RANDOLPH COUNTY BOARD OF EDUCATION CUTHBERT, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 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 REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS 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 6 D RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS 7 E STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 8 F RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES 9 G STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS 10 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 RANDOLPH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 24 3 SCHEDULE OF STATE REVENUE 26 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 INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 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 RANDOLPH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES SECTION I FINANCIAL Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 June 20, 2005 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, 2004, 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 ofEducation'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 financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Randolph County Board of Education, as of June 30, 2004, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. 2004ARL-11 In accordance with Government Auditing Standards, we have also issued our report dated June 20, 2005, 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 grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through vii and page 23 respectively, are not a required part of the basic financial statements but are 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. 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, ~e~/~L~- ~ State Auditor RWH:as 2004ARL-11 RANDOLPH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 INTRODUCTION Our discussion and analysis of the Randolph County Board of Education's financial performance provides an overview of the School District's financial activities for the fiscal year ended June 30, 2004. The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the notes to the basic financial statements and financial statements to enhance their understanding of the School District's financial performance. FINANCIAL HIGHLIGHTS Key financial highlights for fiscal year 2004 are as follows: GASB 34 required governments to comply with a new reporting model for financial statements. Based on total revenues, the Randolph County Board of Education was required to implement beginning fiscal year 2003. On the District-wide financial statements, the assets of the School District exceeded liabilities by $5.6 million. Of this amount, $366,000 is unrestricted and is available for spending at the School District's discretion. The School District had $16.1 million in expenses relating to governmental activities; only $12.4 million of these expenses are offset by program specific charges for services, grants and contributions. Among major funds, the general fund had $15.5 million in revenues and $15.4 million in expenditures. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the Randolph County Board of Education as a financial whole, or as an entire operating entity. Reporting the District as a Whole Statement ofNet Assets and Statement ofActivities While these documents contain the large number of funds used by the School District to provide programs and activities, the view of the School District as a whole looks at all financial transactions and asks the question, "How did we do financially during fiscal year 2004?" The Statement of Net Assets and the Statement ofActivities answer this question. These statements include all assets and all liabilities using the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid. - 1- RANDOLPH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 These two statements report the School District's net assets and changes in those assets. This change in net assets is important because it tells the reader whether, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the result of many factors, some financial, some not. Nonfinancial factors include the School District's property tax base, facility conditions, required educational programs and other factors. In the Statement of Net Assets and the Statement of Activities, the School District has one distinct type of activity: Governmental Activities - All of the School District's programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, food service, after school program, school activity accounts and various others. Reporting the District's Most Significant Funds Fund Financial Statements Fund financial reports provide detailed information about the School District's major funds. The School District uses many funds to account for a multitude of financial transactions. However, these fund financial statements focus on the School District's most significant funds. The School District's major governmental funds are the general fund and the capital projects fund. Governmental Funds - Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at yearend available for spending in future periods. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds is reconciled in the financial statements. Fiduciary Funds - The School District is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the school activity accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations. - 11 - RANDOLPH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 The School District as a Whole The perspective of the Statement of Net Assets is of the School District as a whole. Table 1 provides a summary of the Board's net assets for fiscal year 2003 and 2004. Table 1 Net Assets Governmental Activities Fiscal Fiscal Year 2004 Year 2003 Assets Current and Other Assets Capital Assets, Net $ 2,179,571 $ 2,498,536 4,950,250 4,994,975 Total Assets $ 7,129,821 $ 7,493,511 Liabilities Current and Other Liabilities $ 1,542,674 $ 1,556,164 Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted $ 4,950,250 $ 4,994,975 270,354 527,087 366,543 415,285 Total Net Assets $ 5,587,147 $ 5,937,347 Total net assets decreased $350,200 in fiscal year 2004. Table 2 shows the changes in net assets for fiscal year 2003 and 2004. -111- RANDOLPH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Table 2 Change in Net Assets Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Fiscal Fiscal Year 2004 Year 2003 $ 387,373 11,782,578 274,909 $ 557,759 11,472,612 Total Program Revenues $ 