Randolph County Board of Education, Cuthbert, Georgia, annual financial report for the fiscal year ended 2014 June 30 (including independent auditor's reports)

RANDOLPH COUNTY BOARD OF EDUCATION
CUTHBERT, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2014
(Including Independent Auditor's Reports)

RANDOLPH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET POSITION

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

H

STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS

I 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 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM

Page
1 2
4 5 6 7 8 9 10
25 26 27 28 29

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RANDOLPH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

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SECTION I FINANCIAL

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Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
February 9, 2016

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
Ladies and Gentlemen:
Report on the Financial Statements
We were engaged to audit the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through I) of the Randolph County Board of Education, as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the Board's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
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 Government Auditing 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. Because of the matter described in the "Basis for Disclaimer of Opinion" paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.
Basis for Disclaimer of Opinion
As described in finding FS 2014-005, the School District was unable to prepare these financial statements. We prepared the statements based on the School District's chart of accounts and
2014ARL-23X

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available accounting records, which is considered to be a threat to auditor independence. In addition, safeguards designed to eliminate or reduce the level of threats to independence could not be identified and/or applied during the course of the engagement. This lack of independence has been determined to have a significant effect on all of the School District's opinion units.
Disclaimer of Opinion
Because of the significance of the matter described in the "Basis of Disclaimer of Opinion" paragraph, we were unable to establish the level of independence necessary to express an opinion on the financial statements referred to in the first paragraph. Accordingly, we do not express an opinion on the financial statements referred to in the first paragraph.
Emphasis of Matter
As described in Note 2 to the financial statements, in 2014 the Randolph County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. The School District restated beginning Net Position for the cumulative effect of this accounting change.
As discussed in Note 2 to the financial statements, in 2014, the Randolph County Board of Education restated the prior period financial statements to correct a misstatement.
Other Matters
Required Supplementary Information
Management has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context.
Accounting principles generally accepted in the United States of America require that the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 25, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We did not audit this information and express no opinion on it.
Other Information
Our audit was conducted as required by section 50-6-6(a) of the Official Code of Georgia Annotated. This statute does not allow for our withdrawal from the engagement.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Randolph County Board of Education's basic financial statements. The accompanying supplementary information, consisting of Schedules 2 through 5, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements.
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The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. We did not audit this information and express no opinion on it.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated February 9, 2016, 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 Standards in considering Randolph County Board of Education's internal control over financial reporting and compliance.
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,

GSG:er 2014ARL-23X

Greg S. Griffin State Auditor

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RANDOLPH COUNTY BOARD OF EDUCATION

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RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2014
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Interest Payable Contracts Payable Retainages Payable Deposits and Unearned Revenues Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET POSITION
Net Investment in Capital Assets Restricted for
Bus Replacement Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Position

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

2,004,593.72

969,191.71

975,914.72 854,030.04 403,055.26
46,622.83 29,180.47 72,035.00 6,955,468.53

12,310,092.28

266,204.62 919,828.55 149,075.92
15,562.50 835.88
99,000.00 112,869.02
675,000.00 1,400,000.00
3,638,376.49

4,952,503.53
131,612.87 29,180.47
1,083,953.01 842,038.20
1,632,427.71

$

8,671,715.79

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, 2014

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Debt Services Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Position
Net Position - Beginning of Year (Restated)
Net Position - End of Year

EXPENSES

CHARGES FOR SERVICES

$

6,178,692.76 $

433,828.80 1,092,118.20
164,144.05 285,479.27 889,747.95 230,265.87 951,856.79 874,894.07
60,822.02 85,792.69

951,039.66 49,125.00

$

12,247,807.13 $

255,177.89
56,202.50 311,380.39

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

EXHIBIT "B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET POSITION

$

4,645,831.02 $

213,393.29 881,719.58 117,285.00 369,446.36 375,476.00
61,611.98 347,657.82 421,487.47
2,357.94 73,918.36

874,343.58

$

8,384,528.40 $

221,552.30 $ 40,186.55
1,420.25 263,159.10

-1,056,131.55
-220,435.51 -210,398.62
-46,859.05 124,153.64 -514,271.95 -168,653.89 -604,198.97 -453,406.60 -58,464.08 -11,874.33
-19,073.33 -49,125.00
-3,288,739.24

3,594,994.00 23,215.91
754,123.88 23,382.90
9,653.00 1,121.85 272,738.75
4,679,230.29
1,390,491.05
7,281,224.74

$

8,671,715.79

- 3 -

RANDOLPH COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2014

EXHIBIT "C"

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

GENERAL FUND

DISTRICT-WIDE CAPITAL PROJECTS FUND

DEBT SERVICE
FUND

TOTAL

$

1,325,878.74 $

845,590.92 590,870.94 403,055.26
46,622.83 29,180.47

678,714.98 $
263,159.10

$ 969,191.71
130,323.80

2,004,593.72 969,191.71
975,914.72 854,030.04 403,055.26
46,622.83 29,180.47

Total Assets

$

3,241,199.16 $

941,874.08 $

1,099,515.51 $

5,282,588.75

LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES

LIABILITIES

Accounts Payable

$

Salaries and Benefits Payable

Payroll Withholdings Payable

Contracts Payable

Retainages Payable

Deposits and Unearned Revenue

Total Liabilities

DEFERRED INFLOWS OF RESOURCES

Unavailable Revenue - Property Taxes

FUND BALANCES

Nonspendable Restricted Assigned Unassigned

Total Fund Balances

266,204.62 919,828.55 149,075.92
$ 112,869.02 1,447,978.11
763,247.58
29,180.47 131,612.87
28,240.99 840,939.14 1,029,973.47

$
835.88 99,000.00
99,835.88

0.00 $ 0.00

266,204.62 919,828.55 149,075.92
835.88 99,000.00 112,869.02
1,547,813.99

0.00

0.00

763,247.58

842,038.20 842,038.20

1,099,515.51 1,099,515.51

29,180.47 2,073,166.58
28,240.99 840,939.14
2,971,527.18

Total Liabilities, Deferred Inflows of Resources and Fund Balances

$

3,241,199.16 $

941,874.08 $

1,099,515.51 $

5,282,588.75

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

RANDOLPH COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION JUNE 30, 2014

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Position are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported as assets in governmental 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 governmental funds.
Property Taxes
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable Accrued Interest Payable
Total Long-Term Liabilities
Net Position of Governmental Activities (Exhibit "A")

$ 2,971,527.18

$

72,035.00

411,042.00

10,563,163.53

1,470,619.00

-5,489,356.00

7,027,503.53

763,247.58

$ -2,075,000.00 -15,562.50

-2,090,562.50

$ 8,671,715.79

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

RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2014

EXHIBIT "E"

