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

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

SUMTER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBlTS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

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 ASSETS

FIDUCIARY FUNDS

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

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

SUPPLEMENTARY INFORMATION

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

Page

SUMTER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

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

Page

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENTAUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCEAND OTHER MAllERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WlTH GOVERNMENTAUDITING STANDARDS
INDEPENDENTAUDITOR'S REPORT ON COMPLIANCE WlTH REQUIREMENTSTHAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133

SECTION Ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGSAND QUESTIONED COSTS

SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGSAND QUESTIONED COSTS

SUMTER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION V MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I
FINANCIAL

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 29,2011

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Sumter County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Sumter County Board of Education, as of and for the year ended June 30, 2010, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Sumter County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
Except as discussed in the following paragraphs, we conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
The School District's records did not provide sufficient information for the application of other auditing procedures to verify the completeness of cash and cash equivalents and investments as reported in the District-wide Capital Projects Fund and the Debt Service Fund reflected in the accompanying financial statements as of June 30, 2010. We were therefore, unable to examine sufficient evidence in support of cash and cash equivalents, and investments amounts and disclosures, and we were unable to satisfy ourselves by other means as to their accuracy. The aggregate effect on the financial statements was not reasonably determinable.
In addition, the School District did not provide sufficient documentary evidence to support the amounts reported as contracts payable in the District-wide Capital Projects Fund, for fiscal year 2010, nor did the School District's records provide sufficient information for the application of other auditing proceduresto reasonably determine whether contracts payable were fairly stated. We were

therefore, unable to examine sufficient evidence in support of contracts payable amounts and disclosures, and we were unable to satisfy ourselves by other means as to their accuracy. The aggregate effect on the financial statements was not reasonably determinable.
Because of the significance of the matters discussed in the preceding paragraphs, the scope of our work was not sufficient to enable us to express, and we do not express, an opinion on the Districtwide Capital Projects Fund and the Debt Service Fund referred to in the first paragraph.
As indicated in the third and fourth paragraphs above, the School District's records did not provide sufficient information for the application of other auditing procedures to verify the completeness of cash and cash equivalents, investments and contracts payable as reported in the governmental activities.
In addition, the accounting records did not provide an adequate accounting of the amounts reported as capital assets in the governmental activities. We were therefore, unable to examine sufficient evidence in support of cash and cash equivalents, investments, contracts payable and the capital assets amounts and disclosures, and we were unable to satisfy ourselves by other means as to their accuracy.
In our opinion, except for the effects such adjustments, if any, as might have been determined to be necessary had we been able to examine documentation supporting cash and cash equivalents, investments, capital assets and contracts payable as discussed in the immediately preceding paragraphs, the financial statements referred to previously present fairly, in all material respects, the financial position of the governmental activities of the Sumter County Board of Education, as of June 30, 2010, and the changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In addition, in our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the General Fund and the aggregate remaining fund information of the Sumter County Board of Education, as of June 30, 2010, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The Sumter County Board of Education has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not to be part of, the basic financial statements.
In accordance with Government Audting Standards, we have also issued our report dated June 29, 2011, on our consideration of the Sumter County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessingthe results of our audit.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as
presented on page 25, is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information

and express no opinion on it or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Sumter County Board of Education's financial statements as a whole. The accompanying supplementary information consists of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the financial statements. Except for the amounts disclosed on pages 3 0 and 31, such information has been subjected to the auditing procedures applied in the audit of the financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the financial statements as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and
- made available to the press of the State, as provided for by Official Code of Georgia Annotated
section 50-6-24.
Respectfully submitted,
I
tRus ell W. Hinton, CPA, CGFM
Sta Auditor

SUMTER COUNTY BOARD OF EDUCATION

SUMTER COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30,2010
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Prepaid Items Deferred Charges CapitalAssets. Non-Depreciable CapitalAssets, Depreciable (Net of Accumulated Depreciation)
Total Assets
Accounts Payable Salaries and Benefits Payable Claims Incurred but not Reported (IBNR) Interest Payable Contracts Payable Long-Term Liabilities
Due Within One Year Due in MoreThan One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Bus Replacement Continuationof Federal Programs Debt Service Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT "A"
GOVERNMENTAL ACTIVITIES

