928,335.34

1.39

129,453.16

208,602.26

250,088.16

$

115874.61 $

295,338.29 $

3,879,525.39 $ 3,381,697.10

$

1,995,848.10 $ 1,702,106.90

$

2,348.00

84,847.30 188,365.04
65,317.21 323,463.98 156,464.84
50,662.56 166,760.47 260,999.64
240.00 97,654.75 203,205.03

79,220.58 116,094.81
53,678.07 234,575.63 101,808.89
46,440.44 153,010.85 126,175.60
1,194.37 25,953.68 167,417.86 67,068.32

$

45,000.00

230,412.50

5,924.00

64,372.62 230,798.34
5,924.00

50,000.00 232,925.00
1 432.19

$

2 348.00 $

281,336.50 $

3,894,923.88 $ 3,159,103.19

$

113,526.61 $

14 001.79 $

-15,398.49 $

222,593.91

$

56,559.00

14,691.56 $

19,243.27

-14 691.56

-19,243.27

$

56,559.00 $

0.00

$

113,526.61 $

14,001.79 $

41,160.51 $

222,593.91

234,456.60

379,022.53

1,726,336.14

1,503,532.19

-140.85 1 269.82

37.93 172.11

$

347,983.21 $

393,024.32 $

1,768,625.62 $ 1,726,336.14

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QUITMAN 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, 2003

EXHIBIT"C"

GENERAL FUND

BUDGET

ACTUAL

REVENUES

State Funds Federal Funds Taxes Other Funds

$ 1,731,725.81 $ 1,743,727.73

4,151.09

628,500.00

626,156.59

1,450.00

61,946.42

Total Revenues

$ 2,361,675.81 $ 2,435,981.83

EXPENDITURES

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

$ 1,365,025.96 $ 1,494,759.59

33,982.51 58,300.00 63,570.00 278,040.09 126,175.64 125,259.05 185,136.68 199,534.32
500.00 13,599.00

32,665.19 82,861.02 32,957.50 302,025.79 129,542.10 50,662.56 161,855.11 253,845.11
240.00 13,599.00

19,758.46

Total Expenditures

$ 2,449,123.25 $ 2,574,771.43

Excess of Revenues over (under) Expenditures

$ -87 447.44 $ -138,789.60

OTHER FINANCING SOURCES (USES}

Other Sources Other Uses
Total Other Financing Sources (Uses)

$ 56,559.00 -14,691.56
$ 41,867.44

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

-87,447.44 $

-96,922.16

FUND BALANCE JULY 1, 2002

1,023,769.00 1,071,244.35

Adjustments Food Inventory - Net Change in Period
Donated Commodities Purchased Food

-16,530.81

SPECIAL REVENUE FUND

BUDGET

ACTUAL

$ 217,500.85 $ 205,497.67

789,382.54

809,631.70

7,992.93

17,201.29

$ 1,014,876.32 $ 1,032,330.66

$ 470,267.28 $ 501,088.51

36,312.54 178,988.00
500.00 62,405.00 39,000.00

52,182.11 105,504.02 32,359.71 21,438.19 26,922.74

2,528.00 6,304.00

2,557.36 7,154.53

76,868.26 152,235.72

84,055.75 203,205.03

$ 1,025,408.80 $ 1,036,467.95 $ -10,532.48 $ -4,137.29

$ 14,691.56

$ 14,691.56

$ -10,532.48 $ 10,554.27

21,655.45

41,612.66

-3,399.02

-140.85 1,269.82

FUND BALANCE JUNE 30, 2003

$ 919,790.75 $ 974,322.19

$

7,723.95 $ 53,295.90

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

QUITMAN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Quitman County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The School District is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
FUND ACCOUNTING
The School District uses funds 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 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.

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QUITMAN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2003

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 TYPES - the funds used to account for assets held by a government unit in a trustee capacity or as an agent for individuals, private organizations, other government units and/or other funds. These funds include:
AGENCY FUNDS - the funds used to account for assets held in a fiduciary capacity for other funds, governments, or individuals.
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 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.
Agency funds are purely custodial in nature and do not involve measurement ofresults ofoperations.
Governmental funds are accounted for using the modified accrual basis ofaccounting 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
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QUITMAN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 substantial number of personnel of the School District were employed for a one hundred and ninety day period beginning in August 2002 and ending in early June 2003. Employment contracts for these employment periods typically specify that compensation be paid in twelve equal monthly payments beginning in September 2002 and ending in August 2003. State grants to fund the State's share of these contracts are disbursed to the School District in the same twelve month period. In accordance with generally accepted accounting principles, salary and fringe benefit expenditures and the related revenue from the State to fund these contracts are recorded in the fiscal period covered by these financial statements.
Agency funds are accounted for using the modified accrual basis ofaccounting in recognizing assets and liabilities.
BUDGET
The Quitman County Board of Education's budget is a complete financial plan for the School District's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.
The budget process begins when the School District's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic 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.

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QUITMAN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the 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,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions of the State of Georgia.
RECEIVABLES
Receivables consist ofgrant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables
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QUITMAN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 Quitman County Board of Commissioners fixed the property tax levy for the 2002 tax digest year (calendar year) on September 4, 2002 (levy date). Taxes were due on December 20, 2002 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2002 tax digest are reported as revenue in fiscal year 2003. The Quitman County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues during the fiscal year ended June 30, 2003 for maintenance and operations amounted to $617,718.67 and for school bonds amounted to $70,341.66.

