Randolph County Board of Education, Cuthbert, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2006

RANDOLPH COUNTY BOARD OF EDUCATION
CUTHBERT, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

RANDOLPH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

8

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

9

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

21

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

22

3 SCHEDULE OF STATE REVENUE

24

RANDOLPH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

26

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

27

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

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

RANDOLPH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
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
July 16, 2007

Honorable Sonny Perdue, Governor Members ofthe 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, 2006, 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 opm1ons.
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, 2006, 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.
2006ARL-11

The Randolph County Board ofEducation has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not to be part of, the basic financial statements.
In accordance with Government Auditing Standards, we have also issued our report dated July 16, 2007, 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 considered in assessing the results of our audit.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 21, is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Randolph County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
:i)____ m ~-~
~ ~ n t o n , CPA, CGFM State Auditor
RWH:gp 2006ARL-11

RANDOLPH COUNTY BOARD OF EDUCATION

RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2006
ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Land Improvements 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

$

704,686

73,602 820,741 1,037,592
18,615 13,435

72,035 530,976 6,267,462 1,943,211 -4,291,681

$ ===7='=19=0:!=6=74=

$

274,335

1 432409

$

1706744

$

4,522,003

40,517 379,544 166,164 375 702

$

5,483,930

$ ===7-19...,0.,.6.7..4.===

The notes to the basic financial statements are an integral part of this statement. -1-

RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2006

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 Railroad Cars 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

EXPENSES

CHARGES FOR SERVICES

$

9,117,038 $

592,553 795,556 214,267 555,176 1,005,664 178,502 1,096,578 927,870
95,696 222,246

22,294 1,270,020

$

16,093,460 $

345,633
8,775 85 981 440389

Net Assets - End of Year

The notes to the basic financial statements are an integral part of this statement. -2-

EXHIBIT"B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

7,108,039

310,177 368,759 129,682 626,069 412,923 34,716. 456,406 378,415 $
5,491 115,701

1 418 979

$

11,365,357 $

$ 46,468 46468 $

-1,663,366
-282,376 -426,797
-84,585 70,893 -592,741 -143,786 -640,172 -502,987 -90,205 -106,545
-13,519 234 940
-4,241,246

$

2,531,287

17,006

17,552 14,784 976,613 4,611 334 606

$

3,896,459

$

-344,787

5,828,717

$ ====5=,4=8=3'=93=0=

-3-

RANDOLPH COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2006

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Cash Overdraft 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

$

716,815

69,855 $ 820,741 1,037,592
18,615 13435

$ 3,747

716,815
73,602 820,741 1,037,592
18,615 13 435

$

2,677,053 $

3747 $====2=,6=80='=80=0=

$

$

274,335

1,432,409

$

1706744 $

12,129 $ 12 129 $

12,129 274,335 1 432,409
1 718 873

$

40,517

$

366,109

13,435

$

166,164

53,664

496,584

-174 546

$

970 309 $

-8 382 $

40,517 366,109
13,435 166,164
53,664
496,584 -174 546
961 927

$ 2,677,053 $

3,747 $====2=,6=80='=80=0=

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

RANDOLPH COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2006

EXHIBIT" "

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 Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets

$

961,927

$

72,035

530,976

6,267,462

1,943,211

-4,291,681

4,522,003

Net Assets of Governmental Activities (Exhibit "A")

$ =====5,.4.8.=3=,9=30=

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

RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2006

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

$ 2,514,835 14,784 $
7,883,630 4,510,786
440,389 4,529
380,045
$ 15,748,998 $

$ 17,552
82 17634 $

2,514,835 32,336
7,883,630 4,510,786
440,389 4,611
380 045
15,766,632

$ 8,979,048

589,407 795,556 214,267 545,709 1,005,664 178,502 1,093,405 831,180 95,696 174,939 22,294 1,272,779
$

$ 15,798,446 $

$

-49,448 $

1,019,757

$
46 995 46 995 $ -29,361 $ 20,979

8,979,048
589,407 795,556 214,267 545,709 1,005,664 178,502 1,093,405 831,180 95,696 174,939 22,294 1,272,779 46 995
15,845,441
-78,809
1,040,736

$

970,309 $

-8,382 $ ===9=6=1=92=7=

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 STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2006

EXHIBIT"F"

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

$

-78,809

$

15,650

-263,669

-248,019 27,480

-45439

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

$ ===-344====7=8=7

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

RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS
JUNE 30, 2006
ASSETS Accounts Receivable, Net
Other
LIABILITIES Cash Overdraft Funds Held for Others
Total Liabilities

EXHIBIT"G"

AGENCY FUNDS
$ ===16='=,9=2=1

$

6,358

10,563

$ ===16;,i,.,9...,2=1

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

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Randolph County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Randolph County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients 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.

-9-

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) to be used for the acquisition, construction or renovation of major capital facilities.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless ofwhen 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.

- 10 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
RESTATEMENT OF PRIOR YEAR NET ASSETS
For fiscal year 2006, the School District restated various Capital Assets due to a change in the capitalization policy and errors and omissions. The School District increased, net of accumulated depreciation, land improvements $24,760. Additionally, the School District decreased, equipment $1, and decreased, net of accumulated depreciation, building and building improvements $24,759. The result in Net Assets at July 1, 2005, is $0. This change is in accordance with generally accepted accounting principles.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
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 2005 tax digest year (calendar year) on July 28, 2005 (levy date). Taxes were due on December 20, 2005 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2005 tax digest are reported as revenue in the governmental funds for fiscal year 2006. The Randolph County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2006, for maintenance and operations amounted to $2,497,829.

- 11 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The tax millage rate levied for the 2005 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

18,74 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $17,552 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

INVENTORIES

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

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time 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 ofassets 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:

- 12 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment

All

NIA

$

5,000 0 to 80 years

$

5,000 0 to 80 years

$

5,000 5 to 50 years

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

DEFICIT FUND BALANCE

The fund reporting a deficit fund balance at June 30, 2006, is as follows:

Fund Type/Fund Name

Deficit Balance

Governmental Fund Capital Projects - GSFIC

$ 202,435

To cover the Capital Projects - GSFIC fund balance deficit, the system will transfer funds from Capital Projects - SPLOST and General Fund totaling in the amount of $202,435.

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 value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. At June 30, $1,321,981 ofdeposits were not secured by surety bond, insurance or collateral as specified above. The School District is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the School District's deposits.