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

SUMTER COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDEDJUNE 30,2010

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvementof Instructional Services EducationalMedia Services General Administration School Administration Business Administration Maintenanceand Operationof Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-InstructionalServices Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations
Railroad Can
Sales Taxes Special Purpose Local Option Sales Tax For Debt Services Other Sales Tax
Grants and Contributionsnot Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in NetAssets
NetAssets - Beginningof Year (Restated)
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

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

EXHIBIT "B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

SUMTER COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30,2010

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable. Net
Taxes State Government Federal Government Other Inventories Prepaid Items
Total Assets

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Resewed for: Bus Replacement Continuation of Federal Programs Debt Service
Unreserved Designatedfor Student Activities Undesignated Reported in: General Fund Capital Projects (Deficit)
Total Fund Balances
Total Liabilities and Fund Balances

EXHIBIT "C"
TOTAL

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

SUMTER COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30.2010
- Total Fund Balances Governmental Funds (Exhibit"C")
Amounts reportedfor GovernmentalActivities in the Statement of Net Assets are different because:
CapitalAssets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Constructionin Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Taxes that are not available to pay for current period expendituresare deferred in the funds.
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. LongTerm Liabilities at yearend consist of:
Bonds Payable Accrued Interest Capital Leases Payable Capitalized Bond and Other Debt Issuance Costs Claims and Judgments
Total Long-Term Liabilities
Net Assets of Governmental Activities (Exhibit "A")

EXHIBIT "DM

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

SUMTER COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDEDJUNE 30,2010

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvementof Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenanceand Operation of Plant Student TransportationServices Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

EXHIBIT "En TOTAL

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

SUMTER COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30,2010
Total Net Change in Fund Balances - Governmental Funds (Exhibit "En)
Amounts reported for GovernmentalActivities in the Statement of Activities are different because:
Capital Outlays are reported as expendituresin Governmental Funds. However. in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciationexpense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over DepreciationExpense
Taxes reported in the Statement of Activities that do not provide current financial resourcesare not reported as revenues in the funds.
Bond issuancecosts, deferred gains on refundingsand similar items when debt is first issued are reported as an expenditure in Governmental Funds. but are reported as deferred charges on the Statement of Net Assets and amortized over the term of the debt, usingthe straight-linemethod. The details of this difference in the current period are as follows:
Amortization of Bond Issuance Costs
Repaymentof Long-Term Debt is reported as an expenditure in Governmental Funds, but the repaymentreduces Long-Term Liabilities in the Statement of NetAssets. In the current year. these amounts consist of:
Bond Principal Retirements Capital Lease Payments
Total Long-Term Debt Repayments
Some items reported in the Statement of Activities do not requirethe use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of:
Net Decreasein Accrued Interest Decrease in Claims and Judgments
Total Additional Expenditures
Change in Net Assets of GovernmentalActivities (Exhibit"B")

EXHIBIT "F'

The notesto the basic financial statements are an integral part of this statement
- 7-

SUMTER COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30,2010
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS

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

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

EXHIBIT "H"

Note 1: DESCRIPTION OF SCHOOL DISTRICTAND REPORTING ENTITY
REPORTING ENTITY
The Sumter County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Sumter County Board of Education.
Disfrct-wide Statements: The Statement of Net Assets and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements= The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.

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

EXHIBIT "H"

District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (sales) legally restricted for the payment of general longterm principal, interest and paying agent's fees.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various school activity accounts.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, 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. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are contracted for the school year (July 1- June 30) and paid over a twelve month contract period, generally September 1through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School District over the same twelve month

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

EXHIBIT "H"

period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.

NEW ACCOUNTING PRONOUNCEMENTS

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

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

RESTATEMENT OF PRIOR YEAR NET ASSETS
For fiscal year 2010, the School District made a variety of prior period adjustments due to various errors or omissions, which require the restatement of the June 30, 2010, net assets in Governmental Activities. The result is a decrease in Net Assets at July 1,2009, of $118,121.71. These changes are in accordance with generally accepted accounting principles.