Tax millage rates levied for the 2002 tax year (calendar year) for the Quitman County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations School Bonds

13.140 mills 1.465 mills

14.605 mills

SALES TAXES

Special Purpose Local Option Sales Tax revenue during the year amounted to $210,889.41 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). The School District uses the purchases method to account for inventories ofpurchased foods whereby expenditures are recorded at the time of purchase. Both the donated food commodities inventory and the purchased foods inventory reported on the balance sheet are equally offset by reservations offund balance which indicates that they do not constitute "available spendable resources" even though they are a component of net current assets. The Federally assigned value of donated commodity items received and consumed has not been reflected as revenues and expenditures in the general-purpose financial statements. To conform to generally accepted accounting principles, these amounts should be recorded in the general-purpose financial statements.

- 12 -

QUITMAN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit ofthe government. The outstanding amount ofthese bonds is recorded in the General Long-Term Debt Account Group.
INTERFUND TRANSACTIONS
The School District has the following types of interfund 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 ofoperations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code 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 ofinsurance, 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:

- 13 -

QUITMAN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 2: DEPOSITS AND INVESTMENTS
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 2003, the bank balances were $1,750,731.50. 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, 2003, as follows:

- 14 -

QUITMAN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 2: DEPOSITS AND INVESTMENTS

Risk Category

Bank Balance

1

$ 300,000.00

2

1,442,581.50

3

8,150.00

Total

$1,750,731.50

CATEGORIZATION OF INVESTMENTS At June 30, 2003, the fair value ofthe School District's total investments was $130,302.56 and this entire amount consisted of U. S. Government Securities which was insured or registered, or securities held by the School District or the School District's agent in the School District's name.

Note 3: NON-MONETARY TRANSACTIONS

The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. 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 and job related illness or injuries to employees. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.

The School District has elected to self-insure for all losses related to acts of God. In addition, the School District has elected to self-insure for errors or omissions, which includes, among other risks, risks for sexual harassment and discrimination. The School District has not experienced any losses related to these risks in the past three years.

For the current fiscal year, due to the costs of available coverage, the School District significantly reduced coverage for errors and omissions.

The School District is self-insured with regard to unemployment compensation claims. In connection with this program, a self-insurance reserve has been established within the General Fund by the School District. The School District accounts for claims within the General Fund with expenditure and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

- 15 -

QUITMAN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 4: RISK MANAGEMENT

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

2002 2003

Beginning ofYear Liability

Claims and Changes in Estimates

Claims Paid

EndofYear Liability

$

0.00 $

3,235.32 $

0.00 $

3,235.32

$

3,235.32 $

231.64 $

3,466.96 $

0.00

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

Position Covered

Amount

Superintendent Principal Bookkeeper

$ 25,000.00 $ 25,000.00 $ 25,000.00

Note 5: GENERAL LONG-TERM DEBT

CAPITAL LEASES The Quitman County Board of Education has entered into a lease agreement as lessee for school buses. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of its inception.

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

Purpose

Interest Rates

Amount

General Government - Series 1994

6.00% - 6.900%

General Government - Refunding - Series 1998 4.05%- 4.875%

$ 80,000.00 2,090,000.00

$ 2.170,000.00

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

- 16 -

QUITMAN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2003

Note 5: GENERAL LONG-TERM DEBT

Capital Leases

General Obligation
Bonds

Total

Balance July 1, 2002

$

0.00 $ 2,215,000.00 $2,215,000.00

Additions Capital Leases

56,559.00

56,559.00

Deductions Debt Retired

19,372.62

45,000.00

64,372.62

Balance June 30, 2003

$ 371186.38 $ 2!1701000.00 $ 2!2071186.38

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

Fiscal Year Ended June 30

Capital Leases

General Obligation
Bonds

Total Debt

2004 2005 2006 2007 2008 2009 - 2013 2014 - 2018 2019 - 2023

$ 19,758.46 $ 278,005.00 $ 297,763.46

19,758.46

285,297.50

305,055.96

172,200.00

172,200.00

179,012.50

179,012.50

185,400.00

185,400.00

1,005,212.50 1,005,212.50

1,155,850.02 1,155,850.02

235,968.76

235,968.76

Total Principal and Interest Deduct: Imputed Interest

$ 39,516.92 $ 3A961946.28 $ 3536A63.20 2.330.54

Net Present Value of Future Minimum Lease Payments $ 371186.38

Note 6: PRIOR YEAR DEFEASEMENT OF DEBT

In fiscal year 1998, the School District defeased certain general obligation bonds by placing the proceeds ofnew bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the School District's general-purpose financial statements. At June 30, 2003, $1,835,000.00 of bonds are outstanding and are considered defeased.

