Randolph County Board of Education, Cuthbert, Georgia, annual financial report for the fiscal year ended 2016 June 30 (including independent auditor's reports)

RANDOLPH COUNTY BOARD OF EDUCATION
CUTHBERT, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2016
(Including Independent Auditor's Reports)

RANDOLPH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

EXHIBITS

BASIC FINANCIAL STATEMENTS

GOVERNMENT-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 NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA
2 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA
3 SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA 4 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION 5 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND

Page
1 2
4 5 6 7 8 10
29 30 31 32 33

RANDOLPH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I
FINANCIAL
SCHEDULES
SUPPLEMENTARY INFORMATION
6 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 7 SCHEDULE OF STATE REVENUE 8 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

Page
34 35 37

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 THE UNIFORM GUIDANCE

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

SECTION V MANAGEMENT'S CORRECTIVE ACTION FOR CURRENT YEAR FINDINGS SCHEDULE OF MANAGEMENT'S CORRECTIVE ACTION

SECTION I FINANCIAL

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
January 30, 2019

Honorable Brian P. Kemp, 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 have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Randolph County Board of Education (School District), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the School District'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 from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also

includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the School District, as of June 30, 2016, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 2 to the financial statements, in 2016, the School District adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application, GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and No. 68, and GASB Statement No. 79, Certain External Investment Pools and Pool Participants. Our opinions are not modified with respect to this matter.
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. Our opinions on the basic financial statements are not affected by this missing information.
Accounting principles generally accepted in the United States of America require that the Schedules of Proportionate Share of the Net Pension Liability, Schedule of Contributions to Retirement Systems, Notes to the Required Supplementary Information and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual as presented on pages 29 through 33, 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 have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District's basic financial statements. The accompanying supplementary information, consisting of Schedules 6 through 8, 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 Title 2 U. S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements.
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. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated January 30, 2019, on our consideration of the School District'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 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 the School District'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,
Greg S. Griffin State Auditor

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RANDOLPH COUNTY BOARD OF EDUCATION

RANDOLPH COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2016
ASSETS
Cash and Cash Equivalents Receivables, Net
Taxes State Government Federal Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
DEFERRED OUTFLOWS OF RESOURCES
Related to Defined Benefit Pension Plan
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Interest Payable Deposits and Unearned Revenues Net Pension Liability Long-Term Liabilities
Due Within One Year
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Related to Defined Benefit Pension Plan
NET POSITION
Net Investment in Capital Assets Restricted for
Continuation of Federal Programs Debt Service Capital Projects Bus Replacement Unrestricted (Deficit)
Total Net Position

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

3,465,003.36

377,930.17 595,312.96 352,084.13
53,493.01 6,637.69
72,035.00 6,269,010.73

11,191,507.05

789,738.75

135,751.41 952,123.66
39.00 5,250.00
104.91 7,659,198.00
700,000.00
9,452,466.98

1,223,842.00

5,641,045.73
6,637.69 1,073,195.25
827,133.71 120,795.87 (6,363,871.43)

$

1,304,936.82

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, 2016

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

EXPENSES

CHARGES FOR SERVICES

PROGRAM REVENUES

$

5,797,564.08 $

532,050.24 1,024,795.26
147,081.47 497,200.31 711,469.12 186,431.93 1,277,598.39 801,210.28
57,897.36 90,028.50

1,010,054.91 18,375.00

$

12,151,756.85 $

156,753.72
-
45,923.00 -
202,676.72

Net Position - End of Year

- 2 -

EXHIBIT "B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET POSITION

$

4,742,340.84 $

213,146.24 527,127.96 111,836.00 360,866.37 360,302.65
55,545.85 336,226.30 303,726.36
660.33 70,788.19

916,192.15 -

$

7,998,759.24 $

- $
77,220.00 -
-
77,220.00

(898,469.52)
(318,904.00) (497,667.30)
(35,245.47) (136,333.94) (351,166.47) (130,886.08) (941,372.09) (420,263.92)
(57,237.03) (19,240.31)
(47,939.76) (18,375.00)
(3,873,100.89)

3,530,633.52 26,570.30
638,047.77 16,196.62 27,601.00 2,517.52
473,844.55
4,715,411.28
842,310.39
462,626.43

$

1,304,936.82

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

- 3 -

RANDOLPH COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2016

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Receivables, Net
Taxes State Government Federal Government Other Inventories
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Deposits and Unearned Revenue
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes
FUND BALANCES
Nonspendable Restricted Assigned Unassigned
Total Fund Balances

GENERAL FUND

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 1,660,453.42 $
276,901.15 595,312.96 352,084.13
53,493.01 6,637.69

827,133.71 $
-

977,416.23 $
101,029.02 -

3,465,003.36
377,930.17 595,312.96 352,084.13
53,493.01 6,637.69

$ 2,944,882.36 $

827,133.71 $ 1,078,445.25 $

4,850,461.32

$

135,751.41 $

952,123.66

39.00

104.91

1,088,018.98

- $ -
-

- $ -
-

135,751.41 952,123.66
39.00 104.91
1,088,018.98

215,399.20

-

-

215,399.20

6,637.69 120,795.87
26,961.88 1,487,068.74
1,641,464.18

827,133.71
-
827,133.71

1,078,445.25
-
1,078,445.25

6,637.69 2,026,374.83
26,961.88 1,487,068.74
3,547,043.14

Total Liabilities, Deferred Inflows of Resources, and Fund Balances

$ 2,944,882.36 $

827,133.71 $ 1,078,445.25 $

4,850,461.32

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

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RANDOLPH COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION JUNE 30, 2016

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 in the funds.
Land Buildings and improvements Equipment Land improvements Accumulated depreciation
Some liabilities are not due and payable in the current period and, therefore, are not reported in the funds.
Net pension liability
Deferred outflows and inflows of resources related to pensions are applicable to future periods and, therefore, are not reported in the funds.
Taxes that are not available to pay for current period expenditures are deferred in the funds.
Long-term liabilities, and related accrued interest, are not due and payable in the current period and therefore are not reported in the funds.
Bonds payable Accrued interest payable

$ 3,547,043.14

$

72,035.00

10,563,163.53

1,561,290.00

411,042.00

(6,266,484.80)

6,341,045.73

(7,659,198.00) (434,103.25) 215,399.20

$

(700,000.00)

(5,250.00)

(705,250.00)

Net position of governmental activities (Exhibit "A")

$ 1,304,936.82

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, 2016

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

GENERAL FUND

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$

3,532,490.56 $

16,196.62

5,170,292.54

3,003,636.73

202,676.72

280.71

473,844.55

12,399,418.43

- $ 2.61 -
2.61

- $ 638,047.77
2,234.20 -
640,281.97

3,532,490.56 654,244.39
5,170,292.54 3,003,636.73
202,676.72 2,517.52
473,844.55
13,039,703.01

5,756,023.49
547,270.05 1,064,619.75
152,385.96 449,533.31 750,069.48 202,665.96 1,295,091.44 804,292.09
65,505.01 93,063.46 1,040,232.02
1,293.00
-
12,222,045.02
177,373.41
1,464,090.77

