Randolph County Board of Education, Cuthbert, Georgia, annual financial report for the fiscal year ended June 30, 2010 (including independent auditor's reports)

RANDOLPH COUNTY BOARD OF EDUCATION
CUTHBERT, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED
JUNE 30,2010
(Including Independent Auditor's Reports)

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

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATIONOF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATIONOF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTlVlTlES

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE

RANDOLPH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION I
SCHEDULES SUPPLEMENTARY INFORMATION
4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAlTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS l NDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
SECTION Ill 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 -
SECTION V MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FI NANClAL

Russell W.Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
October 6, 2011

Honorable Nathan Deal, 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 of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Randolph County Board of Education, as of and for the year ended June 30, 2010, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Randolph County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the 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.
In fiscal year 2007, the School District entered into a capital lease for equipment. The capital lease liability has been recorded in the governmental activities. However, the School District has excluded from capital assets certain leased equipment items including the related accumulated depreciation and current year depreciation expense that, in our opinion, should be included to conform with accounting principles generally accepted in the United States of America. The amount by which this omission would affect the assets, net assets and expenses of the governmental activities is not reasonably determinable.

In our opinion, except for the effects of not properly recognizing capital assets and depreciation expense in the governmental activities as described in the preceding paragraph, the financial statements referred to previously present fairly, in all material respects, the financial position of the governmental activities of the Randolph County Board of Education, as of June 30, 2010, and the changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In addition, in our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of each major fund, and the aggregate remaining fund information of the Randolph County Board of Education, as of June 30, 2010, 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 of Education 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 GovernmentAuditng Standards, we have also issued our report dated October 6, 2011, 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 of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standardsand 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 23, is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Randolph County Board of Education's financial statements as a whole. The accompanyingsupplementary information consists 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 of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the financial statements 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,

,

~ u d e lWl . Hinton, CPA, CGFM State Auditor

RANDOLPH COUNTY BOARD OF EDUCATION

RANDOLPH COUNT BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30,2010
ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Deprec~ation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Short-Term Debt Deposits and Deferred Revenues Long-Term Liabilit~es
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Bus Replacement Continuat~onof Federal Programs Capital Projects Unrestricted (Deficit)
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT "A"
GOVERNMENTAL ACTIVITIES

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 30,2010

EXHIBIT "B"

GOVERNMENTAL ACTIVITIES
Instruction Suppon 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-InstructionalServices Community Services Food Services Interest on Short-Term and Long-TermDebt
Total GovernmentaI Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings M~scellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginningof Year

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

Net Assets - End of Year

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

RANDOLPH COUNW BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30,2010

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories

Total Assets

LIABILITIES AND FUND BALANCES
LIABILITIES
Cash Overdraft Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Short-Term Debt D e ~ o S iatn~d Deferred Revenue
Total Liab~lities
FUND BALANCES
Resewed for: Bus Replacement Continuat~onof Federal Programs Capital Projects
UnreSewed Designatedfor Student Activities Designatedfor Self-Insurance UndesignatedReported in: General Fund (Deficit)
Total Fund Balances

Total Liabilities and Fund Balances

EXHIBIT "C" TOTAL

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

RANDOLPH COUNlY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENTOF NET ASSETS JUNE 30.2010
Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Taxes that are not available to pay for current period expenditures are deferred in the funds.
Long-Term Liabilities are not due and payable In the current perlod and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Capital Leases Payable
Net Assets of GovernmentalActivities (Exhib~"tA")

EXHIBIT "D"

The notes to the baslcflnanclal statements are an integral pan of this statement.
- 4 -

RANDOLPH COUNTY BOARD OF EDUCATION STATEMENTOF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30,2010

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 Debt Services
Principal Interest
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

Fund Balances - Ending

EXHIBIT " E TOTAL

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

RANDOLPH COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30,2010
Total Net Change in Fund Balances - Governmental Funds (Exhib~"tE")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlaysare 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
Taxes reported in the Statement of Activities that do not providecurrent financial resources are not reported as revenuesin the funds.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Capital Lease Payments
Change in Net Assets of GovernmentalActivities (Exhibit "EM)

EXHIBIT "F"

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

RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30,2010
ASSETS
Accounts Receivable, Net Other
LIABILITIES Cash Overdraft Funds Held for Others
Total Liabilities

EXHIBIT "G"
AGENCY FUNDS

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

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

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 of Net Assets and the Statement of Activities display information about the financial activities of the 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 nonexchangetransactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
r 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 of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
r Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

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 of accounting 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 of accounting. 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, except for principal and interest on general long-term debt. Capital asset acquisitions are reported as expenditures in governmental funds. Acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are contracted for the school year (July 1- June 30) and paid over a twelve month contract period, generally September 1through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liabilityfor the July and August salaries at June 30, the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

NEW ACCOUNTING PRONOUNCEMENTS

In fiscal year 2010, the School District adopted the Governmental Accounting and Standards Board (GASB) Statement No. 51, Accounting and Reporting for Intangible Assets. The provisions of this Statement generally require retroactive reporting for intangible assets acquired after June 30, 1980, with the exception of those intangible assets that have indefinite useful lives and those that are considered internally generated.

In addition, the School District adopted GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. The provisions of this Statement impacts disclosure regarding derivative instruments entered into by the state and local governments. Derivative disclosures, if any, will be identified in Note 3.

CASH AND CASH EQUIVALENTS

Composition of Deposits Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered buildingand 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 2009 tax digest year (calendar year) on July 30, 2009 (levy date). Taxes were due on December 20, 2009 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2009 tax digest are reported as revenue in the governmental funds for fiscal year 2010. 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, 2010, for maintenance and operations amounted to $2,863,675.69.

The tax millage rate levied for the 2009 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

17.08 mills

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 , 2 0 1 0

EXHIBIT "H"

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $793,097.22 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

INVENTORIES

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

CAPITAL ASSETS

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

Estimated

Policy

Useful Life

Land Land lmprovements Buildings and Improvements Equipment

All

$

5,000.00

$

5,000.00

$

5,000.00

N/A 0 to 80 years 0 to 80 years 5 t o 50 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.
NET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net of outstanding 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 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.

DEFICIT FUND BALANCES Funds reporting a deficit fund balance at June 30, 2010, are as follows:

Fund Tv~e/FundName

Deficit Balances

Governmental Fund General Fund
Fiduciary Fund Agency Fund
The Board has taken the following corrective actions to reduce the deficit:

Freeze hiring of new personnel; evaluate staffing needs; reduce staff by attrition and elimination of unneeded positions; eliminate purchase of unneeded purchases and equipment; issue Tax Anticipation Notes for immediate cash flow needs and examine millage rate in 2011.