- 17 -

QUITMAN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2003

Note 7: ON-BEHALF PAYMENTS
The School District has recognized revenues and expenditures in the amount of $39,066.99 for health insurance and retirement contributions paid on the School District's behalfby the following State Agencies.
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance ofNon-Certified Personnel In the amount of $34,762.99
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 $4,304.00
Note 8: 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 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.
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

- 18 -

QUITMAN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2003

Note 9: RETIREMENT PLANS

by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2003 2002 2001

100% 100% 100%

$ 162,093.29 $ 131,487.85 $ 153,458.85

- 19 -

QUITMAN COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 2003

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

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

61,168.52 $

22,940.79

3,757.60

14,445.05

639.04 1 974.00

Total Assets

$

67,539.16 $ ===3=7=,3=85==84....

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

$

3,739.90 $

13,686.36

10,503.36

23,699.48

$

14,243.26 $

37,385.84

$

639.04

1,974.00

50,682.86 $

$

53,295.90 $

0.00 0.00

Total Liabilities and Fund Equity

$

67,539.16 $ ===3=7=,3=85=.8=4=

See notes to the general-purpose financial statements. -20-

EXHIBIT"E"

FEDERAL PROGRAMS

TOTALS

JUNE 30, 2003

JUNE 30, 2002

$

84,109.31 $

105,638.92

$

242,721.35

260,924.00

42,992.77

639.04 1 974.00

779.89 704.18

$

242,721.35 $

347,646.35 $==1=5=0=,1=1.5....=76===

$

204,625.40 $

204,625.40

9,565.37

26,991.63 $

28,530.58

62,733.42

61,643.71 45,147.94
1,079.25 632.20

$

242?21.35 $

294,350.45 $

108,503.10

$

$ _ _ _ _-""o"..a..00-'-

$

0.00 $

639.04 $ 1,974.00

779.89 704.18

50,682.86

40,128.59

53,295.90 $ _ _ _4_1_,6_12_._66_

$

242,721.35 $

347,646.35 $==1=5=0=1'=15==76==

- 21 -

QUITMAN COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND
YEAR ENDED JUNE 30, 2003

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current Instruction 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 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

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

$

10,563.00 $

194,934.67

182,005.54

17,201.29

$

209,769.83 $

194,934.67

$

147,809.94

36,428.66 20,838.50

832.36

$

201,977.01

955.32

$

201,977.01 $

206,864.78

$

7,792.82 $

-11,930.11

2,761.45

11,930.11

$

10,554.27 $

0.00

41,612.66

0.00

-140.85 1,269.82

FUND BALANCE JUNE 30

$

53,295.90 $====0==00=

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

EXHIBIT"F"

FEDERAL PROGRAMS

TOTALS

YEAR ENDED

JUNE 30, 2003

JUNE 30, 2002

$

205,497.67 $

170,650.25

$

627,626.16

809,631.70

440,845.30

17,201.29

13,942.08

$

627,626.16 $_--:..,.1;=,0.=3a2.;,;3; 30.66 $

625,437.63

$

353,278.57 $

501,088.51 $

338,759.50

15,753.45 84,665.52 32,359.71 21,438.19 26,922.74
1,725.00 7,154.53 84,055.75
272.70

52,182.11 105,504.02 32,359.71 21,438.19 26,922.74
2,557.36 7,154.53 84,055.75 203,205.03

30,874.91 60,336.68
1,376.88
15,589.19 4,308.10 11,653.68 167,339.04

$

627,626.16 $ 1,036,467.95 $

630,237.98

$

0.00 $

-4,137.29 $

-4,800.35

14,691.56

19,243.27

$

0.00 $

10,554.27 $

14,442.92

0.00

41,612.66

26,959.70

-140.85 1,269.82

37.93 172.11

$

0.00 $

53,295.90 $===4=1=,6=12==66=

- 23-

QUITMAN COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 2003

ASSETS Cash and Cash Equivalents Investments Accounts Receivable
Total Assets
FUND EQUITY Fund Balances
Reserved For Purposes of Bond Issue For SPLOST Projects
Unreserved Undesignated
Total Fund Equity

REGULAR

BOND PROCEEDS

$

621.06 $

231,379.88

109.05

$

621.06 $ =====23=1=,4=8=8.=93=

$ $ _ _ _-=6=21..:...:.=06~

231,488.93 0.00

$

621.06 $ =====23=1=,4=8=8.=93=

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

EXHIBIT"G"

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

JUNE 30, 2003

JUNE 30, 2002

$

82,796.56 $

314,797.50 $

234,348.94

109.05

107.66

33,076.66

33,076.66

$

115,873.22 $

347,983.21 $ ==2=3=4=,4=56==60=

$

231,488.93 $

233,835.54

$

115,873.22

115,873.22

0.00

621.06

621.06

$

115,873.22 $

347,983.21 $ ==2=3=4,!,=,4=5=6.=60=

- 25 -

QUITMAN COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND
YEAR ENDED JUNE 30, 2003

REVENUES Taxes Other Funds Total Revenues
EXPENDITURES
Current Maintenance and Operation of Plant
Capital Outlay Building and Building Improvements Equipment Total Expenditures
Excess of Revenues over (under) Expenditures
FUND BALANCE JULY 1
FUND BALANCE JUNE 30

REGULAR

BOND PROCEEDS

$

0.00 $

1.39

$

0.00 $

1.39

$

2,348.00

$

0.00

$

0.00 $

2,348.00

$

0.00 $

-2,346.61

621.06

233,835.54

$

621.06 $ ====2=3=1,=4=88=.9=3=

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

EXHIBIT"H"

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

YEAR ENDED

JUNE 30, 2003

JUNE 30, 2002

$

115,873.22 $

115,873.22

1.39 $ _ _ _ _2.-'-01_

$

115,873.22 $

115,874.61 $ _ _ _ _2.-'-01_

$

2,348.00

$

0.00

$

60,598.11

6,470.21

$

0.00 $

2,348.00 $

67,068.32

$

115,873.22 $

113,526.61 $

-67,066.31

0.00

234,456.60

301,522.91

$

115,873.22 $

347,983.21 $==2=34==,4=5=6.=60=

- 27 -

QUITMAN COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET DEBT SERVICE FUND JUNE 30. 2003

EXHIBIT"!"