-
-
-
-
2.61
827,131.10

-
-
700,000.00 23,625.00
723,625.00
(83,343.03)
1,161,788.28

5,756,023.49
547,270.05 1,064,619.75
152,385.96 449,533.31 750,069.48 202,665.96 1,295,091.44 804,292.09
65,505.01 93,063.46 1,040,232.02
1,293.00
700,000.00 23,625.00
12,945,670.02
94,032.99
3,453,010.15

Fund Balances - Ending

$

1,641,464.18 $

827,133.71 $

1,078,445.25 $ 3,547,043.14

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, 2016

EXHIBIT "F"

Net change in fund balances total governmental funds (Exhibit "E")
Amounts reported for governmental activities in the Statement of Activities are different because:
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of capital assets is allocated over their estimated useful lives as depreciation expense.
Capital outlay 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
District pension contributions are reported as expenditures in the governmental funds when made. However, they are reported as deferred outflows of resources in the Statement of Net Position because the reported net pension liability is measured a year before the District's report date. Pension expense, which is the change in the net pension liability adjusted for changes in deferred outflows and inflows of resources related to pensions, is reported in the Statement of Activities.
Pension expense
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.
Accrued interest on issuance of bonds
Change in net position of governmental activities (Exhibit "B")

$

94,032.99

$

88,037.00

(478,442.00)

(390,405.00) 24,713.26

700,000.00

408,719.14
5,250.00 $ 842,310.39

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, 2016
LIABILITIES Cash Overdraft Funds Held for Others
Total Liabilities

EXHIBIT "G"

AGENCY FUNDS

$

2,145.32

(2,145.32)

$

-

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

- 8 -

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Randolph County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a board elected by the voters and a Superintendent appointed by the Board. The School District 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
The accompanying financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the School District's accounting policies are described below.
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the government-wide financial statements, fund financial statements and notes to the basic financial statements. The government-wide statements focus on the School District as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information's usefulness.
GOVERNMENT-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 Net Position presents the School District's non-fiduciary assets and liabilities, with the difference reported as net position. Net position is reported in three categories as follows:
1. Net investment in capital assets consists of the School District's total investment in capital assets, net of accumulated depreciation, and reduced by 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.
2. Restricted net position consists of resources for which the School District is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties or imposed by law through constitutional provisions or enabling legislation.
3. Unrestricted net position consists of resources not meeting the definition of the two preceding categories. Unrestricted net position often has constraints on resources imposed by management which can be removed or modified.
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.

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

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 financial statements are presented for governmental and fiduciary funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
The 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.
The capital projects fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) that are restricted, committed or assigned for capital outlay expenditures, including the acquisition or construction of capital facilities and other capital assets.
The 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.
The School District reports the following fiduciary fund type:
Agency funds are used to report resources held by the School District in a purely custodial capacity (assets equal liabilities) and do not involve measurement of results of operations.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The government-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, and grants. 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 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.
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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2016, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application. This statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This statement provides guidance for determining a fair value measurement for financial reporting purposes. This statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The School District did not have any items that required a reassessment of value for reporting purposes as a result of adoption of this statement.
In fiscal year 2016, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and No. 68. This statement establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68, Accounting and Financial Reporting for Pensions, as well as for the assets accumulated for purposes of providing those pensions. In addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement No. 68. It also amends certain provisions of Statement No. 67, Financial Reporting for Pension Plans, and Statement No. 68 for pension plans and pensions that are within their respective scopes. The adoption of this statement does not have a significant impact on the School District's financial statements.
In fiscal year 2016, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 79, Certain External Investment Pools and Pool Participants. This statement addresses accounting and financial reporting for certain external investment pools and pool participants. If an external investment pool meets the criteria in this statement and measures all of its investments at amortized cost, the pool's participants also should measure their investments in that external investment pool at amortized cost for financial reporting purposes. The School District participates in an external investment pool, the State of Georgia local government investment pool (Georgia Fund 1), which does not meet the criteria of this statement. Therefore, the investment in this pool is measured at fair value as provided in paragraph 11 of GASB Statement No. 31, as amended.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, demand deposits, investments in the State of Georgia local government investment pool (Georgia Fund 1) 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 (O.C.G.A.) 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
The School District can invest its funds as permitted by O.C.G.A. 36-83-4. 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.

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

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. All other investments are reported at fair value.
For accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired.
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.
INVENTORIES
Food Inventories
On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (calculated on the first-in, first-out basis). 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
On the government-wide financial statements, capital assets are recorded 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 acqusition value on the date donated. 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. The School District does not capitalize book collections or works of art.
Capital acquisition and construction are recorded as expenditures in the governmental fund financial statements at the time of purchase (including ancillary charges), and the related assets are reported as capital assets in the governmental activities column in the government-wide financial statements.
Depreciation is computed using the straight-line for all assets, except land, and is used to allocate the actual or estimated historical cost of capital assets over estimated useful lives.
Capitalization thresholds and estimated useful lives of capital assets reported in the government-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

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of financial position will 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.
In addition to liabilities, the statement of financial position will 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.
LONG-TERM LIABILITIES AND BOND DISCOUNTS/PREMIUMS
In the School District's government-wide financial statements, outstanding debt is reported as liabilities. Bond premiums and discounts and the difference between the reacquisition price and the net carrying value of refunded debt are deferred and amortized over the life of the bonds using the straight-line method. To conform to generally accepted accounting principles, bond premiums and discounts should be amortized using the effective interest method. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued.
In the governmental fund financial statements, the School District recognizes the proceeds of debt and premiums as other financing sources of the current period. Bond issuance costs are reported as debt service expenditures.
PENSIONS
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
FUND BALANCES
Fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent.
The School District's fund balances are classified as follows:
Nonspendable consists of resources 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 consists of resources that can be used only for specific purposes pursuant constraints either (1) externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.
Committed consists of resources that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board. The Board is the School District's highest level of decisionmaking 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.

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

Assigned consists of resources 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 or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.
Unassigned consists of resources within the general fund not meeting the definition of any aforementioned category. The general fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance.
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.
PROPERTY TAXES
The Randolph County Board of Commissioners adopted the property tax levy for the 2015 tax digest year (calendar year) on October 16, 2015 (levy date) based on property values as of January 1, 2015. Taxes were due on December 20, 2015 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2015 tax digest are reported as revenue in the governmental funds for fiscal year 2016. The Randolph County Board of Commissioners 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, 2016, for maintenance and operations amounted to $3,353,524.37.
The tax millage rate levied for the 2015 tax year (calendar year) for the School District was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

17.61 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $152,395.89 during fiscal year ended June 30, 2016.
SALES TAXES
Education Special Purpose Local Option Sales Tax (ESPLOST), at the fund reporting level, during the year amounted to $638,047.77 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.
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 is advertised at least once in a newspaper of general circulation in the locality, as well as the School

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

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 O.C.G.A. 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 the General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual in the Supplementary Information Section for a detail of any over/under expenditures during the fiscal year under review.
NOTE 4: DEPOSITS AND CASH EQUIVALENTS
COLLATERALIZATION OF DEPOSITS
O.C.G.A. 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% 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. 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% 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, 2016, the School District had deposits with a carrying amount of $2,485,441.81, and a bank

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

balance of $2,986,119.34. The bank balances insured by Federal depository insurance were $500,000.00 and the bank balances collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name were $2,486,119.34.