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,

- 13 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "H"

Note 3: DEPOSITS

(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, 2006, the bank balances were $1,485,116. The amounts ofthe total bank balances are classified into four categories of custodial credit risk:

Category 1 - Cash that is insured (e.g., Federal Deposit 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 - Cash collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.
Category 4 - Uncollateralized.

The School District's deposits are classified by custodial credit risk category at June 30, 2006, as follows:

Custodial Credit Risk Category

Bank Balance

1

$ 163,135

2

0

3

0

4

1,321,981

Total

$ 1,485.116

- 14 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "H"

Note 4: NON-MONETARY TRANSACTIONS

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

Note 5: CAPITAL ASSETS

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

Balances July 1, 2005
(Restated)

Increases

Decreases

Balances June 30, 2006

Governmental Activities

Capital Assets, Not Being Depreciated:

Land

$

72,035 $

0 $

0 $

72,035

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 6,267,462 2,106,067 $ 530,976

15,650 $

$ 178,506

6,267,462 1,943,211
530,976

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

2,285,490 1,369,373
506,216

124,545 134,605
4 519

133,067

2,410,035 1,370,911
510,735

Total Capital Assets, Being Depreciated, Net $ 4,743,426 $ -248,019 $

45 439 $ 4,449,968

Governmental Activity Capital Assets - Net $ 4,815,461 $ -248,012 $

45,439 $ 4,522,QQ3

Current year depreciation expense by function is as follows:

Instruction Support Services
Pupil Services General Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services

$ 117,116

$

2,670

8,035

2,693

82,063

402151

135,612 10 941

$ 263,669

- 15 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "H"

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, 2006, were as follows:

District-wide Capital Projects SPLOST

Restricted Cash and Cash Equivalents: Capital Acquisitions

$

162,417

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:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2005 2006

$

0 $

600 $

600 $

0

$

0 $

0 $

0 $

0

- 16 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "H"

Note 7: RISK MANAGEMENT

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 $500,000 loss per occurrence, up to $2,000,000.

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

Position Covered

Amount

Superintendent Each Principal High School Bookkeeper Elementary School Bookkeeper Payroll Clerk Finance Director Head Start Director Bank Depositor Food Service Bookkeeper Head Start 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, 2006, for governmental funds amounted to $109,375. Future minimum lease payments for these leases are as follows:

Year Ending

Governmental Funds

2007

$

47,195

2008

31,945

2009

30,370

2010

12.950

Total

$==1"""'2"""'2,==46==0

- 17 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"H"

Note 9: SHORT-TERM DEBT

The School District issues tax anticipation notes in advance ofproperty tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution ofthe State ofGeorgia limits the aggregate amount ofshort-term debt to 75 percent 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:

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 $406,025 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 ofNon-Certified Personnel In the amount of $403,642

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 $2,383

Note 11: 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.

- 18 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"H"

Note 12: 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 ofTrustees 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

2006 2005 2004

100% 100% 100%

$ 749,788 $ 732,814 $ 737,654

- 19 -

(This page left intentionally blank)

RANDOLPH COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006

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

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

$

2,530,470 $

2,530,470 $

2,514,835

14,784

6,975,235

7,262,322

7,883,630

2,199,044

5,342,961

4,510,786

355,296

355,296

440,389

25,331

25,331

4,529

126 944

126 944

380 045

$

12,212,320 $

15,643,324 $

15 748 998

$

6,892,550 $

8,547,084 $

8,979,048

406,361 427,779 209,558 388,704 878,506 138,051 951,211 669,491
47,044 82,664
1,087,206 4 965

653,310 921,457 209,558 555,738 946,602 171,160 1,013,516 771,007
52,926 201,725
1,411,091 12 534

589,407 795,556 214,267 545,709 1,005,664 178,502 1,093,405 831,180
95,696 174,939 22,294 1,272,779

$

12 184 090 $

15 467 708 $

15 798 446

$

28 230 $

175 616 $

-49 448

$

76,538 $

76,538

-76 248

-76 248

$

290 $

290

$

28,520 $

175,906 $

-49,448

978 042

978 042

1 019 757

Fund Balances - Ending

$

1,006,562 $

1153948 $===9=7.,.0,..3..,09...

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.

- 21 -

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2006

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 Direct Fund for the Improvement of Education Pass-Through From Georgia Department of Education Advanced Placement Program Education for Homeless Children and Youth Enhancing Education Through Technology Program Even Start Hurricane Education Recovery Improving Teacher Quality State Grants Reading First State Grants Rural Education Safe and Drug-Free Schools and Communities - State Grants 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
Health and Human Services, U. S. Department of Direct Head Start

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

. 10.553 10.555 10.559

NIA

N/A

$

N/A $

(2) 931,682
241 566 1,173,248

10.550 10.558

N/A
NIA $

52,585
23 500 1,249,333

84.027 84.173

N/A

$

N/A

$

495,827 (4) 22 842 (5)
518,669

84.215
84.330 84.196 84.318 84.213 84.938 84.367 84.357 84.358 84.186 84.298
. 84.010 84.287 84.048

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

9,914
74 21,468 68,413 164,687 (3) 150,937 246,903 34,365 16,176 5,806 701,427 313,549 (6) 19 216
2,271,604

93.600

$

792 332

- 22 -

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2006

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

$ _ _ _ _4;a:2;,;:2'-'1~9

Total Federal Financial Assistance
NIA = Not Available

$ ===4=,3=55=,4=8=8

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 ($336,292) were not maintained separately and are included in the 2006 National School Lunch Program.
(3) Funds earned on the Hurricane Education Recovery program, in the amount of $5,978, do not require reporting of expenditures.
(4) Includes Federal Assistance of $42,452 provided to subrecipients. (5) Includes Federal Assistance of $3,500 provided to subrecipients. (6) Includes Federal Assistance of $67,597 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.

- 23 -

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2006
AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV Category V Gifted Student - Category VI Special Education - Supplemental Speech 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 - Alternative Nursing Services Principal Supplements Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs Health Insurance Preschool Handicapped Program Statewide K-8 Reading and Mathematics Program Special Education Low Incidence Grant Virtual Schools Grant
- 24 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

175,482

335,518 80,450
862,684 128,519 339,889 117,477 812,351 908,837 339,957
22,858 248,852 272,716
88,847 104,582 26,637
1,553 22,371 73,835 129,682 44,429 26,531
318,698 347,970 380,247
311,059 46,468 35,802 43,966 4,742
976,612 50,862 70,691
-352,200
403,642 50,530 25,526 2,075 500

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2006
AGENCY/FUNDING GRANTS Office of Treasury and Fiscal Services Public School Employees Retirement

SCHEDULE "3"
GOVERNMENTAL FUND TYPE GENERAL FUND
$ _ _ _ _-=2.;;;.38;:;..;3:;_
$ ====7=,8=8='3,=63=0=

See notes to the basic financial statements.