ASSETS Cash and Cash Equivalents Investments Accounts Receivable

DEBT SERVICE
FUND

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

JUNE 30, 2003

JUNE 30, 2002

$ 8,858.95 $

139,199.03 $

148,057.98 $

182,114.11

130,193.51

109,265.21

239,458.72

163,631.68

5,825.62

5,825.62

33,276.74

Total Assets

$ 144,878.08 $

248,464.24 $

393,342.32 $ =====3=79=,0=2=2.=53=

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable
FUND EQUITY
Fund Balances Reserved For Debt Service Unreserved Undesignated
Total Fund Equity

$

318.00

$

318.00

$ 144,560.08 $ 0.00
$ 144,560.08 $

248,464.24 $ 0.00
248,464.24 $

393,024.32 $ 0.00
393,024.32 $

379,022.53 0.00
379,022.53

Total Liabilities and Fund Equity

$ 144,878.08 $

248,464.24 $

393,342.32 $ =====3=79=,0=2=2.=53=

See notes to the general-purpose financial statements.

- 28-

QUITMAN COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
DEBT SERVICE FUND YEAR ENDED JUNE 30. 2003

EXHIBIT "J"

REVENUES Taxes Other Funds Total Revenues
EXPENDITURES Debt Service Principal Interest Paying Agent Fees Total Expenditures
Excess of Revenues over (under) Expenditures FUND BALANCE JULY 1
FUND BALANCE JUNE 30

DEBT SERVICE
FUND

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS YEAR ENDED JUNE 30, 2003 JUNE 30, 2002

$ 70,868.94 $ 68,499.88
$ 139,368.82 $

95,016.19 $ 60,953.28
155,969.47 $

165,885.13 $ 129,453.16
295,338.29 $

247,801.67 135,778.93
383,580.60

$ 30,000.00 $ 71,344.77 2,226.00
$ 103,570.77 $
$ 35,798.05 $
108,762.03

15,000.00 $ 159,067.73
3,698.00
177,765.73 $
-21,796.26 $
270,260.50

45,000.00 $ 230,412.50
5,924.00
281,336.50 $
14,001.79 $
379,022.53

50,000.00 232,925.00
1,432.19
284,357.19
99,223.41
279,799.12

$ 144,560.08 $

248,464.24 $ 393,024.32 $ 379,022.53

See notes to the general-purpose financial statements.

- 29 -

QUITMAN COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUND YEAR ENDED JUNE 30, 2003

EXHIBIT K 11 11

FAMILY CONNECTION ASSETS
Cash and Cash Equivalents Accounts Receivable
Total Assets
LIABILITIES Accounts Payable Funds Held for Others
Total Liabilities

BALANCE JULY 1, 2002

ADDITIONS

DEDUCTIONS

BALANCE JUNE 30, 2003

$

8,134.98 $ 28,400.09 $

56,963.76 $

-20,428.69

0.00

21,999.91

21,999.91

$

8,134.98 $ 50,400.00 $

56,963.76 $ ===1=,5=7=1.=22=

$

7,884.98

$

7,884.98 $

250.00 $ 50,400.00

49,078.78

0.00 1,571.22

$

8,134.98 $ 50,400.00 $

56,963.76 $===1=,5=7=1.=22=

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

QUITMAN COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2003

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food and Nutrition Program Food Distribution Program
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Flow Through Preschool Capacity Building Improvement
Total Special Education Cluster
Other Programs Direct Rural School Achievement Program Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Title I Grants to Local Educational Agencies Title II Enhancing Education Through Technology Improving Teacher Quality Title IV Safe and Drug-Free Schools TitleV Innovative Education Program Strategies Reading Excellence - Local Reading Improvement Pass-Through From Randolph County Board of Education Elementary and Secondary Education Act Title II Enhancing Education Through Technology
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

N/A
NIA $
$

(2) 188,652.56
188,652.56

10.550

N/A
$

(1) 188,652.56

84.027 84.173 84.173

NIA $
N/A N/A
$

41,020.12 20,204.17
1,248.51
62,472.80

84.358

30,904.00

* 84.010

N/A

84.318

N/A

84.367

N/A

84.186

N/A

84.298

N/A

* 84.338

N/A

213,128.73
2,037.55 5,435.07
2,107.19
4,244.13 303,982.05

84.318

N/A
$

4151.09 628,462.61

- 31 -

QUITMAN COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2003

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Labor, U. S. Department of Pass-Through From Columbus. Georgia Consolidated Government Workforce Investment Act

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

17.259

N/A

$ _ _ _..::,3i.;:3..:..14..:..:.;:;.64..:..