12,444,860 $ 12,030,371 General Revenues: Taxes Property Taxes $ 2,192,793 $ 2,137,042 Sales Taxes 15,204 336,367 Real Estate 18,483 4,666 Grants and Contributions not Restricted to Specific Programs 712,833 779,847 Investment Earnings 3,716 6,353 Miscellaneous 365,791 135,939 Total General Revenues $ 3,308,820 $ 3,400,214 Total Revenues $ 15,753,680 $ 15,430,585 Program Expenses 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 ofNon-Instructional Services Community Services Food Services $ 9,243,793 $ 9,048,790 775,149 1,054,656 264,257 520,797 906,677 174,145 1,060,880 685,887 53,016 254,700 755,693 1,177,710 229,545 536,253 850,538 156,139 1,027,945 784,341 82,646 223,307 23,576 1,086,347 35,657 1,148,276 Total Expenses $ 16,103,880 $ 16,056,840 Decrease in Net Assets $ -350.200 $ -626.255 The Statement of Activities shows the cost of program services and the changes for services and grants offsetting those services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. It identifies the cost of these services supported by tax revenue and unrestricted State entitlements. - lV - RANDOLPH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Table 3 Governmental Activities Total Cost of Services Fiscal Fiscal Year 2004 Year 2003 Net Cost of Services Fiscal Fiscal Year 2004 Year 2003 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 ofNon-Instructional Services Community Services Food Services $ 9,243,793 $ 9,048,790 $ 1,886,063 $ 1,728,459 775,149 1,054,656 264,257 520,797 906,677 174,145 1,060,880 685,887 53,016 254,700 755,693 1,177,710 229,545 536,253 850,538 156,139 1,027,945 784,341 82,646 223,307 209,026 165,482 105,325 -89,760 480,998 145,960 552,940 158,311 52,022 25,001 309,342 278,137 95,216 -7,709 441,231 142,756 578,308 303,240 53,172 19,788 23,576 1,086.347 35,657 1,148,276 11,785 -44,133 -2,397 86,926 Total Expenses $16.103.880 $16,056,840 $ 3,659.020 $ 4,026.469 The School District's Funds The School District's governmental funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues of $15.7 million and expenditures of $16.0 million. General Fund Budgeting Highlights The School District's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund. During the course of fiscal year 2004, the School District used site-based budgeting. The budgeting systems are designed to tightly control total site budgets but provide flexibility for site management. For the General Fund, the final budgeted revenues of $16.2 million exceeded the original budgeted amount of $13.8 million by $2.2 million. The actual revenues of $15.5 were below the final budgeted amount by $0.7 million. The final budgeted expenditures of $16.2 million exceeded the original budgeted amount of $13.7 million by $2.5 million. The actual general fund expenditures of $15.4 million were below the final budgeted amount by $0.8 million. General fund revenues exceeded expenditures by $53,746. The School District has made a concerted effort to raise fund balance in anticipation of future needs. -V- RANDOLPH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Capital Assets and Debt Administration Capital Assets At the end of fiscal year 2004, the School District had $4.9 million invested in capital assets, all in governmental activities. Table 4 indicates balances at June 30, 2004, compared with June 30, 2003. Table 4 Capital Assets (Net of Depreciation) Governmental Activities Fiscal Fiscal Year 2004 Year 2003 Land Buildings and Improvements Equipment $ 72,035 $ 72,035 4,138,520 4,258,795 739,695 664,145 Total $ 4,950.250 $ 4,994,975 Current Financial Issues and Concerns The Randolph County School District is financially stable. The School District's current operating mileage is 17.15, which produces approximately $135,152 per mill. The tax digest has been stagnant over the last five years. The residential community has shown a slight decrease in population. The Randolph County Tax Commissioner's office collects taxes for the School District and the average collection rate has been approximately 97% over the last five years. The School District does not anticipate any significant changes in the local tax digest in the immediate future. The Quality Basic Education Act was enacted into law by the 1985 session of the Georgia General Assembly. The Act set out the provisions for educational funding for grades kindergarten through twelve in the State of Georgia. The funding is based on student counts with the expectation that local School Districts fund part of the cost with local tax monies. The reductions in State funding are due to the economic downturn in the State and it is unclear how long the funding reductions will last. Currently, these reductions have caused the School District to increase local taxes. Contacting the Board's Financial Management This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's - Vl - RANDOLPH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 accountability for the money it receives. If you have questions about this report or need additional financial information, contact Bobby Jenkins, Superintendent of Schools, Randolph County Board of Education, 1208 Andrew Street, Cuthbert, Georgia 39840. - Vll - RANDOLPH COUNTY BOARD OF EDUCATION RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30. 2004 ASSETS Cash and Cash Equivalents Accounts Receivable, Net Taxes State Government Federal Government Other Inventories Capital Assets Land Buildings Equipment Less: Accumulated Depreciation Total Assets LIABILITIES Accounts Payable Salaries Payable 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 EXHIBIT"A" GOVERNMENTAL ACTIVITIES $ 334,680 65,679 895,130 804,623 72,533 6,926 72,035 6,798,439 2,038,169 -3,958,393 $ = = = 7 . . , ,1=2=9=,8=21= $ 386,213 1 156 461 $ 1542674 $ 4,950,250 73,764 115,959 80,631 366 543 $ 5 587 147 $ ===7="'1=2=9=8=21= 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. 2004 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 Total Governmental Activities 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 Total General Revenues Change in Net Assets Net Assets - Beginning of Year Net Assets - End of Year EXPENSES CHARGES FOR SERVICES $ 9,243,793 $ 775,149 1,054,656 264,257 520,797 906,677 174,145 1,060,880 685,887 53,016 254,700 23,576 1086347 $ 16,103,880 $ 293,757 11,211 82 405 387 373 The notes to the basic financial statements are an integral part of this statement. -4- EXHIBIT"B" PROGRAM REVENUES OPERATING CAPITAL GRANTS AND GRANTS AND CONTRIBUTIONS CONTRIBUTIONS NET (EXPENSES) REVENUES AND CHANGES IN NET ASSETS $ 6,870,143 $ 566,123 889,174 158,932 610,557 425,679 28,185 501,673 473,841 994 229,699 580 1026998 $ 11782578 $ 193,830 $ 6,267 53,735 21 077 274 909 $ -1,886,063 -209,026 -165,482 -105,325 89,760 -480,998 -145,960 -552,940 -158,311 -52,022 -25,001 -11,785 44133 -3,659,020 $ 2,192,793 15,204 18,483 712,833 3,716 365 791 $ 3,308,820 $ -350,200 5,937 347 $ ====5=5=87====14=7= -5- RANDOLPH COUNTY BOARD OF EDUCATION BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30. 