- 25-

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2006

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 $

46,995 $ 5,239,342 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.

- 26-

RANDOLPH COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2006

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

CategoryV

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

379,412 $ 90,687
957,089 143,312 376,677

240,101 $ 127,221 1,109,868 341,137 529,230

120,924 915,285 1,018,776 377,596 815,973

116,938 773,787 1,506,341 249,842
306,994 408,836
49,728

28,906 26,864 83 797

65,539 39,262 203,991

8,452 $ 406
21,387 1,430
10,507
778 25,597 44,022 34,058
5,610 5,632
273 690 434 368 1 794

248,553 127,627 1,131,255 342,567 539,737
117,716 799,384 1,550,363 283,900
312,604 414,468
50,001 690
65,973 39,630 205 785

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

5,335,298 $ 6,068,815 $

161,438 $

6,230,253

Media Center Program Staff and Professional Development

144,570 29 608

188,237 4 785

19,725 22 375

207,962 27160

TOTAL QBE FORMULA FUNDS

$======5=50=9=4=7=6 $ 6,261,837 $

203,538 $ ===6=4=6=5=3=75=

(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.

- 27 -

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
July 16, 2007

Honorable Sonny Perdue, Governor Members ofthe 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, 2006, which collectively comprise Randolph County Board of Education's basic financial statements and have issued our report thereon dated July 16, 2007. 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 opinions 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 of the internal control over financial reporting that, in our judgment, could adversely affect Randolph County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-7201-06-01, FS-7201-06-02, FS-7201-06-03, FS-7201-06-05, FS-7201-06-06 and FS-7201-0607.
2006YB-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-7201-06-02 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 oflaws, 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,
~t'8nt~ State Auditor
RWH:gp 2006YB-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
July 16, 2007

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 CIRCULARA-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 U.S. 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, 2006 and to the Head Start program for the year ended June 30, 2005. Randolph County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section ofthe accompanying Schedule ofFindings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Randolph County Board of Education's management. Our responsibility is to express an opinion on Randolph County Board ofEducation's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance 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 of Education's compliance with those requirements.
2006SA-65

As described in item FA-7201-06-08 in the accompanying Schedule of Findings and Questioned Costs, Randolph County Board of Education did not comply with requirements regarding Subrecipient Monitoring that are applicable to its 21 st Century Community Learning Centers (CFDA 84.287) major Federal program. Compliance with such requirements is necessary, in our opinion, for Randolph County Board of Education to comply with requirements applicable to that program.
In our opinion, except for the noncompliance described in the preceding paragraph, the Randolph County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2006.
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 the 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-7201-06-01, FA-7201-06-02, FA-7201-06-03, FA-7201-06-04, FA-7201-06-05, FA-7201-06-06, FA-7201-06-07, FA-7201-06-08, and FA-7201-06-09.
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-7201-06-07 and FA7201-06-08 to be material weaknesses.
2006SA-65

This report is intended solely for the information and use of the management, members of the Randolph County Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:gp 2006SA-65

~W.~
Russell W. Hinton, CPA, CGFM State Auditor

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

RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7201-02-06 FS-7201-03-08 FS-7201-03-12 FS-7201-04-01 FS-7201-04-02 FS-7201-04-03 FS-7201-04-04 FS-7201-04-07 FS-7201-05-01 FS-7201-05-02 FS-7201-05-03 FS-7201-05-04 FS-7201-05-05

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

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 ofthis 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 ofnonpayment and similar issues and disputes. The Architect was also asked to participate in the final negotiations with the CM.

Negotiations andSettlement: 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.

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RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
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
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 ofEducation. 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.
EMPLOYEE COMPENSATION Salary Overpayment Amount: $11,250 Finding Control Number: FS-7201-03-08
Practice has been discontinued. Pay above annual salary is approved by the Board of Education.
EMPLOYEE COMPENSATION EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Finding Control Number: FS-7201-03-12
Employees are classified for insurance (health) purposes as per AG opinion. Prior classification was based on materials from Department of Community Health; therefore, we feel no repayment is due.
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RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
EMPLOYEE COMPENSATION EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Finding Control Number: FS-7201-04-07
Employees are classified for insurance (health) purposes as per AG opinion. Prior classification was based on materials from Department of Community Health; therefore, we feel no repayment is due.
CASH AND CASH EQUIVALENTS PROCUREMENT EMPLOYEE COMPENSATION GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number: FS-7201-05-01
We concur with the finding. Additional training will be provided for staff members.
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Finding Control Number: FS-7201-05-02
We concur with this finding. Appropriate procedures have been implemented along with replacing a staff member.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Excessive Payment for Services Finding Control Number: FS-7201-05-03
We disagree with the finding. Small 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.
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RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-7201-02-03 FA-7201-03-01 FA-7201-03-02 FA-7201-03-03 FA-7201-03-04 FA-7201-04-01 FA-7201-04-02 FA-7201-04-03 FA-7201-05-01

Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Previously Corrective Action Implemented Previously Corrective Action Implemented Previously Corrective Action Implemented Unresolved - See Corrective Action/Responses 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 records are kept on split funded employees in Federal programs.

ACTIVITIES ALLOWED OR UNALLOWED Unallowable Activities Amount: $72,495 Finding Control Number: FA-7201-03-01

The School District received guidance from Georgia Department of Education and resolved the issue.

ALLOWABLE COSTS/COST PRINCIPLES Time and Attendance Records Not Utilized Properly Finding Control Number: FA-7201-03-02

Time records are kept on split funded employees in Federal programs.

MATCHING, LEVEL OF EFFORT AND EARMARKING Failure to Meet Matching Requirements Finding Control Number: FA-7201-03-03

Program adheres to stated guidelines.

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RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES REPORTING Inadequate Documentation Finding Control Number: FA-7201-04-03 New personnel and new procedures are in place to correct problem. REPORTING Inadequate Documentation Finding Control Number: FA-7201-05-01 New personnel and new procedures are in place to correct problem.
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SECTION IV FINDINGS AND QUESTIONED COSTS

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

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 ofEducation disclosed financial statement reportable conditions related to the following control categories.