Total Federal Financial Assistance N/A = Not Available

$ ===8=20.,,.,4=2=9=.8==1

Notes to the Schedule of Expenditures of Federal Awards

(1) The amounts for the Food Distribution Program ($6,289.49) represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year. Commodities received during the current fiscal year were not recorded in the School District"s financial statements.
(2) Expenditures for the funds earned on the School Breakfast Program ($71,571.94) were not maintained separately and are included in the 2003 National School Lunch Program.

Major Programs are identified by an asterisk (*) in front of the CFDA number.

The Board did not provide Federal Assistance to any Subrecipient.

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Quitman County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the general-purpose financial statements.

See notes to the general-purpose financial statements.

- 32-

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

SCHEDULE "2"

AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Leaming Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program Students with Disabilities Category II Category Ill Category IV Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Principal Supplements Education Equalization Funding Grant Food Services Austerity Reduction Other State Programs 4-8 Statewide After School Program Health Insurance K-3 Statewide Reading Program Preschool Handicapped Program Lottery Programs Assistive Technology Computers in the Classroom Student Information System
Georgia Institute of Technology Student Information System
Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACT Northwest Georgia Regional Educational Service Agency Georgia's Choice

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

165,291.17 $

165,291.17

$

110,280.00

13,944.00

193,088.00

102,654.00

94,150.00

103,669.00 219,973.00

28,425.00 61,979.00 15,483.00
7,660.00 28,912.00
8,948.00 5,394.00 367,467.00

94,259.00 19,791.00 122,135.00 24,378.00
1,180.00 42,318.00
-38,062.00
7,849.99 34,762.99 11,401.75
7,489.00

4,304.00 49,895.00

10,563.00
3,578.00 5,040.00 7,527.50 13,498.00

110,280.00 13,944.00
193,088.00 102,654.00
94,150.00
103,669.00 219,973.00
28,425.00 61,979.00 15,483.00
7,660.00 28,912.00
8,948.00 5,394.00 367,467.00
94,259.00 19,791.00 122,135.00 24,378.00
1,180.00 42,318.00 10,563.00 -38,062.00
7,849.99 34,762.99 11,401.75
7,489.00
3,578.00 5,040.00 7,527.50
13,498.00
4,304.00

49,895.00

$ 1,743,727.73 $

205,497.67 $ 1,949,225.40

See notes to the general-purpose financial statements.

- 33-

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

SCHEDULE "3"

PROJECT
Repayment of principal and interest on School District's Series 1994 bonds maturing February 1, 2004 and thereafter.
Payment of a portion of the principal and interest on the Quitman County School District General Obligation of School Bonds, Series 1994 and Series 1998 from August 1, 2003 through February 1, 2008, and thereafter to the extent that funds are available, the acquisition, construction and equipping of the elementary school additions, renovations and improvements at existing schools and facilities, equipping, renovating and improving the auditorium, purchasing school buses and acquisition of any necessary property therefor, both real and personal and for paying the cost incident to accomplishing the foregoing.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED
COST (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED
IN PRIOR YEARS (3) (4)

PROJECT STATUS

$ 1,650,000.00 $ 1,650,000.00 $ 177,765.73 $ 734,979.42 Ongoing

1,200,000.00 1,200,000.00

Ongoing

$ 2,850,000.00 $ 2,850,000.00 $ 177,765.73 $ 734,979.42

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.
(3) The voters of Quitman County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.
(4) A portion of the Series 1994 Bonds were retired through the sale of Series 1998 Refunding Bond Issue. The School District will utilize the SPLOST proceeds budgeted for this project, plus any excess SPLOST proceeds to retire the Series 1998 Refunding Bond Issue.

See notes to the general-purpose financial statements.

- 34-

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

SCHEDULE "4"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle Grades (6-8) Program Students with Disabilities Category Ill Alternative Education Program
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

113,250.00 $ 48,016.58 $

308.09 $

48,324.67

28,077.00

130,560.87

636.90

131,197.77

209,631.00

160,380.43

1,546.79

161,927.22

132,697.00

185,869.99

982.52

186,852.51

99,705.00

172,859.35

172,859.35

132,295.00 238,713.00 124,795.00
8,168.00

79,915.52 316,252.91
141,288.15 9,786.28

1,484.86 5,463.31
1,872.32

81,400.38 321,716.22
143,160.47 9,786.28

$

1,087,331.00 $ 1,244,930.08 $ 12,294.79 $ 1,257,224.87

32,532.00 6,236.00

29,316.54

3,589.80

32,906.34

TOTAL QBE FORMULA FUNDS

$

1,126,099.00 $ 1,274,246.62 $ 15,884.59 $ 1,290,131.21

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

See notes to the 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 2, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Quitman County Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of Quitman County Board of Education as of and for the year ended June 30, 2003, and have issued our report thereon dated July 2, 2004. 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 Quitman 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, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Quitman County Board ofEducation's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal
2003YB-40

control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Quitman County Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-7181-03-01, FS-7181-03-02 and FS-7181-03-03.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, ofthe reportable conditions described above, we consider items FS-7181-0301 and FS-7181-03-03 to be material weaknesses.
This report is intended solely for the information and use of the management, members of the Quitman 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,
~,.. ...JXi u)~~
Russell W. Hinton State Auditor
RWH:gp 2003YB-40