2004 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 Total Liabilities FUND BALANCES Reserved for: Bus Replacement Continuation of Federal Programs 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 $ 229.163 $ 105,517 $ 68,975 895,130 804,623 72,533 6 926 2,969 334,680 71,944 895,130 804,623 72,533 6 926 $ 2,077,350 $ 108 486 $ ======2:!'=18=5-=,8=36= $ 386,213 1,156,461 $ 1 542,674 $ 386,213 1156461 $ 1542674 $ 73,764 109,033 6,926 $ $ 80,631 54,264 290,689 27,855 $ 534,676 $ 108.486 $ 73,764 109,033 6,926 80,631 54,264 290,689 27 855 643,162 $ 2,077,350 $ 108 486 $ ===~2~,1~85;;,i,~83~6;,,, The notes to the basic financial statements are an integral part of this statement. -6 - RANDOLPH COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30. 2004 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 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. $ 643,162 $ 72,035 6,798,439 2,038,169 -3,958,393 4,950,250 -6 265 Net Assets of Governmental Activities (Exhibit "A") $ =====5=li5=8=7"'=1=4=7 The notes to the basic financial statements are an integral part of this statement. -7- RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30. 2004 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 $ 2,172,069 18,483 $ 7,796,544 4,752,602 387,373 3,150 371 723 $ 15,501,944 $ $ 15,204 221,174 566 236,944 $ 2,172,069 33,687 8,017,718 4,752,602 387,373 3,716 371 723 15,738,888 $ 8,584,692 775,149 1,064,656 264,257 527,497 906,677 174,145 1,038,007 762,584 53,016 254,700 23,576 1,018,270 972 $ $ 15,448,198 $ $ 53,746 $ 480,930 $ 616,889 616,889 $ -379,945 $ 488 431 8,584,692 775,149 1,064,656 264,257 527,497 906,677 174,145 1,038,007 762,584 53,016 254,700 23,576 1,018,270 617 861 16,065,087 -326, 199 969 361 $ 534 676 $ 108,486 $ ===6=4=3,.,;1=6=2 The notes to the basic financial statements are an integral part of this statement. -8 - 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. 2004 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 $ 252,020 -290,813 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. In the Statement of Activities, only the gain on the sale of the building/equipment is reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the cost of the carrying value of the building/equipment sold. -326,199 -38,793 20,724 -5 932 Change in Net Assets of Governmental Activities (Exhibit "B") $ ===-3=5=0.,,,2=00= The notes to the basic financial statements are an integral part of this statement. -9- RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30. 2004 ASSETS Accounts Receivable, Net Other LIABILITIES Cash Overdraft Accounts Payable Funds Held for Others Total Liabilities EXHIBIT"G" AGENCY FUNDS $ =====8=,=17=5= $ 3,746 81 4,348 $ ===8='=17=5= The notes to the basic financial statements are an integral part of this statement. - 10 - RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 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. 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 ofgoods 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. The School District reports the following major governmental funds: - 11 - RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 Special Purpose Local Option Sales Tax proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation ofmajor 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. 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 umestricted 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. - 12 - RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 School District 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 2003 tax digest year (calendar year) on August 28, 2003 (levy date). Taxes were due on December 20, 2003 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2003 tax digest are reported as revenue in the governmental funds for fiscal year 2004. The Randolph County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2004, for maintenance and operations amounted to $2,172,069. The tax millage rate levied for the 2003 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 SALES TAXES Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $15,204 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. - 13 - RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. 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 All NIA All 25 to 60 years $ 5,000 5 to 12 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. 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 ofthe face - 14 - RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"H" Note 3: DEPOSITS 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, 2004, the bank balances were $1,359,552. The amounts of the total bank balances are classified into three categories of credit risk: - 15 - RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 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, 2004, as follows: Risk Category Bank Balance 1 $ 107,045 2 1,252,507 3 0 Total $ 1,359.552 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: - 16 - RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 5: CAPITAL ASSETS Balances July 1, 2003 Increases Decreases Balances June 30. 2004 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 $ 1,869,033 Less Accumulated Depreciation for: Buildings and Improvements Equipment 2,532,828 1,204.888 Total Capital Assets, Being Depreciated, Net $ 4,922.940 $ Governmental Activity Capital Assets - Net $ 4,994.975 $ 32,840 $ 219,180 151,553 139.260 -38 793 $ -38 793 $ 26,024 $ 6,798,439 50,044 2,038,169 24,462 45 674 2,659,919 1,298,474 5 932 $ 4,878,215 5 932 $ 4,950,250 Current year depreciation expense by function is as follows: Instruction Support Services Maintenance and Operation of Plant Student Transportation Services Food Services $ 165,928 $ 5,365 101 477 106,842 18,043 $=~2~90~,8~1~3 Note 6: RESTRICTED ASSETS 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, 2004, were as follows: Restricted Cash and Cash Equivalents: Capital Acquisitions District-wide Capital Projects SPLOST $ 304,672 - 17 - RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" 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 School District's insurance coverage in any of the past three years. The School District has elected to self-insure for all losses related to acts of God. 