The fiscal year 2010 Family Connections budget was reduced by the Department of Human Resources, which caused a deficit in the agency fund. The Board is working with Department of Human Resourcesto cover the deficit.

USE OF ESTIMATES

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

Note 3: DEPOSITS

COLLATERALIZATION OF DEPOSITS

Official Code of Georgia Annotated (O.C.G.A.) 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 1 1 0 percent of the public funds being secured after the deduction of the amount of deposit

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the 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) lnsurance on accounts provided by the Federal Deposit lnsurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed 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
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. A t June 30, 2010, the bank balances were $1,648,122.17. The bank balances were entirely covered by Federal depository insurance or collateralized with securities held by the pledging financial institution or pledgingfinancial institution's trust department or agent in the School District's name.
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

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 5: CAPITAL ASSETS The following is a summary of changes in t h e Capital Assets during t h e fiscal year:

Governmental Activities Capital Assets. Not Being Depreciated:
Land

Balances July 1, 2009

Increases

Decreases

Balances June 30, 2010

Capital Assets, Being Deprec~ated: Bulldings and improvements Equipment Land Improvements

$ 7,427,614.00

$ 7,427,614.00

2,582,700.00 $ 104,666.00 $ 432.754.00

2,254,612.00

685,175.00

685,175.00

Less: Accumulated Deprec~at~on: Buildings and Improvements Equipment Land Improvements

2,808,413.00 1,849,088.00
496,677.00

170.263.00 152,360.00
14.22800

432,754.00

2.978.676.00 1,568,694.00
510,905.00

Total Capital Assets, Being Depreciated, Net $ 5,541,311.00 $ -232,185.00 $

0.00 $ 5,309.126.00

Governmental Activity Capital Assets - Net $ 5,613,346.00 $ -232,185.00 $

0.00 $ 5,381,161.00

Capital assets being acquired under capital leases a s of June 30, 2010, are as follows:
Governmental Funds
Equipment Less: Accumulated Depreciation

Current year depreciation expense by function is a s follows:
Instruction Support Services
Pupil Services General Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 6: 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 participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1,1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the system varies by line of coverage.

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:

Claims and

Beginningof Year

Changes in

Claims

End of Year

Liability

Estimates

Paid

Liability

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $700,000.00 loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Fund in excess of $700,000.00 loss per occurrence, up to $1,000,000.00, with an aggregate limit of $2,000,000.00.

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

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

Position Covered
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
Note 7: OPERATING LEASES

Amount

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, 2010, for governmental funds amounted to $104,325.00. Future minimum lease payments for these leases are as follows:

Governmental

Year Ending

Funds

Total
Note 8: 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 was to provide cash for operations until property tax collections were received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 3 1 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 Antic~pat~oNnotes

$

0.00 $

1,549,838.00 $

1,000,000.00$

549.838.00

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 9: LONG-TERM DEBT

CAPITAL LEASES

The Randolph County Board of Education entered into various lease agreements for acquiring, constructing and equipping certain educational facilities in the School District and to purchase buses. These lease agreements qualify as capital leases for accounting purposes, and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception.

The changes in Long-Term Debt during the fiscal year ended June 30, 2010, were as follows:

Balance July 1,2009

Add~tions

Governmental Funds

Balance

Deductions

June 30, 2010

Due Within One Year

Capital Leases

$ 2,104,237.27 $

0.00 $ 248,854.61 $ 1,855,382.66 $ 259,587.48

At June 30, 2010, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30:

Capital Leases

Principal

Interest

Total Principal and Interest

$

1,855,382.66 $

290,937.34

Note 10: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $62,557.42 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 $30,964.49
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $23,737.91
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 $7,855.02

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 11: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
On April 13, 2009, the former Chairman and former Superintendent entered into lawsuits against the majority of the Board. The Board had attempted to terminate the contract of the Superintendent and implemented a 2009 Act of the General Assembly requiring an election for Chairman of the Board. The Courts have allowed the termination of the Superintendent and the election of a new Chairman. Rulings of the Court have been applied. Additional lawsuits have been filed. The final outcome of the lawsuits could fundamentally affect the governance of the School District and may consequently have an impact on the financial activities of the School District.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
Note 12: SUBSEOUENT EVENTS
On March 15, 2011, the voters of Randolph County voted in favor of a Special Purpose Local Option Sales Tax referendum for education purposes. The imposition of the tax approved by the voters, as stated in part on the Official Ballot of Randolph County, is as follows:
"Shall the special 1percent sales and use tax for education currently in effect in Randolph County be continued for a period of time not to exceed 2 0 calendar quarters and for the raising of not more than $4,700,000 for the purposes of repairing, renovating, extending, improving, rehabilitating, equipping, and upgrading existing facilities of the Randolph County School District, to include roof repairs; acquiring mechanical and electrical systems and equipment; installing system-wide instructional and administrative technology, safety and security equipment; acquisition of school buses and transportation equipment; acquisition of fine arts, vocational, and physical education/athletic equipment and facilities; acquiring textbooks; and planning for new School District site development and site acquisition at a maximum cost of $4,700,000? If continuation of the tax is approved by the voters, such vote shall also constitute approval of the issuance of general obligation debt of the Randolph County School District in the principal amount of up to $3,500,000, repayable from the proceeds of the aforesaid sales and use tax, for the purpose of funding such portions of the above projects as may be acquired, constructed and equipped with the proceeds of general obligation debt."
The Board issued general obligation bonds of $3,350,000.00 on June 15, 2011.
Note 13: POST-EMPLOYMENTBENEFITS
GEORGIA SCHOOL PERSONNEL EMPLOYEES POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-Employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Insurance Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board).
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 percent of the cost of the health insurance coverage.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2010:
For certificated teachers, librarians and regional educational service agencies:

July 2009 August 2009 -October 2009 November 2 0 0 9 -June 2010

18.534% of covered payroll for August Coverage 14.492% of covered payroll for September - November Coverage 18.534% of covered payroll for December- July Coverage

For non-certificated school personnel:

July 2009 -June 2010

$162.72 per member per month plus Department of Education contribution of $22,838,311.00

No additional contribution was required by the Board for fiscal year 2010 nor contributed to the State OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other post-employment benefits and are subject to appropriation.

The School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 14: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. 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.
On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1,1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 3 0 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 4 0 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 3 0 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.
Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 1 0 years of service. If a member terminates with less than 1 0 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2010, were 5.25% of annual salary. The member contribution rate will increase to 5.53% effective July 1,2010. Employer contributions required for fiscal year 2010 were 9.74% of annual salary as required by the June 30, 2007, actuarial valuation. The employer contribution rate will increase to 10.28% effective
July 1,2010.