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

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

Honorable Sonny Perdue, Governor Members of the General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe Quitman 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 of Quitman County Board of Education with the types of compliance requirements described in the US. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2003. Quitman County Board ofEducation'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 of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Quitman County Board of Education's management. Our responsibility is to express an opinion on Quitman County Board of Education's compliance based on our audit.
We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Quitman 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 Quitman County Board ofEducation's compliance with those requirements.
2003SA-30

In our opinion, the Quitman County Board ofEducation complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 2003.
Internal Control Over Compliance
The management of Quitman 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 Quitman County 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.
We noted certain matters involving the internal control over compliance and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over compliance that, in our judgment, could adversely affect the Quitman County Board of Education's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FA-7181-03-01, FA-7181-03-02 and FA-7181-03-03.
A material weakness is a condition in which the design or operation of one or more ofthe internal control components does not reduce to a relatively low level of risk that noncompliance with the applicable requirements oflaws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe none of the reportable conditions described above is a material weakness.
This report is intended solely for the information and use of the management, members of the Quitman 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.
RWH:gp 2003SA-30

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

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

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7181-01-01 FS-7181-01-03 FS-7181-02-01 FS-7181-02-02

Further Action Not Warranted Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number: FS-7181-02-01

Additional professional staff has been hired and procedures have been implemented to ensure the accuracy ofall cash and cash equivalents, expenditure disbursements, employee compensation and general ledger transactions and balances.

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-7181-02-02

The Quitman County Board ofEducation will comply with GASB 34 compliance and will implement it as required.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-7181-02-01

Partially Resolved - See Corrective Action/Responses

- 1-

QUITMAN COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES REPORTING Failure to Maintain Documentation Finding Control Number: FA-7181-02-01 The Quitman County Board of Education will establish procedures to ensure that applications are complete and proper documentation used to administer the program will be in compliance of the grant application.
-2-

SECTION IV FINDINGS AND QUESTIONED COSTS

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

I SUMMARY OF AUDITOR'S RESULTS

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

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

Cash and Cash Equivalents Employee Compensation General Fixed Assets

Expenditures/Liabilities/Disbursements General Ledger

All of the reportable conditions described above are considered to be material weaknesses.

3. Noncompliance Material to the Financial Statements The audit of the Quitman County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.

4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Quitman County Board ofEducation disclosed reportable conditions in internal control over major programs for the following compliance requirements.

Allowable Costs/Cost Principles Reporting

Special Tests and Provisions

None ofthe reportable conditions described above are considered to be material weaknesses.

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

6. Audit Findings Required to be Reported by Section .5 lO(a) of 0MB Circular A-133 The Quitman County Board of Education's audit disclosed audit findings required to be reported by section .510(a) of 0MB Circular A-133. These audit findings are included in section IV of this report.

7. Major Programs Federal awards audited as major programs are as follows: 84.010 Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies 84.338 Reading Excellence - Local Reading Improvement

- 1-

QUITMAN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
I SUMMARY OF AUDITOR'S RESULTS
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk Auditee The Quitman County Board of Education did not qualify as a low risk auditee as defined by Section .530 of 0MB Circular A-133.
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-7181-03-01
Accounting procedures of the Quitman County Board of Education were insufficient to provide adequate internal controls. Deficiencies are identified by control category and affected funds as follows:
Cash and Cash Equivalents - All Funds
A review ofselected bank reconciliations was performed, including procedures to account for all checks dated in June 2003 and for all checks within the June 2003 sequence ofcheck numbers. Six hundred and ninety-five checks were tested within this sequence. Tests of the bank reconciliations and checks revealed the following deficiencies:
(1) There was no administrative review to determine that bank reconciliations were correct and that all required adjustments had been made.
(2) Three of the voided checks could not be physically located.
(3) Three hundred and twenty of the checks were dated during the months of January 2003 through May 2003 and July 2003 of the subsequent fiscal period.
These deficiencies occurred because of management's decision to limit the number of administrative staff made responsible for accounting functions and failure to ensure that checks are issued in sequential order and void checks are properly accounted for and maintained.
-2-

QUITMAN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-7181-03-01
Expenditures/Liabilities/Disbursements - All Funds
An examination of internal control procedures and review of seventy-eight expenditures revealed that the School District failed to maintain adequate separation of duties and adequate documentation of voucher packages. The following discrepancies were noted:
(1) The duty of approving vouchers for payment was not adequately separated from the duty ofwriting checks. In addition, there was no independent review to determine that expenditures were appropriate, accurate and properly documented prior to payment.
(2) Seven vouchers were paid from a copy or statement rather than the original invoice.
(3) Twenty-two vouchers were paid without any evidence of receipt of service or items.
(4) Pre-printed check numbers on the face of thirteen of the checks did not agree with check numbers recorded on the general ledger.
Additional testing of disbursements made to a music consultant retained by the School District revealed the following discrepancies:
(1) One day of instruction was invoiced twice and paid for twice.
(2) Four days were listed on invoices submitted for payment for which no signature on sign in sheets indicating attendance was noted.
(3) Sign in sheets were not made available by the School District to document dates billed on invoices submitted by the music consultant for the time periods of September 10, 2002 to December 13, 2002 and May 23, 2003 to June 3, 2003.
(4) One check written was not supported by an invoice or other supporting documentation and it was not determinable on four invoices how the total amount invoiced was calculated.
-3-