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. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: 2003 2004 Beginning of Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability $ 0 $ 2,638 $ 2,638 $ 0 $ 0 $ 6 865 $ 6 865 $ 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: - 18 - RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"H" Note 7: RISK MANAGEMENT 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, 2004, for governmental funds amounted to $71,295. Future minimum lease payments for these leases are as follows: Year Ending Governmental Funds 2005 2006 2007 $ 71,000 61,850 54,650 Total $==="'="18==,;7==50==0 Note 9: SHORT-TERM DEBT The School District issues tax anticipation notes in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution ofthe State ofGeorgia limits the aggregate amount of short-term debt to 75 percent ofthe total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred. Short-term debt activity for the fiscal year is as follows: - 19 - RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"H" Note 9: SHORT-TERM DEBT Beginning Balance Issued Redeemed Ending Balance Tax Anticipation Notes $====0 $ 600,000 $ 600.000 $=====0 Note 10: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $197,372 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $195,837 Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $1,535 Note 11: SIGNIFICANT COMMITMENTS The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2004, together with funding available: Project Unearned Executed Contracts Funding Available From State SAO 1S-720-323 $ 7 03 5 $====7='=7"='4==9 The amounts described in this note are not reflected in the basic financial statements. Note 12: 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. -20 - RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"H" Note 12: SIGNIFICANT CONTINGENT LIABILITIES 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. Note 13: 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 2004 2003 2002 100% 100% 100% $ 737,654 $ 746,350 $ 701,049 - 21 - RANDOLPH COUNTY BOARD OF EDUCATION GENERAL FUND SCHEDULE OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED JUNE 30 2004 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 (1) FINAL (1) ACTUAL AMOUNTS $ 2,216,600 $ 2,216,600 $ 2,172,069 18,483 7,277,165 7,517,769 7,796,544 3,906,354 6,066,189 4,752,602 343,083 343,083 387,373 25,389 25,389 3,150 22,217 23 217 371 723 $ 13,790,808 $ 16 192 247 $ 15,501 944 $ 7,318,686 $ 8,705,029 $ 8,584,692 737,540 961,106 238,397 429,015 832,533 159,905 1,046,803 724,546 48,727 195,508 1,012,163 18 297 947,445 1,236,843 240,078 528,781 832,533 187,330 1,101,600 857,999 48,727 269,382 1,219,521 26 959 775,149 1,064,656 264,257 527,497 906,677 174,145 1,038,007 762,584 53,016 254,700 23,576 1,018,270 972 $ 13,723,226 $ 16,202,227 $ 15 448 198 $ 67 582 $ -9 980 $ 53 746 $ 84,548 $ 84,548 -84,548 -84 548 $ 0 $ 0 $ 67,582 $ -9,980 $ 53,746 523,188 523,188 480,930 -658,899 -658 899 Fund Balances - Ending $ -68 129 $ -145,691 $ 534 676 Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual (1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts. The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. - 23- RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30. 2004 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning Summer Food Service Program for Children Total Child Nutrition Cluster Other Programs Pass-Through From Georgia Department of Education Food Donation (1) Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning 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 Special Education Grants to States Preschool Grants Total Special Education Cluster Other Programs Pass-Through From Georgia Department of Education Comprehensive School Reform Demonstration Education for Homeless Children and Youth Enhancing Education Through Technology Program Even Start Improving Teacher Quality State Grants Reading Excellence - Local Reading Improvement Reading First State Grants Rural Education Safe and Drug-Free Schools and Communities State Grants for Innovative Programs Title I Grants to Local Educational Agencies Twenty-First Century Community Learning Centers Vocational Education - Basic Grants to States Total U.S. Department of Education CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD * 10.553 * 10.555 * 10.559 N/A N/A $ N/A $ (2) 777,511 193,349 970,860 10.550 10.558 N/A N/A $ 1,243 22,322 994 425 * 84.027 * 84.173 N/A $ N/A $ 291,500 (3) 21,853 (4) 313,353 84.332 84.196 84.318 84.213 84.367 * 84.338 84.357 84.358 84.186 84.298 * 84.010 84.287 84.048 N/A N/A NIA N/A N/A N/A N/A N/A N/A N/A NIA N/A N/A $ 207,792 25,084 54,574 241,569 151,884 465,699 62,177 37,089 18,375 40,115 881,029 185,577 22,856 2 707 173 - 24- RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30. 2004 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 Block Grants 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 $ NIA NIA NIA NIA $ 954,906 13,275 21,179 20,381 70 028 1079769 17.259 NIA $ 3 342 $ 42 381 Total Federal Financial Assistance NIA = Not Available $ =====-4,,;.;82=7:!:,0=9=0 Notes to the Schedule of Expenditures of Federal Awards (1) The amount shown for the Food Donation 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 ($268,935) were not maintained separately and are included in the 2004 National School Lunch Program. (3) Includes Federal Assistance of $48,004 provided to subrecipients. (4) Includes Federal Assistance of $5,954 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 fund financial statements. See notes to the basic financial statements. - 25 - RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2004 SCHEDULE "3" 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 CategoryV Special Education Itinerant Special Education Supplemental Speech 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 Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs 4-8 Statewide After School Program Health Insurance K-3 Statewide Reading Program Mentor Teachers Preschool Handicapped Program School Improvement (Georgia"s Choice) Special Education Low Incidence Grant Student Information System Lottery Program Student Information System GOVERNMENTAL FUND TYPES CAPITAL GENERAL PROJECTS FUND FUND TOTAL $ 210,977 $ 210,977 442,888 60,436 752,112 148,547 406,904 102,918 904,684 893,750 309,995 16,974 290,901 307,248 51,368 33,396 314 374 24,799 4,471 79,321 133,290 44,970 26,272 314,513 349,387 392,641 290,735 53,735 34,907 45,662 5,320 9,008 707,685 52,138 69,261 -321,628 6,851 195,837 9,112 3,699 46,832 120,000 5,684 15,156 58,372 442,888 60,436 752,112 148,547 406,904 102,918 904,684 893,750 309,995 16,974 290,901 307,248 51,368 33,396 314 374 24,799 4,471 79,321 133,290 44,970 26,272 314,513 349,387 392,641 290,735 53,735 34,907 45,662 5,320 9,008 707,685 52,138 69,261 -321,628 6,851 195,837 9,112 3,699 46,832 120,000 5,684 15,156 58,372 - 26- RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2004 SCHEDULE "3" AGENCY/FUNDING GRANTS Georgia State Financing and Investment Commission Reimbursement on Construction Projects Office of Treasury and Fiscal Services Public School Employees Retirement Office of the Governor Children and Youth Coordinating Council STAR Program CONTRACTS Human Resources, Georgia Department of Teen Plus Tobacco Use Prevention GOVERNMENTAL FUND TYPES CAPITAL GENERAL PROJECTS FUND FUND TOTAL $ 221,174 $ 221,174 $ 1,535 1,535 6,431 6,431 75,347 1 415 75,347 1,415 $ 7,796,544 $ 221,174 $===8=,0=1=7,=7=18= 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. 2004 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 COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR (3) AMOUNT EXPENDED IN PRIOR YEARS (3) PROJECT STATUS $ 3,300,000 $ 5,613,273 $ 616 889 $ 4,496,243 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. 2004 SCHEDULE "5" DESCRIPTION ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) ELIGIBLE QBE PROGRAM COSTS SALARIES OPERATIONS TOTAL Direct Instructional Programs Kindergarten Program $ Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program 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 II Category Ill Category IV Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program 483,428 $ 65,436 817,082 185,090 461,562 130,280 1,004,110 984,870 337,288 763,670 28,550 18,951 87,114 404,591 $ 122,814 781,218 268,581 576,527 263,407 807,087 1,372,330 291,401 324,961 334,411 46,351 11,005 65,009 67,644 201,492 13,574 $ 384 21,152 384 24,008 638 20,723 45,205 23,893 3,408 5,064 1,631 126 145 855 1,472 418,165 123,198 802,370 268,965 600,535 264,045 827,810 1,417,535 315,294 328,369 339,475 47,982 11,131 65,154 68,499 202,964 TOTAL DIRECT INSTRUCTIONAL PROGRAMS $ 5,367,431 $ 5,938,829 $ 162,662 $ 6,101,491 Media Center Program Staff and Professional Development 147,771 29,072 246,694 20,345 9,105 267,039 9,105 TOTAL QBE FORMULA FUNDS $ 5,544,274 $ 6,185,523 $ 192,112 $ ==..;6;,.,3;;,;7~7.,;,6;,;;3;;;,,5 (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 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 June 20, 2005 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 INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 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, 2004, which collectively comprise Randolph County Board of Education's basic financial statements and have issued our report thereon dated June 20, 2005. 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. 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 an opinion on the internal 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-7201-04-01, FS-7201-04-02, FS-7201-04-03, FS-7201-04-04, FS-7201-04-05, FS-7201-04-06 andFS-7201-0407. 2004YB-40 A material weakness is a reportable condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, of the reportable conditions described above, we consider item FS-7201-04-03 to be a material weakness. Compliance and Other Matters 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 of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the management and members of the Randolph County Board of Education and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~~-~ Russell W. Hinton State Auditor RWH:as 2004YB-40 Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 June 20, 2005 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, 2004. 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 of Randolph 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 of America; 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. 2004SA-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, 2004. 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-7201-04-01, FA-7201-04-02, FA-7201-04-03 and FA-7201-0404. A material weakness is a reportable condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level ofrisk that noncompliance with the applicable requirements of laws, regulations, contracts and grants caused by error or fraud 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 ofthe 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-7201-04-01 and FA7201-04-03 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, ~t~-~ State Auditor RWH:as 2004SA-35 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, 2004 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-7201-02-01 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-7201-03-01 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 FS-7201-03-11 FS-7201-03-12 Previously Reported Corrective Action Implemented Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Further Action Not Warranted Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Unresolved - See Corrective Action Implemented Previously Reported Corrective Action Implemented Unresolved - See Corrective Action Implemented CORRECTIVE ACTION/RESPONSES REVENUES/RECEIPTS/RECEIVABLES EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Documentation for School Activity Accounts Finding Control Number: FS-7201-02-04 Procedures will be implemented to correct deficiency. PROCUREMENT EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Procedures Finding Control Number: FS-7201-02-05 Appropriate procedures have been implemented. - 1- RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 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 Background: Due to the Contract Manager's (CM) failure to prosecute the work as required by the Contract Documents it became necessary for the Board of Education to administratively take charge of the project in a manner that would not invalidate the Construction Agreement or prejudice the Board of Education rights. Because of this crisis and since the Architect was familiar with the project, the Board of Education 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 ofnon-payment and similar issues