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

(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 30,2010

REVENUES
PrOpeRy Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnlngs Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Suppon Services Pupil Services Improvement of lnstructlonal Services Educational Medla Services General Administration School Admlnlstratlon Business Adrnlnlstratlon Maintenance and Operation of Plant Student Transportation Services Central Support Servlces Other Suppon Services Community Services Food Servlces Operation
Capltal Outlay Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
OperatingTransfers From Other Funds Other Source OperatingTransfers To Other Funds
Total Other FinancingSources (Uses)
Net Change In Fund Balances
Fund Balances- Beg~nning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

Fund Balances Ending

Notes to the Schedule of Revenues. Exoendituresand Chanaes In Fund Balances BudEet and Actual
(1) Originaland Final Budget amounts do not include budgeted revenuesor expendltures of the various princ~paal ccounts.
The accompanyingscheduleof revenues, expendituresand changes in fund balances budget and actual is presented on the mod~f~eadccrual basis of accounting whlch IS the basis of accounting used In the presentation of the fund financial statements.

SCHEDULE "1"
ACTUAL AMOUNTS

See notes to the basic financ~asl tatements.

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURESOF FEDERAL AWARDS
YEAR ENDED JUNE 30.2010

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Depariment of Chlld Nutrition Cluster Pass-Through From Georgia Depanment of Education Food Services School Breakfast Program Natlonal School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Bright From the Start: Georgra Department of Early Care and Learning Child and Adult Care Food Program Pass-Through From Georgia Department of Education Food Sewlces ARRA - Child Nutrition Discret~onatyGrants Limlted Avallab~llty
Total Other Programs
Total U. S. Department of Agr~culture
Educat~on,U. S. Department of Education of Homeless Chlldren and Youth Cluster Pass-Through From Georgia Department of Education Education for Homeless Children and Youth
Education Technology State Grants Cluster Pass-ThroughFrom Georgia Department of Educat~on Education TechnoloB State Grants
Special Education Cluster Pass-ThroughFrom Georgia Department of Education Special Education ARRA - Grants to States
ARRA - Preschool Grants
Grants to States Preschool Grants
Total Special Education Cluster
State Fiscal Stabilizat~onFund Cluster Pass-Through From Georgia Department of Education
ARRA - Educat~onState Grants
T~tleI. Part A Cluster Pass-ThroughFrom Georg~aDepartment of Education ARRATitle I Grantsto Local Educat~onaAl gencles T~tleI Grantsto Local Educational Agencies
Total Title I. Part A Cluster
Other Programs Direct Safe and Drug-FreeSchools and Communit~es- Nat~onaPl rograms Pass-ThroughFrom Georgia Department of Education Career and Techn~caEl ducation - Basic Grants to States ImprovingTeacher Quality State Grants Reading First State Grants Rural Education
Safe and Drug-FreeSchools and Communities - State Grants
Total Other Programs
Total U. S. Department of Educat~on

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURESOF FEDERALAWARDS
YEAR ENDED JUNE 30,2010

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Health and Human Services. U. S. Department of Ch~ldCare and DevelopmentFund Cluster Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning
ARRA - Child Care and Development Block Grant
Head Start Cluster Direct ARRA - Head Start Head Start
Total Head Start Cluster
Other Programs Pass-Through From Georgia Department of Human Resources Temporary Asslstance for Needy Families
Total U. S. Department of Health and Human Services
Labor. U. S. Department of Pass-ThroughFrom Columbus ConsolidatedGovernment ARRA - Workforce Investment Act Youth Activities
Defense, U. S. Department of D~rect Department of the Army R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

Total Federal Financial Asslstance
N/A = Not Available
Notes to the Schedule of Exgend~turesof Federal Awards
(1) Includes the Federallyassigned value of donated commodities for the Food Donatlon Program in the amount of $77,946.06.
(2) Expendituresfor the funds earned on the School Breakfast Program ($335,510.78) were not maintained separately and are included in the 2010 Natlonal School Lunch Program.
Major Programsare ~dentlfiedby an asterisk (*) in front of the CFDA number.
The School District did not provlde Federal Asslstance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards Includesthe Federal grant actlvlty of the RandolphCounty Board of Education and is presented on the modified accrual basis of accountingwhich is the basis of accounting used In the presentation of the fund financial statements.

See notes to the basic financial statements.

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30.2010
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 Disabil~ties- Categories I-V G~ftedStudent - CategoryVI
Remedial Education Program Alternative Education Program Media Center Program 2 0 Days Add~tionaIlnstruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular
Sparsity - Alternative
Nursing Services Vocational Supervisors Mid-term Adjustment Hold-Harmless Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Health Insurance Preschool Handicapped Program Teachers' Retirement Virtual Schools Grant
Office of Treasury and Fiscal Services Public School Employees Retirement

SCHEDULE "3"
GOVERNMENTAL FUND TYPE GENERAL FUND

See notes to the basic financial statements.

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30.2010

SCHEDULE " 4

PROJECT
Providingfunds to pay the cost of renovating, repairing and equipping Randolph County Elementary School and related fac~lities,includ~ng necessaryfurnishings, f~xtures, equipment and paving; renovating, repalring and equipping Randolph Clay Middle School and related facilities, includ~ngnecessaryfurnishings, fixtures and equipment; renovating, repairing and equipp~ngRandolph Clay High School and related facllltles, including necessaryfurnishings, fixtures and equipment; renovating and repairing athletic facilities, including necessary furnishings, fixtures and equipment; acquiring, constructing and equipping a new fleld house; acqulrlng, 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 ~nstallation of heating, ventilation and air conditionlng(HVAC) units; acquiring and installingsystem-wide instructional and administrative technology equipment; acquisition of school buses and transportation equipment; renovating, repairingand equipping RandolphClay Learning Center and Randolph County Board of Education office, including necessaryfurnishings, fixtures, and equipment; acquiring any necessary property therefore, both real and personal; and paying expenses incident to accomplishing the forego~ng(the Projects).

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3)

AMOUNT EXPENDED IN PRIOR YEARS (3)

PROJECT STATUS

$ 3.800,000.00 $ 3,800,000.00 $ 120,401.16 $ 2,149,720.15 Ongoing

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

See notes to the basic financial statements.

