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

RANDOLPH COUNTY BOARD OF EDUCATION
CUTHBERT, 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

RANDOLPH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

3

B

STATEMENT OF ACTIVITIES

4

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

5

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

6

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

7

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

8

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

9

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

11

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

23

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

24

3 SCHEDULE OF STATE REVENUE

26

RANDOLPH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

28

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

29

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 7, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Randolph County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) ofthe Randolph County Board of Education, as of and for the year ended June 30, 2003, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Randolph County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States 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 opm10ns.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective position ofthe governmental activities, each major fund, and the aggregate remaining fund information of the Randolph County Board of Education, as of June 30, 2003, and the respective changes in financial position thereoffor the year then ended in conformity with accounting principles generally accepted in the United States of America.
2003-34ARL-11

The Randolph County Board ofEducation has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not to be part of, the basic financial statements.
As discussed in Note 2 to the basic financial statements, during fiscal year 2003, the Board completed a comprehensive inventory of its capital assets for inclusion in the basic financial statements and consolidated its individual school activity accounts for inclusion in the basic financial statements. These changes are in accordance with generally accepted accounting principles.
As described in Note 2, the Randolph County Board of Education has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2003.
In accordance with Government Auditing Standards, we have also issued our report dated July 7, 2004, on our consideration of the Randolph 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.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 23, is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Randolph County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
2003-34ARL-l l

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 of Georgia Annotated section 506-24.
Respectfully submitted,
.... QQ.tu~ ~ssell W. Hinton State Auditor
RWH:gp 2003-34ARL-11

RANDOLPH COUNTY BOARD OF EDUCATION

RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2003

EXHIBIT"A"

ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Buildings and Improvements Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries Payable Deposits and Deferred Revenues
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Bus Replacement Continuation of Federal Programs Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets

GOVERNMENTAL ACTIVITIES

$

891,477

46,951 920,774 488,751 143,657
6,926

72,035 6,791,623 1,869,033 -3,737,716

$ ======7:!:,4=9=3!::,5:::11=

$

332,488

1,146,593

77,083

$

1,556,164

$

4,994,975

59,018 6,926
461,143 415,285

$

5,937,347

$ ====7!::,4=93=1,'=51=1=

The notes to the basic financial statements are an integral part of this statement. -3-

RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30. 2003

EXHIBIT"B"

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

GOVERNMENTAL ACTIVITIES

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 Operations of Non-Instructional Services Community Services Food Services

$ 9,048,790 $
755,693 1,177,710
229,545 536,253 850,538 156,139 1,027,945 784,341
82,646 223,307
35,657 1 148 276

463,903 $
11,454 82402

6,856,428 $
446,351 899,573 134,329 543,962 409,307
13,383 449,637 481,101
29,474 203,519
26,600 978 948

-1,728,459
-309,342 -278,137
-95,216 7,709
-441,231 -142,756 -578,308 -303,240
-53,172 -19,788
2,397 -86 926

Total Governmental Activities

$ 16,056,840 $

557 759 $==~1~1.4;7;2.6;1;2~ $

-4,026,469

General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous

$

2,137,042

336,367 4,666
779,847 6,353
135 939

Total General Revenues

$ _ _ __::3:,_4:..::0:.:::0i.::2:..:.1..:_4

Change in Net Assets

$

-626,255

Net Assets - Beginning of Year

6 563 602

Net Assets - End of Year

$ ===.;;;5.;;9;;;;3,;,;7,;;;;34;;,;7=

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

RANDOLPH COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30. 2003

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Bus Replacement Inventories Capital Projects
Unreserved Designated for Self-Insurance Undesignated Reported in: General Fund Capital Projects
Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$

406,610 $

484,867 $

70,376 920,774 488,751 143,657
6 926

3,564

891,477
73,940 920,774 488,751 143,657
6 926

$ 2,037,094 $

488,431 $==~2~,5~2~5~,5~25=

$

332,488

1,146,593

77 083

$

1,556,164

$

332,488

1,146,593

77 083

$

1 556,164

$

59,018

$

6,926

$

461,143

61,129

353,857

27,288

$

480,930 $

488,431 $

59,018 6,926
461,143
61,129
353,857 27 288
969,361

$ 2,037,094 $

488,431 $====2=,5=2=='5,=52=5=

The notes to the basic financial statements are an integral part of this statement.
-5-

RANDOLPH COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30. 2003

EXHIBIT"D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Buildings and Improvements Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District's property tax revenues will be collected after year end but are not available soon enough to pay for the current period"s expenditures.

$

969.361

$

72,035

6,791,623

1,869,033

-3,737,716

4,994,975

-26,989

Net Assets of Governmental Activities (Exhibit "A")

$ ====5:e,9=3=7-=,3=4=7

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

RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30. 2003

EXHIBIT"E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Community Services Food Services Operation
Capital Outlay
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$ 2,167,326 4,666 $
7,993,861 4,258,598
557,759 4,274
135,939
$ 15,122,423 $

$ 336,367
2,079 338,446 $

2,167,326 341,033
7,993,861 4,258,598
557,759 6,353
135,939
15,460,869

$ 8,626,515

755,693 1,177,710
229,545 536,253 850,538 156,139 1,017,823 672,353
82,646 223,307
35,657 1,109.430
50,388 $

$ 15,523,997 $

$

-401,574 $

882,504

$
432,602 432,602 $ -94,156 $ 582,587

8,626,515
755,693 1,177,710
229,545 536,253 850,538 156,139 1,017,823 672,353
82,646 223,307
35,657 1,109,430
482,990
15,956,599
-495,730
1,465 091

$

480,930 $

488,431 $ ===9=6=96=,3=61=

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

RANDOLPH COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2003

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.

$

-495,730

$

169,000

-269,241

-100,241 -30,284

Change in Net Assets of Governmental Activities (Exhibit "B")

$ ==-=6=26=,2=5=5

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

RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2003
ASSETS Accounts Receivable, Net
Other
LIABILITIES Cash Overdraft Accounts Payable Funds Held for Others
Total Liabilities

EXHIBIT"G"

AGENCY FUNDS
$ ===1=8=1,=97=

$

18,388

177

-368

$===1=8,=1=97=

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

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Randolph 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 Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Randolph County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including taxes (sales) legally restricted to be used for the acquisition, construction or renovation of major capital facilities.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred. Capital asset acquisitions are reported as expenditures in governmental funds.

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.

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 costs and the related revenue from the State to fund these contracts are recorded in the fiscal period covered by these financial statements.

