Randolph County Board of Education, Cuthbert, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2007

RANDOLPH COUNTY BOARD OF EDUCATION
CUTHBERT, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007
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

25

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
September 15, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Randolph County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) ofthe Randolph County Board of Education, as of and for the year ended June 30, 2007, 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 of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Randolph County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 opinions.

2007ARL-11

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, 2007, 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.
The Randolph County Board ofEducation has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States of America 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 September 15, 2008, on our consideration of the Randolph County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope ofour testing ofinternal control over financial reporting and compliance and the results ofthat 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,
~M~
ell W. Hinton, CPA, CGFM State Auditor
RWH:gp 2007ARL-11

RANDOLPH COUNTY BOARD OF EDUCATION

RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2007
ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits 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

$

524,065.36

228,510.03 890,439.92 842,322.11 238,536.52
13,435.30

72,035.00 67,229.99 530,976.00 6,267,462.00 2,253,789.00 -4,565,915.00

$ ===7'536=2:!ai,8=8=6=.2=3

$

251,266.52

1,420,688.36

$

1,671,954.88

$

4,625,576.99

1,973.15 436,944.65 222,788.96 403,647.60

$

5,690,931.35

$==,;,,7,536=2:!ai,8=8=6.=23=

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, 2007

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 Intangible Recording Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$

9,098,800.45 $

540,467.33 812,414.36 231,521.28 440,270.30 936,367.61 192,763.67 1,137,825.98 1,041,847.64 104,940.06 258,721.61

21,028.67 1,350,205.17

$ 16167174.13 $

318,914.20
80 897.50 399 811.70

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

EXHIBIT "B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

7,036,207.24

253,023.98 481,415.25 133,204.00 569,216.05 429,476.28
29,806.44 404,088.27 408,526.73 $
5,233.17 132,051.48

1,133,430.24 $ 11,015,679.13 $

$ 224,716.00 224,716.00 $

-1,743,679.01
-287,443.35 -330,999.11
-98,317.28 128,945.75 -506,891.33 -162,957.23 -733,737.71 -408,604.91 -99,706.89 -126,670.13
-21,028.67 -135 877.43
-4,526,967.30

$

2,610,821.48

37,683.52

788,950.93 12,148.23
1,015,224.00 5,795.62
263,342.28

$

4,733,966.06

$

206,998.76

5,483,932.59

$ ===5-=,6=90=!.,9=3=1=.3=5

-3-

RANDOLPH COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2007

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government other Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable
Total Liabilities
FUND BALANCES
Reserved for: Bus Replacement Continuation of Federal Programs Inventories Capital Projects
Unreserved Designated for Student Activities Designated for Self-Insurance Undesignated Reported in: General Fund
Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$ 211,038.05 $ 313,027.31 $

173,760.65 890,439.92 842,322.11 238,536.52
13,435.30

126,835.37

524,065.36
300,596.02 890,439.92 842,322.11 238,536.52
13,435.30

$ 2,369,532.55 $ 439,862.68 $ ===2,=8=09=,3=9=5=.2=3

$

34,192.80 $

1,420,688.36

$ 1,454,881.16 $

217,073.72 $ 217,073.72 $

251,266.52 1,420,688.36
1,671,954.88

$

1,973.15

$

423,509.35

13,435.30

$ 222,788.96

10,677.62 42,853.94

422,202.03

$ 914,651.39 $ 222,788.96 $

1,973.15 423,509.35
13,435.30 222,788.96
10,677.62 42,853.94
422,202.03
1,137,440.35

$ 2,369,532.55 $ 439,862.68 $ ===2=,8=09=,3=9=5=.2=3

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, 2007

EXHIBIT "D"

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

$ 1,137,440.35

$

72,035.00

67,229.99

530,976.00

6,267,462.00

2,253,789.00

-4,565,915.00

4,625,576.99

-72,085.99

$ 5,690,931.35

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, 2007

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

$ 2,720,590.99

$ 2,720,590.99

12,148.23 $ 788,950.93

801,099.16

8,571,650.41

8,571,650.41

3,683,968.72

3,683,968.72

399,811.70

399,811.70

5,466.13

329.49

5,795.62

263,342.28

263,342.28

$ 15,656,978.46 $ 789,280.42 $ 16,446,258.88

$ 8,801,467.00

$ 8,801,467.00

533,472.36 812,414.36 231,521.28 419,219.89 936,367.61 192,763.67 1,123,898.91 1,048,307.39 104,940.06 159,956.29
21,028.67 1,327,281.57
$

558,109.06

533,472.36 812,414.36 231,521.28 419,219.89 936,367.61 192,763.67 1,123,898.91 1,048,307.39 104,940.06 159,956.29
21,028.67 1,327,281.57
558,109.06

$ 15,712,639.06 $ 558,109.06 $ 16,270,748.12

$ -55,660.60 $ 231,171.36 $ 175,510.76

970,311.99

-8,382.40

961,929.59

$ 914 651.39 $ 222,788.96 $ 1137 440.35

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, 2007

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

$ 377,807.99 -274,234.00

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.