Reconciliation of cash and cash equivalents balances to carrying value of deposits:

Statement of Net Position Cash and cash equivalents
Statement of Fiduciary Net Position Cash and cash equivalents

$ 3,465,003.36 (2,145.32)

Total cash and cash equivalents

3,462,858.04

Less: Investment pools reported as cash and cash equivalents
Georgia Fund 1

977,416.23

Total carrying value of deposits - June 30, 2017

$ 2,485,441.81

CATEGORIZATION OF CASH EQUIVALENTS

The School District reported cash equivalents of $977,416.23 in Georgia Fund 1, a local government investment pool. Georgia Fund 1 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, which approximates fair value. 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, 2016, was 42 days.

Georgia Fund 1, administered by the State of Georgia, Office of the State Treasurer, 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, 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 www.audits.ga.gov/SGD/CAFR.html.

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

NOTE 5: CAPITAL ASSETS

The following is a summary of changes in the capital assets for governmental activities during the fiscal year:

Balances July 1, 2015

Increases

Decreases

Balances June 30, 2016

Governmental Activities Capital Assets, Not Being Depreciated:
Land

$

72,035.00 $

- $

- $

72,035.00

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

10,563,163.53 1,473,253.00 411,042.00

88,037.00
-

-

10,563,163.53

-

1,561,290.00

-

411,042.00

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

4,475,179.80 1,001,822.00
311,041.00

367,174.00 97,935.00 13,333.00

-

4,842,353.80

-

1,099,757.00

-

324,374.00

Total Capital Assets, Being Depreciated, Net

6,659,415.73

(390,405.00)

-

6,269,010.73

Governmental Activity Capital Assets - Net

$ 6,731,450.73 $ (390,405.00) $

- $ 6,341,045.73

Current year depreciation expense by function is as follows:

Instruction Support Services
General Administration Student Transportation Services Food Services

$ 47,667.00 105,773.00

$ 324,148.00
153,440.00 854.00

$ 478,442.00 NOTE 6: LONG-TERM LIABILITIES The changes in long-term liabilities during the fiscal year for governmental activities, were as follows:

Balance July 1, 2015

Governmental Activities

Balance

Additions

Deductions

June 30, 2016

Due Within One Year

General Obligation Bonds

$ 1,400,000.00 $

- $ 700,000.00 $ 700,000.00 $ 700,000.00

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

GENERAL OBLIGATION DEBT OUTSTANDING
The School District's bonded debt consists of general obligation bonds that are generally callable with interest payable semiannually. Bond proceeds primarily pay for acquiring or constructing capital facilities. The School District repays general obligation bonds from voter-approved sales taxes. General obligation bonds are direct obligations and pledge the full faith and credit of the School District.
Of the total amount originally authorized, $150,000.00 remains unissued. General obligation bonds currently outstanding are as follows:

Description

Interest Rate

Issue Date

Maturity Date

Amount Issued Amount Outstanding

General Government - Series 2011

2.25%

6/16/2011

9/1/2016 $ 3,350,000.00 $

700,000.00

The following schedule details debt service requirements to maturity for the School District's total general obligation bonds payable:

Fiscal Year Ended June 30:

General Obligation Debt

Principal

Interest

2017

$ 700,000.00 $

7,875.00

NOTE 7: RISK MANAGEMENT
INSURANCE
Commercial Insurance
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; and natural disasters. Except as described below, the School District carries commercial insurance for these risks. Settled claims resulting from these insured risks have not exceed commercial insurance coverage in any of the past three fiscal years.
The School District has elected to self-insure for losses related to natural disasters. The School District has not experienced any losses related to this risk in the past three years.
WORKERS' COMPENSATION
Georgia Education Workers' Compensation Trust
The School District participates in the Georgia Education Workers' Compensation Trust (the 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 workers' 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 $1.0 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2.0 million. The Trust covers the first $1.0 million of each Employers Liability claim with Safety National providing additional Employers Liability limits up to a $2.0 million per occurrence maximum. Safety National Casualty Company also provides $2.0 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, 2016

EXHIBIT "H"

UNEMPLOYMENT COMPENSATION
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

2015

$

-

$ 5,991.55 $ 5,991.55 $

-

2016

$

-

$ 5,518.73 $ 5,518.73 $

-

SURETY BOND

The School District purchased a surety bond to provide additional insurance coverage as follows:

Position Covered

Amount

Superintendent

$

50,000.00

NOTE 8: FUND BALANCE CLASSIFICATION DETAILS

The School District's financial statements include the following amounts presented in the aggregate at June 30, 2016:

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

$

6,637.69

$ 120,795.87 827,133.71
1,078,445.25

2,026,374.83

26,961.88 1,487,068.74

Fund Balance, June 30, 2016

$ 3,547,043.14

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.
NOTE 9: SIGNIFICANT COMMITMENTS
OPERATING LEASES
The School District leases copiers under the provisions of one or more long-term lease agreements classified as operating leases for accounting purposes. Rental expenditures under the terms of the operating leases totaled $101,621.20 for governmental activities for the year ended June 30, 2016.

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

The following future minimum lease payments were required under operating leases at June 30, 2016:

Year Ending

Governmental Funds

2017 2018 2019 2020 2021

$

74,372.80

73,840.00

73,840.00

73,840.00

19,930.00

Total

$ 315,822.80

NOTE 10: SIGNIFICANT CONTINGENT LIABILITIES FEDERAL GRANTS

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. Any disallowances resulting from the grantor audit may become a liability of the School District. However, the School District believes that such disallowances, if any, will be immaterial to its overall financial position.
LITIGATION

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 have a material adverse effect on the financial condition of the School District.
NOTE 11: 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 for retirees, to the Board of Community Health (Board). Additional information about the School OPEB Fund is disclosed in the State of Georgia Comprehensive Annual Financial Report. This report can be obtained from the Georgia Department of Audits and Accounts at www.audits.ga.gov/SGD/CAFR.html.
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% 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

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

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, 2016:

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

July 1, 2015 June 30, 2016

$945.00 per member per month

For non-certificated school personnel:

July 1, 2015 December 31, 2015 $596.20 per member per month

January 1, 2016 June 30, 2016 $746.20 per member per month

No additional contribution was required by the Board for fiscal year 2016 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

2016 2015 2014

100% 100% 100%

$ 1,365,991.02 $ 1,227,209.60 $ 1,330,646.75

NOTE 12: RETIREMENT PLANS

The School District participates in various retirement plans administered by the State of Georgia, as further explained below.

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description: All teachers of the School District as defined in O.C.G.A 47-3-60 and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers Retirement System of Georgia issues a publicly available separate financial audit report that can be obtained at www.trsga.com/publications.