(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 30.2010

SCHEDULE " 5

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

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATlOh (1)(7)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

TOTAL QBE FORMULA FUNDS

(1) Comprisedof 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 financ~asltatements

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-1 56 Atlanta, Georgia 30334-8400
October 6 , 2 0 1 1

Honorable Nathan Deal, 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 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAlTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDlTlNG STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Randolph County Board of Education as of and for the year ended June 30, 2010, which collectively comprise Randolph County Board of Education's basic financial statements and have issued our report thereon dated October 6, 2011. The report on governmental activities was qualified for certain leased equipment items being excluded from Capital Assets. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GovernmentAuditingStandards, 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 of Education'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 of expressing 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 of the Randolph County Board of Education's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses and therefore, there can be no assurances that all deficiencies, significant deficiencies or material weaknesses have been identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses and other deficiencies that we consider to be significant deficiencies.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider items FS-7201-10-01, FS-7201-10-04, FS-7201-10-05 and FS7201-10-07 in the accompanying Schedule of Findings and Questioned Costs to be material weaknesses.
A s@nificantdeficiencyis a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider items FS-7201-10-02, FS-7201-10-03, and FS-7201-10-06 in the accompanying Schedule of Findings and Questioned Costs to be significant deficiencies in internal control over financial reporting.
Com~lianceand Other Matters
As part of obtaining reasonable assurance about whether Randolph County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed an instance of noncompliance or other matter that is required to be reported under Government Auditing Standards and which is described in the accompanying Schedule of Findings and Questioned Costs as item FS-7201-10-04.
We also noted certain matters that we have reported to management of Randolph County Board of Education in a separate letter dated October 6, 2011.
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.
This report is intended solely for the information and use of management, members of the Randolph County Board of Education, others within the entity, 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, .
~uss)ll W. Hinton, CPA, CGFM State Auditor

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
October 6, 2 0 1 1

Honorable Nathan Deal, 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 REPORT ON COMPLIANCE WlTH REQUIREMENTS THAT COULD HAVE
A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL
OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Ladies and Gentlemen:

We have audited Randolph County Board of Education's compliance with the types of compliance requirements described in the OM6 Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010. Randolph County Board of Education's major Federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major Federal programs is the responsibility of Randolph County Board of Education's management. Our responsibility is to express an opinion on Randolph County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, local Governments,and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Randolph County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Randolph County Board of Education's compliance with those requirements.
In our opinion, the Randolph County Board of Education complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010.

Internal Control Over Com~liance

Management of Randolph County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the 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 the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, 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.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, we identified certain deficiencies in internal control over compliance that we consider to be significant deficiencies as described in the accompanying Schedule of Findings and Questioned Costs as items FA-7201-10-01 and FA-7201-10-02. A signtifiant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Randolph County Board of Education's responses to the findings identified in our audit are described in the accompanying Schedule of Management's Responses. We did not audit Randolph County Board of Education's responses and, accordingly, we express no opinion on the responses.

This report is intended solely for the information and use of management, members of the Randolph

County Board of Education, others within the entity, 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,

+

II W. Hinton, CPA, CGFM

SECTION Ill 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 3 0 , 2 0 1 0
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS
FINDING CONTROL NUMBER AND STATUS
Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Further Action Not Warranted Further Action Not Warranted Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved- See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses
CORRECTIVE ACTION/RESPONSES
EXPENDITURES/LIABILlTlES/DISBURSEMENTS Improper Expenditure Finding Control Number: FS-7201-08-05
The Board has discontinued this practice in the fiscal year 2010 school year.
CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILlTlES/DISBURSEMENTS EMPLOYEE COMPENSATION CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Finding Control Number: FS-7201-09-01
The School District has strengthened the bank reconciliation process by clearing up reconciling items being carried forward for excessive amount of time and completing bank reconciliations in a timely manner with evidence of supervisory review. The School District is working to ensure voucher packages are complete including purchase orders, evidence of receipts, original invoices and verifying expenditures to avoid overpayment. The School District is working to pay credit card expenditures in a timely manner to avoid finance charges and late fees. The School District has implemented adequate procedures to ensure employee compensation expenditures are properly documented, calculated and approved before the disbursement of funds. The School District is working to ensure Capital Assets are properly recorded and maintained. The Board has approved a new Capitalization Policy retroactive to July 1,2010, reflecting increase and changes to the Capitalization of Fixed Assets, Intangible Assets, Depreciation Policy and Disposition of Assets. Currently, the School District uses PC Genesis as the accounting information system so the controls are not limited to all employees' access for the performance of the employee's duties.

RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDlTURES/LIABILlTlES/DISBURSEMENTS lnadequate Internal Control Procedures over School Activity Accounts Finding Control Number: FS-7201-09-02
The Board will continue to provide training to school level staff members. We have implemented procedures for adequate controls for bank reconciliations and approval by the appropriate level of management. Procedures with updated forms have been implemented for receipt documentation and deposits. A policy is in place for proper approval and adequate documentation for expenditures and disbursements.
REVENUES/RECEIVABLES/RECEIPTS lmproper Reporting of SPLOST Interest Finding Control Number: FS-7201-09-03
In March 2011, a separate bank account was set up for SPLOST payments and interest. As of June 30, 2011, all transfers for 2010 - 2 0 1 1 prior to March 2 0 1 1 were completed. All subsequent receipts for SPLOST will go directly into the SPLOST bank account.
EXPENDlTURES/LIABILlTlES/DISBURSEMENTS lmproper use of SPLOST Proceeds Questioned Cost: $37,670.94 Finding Control Number: FS-7201-09-04
The School District consulted with legal counsel to verify how SPLOST funds should be used. In the fiscal year 2 0 1 1 school year SPLOST funds were not being used for any unallowable expenses per the referendum. This practice will continue with the fiscal year 2012 school year.
EXPENDITURES/LIABI LITIES/DISBURSEMENTS lmproper Expenditure Questioned Cost: $1,000.00 Finding Control Number: FS-7201-09-05
The School District discontinued this practice in the fiscal year 2010 school year.
EXPENDITURES/LlABILlTlES/DISBURSEMENTS CAPITAL ASSETS FINANCIAL REPORTING lnadequate Internal Controls over Reporting of Capital Leases Finding Control Number: FS-7201-09-06
The School District is reviewing accounting procedures currently in place to design and implement procedures to ensure the lease amount is recorded properly.

RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CORRECTIVE ACTION/RESPONSES

GENERAL LEDGER lnadequate Control over General Ledger Finding Control Number: FS-7201-09-07

The School District is continuously working to clear inactive funds on the general ledger. There have been some funds cleared but not all. All funds with balances from prior years are being reviewed to determine how to fund deficits and dispose of the balances on hand. The objective is to clear up prior year balances in inactive funds by end of June 2012.