175,510.76
103,573.99 -72,085.99

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

$ 206,998.76

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, 2007

EXHIBIT"G"

ASSETS Accounts Receivable, Net
Other
LIABILITIES Cash Overdraft Accounts Payable Funds Held for Others
Total Liabilities

AGENCY FUNDS
$ ===1=7=,8==1=7.=8==9

$

10,471.79

14.14

7,331.96

$ ===1=7=,8==1==7=89==

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, 2007

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 of internal 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, 2007

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 of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred. Capital asset acquisitions are reported as expenditures in governmental funds.
The School District funds certain programs by a combination 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
- 10 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.

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. Official Code of Georgia Annotated Section 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 2006 tax digest year (calendar year) on August 10, 2006 (levy date). Taxes were due on December 20, 2006 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2006 tax digest are reported as revenue in the governmental funds for fiscal year 2007. The Randolph County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2007, for maintenance and operations amounted to $2,682,907.47.

The tax millage rate levied for the 2006 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

14.37 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $788,950.93 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

- 11 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVENTORIES

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

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works ofart. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.

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

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment

All

NIA

$ 5,000.00 0 to 80 years

$ 5,000.00 0 to 80 years

$ 5,000.00 5 to 50 years

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

- 12 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
Note 3: DEPOSITS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. 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.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
- 13 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 3: DEPOSITS

(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, 2007, the bank balances were $1,596,017.98. The amounts of the total uninsured bank balances are classified into three categories of custodial credit risk:

Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the School District's name.

The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2007, as follows:

Custodial Credit Risk Category

Bank Balance

1

$

0.00

2

1,491,533.36

3

0.00

Total

$ 1,491,533.36

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

- 14 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 5: CAPITAL ASSETS

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

Balances July 1. 2006

Increases

Balances Decreases June 30. 2007

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress

$ 72,035.00

$

0.00 $ 67,229.99

0.00 $ 72,035.00 67,229.99

Total Capital Assets Not Being Depreciated $ 72,035.00 $ 67,229.99 $

0.00 $ 139,264.99

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 6,267,462.00

$

1,943,211.00 $ 310,578.00

530,976.00

0.00 $ 6,267,462.00 2,253,789.00 530,976.00

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

2,410,035.00 1,370,911.00
510,735.00

124,545.00 149,689.00

2,534,580.00 1,520,600.00
510,735.00

Total Capital Assets, Being Depreciated, Net $ 4,449,968.00 $ 36,344.00 $

0.00 $ 4,486,312.00

Governmental Activity Capital Assets - Net $ 4,522,003,00 $ 103,573.99 $

0.00 $ 4,625,516.29

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

$ 113,493.00

$ 2,670.00 8,035.00 5,316.00
98,271.00 37,699.00

151,991.00 8,750.00

$ 274,234.00

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) is a restricted asset in the Statement of Net Assets because its use is limited by statutory provisions. Restricted assets at June 30, 2007, were as follows:

- 15 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"H"

Note 6: RESTRICTED ASSETS

District-wide Capital Projects SPLOST

Restricted Cash and Cash Equivalents: Capital Acquisitions

$ 313,027.31

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 of loss 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

2006 2007

$

0.00 $

0.00 $

0.00 $

0.00

$

0.00 $ 10,817.37 $ 10,810.37 $

0.00

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

- 16 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 7: RISK MANAGEMENT

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 $500,000.00 loss per occurrence, up to $2,000,000.00.

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

$ 50,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 5,000.00 $ 5,000.00 $ 5,000.00 $ 1,000.00

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, 2007, for governmental funds amounted to $61,495.00. Future minimum lease payments for these leases are as follows:

Year Ending

Governmental Funds

2008 2009 2010 2011

$ 37,245.00 26,670.00 18,250.00 2,500.00

Total

$ 84,665.00

- 17 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 9: SHORT-TERM DEBT

The School District issues tax anticipation notes in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution ofthe State ofGeorgia limits the aggregate amount of short-term debt to 75 percent ofthe total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred.

Short-term debt activity for the fiscal year is as follows:

Beginning Balance

Issued

Redeemed

Ending Balance

Tax Anticipation Notes

$===o""".o==o $600,000.00 $ 600,000.00 $====o===.o==o

Note 10: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $354,705.06 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $346,362.82

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $5,959.24

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 $2,383.00

Note 11: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2007:

- 18 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "H"

Note 11: SIGNIFICANT COMMITMENTS

Project
Randolph County Elementary School Playground/ Parking Lot/Canopy

Unearned Executed Contracts
$ 26,793.01

The amount described in this note is not reflected in the basic financial statements.