RESTATEMENT OF PRIOR YEAR FUND BALANCE - GENERAL FUND

In prior years, the financial activities of the School District's School Food Services Fund, Lottery Programs and Federal Programs were reported as Special Revenue Funds. These funds had a combined fund balance of $2,652 at July 1, 2002. For fiscal year 2003, these funds have been reported as part of the General Fund. In addition, governmental fund activity from the various school activity accounts, which were not reported in the prior year's financial statements, have been reported within the General Fund for fiscal year ended June 30, 2003. The governmental fund activity of the various school activity accounts had a fund balance of$12,685 at July 1, 2002. This change is in accordance with generally accepted accounting principles.

General Fund Balance July 1, 2002

$ 867,167

Add Funds Consolidated with General Fund: School Food Services Fund School Activity Account - Governmental Activity

2,652 12,685

General Fund Balance July 1, 2002 (Restated) CHANGES IN ACCOUNTING PRINCIPLES

$===8""=82=,5==0==4

The Randolph County Board of Education has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2003.

The provisions of GASB Statement No. 34 require the inclusion ofa Statement ofNet Assets. The elements comprising Net Assets - Beginning include the following:

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General Fund (Restated) July 1, 2002 Capital Projects Fund

$ 882,504 582,587

Governmental Funds (Restated) July 1, 2002 Capital Assets Accumulated Depreciation Property Tax Revenue Timing Differences

$ 1,465,091 8,563,691 -3,468,475 3,295

Net Assets Beginning (See Exhibit "B")

$ 6!563!602

CASH AND CASH EQUIVALENTS

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

RECEIVABLES

Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

PROPERTY TAXES

The Randolph County Board of Commissioners fixed the property tax levy for the 2002 tax digest year (calendar year) on September 26, 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 the governmental funds for fiscal year 2003. The Randolph 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 oftaxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2003, for maintenance and operations amounted to $2,167,326.

The tax millage rate levied for the 2002 tax year (calendar year) for the Randolph County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

16.15 mills

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $336,367 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

INVENTORIES

FOOD INVENTORIES On the basic financial statements, inventories of donated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time ofpurchase. On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art.

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

Capitalization Policy

Estimated Useful Life

Land Buildings and Improvements Equipment

$

5,000

NIA

$

5,000 25 to 60 years

$

5,000

10 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "H"

Note 3: DEPOSITS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts 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 $1,815,747. The amounts of the total bank balances are classified into three categories of credit risk:

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 3: DEPOSITS

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:

Risk Category
1
2
3
Total

Bank Balance
$ 154,992 1,613,974 46 781
$ 1,815.747

Note 4: NON-MONETARY TRANSACTIONS

The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

Note 5: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

Balances July 1, 2002

Increases

Decreases

Balances June 30, 2003

Governmental Activities

Capital Assets, Not Being Depreciated:

Land

$

72,035 $

0 $

0 $

72,035

Capital Assets Being Depreciated Buildings and Improvements Equipment

$ 6,791,623 1,700,033 $

$ 169,000

0 $ 6,791,623 1,869,033

Less Accumulated Depreciation for: Buildings and Improvements Equipment

2,399,455 1,069,020

133,373 135,868

2,532,828 1,204,888

Total Capital Assets, Being Depreciated, Net $ 5,023,181 $ -100,241 $

0 $ 4,922,940

Governmental Activity Capital Assets - Net $ 5,095,216 $ -100.241 $

0 $ 4,994.975

- 17 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "H"

Note 5: CAPITAL ASSETS

Current year depreciation expense by function is as follows:

Instruction Support Services
Maintenance and Operation of Plant Student Transportation Services Food Services

$ 151,142

$

3,623

100,572

104,195 13 904

Note 6: RESTRICTED ASSETS

$==2==69-,2==4==1

Special Purpose Local Option Sales Tax (SPLOST) is reported as a restricted asset in the Statement ofNet Assets because its use is limited by statutory provisions. Restricted assets at June 30, 2003, were as follows:

Restricted Cash and Cash Equivalents: Capital Acquisitions

District-wide Capital Projects SPLOST

$

457,579

Note 7: RISK MANAGEMENT

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

The School District has obtained commercial insurance for risk ofloss associated with torts, assets and errors or omissions. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any ofthe past three years.
The School District has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years.

The School District is self-insured with regard to unemployment compensation claims. 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 expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

- 18 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "H"

Note 7: RISK MANAGEMENT

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

2002 2003

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

$

0 $

0 $

0 $

0

$

0 $

2,638 $

2,638 $

0

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $400,000 loss per occurrence, up to $2,000,000.

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

Position Covered

Amount

Superintendent Each Principal High School Bookkeeper Elementary School Bookkeeper Payroll Clerk Finance Director Head Start Director Head Start Bookkeeper Bank Depositor Food Service Bookkeeper Head Start Secretary Each School Food Service Manager Each Athletic Gate Keeper Each School System Employee

$

50,000

$

10,000

$

10,000

$

10,000

$

10,000

$

10,000

$

10,000

$

10,000

$

10,000

$

10,000

$

5,000

$

5,000

$

5,000

$

1,000

Note 8: OPERATING LEASES

Randolph County Board of Education has entered into various leases as lessee for copiers. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2003, for governmental funds amounted to $72,044. Future minimum lease payments for these leases are as follows:

- 19 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 8: OPERATING LEASES

Year Ending

Governmental Funds

2004 2005 2006 2007

$

20,595

20,300

11,150

3 950

Total Note 9: SIGNIFICANT COMMITMENTS

$===55=9~9~5

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2003:

Project

Unearned Executed Contracts

Furniture and Accessories Intercom System Surveillance System Various Repairs and Improvements

$ 207,442 137,449 109,754 54 417

$ 509!062

The amounts described in this note are not reflected in the basic financial statements.

Note 10: SIGNIFICANT CONTINGENT LIABILITIES

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

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

- 20-

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "H"

Note 11: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The 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%

$ 746,350 $ 701,049 $ 834,767

- 21 -

RANDOLPH COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30. 2003

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Community Services Food Services Operation
Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Other Sources Other Uses
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

ACTUAL AMOUNTS (1)

$

2,212,918 $

2,212,918 $

2,167,326

4,666

7,717,994

7,717,994

7,993,861

2,968,327

2,968,327

4,258,598

400,133

400,133

388,352

49,748

49,748

4,146

18 867

18,867

65,278

$

13,367 987 $

13,367,987 $

14,882,227

$

7,427,082 $

7,427,082 $

8,400,536

617,132 859,760 201,951 399,452 814,241 142,654 1,002,577 610,004
39,393 97,149 16,703 1,288,212 20,868

617,132 859,760 201,951 399,452 814,241 142,654 1,002,577 610,004
39,393 97,149 16,703 1,288,212 20,868

755,693 1,177,710
229,545 536,253 850,538 156,139 1,017,823 672,353
82,646 223,307
35,657 1,109,430
50,388

$

13,537 178 $

13,537,178 $

15,298,018

$

-169,191 $

-169 191 $

-415,791

$

56,114 $

56,114

-56 114

-56,114

$

0 $

0

$

-169,191 $

-169,191 $

-415,791

849,400

849,400

869,819

-101,312

-101,312

Fund Balances - Ending

$

578 897 $

578 897 $ ===4=5=4-=0=28=

Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual

(1) Actual amounts have been adjusted to exclude the governmental activity from the various principal accounts.