and disputes. The Architect was also asked to participate in the final negotiations with the CM. Negotiations and Settlement: In order to successfully close out the project, the Board of Education, Architect and CM participated in negotiations to reach a final resolution ofthe 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 Board of Education. In order not to stall the negotiation process, it was agreed not to attempt to negotiate each ofthe one hundred and one (101) line items shown in the CM's Application for Payment individually. The Board of Education 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 Board ofEducation Attorney approved this settlement. Conclusion: The additional services of the Architect and this settlement resulted in a significant cost savings to the Board of Education 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 Board of Education. -2 - RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 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 Simply put, the Board ofEducation submits that a portion ofthe 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. EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Procedures for Vehicle Repairs and Maintenance Finding Control Number: FS-7201-02-07 Tracking system will be implemented. EMPLOYEE COMPENSATION Salary Overpayments/Underpayment Inadequate Leave Records Finding Control Number: FS-7201-02-08 Process implemented for proper accounting of leave. REVENUES/RECEIPTS/RECEIVABLES EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Documentation for School Activity Accounts Finding Control Number: FS-7201-03-03 Procedures will be implemented to correct deficiency. -3 - RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES REVENUES/RECEIPTS/RECEIVABLES EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Use of School District Vehicles Finding Control Number: FS-7201-03-04 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. Policy will be changed to reflect current procedure. PROCUREMENT EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION Inadequate Accounting Procedures Finding Control Number: FS-7201-03-05 Appropriate procedures have been implemented. EXPENDITURES/LIABILITIES/DISBURSEMENTS Excessive Payment for Services Finding Control Number: FS-7201-03-06 Small School Districts lack sufficient staff to manage multiple ongoing projects. The fee paid to the architect was reasonable based on the services received. The School District is pleased with the services rendered for fees paid. EMPLOYEE COMPENSATION Salary Overpayment Finding Control Number: FS-7201-03-08 Practice has been discontinued. Pay above annual salary is approved by the Board of Education. EMPLOYEE COMPENSATION Improper Processing/Reporting of Wages Finding Control Number: FS-7201-03-10 Practice has been discontinued. All employees are paid through payroll office. -4 - RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES EMPLOYEE COMPENSATION EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Finding Control Number: FS-7201-03-12 Beginning fiscal year 06, all employees will be classified according to latest info from state health department and Attorney General's opinion. Appropriateness ofreimbursement is being addressed by legal counsel. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FA-7201-02-02 FA-7201-02-03 FA-7201-03-01 FA-7201-03-02 FA-7201-03-03 FA-7201-03-04 FA-7201-03-05 FA-7201-03-06 Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses CORRECTIVE ACTION/RESPONSES ALLOWABLE COSTS/COST PRINCIPLES Time and Attendance Records Not Utilized Properly Amount: $24,942.95 Finding Control Number: FA-7201-02-03 Time and attendance documentation are kept on split funded staff members. ACTIVITIES ALLOWED OR UNALLOWED Unallowable Activities Amount: $72,495 Finding Control Number: FA-7201-03-01 The use of Title I funds at an alternative school does not require approval since Title I services can follow eligible children, and the alternative school is a program rather than a -5- RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES ACTIVITIES ALLOWED OR UNALLOWED Unallowable Activities Amount: $72,495 Finding Control Number: FA-7201-03-01 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/COST PRINCIPLES Time and Attendance Records Not Utilized Properly Finding Control Number: FA-7201-03-02 Time and attendance documentation are kept on split funded staff members. MATCHING, LEVEL OF EFFORT AND EARMARKING Failure to Meet Matching Requirements Finding Control Number: FA-7201-03-03 District has complied with grant requirements. Changes effective fiscal year 2005. MATCHING, LEVEL OF EFFORT AND EARMARKING Failure to Meet Earmarking Requirements Finding Control Number: FA-7201-03-04 School District has met grant requirements. Changes made effective fiscal year 2005. SPECIAL TESTS AND PROVISIONS Fiscal Requirements of School-wide Program Not Fully Implemented Finding Control Number: FA-7201-03-06 Guidance from SDOE will correct problem. Action implemented fiscal year 2005. -6- SECTION IV FINDINGS AND QUESTIONED COSTS RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 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 Employee Compensation Procurement Expenditures/Liabilities/Disbursements Revenues/Receivables/Receipts Of the reportable conditions described above, Procurement, Expenditures/Liabilities/ Disbursements and Employee Compensation 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 Reporting Period of Availability 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. - 1- RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 I SUMMARY OF AUDITOR'S RESULTS 7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 10.559 Summer Food Service Program for Children 84.010 Title I Grants to Local Educational Agencies 84.027 Special Education - Grants to States 84.173 Special Education - Preschool Grants 84.338 Reading Excellence - Local Reading Improvement 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 Inadequate Internal Control Procedures Reportable Condition Finding Control Number: FS-7201-04-01 Our examination ofprincipal accounts disclosed weaknesses in internal control as discussed below: Cash and Cash Equivalents (1) The bank reconciliation function was not separated from the record keeping functions. Revenues/Receivables/Receipts (1) Deposit preparation was not separated from the record keeping and cash custody functions. -2- RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Reportable Condition Finding Control