Budget Preparation/Execution Cash and Cash Equivalents Revenues/Receivables/Receipts Procurement Accounting Controls (Overall)

Expenditures/Liabilities/Disbursements Employee Compensation General Ledger Capital Assets

Of the reportable conditions described above, Cash and Cash Equivalents, Procurement, Expenditures/Liabilities/Disbursements, Employee Compensation, General Ledger, Capital Assets and Accounting Controls (Overall) are considered to be material weaknesses.

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

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

Activities Allowed or Unallowed Matching, Level of Effort and
Earmarking Special Tests and Provisions

Program Income Reporting Subrecipient Monitoring

Of the reportable conditions described above, Reporting and Subrecipient Monitoring 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 except for 21 st Century Community Leaming Centers, which was qualified.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

I SUMMARY OF AUDITOR'S RESULTS

6. Audit Findings Required to be Reported by Section .5 lO(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) ofOMB Circular A-133. These audit findings are included in section IV of this report.

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 10.559 Summer Food Service Program for Children 84.287 Twenty-First Century Community Leaming Centers 93.600 Head Start - Fiscal Years 2005 and 2006

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 ofOMB Circular A-133.

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

BUDGET PREPARATION/EXECUTION Deficit Fund Balance Reportable Condition Finding Control Number: FS-7201-06-01

Condition:

The School District had an unreserved deficit fund balance in their Capital Projects fund.

Criteria:

Chapter 25 Reportingfor LUAs with General Fund Deficit Balances of the Financial Management for Georgia Local Units of Administration states in part: "Ifoverspending in a major construction project (i.e., a Capital Projects Fund) occurs, the deficit must be eliminated by an interfund transfer from General Fund. The seriousness offund balance deficits cannot be overstated. The Georgia Department of Education requires those LUAs with deficit balances to meet certain reporting requirements".

Questioned Cost: NIA

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

BUDGET PREPARATION/EXECUTION Deficit Fund Balance Reportable Condition Finding Control Number: FS-7201-06-01

Information:

The School District's Capital Project - GSFIC Fund reported a deficit fund balance in the amount of $202,435. This caused the Capital Projects Fund overall to have an unreserved fund balance deficit in the amount of$174,546.

Cause:

The School District incurred expenditures in excess of revenues in the Capital Projects - GSFIC Fund.

Effect:

A financial statement irregularity in accordance with O.C.G.A. 20-2-67.

Recommendation: The School District should implement procedures designed to ensure that in future periods the School District does not report a deficit fund balance.

CASH AND CASH EQUIVALENTS PROCUREMENT EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-7201-06-02

Condition:

This is a repeat finding (FS-7201-05-01, FS-7201-04-03, FS-7201-03-05 and FS-7201-02-05) from fiscal years June 30, 2002 through June 30, 2005. The accounting procedures of the School District were insufficient to provide adequate internal controls over numerous control categories.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures. Such internal controls would limit any one individual's access to both physical assets and the related accounting records.

Questioned Cost: $7,491

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS PROCUREMENT EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-7201-06-02

Information:

Cash and Cash Equivalents The School District did not have adequate procedures in place to make sure that all bank reconciliations were adequately prepared and approved. 1. Eight bank reconciliations did not include evidence of a preparer, 2. four bank reconciliations did not include evidence of approval, 3. two bank reconciliations included unidentified reconciling items totaling $364, 4. one bank reconciliation included an undocumented deposit in transit in the amount of $3,172, and 5. one bank reconciliation was not reconciled to the general ledger by $5,989.

Procurement The School District did not have adequate procedures in place to ensure that the procurement process was implemented properly. Out ofthirty-three vouchers tested, twelve had purchase orders that were issued after the expenditure was incurred.

Expenditures/Liabilities/Disbursements The School District did not have adequate procedures in place to ensure expenditures were adequately documented, approved and allowable. During a test oftwenty expenditures, the following problems were noted: 1. Three voucher packages contained no evidence of approval, and 2. one voucher package did not contain an original mv01ce.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS PROCUREMENT EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-7201-06-02
During a test ofthirteen purchase card voucher packages, the following problems were noted: 1. Ten charges did not have adequate supporting documentation, 2. ten charges did not have adequate approval authorizing the expenditures, and 3. three charges included taxes.
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 offunds. During a test of compensation paid to twenty employees, the following problems were noted: 1. Three employees were paid $2,025 for extra work which supporting documentation could not be provided, 2. supporting documentation could not be provided for an employee whose pay was docked, 3. four employees were overpaid by the amount of$7,738, 4. two employees were underpaid by the amount of $247, 5. one employee did not have an approved contract on file, and 6. one employee did not have the proper tax forms on file.
The School District did not have adequate procedures in place to ensure that leave was properly documented and approved. Offifteen employees' leave records tested for November 2005, eight employees did not have supporting documentation approving the leave taken.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS PROCUREMENT EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-7201-06-02
General Ledger The School District did not have adequate procedures in place to ensure that journal entries were properly documented. Two of twenty-five journal entries tested were not properly documented.
Capital Assets The School District did not have adequate procedures in place to ensure that Capital Assets were being properly maintained. 1. The School District's capital asset policy did not include estimated useful lives for land improvements. 2. The School District did not record capital assets in line with the approved policy. An audit adjustment was proposed and made to correct buildings and improvements and land improvements. 3. The School District did not remove accumulated depreciation for current year equipment deletions. An audit adjustment was proposed and made to correct the accumulated depreciation for equipment. 4. Accumulated depreciation for equipment recorded on the general ledger did not agree with the subsidiary ledger.
Accounting Controls (Overall) Access controls in the Financial System do not prevent users from accessing accounting functions that are outside of their area of responsibility.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS PROCUREMENT EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Reportable Condition - Material Weakness Finding Control Number: FS-7201-06-02

Cause:

The deficiencies noted above occurred because of management's failure to implement adequate controls to ensure bank reconciliations are properly prepared and approved, purchase orders are issued before an order is placed, expenditures are adequately documented and approved, all amounts paid to system employees are adequately documented and properly approved, leave is adequately documented and approved, journal entries are adequately documented, capital assets are properly recorded and maintained and access controls in the accounting information system complement the system of internal control by limiting an employee's access to only the accounting functions necessary for the performance of that employee's duties.

Effect:

Without satisfactory accounting controls and procedures in place, the School District could place itself in a position where potential misappropriation of assets could occur. In addition, the lack ofcontrols could impact reporting of its financial position and results of operation.