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RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

Benefits Provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee 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. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.
Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2016. The School District's contractually required contribution rate for the year ended June 30, 2016 was 14.27% of annual School District payroll, of which 14.14% of payroll was required from the School District and 0.13% of payroll was required from the State. For the current fiscal year, employer contributions to the pension plan were $786,557.75 and $50,780.03 from the School District and the State, respectively.
PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS)
Plan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.
Benefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service.
Upon retirement, the member will receive a monthly benefit of $14.75, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits.
Contributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current fiscal year contribution was $30,599.00.

- 23 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2016, the School District reported a liability of $7,659,198.00 for its proportionate share of the net pension liability for TRS.

The TRS net pension liability reflected a reduction for support provided to the School District by the State of Georgia for certain public school support personnel. The amount recognized by the School District as its proportionate share of the net pension liability, the related State of Georgia support, and the total portion of the net pension liability that was associated with the School District were as follows:

School District's proportionate share of the net pension liability

$ 7,659,198.00

State of Georgia's proportionate share of the net pension liability associated with the School District

73,532.00

Total

$ 7,732,730.00

The net pension liability for TRS was measured as of June 30, 2015. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2014. An expected total pension liability as of June 30, 2015 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2015.
At June 30, 2015, the School District's TRS proportion was 0.050310%, which was a decrease of 0.003709% from its proportion measured as of June 30, 2014.
At June 30, 2016, the School District did not have a PSERS liability for a proportionate share of the net pension liability because of a Special Funding Situation with the State of Georgia, which is responsible for the net pension liability of the plan. The amount of the State's proportionate share of the net pension liability associated with the School District is $117,900.00.
The PSERS net pension liability was measured as of June 30, 2015. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2014. An expected total pension liability as of June 30, 2015 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2015.
For the year ended June 30, 2016, the School District recognized pension expense of $382,519 for TRS and $7,031.00 for PSERS and revenue of $3,999.00 for TRS and $7,031.00 for PSERS. The revenue is support provided by the State of Georgia. For TRS the State of Georgia support is provided only for certain support personnel.

- 24 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

At June 30, 2016, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

TRS Deferred Outflows of Resources

Deferred Inflows of Resources

Differences between expected and actual experience
Net difference between projected and actual earnings on pension plan investments
Changes in proportion and differences between School District contributions and proportionate share of contributions
School District contributions subsequent to the measurement date

$

- $

67,367.00

-

646,061.00

3,181.00

510,414.00

786,557.75

-

Total

$

789,738.75 $ 1,223,842.00

The School District contributions subsequent to the measurement date of $786,557.75 for TRS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30:

TRS

2017

$ (436,636.00)

2018

$ (436,636.00)

2019

$ (436,636.00)

2020

$ 116,760.00

2021

$ (27,513.00)

Actuarial assumptions: The total pension liability as of June 30, 2015 was determined by an actuarial valuation as of June 30, 2014, using the following actuarial assumptions, applied to all periods included in the measurement:

Teachers Retirement System:

Inflation

3.00%

Salary increases

3.75% 7.00%, average, including inflation

Investment rate of return

7.50%, net of pension plan investment expense, including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females set back two years for males and set back three years for females.

- 25 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.
Public School Employees Retirement System:

Inflation

3.00%

Salary increases Investment rate of return

N/A
7.50%, net of pension plan investment expense, including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table set forward one year for males for the period after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back two years for males and set forward one year for females for the period after disability retirement.

The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

The long-term expected rate of return on TRS and PSERS pension plan investments was determined

using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of

return (expected returns, net of pension plan investment expense and inflation) are developed for

each major asset class. These ranges are combined to produce the long-term expected rate of return

by weighting the expected future real rates of return by the target asset allocation percentage and by

adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of

return for each major asset class are summarized in the following table:

Long-term

Target

expected real

Asset class

allocation

rate of return*

Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks
Total

30.00% 39.70%
3.70% 1.60% 18.90% 6.10%
100.00%

3.00% 6.50% 10.00% 13.00% 6.50% 11.00%

* Rates shown are net of the 3.00% assumed rate of inflation

Discount rate: The discount rate used to measure the total TRS and PSERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and PSERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

- 26 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

Sensitivity of the School District's proportionate share of the net pension liability to changes in the discount rate: The following presents the School District's proportionate share of the net
pension liability calculated using the discount rate of 7.50%, as well as what the School District's
proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate:

Teachers Retirement System:

1% Decrease (6.50%)

Current Discount Rate (7.50%)

1% Increase (8.50%)

School District's proportionate share of the net

pension liability

$ 13,161,753.00 $

7,659,198.00 $ 3,123,784.00

Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS and PSERS financial report which is publically available at www.trsga.com/publications and http://www.ers.ga.gov/formspubs/formspubs.html.

NOTE 13: DEFICIT FUND BALANCE OF INDIVIDUAL FUNDS

Funds reporting a deficit fund balance at the fiscal year end, are as follows:

Fund Type/Fund Name

Deficit Balance

Governmental Funds/ School Food Service

$

62,588.94

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.

NOTE 14: SUBSEQUENT EVENTS

In the subsequent fiscal year, voters authorized the School District to issue general obligation bonds in the amount of $8,450,000.00. The proceeds from these bonds will be used for (1) acquiring, constructing, repairing, improving, renovating, adding to, extending, upgrading, furnishing, and equipping school buildings and support facilities and infrastructure in the Randolph County School District useful or desirable in connection therewith, including acquiring any necessary property therefore, both real and personal, including, but not limited to, modernizing and renovating the existing middle/high school for use as a combined K to 12th grade building and athletic/physical education facilities; (2) acquiring equipment for physical education and the athletic departments; (3) acquiring technology, safety, security, and/or fire protection equipment; (4) acquiring buses, vehicles, and/or transportation equipment; (5) acquiring real property (collectively, the "Projects"); and/or (6) paying capitalized interest and/or costs of issuing the Bonds. The School District has not issued any of these bonds as of the report date. In addition, the voters authorized the continuation of a one percent sales and use tax for the raising of not more than $3,300,000.00 for (1) paying a portion of the principal of and interest on the Bonds and/or (2) paying all or a portion of the cost of the Projects.
NOTE 15: RELATED PARTY TRANSACTIONS

During the year under review, the School District conducted business with two related parties, Sarah Graddy and Xavier Graddy. Sarah Graddy is the wife of the Board Chair and Xavier Graddy is the son of the Board Chair. Current year expenditures for Sarah Graddy totaled $17,179.00 and for Xavier Graddy totaled $15,450.85 for a total of $32,629.85.