Number: FS-7201-04-01 (2) Receipts recorded in the Elementary School's accounting system could not easily be traced to receipt documentation maintained. Multiple receipt books were used to record funds received without regard to pre-numbered sequences. For numerous months, no receipt books were provided. As a result, there is no method oftracing deposits recorded in receipt books to the financial records. This lack ofproper 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. Expenditures/Liabilities/Disbursements (1) Nine of eleven vouchers tested were charged to the wrong functional expenditure classification. The School District recorded all ofthe vouchers to the instruction function. (2) Two of eleven vouchers tested were not approved. These deficiencies were a result ofmanagement's decision to limit the number ofadministrative staff made responsible, at the various principal account sites, for the accounting functions and failure to implement controls to properly account for all transactions involving principal accounts. Management should implement additional procedures to ensure that the key accounting functions of custody and record keeping be segregated. In addition, controls should be revised to ensure disbursements and receipts of funds within the principal accounts are adequately documented, approved, and recorded in the financial records. REVENUES/RECEIVABLES/ RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Use of School District Vehicles Reportable Condition Repeated from Prior Year Finding Control Number: FS-7201-04-02 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 previous fiscal years, and the current fiscal year, we noted only one instance when the -3- RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS REVENUES/RECEIVABLES/ RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Use of School District Vehicles Reportable Condition Repeated from Prior Year Finding Control Number: FS-7201-04-02 School District approved use ofa 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 non-school 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 of the number of fans 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. PROCUREMENT EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION Inadequate Accounting Procedures Reportable Condition - Material Weakness Repeated from Prior Year Finding Control Number: FS-7201-04-03 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. -4 - RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS PROCUREMENT EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION Inadequate Accounting Procedures Reportable Condition - Material Weakness Repeated from Prior Year Finding Control Number: FS-7201-04-03 Expenditures/Liabilities/Disbursements The School District did not have procedures in place to ensure all expenditures were adequately documented, properly approved or checked for accuracy before disbursement of funds. Our tests ofoperating expenditures revealed numerous instances where funds were disbursed without proper documentation to support the expenditure. One such instance resulted in a duplicate payment of $6,277. 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-one employees revealed seventeen instances where disbursements were improperly made to employees. Tests also revealed that one teacher did not have a teaching certificate and one teacher was paid at the wrong certificate level. 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, processed and approved before disbursement of funds and employee compensation expenditures are properly documented, 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. -5 - RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Excessive Payment for Services Reportable Condition Repeated from Prior Year Finding Control Number: FS-7201-04-04 A review of amounts charged for architectural work performed during fiscal years 2003 and 2004 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. EMPLOYEE COMPENSATION Salary Overpayment Reportable Condition Amount: $14,750 Finding Control Number: FS-7201-04-05 A review of employee compensation expenditures revealed payments to five administrative employees in excess of compensation approved by the School District. Additional payments in the amounts of $750 and $1,000 were made periodically throughout the fiscal year for a total salary overpayment of $14,750. No documentation could be provided for additional work performed outside of the normal workday. 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. -6 - RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS EMPLOYEE COMPENSATION Improper Processing/Reporting of Wages Reportable Condition Repeated from Prior Year Finding Control Number: FS-7201-04-06 School District employees (bus drivers) were compensated directly with proceeds collected from groups utilizing the buses, instead ofthrough normal payroll procedures. As a result, gross wages for these individuals was under reported 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 ofpenalty charges against the employees for the underpayment ofindividual 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. EMPLOYEE COMPENSATION EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Reportable Condition Repeated from Prior Year Finding Control Number: FS-7201-04-07 During the fiscal year ended June 30, 2004, the School District utilized a process to reduce employer cost associated with health insurance plans administered by the Georgia Department ofCommunity Health (DCH). The School District, moved/classified 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: -7- RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS EMPLOYEE COMPENSATION EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Reportable Condition Repeated from Prior Year Finding Control Number: FS-7201-04-07 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. 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. -8- RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 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: $57,151 Finding Control Number: FA-7201-04-01 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 Learning Center. In accordance with provisions of U. S. Department of Education Instructions and 0MB Compliance Supplement provisions, Title I funds shall be used only to provide services and benefits to eligible children. The Randolph Clay Learning 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 $57,151. 