BUDGET PREPARATION/EXECUTION Deficit Fund Balance Finding Control Number: FS-7201-09-08

The School District for the year 2011-2012 is working to reduce the deficit fund balance. We have a substantial reduction in staff, trimmed bus routes, increased teacher/student ratio, reduced field trips, are closely monitoring budgets and have included a reserve fund in the initial budget to correct overspending. Funds were also budgeted to include a deficit reduction amount in the initial budget. The School District will put procedures in place to meet reporting requirements.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-7201-07-05 FA-7201-08-02 FA-7201-08-03 FA-7201-08-05

Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

REPORTING lnadequate Documentation U. S. Department of Agriculture Through Bright from the Start: Georgia Department of Early Care and Learning Summer Food Service Program For Children (CFDA 10.559) Finding Control Number: FA-7201-07-05

The School District no longer operates the Summer Food Service Program.

RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010
PRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
ALLOWABLE COSTS/COST PRINCIPLES Unsupported Costs U. S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Amount: $43,603.20 Finding Control Number: FA-7201-08-02
The School District has implemented procedures to ensure that employee salaries are charged to the proper fund with supportive documentation. We are following the guidelines provided by the Federal programs.
ALLOWABLE COSTS/COST PRl NCl PLES Improper Application of Indirect Cost Rate U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Amount: $56,393.32 Finding Control Number: FA-7201-08-03
The School District has implemented procedures to ensure the correct calculation of indirect cost. The School District uses the worksheet and indirect cost percent for the current year provided by Financial Review to calculate the indirect cost less the 7 0 0 object code expenditures.
REPORTING Inadequate Documentation U. S. Department of Agriculture Through Bright From the Start: Georgia Department of Early Care and Learning Child Nutrition Cluster (CFDA 10.559) Finding Control Number: FA-7201-08-05
The School District no longer operates the Summer Food Service Program for Children.

SECTION IV FINDINGS AND QUESTIONED COSTS

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONEDCOSTS
YEAR ENDED JUNE 30,2010

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

Type of auditor's report issue: General Fund; Capital Projects Fund; Aggregate Remaining Fund Information Governmental Activities

Internal control over financial reporting: Material weaknesses identified? Significant deficiencies identified?

Noncompliance material to financial statements noted:
Federal Awards
lnternal Control over major programs: Material weakness identified? Significant deficiencies identified?

Type of auditor's report issued on compliance for major programs: All major programs

Any audit findings disclosed that are required to be reported in accordance with OMB Circular A-133, Section 510(a)?

Identification of major programs:

CFDA Number(s1

Name of Federal Program or Cluster

Title I, Part A Cluster Special Education Cluster State Fiscal Stabilization Fund Cluster Head Start Cluster

Dollar threshold used to distinguish between Type A and Type B programs:

Auditee qualified as low-risk auditee?

Unqualified Qualified
Yes Yes Yes
N 0 Yes
Unqualified
Yes

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGSAND QUESTIONED COSTS
YEAR ENDED JUNE 30.2010
II FINANCIAL STATEMENT FIND1NGS AND QUESTIONEDCOSTS
CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILlTlES/DISBURSEMENTS EMPLOYEE COMPENSATION CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-7201-10-01
Condition: This is a repeat finding (FS-7201-09-01, FS-7201-08-01 and FS-7201-07-01) from fiscal years ended June 30, 2009, June 30, 2008, and June 30, 2007, respectively. The accounting procedures of the School District were insufficient to provide adequate internal controls over numerous control categories.
Criteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures. Such internal controls would limit any one individual's access to both physical assets and the related accounting records.
Questioned Cost: N/A
Information: Cash and Cash Equivalents
The School District did not have procedures in place to ensure proper cutoff of transactions recorded in the period. Nine checks in the amount of $146,628.05 were written during July and back dated to June 30, 2010. This resulted in cash and payroll withholding payables being misstated on the financial statements. The School District did not have adequate procedures in place to make sure that all bank reconciliations were adequately prepared and approved. The following deficiencies were noted: 1. The bank reconciliations included accounts receivable as deposit in transit. 2. There was a variance between bank reconciliations and the balance on the general
ledger. 3. The bank reconciliations had numerous reconciling items that have been carried forward
for excessive amounts of time. 4. The bank reconciliations were not completed in a timely manner. 5. The bank reconciliations did not have evidence of supervisory review. 6. Several wire transfers for State payroll taxes and other payroll withholdings that were
shown as reconciling items did not clear the bank until several months later or are currently still being shown as reconciling items. The Board recorded the transfers on the accounting records as cash disbursements, but did not request the bank to transfer the funds. A correcting entry of $311,299.69 was proposed and accepted to correctly record outstanding wire transfers at June 30, 2010, as liabilities on the financial statements.

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30.2010
II FINANCIAL STATEMENT FINDINGSAND QUESTIONEDCOSTS
CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION CAPITAL ASSETS ACCOUNT1NG CONTROLS (OVERALL) Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-7201-10-01
Expenditures/Liabilities/Disbursements The School District did not have adequate procedures in place to ensure expenditures were adequately documented and properly approved. During a test of expenditures, the following problems were noted: 1. One expenditure was missing adequate supporting documentation. 2. Several voucher packages did not include evidence of approval. During a test of credit card voucher packages, the following problems were noted: 1. Several expenditures were not adequately documented. 2. Several expenditures included finance charges and late fees.
Employee Compensation The School District did not have adequate procedures in place to ensure employee compensation expenditures were properly documented, calculated and approved before disbursement of funds. During a test of compensation, the following problems were noted: 1. Three employees were overpaid due to either paid at wrong salary step, timesheet error, or the furlough amount was paid instead of deducted. 2. Two employees were underpaid due to either local supplement was paid at incorrect amount or step increase was paid at incorrect amount. 3. Salary amount paid to two employees could not be supported. 4. Supporting documentation could not be provided for all extra pay paid to two employees. 5. Local supplemental pay for one employee could not be supported.
Capital Assets The School District did not have adequate procedures in place to ensure Capital Assets were adequately maintained. The following deficiencies were noted: 1. Donated land received in fiscal year 2008 was not capitalized, and the estimated fair market value on the date donated could not be provided. 2. Additions purchased through a capital lease in fiscal year 2008 were not capitalized as discussed in finding FS-7201-10-05. 3. Seven portable buildings listed on the fixed asset listing were disposed of during fiscal year 2010 and have not been removed from the asset listing or the financial records.
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.