Net assets, July 1,2009, as previously reported

$

36,952,290.64

Deferral of bond issuance costs Claims Incurred but not Reported

Net assets, July 1,2009, as restated

CASH AND CASH EQUIVALENTS
Composition of Deposits Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered buildingand loan associations.
INVESTMENTS
Composition of Investments lnvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported a t fair value. The Official

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

EXHIBIT "H"

Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:

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

(2) Obligations issued by the United States government,

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

(4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances,

(6) The Georgia Fund 1administered by the State of Georgia, Office of Treasury and Fiscal Services,

(7) Repurchase agreements, and

(8) Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.

RECEIVABLES

Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES

The Sumter County Board of Commissionersfixed the property tax levy for the 2009 tax digest year (calendar year) on September 17, 2009 (levy date). Taxes were due on December 1,2009 (lien date). Taxes collected within the current fiscal year or within 6 0 days after year-end on the 2009 tax digest are reported as revenue in the governmental funds for fiscal year 2010. The Sumter County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2010, for maintenance and operations amounted to $12,070,753.98.

The tax millage rate levied for the 2009 tax year (calendar year) for the Sumter County Board of Educationwas as follows (a mill equals $ 1 per thousand dollars of assessed value):

School Operations

17.533 mills

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

EXHIBIT "H"

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $4,052,476.92 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

INVENTORIES

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

PREPAID ITEMS

Payments made to vendors for services that will benefit periods subsequent to June 30, 2010, are recorded as prepaid items.

CAPITAL ASSETS

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

Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide

statements are as follows:

Capitalization

Estimated

Policy

Useful Life

Land Land Improvements Buildings and Improvements Equipment Construction in Progress

$

0.00

N/A

$

10,000.00 20 to 8 0 years

$

10,000.00 15 to 8 0 years

$

10,000.00

5 to 5 0 years

$

0.00

N/A

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

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

EXHIBIT "H"

GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as deferred charges and amortized over the term of the debt.
In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
NET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets-These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
DEFICIT FUND BALANCES
The fund reporting a deficit fund balance at June 30,2010, is as follows:

Fund Tv~e/FundName

Deficit Balance

Governmental Funds Capital Projects Fund

The School District's plan to eliminate this deficit is as follows:
Approve transfers of SPLOST revenue from the Debt Service Fund to the Capital Projects Fund to ensure no future deficits occur.

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

EXHIBIT "H"

USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 1 1 0 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) lnsurance on accounts provided by the Federal Deposit lnsurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. At June 30, 2010, the bank balances were $5,445,136.18. The bank balances were entirely covered by Federal depository insurance.

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

EXHIBIT "H"

CATEGORIZATION OF INVESTMENTS

At June 30, 2010, the carrying value of the School District's total investments was $3,452,248.16, which is materially the same as fair value. This investment consisted entirely of funds invested in the Georgia Fund 1,formerly referred to as LGIP, administered by the State of Georgia, Office of Treasury and Fiscal Services which are 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 Treasury and Fiscal Services for the Georgia Fund 1(Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1is disclosed in the State of Georga Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at htt~://www.audits.~a.aov/SGD/cafrh. tml.
The Primary Liquidity Portfolio consists of Georgia Fund 1which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1may not exceed 6 0 days. The weighted average maturity for Georgia Fund 1on June 30,2010, was 4 6 days.