QUITMAN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-7181-03-01
Additional testing ofexpenditures relating to the Superintendent's travel and charges to the School District's credit card, which was also in the name ofthe Superintendent, revealed the following problems:
(1) Mileage in the amount of $261.80 was improperly reimbursed on five travel expense reports.
(2) Gas in the amount of$84.00 was improperly reimbursed.
(3) A meal in the amount of$7.00 was improperly reimbursed on a travel expense, as well as $348.35 of what appears to be meal charges on the School District's credit card.
(4) Undocumented credit card charges of$906.07 were noted, which included $516.11 of what appears to be lodging type expenditures which could not be associated to travel vouchers filed by the Superintendent.
(5) One credit card charge was for what appeared to be a PDA for which no reimbursement could be found nor could the piece ofequipment be physically located.
(6) A reimbursement to the Superintendent in the amount of $278.08 for cups appears to be an unallowable expenditure.
These deficiencies occurred because of management's decision to limit the number of administrative staff made responsible for accounting functions and failure to ensure that check numbers are properly recorded and that check vouchers are maintained and include adequate documentation such as original invoices, receiving reports and other forms of documentation. Also the School District should implement procedures to ensure that State travel guidelines are followed and that only allowable expenditures are reimbursed.
-4-

QUITMAN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-7181-03-01
Employee Compensation - General and Special Revenue Funds
An examination of internal controls was performed. In addition, a random sample of ten employees and an additional test of five employees were conducted for the purpose of testing the accuracy of employee compensation paid. The following deficiencies were noted:
(1) The duty of approving payroll disbursements for the General and Special Revenue Funds was not adequately separated from the duty of writing checks. In addition, there was no independent review ofthe payroll registers to determine that the payroll disbursements were authorized, properly documented and in accordance with approved contracts and salaries.
(2) Two employees were paid stipends for which supporting documentation and approval could not be provided.
(3) Two employee's salaries were based on amounts for which adequate supporting documentation and approval could not be provided.
(4) Five employees were overpaid a total of$4,440.65. The overpayments were a result of annual salary calculation errors, failure to deduct for use ofexcess leave, duplicate payment for work performed and for payment ofaccrued vacation leave not approved by Board policy.
(5) Two employees were underpaid a total of $1,489.17. The underpayments were a result of annual salary calculation errors and excess deductions for leave.
These deficiencies occurred because of management's decision to limit the number of administrative staffmade responsible for accounting functions and failure to ensure that all payroll disbursements are properly documented, approved and disbursed.
-5-

QUITMAN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-7181-03-01
General Ledger - All Funds
(1) An examination of internal accounting control procedures and a test of twenty-five journal entries revealed that twenty journal entries had no evidence of independent administrative review. This deficiency occurred because of management's failure to ensure that adjustments posted to the general ledger are supported with evidence of independent administrative review.
(2) USDA commodities received were not recorded on the general ledger. This deficiency occurred because of management's failure to ensure that non-monetary transactions are recorded on the general ledger.
Separation of duties involving key accounting functions is the basis for achieving an adequate system of internal control. Inadequate separation of duties creates an environment that does not provide reasonable assurance that accounting data and financial statements are accurate and complete. Management should periodically review the decision to limit the number of administrative staff made responsible for accounting functions to determine if employee duties can be reassigned to achieve a higher degree of internal control with the existing staff. The School District should also establish procedures to ensure that all transactions are supported with adequate documentation, the general ledger is complete and accurate with transactions posted in a timely manner. The School Board should determine ifreimbursement for salary overpayments and improper travel payments is appropriate.
EMPLOYEE COMPENSATION Inaccurate Reporting of Senior Management Compensation Reportable Condition Amount: $4,461.18 Finding Control Number: FS-7181-03-02
Our examination of compensation paid to senior management of the School District revealed a significant error in the amount reported as salary to the Department of Audits and Accounts. The School District failed to include payments of $2,136.90 for health insurance made on the Superintendent's behalf. This payment was in accordance with the contract between the Superintendent and the School District.
-6-

QUITMAN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION Inaccurate Reporting of Senior Management Compensation Reportable Condition Amount: $4,461.18 Finding Control Number: FS-7181-03-02
The School District reported a salary of$97,424.27 for Superintendent Dr. Jewel Faison in its salary and travel report for the period ended June 30, 2003. The actual compensation for Dr. Faison totaled $99,561.17 which includes the $2,136.90 health insurance payment referenced above.
Included in the reported salary mentioned above is a payment of$2,324.28 which according to the Board Minutes dated April 21, 2003 is to reimburse "... for health insurance premiums in the amount of$2,324.28 for school year 2002-2003 ... ". As noted in the preceding paragraph, the School District previously paid the employee's portion ofhealth insurance, resulting in an overpayment of$2,324.28.
The School District should implement procedures to ensure that all employee compensation is included in the salary total reported to the Department ofAudits and Accounts. The School District should implement procedures and closely review recommendations for increases to senior management's compensation before approving for payment. The School Board should review this matter and determine if recovery of the overpayment is appropriate.
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-7181-03-03
The Quitman County Board of Education did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general-purpose financial statements ofthe School District being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the School District to establish accounting controls and procedures to provide for maintenance ofa General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the School District and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained ofall additions and deletions to the General Fixed Assets Account Group.
-7-