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

GENERAL FUND

DISTRICT-WIDE CAPITAL PROJECTS FUND

DEBT SERVICE
FUND

TOTAL

$

3,091,232.33

23,382.90

4,925,744.20 $

3,468,437.20

311,380.39

246.09

272,738.75

12,093,161.86

$ 263,159.10
80.83
263,239.93

$ 754,123.88
794.93 754,918.81

3,091,232.33 777,506.78
5,188,903.30 3,468,437.20
311,380.39 1,121.85
272,738.75
13,111,320.60

5,881,965.00
433,828.80 1,092,118.20
164,144.05 231,152.27 889,747.95 230,265.87 947,523.29 782,042.07
60,822.02 85,792.69 949,119.66
2,098.00
11,750,619.87
342,541.99
687,431.48

104,945.08
971,161.18
1,076,106.26 -812,866.33
1,654,904.53

650,000.00 54,000.00
704,000.00
50,918.81
1,048,596.70

5,881,965.00
433,828.80 1,092,118.20
164,144.05 231,152.27 889,747.95 230,265.87 1,052,468.37 782,042.07
60,822.02 85,792.69 949,119.66 973,259.18
650,000.00 54,000.00
13,530,726.13
-419,405.53
3,390,932.71

$

1,029,973.47 $

842,038.20 $

1,099,515.51 $

2,971,527.18

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

RANDOLPH COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2014

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in 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 Position. In the current year, these amounts consist of:
Bond Principal Retirements
Some items reported in the Statement of Activities do not require the use of current financial resources and, therefore are not reported as expenditures in Governmental Funds. These activities consist of:
Net Decrease in Accrued Interest
Change in Net Position of Governmental Activities (Exhibit "B")

$

-419,405.53

$ 1,076,653.00 -448,609.00

628,044.00 526,977.58

650,000.00

4,875.00 $ 1,390,491.05

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

RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS JUNE 30, 2014

EXHIBIT "G"

ASSETS Cash and Cash Equivalents
LIABILITIES Cash Overdraft Accounts Payable Funds Held for Others
Total Liabilities
NET POSITION Held in Trust for Private Purposes

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

$

1,000.00 $

0.00

1,000.00 1,000.00 $

825.44 -825.44
0.00

$

0.00

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

RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2014
ADDITIONS Contributions Donors
DEDUCTIONS Scholarships Change in Net Position
Net Position - Beginning
Net Position - Ending

EXHIBIT "H"

PRIVATE PURPOSE TRUSTS

$

1,000.00

1,000.00 0.00 0.00

$

0.00

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

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

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 Position 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 nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements:
The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund.
District-wide Capital Projects Fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST), Bond Proceeds, and grants from Georgia State Financing and Investment Commission that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.
Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest.

- 10 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

The School District reports the following fiduciary fund types:
Private Purpose Trust fund report trust arrangements under which principal and income benefit student scholarships.
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 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. The School District considers all intergovernmental revenues to be available if they are collected within 120 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 longterm debt which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities 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, both restricted and unrestricted resources are available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
RESTATEMENT OF PRIOR YEAR NET POSITION/FUND BALANCE
For fiscal year 2014, the School District made a prior period adjustment due to the adoption of GASB Statement No. 65, as described in "New Accounting Pronouncements" below, which requires the restatement of the June 30, 2013, net position in Governmental Activities. The result is a decrease in Net Position at July 1, 2013 of $49,666.66. This change is in accordance with generally accepted accounting principles.
In addition, the School District made a prior period adjustment due to an omission, which requires the restatement of the June 30, 2013, net position in Governmental Activities and fund balance in the General Fund. The result is an increase in Net Position and Fund Balance at July 1, 2013 of $508,069.49. This change is in accordance with generally accepted accounting principles.

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

Net position, July 1, 2013 as previously reported

$

Reclassification of Bond Issurance Costs Correction of Prior Year Head Start Revenue

Net position, July 1, 2013, as restated

$

Fund Balance, July 1, 2013, as previously reported

$

Correction of Prior Year Head Start revenue

Fund Balance, July 1, 2013, as restated

$

6,822,821.91
-49,666.66 508,069.49 7,281,224.74
2,882,863.22 508,069.49
3,390,932.71

NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2014, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. The provisions of this statement establish accounting and financial reporting standards that reclassify, as deferred outflows or inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows or inflows of resources, certain items that were previously reported as assets and liabilities. As noted above the School District restated beginning Net Position for the cumulative effect of this accounting change.
FUTURE ACCOUNTING PRONOUNCEMENTS
In fiscal year 2015, the School District will adopt Governmental Account Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. Implementation of this statement will require the School District to record a liability for its proportionate share of the Net Pension Liability of pension plans in which it participates. Based on information provided by the Teacher Retirement System of Georgia (TRS), the School District's liability for the unfunded portion of the pension plan administered through TRS is estimated to be $6.8 million at June 30, 2015.
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 building and loan associations.
INVESTMENTS
Composition of Investments
Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

1. Obligations issued by the State of Georgia or by other states,

2. Obligations issued by the United States government,

3. Obligations fully insured or guaranteed by the United States government or a United States government agency,

4. Obligations of any corporation of the United States government,

5. Prime banker's acceptances,

6. The local government investment pool (Georgia Fund 1) administered by the State of Georgia, Office of the State Treasurer,

7. Repurchase agreements, and

8. Obligations of other political subdivisions of the State of Georgia.

The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.

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 adopted the property tax levy for the 2013 tax digest year (calendar year) on August 15, 2013 (levy date) based on property values as of January 1, 2013. Taxes were due on December 20, 2013 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2013 tax digest are reported as revenue in the governmental funds for fiscal year 2014. 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, 2014, for maintenance and operations amounted to $2,942,377.03.

The tax millage rate levied for the 2013 tax year (calendar year) for the Randolph County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

16.58 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $125,639.39 during fiscal year ended June 30, 2014.
SALES TAXES
Education Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $754,123.88 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
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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

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 Policy

Estimated Useful Life

Land

Land Improvements

$

Buildings and Improvements $

Equipment

$

Intangible Assets

$

Any Amount 50,000.00 50,000.00 50,000.00
100,000.00

N/A 0 to 80 years 0 to 80 years 5 to 25 years 10 to 20 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.

Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets, generally 10 to 20 years.

DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. The School District did not have any items that qualified for reporting in this category for the year ended June 30, 2014.

In addition to liabilities, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time. The School District has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and grants and these amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available.

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued.
In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Position.
NET POSITION
The School District's net position in the District-wide Statements is classified as follows:
Net investment in capital assets - 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 net investment in capital assets.
Restricted net position - This represents resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal Programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net position - Unrestricted net position represents 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.
FUND BALANCES
The School District's fund balances are classified as follows:
Nonspendable Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.
Restricted Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.
Committed Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

Unassigned The residual classification for the General Fund. This classification represents fund balances that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund.