- 27 -

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RANDOLPH COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "1"

Year Ended

School District's proportion of the
net pension liability

School District's proportionate share of the net pension liability

State of Georgia's proportionate share of the
net pension liability associated with the School
District

2016 2015

0.053010% $ 0.054019% $

7,659,198.00 $ 6,824,588.00 $

73,532.00 $ 66,074.00 $

Total

School District's covered employee
payroll

School District's proportionate share of the net pension liability as a percentage of its covered employee payroll

Plan fiduciary net position as a
percentage of the total pension liability

7,732,730.00 $ 6,890,662.00 $

5,356,297.85 5,510,977.36

142.99% 123.84%

81.44% 84.03%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 29 -

RANDOLPH COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "2"

Year Ended
2016 2015

School District's proportion of the net
pension liability

School District's proportionate share of the
net pension liability

State of Georgia's proprotionate share of the net pension liaibility associated with the School District

0.00% $ 0.00% $

-

$

-

$

117,900.00 $ 110,827.00 $

Total

School District's covered employee
payroll

School District's proportionate share of the net pension liability as a percentage of its
covered employee payroll

Plan fiduciary net position as a
percentage of the total pension liability

117,900.00 $ 110,827.00 $

360,597.95 430,082.81

N/A

87.00%

N/A

88.29%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 30 -

RANDOLPH COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "3"

Year Ended

Contractually required contribution

Contributions in relation to the contractually required
contribution

Contribution deficiency (excess)

2016

$

786,557.75 $

786,557.75 $

-

2015

$

704,353.17 $

704,353.17 $

-

School District's covered employee
payroll
$ 5,562,967.92 $ 5,356,297.85

Contribution as a percentage of covered
employee payroll
14.14% 13.15%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 31 -

RANDOLPH COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2016

SCHEDULE "4"

Teachers Retirement System

Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience.

Method and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2016 reported in that schedule:

Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation rate Salary increases Investment rate of return

June 30, 2013 Entry age Level percentage of payroll, closed 30 years Five-year smoothed market 3.00% 3.75 7.00%, including inflation 7.50%, net of pension plan investment
expense, including inflation

Public School Employees Retirement System

Changes of assumptions: The last experience investigation was prepared for the five-year period ending June 30, 2009, and based on the results of the investigation various assumptions and methods were revised and adopted by the board on December 16,2010. The next experience investigation will be prepared for the period July 1, 2009 through June 30, 2014.
Method and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2016 reported in that schedule:

Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation rate Salary increases Investment rate of return
Cost-of living adjustments

June 30, 2013 Entry age Level dollar, closed 25 years Five-year smoothed market 3.00% N/A 7.50%, net of pension plan investment
expense, including inflation 1.50% semi-annually

- 32 -

RANDOLPH COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2016

SCHEDULE "5"

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 (USES)
Other Sources Other Uses
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$

3,360,505.00 $ 3,360,505.00 $

3,532,490.56 $

16,196.62

4,807,918.00

4,955,779.00

5,170,292.54

831,216.00

1,938,426.00

3,003,636.73

236,635.00

236,635.00

202,676.72

17.00

17.00

280.71

1,000.00

19,556.69

473,844.55

9,237,291.00

10,510,918.69

12,399,418.43

171,985.56 16,196.62
214,513.54 1,065,210.73
(33,958.28) 263.71
454,287.86
1,888,499.74

5,015,553.72
241,169.88 571,816.66 131,039.32 256,181.01 720,536.09 168,955.75 1,092,683.95 670,744.87
59,569.57 20,417.92 982,588.45
2,000.00
9,933,257.19
(695,966.19)

5,970,303.24
465,333.88 1,044,748.66
131,039.32 257,946.01 720,536.09 219,410.75 1,153,478.91 754,847.87
59,577.57 90,707.92 1,048,511.91
6,000.00
11,922,442.13
(1,411,523.44)

5,756,023.49
547,270.05 1,064,619.75
152,385.96 449,533.31 750,069.48 202,665.96 1,295,091.44 804,292.09
65,505.01 93,063.46 1,040,232.02
1,293.00
12,222,045.02
177,373.41

214,279.75
(81,936.17) (19,871.09) (21,346.64) (191,587.30) (29,533.39) 16,744.79 (141,612.53) (49,444.22)
(5,927.44) (2,355.54) 8,279.89 4,707.00
(299,602.89)
1,588,896.85

85,981.00 (85,981.00)
(695,966.19) 996,346.83

85,981.00 (85,981.00)
(1,411,523.44)
996,346.83

177,373.41 1,464,090.77

(85,981.00) 85,981.00
1,588,896.85
467,743.94

Fund Balances - Ending

$

300,380.64 $

(415,176.61) $

1,641,464.18 $

2,056,640.79

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 budgeted revenues or expenditures of the various principal accounts. The actual revenues and expenditures of the various principal accounts are $205,757.34 and $198,197.80, respectively.
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.

- 33 -

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2016

SCHEDULE "6"

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 Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Services Child Nutrition Discretionary Grants Limited Availability
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education 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

16165GA324N1099 $ 16165GA324N1099

265,378.44 716,473.21
981,851.65

10.579

15155GA350N8103

7,120.35 988,972.00

84.027 84.173

H027A150073 H173A150081

84.048 84.367 84.358 84.371 84.010

V048A150010 S367A150001 S358B150010 S371C110049 S010A150010

93.600

231,494.25 8,971.07
240,465.32
17,372.43 135,448.17
26,477.77 13,059.29 712,147.31 904,504.97 1,144,970.29
881,598.18

Total Expenditures of Federal Awards

$

3,015,540.47

Notes to the Schedule of Expenditures of Federal Awards
Note 1. Basis of Presentation
The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of the Randolph County Board of Education (the "Board") under programs of the federal government for the year ended June 30, 2016. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Board, it is not intended to and does not present the financial position or changes in net position of the Board.
Note 2. Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following, as applicable, either the cost principles in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments , or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards , wherein certain types of expenditures are not allowable or are limited as to reimbursement. The Board has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance.

See notes to the basic financial statements.

- 34 -

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2016
AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Principal Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Sparsity Education Equalization Funding Grant Other State Programs Food Services Math and Science Supplements Preschool Handicapped Program Pupil Transportation - State Bonds Teachers Retirement Vocational Education
Office of the State Treasurer Public School Employees Retirement

SCHEDULE "7"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

60,772.80

189,642.00 108,042.00 503,883.00 263,850.00 231,555.00 169,779.00 431,028.00 537,203.00 186,250.00 916,849.00 110,665.00
41,582.00 93,843.00 29,077.00 17,908.00
757.00
304,403.00 302,116.00 231,228.00 (246,452.00)
224,594.00 45,000.00
106,936.00 27,601.00
20,440.00 29,914.79 61,650.64 77,220.00 50,780.03 11,576.28
30,599.00
$ 5,170,292.54

See notes to the basic financial statements.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2016

SCHEDULE "8"

PROJECT

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

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).

$ 3,800,000.00 $ 3,800,000.00 $

- $ 3,376,995.94 $

- $

-

SPLOST III

Repairing, renovating, extending, improving, rehabilitating, equipping, and

upgrading existing facilities of the Randolph County School District, to include

roof repairs;

18,462.79

2,137,437.14

-

1,062,731.94

-

-

acquiring mechanical and electrical systems and equipment;

1,674,817.14

1,674,817.14

-

1,674,817.14

1,674,817.14

-

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;

115,427.27 259,748.67
1,450.32 39,058.24

416,049.92 262,616.67
37,136.44 82,904.80

-

416,049.92

416,049.92

-

-

262,616.67

262,616.67

-

-

25,100.44

25,100.44

12,036.00

-

82,904.80

82,904.80

-

ESTIMATED COMPLETION
DATE
Completed
6/30/2017 Completed Completed Completed Completed Completed

and planning for new School District site development and site acquisition Totals SPLOST III

2,591,035.57 4,700,000.00

100,000.00 4,710,962.11

-

-

-

-

6/30/2017

-

3,524,220.91

2,461,488.97

12,036.00

$ 8,500,000.00 $ 8,510,962.11 $

- $ 6,901,216.85 $ 2,461,488.97 $

12,036.00

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. (2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion. (3) The voters of Randolph County approved the imposition of a 1% sales tax to fund the above projects 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 Current Year Total

$

214,828.13

23,625.00

$

238,453.13

See notes to the basic financial statements.