Recommendation:

The School District should review the accounting procedures in place and design and implement procedures relative to the above control categories to strengthen the internal controls over the accounting functions.

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures over School Activity Accounts Reportable Condition Finding Control Number: FS-7201-06-03

Condition:

This is a repeat finding (FS-7201-05-02 and FS-7201-04-01) from the years ended June 30, 2005, and June 30, 2004, respectively. The accounting procedures of the School District were insufficient to provide for adequate internal controls over the school activity accounts.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures over School Activity Accounts Reportable Condition Finding Control Number: FS-7201-06-03

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: NIA

Information:

Cash and Cash Equivalents The School District did not have adequate internal controls in place to ensure that the bank reconciliation function was separate of the record keeping function.

Revenues/Receivables/Receipts The School District did not have adequate internal controls in place to ensure proper separation of duties and proper documentation. 1. Deposit preparation was not separated from the record keeping and cash custody functions. 2. During a test of ten receipts, the following problems were noted: There was insufficient documentation to determine where the transactions were recorded on the general ledger. There was not enough documentation to determine if six of the receipts were ever deposited.

Expenditures/Liabilities/Disbursements The School District did not have proper procedures in place to ensure expenditures were properly approved, adequately documented or that the policies of the School District were followed. 1. During a test often transactions, the following problems were noted: For all ten transactions tested, no documentation was provided to support where the transactions were recorded on the general ledger, or to identify if they were governmental or agency fund in nature.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures over School Activity Accounts Reportable Condition Finding Control Number: FS-7201-06-03

Six of the expenditures did not have adequate documentation.
One expenditure was not properly approved. Five expenditures included purchase orders which
were issued after the expenditure was incurred.

Cause:

These deficiencies were a result of management's decision to limit the number ofadministrative staffmade responsible for the accounting functions at the various principal account sites and a failure to implement controls to properly account for all transactions involving student activity accounts.

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation:

The School District should implement additional procedures to ensure that the key accounting functions ofcustody and record keeping are separated. In addition, the School District should implement procedures to ensure that disbursements and receipts of funds within the school activity accounts are adequately documented and recorded in the financial records. Controls should also be revised and School District should monitor controls to provide reasonable assurance that transactions are processed according to established procedures.

CASH AND CASH EQUIVALENTS Uncollateralized Deposits Nonmaterial Noncompliance Finding Control Number: FS-7201-06-04

Condition:

The School District failed to have its bank balances fully collateralized as required by the Official Code of Georgia Annotated Section 45-8-12.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS Uncollateralized Deposits Nonmaterial Noncompliance Finding Control Number: FS-7201-06-04

Criteria:

The Official Code of Georgia annotated Section 45-8-12 provides, in part, as follows: "The collecting officer or officers holding public funds may not have on deposit at any one time in any depository for a time longer than ten days a sum ofmoney belonging to the public body when such depository has not given bond to the public body as set forth in this code section. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction ofthe amount of deposit insurance".

Questioned Cost: NIA

Information:

One of the School District's individual banks had uncollateralized bank balances at June 30, 2006, in the amount of $1,321,981.

Cause:

Management failed to adequately monitor the collateralization ofbalances at individual banks.

Effect:

The School District is not in compliance with O.C.G.A. 45-8-12.

Recommendation:

The School District should implement adequate procedures to monitor the collateralization ofbank balances to ensure compliance at all times with State laws governing deposits and investments.

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Procedures Reportable Condition Finding Control Number: FS-7201-06-05

Condition:

Travel paid to the Superintendent was not properly documented and was not accurately reported to the Department of Audits and Accounts. In addition, certain charges were determined to be unallowable.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that ensure expenditures are properly processed and documented and that State implemented guidelines are followed.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Procedures Reportable Condition Finding Control Number: FS-7201-06-05

Questioned Cost: $221

Information:

A review of the Superintendent's travel revealed the following: Lunch was claimed in the amount of$21 for 3 day trips without being away for more than 13 hours. Meal charges for 28 employees were charged to the Superintendent's travel and were not adequately documented and exceeded the maximum allowable meal reimbursement by $200. Arrival/departure times were not included on 5 reimbursement forms in which the Superintendent was reimbursed for meals.

Cause:

The School District failed to implement internal controls to ensure that employee travel expenses follow procedures established in the State of Georgia - Statewide Travel Regulations.

Effect:

The School District was not in compliance with the Statewide Travel Regulations for reimbursement related to the Superintendent's travel, and the School District is susceptible to payment ofunallowable expenditures.

Recommendation:

The School District should implement policies and procedures to ensure that expenditures are properly documented and allowable and adhere to the Statewide Travel Regulations. In addition, the School District should review the questioned costs noted above, determine the amount of reimbursement due and take any other action deemed appropriate.

GENERAL LEDGER Failure to Report the Financial Statements in a Timely Manner Reportable Condition Finding Control Number: FS-7201-06-06

Condition:

The School District failed to submit the DE046 financial report to the Georgia Department of Education in a timely manner.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Failure to Report the Financial Statements in a Timely Manner Reportable Condition Finding Control Number: FS-7201-06-06

Criteria:

Chapter 1 Introduction to LUA Accounting ofthe Financial Management for Georgia Local Units of Administration indicates that "accounting records must provide meaningful, reliable, accurate and timely information to the many persons and groups with legitimate interests in the financial affairs of an LUA".

Questioned Cost: NIA

Information:

The School District's DE046 financial report was submitted to the Georgia Department of Education on November 16, 2006.

Cause:

Management failed to comply with the due date of September 30, 2006, as established by the Georgia Department of Education.

Effect:

The failure ofthe School District to prepare and submit the financial report in a timely manner prohibits legitimate users ofthe financial report from being able to have timely access to the financial information provided.

Recommendation:

The School District should implement controls to ensure that the Georgia Department of Education's policies and procedures are followed and implement procedures to ensure that the DE046 financial report is submitted in a timely manner.

GENERAL LEDGER Inadequate Control over General Ledger Reportable Condition Finding Control Number: FS-7201-06-07

Condition:

The accounting procedures ofthe School District were insufficient to provide adequate general ledger controls over the funds.