Fund Balances of the Governmental Funds at June 30, 2014, are as follows:

Nonspendable Inventories
Restricted Bus Replacement Capital Projects Debt Service
Assigned School Activity Accounts
Unassigned

$

29,180.47

$

131,612.87

842,038.20

1,099,515.51

2,073,166.58

28,240.99 840,939.14

Fund Balance, June 30, 2014

$ 2,971,527.18

When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.

DEFICIT FUND BALANCES
The fund reporting a deficit fund balance at June 30, 2014, is as follows:

Fund Type/Fund Name Governmental Funds
School Food Service

Deficit Balance

$

65,064.63

The Board has taken the following corrective actions to reduce the deficit:
All school nutrition employees daily work hours have been reduced by one hour with the exception of the director, the manager and the bookkeeper; no full time substitute employees; reduced food purchases; reduce staff by attrition and elimination; and USDA food usage was increased.
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: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except for various school activity (principal) accounts, is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America.
The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. After approval of this tentative budget by the Board, such budget
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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
See Schedule 1 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for a detail of any over/under expenditures during the fiscal year under review.
NOTE 4: DEPOSITS AND INVESTMENTS
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 110 percent of the public funds being secured after the deduction of the amount of deposit 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. Insurance on accounts provided by the Federal Deposit Insurance Corporation,
3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
5. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
7. Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by 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. At June 30, 2014, the School District had deposits with a carrying amount of $2,004,768.28, and a bank balance of $2,153,437.44. The bank balances insured by Federal depository insurance were $500,000.00, and the bank balances collateralized with securities held by the pledging institution or by the pledging financial institution's trust department or agent in the School District's name were $1,653,437.44.

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

CATEGORIZATION OF INVESTMENTS
At June 30, 2014, the carrying value of the School District's total investments was $969,191.71, which is materially the same as fair value. This investment consisted entirely of funds invested in the Georgia Fund 1 (local government investment pool) administered by the State of Georgia, Office of the State Treasurer which is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.ga.gov/SGD/cafr.html.

The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company and does not operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAf rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2014, was 62 days.

NOTE 5: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

NOTE 6: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:

Governmental Activities Capital Assets, Not Being Depreciated:
Land

Balances July 1, 2013

Increases

Decreases

Balances June 30, 2014

$

72,035.00 $

0.00 $

0.00 $

72,035.00

Capital Assets, Being Depreciated Buildings and Improvements Equipment Land Improvements
Less: Accumulated Depreciation: Buildings and Improvements Equipment Land Improvements

9,486,510.53 1,470,619.00
411,042.00
3,752,742.00 1,003,630.00
284,375.00

1,076,653.00
350,262.00 85,014.00 13,333.00

0.00

10,563,163.53 1,470,619.00 411,042.00

4,103,004.00 1,088,644.00
297,708.00

Total Capital Assets, Being Depreciated, Net

6,327,424.53

628,044.00

0.00

6,955,468.53

Governmental Activity Capital Assets - Net $ 6,399,459.53 $

628,044.00 $

0.00 $ 7,027,503.53

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

Current year depreciation expense by function is as follows:

Instruction Support Services
General Administration Student Transportation Services Food Services

$
$ 54,327.00 92,852.00

299,510.00
147,179.00 1,920.00

$

448,609.00

NOTE 7: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.
The School District has obtained commercial insurance for risk of loss associated with torts, assets, and errors or omissions. However, the errors or omissions policy excludes coverage for sexual harassment and discrimination. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.
The School District has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years.
The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.
Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2013 $ 2014 $

0.00 $ 28,512.72 $ 28,512.72 $

0.00 $

6,008.00 $ 6,008.00 $

0.00 0.00

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general worker's compensation insurance coverage. Specific excess of loss insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2 million. The Trust covers the first $1 million of each Employers liability claim with Safety National providing additional Employers Liability limits up to a $2 million per occurrence maximum. Safety National Casualty Company also provides $2 million in aggregate coverage to the Trust, attaching at 110% of the loss fund and based on the Fund's annual normal premium.
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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

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

Position Covered

Amount

Superintendent All Employees

$

50,000.00

$

100,000.00

NOTE 8: OPERATING LEASES
Randolph County Board of Education has entered into various leases as lessee for copiers. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2014, for governmental funds amounted to $85,181.20. Future minimum lease payments for these leases are as follows:

Year Ending

Governmental Funds

2015 2016 2017

$

33,206.20

2,131.20

532.80

Total

$

35,870.20

NOTE 9: LONG-TERM LIABILITIES

GENERAL OBLIGATION DEBT OUTSTANDING
General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rate

Amount

General Government - Series 2011

2.25%

$ 2,075,000.00

Voters have authorized $150,000.00 in general obligation debt for Randolph County Board of Education which was not issued as of June 30, 2014.

The changes in Long-Term Liabilities during the fiscal year ended June 30, 2014, were as follows:

Balance July 1, 2013

Governmental Activities

Balance

Additions

Deductions

June 30, 2014

Due Within One Year

G.O. Bonds $

2,725,000.00 $

0.00 $ 650,000.00 $ 2,075,000.00 $ 675,000.00

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

At June 30, 2014, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30:

General Obligation Debt

Principal

Interest

2015 2016 2017

$ 675,000.00 $ 39,093.75

700,000.00 23,625.00

700,000.00

7,875.00

Total Principal and Interest $ 2,075,000.00 $ 70,593.75

NOTE 10: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $464,987.97 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 Certificated Personnel In the amount of $426,672.00
Paid to the Teachers' Retirement System of Georgia For Teachers' Retirement System (TRS) Employer's Cost In the amount of $6,483.97
Office of the State Treasurer Paid to the Public School Employees' Retirement System For Public School Employees' Retirement (PSERS) Employer's Cost In the amount of $31,832.00
Funds paid to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District are reported as part of the Quality Basic Education revenue allotments on Schedule 3 Schedule of State Revenue.
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.
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: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL 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 service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits
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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

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. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012, pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.

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 "payas-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, 2014:

For certificated teachers, librarians and regional educational service agencies and certain other eligible participants:

July 1, 2013 June 30, 2014 $945.00 per member per month

For non-certificated school personnel:

July 1, 2013 June 30, 2014 $596.20 per member per month

No additional contribution was required by the Board for fiscal year 2014 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School 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:

Fiscal Year

Percentage Contributed

Required Contribution

2014 2013 2012

100% 100% 100%

$ 1,330,646.75 $ 1,240,103.87 $ 1,093,672.23

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "I"

NOTE 13: 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 30 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 40 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 30 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 10 years of service. If a member terminates with less than 10 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, 2014, were 6.00% of annual salary. Employer contributions required for fiscal year 2014 were 12.28% of annual salary as required by the June 30, 2011, actuarial valuation.