Note 12: SIGNIFICANT CONTINGENT LIABILITIES

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

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

Note 13: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year
2007 2006 2005

Percentage Contributed
100% 100% 100%

Required Contribution
$ 739,263.10 $ 749,788.00 $ 732,814.00

- 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, 2007

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

$ 2,530,470.00 $ 2,530,470.00 $ 2,720,590.99

12,148.23

7,744,006.00

7,774,057.09

8,571,650.41

2,795,844.01

3,988,862.01

3,683,968.72

358,957.00

358,957.00

399,811.70

27,500.00

27,500.00

5,466.13

122,630.00

136,130.00

263,342.28

$ 13,579,407.01 $ 14,815,976.10 $ 15,656,978.46

$ 7,615,033.25 $ 8,460,356.62 $ 8,801,467.00

592,461.18 638,306.30 223,580.00 317,256.00 1,010,312.00 196,549.51 1,120,514.75 808,129.93 104,948.00
76,980.31
1,250,576.94 11 147.89

626,122.18 875,235.30 223,580.00 428,914.00 1,008,381.44 196,549.51 1,120,964.75 873,263.22 104,948.00 183,353.73
13,500.00 1,493,371.42
11 147.89

533,472.36 812,414.36 231,521.28 419,219.89 936,367.61 192,763.67 1,123,898.91 1,048,307.39 104,940.06 159,956.29
21,028.67 1,327,281.57

$ 13,965,796.06 $ 15,619,688.06 $ 15,712,639.06

$

-386,389.05 $

-803 711.96 $

-55,660.60

$

75,548.00 $

75,548.00

-72,548.00

-72,548.00

$

3 000.00 $

3 000.00

$

-383,389.05 $

-800,711.96 $

966,577.68

966,577.68

-55,660.60 970,311.99

Fund Balances - Ending

$

583,188.63 $

165,865.72 $

914,651.39

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, 2007

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 Enhancing Education Through Technology Program 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
Defense, U.S. Department of Direct Department of the Army R.O.T.C. Program

Total Federal Financial Assistance NIA= Not Available

- 22-

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555
* 10.559

NIA

NIA

$

(2) 952,579.00

NIA

287,852.23

$ 1,240,431.23

10.550 10.558

NIA

53,082.00

NIA

30,576.40

$ 1,324,089.63

84.027 84.173

NIA

$

NIA

$

433,517.67 (3) 19,666.85 (4)
453,184.52

84.215
84.318 84.367 84.357 84.358 84.186 84.298 84.010 * 84.287 84.048

14,798.09

NIA

122,789.50

NIA

111,936.44

NIA

134,328.41

NIA

31,798.16

NIA

11,738.79

NIA

990.90

NIA

722,227.06

NIA

192,796.09

NIA

35,296.54

$ 1,831,884.50

* 93.600

$

712 775.11

$

47 631.51

$=====3,=9=16=,3=8=0..7...5..

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2007

SCHEDULE "2"

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 ($345,591.26) were not maintained separately and are included in the 2007 National School Lunch Program.
(3) Includes Federal Assistance of $40,112.25 provided to subrecipients. (4) Includes Federal Assistance of $6,150.83 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, 2007

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 Gifted Student - Category VI Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity - Alternative Nursing Services Principal Supplements Vocational Supervisors Mid-term Adjustment Hold-Harmless Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Comprehensive Academic Performance System (CAPS) Health Insurance K-8 Statewide Reading and Math Program Middle School Remediation Grant Preschool Handicapped Program Pupil Transportation - State Bonds Special Education Low Incidence Grant Teachers' Retirement Virtual Schools Grant
Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACT Human Resources, Georgia Department of After School Services (SNAP)

See notes to the basic financial statements.

- 24-

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

115,753.21

338,996.00 87,291.00
888,567.00 82,836.00
428,789.00 55,295.00
606,711.00 910,178.00 292,718.00 884,234.00
17,120.00 158,354.00
66,001.00 133,204.00
43,657.00 25,995.00
328,769.00 354,127.00 355,057.00
330,029.00 24,716.00 35,802.00 41,805.00 4,357.00 11,485.41
231,309.00 1,015,224.00
52,046.00 76,840.59 -126,771.00
40,075.00 346,362.82
20,163.14 2,619.00
64,027.00 200,000.00
1,986.00 5,959.24
450.00
2,383.00
17,130.00
$ ==s,..,,..51.,.1...6..,..5,..o..,41._

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2007

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS(3)

PROJECT STATUS

Providing funds to pay the cost of renovating, repairing and equipping Randolph County Elementary School and related facilities, including necessary furnishings, fixtures, equipment and paving; renovating, repairing and equipping Randolph Clay Middle School and related facilities, including necessary furnishings, fixtures and equipment; renovating, repairing and equipping Randolph Clay High School and related facilities, including necessary furnishings, fixtures and equipment; renovating and repairing athletic facilities, including necessary furnishings, fixtures and equipment; acquiring, constructing and equipping a new field house; acquiring, constructing and equipping all purpose buildings; renovating, extending, repairing and equipping existing School District schools to include paving parking lots, roof repairs, floor repairs and installation of heating, ventilation and air conditioning (HVAC) units; acquiring and installing system-wide instructional and administrative technology equipment; acquisition of school buses and transportation equipment; renovating, repairing and equipping Randolph Clay Learning Center and Randolph County Board of Education office, including necessary furnishings, fixtures, and equipment; acquiring any necessary property therefore, both real and personal; and paying expenses incident to accomplishing the foregoing (the Projects).