Criteria:

The National Council on Governmental Accounting (NCGA) Statement 1, paragraph 4 states "Governmental units should establish and maintain those funds required by law and sound financial administration. Only the minimum number offunds consistent with legal and operating requirements should be established, however, since unnecessary funds results in inflexibility, undue complexity, and inefficient financial administration.... "

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Inadequate Control over General Ledger Reportable Condition Finding Control Number: FS-7201-06-07

Questioned Costs: NIA

Information:

The School District has twenty-four funds which did not have any current year activity recorded.
Four funds classified as State had a total fund balance of $34,897, four funds classified as State had a deficit fund balance of$211,923, four funds classified as Federal had a total fund balance of $23,817, six funds classified as Federal had a deficit fund balance of$23,71 l, two funds classified as local had a total fund balance of $29,542, one fund classified as local had a deficit fund balance of $4,051, two funds in which the classification between State, Federal or local
could not be determined had a deficit fund balance of $2,881, and one fund had a beginning fund balance, and a new program was
recorded in the fund. The prior year program had a deficit fund balance of $6,540.

Cause:

The School District failed to implement adequate controls over the general ledger.

Effect:

Failure to implement satisfactory accounting controls and procedures could cause information generated from the general ledger to be inaccurate and misleading. In addition, the School District could place itself in a position where potential misrepresentation of financial activities could occur.

Recommendation:

The School District should implement controls to ensure that only the minimum number of funds required by legal and operating requirements is established. Also, the School District should review the inactive funds to determine how to fund the deficits and determine the disposition ofthe funds on hand.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED OR UNALLOWED Inadequate Internal Controls Reportable Condition U.S. Department of Agriculture Through Bright From the Start: Georgia Department of Early Care and Leaming Summer Food Service Program for Children (CFDA 10.559) Finding Control Number: FA-7201-06-01

Condition:

The accounting procedures ofthe School District were insufficient to provide adequate internal control over disbursements for the Summer Food Service Program for Children (CFDA 10.559).

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: $4,196

Information:

The School District made a duplicate payment in the amount of $4,196 to a vendor from a photocopy of the invoice.

Cause:

This deficiency was the result ofmanagement's failure to implement controls adequate to ensure vendors are paid the correct amount.

Effect:

A misstatement ofthe financial statements could occur and not be detected in a timely manner.

Recommendation:

The School District should implement procedures to ensure that payment of invoices is made from the original only. In addition, the School District should seek reimbursement from the vendor.

ACTIVITIES ALLOWED OR UNALLOWED Inadequate Documentation Reportable Condition U.S. Department of Health and Human Services Head Start (CFDA 93.600) Finding Control Number: FA-7201-06-02

Condition:

The School District failed to have adequate procedures in place to ensure that payments to vendors from the Head Start program funds (CFDA 93.600) are made only after adequate supporting documentation is received.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED OR UNALLOWED Inadequate Documentation Reportable Condition U.S. Department of Health and Human Services Head Start (CFDA 93.600) Finding Control Number: FA-7201-06-02

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: $7,500

Information:

A review of thirty expenditures charged to the fiscal year 2005 Head Start program and thirty expenditures charged to the fiscal year 2006 Head Start program revealed the following:
One expenditure in each year was paid from an approved Purchase Order with no other documentation available.
One expenditure charged to the fiscal year 2006 grant was paid to the School District's central office for services provided in the amount of $7,500; however, the calculation of services provided by the central office could not be provided.

Cause:

The School District failed to implement procedures to ensure that expenditures were only paid when adequate supporting documentation is available.

Effect:

Over or under payments could occur due to payments being made to vendors without adequate supporting documentation.

Recommendation:

The School District should implement procedures to ensure that adequate documentation for all expenditures is received before payments are made to vendors. The U.S. Department ofHealth and Human Services should review this matter to determine if a reclaim of funds is appropriate.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED OR UNALLOWED Inadequate Internal Controls Reportable Condition U.S. Department of Education Through Georgia Department of Education 21 st Century Community Learning Centers (CFDA 84.287) Finding Control Number: FA-7201-06-03

Condition:

The accounting procedures ofthe School District were insufficient to provide adequate internal control over the expenditure approval process for the 21 st Century Community Learning Centers (CFDA 84.287) grant.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: NIA

Information:

Five ofthe ten 21 st Century Community Learning Centers voucher packages tested were not properly approved.

Cause:

The School District failed to implement controls adequate to ensure expenditures are properly documented and approved.

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation: The School District should establish and implement appropriate procedures to strengthen internal controls over the expenditure approval process.

MATCHING, LEVEL OF EFFORT AND EARMARKING Failure to Meet Matching Requirements Reportable Condition U.S. Department of Health and Human Services Head Start (CFDA 93.600) Finding Control Number: FA-7201-06-04

Condition:

The School District failed to meet matching requirements for Head Start (CFDA 93.600) program.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

MATCHING, LEVEL OF EFFORT AND EARMARKING Failure to Meet Matching Requirements Reportable Condition U. S. Department of Health and Human Services Head Start (CFDA 93.600) Finding Control Number: FA-7201-06-04

Criteria:

45 CFR 1301.20-21 requires that the School District contribute twenty percent of the cost of the program through non-Federal in-kind or cash contributions.

Questioned Cost: NIA

Information:

A review of matching requirement documentation for the fiscal year 2005 and fiscal year 2006 Head Start program years revealed the following deficiencies:
Matching requirements for Award No. 04CH0220/21 totaled $200,297. The School District provided documentation of in-kind contributions in the amount of $162,753, of which $27,801 was provided through another Federally funded program.
Matching requirements for Award No. 04CH0220/22 totaled $195,167. The School District provided documentation of in-kind contributions in the amount of $154,155, of which $14,039 was provided through another Federally funded program.

Cause:

The School District failed to establish procedures to ensure the required match was contributed through non-Federal in-kind or cash contributions.

Effect:

Failure to ensure compliance with 45 CFR 1301.20-21 can result in noncompliance with the requirements of the Federal grant.

Recommendation:

The School District should implement procedures to ensure that matching requirements are met as required by 45 CFR 1301.20-21. The U. S. Department of Health and Human Services should review this matter to determine if a reclaim of funds is appropriate.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

MATCHING, LEVEL OF EFFORT AND EARMARKING Unallowable Expenditures Reportable Condition U.S. Department of Health and Human Services Head Start (CFDA 93 .600) Finding Control Number: FA-7201-06-05

Condition:

The School District exceeded the allowable 15 percent of the annual total program costs for developing and administering the Head Start (CFDA 93.600) program.

Criteria:

Requirements included in 45 CFR 1301.32 state that allowable costs for developing and administering a Head Start program may not exceed 15 percent of the total approved costs of the program.