Note 4: NON-MONETARYTRANSACTIONS

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

Note 5: CAPITAL ASSETS

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

Balances Julv 1.2009

Increases

Decreases

Balances June 30.2010

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

$

602,949.00

$

602.949.00

889,790.79 $ 280,625.00 $ 566,100.70

604,315.09

$ 1,492,739.79 $ 280,625.00 $ 566,100.70 $ 1,207,264.09

Capital Assets Being Depreciated Buildings and lrnprovements Equipment Land lmprovements
Less Accumulated Depreciation for: Buildings and Improvements Equipment Land lmprovements

Total Capital Assets. Being Depreciated, Net
GovernmentalActivity CapitalAssets - Net

$ 42,831,142.52 $ -694,188.30$

0.00 $ 42,136,954.22

$ 44,323,882.31 $ -413,563.30$ 566,100.70 $ 43,344,218.31

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

EXHIBIT "H"

Current year depreciation expense by function is as follows:

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

$

3,590.00

16,398.00

232,803.00

34,933.00

2,753.00

$ 957,819.00
290,477.00 58.017.00

Note 6: RISK MANAGEMENT

The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.

The School District has obtained commercial insurance for risk of loss associated with torts, assets, errors or omissions, and acts of God. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.

The School District 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:

Claims and

Beginningof Year

Changes in

Claims

End of Year

Liability

Estimates

Paid

Liability

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

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

EXHIBIT "H"

On October 27, 2009, a consent order of liquidation was entered in the case of State of Georgia, Ex. Rel., John W. Oxendine, Commissioner of lnsurance of the State of Georgia v. Southeastern U.S. Insurance, Inc., a Georgia Insurer. Sumter County School District was an insured of the defendant for workers compensation purposes. As of the date of the order of liquidation, the School District was no longer covered by its workers compensation policy with the defendant. Coverage with our new Workers' Compensation carrier, GEWCT/Affinity Service Group began on October 30, 2009. Sumter County Board of Education has secured GEWCT/Affinity Service Group to close the open claims that were still open with Southeastern U.S. lnsurance at the time of its liquidation. The estimated liability of these claims has been reflected on the District-widefinancial statements.
The School District has purchased surety bonds to provide additional insurance coverage as follows:

Position Covered

Amount

Superintendent All Employees

Note 7: SHORT-TERM DEBT

The School District issues tax anticipation notes in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 7 5 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 3 1of the calendar year in which the debt was incurred.
Short-term debt activity for the fiscal year is as follows:

Beginning Balance

Issued

Redeemed

Ending Balance

Tax Anticipation Notes $

0.00 $ 4,300,000.00 $ 4,300,000.00 $

0.00

Note 8: LONG-TERM DEBT
CAPITAL LEASES
The Sumter County Board of Education entered into various lease agreements for energy efficient equipment and computers. These lease agreements qualify as capital leases for accounting purposes, and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of thei,r inception.

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

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

Purpose

Interest Rates

General Government-Series 2006 General Government -Series 2007

EXHIBIT "H"
Amount

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

Balance July 1,2009

Additions

Governmental Funds

Balance

Deductions

June 30, 2010

Due Within One Year

G. 0. Bonds Capital Leases

$ 12,560,000.00 $ 848,387.46

0.00 $ 3,220,000.00 $ 9,340,000.00 $ 2,995,000.00

112,277.46

736,110.00

117,665.92

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

Capital Leases

Principal

Interest

Fiscal Year Ended June 30:

Total PrinciDal and lnterest Fiscal Year Ended June 30: Total Principal and lnterest

General Obligation Debt

Principal

Interest

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

EXHIBIT "H"

Note 9: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $129,329.40 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $80,143.39

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $23,829.48

Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $25,356.53

Note 10: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed

by the School District as of June 30, 2010:

Unearned

Executed

Project

Contracts

Sumter County Building Projects

$

Americus Sumter County High South -Vocational

ROTC Building

136,296.37 344,256.16

The amounts described in this note are not reflected in the basic financial statements.
Note 11: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.