See notes to the basic financial statements.

- 23-

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

SCHEDULE "2"

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 Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning Food and Nutrition Program Summer Food Service Program for Children

Total Child Nutrition Cluster

Other Programs Pass-Through From Georgia Department of Education Food and Nutrition Program Food Distribution Program (1) Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning Food and Nutrition Program Child and Adult Care Food 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 Capacity Building Improvement Flow Through Preschool

Total Special Education Cluster

Other Programs Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Title I Comprehensive School Reform Demonstration Grant Even Start Grants to Local Educational Agencies Title II Enhancing Education Through Technology Improving Teacher Quality Title IV Safe and Drug-Free Schools and Communities TitleV Innovative Education Program Strategies Title VI Rural and Low Income Schools Reading Excellence - Local Reading Improvement Stewart B. McKinney Homeless Assistance Act Education for Homeless Children and Youth Vocational Education - Basic Grants to States High School Program Basic Grant

Total U. S. Department of Education

- 24-

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555
10.559

N/A

N/A

$

(2) 854,091

N/A $

150 826 1,004,917

10.550 10.558

N/A
N/A $

22,822
37 933 1,065,672

84.173 84.027 84.173

NIA

$

N/A

N/A

$

4,557 (3) 245,575 (4)
19 458 (5)
269,590

84.332 84.213 84.010
84.318 84.367
84.186
84.298
84.358 84.338
84.196
84.048

N/A NIA N/A
N/A N/A
N/A
NIA N/A N/A
N/A
N/A
$

214,227 226,583 815,334
264,436 151,744
16,713
17,013 32,305 289,053
16,832
46 797
2,360,627

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

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Health and Human Services, U. S. Department of Direct Head Start Pass-Through From Department of Human Resources Child Care and Development Block Grant Block Grant for Prevention and Treatment of Substance Abuse Temporary Assistance to Needy Families Pass-Through From Office of the Governor Children and Youth Coordinating Council Abstinence Education Block Grant
Total U.S. Department of Health and Human Services
Labor, U. S. Department of Pass-Through From Columbus, Georgia Consolidated Government Workforce Investment Act
Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

93.600
93.575 93.959 93.558
93.235

$
N/A N/A NIA
N/A
$

739,331
41,071 28,494 22,683
54652
886 231

17.259

NIA

$

2 906

$

50,205

Total Federal Financial Assistance N/A = Not Available

$ ===4=!=36=5,;,;6=4=1

Notes to the Schedule of Expenditures of Federal Awards

(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($242,085) were not maintained separately and are included in the 2003 National School Lunch Program.
(3) Includes Federal Assistance of $867 provided to subrecipients. (4) Includes Federal Assistance of $40,198 provided to subrecipients. (5) Includes Federal Assistance of $6,033 provided to subrecipients.

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

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Randolph 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 basic financial statements.

See notes to the basic financial statements.

- 25 -

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2003
AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning 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 School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Principal Supplements Vocational Supervisors Mid-term Adjustment Hold-Harmless Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs 4-8 Statewide After School Program K-3 Statewide Reading Program Mentor Teachers Preschool Handicapped Program Lottery Programs Assistive Technology Computers in the Classroom Student Information System
- 26-

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

229,133

402,688 42,381
644,449 258,295 490,921 191,398 920,476 856,810 256,227
-1, 135 250,849 284,508
71,808 8,032
30,893 88,992 74,189 135,455 48,417 25,470
317,111 350,850 380,511
305,269 60,297 34,095 45,482 5,358 11,119 69,684
710,163 55,702 70,759
-171,320
11,361 18,890
5,396 46,832
4,932 29,269
2,252

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2003
AGENCY/FUNDING
GRANTS Northwest Georgia Regional Educational Service Agency Student Achievement
Office of the Governor Children and Youth Coordinating Council STAR Program
CONTRACTS Education, Georgia Department of After School Programs
Human Resources, Georgia Department of Substance Abuse Prevention and Treatment Teen Plus Tobacco Use Prevention
OTHER Community Affairs, Georgia Department of Local Assistance Grant

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

112,437

37,500

19,192
7,000 88,327
7,637

47,500

$ ====7=9=9=3=8=61=

See notes to the basic financial statements.

-27-

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

SCHEDULE "4"

PROJECT
Providing funds to pay the cost of constructing certain new facilities; acquiring instructional and administrative technology improvements for existing schools; adding to, renovating, repairing, improving and equipping existing school buildings and other buildings and facilities useful or desirable in connection therewith; and acquiring any necessary property therefor, both real and personal, all at the maximum cost of $3,300,000

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED
COST (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

$ 3,300,000 $ 5,367,524 $

432,602 $ 4,063,641 Ongoing

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the project. Includes all cost from project inception to completion.
(3) The voters of Randolph County approved the imposition of a 1% sales tax to fund the above project. Amounts expended for this project may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project.

See notes to the basic financial statements.

- 28 -

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

SCHEDULE "5"

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 School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV Category V Gifted Student - Category VI Remedial Education Program 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

$

429,038 $

351,414 $

11,351 $

362,765

54,892

132,079

2,513

134,592

701,235

805,310

16,497

821,807

302,530

306,260

3,646

309,906

515,211

551,999

10,888

562,887

223,476 991,371 929,629 289,136 670,699
34,273 101,424
80,687

303,219 872,303 1,227,892 298,543
234,226 322,667
38,855 7,807
58,470 107,939 222,466

4,439 20,498 38,063 22,678
234 3,307 5,665 1,685
758 1,074 2,500

307,658 892,801 1,265,955 321,221
234 237,533 328,332
40,540 7,807
59,228 109,013 224,966

$

5,323,601 $ 5,841,449 $

145,796 $

5,987,245

147,386 27,946

217,092 6,341

19,108 22,201

236,200 28,542

TOTAL QBE FORMULA FUNDS

$

5,498,933 $ 6,064,882 $

187,105 $ ==;;,:6,,;;;;25;.;1~9,;,;;8,;,.7

(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 basic financial statements.