Questioned Cost: $9,815

Information:

The School District exceeded the 15 percent limit for development and administration costs for fiscal year 2005 in the amount of $3,518 and fiscal year 2006 in the amount of $6,297.

Cause:

Management failed to implement controls for monitoring compliance with Federal guidelines to ensure that the amount of expenditures charged for developing and administrative purposes were within the stated limitations.

Effect:

Failure to monitor development and administration costs for compliance can result in noncompliance with the requirements of the Federal grant.

Recommendation:

The School District should review the Federal compliance procedures in place, design procedures which enhance monitoring compliance with Federal requirements and implement those procedures to strengthen the internal control over the grant. The U. S. Department ofHealth and Human Services should review this matter to determine if a reclaim of funds is appropriate.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

PROGRAM INCOME Inadequate Controls over Meal Sales Reportable Condition U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-7201-06-06

Condition:

A review of the School District's internal control policies and procedures noted deficiencies in providing adequate internal control over the collection of cash from meal sales for the Child Nutrition Cluster (CFDA 10.553 and 10.555) programs.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: NIA

Information:

During testing ofthe Daily Lunch Cash Reports for the month ofMay 2006, collections for seven days at the Elementary School II and five days at Randolph-Clay High School did not agree to the amounts deposited or the amounts recorded on the general ledger.

Cause:

The School District failed to implement internal controls for monitoring cash collections for meal sales.

Effect:

Failure to reconcile the cash collected to the amount deposited and recorded on the general ledger could result in errors in financial reporting and increases the risk of material misstatement in the financial statements including misstatements due to fraud.

Recommendation:

Cash collection procedures should be implemented and/or enhanced to ensure all cash is properly accounted for and reconciled to the amounts recorded on the general ledger and deposited in the bank.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

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 Leaming Summer Food Service Program for Children (CFDA 10.559) Finding Control Number: FA-7201-06-07

Condition:

This is a repeat finding (FA-7201-05-01, FA-7201-04-03, FA-7201-03-05 and FA-7201-02-02) from fiscal years June 30, 2002 through June 30, 2005. The School District failed to support claims for reimbursement with accurate meal count documentation for the Summer Food Service Program for Children (CFDA 10.559).

Criteria:

7 CFR 225.15c(l) states "Sponsors shall maintain accurate records which justify all costs and meals claimed....The sponsor's records shall be available at all times for inspection and audit. .. for a period ofthree years following the date of submission of the final claim for reimbursement for the fiscal year".

Questioned Cost: NIA

Information:

The School District failed to adequately document meal counts and reimbursement claims.
Daily meal count forms for five sites were compared to the Weekly meal count forms for July 2005, and June 2006, and the following problems were noted. 1. Sixteen daily snack count forms could not be located, 2. thirteen daily snack count forms did not agree to what was reported on the weekly Snack Count form, 3. two daily snack count forms appeared to have been altered, 4. six daily snack count forms were not completed at all or were partially completed, 5. one weekly meal count form for snacks included the nonprogram adult meals in with the total meals served to children, 6. twenty-six daily meal count forms appeared to have been altered, 7. one daily meal count form reported four second meals; however, the weekly meal count form included them as first meals, 8. nine daily meal count forms did not agree with what was reported on the weekly meal count form,

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006
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 Leaming Summer Food Service Program for Children (CFDA 10.559) Finding Control Number: FA-7201-06-07
9. three days tested had two daily meal count forms for the same location,
10. eight weekly meal count forms included meals served to adults, leftover meals, and second meals in the total meals served to children,
11. one daily meal count form appeared to have been a copy of the previous day with the amounts adjusted, and
12. four daily meal count forms could not be located. Weekly meal count forms were compared to the "Meal Count -
Consolidation Form" for July 2005, and June 2006, and the following problems were noted:
1. Three weekly meal count forms were incorrectly calculated and recorded on the "Meal Count - Consolidation Form",
2. two weekly meal count forms did not agree to the "Meal Count - Consolidation Form",
3. six weekly snack count forms were not completed, and 4. the "Meal Count - Consolidation Form" did not agree to the
reimbursement claim summary for snacks. Delivery tickets for five sites were tested for two days in July 2005,
and June 2006, and the following problems were noted: 1. Three daily meal count forms meals received section was not complete, and 2. three delivery tickets did not agree to the daily meal count form for the amount of meals received.
For July 2005, the calculated average daily attendance exceeded the maximum average daily attendance for one of five sites tested.
For June 2006, the calculated average daily attendance exceeded the maximum average daily attendance for all five sites tested.
For June 2006, the School District served snacks at one site that was not approved to serve snacks.
Actual expenditures claimed on the reimbursement request for 2005, and 2006 grants submitted to the grantor agency did not agree to the general ledgers for the fiscal periods covered.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

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 Leaming Summer Food Service Program for Children (CFDA 10.559) Finding Control Number: FA-7201-06-07

Cause:

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.

Effect:

Inaccurate meal counts and expenditure reporting could result in the School District receiving incorrect reimbursement of Federal funds.

Recommendation:

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 a reclaim of funds is appropriate.

SUBRECIPIENT MONITORING Inadequate Documentation Reportable Condition - Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education 21 st Century Community Leaming Centers (CFDA 84.287) Finding Control Number: FA-7201-06-08

Condition:

The School District failed to provide documentation that monitoring was adequately performed, that reimbursement requests from subrecipient were properly documented, and to make sure the subrecipient received an audit for the 21 st Century Community Leaming Centers (CFDA 84.287) Grant.

Criteria:

As noted in OMB's Compliance Supplement, Part 3M, a pass-through entity is responsible for:
Monitoring the subrecipient's activities to provide reasonable assurance that the subrecipient administers Federal awards in compliance with Federal requirements.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SUBRECIPIENT MONITORING Inadequate Documentation Reportable Condition - Material Weakness Material Noncompliance U. S. Department of Education Through Georgia Department of Education 21 st Century Community Leaming Centers (CFDA 84.287) Finding Control Number: FA-7201-06-08

Ensuring that recipients expending $500,000 or more in the fiscal year have met the requirements of 0MB Circular A-133, issued a management decision on audit findings within six months after receipt of the subrecipient's audit report and that the recipient takes timely and appropriate corrective action on all findings. In cases of the subrecipient's unwillingness or inability to have the required audits, the pass-through entity shall take appropriate action including sanctions.