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIAL STATEMENT FINDINGS AND QUESTIONEDCOSTS
CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION CAPITAL ASSETS ACCOUNTING CONTROLS (OVERALL) Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-7201-10-01
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 properly paid, (3) all amounts paid to system employees are adequately documented and properly approved, (4) capital assets are properly recorded and maintained and (5) access controls in the accounting information system complement the system of internal control by limiting an employee's access to only the accounting functions necessary for the performance of that employee's duties.
Effect: Without satisfactory accounting controls and procedures in place, the School District could place itself in a position where potential misappropriation of assets could occur. In addition, the lack of controls 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 EXPENDlTURES/LIABILlTlES/DISBURSEMENTS Inadequate Internal Control Procedures over School Activity Accounts Significant Deficiency Finding Control Number: FS-7201-10-02
Condition: This is a repeat finding (FS-7201-09-02, FS-7201-08-02 and FS-7201-07-02) from fiscal years ended June 30,2009, June 30,2008, and June 30, 2007, respectively. The accounting procedures of the School District were insufficient to provide for adequate internal controls over the school activity accounts.
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: N/A

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
I1 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDlTURES/LIABILlTlES/DISBURSEMENTS Inadequate Internal Control Procedures over School Activity Accounts Significant Deficiency Finding Control Number: FS-7201-10-02
Information: Cash and Cash Equivalents
The School District did not have adequate internal controls in place to ensure that the bank reconciliation function was separate of the record keepingfunction.
Revenues/Receiva bles/Receipts The School District did not have adequate internal controls in place to ensure proper separation of duties and proper documentation of receipts as follows: 1. Deposit preparation was not separated from the record keeping and cash custody functions. 2. Adequate receipt documentation was not maintained for deposits recorded on the general ledger.
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.
Cause: These deficiencies were a result of management's decision to limit the number of administrative staff made 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 necessary 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 disbursements and receipts of funds within the school activity accounts are adequately documented and recorded in the financial records. The School District should also establish a monitoring process to provide reasonable assurance that transactions are processed according to established procedures.

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIALSTATEMENT FINDINGSAND QUESTIONEDCOSTS
REVENUES/RECEIVABLES/RECElPTS Improper Reporting of SPLOST lnterest Significant Deficiency Finding Control Number: FS-7201-10-03
Condition: This is a repeat finding (FS-7201-09-03 and FS-7201-08-03) from fiscal years ended June 30, 2009, and June 30, 2008, respectively. The School District did not maintain Special Purpose Local Option Sales Tax (SPLOST) funds in a separate bank account for its SPLOST capital projects funds. The funds were deposited in the general operating account and transferred to the capital projects account at a later date. In addition, interest earned on these funds was not transferred to the capital projects account.
Criteria: According to Official Code of Georgia Annotated 548-8-121(a), SPLOST proceeds shall be kept in a separate bank account from other funds of the entity. The Attorney General's Official Opinion 20013 states: "The requirement of a separate account and the mandate that the proceeds placed in the account not be commingled with other funds, as set forth in the second part of the statutory limitation, demonstrate a legislative intent that all money in the account, including any interest, is dedicated for the purposes specified in the involved resolution or ordinance, as required by the first part of the statutory limitation. This determination of legislative intent is consistent with the general rule that interest follows principal."
Questioned Cost: N/A
Information: During the year under review, it was noted that the SPLOST funds of the School District were being deposited in the general operating bank account, and then transferred to the capital projects bank account. The 2010 fiscal year SPLOST receipts totaling $793,558.46 were not transferred from the general operating account into the capital projects funds as of June 30, 2010. It was noted that the interest earned on these funds in the general operating account was recorded in the general fund and has not been transferred to the SPLOST capital projects fund as required.
Cause: The School District failed to ensure that SPLOST funds were transferred out of the general operating account in a timely manner. In addition, they did not track and transfer interest earned on the funds from the general fund to the SPLOST capital projects fund.
Effect: lnterest earned was misstated between the general fund and the SPLOST capital projects fund. Additionally, the School District did not comply with State law. A financial statement irregularity in accordance with Official Code of Georgia Annotated 920-2-67.
Recommendation: The School District should ensure that all SPLOST funds are kept separately from all other funds of the entity. In addition, the School District should determine the total interest earned on these funds to date and transfer that amount to the SPLOST capital projects fund.

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EXPENDITURES/LIABILlTlES/DISBURSEMENTS lmproper Use of SPLOST Proceeds Material Noncompliance Material Weakness Finding Control Number: FS-7201-10-04
Condition: This is a repeat finding (FS-7201-09-04and FS-7201-08-04)from fiscal years ended June 30, 2009, and June 30, 2008, respectively. lmproper use of Special Purpose Local Option Sales Tax (SPLOST) proceeds.
Criteria: According to Paragraph IV, Section VI, Article Vlll of the Constitution of the State of Georgia, "the purpose or purposes for which the proceeds of the tax are to be used and may be expended include: (1) Capital outlay projects for educational purposes; (2) the retirement of previously incurred general
obligation debt with respect only to capital projects of the school system..." Official Code of Georgia
Annotated (O.C.G.A.) 548-8-121 states, "The proceeds received from the tax authorized by this part
shall be used ... exclusively for the purpose or purposes specified in the resolution or ordinance
calling for imposition of the tax".
The Attorney General's Official Opinion 97-7 for O.C.G.A. 520-2-260(b)(5), states, "capital outlay projects as used in the educational sales tax purposes amendment should be read as well to refer to major, permanent, or long-lived improvements or betterments, such as would be properly chargeable to a capital asset account and as distinguished from current expenditures and ordinary maintenance expenses". Since maintenance contracts, license renewal and software are not denoted in the School District's approved SPLOST referendum, these expenditures are not an allowable use of SPLOST proceeds.
Questioned Cost: $28,906.15
Information: During the year under review, the School District spent $28,906.15 for maintenance contracts, license renewals, and software.
Cause: The School District believed these expenditures were covered by a general reference in the SPLOST referendum regarding "installing system-wide instructional and administrative technology equipment". However, the reference concerns the installation of equipment, not the maintenance of equipment.
Effect: Expenditures of SPLOST funds for maintenance contracts, license renewals, and software appear to be in conflict with State laws regarding imposition and use of SPLOST funds after considering that Paragraph IV, Section VI, Article Vlll of the Constitution of the State of Georgia indicates SPLOST proceeds should be spent on "capital outlay projects for educational purposes" and the Attorney General has ruled that capital outlay projects refer to major, permanent, or long-lived improvements or betterments, such as would be properly chargeable to a capital asset account and as distinguished from current expenditures and ordinary maintenance expenses.