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

Fiscal Year

Percentage Contributed

Required Contribution

2014 2013 2012

100% 100% 100%

$ 676,748.02 $ 625,382.03 $ 622,300.99

PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM (PSERS)
Bus drivers, lunchroom personnel, and maintenance and custodial personnel are members of the Public School Employees' Retirement System of Georgia. The System is funded by contributions by the employees and by the State of Georgia. The School District makes no contribution to this plan.

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RANDOLPH COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2014

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$

3,100,000.00 $

3,100,000.00 $ 3,091,232.33 $

23,382.90

4,243,470.00

4,303,470.00

4,925,744.20

860,185.00

2,552,727.00

3,468,437.20

257,129.00

257,129.00

311,380.39

50.00

70.00

246.09

144,699.00

144,699.00

272,738.75

-8,767.67 23,382.90 622,274.20 915,710.20 54,251.39
176.09 128,039.75

8,605,533.00

10,358,095.00

12,093,161.86

1,735,066.86

5,451,888.76
183,269.00 421,282.25 167,246.00 269,121.00 785,169.00 168,048.00 874,027.00 687,850.00
55,328.00 45,764.00 1,006,667.00
10,115,660.01
-1,510,127.01

6,581,401.02
366,024.00 1,326,310.74
167,263.44 309,153.00 785,169.00 214,883.00 924,391.00 764,444.00
55,590.00 109,286.00 1,006,667.51
3,500.00
12,614,082.71
-2,255,987.71

5,881,965.00
433,828.80 1,092,118.20
164,144.05 231,152.27 889,747.95 230,265.87 947,523.29 782,042.07
60,822.02 85,792.69 949,119.66
2,098.00
11,750,619.87
342,541.99

699,436.02
-67,804.80 234,192.54
3,119.39 78,000.73 -104,578.95 -15,382.87 -23,132.29 -17,598.07 -5,232.02 23,493.31 57,547.85
1,402.00
863,462.84
2,598,529.70

-1,510,127.01 666,364.99

2,000.00 -2,253,987.71
666,364.99

342,541.99 687,431.48

-2,000.00 2,596,529.70
21,066.49

$

-843,762.02 $ -1,587,622.72 $ 1,029,973.47 $ 2,617,596.19

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include the actual revenues ($189,992.35) or expenditures ($178,238.55) of the various principal accounts.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 25 -

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2014

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total U. S. Department of Agriculture
Education, U. S. Department of School Improvement Grants Cluster Pass-Through From Georgia Department of Education ARRA - School Improvement Grants School Improvement Grants
Total School Improvement Grants Cluster
Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Improving Teacher Quality State Grants Rural Education Striving Readers Title I Grants to Local Educational Agencies
Total Other Programs
Total U. S. Department of Education
Health and Human Services, U.S. Department of Direct Head Start

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555

N/A

N/A

$

(2) 914,827.24 (1)
914,827.24

84.388

N/A

84.377

N/A

457,271.75 247,011.96
704,283.71

* 84.027

N/A

* 84.173

N/A

84.048

N/A

84.367

N/A

84.358

N/A

84.371

N/A

84.010

N/A

* 93.600

233,249.18 9,397.22
242,646.40
38,263.00 121,120.99
13,197.91 5,289.80
688,132.00 866,003.70 1,812,933.81
740,237.55

Total Expenditures of Federal Awards

$

3,467,998.60

N/A = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $48,829.53.
(2) Expenditures for the funds earned on the School Breakfast Program ($298,030.92) were not maintained separately and are included in the 2014 National School Lunch Program.

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

The School District did not provide Federal Assistance to any Subrecipient.

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Randolph County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 26 -

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2014

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education (1) Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Education Equalization Funding Grant Other State Programs Food Services Math and Science Supplements Preschool Handicapped Program Teachers' Retirement Vocational Education
Georgia State Financing and Investment Commission Reimbursement on Construction Projects
Office of the State Treasurer Public School Employees' Retirement

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

120,547.17

$

120,547.17

234,570.00 120,013.00 525,576.00 302,007.00 273,931.00
61,931.00 560,662.00 681,658.00 211,841.00 917,609.00
44,231.00 45,512.00 101,781.00 33,052.00 21,712.00
312,257.00 320,488.00 248,996.00 -691,347.00
297,851.00 19,338.00 9,653.00
20,185.00 7,618.77
71,092.29 6,483.97
14,663.00

234,570.00 120,013.00 525,576.00 302,007.00 273,931.00
61,931.00 560,662.00 681,658.00 211,841.00 917,609.00
44,231.00 45,512.00 101,781.00 33,052.00 21,712.00
312,257.00 320,488.00 248,996.00 -691,347.00
297,851.00 19,338.00 9,653.00
20,185.00 7,618.77
71,092.29 6,483.97
14,663.00

$ 263,159.10 31,832.00

263,159.10 31,832.00

$ 4,925,744.20 $ 263,159.10 $ 5,188,903.30
(1) Payments to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District in the amount of $426,672.00 are included as part of the Quality Basic Education revenue allotments above.

See notes to the basic financial statements.

- 27 -

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2014

SCHEDULE "4"

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

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED IN PRIOR YEARS (3) (4)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED

ESTIMATED COMPLETION
DATE

$ 3,800,000.00 $

3,800,000.00 $

104,945.08 $ 3,272,050.86 $

0.00 $

0.00

6/30/2015

18,462.79 1,674,817.14

2,137,437.14 1,674,817.14

971,161.18

91,570.76 1,674,817.14

115,427.27 259,748.67
1,450.32 39,058.24 2,591,035.57 4,700,000.00

416,049.92 262,616.67
37,136.44 82,904.80 100,000.00 4,710,962.11

416,049.92 262,616.67
25,100.44 82,904.80

971,161.18

2,553,059.73

$ 8,500,000.00 $

8,510,962.11 $ 1,076,106.26 $ 5,825,110.59 $

0.00
0.00 0.00 $

0.00
0.00 0.00

6/30/2015 6/30/2015
6/30/2015 6/30/2015 6/30/2015 6/30/2015 6/30/2015

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.

(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.

(3) The voters of Randolph County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

(4) In addition to the expenditures shown above, the School District has incurred interest to provide advance funding for the above projects as follows:

Prior Years

$

121,734.38

Current Year

54,000.00

Total

$

175,734.38

See notes to the basic financial statements.