$ 3,800,000.00 $

3,800,000.00 $

534,632.18

Ongoing

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 therefore, both real and personal, all at the maximum cost of $3,300,000.00.

3,300,000.00

5,613,273.00

23,476.88 $ 5,286,337.00 Ongoing

$ 7,100,000.00 $ 9,413,273.00 $ 558,109.06 $ 5,286,337.00

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

See notes to the basic financial statements.

- 25 -

(This page left intentionally blank)

RANDOLPH COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2007

SCHEDULE "5"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

378,424.00 $ 315,345.15 $

6,335.17 $

321,680.32

96,442.00

178,002.31

916.03

178,918.34

986,532.00 1,192,705.70

20,196.75

1,212,902.45

99,715.00

176,111.49

1,790.33

177,901.82

463,945.00

667,904.29

11,134.45

679,038.74

70,201.00 710,919.00 1,015,843.00 333,180.00 963,456.00
20,500.00 155,210.00
75 095.00

115,797.80 670,502.36 1,610,156.31 281,183.44
322,036.42 379,001.50
44,013.27 61,978.56
478.39 11,395.82 166,643.18

1,108.65 14,568.80 15,232.40 30,481.78
744.43 4,295.48 1,519.46 2,110.88 5,344.26
480.24 226.11 1 067.79

116,906.45 685,071.16 1,625,388.71 311,665.22
744.43 326,331.90 380,520.96
46,124.15 67,322.82
958.63 11,621.93 167 710.97

$

5,369,462.00 $ 6,193,255.99 $ 117,553.01 $ 6,310,809.00

148,549.00 29 018.00

199,080.50 14,956.07

24,621.37 5,050.00

223,701.87 20,006.07

TOTAL QBE FORMULA FUNDS

$

5,547,029.00 $ 6,407,292.56 $ 147,224.38 $ 6,554,516.94

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment.

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
September 15, 2008

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe 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, 2007, which collectively comprise Randolph County Board of Education's basic financial statements and have issued our report thereon dated September 15, 2008. 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 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 as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the Randolph County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness ofthe Randolph County Board of Education's internal control over financial reporting.
Our consideration ofinternal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies.
2007YB-40

A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Randolph County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement ofthe Randolph County Board ofEducation's financial statements that is more than inconsequential will not be prevented or detected by the Randolph County Board ofEducation's internal control. We consider items FS-7201-07-01, FS-7201-07-02, FS-7201-07-03 and FS-7201-07-04 in the accompanying Schedule ofFindings and Questioned Costs to be significant deficiencies in internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Randolph County Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, of the significant deficiencies described above, we consider items FS-7201-07-01 and FS-7201-07-04 to be material weaknesses.
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.
We noted certain matters that we have reported to management of Randolph County Board of Education in a separate letter dated September 15, 2008.
Randolph County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Randolph County Board of Education's response and, accordingly, we express no opinion on it.
2007YB-40

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 2007YB-40

~to~;A~ State Auditor

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
September 15, 2008

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 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, 2007. Randolph County Board ofEducation's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each ofits major Federal programs is the responsibility ofRandolph County Board of Education's management. Our responsibility is to express an opinion on Randolph County Board of Education's compliance based on our audit.
We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits ofStates, 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 ofEducation's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Randolph County Board ofEducation's compliance with those requirements.
2007SA-65

As described in item FA-7201-07-02 in the accompanying Schedule of Findings and Questioned Costs, Randolph County Board ofEducation did not comply with requirements regarding Allowable Costs/Cost Principles that are applicable to its Child Nutrition Cluster (CFDA 10.553 and 10.555). Compliance with such requirements is necessary, in our opinion, for Randolph County Board of Education to comply with requirements applicable to those programs.
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, 2007.
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 ofexpressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Randolph County Board of Education's internal control over compliance.
Our consideration ofthe internal control over compliance was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in the Board's internal control that might be significant deficiencies or material weaknesses as defined below. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be significant deficiencies and others we consider to be material weaknesses.
A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type ofcompliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement ofa Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. We consider the deficiencies in internal control over compliance described in the accompanying Schedule ofFindings and Questioned Costs as items FA7201-07-01, FA-7201-07-02, FA-7201-07-03, FA-7201-07-04 and FA-7201-07-05 to be significant deficiencies.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control. Of the significant deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs, we consider item FA-7201-07-02 to be a material weakness.
2007SA-65