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
I1 FINANCIALSTATEMENT FINDINGSAND QUESTIONEDCOSTS
EXPENDlTURES/LIABILITIES/DISBURSEMENTS Improper Use of SPLOST Proceeds Material Noncompliance Material Weakness Finding Control Number: FS-7201-10-04
Recommendation: The School District should research this issue, consult with legal counsel and verify if expenditures of this nature are an appropriate use of SPLOST funds in accordance with State law and the SPLOST referendum as approved by the voters of Randolph County.
EXPENDlTURES/LIABILlTlES/DISBURSEMENTS CAPITAL ASSETS F1NANCIAL REPORTING Inadequate Internal Controls over Reporting of Capital Leases Material Weakness Finding Control Number: FS-7201-10-05
Condition: This is a repeat finding (FS-7201-09-06and FS-7201-08-06)from fiscal years ended June 30, 2009, and June 30, 2008, respectively. The School District did not have adequate controls in place to ensure that all required activity was included in the financial statement information presented for audit. During our examination of capital assets and capital leases, we noted weaknesses in internal controls which we consider relevant to the School District's financial statements for the fiscal year ended June 30,2010.
Criteria: Chapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration indicates that School Districts must prepare their financial statements in accordance with generally accepted accounting principles. Controls should be in place to appropriately categorize and report lease activity on the financial statements. Generally accepted accounting principles require that a lease be capitalized if any one of the following four criteria pertaining to the lease transaction is met: 1)the lease transfers ownership of the property to the lessee by the end of the lease term, 2) the lease contains a bargain purchase option, 3) the lease term is equal to 75% or more of the estimated economic life of the leased property and 4) the present value of the minimum lease payments at the inception of the lease, excluding executor costs, equals at least 90% of the fair value of the leased property.
Questioned Cost: N/A
Information: In the fiscal year ended June 30, 2008, Randolph County Board of Education entered into capital leases with Citi Mortgage in the amount of $2,183,305.23 and $164,000.00. Neither the capital lease liability nor the capital assets obtained through the leases were recorded within the financial records of the School District in fiscal year 2008. Correcting entries were proposed for the capital lease liability of $2,183,305.23 and accepted by the School District to properly reflect the material lease activity in the fiscal year 2008 financial statements. However, the amount of assets purchased through those leases which should be capitalized could not be reasonably determined in the 2008, 2009 or the 2010 fiscal years. Therefore, the audit opinion of governmental activities has been appropriately qualified for activity related to capital assets.
- 8 -

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIAL STATEMENT FINDINGS AND QUESTIONEDCOSTS
EXPENDITURES/LIABILlTlES/DISBURSEMENTS CAPITAL ASSETS FINANCIAL REPORTING lnadequate Internal Controls over Reporting of Capital Leases Material Weakness Finding Control Number: FS-7201-10-05
Cause: Management of Randolph County Board of Education failed to implement adequate controls and procedures to ensure that all activity of the School District was recorded in accordance with generally accepted accounting principles.
Effect: The lack of proper accounting policies and procedures materially impacted the School District's reporting of its financial position and results of operation.
Recommendation: The School District should review the accounting procedures currently in place, identify weaknesses, and design and implement procedures to ensure that all capital lease activity is properly reflected on the financial statements.
GENERAL LEDGER lnadequate Control over General Ledger Significant Deficiency Finding Control Number: FS-7201-10-06
Condition: This is a repeat finding (FS-7201-09-07, FS-7201-08-07 and FS-7201-07-03)from the fiscal years ended June 30,2009, June 30,2008, and June 30, 2007, respectively. The accounting procedures of the 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 Cost: N/A
Information: The School District has numerous funds which had balances from prior fiscal years for which adequate disposition was not made during the year under review.
Cause: The School District failed to implement adequate controls over the general ledger.

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONEDCOSTS
YEAR ENDED JUNE 30,2010
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Inadequate Control over General Ledger Significant Deficiency Finding Control Number: FS-7201-10-06
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 these funds to determine how to fund the deficits and determine the disposition of the funds on hand.
BUDGET PREPARATION/EXECUTION Deficit Fund Balance Failure to Adopt a Balanced Budget Material Weakness Finding Control Number: FS-7201-10-07
Condition: This is a repeat finding (FS-7201-09-08) from fiscal year ended June 30, 2009. The General and Agency Funds of the Randolph County Board of Education reported deficit fund balances. In addition, the School District failed to adopt a balanced budget for the General Fund.
Criteria: Chapter 25, Governmental Fund Deficits of the Financial Management for Georgia Local Units of Administration states in part: "The seriousness of fund balances cannot be overstated. The Georgia Department of Education requires those LUAs with deficit governmental fund balances to meet certain reporting requirements."
Chapter 32, Preparing Operating Budgets, of the Financial Management for Georgia Local Units of Administration states in part: "The budget must be balanced for all budgeted funds. Total anticipated revenues should equal total estimated expenditures. In the event anticipated revenues are insufficient to fund anticipated essential expenditures, a portion of unreserved fund balance from previous years must be used to fund the shortfall. In the event there is insufficient unreserved fund balance from previous years to fund anticipated expenditures, then such expenditures must be reduced to equal anticipated revenues plus available unreserved fund balance."
Questioned Cost: N/A
Information: The School District's General and Agency Funds reported deficit fund balances in the amounts of $1,651,487.68 and $5,205.79, respectively. In addition, the School District did not present the required monthly reports containing all anticipated expenditures, publish actual financial operations, and submit actual financial operations to appropriate authorities as required.

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIALSTATEMENT FINDINGS AND QUESTIONED COSTS
BUDGET PREPARATION/EXECUTION Deficit Fund Balance Failure to Adopt a Balanced Budget Material Weakness Finding Control Number: FS-7201-10-07
Cause: The School District's original and final budgets for the General Fund budgeted deficit fund balances in the amounts of $922,299.06 and $273,857.78, respectively.
Effect: A financial statement irregularity in accordance with Official Code of Georgia Annotated 20-2-67.
Recommendation: The School District should establish policies and procedures designed to ensure that expenditures do not exceed availability of resources, so that in future periods the School District does not report a deficit fund balance. In addition, appropriate procedures should be implemented to ensure that the adopted budget for each budgeted fund is balanced as required. Finally, the School District should establish procedures to meet the reporting requirement of O.C.G.A. 520-2-67 until the deficit is eliminated.
Ill FEDERALAWARD FINDINGS AND QUESTIONEDCOSTS
ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control over Employee Compensation Process Significant Deficiency U. S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027, 84.173, 84.391, 84.392) Title 1Cluster (CFDA 84.010, 84.389) U. S. Department of Health and Human Services Head Start Cluster (CFDA 93.600, 93.708) Finding Control Number: FA-7201-10-01
Condition: A review of employee compensation charged to various Federal programs revealed that internal procedures were not in place to ensure that employee compensation expenditures are properly documented and calculated.
Criteria: Provisions of OMB Circular A-87, Cost Principles for State, Local and Indian TribalGovernments,require that costs charged to a Federal award be program necessary and reasonable for proper and efficient performance and administration of the Federal Award, as well as, be adequately documented.
Questioned Cost: N/A