QUITMAN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ALLOWABLE COSTS/COST PRINCIPLES Unallowable Administrative Charges to School-wide Program Reportable Condition U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-7181-03-01
During the year under review, the School District identified its only school as participating in a school-wide program supported, in part, by the Reading Excellence - Local Reading Improvement program (CFDA 84.338). On April 21, 2003, the Quitman County Board ofEducation approved the Superintendent to be paid an additional $5,000.00 as an indirect cost associated with the Reading Excellence - Local Reading Improvement program (CFDA 84.338). No additional time and attendance records were available to support any time spent on the program. In addition, the School District also charged indirect cost to the Reading Excellence grant based on the restricted indirect cost rate approved by the Georgia Department of Education, meaning that any indirect cost for salaries should be paid from the School District's General Fund. The charging of a portion of the Superintendent's salary to the Reading Excellence program would be ofan administrative nature and would not be considered to "upgrade the entire educational program of the school and to raise academic achievement for all students" as noted in the ED Cross-Cutting Section of the 0MB Circular A-133, Compliance Supplement.
This condition was a result of management's failure to implement adequate internal controls for monitoring compliance with Federal guidelines. The School District should review the Federal compliance procedures in place, design procedures which would enhance monitoring compliance with Federal guidelines and proper internal controls relative to the above Federal compliance requirement and implement those procedures to strengthen the internal control over Federal programs. Also, the Georgia Department of Education should review this matter to determine if a reclaim of funds is appropriate.
REPORTING Failure to Maintain Documentation Reportable Condition U. S. Department of Education Through Georgia Department of Education Finding Control Number: FA-7181-03-02
The 2003 Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies (CFDA 84.010) program grant application and 34 CFR 76.730 require the School District to assure the Georgia Department of Education that records will be maintained and provided for audit purposes. Tests performed revealed that the School District could not provide adequate documentation of FTE and student information system reports supporting the State Per Pupil Expenditure Data submitted to Georgia Department of Education.
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QUITMAN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
REPORTING Failure to Maintain Documentation Reportable Condition U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-7181-03-02
These conditions were the result of the School District's failure to ensure that supporting documentation used to administer the program was maintained for audit purposes. The School District should establish procedures to ensure that proper supporting documentation used to administer the program is maintained in compliance with the requirements of the grant application and 34 CFR 76.730. Also, the Georgia Department of Education should review this matter to determine if a reclaim of funds is appropriate.
SPECIAL TESTS AND PROVISIONS Fiscal Requirements of School-wide Program Not Fully Implemented Reportable Condition U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-7181-03-03
During the year in review, the School District identified its school as participating in a school-wide program. Federal provisions prescribe that multiple funding sources (Federal, State or Local) are required to support a school-wide program. The Title I - Grants to Local Educational Agencies program, and the Reading Excellence - Local Reading Improvement program supported the schoolwide program at the District's school. Although required by U. S. Department of Education and 0MB A-133 Compliance Supplement provisions, we found that the School District had not consolidated the different Federal funds for the school that participated in a school-wide program. Furthermore, we noted that the School District arbitrarily charged each Federal fund with individual school-wide expenditures rather than using a prescribed cost allocation plan to distribute school-wide program expenditures to each funding source.
In accordance with provisions ofU. S. Department of Education Instructions and 0MB Circular Al 33, Compliance Supplement provisions, eligible schools are able to use their Title I - Part A funds, in combination with other Federal, State and local funds, in order to upgrade the entire educational program of the school and to raise academic achievements for all students. By combining funds from Title I and other eligible U. S. Department of Education funded programs in support of a school-wide program, U.S. Department ofEducation Instructions provide that specific school-wide program costs lose their identity but only in those circumstances when funds are combined in a school-wide program. In line with 0MB Circular A-87 requirements, school-wide expenditures should be charged to those Federal funding sources supporting the school-wide program in a
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QUITMAN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 2003
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS SPECIAL TESTS AND PROVISIONS Fiscal Requirements of School-wide Program Not Fully Implemented Reportable Condition U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-7181-03-03 reasonable manner. When more than one Federal program supports a school-wide program, then school-wide program expenditures may be allocated to specific Federal funds in proportion to the different Federal funds provided in support of the school-wide program. To distribute such costs, provisions of 0MB Circular A-87, Attachment E, F.3 state that a cost allocation plan should be developed, documented, maintained for audit. The School District personnel were unaware ofthese requirements and it was the School District's understanding that school-wide program expenditures lose their identity and therefore any school-wide program cost can be charged to Title I and other Federal funding programs. The School District should implement procedures to (1) combine such funds as prescribed by U.S. Department of Education and (2) in line with 0MB Circular A-87 provisions allocate such schoolwide program costs to the respective Federal fund in a reasonable manner. The School District should seek Georgia Department of Education guidance in implementing fiscal procedures for combining and allocating school-wide program expenditures to Federal programs.
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