Randolph County Board ofEducation's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Randolph County Board of Education's response and, accordingly, we express no opinion on it.
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,
~
ell W. Hinton, CPA, CGFM State Auditor
RWH:gp 2007SA-65

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, 2007

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FS-7201-02-06 Further Action Not Warranted

(1)

FS-7201-03-08 Further Action Not Warranted

(1)

FS-7201-03-12 Unresolved - See Corrective Action/Responses

FS-7201-04-07 Unresolved - See Corrective Action/Responses

FS-7201-05-01 Further Action Not Warranted

FS-7201-05-02 Further Action Not Warranted

FS-7201-05-03 Further Action Not Warranted

(1)

FS-7201-06-01 Previously Reported Corrective Action Implemented

FS-7201-06-02 Unresolved - See Corrective Action/Responses

FS-7201-06-03 Unresolved - See Corrective Action/Responses

FS-7201-06-04 Previously Reported Corrective Action Implemented

FS-7201-06-05 Further Action Not Warranted

(2)

FS-7201-06-06 Further Action Not Warranted

(2)

FS-7201-06-07 Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

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 Attorney General opinion. Prior classification was based on materials from DCH; therefore, we feel no repayment is due.

-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 Attorney General opinion. Prior classification was based on materials from DCH; 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, 2007
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
CASH AND CASH EQUIVALENTS PROCUREMENT EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Amount: $7,491.00 Finding Control Number: FS-7201-06-02
The School District will have adequate controls and procedures in place to ensure that bank reconciliations are properly approved, purchase orders 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.
CASH AND CASH EQUIVALENTS REVENUESIRECEIV ABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures over School Activity Accounts Finding Control Number: FS-7201-06-03
Additional training will be provided for school level staff members.
GENERAL LEDGER Inadequate Control over General Ledger Finding Control Number: FS-7201-06-07
The School District will implement controls to ensure that inactive funds are cleared on the general ledger.
AUDITOR'S COMMENTS
(1) While these findings will not be reported or require auditor follow-up in subsequent years, management still has responsibility for the resolution of these findings.
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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, 2007

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

AUDITOR'S COMMENTS
(2) Findings/internal control deficiencies of this nature, that are not deemed significant deficiencies or material weaknesses and do not require reporting in the audit report in accordance with Statements on Auditing Standards (SAS) 112 or Governmental Auditing Standards (Yellow Book), will be communicated in a management letter in subsequent periods.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FA-7201-02-03 Further Action Not Warranted

FA-7201-03-01 Previously Reported Corrective Action Implemented

FA-7201-03-02 Further Action Not Warranted

FA-7201-03-03 Previously Reported Corrective Action Implemented

FA-7201-04-03 Further Action Not Warranted

FA-7201-05-01 Unresolved - See Corrective Action/Responses

FA-7201-06-01 Unresolved - See Corrective Action/Responses

FA-7201-06-02 Unresolved - See Corrective Action/Responses

FA-7201-06-03 Unresolved - See Corrective Action/Responses

FA-7201-06-04 Further Action Not Warranted

FA-7201-06-05 Unresolved - See Corrective Action/Responses

FA-7201-06-06 Further Action Not Warranted

(1)

FA-7201-06-07 Unresolved - See Corrective Action/Responses

FA-7201-06-08 Unresolved - See Corrective Action/Responses

FA-7201-06-09 Further Action Not Warranted

(1)

CORRECTIVE ACTION/RESPONSES

REPORTING Inadequate Documentation U. S. Department of Agriculture Through Bright from the Start: Georgia Department of Early Care and Learning Finding Control Number: FA-7201-05-01

New personnel and new procedures are in place to correct problem.