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONEDCOSTS
YEAR ENDEDJUNE 30,2010
Ill FEDERALAWARD FINDINGS AND QUESTIONEDCOSTS
ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control over Employee Compensation Process Significant Deficiency U. S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027, 84.173, 84.391, 84.392) Title 1Cluster (CFDA 84.010,84.389) U. S. Department of Health and Human Services Head Start Cluster (CFDA 93.600, 93.708) Finding Control Number: FA-7201-10-01
Information: A review of employee compensation revealed several instances where employees were either underpaid or overpaid because of miscalculations of salaries and other various calculation errors.
Cause: Management did not have controls and procedures in place to assure that compensation charged to Federal programs and paid to personnel were supported by approved contracts, salary schedules, timesheets and accurate calculations.
Effect: Failure to monitor employee compensation expenditures for compliance can result in noncompliance with the requirements of the Federal grant.
Recommendation: The School District should establish and implement appropriate procedures to strengthen internal controls over processing employee compensation. Additionally, the School District should implement procedures to ensure that all payroll disbursements are based on approved contracts, salary schedules and time worked.
MATCHING, LEVEL OF EFFORT AND EARMARKING Undocumented In-Kind Donations Significant Deficiency U. S. Department of Health and Human Services Head Start (CFDA 93.600) Finding Control Number: FA-7201-10-02
Condition: The School District failed to provide adequate documentation for all items used to meet the matching requirements for the Head Start (CFDA 93.600) program.
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.
Questioned Cost: N/A

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FIND1NGS AND QUESTIONEDCOSTS
YEAR ENDED JUNE 30,2010
Ill FEDERAL AWARD FINDINGS AND QUESTIONEDCOSTS
MATCHING, LEVEL OF EFFORT AND EARMARKING Undocumented In-Kind Donations Significant Deficiency U. S. Department of Health and Human Services Head Start (CFDA 93.600) Finding Control Number: FA-7201-10-02
Information: In-kind donations for donated space for Facilities and Playground were valued by the Head Start Program at $60,048.00, which is over 25% of the total in-kind donations of $220,903.34. Documentation to support the valuation of these items for non-Federal in-kind matching purposes was not provided.
Cause: Management failed to implement procedures to ensure that the valuation of non-Federal in-kind contributions were verifiable to supporting documentation.
Effect: Failure to ensure compliance with 45 CFR 1301.20-21 could result in noncompliance with the requirements of the Federal grant.
Recommendation: The School District should implement procedures to ensure that matching requirements are met and documented as required by 45 CFR 1301.20-21.

SECTION V MANAGEMENT'S RESPONSES

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30,2010
Finding Control Number: FS-7201-10-01
We concur with this finding.
* We are working to ensure proper cutoff for transactions in the fiscal period. * The School District has strengthened the bank reconciliation process by clearing up
reconciling items being carried forward for an excessive amount of time and completing the bank reconciliations in a timely manner with evidence of supervisory review. We will continue to improve all aspects of our reconciliation functions.
* The School District is working to ensure voucher packages are complete including purchase
orders, evidence of receipts, original invoices and verifying expenditures to avoid overpayment. The School District is working to pay credit card expenditures in a timely manner to avoid finance charges and late fees.
* The School District has implemented adequate procedures for employee compensation
expenditures to be properly documented, calculated and approved before the disbursement of funds.
* The School District is working to properly record and maintain Capital Assets. The Board has
approved a new Capitalization Policy retroactive to July 1,2010, reflecting increases and changes to the Capitalization of Fixed Assets, Intangible Assets, Depreciation Policy and Disposition of Assets.
* The School District will review each individual's access to PCGenesis to prevent users from
accessing accountingfunctions that are outside of their area of responsibility.
Finding Control Number: FS-7201-10-02
We concur with this finding. The School District will implement procedures to separate record keeping functions at the principal account sites. Deposit preparation will be separated from the record keeping and cash custody functions. Procedures will be implemented for adequate receipt documentation to include gate tickets for athletics for deposits recorded on the general ledger.
Finding Control Number: FS-7201-10-03
We concur with this finding. In March 2011, a separate bank account was set up for SPLOST payments and interest. As of June 30, 2011, all transfers for 2010-2011 prior to March 2 0 1 1 were completed. All subsequent receipts for SPLOST will go directly into the SPLOST bank account.
Finding Control Number: FS-7201-10-04
We concur with this finding. The School District consulted with legal counsel to verify how SPLOST funds should be used. In the 2 0 1 1 school year SPLOST funds were not being used for any unallowable expenses per the referendum. This practice will continue with subsequent school years.
Finding Control Number: FS-7201-10-05
We concur with this finding. The School District is reviewing accounting procedures currently in place to design and implement procedures to ensure the lease amount is recorded properly.

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30,2010

Finding Control Number: FS-7201-10-06

We concur with this finding. The School District is continuously working to clear inactive funds on the general ledger. There have been some funds cleared but not all. All funds with balances from prior years are being reviewed to determine how to fund deficits and dispose of the balances on hand. The objective is to clear up prior balances in inactive funds by the end of June 2012.

Finding Control Number: FS-7201-10-07

We concur with this finding. The School District is working to reduce the deficit fund balance for the year 2011-2012. We have a substantial reduction in staff, trimmed bus routes, increased teacher/student ratio, reduced field trips, are closely monitoring budgets and have included a reserve fund in the initial budget to help correct overspending. Funds were also budgeted to include a deficit reduction amount in the initial budget. The School District will put procedures in place to meet reporting requirements.

Finding Control Number: FA-7201-10-01

We concur with this finding. The School District will implement procedures to ensure that employee compensation expenditures are properly documented by approved contracts, salary schedules, and time sheets with accurate calculations.

Finding Control Number: FA-7201-10-02

We concur with this finding. The School District will implement procedures to provide adequate documentation of all items used to meet matching requirements.

Contact Person: Telephone: Fax: Email:

Andrea L. Henderson, Finance Officer (229) 732-2260 (229) 732-3840 andrea.henderson@sowegakl2.org