- 29 -

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 7, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Randolph 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 the governmental activities, each major fund, and the aggregate remaining fund information ofRandolph County Board ofEducation as ofand for the year ended June 30, 2003, which collectively comprise Randolph County Board of Education's basic financial statements and have issued our report thereon dated July 7, 2004. 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 Randolph 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 offinancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective ofour audit, and accordingly, we do not express such an opinion. The results ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Randolph 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
2003-34YB-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 Randolph County Board of Education's ability to record, process, summarize and report financial data consistent with assertions ofmanagement in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-7201-03-01, FS-7201-03-02, FS-7201-03-03, FS-7201-03-04, FS-7201-03-05, FS-7201-03-06, FS-7201-03-07, FS-7201-03-08, FS-7201-03-09, FS -7201-03-10 and FS-7201-03-12.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, ofthe reportable conditions described above, we consider item FS-7201-0305 to be a material weakness.
This report is intended solely for the information and use of the management, members of the Randolph County Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~-~~

RWH:gp 2003-34 YB-40

State Auditor

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 7, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Randolph 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 Randolph 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. Randolph 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 ofRandolph County Board of Education's management. Our responsibility is to express an opinion on Randolph County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States 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 Randolph 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 Randolph County Board ofEducation's compliance with those requirements.
2003SA-35

In our opinion, the Randolph County Board ofEducation complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2003.
Internal Control Over Compliance
The management of Randolph 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 Randolph 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 Randolph 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-7201-03-01, FA-7201-03-02, FA-7201-03-03, FA-7201-03-04, FA-7201-03-05 and FA-7201-03-06.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level of risk that noncompliance with the applicable requirements oflaws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, ofthe reportable conditions described above, we consider items FA-7201-03-01 and FA-7201-03-05 to be material weaknesses.
This report is intended solely for the information and use of the management, members of the Randolph County Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:gp 2003SA-35

State Auditor

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

RANDOLPH 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-7201-01-01 FS-7201-01-02 FS-7201-02-01 FS-7201-02-02 FS-7201-02-03 FS-7201-02-04 FS-7201-02-05 FS-7201-02-06 FS-7201-02-07 FS-7201-02-08 FS-7201-02-09 FS-7201-02-10

Further Action Not Warranted Further Action Not Warranted Umesolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Umesolved - See Corrective Action/Responses Umesolved - See Corrective Action/Responses Umesolved - See Corrective Action/Responses Umesolved - See Corrective Action/Responses Umesolved - See Corrective Action/Responses Umesolved - See Corrective Action/Responses Umesolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS REVENUES/RECEIPTS/RECEIVABLES EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Collection and Use of Student Funds Finding Control Number: FS-7201-02-01

System implemented procedures to document fees collected from students. Effective fiscal year 2004.

REVENUES/RECEIPTS/RECEIVABLES EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Use of School District Vehicles Finding Control Number: FS-7201-02-03

The Board may authorize the use ofbuses for any school-sponsored activity. Transporting student fans to games and adult fans to out oftown games are consistent with our efforts to increase parental involvement in school activities. Buses are not loaned to outside agencies. School buses are only driven by school employees. Board of Education policy will be revised to reflect practice.

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RANDOLPH 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
CORRECTIVE ACTION/RESPONSES
REVENUES/RECEIPTS/RECEIVABLES EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Documentation for School Activity Accounts Finding Control Number: FS-7201-02-04
Principals and bookkeepers have been instructed to document collection and disbursement of funds to students. Effective fiscal year 2004.
PROCUREMENT EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Procedures Finding Control Number: FS-7201-02-05
Procurement policies will be followed. Documentation was provided for disbursements. Written permission will be secured from grantor for any deviation from grantor's agreement.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Duplicate Payment for Services Amount: $35,103.37 Finding Control Number: FS-7201-02-06
Background: Due to the CM's failure to prosecute the work as required by the Contract Documents it became necessary for the BOE to administratively take charge ofthe project in a manner that would not invalidate the Construction Agreement or prejudice the BOE rights.
Because of this crisis and since the Architect was familiar with the project, the BOE engaged the Architect, on an emergency basis, to bring the project to a successful completion on an expedited schedule. The Architect agreed and provided the required services to get the project back on track by working directly with the CM's Subcontractors, Subcontractors and Materials Suppliers. The firm evaluated and made recommendations to resolve all outstanding Subcontractor, Subcontractor and Materials Suppliers claims of non-payment and similar issues and disputes. The Architect was also asked to participate in the final negotiations with the CM.
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RANDOLPH 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
CORRECTIVE ACTION/RESPONSES
EXPENDITURES/LIABILITIES/DISBURSEMENTS Duplicate Payment for Services Amount: $35,103.37 Finding Control Number: FS-7201-02-06
Negotiations and Settlement: In order to successfully close out the project, BOE, Architect and CM participated in negotiations to reach a final resolution of the Contract Sum to be paid to the CM.
The job was stalled and the CM was demanding an amount in excess of$2,776,886.69 be paid to him by the BOE. In order not to stall the negotiation process it was agreed not to attempt to negotiate each of the one hundred and one (101) line items shown in the CM's Application for Payment individually. The BOE proposed a bottom line payment of $2,291,989.14 as recommended in the SPREADSHEET OF ADJUSTED GMP AMOUNTS, dated September 18, 2001 (Exhibit A).
After extensive discussions the parties agreed to settle this dispute conditioned upon a bottom line settlement of $2,361,989.84. The BOE Attorney approved this settlement.
Conclusion: The Additional Services of the Architect and this settlement resulted in a significant cost savings to the BOE of $516,244.09 over the original Guaranteed Maximum Price. It also avoided the possibility of protracted, expensive litigation and a work stoppage, which would have resulted in a less favorable outcome for the BOE.
Simply put, the BOE submits that a portion of the negotiated total job costs savings mentioned above (which was negotiated as a more favorable Lump Sum Settlement, instead of a protracted and less favorable line item negotiated settlement) be designated as a recovery or set-off of the Line Item amount for the CM's Fee disputed in the Auditors report.
Based on the factual representations outlined above and additionally that the field Auditor was not involved in the process, we are requesting that all statements regarding this matter be expunged from the final Audit Report.
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RANDOLPH 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

CORRECTIVE ACTION/RESPONSES

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Procedures for Vehicle Repairs and Maintenance Finding Control Number: FS-7201-02-07

Tracking procedures will be implemented after a permanent transportation director is hired.

EMPLOYEE COMPENSATION Salary Overpayments/Underpayment Inadequate Leave Records Finding Control Number: FS-7201-02-08

The District will review the salary overpayments, underpayments and leave records to determine appropriate action. Overpayments/underpayments have not been resolved at this time.