- 28 -

RANDOLPH COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2014

SCHEDULE "5"

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

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

$

277,927.00 $

145,504.00

609,499.00

365,893.00

313,931.00

89,652.00 671,520.00 802,212.00 246,939.00 1,065,942.00

53,672.00 55,563.00
4,698,254.00
120,129.00 24,646.00

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

323,401.07 $
724,673.62
349,248.43
465,522.78 820,378.34 195,636.83
23,096.59 74,186.33 285,082.50 119,529.44 72,207.97
50,850.88
3,503,814.78
147,994.20

2,979.63 $ 1,276.20 7,598.62 3,373.58 4,003.74
803.84 9,518.95 19,249.43 19,465.96
613.99 1,143.94 5,094.67 2,221.95 4,295.21
81,639.71
13,522.60 1,928.97

326,380.70 1,276.20
732,272.24 3,373.58
353,252.17
803.84 475,041.73 839,627.77 215,102.79
23,710.58 75,330.27 290,177.17 121,751.39 76,503.18
50,850.88
3,585,454.49
161,516.80 1,928.97

TOTAL QBE FORMULA FUNDS

$

4,843,029.00 $

3,651,808.98 $

97,091.28 $

3,748,900.26

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

See notes to the basic financial statements.

- 29 -

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SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

(This page left intentionally blank)

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
February 9, 2016

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 MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We were engaged to audit, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, 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, 2014, and the related notes to the financial statements, which collectively comprise Randolph County Board of Education's basic financial statements and have issued our report thereon dated February 9, 2016. The report on the financial statements was disclaimed because we were unable to establish the level of independence necessary to issue an opinion on the financial statements.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Randolph County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances 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. Accordingly, we do not express an opinion on the effectiveness of the Randolph County Board of Education's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not 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.

2014YB-60X

(This page left intentionally blank)

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 the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS 2014-001, FS 2014-002, FS 2014-003, FS 2014-004 and FS 2014-005 to be material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Randolph County Board of Education's financial statements are free from 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 matters that are required to be reported under Government Auditing Standards and which is described in the accompanying Schedule of Findings and Questioned Costs as item FS 2014-005.
We also noted certain matters that we have reported to management of Randolph County Board of Education in a separate letter dated February 9, 2016.
Randolph County Board of Education's Response to Findings
Randolph County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Randolph County Board of Education's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,

GSG:er 2014YB-60X

Greg S. Griffin State Auditor

(This page left intentionally blank)

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
February 9, 2016

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 FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
Ladies and Gentlemen:
Report on Compliance for Each Major Federal Program
We have audited Randolph County Board of Education's compliance with the types of compliance requirements described in the OMB 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, 2014. 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.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of Randolph County Board of Education's major federal programs based on our audit of the types of compliance requirements referred to above. 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 on compliance for each major federal program. However, our audit does not provide a legal determination of Randolph County Board of Education's compliance.
2014SA-55

(This page left intentionally blank)

Basis for Qualified Opinion on Child Nutrition Cluster
As described in the accompanying Schedule of Findings and Questioned Costs, Randolph County Board of Education did not comply with requirements regarding Child Nutrition Cluster as described in item FA 2014-002 for Equipment and Real Property Management. Compliance with such requirements is necessary, in our opinion, for Randolph County Board of Education to comply with requirements applicable to that program.
Qualified Opinion on Child Nutrition Cluster
In our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the Randolph County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on Child Nutrition Cluster for the year ended June 30, 2014.
Unmodified Opinion on Each of the Other Major Federal Programs
In our opinion, Randolph County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its other major federal programs identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs for the year ended June 30, 2014.
Other Matters
The results of our auditing procedures disclosed another instance of noncompliance, which is required to be reported in accordance with OMB Circular A-133 and which is described in the accompanying Schedule of Findings and Questioned Costs as item FA 2014-001. Our opinion on each major federal program is not modified with respect to this matter.
Randolph County Board of Education's response to the noncompliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Randolph County Board of Education's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
Report on Internal Control over Compliance
Management of Randolph County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Randolph County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program 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.
Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses and significant deficiencies.
2014SA-55

(This page left intentionally blank)

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. We consider the deficiency in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as item FA 2014-002 to be a material weakness.
A significant 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. We consider the deficiency in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as item FA 2014-001 to be a significant deficiency.
Randolph County Board of Education's response to the internal control over compliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Randolph County Board of Education's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,

GSG:er 2014SA-55

Greg S. Griffin State Auditor

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

(This page left intentionally blank)

RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FS-7201-10-03

Partially Resolved See Corrective Action/Responses

FS-7201-11-04

Unresolved See Corrective Action/Responses

FS-7201-12-01

Further Action Not Warranted

(1)

FS-7201-12-02

Further Action Not Warranted

(1)

FS-7201-12-03

Further Action Not Warranted

(1)

FS-7201-12-04

Partially Resolved See Corrective Action/Responses

FS-7201-13-01

Partially Resolved See Corrective Action/Responses

FS-7201-13-02

Unresolved See Corrective Action/Responses

FS-7201-13-03

Unresolved See Corrective Action/Responses

FS-7201-13-04

Unresolved See Corrective Action/Responses

FS-7201-13-05

Partially Resolved See Corrective Action/Responses

AUDITOR'S COMMENTS

(1) Findings have been repeated in fiscal years 2013 and 2014.

CORRECTIVE ACTION/RESPONSES

REVENUES/RECEIVABLES/RECEIPTS Improper Reporting of SPLOST Interest Finding Control Number: FS-7201-10-03

We will be transferring funds to the SPLOST account in fiscal year 2016.

EXPENDITURES Improper Use of Bond Proceeds Finding Control Number: FS-7201-11-04

We will be transferring funds to the Bond Proceeds account in fiscal year 2016.

EMPLOYEE COMPENSATION Inaccurate Senior Management Compensation Finding Control Number: FS-7201-12-04

In fiscal year 2014, we developed and implemented controls to ensure that payments made to the Superintendent are based on the employment contract and Board policy. A refund of overpayment has not been received.

- 1 -

RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
ACCOUNTING CONTROLS (OVERALL) CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS FINANCIAL REPORTING EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Accounting Procedures Head Start and Pre-K Programs Finding Control Number: FS-7201-13-01
Procedures have been put in place to ensure all activity is booked and processed through PC Genesis.
ACCOUNTING CONTROLS (OVERALL) CASH AND CASH EQUIVALENTS GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number: FS-7201-13-02
We are working to ensure proper cutoff for transactions in the fiscal period. We have an inhouse employee, totally independent from the Finance department, to complete our bank reconciliations. In fiscal year 2015, we began requiring all bank reconciliations to be dated by the preparer and the approver. We are in the process of changing PC Genesis user access rights to adequately separate the functions of initiating, authorizing and recording transactions, reconciliations and maintaining the custody of assets.
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Finding Control Number: FS-7201-13-03
In fiscal year 2015, we began reviewing other districts' school activity manuals in an effort to adopt our own. In fiscal year 2016, we will be restructuring the school level activity bookkeeper's duties and responsibilities.
FINANCIAL REPORTING Inadequate Controls over Financial Reporting Finding Control Number: FS-7201-13-04
We plan to retain a consultant to prepare the financial statements, in fiscal year 2016.
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RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CORRECTIVE ACTION/RESPONSES

EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Use of SPLOST Proceeds Finding Control Number: FS-7201-13-05

The School District used all SPLOST funds properly by consulting the SPLOST referendum before making any purchases in fiscal year 2014.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

FA-7201-12-01 FA-7201-12-02 FA-7201-12-03 FA-7201-12-04 FA-7201-13-01 FA-7201-13-02 FA-7201-13-03 FA-7201-13-04

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

CORRECTIVE ACTION/RESPONSES

ACTIVITIES ALLOWED OR UNALLOWED ALLOWABLE COSTS/COSTS PRINCIPLES CASH MANAGEMENT EQUIPMENT AND REAL PROPERTY MANAGEMENT MATCHING, LEVEL OF EFFORT AND EARMARKING PERIOD OF AVAILABILITY OF FEDERAL FUNDS REPORTING Inadequate Internal Controls over Federal Program U.S. Department of Health and Human Services Head Start (CFDA 93.600) Finding Control Number: FA-7201-12-01

We are implementing controls and procedures to ensure that all Federal revenues and expenditures are recorded in accordance with OMB Circular A-87 and the terms and conditions of the Head Start award. These controls and procedures include the use of PC Genesis and adequate documentation for administrative expenses. Additionally, we are awaiting a response from the U.S. Department of Health and Human Services in regards to the resolution of this finding.

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RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
ACTIVITIES ALLOWED OR UNALLOWED ALLOWABLE COSTS/COSTS PRINCIPLES CASH MANAGEMENT EQUIPMENT AND REAL PROPERTY MANAGEMENT MATCHING, LEVEL OF EFFORT AND EARMARKING PERIOD OF AVAILABILITY OF FEDERAL FUNDS REPORTING Inadequate Internal Controls over Federal Program U.S. Department of Health and Human Services Head Start (CFDA 93.600) Finding Control Number: FA-7201-13-01
We are implementing controls and procedures in fiscal year 2015 to ensure that all Federal revenues and expenditures are recorded in accordance with OMB Circular A-87 and the terms and conditions of the Head Start award. These controls and procedures include the use of PC Genesis and adequate documentation for administrative expenses. Additionally, we are awaiting a response from the U.S. Department of Health and Human Services in regards to the resolution of this finding.
ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control over Employee Compensation Process U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) U.S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027 and 84.173) U.S. Department of Health and Human Services Head Start (CFDA 93.600) Finding Control Number: FA-7201-13-02
The School District implemented procedures in fiscal year 2015 to ensure employee compensation expenditures are properly documented and calculated with approved contracts, salary schedules, and time sheets with accurate calculations
EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequate Internal Control Procedures U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553, 10.555) Finding Control Number: FA-7201-13-03
We are developing an equipment listing for fiscal year 2015 including information on each piece of equipment's cost, acquisition date, location date, serial number, percentage of Federal participation, who holds title, use and condition of property, and ultimate disposal data. Inventory checks will be conducted periodically.
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SECTION IV FINDINGS AND QUESTIONED COSTS

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

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

Disclaimer

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

Yes None Reported

Noncompliance material to financial statements noted:

Yes

Federal Awards

Internal Control over major programs:

Material weakness identified?

Yes

Significant deficiency identified?

Yes

Type of auditor's report issued on compliance for major programs: Unmodified for all major programs except for Child Nutrition Cluster, which was qualified.

Any audit findings disclosed that are required to be reported in

accordance with OMB Circular A-133, Section 510(a)?

Yes

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555 84.027, 84.173 93.600

Child Nutrition Cluster Special Education Cluster Head Start Cluster

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

$300,000.00

Auditee qualified as low-risk auditee?

No

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2014-001 Control Category:
Internal Control Impact:

Inadequate Accounting Procedures - Head Start and Pre-K Programs Accounting Controls (Overall) Cash and Cash Equivalents Revenues/Receivables/Receipts General Ledger Material Weakness

Description: This is a repeat finding (FS-7201-13-01 and FS-7201-12-01) from fiscal years ended June 30, 2013 and June 30, 2012. The accounting procedures of the School District were insufficient to provide for adequate internal controls over numerous control categories for the Head Start Grant Fund and the Pre-Kindergarten Program Fund.

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 for the Head Start Grant and Pre-Kindergarten funds. Such internal controls would limit any one individual's access to both physical assets and the related accounting records.

Condition: Accounting Controls (Overall)
The School District did not have internal controls in place to ensure the reliability and accuracy of the financial activity for these programs. In the prior year, the programs were partially maintained on a separate accounting system from the rest of the School District activities. Balances from the separate accounting system have not yet been recorded on the School District's general ledger and therefore, financial statement adjustments were posted by the auditors.

Cash and Cash Equivalents The School District did not ensure that all bank reconciliations were adequately prepared. The bank reconciliations did not reconcile to the general ledger due to the use of the separate accounting system in the prior year.

Revenues/Receivables/Receipts The School District did not have adequate procedures in place to ensure that Head Start program receivables and related revenue were recorded appropriately on the general ledger.

General Ledger School District did not provide sufficient appropriate audit evidence to support several balances recorded on the general ledger. The School District was unable to provide documentation to support all journal entries posted to the general ledger; and A restatement entry that affected Beginning Fund Balance and Cash was required to reflect the effect of material prior year Head Start program receipts that were not recorded on the general ledger.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

Cause: In discussing this deficiency with the School District, management indicated that the cause was a direct result of moving the accounting for the Head Start and Pre-Kindergarten programs, with the exception of employee compensation, to a different accounting system without establishing related internal controls from the PC Genesis system in November of 2011. In doing so management failed to implement adequate controls to ensure that (1) bank reconciliations were properly prepared, (2) revenues and receivables were recorded appropriately, (3) adequate documentation was maintained for journal entries and (4) adequate controls over the financial accounting software were implemented.

Effect or Potential Effect: Without satisfactory accounting controls and procedures in place, potential misappropriation of assets could occur. In addition, the lack of controls could impact reporting of its financial position and results of operations.

Recommendation: The School District should review the accounting procedures in place and design and implement procedures relative to the above control categories over the Head Start Program and the PreKindergarten Program to strengthen the internal controls over the accounting functions. The School District should consider recording all of the prior period activity for these programs in PC Genesis.

Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The School District has implemented procedures to strengthen internal controls and ensure that all activity is booked and processed through PC Genesis.