- 37 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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
January 30, 2019

Honorable Brian P. Kemp, 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 PREFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited, 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 (School District) as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements and have issued our report thereon dated January 30, 2019.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the School District'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 School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the School District'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 that we consider to be material weaknesses and a significant deficiency.
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 2016-001, and FS 2016-002, to be material weaknesses.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs as item FS 2016-003 to be a significant deficiency.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the School District'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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
School District's Response to Findings
The School District's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District'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 School District'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 School District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,
Greg S. Griffin State Auditor

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
January 30, 2019

Honorable Brian P. Kemp, 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 THE UNIFORM GUIDANCE
Ladies and Gentlemen:
Report on Compliance for Each Major Federal Program
We have audited Randolph County Board of Education's (School District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2016. The School District'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 federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the School District'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 the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 School District'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 the School District's compliance.

Basis for Qualified Opinion on Child Nutrition Cluster (CFDA 10.553, 10.555) and Head Start (CFDA 93.600)
As described in the accompanying Schedule of Findings and Questioned Costs, the School District did not comply with requirements regarding Child Nutrition Cluster (CFDA 10.553, 10.555) as described in item FA 2016-004 for Equipment and Real Property Management, and Head Start (CFDA 93.600) as described in items FA 2016-001 and FA 2016-003 for Activities Allowed/Unallowed, Allowable Costs/Costs Principles, Period of Performance, and Cash Management. Compliance with such requirements is necessary, in our opinion, for the School District to comply with requirements applicable to those programs.
Qualified Opinion on Child Nutrition Cluster (CFDA 10.553, 10.555) and Head Start (CFDA 93.600)
In our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the School District 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 (CFDA 10.553, 10.555) and Head Start (CFDA 93.600) for the year ended June 30, 2016.
Other Matters
The results of our auditing procedures disclosed another instance of noncompliance, which is required to be reported in accordance with the Uniform Guidance and which is described in the accompanying Schedule of Findings and Questioned Costs as item FA 2016-002. Our opinion on each major federal program is not modified with respect to this matter.
The School District's response to the noncompliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District'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 the School District 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 the School District'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 the Uniform Guidance, 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 School District'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 a significant deficiency.
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 deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as items FA 2016-001, FA 2016-003, and FA 2016-004, to be material weaknesses.
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 2016-002, to be a significant deficiency.
The School District's response to the internal control over compliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District'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 the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,
Greg S. Griffin State Auditor

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

RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS-7201-12-01

Inadequate Accounting Procedures

Control Category:
Internal Control Impact: Compliance Impact:

Accounting Controls (Overall) Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements General Ledger Material Weakness None

Finding Status:

Previously Reported Corrective Action Implemented.

FS-7201-12-02 Control Category:
Internal Control Impact: Compliance Impact: Finding Status:

Inadequate Accounting Procedures
Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Employee Compensation Capital Assets Material Weakness None
Unresolved

FS-7201-12-03 Control Category:
Internal Control Impact: Compliance Impact: Finding Status:

Inadequate Internal Control Procedures over School Activity Accounts
Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Significant Deficiency None
Unresolved

FS-7201-12-04
Control Category: Internal Control Impact: Compliance Impact:
Finding Status:

Inaccurate Senior Management Compensation
Employment Compensation Significant Deficiency None
Further Action Not Warranted.

- 1 -

RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS-7201-13-01

Inadequate Accounting Procedures Head Start and Pre-K Programs

Control Category:
Internal Control Impact: Compliance Impact:

Accounting Controls (Overall) Cash and Cash Equivalents Revenues/Receivables/Receipts Financial Reporting Expenditures/Liabilities/Disbursements General Ledger Material Weakness None

Finding Status:

Previously Reported Corrective Action Implemented.

FS-7201-13-02 Control Category:
Internal Control Impact: Compliance Impact: Finding Status:

Inadequate Accounting Procedures
Accounting Controls (Overall) Cash and Cash Equivalents General Ledger Material Weakness None
Unresolved

FS-7201-13-03 Control Category:
Internal Control Impact: Compliance Impact: Finding Status:

Inadequate Internal Controls over School Activity Accounts
Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Significant Deficiency None
Unresolved

FS-7201-13-04
Control Category: Internal Control Impact: Compliance Impact:
Finding Status:

Inadequate Controls over Financial Reporting
Financial Reporting Material Weakness Material Noncompliance
Previously Reported Corrective Action Implemented

- 2 -

RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS-7201-13-05

Improper Use of SPLOST Proceeds

Control Category: Internal Control Impact: Compliance Impact:

Expenditures/Liabilities/Disbursements None Nonmaterial Noncompliance

Finding Status:

Partially Resolved

FS 2014-001 Control Category:
Internal Control Impact: Compliance Impact: Finding Status:

Inadequate Accounting Procedures Head Start and Pre-K Programs
Accounting Controls (0verall) Cash and Cash Equivalents Revenues/Receivables/Receipts General Ledger Material Weakness None
Previously Reported Corrective Action Implemented.

FS 2014-002 Control Category:
Internal Control Impact: Compliance Impact: Finding Status:

Inadequate Internal Control Procedures
Accounting Controls (Overall) Cash and Cash Equivalents Investments Expenditures/Liabilities/Disbursements General Ledger Capital Assets Material Weakness None
Unresolved

FS 2014-003 Control Category:
Internal Control Impact: Compliance Impact: Finding Status:

Inadequate Accounting Procedures
Investments Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements General Ledger Capital Assets Material Weakness None
Unresolved
- 3 -

RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2014-004

Inadequate Internal Controls over School Activity Accounts

Control Category:
Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements General Ledger Material Weakness None

Finding Status:

Unresolved

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

Inadequate Controls over Financial Reporting
Financial Reporting Material Weakness Material Noncompliance
Previously Reported Corrective Action Implemented

FS 2015-001 Control Category:
Internal Control Impact: Compliance Impact: Finding Status:

Inadequate Accounting Procedures Head Start and Pre-K Programs
Accounting Controls (0verall) Cash and Cash Equivalents Revenues/Receivables/Receipts General Ledger Material Weakness None
Previously Reported Corrective Action Implemented

FS 2015-002 Control Category:
Internal Control Impact: Compliance Impact: Finding Status:

Inadequate Internal Control Procedures
Accounting Controls (Overall) Cash and Cash Equivalents Investments Expenditures/Liabilities/Disbursements Employee Compensation General Ledger Capital Assets Material Weakness None
Unresolved
- 4 -

RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2015-003

Inadequate Accounting Procedures

Control Category:
Internal Control Impact: Compliance Impact:

Investments Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements General Ledger Capital Assets Material Weakness None

Finding Status:

Unresolved

FS 2015-004 Control Category:
Internal Control Impact: Compliance Impact: Finding Status:

Inadequate Internal Control Procedures over School Activity Accounts
Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements General Ledger Material Weakness None
Unresolved

FS 2015-005
Control Category: Internal Control Impact: Compliance Impact:
Finding Status:

Inadequate Controls over Financial Reporting
Financial Reporting Material Weakness Material Noncompliance
Previously Reported Corrective Action Implemented

- 5 -

RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FA-7201-12-01

Inadequate Internal Control Procedures over Federal Program

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

Activities Allowed/Unallowed Allowable Costs/Cost Principles Cash Management Equipment and Real Property Management Matching, Level of Effort and Earmarking Period of Availability of Federal Funds Reporting Material Weakness Material Noncompliance U.S. Department of Health and Human Services Direct CFDA 93.600 Head Start

Finding Status:

Partially Resolved

FA-7201-12-02 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency:
Pass-Through Entity: CFDA Number and Title:
Finding Status:

Inadequate Internal Control over Employee Compensation Process
Allowable Costs/Cost Principles Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education U.S. Department of Agriculture U.S. Department of Health and Human Services Georgia Department of Education Direct Special Education Cluster (CFDA 84.173 and 84.027) Child Nutrition Cluster (CFDA 10.553 and 10.555) Head Start (CFDA 93.600)
Partially Resolved

FA-7201-12-03
Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title:
Finding Status:

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

- 6 -

RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FA-7201-13-01

Inadequate Internal Controls over Federal Program

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

Activities Allowed or Unallowed Allowable Costs/Cost Principles Cash Management Equipment and Real Property Management Matching, Level of Effort and Earmarking Period of Availability of Federal Funds Reporting Material Weakness Material Noncompliance U.S. Department of Health and Human Services Direct Head Start (CFDA 93.600)

Finding Status:

Partially Resolved

FA-7201-13-02 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency:
Pass-Through Entity: CFDA Number and Title:
Finding Status:

Inadequate Internal Control over Employee Compensation Process
Allowable Costs/Cost Principles Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education U.S. Department of Agriculture U.S. Department of Health and Human Services Georgia Department of Education Direct Special Education Cluster (CFDA 84.173 and 84.027) Child Nutrition Cluster (CFDA 10.553 and 10.555) Head Start (CFDA 93.600)
Partially Resolved

FA-7201-13-03
Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title:
Finding Status:

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)
Unresolved

- 7 -

RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA 2014-001

Inadequate Internal Control over Employee Compensation Process

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

Allowable Costs/Cost Principles Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education U.S. Department of Agriculture U.S. Department of Health and Human Services Georgia Department of Education Direct Special Education Cluster (CFDA 84.173 and 84.027) Child Nutrition Cluster (CFDA 10.553 and 10.555) Head Start (CFDA 93.600)

Finding Status:

Partially Resolved

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

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)
Unresolved

FA 2015-001 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency:
Pass-Through Entity: CFDA Number and Title:
Finding Status:

Inadequate Internal Control over Employee Compensation Process
Allowable Costs/Cost Principles Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education U.S. Department of Agriculture U.S. Department of Health and Human Services Georgia Department of Education Direct Special Education Cluster (CFDA 84.173 and 84.027) School Improvement Grants Cluster (CFDA 84.388) Child Nutrition Cluster (CFDA 10.553 and 10.555) Head Start (CFDA 93.600)
Partially Resolved

- 8 -

RANDOLPH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FA 2015-002

Inadequate Internal Control Procedures

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

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)

Finding Status:

Unresolved

- 9 -

SECTION IV FINDINGS AND QUESTIONED COSTS

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

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
Internal control over financial reporting: Material weaknesses identified? Significant deficiency identified?
Noncompliance material to financial statements noted:

Federal Awards
Internal Control over major programs: Material weaknesses identified? Significant deficiency identified?

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

Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)?

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555, 93.600

Child Nutrition Cluster Head Start Cluster

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

Auditee qualified as low-risk auditee?

Unmodified Yes Yes No
Yes Yes Qualified Yes
$750,000.00 No

- 1 -

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2016-001 Control Categories:
Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding:

Internal Control Procedures Accounting Controls (OVERALL) Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Employee Compensation General Ledger Capital Assets Material Weakness None FS 2015-002, FS 2014-002, FS-7201-13-02, FS-7201-12-02

Description: The accounting procedures of the School District were insufficient to provide adequate internal controls over numerous control categories.

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

Condition: Accounting Controls (OVERALL)
The School District does not have adequate logical access controls in place to ensure only appropriate users have access to the School District's significant financial application and student information system. For the financial application, 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. In addition, the School District does not have a formal policy for managing user access to the financial application or student information system and supporting infrastructure. It was also noted that the School District could not provide documentation that the backups are completed successfully. For the student information system, we noted the School District did not have adequate password policies.

Cash and Cash Equivalents The timeliness of bank reconciliations could not be determined because they were not dated by the preparer or the approver. Several bank reconciliations did not reflect evidence of supervisory review or approval. Reconciling items reflected on the general operating account, Head Start, and school food service bank reconciliations 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. The Local Government Investment Pool (LGIP) account was not reconciled to the general ledger for any month during the fiscal year under review. For the operating account, a check was written in August 2016 but was dated June 30, 2016.

- 2 -

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Revenues/Receivables/Receipts
A test of six receipts revealed one receipt was posted in the wrong period. Expenditures/Liabilities/Disbursements
Our examination of expenditures revealed the following deficiencies: o One voucher package could not be located. o Five expenditures were not approved. o One expenditure did not agree to the invoice and was overpaid.
Employee Compensation The Superintendent received payments for the employee portion of health, dental, vision, and life insurance, but could not provide a contract amendment supporting the payments.
General Ledger The School District could not provide documentation for five of the nineteen journal entries. None of the nineteen journal entries tested were approved.
Capital Assets A capital asset physical inventory has not been performed in over two years.
Cause: These deficiencies were a result of management's failure to ensure that accounting and internal controls were established, implemented, and functioning. 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 financial position and results of operations. 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: We concur with this finding.
- 3 -

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2016-002 Control Category:
Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding:

Accounting Procedures Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Employee Compensation General Ledger Capital Assets Material Weakness None FS 2015-003, FS 2014-003

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 procedures that provide reasonable assurance that transactions are processed and recorded on the general ledger. Section I- Chapter 1 Introduction to LUA Accounting of the Financial Management for Georgia Local Units of Administration (FMGLUA) states in part "Accounting records must provide meaningful, reliable, accurate and timely information to the many persons and groups with legitimate interest in the financial affairs of an LUA."

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

Revenues/Receivables/Receipts On-behalf payments in the amount of $81,379.03 were not recorded on the general ledger. Property tax revenue in the amount of $205,287.25 was not recorded on the general ledger. Property tax accounts receivable in the amount of $21,621.79 was not recorded on the general ledger. Special purpose local option sales tax (SPLOST) accounts receivables in the amount of $101,029.02 were not recorded on the general ledger and SPLOST receipts in the amount of $537,018.75 were not recorded on the general ledger. Federal program grant revenues and accounts receivables in the amount of $267,348.65 were not accrued for expenditures incurred on grants during the fiscal year under review. The accounts receivable for federal and state grants were overstated by $93,460.33.