EMPLOYEE COMPENSATION Improper Processing/Reporting of Wages Finding Control Number: FS-7201-02-09

System will change process in fiscal year 2005.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-7201-02-01 FA-7201-02-02 FA-7201-02-03 FA-7201-02-04

Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented

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RANDOLPH 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 ACTIVITIES ALLOWED OR UNALLOWED REPORTING Inaccurate Claim for Reimbursement Finding Control Number: FA-7201-02-02 We agree with the finding. Additional staffwill be hired to ensure accurate accounting of meals. ALLOWABLE COSTS/COST PRINCIPLES Time and Attendance Records Not Utilized Properly Amount: $24,942.95 Finding Control Number: FA-7201-02-03 Employee was secretary for the curriculum director who also served as project director for the grant. The Technology Literacy Challenge Fund grant funded activities for a consortium consisting of the schools in Randolph, Clay, Quitman, and Stewart Counties and a private school in Randolph County. Our system served as fiscal agent for the consortium. The employee handled procurement process, received shipment of and inventoried all supplies and equipment, scheduled and monitored staff development activities for all schools involved in the consortium. Although records were not kept, employee spent 75-80% of her time with this grant. System will work with DOE to resolve this issue.
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SECTION IV FINDINGS AND QUESTIONED COSTS

RANDOLPH 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 Randolph County Board ofEducation's financial statements was unqualified.

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

Cash and Cash Equivalents Revenues/Receivables/Receipts Procurement

Expenditures/Liabilities/Disbursements Employee Compensation General Ledger

Of the reportable conditions described above, Procurement, Expenditures/Liabilities/ Disbursements and Employee Compensation include items that are considered to be material weaknesses.

3. Noncompliance Material to the Financial Statements The audit of the Randolph 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 Randolph County Board of Education disclosed reportable conditions in internal control over major programs for the following compliance requirements.