SUMTER COUNlY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 12: SUBSEOUENT EVENTS
In the subsequent fiscal year, the voters of Sumter County approved the renewal of a 1%sales tax to continue funding the current SPLOST project. In addition, the voters also approved the issuance of general obligation debt of the Sumter County School District in the principal amount of up to $15,365,000.00 for the purpose of funding portions of the SPLOST project.
On March 11,2010, the School District obtained a tax anticipation note for cash flow purposes for an amount not to exceed $5,000,000.00. The loan had an interest rate of 2.49% with a maturity date of December 31, 2010. One draw totaling $500,000.00 was required to meet the cash flow needs of the School District. The loan was repaid on December 31,2010.
Note 13: POST-EMPLOYMENTBENEFITS
GEORGIA SCHOOL PERSONNEL EMPLOYEES POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-Employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Insurance Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board).
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 percent of the cost of the health insurance coverage.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not t o exceed thirty years.
The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30,2010:
For certificated teachers, librarians and regional educational service agencies:

July 2009
August 2009 - October 2009
November 2009 -June 2010

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

For non-certificated school personnel:

July 2009 -June 2010

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

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

EXHIBIT "H"

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

The School District's combined active and retiree contributions to the health insurance plans, which

equaled the required contribution, for the current fiscal year and the preceding two fiscal years were

as follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

Note 14: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1,1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 3 0 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 4 0 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 6 0 or by 7% for each year or fraction thereof by which the member has less than 3 0 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.

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

EXHIBIT "H"

Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 1 0 years of service. If a member terminates with less than 1 0 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2010, were 5.25% of annual salary. The member contribution rate will increase to 5.53% effective July 1,2010. Employer contributions required for fiscal year 2010 were 9.74% of annual salary as required by the June 30, 2007, actuarial valuation. The employer contribution rate will increase to 10.28% effective July 1,2010.

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

Fiscal Year

Percentage Contributed

Required Contribution

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SUMTER COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDEDJUNE 30.2010

SCHEDULE "1"

RNENUES
Propew Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvementof Instructional Services EducationalMedia Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Debt Service
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments
Fund Balances - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

Notesto the Schedule of Revenues. Exoendituresand Changes in Fund Balances Budget and Actual
(1) Original and Final Budgetamounts do not include budgeted revenuesor expendituresof the various principal accounts.
The accompanyingscheduleof revenues, expendituresand changes in fund balances budget and actual is presentedon the modified accrual basis of accountingwhich is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

SUMTER COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERALAWARDS
YEAR ENDEDJUNE 30,2010

SCHEDULE "2'

FUNDING AGENCY PROGRAM/GRANT
Agriculture. U. S. Department of Child Nutrition Cluster Pass-ThroughFrom 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 ARRA- Child Nutrition Discretionary Grants Limited Availability
Total U. S. Department of Agriculture
Educat~on,U. S. Department of Education Technology State Grants Cluster Pass-Through From Georgia Department of Education Education TechnologyState Grants
School Improvement Grants Cluster Pass-Through From Georgia Department of Education School ImDrovement Grants
Special Education Cluster Pass-Through From Georgia Department of Education Special Education
ARRA - Grants to States
Grants t o States
Total Special Education Cluster
State Fiscal Stabilization Fund Cluster Pass-Through From Georgia Department of Education ARRA- Education State Grants
Title I. Part A Cluster Pass-Through From Georgia Department of Education ARRA-Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies
Total Title I, PartA Cluster
Other Programs Pass-Through From Georgia Department of Education
Career and Technical Education - Basic Grants to States
English LanguageAcquisition Grants ImprovingTeacher Quality State Grants Mathematics and Science Partnerships
Migrant Education - State Grant Program
Reading First State Grants Rural Education
Safe and Drug-FreeSchools and Communities - State Grants
Twenty-First Century Community Learning Centers Pass-Through From Georgia Professional Standards Commiss~on
Transition to Teaching
Total Other Programs
Total U. S. Department of Education

CFDA NUMBER

PASS THROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

SUMTER COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30.2010

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Health and Human Services, U. S. Department of Child Care and DevelopmentFund Cluster Pass-Through From Bright Fromthe Start: Georgia Department of Early Care and Learning ARRA- Child Care and Development Block Grant Pass-Through From Georgia Department of Human Resources Block Grants for Preventionand Treatment of SubstanceAbuse
Total U. S. Department of Health and Human Services
Justice, U. S. Department of Pass-Through From Childrenand Youth CoordinatingCouncil Juvenile Justice and Delinquency Prevention
Defense. U. S. Department of Direct Department of the Army R.O.T.C. Program