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. PERIOD OF AVAILABILITY Expenditures After Grant Period Reportable Condition U.S. Department of Health and Human Services Amount: $122,663 Finding Control Number: FA-7201-04-02 An examination of the Headstart Program (CFDA 93.600) revealed that there were expenditures charged to the program after the end of the grant period. The approved grant period for the Head Start program is November 1, 2002 through October 31, 2003. There were four noted expenditures totaling $122,663 that were subsequent to the approved grant period. The School District should contact the U.S. Department of Health and Human Services to obtain instructions regarding the resolution ofthe noted expenditures charged to the program subsequent to the grant period. -9- RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS REPORTING Inadequate Documentation Reportable Condition - Material Weakness U.S. Department of Agriculture Through Bright From the Start: Georgia Department of Early Care and Learning Finding Control Number: FA-7201-04-03 An examination ofthe Summer Food Service Program for Children (CFDA 10.559) revealed thatthe July, 2003 and June, 2004 claims for reimbursement were not supported by accurate meal count documentation as required by 7 CFR 225.15c. The following discrepancies were noted: (1) Five sites were tested for July, 2003 and June, 2004 and eleven daily meal count forms could not be found. All sites had at least one day with two daily meal count forms and each form had a different number of meals served. Therefore, the number of meals claimed for each site tested could not be verified to the number of meals claimed. (2) Forty-eight sites were tested for one day in July, 2003 and numerous discrepancies were noted between the number ofmeals reported on the daily meal count forms, meals reported on delivery tickets and meals reported on the daily meal count summary sheets. In addition, four sites did not have delivery tickets to document the number ofmeals delivered to the site and three sites did not have the number of meals delivered listed on daily meal count forms. Forty-nine sites were tested for two days in June, 2004 and it was noted that six delivery tickets and ten daily meal count forms could not be located, also fifteen delivery tickets did not agree to the daily meal count forms. (3) In June 2004, three of five sites tested had numerous days where the number of meals served exceeded the approved maximum average daily attendance. 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. 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. 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. - 10 - RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 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 Repeated from Prior Year Finding Control Number: FA-7201-04-04 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 school 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 A133, 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 ofthe school and to raise academic achievements for all students. By combining funds from Title I and other eligible U. S. Department ofEducation funded programs in support ofa school-wide program, U. S. Department of Education Instructions provide that specific school-wide program costs lose their identity but only in those circumstances when funds are combined in a schoolwide 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 reasonable manner. If there 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. - 11 - SECTIONV MANAGEMENT'S RESPONSES RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDED JUNE 30, 2004 Finding Control Number: FS-7201-04-01 We concur with the finding. Additional training will be provided for school level bookkeepers to comply with the requirements of GASB 34. Separation of duties may not be practical due to the limited number of clerical staff at each school. Finding Control Number: FS-7201-04-02 We disagree with the finding. The School District may authorize the use of buses for any schoolsponsored or school related activity. Transporting student fans to games and adult fans to out of town games are consistent with our efforts to increase parental involvement in school activities. A fee schedule has been established for reimbursement. Finding Control Number: FS-7201-04-03 We concur with the finding. Appropriate procedures have been implemented. Some errors were caused by staff transition. Finding Control Number: FS-7201-04-04 We disagree with the finding. Small school districts lack sufficient staffto manage multiple ongoing projects. The fee paid to the architect was reasonable based on the services received. The School District is pleased with the services rendered for fees paid. Finding Control Number: FS-7201-04-05 We disagree with the finding. The Superintendent determines salaries for administrative secretaries and other non-certificated personnel who work in the central office. Finding Control Number: FS-7201-04-06 We concur with the finding. This process has been discontinued effective fiscal year 2005. Finding Control Number: FS-7201-04-07 We disagree with the finding. The classification of employees for Health Insurance on the certification requirements ofthe position was contained in materials distributed by the Department of Community Health based on their interpretation of 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 School District will revisit the classification ofemployees for fiscal year 2006 so that our process is consistent with the interpretation of the Attorney General. Since these actions were taken based on information from DCH, we feel that no repayment is due DCH. Issue will be resolved with DCH. - 1- RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDED JUNE 30, 2004 Finding Control Number: FA-7201-04-01 We disagree with the finding. 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. Finding Control Number: FA-7201-04-02 We concur with the finding. Procedures will be implemented to ensure compliance with regulations. Finding Control Number: FA-7201-04-03 We concur with the finding. Previous program changes have helped with the problem but have not fully corrected all issues. We will develop additional procedures. Finding Control Number: FA-7201-04-04 We concur with the finding. The School District has received guidance from SDOE to correct this finding effective fiscal year 2005. Contact Person: Bobby Jenkins, Superintendent Phone: (229) 732-3601 Fax Number: (229) 732-3840 E-mail Address: bjenkins@doe.kl2.ga.us -2-