Activities Allowed or Unallowed Matching, Level of Effort and
Earmarking

Allowable Costs/Cost Principles Reporting Special Tests and Provisions

Of the reportable conditions described above, Activities Allowed or Unallowed and Reporting are considered to be material weaknesses.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Randolph 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 .510(a) of 0MB Circular A-133 The Randolph 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.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
I SUMMARY OF AUDITOR'S RESULTS
7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services- National School Lunch Program 10.559 Food and Nutrition Program - Summer Food Service Program for Children 84.010 Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies 93.600 Head Start
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.
9. Low Risk Auditee The Randolph County Board ofEducation 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 REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Collection and Use of Student Funds Reportable Condition Repeated From Prior Year Finding Control Number: FS-7201-03-01
An examination ofreceipt documentation related to the Randolph County Board ofEducation's After School programs revealed that $1,986 was deposited into the School District's general operating account and an estimated $708 was deposited in the After School activity account maintained at the Randolph County Elementary School. These deposits consisted of proceeds from a carnival-type event (teen center celebration) and non-refundable field trip deposits. These proceeds were not used to offset grant expenditures incurred nor were proper internal controls or adequate documentation maintained to ensure all funds received from these activities were deposited into School District accounts. These deficiencies occurred because management failed to implement proper accounting procedures to ensure that funds were properly safeguarded, deposited and recorded in the School District's accounting records. Procedures should be implemented to ensure that all funds collected by the School District are properly safeguarded, deposited and recorded in the School District's accounting records. In addition, income generated from the use of grant funds should be used to offset expenditures for that grant.
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RANDOLPH 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 REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Collection and Use of Student Funds Reportable Condition Repeated From Prior Year Finding Control Number: FS-7201-03-01
Management's Response:
The District will implement and enforce a system for collection of fees from students that includes written receipts and/or sign off list for monies received from students. No grant funds will be used in future events of this nature unless duly authorized. This finding is repeated due to the late completion date of the fiscal year 2002 audit. The activity had occurred two times before we received the first audit report.
CASH AND CASH EQUIVALENTS REVENUES/RECEIPTS/RECEIVABLES Unrecorded Petty Cash Fund Reportable Condition Finding Control Number: FS-7201-03-02
Discussions with After School Program personnel revealed a previously unidentified petty cash fund in the custody ofthe After School Program Director at the Teen Center. A count ofthis petty cash fund revealed $152 ofcash on hand which had not been recorded in the School District's accounting records. The After School Program Director stated that these funds were collected from food sales generated during the July 4, 2003, holiday celebration sponsored by the School District. Adequate documentation was not available to determine the actual amount offunds collected during this event. This lack ofproper accounting procedures increases the risk ofnot only unapproved but fraudulent use of funds or theft. This deficiency occurred because management failed to implement proper accounting procedures to ensure that all funds were properly safeguarded, deposited and recorded in the School District's accounting records. Procedures should be implemented to ensure that all funds collected by the School District are properly safeguarded, deposited and recorded in the School District's accounting records.
Management's Response:
Account has been dissolved.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUES/RECEIPTS/RECEIVABLES EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Documentation for School Activity Accounts Reportable Condition Repeated From Prior Year Finding Control Number: FS-7201-03-03
During our review of student activity accounts located in each school, we noted the following internal control weaknesses in handling student funds:
(1) The High School Activity Account reflected a $100 check made payable to the high school bookkeeper to obtain cash to refund 20 students each for a $5 field trip deposit. However, adequate documentation to support distribution ofthese funds to students was not available.
(2) Receipts recorded in the Elementary School's accounting system could not be easily traced to receipt documentation maintained. Multiple receipt books were used to record funds received without regard to pre-numbered sequences. As a result, there is no method oftracing deposits recorded in receipt books to the financial records. This lack of proper accounting procedures increases the risk of theft or fraud as there are no controls in place to verify that all funds received were actually recorded in the financial records.
These deficiencies occurred because management failed to implement controls to properly account for all transactions involving student activity accounts. The School District should implement controls to ensure disbursements of funds from student activity accounts are either with checks made payable to recipients and/or signed receipts are obtained for distribution of cash to recipients. In addition, the School District should issue pre-numbered receipts in sequence to document funds received with descriptions sufficient to determine the purpose of funds and the activity account to which funds should be deposited.
Management's Response:
Appropriate procedures will be implemented to insure adequate controls. This finding is repeated due to the late completion date of the fiscal year 2002 audit.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUES/RECEIPTS/RECEIVABLES EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Use of School District Vehicles Reportable Condition Repeated From Prior Year Finding Control Number: FS-7201-03-04
Our review of the School District's policies and procedures regarding use of School District buses revealed that use of School District vehicles for non-school related activities is prohibited unless specifically approved by School District action. Per our review of Board minutes of the School District for fiscal years ending June 30, 2001, June 30, 2002 and June 30, 2003, we noted only one instance when the School District approved use of a School District vehicle for a non-school related activity. We noted numerous instances in which buses were used for transportation of fans, to athletic events, and various community groups, which are considered non-school related activities. In addition, the School District policy states that a "reimbursable rate per mile will be reimbursed to the Randolph County School System" to cover costs incurred in providing transportation for nonschool related activities. The use of school buses to transport fans to home football and basketball games does not follow this policy. The Athletic Fund should reimburse the School District, on a per mile basis, for the cost associated with running each bus regardless ofthe number offans on the bus. Drivers picked up fans at central locations and collected money from each fan as they boarded the bus. Receipts were submitted to the high school bookkeeper who then paid each driver by check from the Athletic Fund - School Activity Account. The remaining proceeds, if any, were remitted to the Central Office. Our testing revealed occasions where funds collected from fans were insufficient to cover the bus driver's salary. This causes School District funds to be used to supplement the operation of fan buses. Also, there were no records/logs tracking the dates or mileage run by each bus and the purpose of each trip. These deficiencies occurred because management failed to adhere to policies and procedures approved by the School District. The School District should re-visit School District policies and implement procedures to ensure management is in compliance with appropriate School District policies.
Management's Response:
The Board may authorize the use of buses for any school-sponsored activity. Transporting student fans to games and adult fans to out oftown games are consistent with our efforts to increase parental involvement in school activities. Buses are not loaned to outside agencies and are only driven by school employees. This finding is repeated due to the late completion date of the fiscal year 2002 audit.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
PROCUREMENT EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-7201-03-05
Accounting procedures of the Randolph County Board of Education were insufficient to provide adequate controls over the above control categories. The following deficiencies were noted:
Procurement
The School District did not have adequate procedures in place to ensure that the procurement process was implemented properly. Our tests revealed numerous instances where purchase orders were issued after the expenditures were incurred.
Expenditures/Liabilities/Disbursements
The School District did not have procedures in place to ensure all expenditures were adequately documented, properly coded or checked for accuracy before disbursement of funds. Our tests of operating expenditures revealed numerous instances where funds were disbursed without proper documentation to support the expenditure.
Employee Compensation
The School District did not have adequate procedures in place to ensure employee compensation expenditures were properly documented, calculated and approved before disbursement of funds. Our tests of employee compensation records for thirty-two employees revealed ten instances where disbursements were improperly made to employees. Tests also revealed that proper documentation was not available to support split-funded employees. In addition, leave records were inadequate resulting in leave accruals at an inaccurate rate and failure to properly deduct leave used from leave balances.
The deficiencies noted above occurred because management failed to follow the School District's procurement policies, implement adequate controls to ensure expenditures are properly documented and processed before disbursement of funds and employee compensation expenditures are properly documented, coded, processed and approved before disbursement of funds. The School District should establish and implement appropriate procedures to ensure that purchasing procedures are followed for all expenditures and strengthen internal controls over processing expenditures and employee compensation. The School District should determine ifreimbursement/payment for salary overpayments/underpayments is appropriate.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
PROCUREMENT EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-7201-03-05
Management's Response:
All expenditures were documented. A very small percentage ofthe invoices were faxed copies and not originals, but documentation nonetheless.
The District will review the salary overpayments, underpayments, and leave records to determine appropriate action.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Excessive Payment for Services Reportable Condition Finding Control Number: FS-7201-03-06