CFDA NUMBER

PASS THROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

Total Federal FinancialAssistance
N/A = Not Available
Notesto the Scheduleof Exoendituresof Federal Awards
(1) Includesthe Federally assigned value of donated commodities for the Food Donation Program in the amount of $208,821.07.
(2) Expendituresfor the funds earned on the School Breakfast Program ($1,114.375.48) were not maintained separately and are included in the 2010 National School Lunch Program.
Major Programsare identified by an asterisk (*) in front of the CFDA number.
The School District did not provide FederalAssistance to any Subrecipient.
The accompanyingscheduleof expenditures of Federal awards ~ncludesthe Federalgrant activity of the Sumter County Boardof Educationand is presentedon the modified accrual basis of accountingwhich is the basis of accounting used in the presentation of the fund financial statements.

See notesto the basic financial statements.

(This page left intentionally blank)

SUMTER COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDEDJUNE 30.2010

SCHEDULE "4"

PROJECT
Fundingthe payment of principaland interest on the Sumter County School District General Obligation Bonds, Series 1993, comingdue beginningon June 1,2003, fundingthe payment of principaland Intereston the City of Americus General Obligation School Bonds, Series 1995, comingdue beginningFebruary 1,2003, and rehabilitating,adding to, repairing, renovating, extending and approvingAmericus High School, Sumter High School. Staley MiddleSchool, Cherokee ElementarySchool and Sarah Cobb ElementarySchool, and relatedfacilities useful or desirable in connectionthere with, including without limitation, roof replacements and repairs, mechanical system repairs and replacements, wiring and infrastructure modifications,additional parkingand paving, and security systems; the acquisition and installation of technology additions and improvements; and purchasingschool furnishings, equipmentand fixtures in the amount of 521,200.000.00. Fundingfor the purpose of renovating, repairing, improvingand equippingexistingschools and related facilities. including without limitations, roof replacements and repairs, mechanical system repairs and replacements, parking lot repairs and renovations, and improvements and renovationsto physical educationand athletic facilities including, the Americus-SumterHigh School stadium; acquiring and installing system-wide instructional and administrativetechnology, safety and securityequipment including monitoringsystems; acquisitionof school buses, vehicles and transportation equipment; renovations, extensions and improvements to the transportation and maintenance facilities; acquiringvocational,fine arts, physical education, and athletic equipment; acquiringany necessaryproperty therefore, both real and personal; planningfor constructingand purchasingproperty for future new facilities; and payingcosts incidentto accomplishingthe foregoing not to exceed 525,000,000.00.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4) (5)

AMOUNT EXPENDED IN PRIOR YEARS (3) (4) (5)

PROJECT STATUS

Completed Completed Completed
Ongoing Ongoing Ongoing Ongoing Ongoing Ongoing Ongoing Ongoing

(1) The School District'soriginalcost estimate as specified in the resolutioncalling for the impositionof the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the projects. Includes all cost from project inceptionto completion.
(3) The voters of Sumter County approved the imposition of a 1%sales tax to fund the above projectsand retire associateddebt. Amounts expended for these projects may include sales tax proceeds. local property taxes and/or other funds over the life of the projects.

SUMTER COUNN BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30,2010

(4) In addition to the expenditures shown above. the School District has incurred interest to provideadvancefundingfor the above projects as follows:

Prior Years

$ 1,057,811.88

Current Year

373,455.50

Total

$ 1,431,267.38

(5) The Sumter County Board of Education issued General Obligation RefundingBond Issue 2004 to refund portions of the 1993 Bond Issue. The amount expended in current year and prior years includes debt service on the replacement refunding issue.

SCHEDULE "4"

See notes to the basicfinancial statements.