Expenditures/Liabilities/Disbursements Debt Service principal and interest payments totaling $723,625.00 were not recorded on the general ledger. Long-term liabilities pertaining to bond debt totaling $700,000.00 was not recorded on the general ledger.

Employee Compensation Salary and benefit accruals were overstated by $363,453.31.

General Ledger Numerous journal entries, required to tie beginning fund balances, were not recorded on the School District's general ledger.

- 4 -

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Capital Assets
The addition of a $88,037.00 bus was not recorded as a capital asset addition on the general ledger.
Current year depreciation of $478,442.00 was not recorded on the general ledger. 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 were not 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: We concur with this finding.
- 5 -

RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2016-003 Control Categories:
Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding:

Internal Control Procedures over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements General Ledger Significant Deficiency None FS-2015-004, FS 2014-004, FS-7201-13-03, FS-7201-12-03

Description: 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. June 2016 bank reconciliations were not provided for three of the four school activity bank accounts. The cash balances reported on the school general ledger reports did not tie to the overall school activity account spreadsheet provided.
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. The School District did not provide a transaction detail of receipts for June 2016. During a test of 15 receipts, the following problems were noted: o Adequate receipt documentation was not maintained for seven deposits tested; o Gate reconciliations could not be provided for two deposits tested; o Only four receipts could be traced to a deposit slip; and o No documentation was maintained for eight deposits.
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. The School District did not provide a transaction detail of expenditures for June 2016. During a test of 14 disbursements, the following problems were noted: o Four expenditures were not approved; o One expenditure did not have an original invoice; o Five expenditures did not have evidence of receipt of goods; and o Five expenditures could not be located.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS General Ledger
During testing of journal entries used to post school activity accounts to the financial statements, it was noted that none of the student activity account activity was posted to the general ledger.
Cause: In discussing this deficiency with the School District, they stated that the errors were made due to a lack of training and the lack of 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: Failure to maintain adequate internal controls over school activity accounts increases the risk that misstatements could occur in the financial statements due to errors or fraud and 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 the case when management determines separation of duties is not cost beneficial, management should implement compensating controls that assist in assuring that transactions are properly processed and reported. 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: We concur with this finding.
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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA 2016-001 Compliance Requirement:
Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Questioned Costs: Repeat of Prior Year Finding

Internal Control Procedures Activities Allowed/Unallowed Allowable Costs/Costs Principles Period of Performance Material Weakness Material Noncompliance U.S. Department of Health and Human Services Direct Head Start (CFDA 93.600) 04CH4772/02 (Year 2016); 04CH4772/01 (Year 2015) $9,069.39 FA 7201-13-01, FA-7201-12-01

Description: A review of expenditures charged and journal entry adjustments to the Head Start Grant (CFDA 93.600) revealed the School District did not implement internal control procedures to ensure transactions were properly documented and approved.

Criteria: 2 CFR Part 200.403 states in part that "costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles...(c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity... (g) Be adequately documented..."

Condition: A sample of twenty-five expenditure vouchers for the Head Start Grant revealed three of the vouchers could not be located.

A review of two journal entries for the Head Start Grant revealed that one of the journal entries could not be located and one was not approved.

Questioned Costs: Questioned costs of $9,069.39, with likely questioned costs of $58,683.83, were identified.

Cause: In discussing these deficiencies with management, they stated that the errors occurred due to employee turnover in the Headstart department.

Effect or Potential Effect: Failure to ensure that expenditures and journal entries are properly documented and approved resulted in noncompliance with the requirements of the Federal grant.

Recommendation: The School District should implement internal control procedures to ensure that all expenditures and journal entries are properly documented and approved and the documents are maintained on file.

Views of Responsible Officials: We concur with this finding.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA 2016-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Costs:

Internal Control Procedures 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) 16165GA324N1099 None Identified

Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title:
Federal Award Number:
Questioned Costs:

U.S. Department of Education Georgia Department of Education Special Education Cluster (CFDA 84.027 and 84.173) Title I, Part A (CFDA 84.010) H027A150073 Special Education Grants to States H173A150081 Special Education Preschool S010A150010 Title I Grants to Local Educational Agencies None Identified

Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Questioned Costs:

U.S. Department of Health and Human Services Direct Head Start (CFDA 93.600) 04CH4772/02 (Year: 2016), 04CH4772/01 (Year: 2015) None Identified

Repeat of Prior Year Finding: FA 2015-001, FA 2014-001, FA-7201-13-02, FA-7201-12-02

Description: A review of employee compensation charged to various Federal programs revealed that internal controls procedures were not in place to ensure leave balances were not properly calculated.

Criteria: 2 CFR section 200.430(i) states that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.

Condition: A review of employee compensation revealed that the School District did not properly calculate leave balances for those employees tested who were hired during or prior to fiscal year 2013.

Cause: In discussing this deficiency with management, they stated in fiscal year 2013 the leave balances were calculated incorrectly due to technical issues with the leave system and have never been corrected.

Effect or Potential Effect: Failure to monitor employee compensation expenditures for compliance resulted in noncompliance with the requirements of the Federal grants.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

Recommendation: The School District should establish and implement appropriate procedures to strengthen internal controls over processing employee leave balances to ensure they are properly calculated.

Views of Responsible Officials: We concur with this finding.

FA 2016-003 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Questioned Costs:

Excessive Cash Balance Cash Management Material Weakness Material Noncompliance U.S. Department of Health and Human Services Direct Head Start (CFDA 93.600) 04CH4772/02 (Year: 2016), 04CH4772/01 (Year 2015) None Identified

Description: The School District made cash drawdowns in excess of immediate cash needs for the Head Start program.

Criteria: 2 CFR 200.305(b) states, "For non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from...the pass-through entity and the disbursement by the non-Federal entity."

Condition: Upon review of cash drawdowns and disbursements related to the Head Start program, excessive cash balances were noted for 365 days in the fiscal year.

Questioned Cost: N/A

Cause: In discussing the issue with management they stated drawdowns were requested based on anticipated expenditures, instead of actual expenditures due to the unfamiliarity of personnel with the procedures for drawdowns.

Effect or Potential Effect: Failure to monitor the cash needs of the program resulted in noncompliance with requirements of the Federal Grant.

Recommendation: The School District should implement procedures to accurately forecast the cash needs of the Head Start program. In addition, procedures should be implemented to monitor the program cash balances and minimize the time elapsing between the transfer of funds from the U.S. Department of Health and Human Services and disbursement of such funds by the School District.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

Views of Responsible Officials: We concur with this finding.

FA 2016-004 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Costs: Repeat of Prior Year Finding:

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) 16165GA324N1099 None Identified FA 2015-002, FA 2014-002, FA-7201-13-03, FA-7201-12-03

Description: 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: 2 CFR 200.313(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 funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, Federal participation in the project cost for the Federal award under which the property was acquired, 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, 2 CFR 200.313(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".

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.

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.

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RANDOLPH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 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.
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SECTION V MANAGEMENT'S CORRECTIVE ACTION