A review of amounts charged for architectural work performed during fiscal year 2003 appeared to be excessive in relation to the type of services provided. Based on an amended architectural agreement, signed on September 10, 2002, the architect was to receive $34,000 for support and consultation services in connection with on site assessments of existing buildings and grounds owned by the School District. In addition, the architect was also scheduled to receive 20% or approximately $110,529 for contract administration services on contracts totaling $552,645. These contracts include $207,442 for furniture and accessories, $109,754 for a security system, $137,449 for an intercom system and $98,000 for various repairs and improvements.
A review of expenditure documentation noted that the architect billed the School District a fee of $184,000, an increase of $39,471 over the amended architectural agreement. Explanation for the increase in fees of$39,471 was provided as follows: (a) administration fees of$10,817, representing 25% of purchase orders of $34,498 for stage curtains and $8,769 for miscellaneous repair and renovation projects and (b) architectural services of $28,654 for other miscellaneous projects.
Contract administration fees of 20-25% for the above work appear to be excessive for the type of services provided. The School District should contact the architect and inquire about obtaining a reduced rate of these fees.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EXPENDITURES/LIABILITIES/DISBURSEMENTS Excessive Payment for Services Reportable Condition Finding Control Number: FS-7201-03-06
Management's Response:
Small districts lack sufficient staffto manage multiple ongoing projects. The fee paid to the architect was reasonable based on the services received. The district is pleased with the services rendered for fees paid.
EMPLOYEE COMPENSATION Inaccurate Reporting of Senior Management Compensation Reportable Condition Amount: $8,384 Finding Control Number: FS-7201-03-07
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 did not include payments of $8,384 for retirement benefits and health, dental and life insurance benefits on the Superintendent's behalf. These payments were in accordance with the contract between the Superintendent and the School District.
The School District reported a salary of $96,224 for Superintendent Bobby Jenkins in its salary and travel report for the period ended June 30, 2003. The actual compensation for Mr. Jenkins totaled $104,608, which includes the $8,384 benefit payments referenced above.
The School District should implement procedures to ensure that all employee compensation is included in the salary reported to the Department of Audits and Accounts.
Management's Response:
The District will implement procedures to ensure proper reporting of salary.
EMPLOYEE COMPENSATION Salary Overpayment Reportable Condition Amount: $11,250 Finding Control Number: FS-7201-03-08
A review of employee compensation expenditures revealed payments to six administrative employees in excess of compensation approved by the School District. Additional payments in the
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION Salary Overpayment Reportable Condition Amount: $11,250 Finding Control Number: FS-7201-03-08
amount of$750 were made periodically throughout the fiscal year for a total salary overpayment of $11,250. No documentation could be provided for additional work performed outside ofthe normal workday. Ofthe total overpayments of$ l l ,250, payments of$3,750 were charged to the Elementary and Secondary Education Act - Reading Excellence - Local Reading Improvement Program. This deficiency occurred because management failed to obtain proper documentation for changes in employee compensation prior to disbursement of funds. The School District should implement procedures to ensure that all payroll disbursements are properly documented and in accordance with amounts approved by the School District. The School District should review the overpayments to determine whether reimbursements should be secured. In addition, the School District should refund $3,750 to the Georgia Department of Education for the Reading Excellence Program.
Management's Response:
The Superintendent is authorized to determine salaries for administrative secretaries.
EMPLOYEE COMPENSATION Advance Payment to Employees Reportable Condition Finding Control Number: FS-7201-03-09
A review of employee compensation transactions noted that salary advances ranging from $100 to $849 were paid to seven employees at various times during the year under review. One advance payment of $190 remained uncollected at the time of review. The granting of salary advances constitutes interest free loans which are considered gratuities and are prohibited by Article 3, Section 6, Paragraph 6 of the Constitution of the State of Georgia. This deficiency occurred because management failed to adhere to limitations imposed by the Constitution of the State of Georgia regarding gratuitous payments. The School District should discontinue the practice of making advance payments to employees. The School District should seek reimbursement for the outstanding advance payment.
Management's Response:
Salary advances have been discontinued. The District will seek reimbursement for uncollected advancement.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION Improper Processing/Reporting of Wages Reportable Condition Repeated From Prior Year Finding Control Number: FS-7201-03-10
School District employees (bus drivers) were compensated directly from proceeds collected from groups utilizing the buses, instead of being paid through normal payroll procedures. As a result, gross wages for these individuals was underreported for income tax purposes. Federal income taxes are generally required to be withheld for all payments of compensation. Failure to follow tax regulations could result in the assessment of penalty charges against the employees for the underpayment of individual income taxes and could result in a liability to the School District. This deficiency occurred because management failed to process all employee compensation through the payroll system. The School District should review its policies and procedures to ensure all wage compensation is processed through the payroll system. In addition, the School District should adjust employee earnings records to properly reflect actual wages earned by the individuals affected.
Management's Response:
School bookkeepers were required to issue 1099's to drivers as applicable. Procedure has been discontinued. All employee compensation is made through payroll office.
GENERAL LEDGER Detailed Listing of Salaries and Travel Not Reconciled Nonmaterial Noncompliance Finding Control Number: FS-7201-03-11
The detailed listing ofsalary payments made to employees as submitted by the School District to the Georgia Department ofAudits was not reconciled with the general ledger as presented for audit. An unidentified variance totaling $11,963 could not be identified.
This condition occurred because management did not reconcile amounts submitted to Georgia Department of Audits to the School District's general ledger. Procedures should be established by the School District to ensure that the detailed listing ofsalary is reconciled to the accounting records prior to submission to the Georgia Department of Audits.
Management's Response:
An accounting consultant has been hired to assist in reconciling various reports.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Reportable Condition Finding Control Number: FS-7201-03-12
During the fiscal year ended June 30, 2003, the School District entered into a contract with Live Oak Consulting, Inc. (LOC). The firm assists local school boards in reducing employer cost associated with health insurance plans administered by the Georgia Department of Community Health (DCH). LOC is paid a fee equal to 50 percent ofthe first year employer cost savings identified by LOC. The School District, following the recommendations ofLOC, moved various employees from the Health Insurance Plan for Public School Teachers (See OCGA Title 20, Chapter 2, Article 17, Part 6, Sub Part 1) to the Health Insurance Plan for Public School Employees (See OCGA Title 20, Chapter 2, Article 17, Part 6, Sub Part 2).
According to DCH, School District employees who are to be included as members of the Health Insurance Plan for Public School Teachers (PST) are either:
1. Employed in a professionally certificated position; employee holds a valid certification; employee is assigned to a position that requires a certification as a qualification; employee's compensation is determined, at least in part, based upon the certificate; and employee is a member of the Teachers Retirement System or other public school retirement system.
Or:
2. Employed in a professionally certificated capacity; employee holds a valid certification; employee is not assigned to a position that requires a certification as a qualification; employee's compensation is determined, at least in part, based upon the certificate; and employee is a member ofthe Teachers Retirement System or other public school retirement system.
With respect to membership in the Health Insurance Plan for Public School Employees (PSE) Georgia Laws OCGA 20-2-910 and 47-4-2 (20) provide that the definition of public school employee, for the purpose ofmembership in the Health Insurance Plan for Public School Employees, means classroom aides, paraprofessionals, noncertified administrative and clerical employees, school bus drivers, school lunchroom personnel, school maintenance personnel and school custodial personnel. Generally, in order to determine which School District employees are eligible for the PSE or for the PST insurance plans, a comparison should be made ofthe employee's position and DCH's criteria listed above. Ifthe employee meets either test, then the employee is eligible for the Health Insurance Plan for Public School Teachers. If the employee fails both of the above tests, the employee is eligible for the Health Insurance Plan for Public School Employees.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Reportable Condition Finding Control Number: FS-7201-03-12
From information provided by the School District, it is not clear that all of these employees who were moved from the PST plan to the PSE plan are eligible for membership in the PSE plan under DCH's criteria.
The School District should establish policies and procedures to ensure that employer contributions for employee health insurance plans are paid in accordance with State Laws. In addition, the School District should contact the Georgia Department of Community Health to determine whether the employees who were moved from the PST plan were moved in error. Ifemployees were moved in error the affected employees should be returned to the PST plan and the School District should make payment to DCH for those employees. If all above referenced employees should have remained in the PST plan the amount due to DCH would be $16,756. Additionally, the School District should consult with its legal counsel regarding obtaining a refund for those employees who should not have been moved to the PSE plan. The amount of the refund from LOC could be as much as $8,378.
Management's Response:
Classifying employees for Health Insurance based on the certification requirements of the position was contained in materials distributed by the Department of Community Health based on their interpretation of the relevant laws. While that interpretation is not a clear violation of the law, the Attorney General's view of the laws' intent differs from the previous practice. The District will revisit the classification of employees for fiscal year 2006 so that our process is consistent with the interpretation of the Attorney General.