(This page left intentionally blank)

SUMTER COUNTY BOARD OF EDUCATION
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
- ALLOTMENTSAND EXPENDITURES BY PROGRAM
YEAR ENDEDJUNE 30,2010

SCHEDULE " 5

Direct Instructional Programs Kindergarten Program Kindergarten Program-Early lntervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper ElementaryGrades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8)Program High School General Education (912) Program Vocational Laboratory (912) Program Students with Disabilities Category II Category Ill Category IV Gifted Student - Category VI Remedial Education Program Alternative Educabon Program EnglishSpeakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and ProfessionalDevelopment

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

TOTAL QBE FORMULA FUNDS

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

See notes to the basic financial statements.

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 29,2011

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Sumter County Board of Education
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAlTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, the General Fund, and the aggregate remaining fund information of Sumter County Board of Education as of and for the year ended June 30, 2010, which collectively comprise Sumter County Board of Education's basic financial statements and have issued our report thereon dated June 29, 2011. We disclaimed an opinion on the District-wide Capital Projects Fund and Debt Service Fund because the School District's records did not provide sufficient information for the application of auditing procedures to verify the completeness of cash and cash equivalents and investments as reported in the Districtwide Capital Projects Fund and the Debt Service Fund, and for contracts payable as reported in the District-wide Capital Projects Fund. The governmental activities was qualified because of departures from generally accepted accounting principles, as identified in the auditors' report on the basic financial statements. Except as discussed in the preceding two sentences, we conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reeorting
In planning and performing our audit, we considered Sumter County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressingour opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Sumter County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Sumter County Board of Education's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider items FS-7291-10-01, FS-7291-10-02, FS-7291-10-03, and FS-7291-10-04 in the accompanyingSchedule of Findings and Questioned Costs to be material weaknesses.
Com~lianceand Other Matters
As part of obtaining reasonable assurance about whether Sumter County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed an instance of noncompliance or other matter that is required to be reported under Government Auditing Standards and which is described in the accompanying Schedule of Findings and Questioned Costs as item FS-7291-10-04.
We also noted certain matters that we have reported to management of Sumter County Board of Education in a separate letter dated June 29,2011.
Sumter County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Sumter County Board of Education's response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of the finance committee, management, members of the Sumter County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
usd dell W. Hinton, CPA, CGFM
State Auditor

Russell W. Hinton
STATE AUDITOR
(404)6563174

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 2 9 , 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Sumter County Board of Education
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REOUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJORPROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited Sumter County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplementthat could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010. Sumter County Board of Education's major Federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major Federal programs is the responsibility of Sumter County Board of Education's management. Our responsibility is to express an opinion on Sumter County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Au&& of States, Local Governmen&, and Nun-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Sumter County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Sumter County Board of Education's compliance with those requirements.
In our opinion, the Sumter County Board of Education complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major Federal programsfor the year ended June 30,2010.

Internal Control Over Com~liance
Management of Sumter County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal programs. In planning and performing our audit, we considered Sumter County Board of Education's internal control over compliance with the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Sumter County Board of Education's internal control over compliance.
A deficiency in internal control over complhnce exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses,as defined above.
This report is intended solely for the information and use of management, members of the Sumter County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
7zmk;;
Ru sell W. Hinton, CPA, CGFM State Auditor

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

SUMTER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDEDJUNE 30,2010

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7291-06-03 FS-7291-08-01 FS-7291-08-02 FS-7291-08-03 FS-7291-09-01 FS-7291-09-02 FS-7291-09-03

Partially Resolved - See Corrective Action/Responses Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

EXPENDlTURES/LIABILlTlES/DISBURSEMENTS Improper Expenditure Amount: $27,738.08 Finding Control Number: FS-7291-06-03

Only partial repayments made for a total of $23,444.91. Payment of $10,000.00 was made in fiscal year 2010.

INVESTMENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION lnadequate Accounting Procedures Finding Control Number: FS-7291-09-01

Although it has been a practice of the School District to record investment transaction activity at year-end, we do agree it would provide an increased level of control as well as facilitate a more efficient use of resources to record the investment activity monthly. Procedures will be developed to put this process in place during the 2 0 1 1fiscal year.

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-7291-09-02

Duties for maintaining capital assets records have been assigned to accounting personnel. Although this would normally result in ownership to perform and improve accuracy of records, there were only marginal results.