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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, 2007
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
ACTIVITIES ALLOWED OR UNALLOWED Inadequate Internal Controls U. S. Department of Agriculture Through Bright from the Start: Georgia Department of Early Care and Leaming Amount: $4,196 Finding Control Number: FA-7201-06-01
The School District will implement procedures to ensure that payment ofinvoices is made from original invoices to avoid duplicate payments.
ACTIVITIES ALLOWED OR UNALLOWED Inadequate Documentation U.S. Department of Health and Human Services Amount: $7,500 Finding Control Number: FA-7201-06-02
The School District will have procedures in place to ensure that expenditures are not paid without adequate supporting documentation.
ACTIVITIES ALLOWED OR UNALLOWED Inadequate Internal Controls U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-7201-06-03
The School District will have procedures in place to ensure that expenditures are properly documented and approved. The School District no longer has a Twenty-First Century Community Leaming Center at Andrew College.
MATCHING, LEVEL OF EFFORT AND EARMARKING Unallowable Expenditures U.S. Department of Health and Human Services Amount: $9,815 Finding Control Number: FA-7201-06-05
The School District will ensure that proper monitoring of the Federal compliance procedures is in place to implement procedures for internal control of the grant.
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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, 2007
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES REPORTING Inadequate Documentation U.S. Department ofAgriculture Through Bright from the Start: Georgia Department of Early Care and Learning Finding Control Number: FA-7201-06-07 The School District will continue to restructure the Summer Food Service Program for Children to ensure proper operation. Additional staffand proper training will be added to ensure documentation for claims; meals served and delivered are accurate. SUBRECIPIENT MONITORING Inadequate Documentation U. S. Department of Education Through Georgia Department of Education Amount: $36,941 Finding Control Number: FA-7201-06-08 The School District will have procedures in place to ensure that subrecipients receive required documentation. The School District no longer has a Twenty-First Century Community Learning Center at Andrew College. AUDITOR'S COMMENTS (1) Findings/internal control deficiencies of this nature, that are not deemed significant deficiencies or material weaknesses and do not require reporting in the audit report in accordance with Office ofManagement and Budget (0MB) Circular A-133, will be communicated in a management letter in subsequent periods.
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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, 2007

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. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Randolph County Board ofEducation disclosed financial statement significant deficiencies related to the following control categories.

Cash and Cash Equivalents Revenues/Receivables/Receipts Accounting Controls (Overall) Capital Assets

Expenditures/Liabilities/Disbursements Employee Compensation General Ledger Financial Reporting

Of the significant deficiencies described above, Cash and Cash Equivalents, Accounting Controls (Overall), Expenditures/Liabilities/Disbursements, Employee Compensation, General Ledger, Capital Assets and Financial Reporting 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. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Randolph County Board of Education disclosed significant deficiencies in internal control over major programs for the following compliance requirements.

Activities Allowed or Unallowed Allowable Costs/Cost Principles

Reporting Matching, Level of Effort and
Earmarking

Of the significant deficiencies described above, Allowable Costs/Cost Principles 1s considered to be a material weakness.

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 Child Nutrition Cluster (CFDA 10.553 and 10.555) which was qualified.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

I SUMMARY OF AUDITOR'S RESULTS

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

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 93.600 Head Start 84.287 Twenty-First Century Community Learning Centers

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.

9. Low Risk Auditee The Randolph County Board ofEducation did not qualify as a low risk auditee as defined by Section .530 of 0MB Circular A-133.

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-7201-07-01

Condition:

This is a repeat finding (FS-7201-06-02, FS-7201-05-01, FS-7201-04-03, FS7201-03-05 and FS-7201-02-05) from fiscal years June 30, 2002, through June 30, 2006. The accounting procedures of the School District were insufficient to provide adequate internal controls over numerous control categories.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-7201-07-01

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: NIA

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. Three bank reconciliations did not include evidence of a preparer, 2. three bank reconciliations did not include evidence of approval, 3. one bank reconciliation included unidentified reconciling items totaling $120.32, 4. one bank reconciliation included an accounts receivable as a deposit in transit in the amount of $73.44, 5. one bank account did not agree to the General Ledger by $163.41, and 6. numerous bank reconciliations were not completed in a timely manner. The bank reconciliations for June were not prepared until December 2007.

Expenditures/Liabilities/Disbursements The School District did not have adequate procedures in place to ensure that expenditures were adequately documented, approved and charged to the proper period.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-7201-07-01
During a test of forty-eight expenditures, the following problems were noted: I. Fourteen voucher packages contained no evidence of approval, 2. one voucher package was not posted to the proper period, 3. one voucher package had an expenditure charged to an improper account, and 4. one check did not agree to the invoice.
During a test of twenty-three purchase card voucher packages, the following problems were noted: I. Two vouchers did not have an approval, and 2. five expenditures did not have adequate documentation.
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 thirty-four employees, the following problems were noted: I . Four employees were paid from timesheets that were not originals, that were either approved by the supervisor prior to date submitted or were not approved by the supervisor, 2. three employees were underpaid in the amount of$2,559.67, 3. two employees were paid a local supplement which did not agree to the Board approved local supplement schedule, and 4. one employee did not have an approved contract on file.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-7201-07-01
The School District did not have adequate procedures in place to ensure that leave was properly documented. Of the twenty employees' leave records tested, two employees' sick leave records did not agree with supporting documentation.
General Ledger The School District did not have adequate procedures in place to ensure that journal entries were properly documented. Two of twenty-six journal entries tested were not properly documented and one could not be located.
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 did not record construction-in-progress on their books. An audit adjustment was proposed and accepted by School District. 2. The School District's capital assets recorded on the general ledger did not agree to the subsidiary ledger. 3. 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, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-7201-07-01

Cause:

The deficiencies noted above occurred because of management's failure to implement adequate controls to ensure that ( 1) bank reconciliations are properly prepared and approved, (2) expenditures are adequately documented and approved, (3) all amounts paid to system employees are adequately documented and properly approved, (4) leave is adequately documented and approved, (5) journal entries are adequately documented, (6) capital assets are properly recorded and maintained and (7) access controls in the accounting information system complement the system ofinternal control by limiting an employee's access to only the accounting functions necessary for the performance ofthat 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 Significant Deficiency Finding Control Number: FS-7201-07-02

Condition:

This is a repeat finding (FS-7201-06-03, FS-7201-05-02 andFS-7201-04-01) from fiscal years June 30, 2004, through June 30, 2006. 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, 2007

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 Significant Deficiency Finding Control Number: FS-7201-07-02

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 bank reconciliation function was separate ofthe 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 ofeleven 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 agreed to the deposit ticket or if they 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 of thirty transactions, the following problems were noted:

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

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 Significant Deficiency Finding Control Number: FS-7201-07-02

There was not adequate supporting documentation to determine where the transactions were recorded on the general ledger, or to tell if they were governmental or agency fund in nature.
Nine of the expenditures did not have adequate documentation.
One expenditure for $255.30 was for a travel reimbursement that should have been paid through the Central business office and reported with salaries and travel information submitted to the Georgia Department of Audits.

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 of custody and record keeping are separated. In addition, the School District should implement procedures to ensure that disbursement and receipt of funds within the school activity accounts are adequately documented and recorded in the financial records. Controls should also be revised and School District personnel should monitor controls to provide reasonable assurance that transactions are processed according to established procedures.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Inadequate Control over General Ledger Significant Deficiency Finding Control Number: FS-7201-07-03

Condition:

This is a repeat finding (FS-7201-06-07) from the year ended June 30, 2006. 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 of funds consistent with legal and operating requirements should be established, however, since unnecessary funds results in inflexibility, undue complexity, and inefficient financial administration....".

Questioned Costs: NIA

Information:

The School District has twenty-one funds which did not have any current year activity recorded.
One fund classified as State had a fund balance of $30,062.50, two funds classified as State had a deficit fund balance of$16,403.48, five funds classified as Federal had a total fund balance of
$42,475.85, and thirteen funds classified as Federal had a deficit fund balance of
$249,189.63.

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, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-7201-07-04

Condition:

The School District did not have adequate controls in place over the financial statement reporting process.

Criteria:

Management is responsible for having adequate controls over the financial reporting process, which not only includes proper recording oftransactions to the general ledger, but extends to accurate preparation and presentation ofthe financial statements, including note disclosures.

Information:

The Governmental Accounting Standards Board (GASB) Statement 34 reporting model requires the presentation ofboth fund level and entity-wide level statements in the School District's financial statements. During the audit, numerous correcting entries were proposed by the auditor and accepted by the client to properly present the entity's fund level and entity-wide level financial statements.

Cause:

The School District did not implement an adequate system ofinternal control over the financial statement reporting process.

Effect:

The School District did not have adequate controls in place to ensure that the financial statements were properly prepared in accordance with generally accepted accounting principles.

Recommendation:

The School District should develop and implement internal controls over the financial statement reporting process to ensure that activity is properly recorded in the general ledger; to verify that financial statements (including note disclosures) properly reflect activity reported in the general ledger; and to include a monitoring process to evaluate the accuracy of the financials presented for audit.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED OR UNALLOWED Inadequate Internal Controls over Expenditure Process Significant Deficiency U.S. Department of Education Through Georgia Department of Education Twenty-First Century Community Leaming Centers (CFDA 84.287) Finding Control Number: FA-7201-07-01

Condition:

This is a repeat finding (FA-7201-06-03) from fiscal year ended June 30, 2006. The accounting procedures ofthe School District were insufficient to provide adequate internal control over the expenditure process for the Twenty-First Century Community Leaming 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 policies and procedures.

Questioned Cost: NIA

Information:

A review of expenditures charged to the Twenty-First Century Community Leaming Centers grant revealed the following:
Seven of ten transactions did not have an approved invoice, one purchase order was dated after the invoice date, and one expenditure did not have evidence of receipt of goods.

Cause:

These deficiencies are the result of management's failure to implement controls adequate to ensure purchase orders are issued before an order is placed and expenditures are adequately 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 process.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES Improper Application of Indirect Cost Rate Material Weakness Material Noncompliance U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-7201-07-02

Condition:

The School District did not have adequate internal controls and procedures in place to ensure indirect costs charged to the Child Nutrition Cluster (CFDA 10.553 and 10.555) were made according to provisions in the 0MB Circular A-87.

Criteria:

The School District's management is responsible for designing and maintaining internal controls to provide reasonable assurance that indirect costs transactions are processed according to established provisions in 0MB Circular A-87, Cost Principles for Determining Allowable Costs.