Questioned Cost: $36,941

Information:

The School District could not provide documentation that monitoring was performed at Andrew College, the subrecipient. In addition, the School District did not obtain a copy of the College's audit, or a notification letter that an audit was performed. Also, during a test of the expenditures to the subrecipient, the following problems were noted.
1. Six expenditures were for salaries which were not supported by timesheets,
2. three expenditures for travel were not properly documented, 3. the invoice for one expenditure did not support the amount paid, 4. one expenditure was overpaid, and 5. forty-two expenditures did not have adequate supporting
documentation.

Cause:

The School District failed to implement procedures to ensure that subrecipient monitoring compliance requirements were met. Also, management did not properly review the subrecipient's reimbursement requests to ensure that expenditures were allowable or within Federal/State guidelines.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SUBRECIPIENT MONITORING Inadequate Documentation Reportable Condition - Material Weakness Material Noncompliance U.S. Department of Education Through Georgia Department of Education 21 st Century Community Leaming Centers (CFDA 84.287) Finding Control Number: FA-7201-06-08

Effect:

The subrecipient was reimbursed $36,941 without adequately determining that the subrecipient incurred allowable Federal program costs. Without proper review of subrecipient reimbursement requests and supporting documentation, errors or irregularities could also occur without detection. The subrecipient may not be in compliance with Federal regulations of the grant.

Recommendation:

The School District should implement policies to ensure that 21 st Century Community Leaming Centers funds submitted to subrecipients are in compliance with Federal regulations. The Georgia Department ofEducation should review this matter to determine if a reclaim of funds is appropriate.

SPECIAL TESTS AND PROVISIONS Federal Reimbursement Transfers Not Timely Reportable Condition U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-7201-06-09

Condition:

A review of the School District's process for the transfer of Federal reimbursement payments for the Child Nutrition Cluster (CFDA 10.553 and 10.555) disclosed that Federal reimbursement payments had not been credited to the food service account in a timely manner.

Criteria:

Federal Regulation 7 CFR 210.14(a) specifies revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service. Hence, any interest earned from the National School Lunch Program (NSLP) and School Breakfast Program (SBP) is required to be used in furtherance ofthe program. Accordingly, any and all interest that may be generated in the General Fund as a result ofwithholding any NSLP and SBP reimbursement should be placed in the

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Federal Reimbursements Transfers Not Timely Reportable Condition U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-7201-06-09

School Food Service fund for program purposes. Georgia Department of Education policy requires that School Districts place NSLP and SBP reimbursements into the School Food Service Fund upon receipt by the School District. Upon receipt in the General Fund, School Districts are responsible for transferring the amount of each NSLP and SBP reimbursement into the School Food Service Fund in a timely manner.

Questioned Cost: NIA

Information:

A test revealed that in May 2006, the Federal reimbursement was not transferred to the School Food Service account for twenty-eight days after the receipt of funds, and in June 2006, the Federal reimbursement was not transferred for fourteen days after the receipt of funds.

Cause:

The School District failed to implement appropriate internal controls for monitoring compliance in accordance with Federal guidelines.

Effect:

If funds are not transferred in a timely manner, interest earned on these
funds may not be used in furtherance of the Food Service Program.

Recommendation:

The School District should implement policies and procedures to ensure compliance with Federal requirements over the process of transferring Federal reimbursements.

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SECTIONV MANAGEMENT'S RESPONSES

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-7201-06-01
We concur with this finding. To cover the Capital Projects Fund overall fund balance deficit, the system will transfer funds from Capital Projects and General Fund totaling in the amount of $174,546.
Finding Control Number: FS-7201-06-02
We concur with this finding. The School District will have adequate controls and procedures in place to ensure that bank reconciliations are properly approved, purchase order procedures are carefully followed and expenditures are adequately documented and approved. Procedures will be implemented to ensure that journal entries have proper documentation, and capital assets are properly recorded and maintained. The School District will review salary overpayments, underpayments and leave records to determine appropriate action.
Finding Control Number: FS-7201-06-03
We concur with this finding. Additional training will be provided for school level staff members.
Finding Control Number: FS-7201-06-04
We disagree with this finding. The bank balances are fully collateralized. The bank failed to produce the requested documentation in a timely manner. The School District will work with the bank to ensure that the adequate documentation is received.
Finding Control Number: FS-7201-06-05
We disagree with this finding. The School District will review travel regulations and policies to improve internal controls of employee travel expenses. Local Board policies states that reimbursement for the noon meals will be allowed ifthe Superintendent is on travel status at the time the expense is incurred, or if the noon meal is a part of the attended meeting.
Finding Control Number: FS-7201-06-06
We concur with this finding. The School District will ensure that the financial statements are submitted in a timely manner.
Finding Control Number: FS-7201-06-07
We concur with this finding. The School District will implement controls to ensure that inactive funds are cleared on the general ledger.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FA-7201-06-01
We concur with this finding. The School District will implement procedures to ensure that payment of invoices is made from original invoices to avoid duplicate payments.
Finding Control Number: FA-7201-06-02
We concur with this finding. The School District will have procedures in place to ensure that expenditures are not paid without adequate supporting documentation.
Finding Control Number: FA-7201-06-03
We concur with this finding. The School District will have procedures in place to ensure that expenditures are properly documented and approved. The School District no longer has a 21 st Century Center at Andrew College.
Finding Control Number: FA-7201-06-04
We concur with this finding. The School District will have procedures in place to ensure that matching requirements are met.
Finding Control Number: FA-7201-06-05
We concur with this finding. The School District will ensure that proper monitoring ofthe Federal compliance procedures is in place to implement procedures for internal control of the grant.
Finding Control Number: FA-7201-06-06
We concur with this finding. The School District will ensure that proper cash collection procedures are enhanced and implemented for accountabil_ity.
Finding Control Number: FA-7201-06-07
We concur with this finding. The School District will continue to restructure the Summer Food Service Program for Children to ensure proper operation. Additional staff and proper training will be added to ensure documentation for claims; meals served and delivered are accurate.
Finding Control Number: FA-7201-06-08
We concur with this finding. The School District will have procedures in place to ensure that subrecipients receive required documentation. The School District no longer has a 21 st Century Program at Andrew College.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006 Finding Control Number: FA-7201-06-09 We concur with this finding. The School District has procedures in place to ensure that processing of Federal reimbursements is transferred in a timely manner. Contact Person: Bobby Jenkins, Superintendent Phone: (229) 732-3601 Fax Number: (229) 732-3840 E-mail Address: jenkinsb@sowegak12.org
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