Estimated Corrective Action Date: March 1, 2016 Contact Person: Britney Johnson, Financial Officer Telephone: (229) 732-2260 Fax: (229) 732-3840 Email: Britney.johnson@sowegak12.org

FS 2014-002 Control Category:
Internal Control Impact:

Inadequate Internal Control Procedures Accounting Controls (OVERALL) Cash and Cash Equivalents Investments Expenditures/Liabilities/Disbursements General Ledger Capital Assets Material Weakness

Description: This is a repeat finding (FS-7201-13-02, FS-7201-12-02 and FS-7201-11-01) from fiscal years ended June 30, 2013, June 30, 2012 and June 30, 2011, respectively. The accounting procedures of the School District were insufficient to provide adequate internal controls over numerous control categories.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
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.
Condition: Accounting Controls (OVERALL)
The School District does not have adequate logical access controls in place to ensure only appropriate users have access to significant financial applications. We noted several users with access rights that exceeded their need to complete their assigned job functions. Further, the access granted did not adequately separate the functions of initiating, authorizing, and recording transactions, reconciliations, and maintaining the custody of assets.
Cash and Cash Equivalents The timeliness of bank reconciliations could not be determined because they were not dated by the preparer or the approver. Reconciling items reflected on the General Operating account bank reconciliation were not investigated and recorded in a timely manner. Several bank reconciliations had reconciling items that were undocumented. For numerous bank accounts, there were variances between the bank reconciliations and the balance on the general ledger.
Investments The Local Government Investment Pool (LGIP) account was not reconciled to the general ledger for any month during the fiscal year under review.
Expenditures/Liabilities/Disbursements Our examination of expenditures revealed the following deficiencies: o A voucher package could not be located for two expenditures. o Two expenditures did not have adequate supporting documentation, such as an invoice. o One expenditure did not have evidence of receipt. o Two subsequent period expenditures were incurred in the period under review but were not accrued appropriately. During a test of credit card voucher packages, it was noted that two expenditures were not approved.
General Ledger The School District could not provide documentation for numerous journal entries.
Capital Assets A capital asset physical inventory has not been performed in over two years.
Cause: In discussing this deficiency with the School District, they stated that these issues were a result of a lack of separation of duties and internal control procedures within the finance department.
Effect or Potential 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 impacted its reporting of its financial position and results of operations.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

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

Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The School District will review accounting procedures and make needed changes to strengthen procedures relative to PC Genesis, voucher packages and bank reconciliations.

Estimated Corrective Action Date: March 1, 2016 Contact Person: Britney Johnson, Financial Officer Telephone: (229) 732-2260 Fax: (229) 732-3840 Email: Britney.johnson@sowegak12.org

FS 2014-003 Control Category:
Internal Control Impact:

Inadequate Accounting Procedures Investments Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements General Ledger Capital Assets Material Weakness

Description: The accounting procedures of the School District were insufficient to ensure that transactions were recorded accurately on the general ledger.

Criteria: The School District's management is responsible for designing and maintaining internal controls and accounting procedurs that provide reasonable assurance that transactions are processed and recorded on the general ledger.

Condition: The following deficiencies were noted during our audit procedures:

Investments Investment activity relating to the Local Government Investment Pool (LGIP) account was misclassified in Cash.

Revenues/Receivables/Receipts Special Purpose Local Option Sales Tax (SPLOST) accounts receivables of $130,323.80 were not reported on the general ledger. Property Tax accounts receivables of $29,523.40 were not reported on the general ledger. State Quality Basic Education (QBE) accounts receivable of $576,078.00 was not reported on the general ledger. Federal program grant revenues in the amount of $349,932.61 were not accrued for expenditures incurred on grants during the fiscal year under review.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
State funds from the Georgia State Financing and Investment Commission (GSFIC) in the amount of $263,159.10 were not accrued for expenditures incurred during the year under review.
An invalid accounts receivable of $11,250.00 relating to prior fiscal years was noted. Various misclassifications were noted in the revenue and accounts receivable accounts.
Expenditures/Liabilities/Disbursements Debt Service principal and interest payments totaling $704,000.00 were not reported on the general ledger. Long-term liabilities pertaining to bond debt totaling $2,075,000.00 were not reported on the general ledger. Retainages Payable of $99,000.00 was not recorded on the general ledger. Accounts Payable of $11,550.00 was not recorded on the general ledger. Various misclassifications were noted in the liability accounts.
General Ledger Numerous journal entries, required to tie beginning fund balances, were not recorded on the School District's general ledger. A restatement of beginning fund balance totaling $508,069.49 was required to reflect the effect of material prior year Head Start program receipts that were not recorded on the general ledger. Agency Fund activity related to the Family Connections grant was inappropriately reflected in the General Fund.
Capital Assets The Elementary School roof replacement project, which had a net book value of $1,049,736.00, was not capitalized as a building improvement. Current year depreciation was not properly calculated resulting in an overstatement of $14,088.00.
Cause: In discussing this deficiency with the School District, they stated that these issues were a result of a lack of training and internal control procedures within the finance department.
Effect or Potential Effect: Material errors and/or irregularities may not be detected in a timely manner.
Recommendation: The School District should establish and implement appropriate controls over the significant processes and procedures to prevent errors as noted above. In addition, the School District should provide training to those responsible for the implementation of these controls.
Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The School District will establish controls to prevent errors noted above. In addition, we will research training in internal control procedures for the Finance Department.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

Estimated Corrective Action Date: March 1, 2016 Contact Person: Britney Johnson, Financial Officer Telephone: (229) 732-2260 Fax: (229) 732-3840 Email: Britney.johnson@sowegak12.org

FS 2014-004 Control Category:
Internal Control Impact:

Inadequate Internal Control Procedures over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements General Ledger Material Weakness

Description: This is a repeat finding (FS-7201-13-03, FS-7201-12-03 and FS-7201-11-02) from fiscal years ended June 30, 2013, June 30, 2012 and June 30, 2011, 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.

Condition: The following deficiencies were noted with the School District's school activity accounts:

Cash and Cash Equivalents The School District did not have adequate internal controls in place to ensure that the bank reconciliation function was separate from the record keeping function; and The cash balances reported on the general ledger did not tie to the bank reconciliations for several school bank accounts.

Revenues/Receipts/Receivables The School District did not have adequate internal controls in place to ensure proper separation of duties and proper documentation of receipts; and During a test of 15 receipts, the following problems were noted: o Adequate receipt documentation was not maintained for 11 deposits tested; and o The auditor could not determine if any of the 15 receipts were credited to the correct revenue account due to lack of documentation.