Questioned Cost: $49,533.48

Information:

During the year under review, the School District incorrectly charged $98,460.00 of indirect costs to the Child Nutrition Cluster program using budgeted expenditures, as well as, using equipment costs and food costs in the calculation. The total amount of indirect costs allowed to be charged to the Child Nutrition Cluster program using actual expenditures less equipment and food costs was $48,926.52.

Cause:

The School District failed to design and implement internal controls to ensure that indirect costs expenditures charged to the Child Nutrition Cluster were calculated correctly.

Effect:

The School District received indirect cost funds in excess ofthe amount due to them determined by provisions ofOMB Circular A-87, Cost Principlesfor Determining Allowable Costs.

Recommendation:

The School District should design and implement internal controls and procedures to ensure that the School District charges the correct amount of indirect costs. In addition, Georgia Department ofEducation should review the matter and determine if a refund is appropriate.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

MATCHING, LEVEL OF EFFORT AND EARMARKING Failure to Meet Matching Requirements Significant Deficiency U.S. Department of Health and Human Services Head Start (CFDA 93.600) Finding Control Number: FA-7201-07-03

Condition:

The School District failed to meet matching requirements for the Head Start (CFDA 93.600) program. This has been a recurring issue since 2004; however, the School District requested and received a waiver from the grantor agency on this compliance requirement for award periods 2004 through 2006.

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 ofmatching requirement documentation for the Head Start program revealed that the matching requirements for Award No. 04CH0220/23 totaled $198,196.00. The School District provided documentation of in-kind contributions in the amount of $177,954.00 which results in a variance of $20,242.00.

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, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

MATCHING, LEVEL OF EFFORT AND EARMARKING Unallowable Expenditures Significant Deficiency U.S. Department of Health and Human Services Head Start (CFDA 93.600) Finding Control Number: FA-7201-07-04

Condition:

This is a repeat finding (FA-7201-06-05) from fiscal year ended June 30, 2006. 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: $6,261.33

Information:

The School District exceeded the 15 percent limit for development and administration costs.

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, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

REPORTING Inadequate Documentation Significant Deficiency 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-7201-07-05

Condition:

This is a repeat finding (FA-7201-06-07, FA-7201-05-01, FA-7201-04-03, FA-7201-03-05 andFA-7201-02-02) from fiscal years June 30, 2002 through June 30, 2006. 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 of three years following the date ofsubmission ofthe 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 2006 and June 2007, and the following problems were noted: 1. Nine daily meal count forms could not be located, 2. two daily meal count forms (one for lunch and one for snack) appeared to have been changed to make the number ofmeals received agree with the number of meals served, 3. ten daily count forms did not agree to the weekly meal count forms, and 4. nine daily meal count forms were not completed correctly.
Weekly meal count forms were compared to the "Meal Count Consolidation Form" for July 2006 and June 2007, and the following problem was noted: One weekly meal count form was incorrectly calculated and recorded on the "Meal Count - Consolidation Form".

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

REPORTING Inadequate Documentation Significant Deficiency U.S. Department ofAgriculture 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-7201-07-05

Delivery tickets for five sites were tested for July 2006 and for two days in June 2007, and the following problem was noted: The School District was unable to provide daily delivery tickets for any days in July 2006.
Actual expenditures claimed on the reimbursement request for 2006 and 2007 grants submitted to the grantor agency did not agree to the general ledgers for the fiscal periods covered.

Cause:

These discrepancies were due to management's failure to ensure that the number ofmeals claimed were based on accurate counts and verify that 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 ofLeaming should review this matter to determine if a reclaim offunds is appropriate.

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SECTIONV MANAGEMENT'S RESPONSES

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2007
Finding Control Number: FS-7201-07-01 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-7201-07-02 We concur with this finding. Additional training will be provided for school level staff members annually. Finding Control Number: FS-7201-07-03 We concur with this finding. The School District will implement controls to ensure that inactive funds are cleared on the general ledger. Finding Control Number: FS-7201-07-04 We concur with this finding. We will implement procedures to develop a financial statement and verify its accuracy. Finding Control Number: FA-7201-07-01 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 TwentyFirst Century Center at Andrew College. Finding Control Number: FA-7201-07-02 We concur with this finding and we have implemented procedures for correct calculation ofindirect cost. Finding Control Number: FA-7201-07-03 We concur with this finding. The School District will have procedures in place to ensure that matching requirements are met. We are working with HHS to resolve this issue.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2007
Finding Control Number: FA-7201-07-04 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 ofthe grant. We are working with HHS to resolve this issue. Finding Control Number: FA-7201-07-05 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 has been added and training has been revamped to ensure documentation for claims and the count of meals served and delivered are accurate. Contact Person: Bobby Jenkins, Superintendent Phone: (229) 732-3601 Fax: (229) 732-3840 E-mail: jenkinsb@sowegakl2.org
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