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ACTIVITIES ALLOWED OR UNALLOWED Unallowable Activities Reportable Condition - Material Weakness U.S. Department of Education Through Georgia Department of Education Amount: $72,495 Finding Control Number: FA-7201-03-01
A review of expenditures charged to the Title I - Grants to Local Educational Agencies program (CFDA 84.010) disclosed personnel services and operating costs for the Randolph Clay Leaming Center. In accordance with provisions of U. S. Department of Education Instructions and 0MB
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ACTIVITIES ALLOWED OR UNALLOWED Unallowable Activities Reportable Condition - Material Weakness U.S. Department of Education Through Georgia Department of Education Amount: $72,495 Finding Control Number: FA-7201-03-01
Compliance Supplement Provisions - Title I funds shall be used only to provide services and benefits to eligible children. The Randolph Clay Leaming Center is an alternative school which serves alternative students for Randolph, Clay and Stewart Counties. Approval for Title I funding at this location could not be documented through a review of the approved application. In addition, the School District could not provide documentation that only Title I eligible students had been served with the expenditure of these funds. This deficiency results in a questioned cost of $72,495. This condition occurred because management failed to ensure that Title I funds were expended only for the benefit of eligible Title I students.
The School District should implement procedures to ensure that all activities charged to the Title I Grants to Local Educational Agencies are allowable. The Georgia Department ofEducation should review this matter to determine if a refund is appropriate.
Management's Response:
The use of Title I funds at an alternative school program does not require approval since Title I services can follow the eligible children, and the alternative school is a program rather than a school. Eligibility is determined at the child's base school. Records are maintained to justify services to Title I eligible students at our alternative school since Title I services can follow eligible students.
ALLOWABLE COSTS/COSTS PRINCIPLES Time and Attendance Records Not Utilized Properly Reportable Condition U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-7201-03-02
A review of split-funded salaries charged to the Title II-Enhancing Education Through Technology program (CFDA 84.318) disclosed that one employee's time and attendance records were not being utilized as required by Chapter 41, of the Financial Management of Georgia Local Units of Administration (FMGLUA). This deficiency resulted in a questioned cost of$6,204. This condition occurred because the School District charged the employee's total salary to the program even though the employee performed other non-program related duties. The School District should implement
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ALLOWABLE COSTS/COSTS PRINCIPLES Time and Attendance Records Not Utilized Properly Reportable Condition U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-7201-03-02
procedures to ensure that all split-funded salaries are charged to the accounting records according to time and attendance records as required by Chapter 41, ofthe FMGLUA. The Georgia Department of Education should review this matter to determine if a refund is appropriate.
Management's Response:
Procedures have been implemented to ensure that time and attendance records are kept on all split funded staff.
MATCHING, LEVEL OF EFFORT AND EARMARKING Failure to Meet Matching Requirements Reportable Condition U. S. Department of Health and Human Services Finding Control Number: FA-7201-03-03
An examination ofthe Head Start program (CFDA 93 .600) revealed that the School District failed to meet matching requirements set forth in 45 CFR 1301.20-.21, which states, in part, that the School District is required to contribute twenty percent of the cost of the program through non-Federal inkind or cash contributions. The following deficiencies were noted:
(1) Matching requirements for Award No. 04CH0220/18 totaled $203,484. The School District provided documentation ofin-kind contributions in the amount of$176,730, of which $26,840 was provided through another Federally funded program.
(2) Matching requirements for Award No. 04CH0220/19 totaled $224,272. The School District provided documentation ofin-kind contributions in the amount of$168,327, of which $26,478 was provided through another Federally funded program.
These deficiencies occurred because management failed to ensure that the School District contributed the required match through non-Federal in-kind or cash contributions.
The School District should implement procedures to ensure that matching requirements are met as stated in 45 CFR 1301.20-.21. The U.S. Department ofHealth and Human Services should review this matter to determine if a reclaim of funds is appropriate.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
MATCHING, LEVEL OF EFFORT AND EARMARKING Failure to Meet Matching Requirements Reportable Condition U.S. Department of Health and Human Services Finding Control Number: FA-7201-03-03
Management's Response:
School District will comply with requirements of the grant.
MATCHING, LEVEL OF EFFORT AND EARMARKING Failure to Meet Earmarking Requirements Reportable Condition U.S. Department of Health and Human Services Finding Control Number: FA-7201-03-04
An examination ofthe Head Start program (CFDA 93.600) revealed that the School District failed to meet earmarking requirements set forth in 45 CFR 1305.4-.7, which states, in part, that enrollment levels must adhere to the levels specified in the financial assistance award and at least ninety percent of the enrollees must come from families whose income is below the official Federal poverty guidelines or who are receiving public assistance. For the year under review, funds were awarded to serve 125 Head Start children. Only 111 children were enrolled in the Head Start program for the school year 2002-2003. Ofthe 111 children enrolled, only 86 percent ofthe children met the income requirement. This deficiency occurred because management failed to ensure that enrollment levels were maintained and enrollees met the income requirements.
The School District should implement procedures to ensure that earmarking requirements are met as stated in 45 CFR 1305.4-.7. The U. S. Department ofHealth and Human Services should review this matter to determine if a reclaim of funds is appropriate.
Management's Response:
School District will comply with requirements of the grant.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
REPORTING Inaccurate Claim for Reimbursement Reportable Condition - Material Weakness U. S. Department of Agriculture Through Office of School Readiness Amount: $12,335 Finding Control Number: FA-7201-03-05
An examination ofthe Summer Food Service Program for Children (CFDA 10.559) revealed that the July, 2002 and June, 2003 claims for reimbursement were not supported by accurate meal count documentation or the School District's accounting records as required by 7 CFR 225.15c. The following discrepancies were noted:
(1) A comparison of meal counts reported on the monthly claim for reimbursement to the daily meal count summary sheets for the test months of July, 2002 and June, 2003 revealed 100 and 287 meals over claimed, respectively.
(2) Numerous discrepancies were noted between meals reported on the meal count summary sheets and meals reported on the daily count forms completed at the various feeding sites.
(3) Forty-eight sites were tested for two days in July, 2002 and on each day tested, at least two sites did not have delivery tickets to document the number ofmeals delivered to the site and at least fifteen sites' daily meal count summaries did not agree to the delivery tickets for that site.
(4) Additional testing comparing the meals claimed on the daily meal count summary sheets to the average daily attendance listed on forty-eight site applications for two days in July, 2002 revealed that fourteen sites did not have an average daily attendance listed on the application and nine sites had no application on file.
(5) The School District's reported program costs were not supported by the general ledger resulting in a variance of$12,335, which remained on hand for the year ending June 30, 2003. In the subsequent period, $12,335 was refunded to the Bright From the Start: Georgia Department of Early Care and Learning.
These discrepancies were due to management's failure to ensure that the number of meals claimed were based on accurate counts and these counts were supported by accurate documentation to support that meals were delivered and served to participating children and failure to verify that the amount of reported program costs were in agreement with and supported by the expenditures reflected on the School District's general ledger.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
REPORTING Inaccurate Claim for Reimbursement Reportable Condition - Material Weakness U.S. Department of Agriculture Through Office of School Readiness Amount: $12,335 Finding Control Number: FA-7201-03-05
The School District should implement procedures to ensure that all claims for reimbursement include an accurate and fully documented count of meals delivered and served and all program costs are supported by the School District's general ledger. The Bright From the Start: Georgia Department of Early Care and Leaming should review this matter to determine if an additional reclaim of funds is appropriate.
Management's Response:
Additional staff will be hired to ensure that proper procedures are followed.
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-7201-03-06
During the year in review, there was one school that the School District identified as participating in a school-wide program. While Federal provisions prescribe that multiple funding sources (Federal, State or Local) are required to support a school-wide program, we noted that the Title I program was identified as the only funding source supporting the school-wide program concept at the participating schools and, in contrast with Federal requirements, the School District arbitrarily charged the Title I fund with school-wide expenditures.
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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RANDOLPH 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-7201-03-06 reasonable manner. Ifthere is only one Federal funding source, then costs should be charged to the Federal program based on the specific benefits derived from that cost. 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. It was the School District's understanding that costs related to a school-wide program lose their identity and therefore any school-wide program cost can be charged to the Title I program. They were unaware that this was only applicable when there is more than one funding source supporting the school-wide program. The School District should implement procedures to assure that ifthe Title I program continues to be the only funding source in support ofa school-wide program, only those costs that specifically relate to the Title I program may be charged to the Title I fund. If more than one funding source is to support the school-wide program in the future, then procedures should be developed to (1) combine such funds as prescribed by U.S. Department ofEducation and (2) in line with 0MB Circular A-87 provisions, allocate such school-wide 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. Management's Response: The District has received guidance from SDOE to correct this finding.
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