Expenditures/Liabilities/Disbursements The School District did not have adequate internal controls in place to ensure proper separation of duties and to ensure expenditures were properly approved, adequately documented, and the purchasing policies of the School District were followed.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
During a test of nine disbursements, the following problems were noted: o Three expenditures did not have an approved purchase order or equivalent; o Two expenditures did not have an original invoice; o Three expenditures did not have evidence of receipt of goods; and o Three purchase orders were dated after the invoice date.
General Ledger During testing of journal entries used to post school activity accounts to the general ledger, the auditor could not determine which accounts and organizations were included in Agency Funds or Governmental Funds. Upon reviewing each school's general ledger, financial statement adjustments, which were material to the Agency Fund, were proposed and recorded to report activity for various accounts and organizations appropriately in the Agency Fund and General Fund.
Cause: In discussing this deficiency with the School District, they stated that the errors were made due to the schools not having a school activity account policy manual. In addition, the schools do not have adequate personnel in order to be able to separate the duties.
Effect or Potential 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.
Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The School District is reviewing other Districts' school activity manuals in efforts to adopt our own. In fiscal year 2016, we will be restructuring the school level activity bookkeepers' duties and responsibilities. In addition, we have determined which accounts and organizations shall be classified as agency funds or governmental funds.
Estimated Corrective Action Date: March 1, 2016 Contact Person: Britney Johnson, Financial Officer Telephone: (229) 732-2260 Fax: (229) 732-3840 Email: Britney.johnson@sowegak12.org
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2014-005 Control Category: Internal Control Impact: Compliance Impact:

Inadequate Controls over Financial Reporting Financial Reporting Material Weakness Material Noncompliance

Description: This is a repeat finding (FS-7201-13-04) from fiscal year ended June 30, 2013. The School District did not present financial statements for audit.

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.

Condition: The Department of Audits and Accounts prepared financial statements that were based on the School District's chart of accounts and available accounting records.

Cause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of time and resources to train Board personnel to accomplish the preparation of the financial statements and a lack of the ability to retain a consultant who is knowledgeable in the preparation of financial statements.
Effect or Potential Effect: The School District did not comply with the requirements of the Department of Education regarding financial reporting.
Recommendation: The School District should establish and implement controls over the financial statement reporting process as required by the Financial Management for Georgia Local Units of Administration.
Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The School District plans to retain a consultant for financial statement preparation in fiscal year 2016.
Estimated Corrective Action Date: March 1, 2016 Contact Person: Britney Johnson, Financial Officer Telephone: (229) 732-2260 Fax: (229) 732-3840 Email: Britney.johnson@sowegak12.org

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA 2014-001 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title:

Inadequate Internal Control over Employee Compensation Process Allowable Costs/Costs Principles Significant Deficiency Nonmaterial Noncompliance U.S. Department of Agriculture Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555)

Federal Awarding Agency: U.S. Department of Education

Pass-Through Entity:

Georgia Department of Education

CFDA Number and Title: Special Education Cluster (CFDA 84.027 and 84.173)

School Improvement Grants Cluster (CFDA 84.377 and 84.388)

Federal Awarding Agency: U.S. Department of Health and Human Services

Pass-Through Entity:

Direct

CFDA Number and Title: Head Start (CFDA 93.600)

Description: This is a repeat finding (FA-7201-13-02, FA-7201-12-02 and FA-7201-11-01) from fiscal years ended June 30, 2013, June 30, 2012, and June 30, 2011, respectively. A review of employee compensation charged to various Federal programs revealed that internal controls procedures were not in place to ensure employee compensation expenditures are properly documented and calculated. Leave balances were not properly calculated.

Criteria: Provisions of the OMB Circular A-87, Cost Principals for State, Local and Indian Tribal Governments, 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.

Condition: A review of employee compensation revealed the following deficiencies:
Two employees were paid incorrectly due to calculation errors. Stipends paid to two employees from School Improvement Grant Cluster and Child Nutrition
Cluster funds did not agree to approved documentation maintained on file. Compensation paid to one employee from the Child Nutrition Cluster and five employees from
the School Improvement Grant Cluster was not supported by personnel activity reports or equivalent documentation that accounted for the actual activity of the employees. The School District did not properly calculate leave balances for those employees tested.

Questioned Cost: $2,000.00 in Child Nutrition Cluster (CFDA 10.553 and 10.555) $16,200.00 in School Improvement Grant Cluster (CFDA 84.377 and 84.388)

Cause: In discussing this deficiency with management, they stated the cause was a direct result of not having the proper controls and procedures in place to ensure that compensation charged to Federal programs and paid to personnel were supported by accurate calculations and documentation. Also, leave balances were calculated incorrectly due to technical issues with the leave system.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Effect or Potential Effect: Failure to monitor employee compensation expenditures for compliance resulted 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, time worked and leave balances are properly calculated.
Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The School District implemented procedures to ensure employee compensation expenditures are properly documented and calculated with approved contracts, salary schedules and time sheets with accurate calculations.
Estimated Corrective Action Date: March 1, 2016 Contact Person: Britney Johnson, Financial Officer Telephone: (229) 732-2260 Fax: (229) 732-3840 Email: Britney.johnson@sowegak12.org

FA 2014-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title:

Inadequate Internal Control Procedures Equipment and Real Property Management Material Weakness Material Noncompliance U.S. Department of Agriculture Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555)

Description: This is a repeat finding (FA-7201-13-03 and FA-7201-12-03) from fiscal years ended June 30, 2013 and June 30, 2012, respectively. The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Child Nutrition Cluster.

Criteria: 7 CFR 3016.32 (d)(1) states, "Property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date, and cost of the property, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property". In addition, 7 CFR 3016.32 (d)(2) states, "A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years".

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Condition: The School District did not maintain an adequate equipment listing for the Child Nutrition Cluster including information regarding the equipment's cost, acquisition date, location, serial number, percentage of Federal participation in regards to cost, who holds title, use and condition of the property, and ultimate disposal data. The School District also did not perform a physical inventory of the property and reconcile the results to property records. In addition, auditor could not physically locate two items reflected on the entity's equipment listing.
Questioned Cost: N/A
Cause: In discussing this deficiency with management, they stated the deficiencies occurred because management failed to effectively implement Federal guidelines as they pertain to equipment and real property management.
Effect or Potential Effect: Failure to maintain a proper equipment listing and perform a physical inventory resulted in material noncompliance with the requirements of the Federal Grant.
Recommendation: The School District should develop and maintain an equipment listing including information on each piece of equipment's cost, acquisition date, location date, serial number, percentage of federal participation, who holds title, use and condition of property, and ultimate disposal data. In addition, an inventory of equipment items on this listing should be conducted at least once every two fiscal years in order to ensure that information on the listing remains valid.
Views of Responsible Officials and Corrective Action Plans: We concur with this finding. We are developing an equipment listing including information on each piece of equipment's cost, acquisition date, location date, serial number, percentage of Federal participation who holds title, use and condition of property, and ultimate disposal data. Inventory checks will be conducted periodically.
Estimated Corrective Action Date: March 1, 2016 Contact Person: Britney Johnson, Financial Officer Telephone: (229) 732-2260 Fax: (229) 732-3840 Email: Britney.johnson@sowegak12.org
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