FINANCIAL REPORTING lnadequate Controls over Financial Reporting Finding Control Number: FS-7291-09-03

Finance area did not attempt to complete the financial statements for fiscal year 2010. We will need to extend training on proper completion of financial statements.

SUMTER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 3 0 , 2 0 1 0

PRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-7291-06-01

Further Action Not Warranted

SECTION IV FINDINGS AND QUESTIONED COSTS

SUMTER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

Type of auditor's report issue: General Fund; Aggregate Remaining Fund Information Governmental Activities Capital Projects Fund; Debt Service Fund
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 weakness 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 OMB Circular A-133, Section 510(a)?

Identification of major programs:

CFDA Numberk)

Name of Federal Program or Cluster

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

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

Auditee qualified as low-risk auditee?

Unqualified Qualified
Disclaimed
Yes None Reported
Yes
N 0 None Reported
Unqualified

SUMTER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS INVESTMENTS GENERAL LEDGER REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILlTlES/DISBURSEMENTS Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-7291-10-01
Condition: This is a repeat finding (FS-7291-09-01 and FS-7291-08-01) from the years ended June 30, 2009, and June 30, 2008, respectively. The accounting procedures of the School District were insufficient to provide for adequate internal controls over the recording of cash and investment activity, SPLOST revenues, and debt service payments. In addition, internal controls were not sufficient to prevent the recording of undocumented journal entries.
Criteria: The School District's management is responsible for designing and maintaining internal controls that provide for reasonable assurance that transactions are processed according to established procedures.
Questioned Cost: N/A
Information: The School District records investment activity, SPLOST revenues, and debt service payments at year-end and not when the activity takes place. This resulted in the SPLOST revenue being overstated $115,199.24 and debt service expenditures being understated $3,220,000.00.
The School District's cash and investments per reconciliation and/or supporting documentation did not reconcile to the general ledger at year-end.
The School District was unable to provide adequate supporting documentation for $452,598.35 reported as cash on the Statement of Net Assets, $945,958.75 reported as cash on the Debt Service Fund Balance Sheet, and $(493,360.40) reported as cash on the Capital Projects Fund Balance Sheet.
The School District has an unreconciled variance of $(650,389.82) between amounts reported as investments in the financial statements and bank statements and/or outside confirmations.
Several journal entries recorded in fiscal year 2010 were undocumented and could not be explained by the School District.
Audit adjustments were made to properly reflect the SPLOST revenue and bond principal payments on the financial statements. No audit adjustments were made to cash, or investments, since sufficient audit evidence was not available to determine the appropriate amounts.

SUMTER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIAL STATEMENT FINDINGSAND QUESTIONEDCOSTS
CASH AND CASH EQUIVALENTS INVESTMENTS GENERAL LEDGER REVENUES/RECEIVABLES/RECEIPTS EXPENDlTURES/LIABILlTlES/DISBURSEM ENTS Inadequate Accounting Procedures Material Weakness Finding Control Number: FS-7291-10-01
Cause: These deficiencies were a result of management's failure to ensure that internal controls were established, implemented and functioning.
Effect: Errors and/or irregularities may not be detected in a timely manner. A financial statement irregularity in accordance with Official Code of Georgia Annotated 520-2-67.
Recommendation: The School District's management should establish accounting procedures to ensure financial information is recorded timely and accurately in the general ledger. Also, journal entries should be properly documented.
CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Material Weakness Finding Control' Number: FS-7291-10-02
Condition: This is a repeat finding (FS-7291-09-02, FS-7291-08-02 and FS-7291-07-03) from the years ended June 30, 2009, June 30, 2008, and June 30, 2007, respectively. The School District failed to adequately maintain and report capital assets activity.
Criteria: Chapter 37 Implementing a Bpital Assets Management System of the Financial Management for Georgia Local Units of Administration provides that School Districts must establish fixed asset policies, define system requirements, implement a fixed asset system, and maintain fixed asset inventory records.
Questioned Cost: N/A
Information: A review of the School District's capital assets policies and procedures and the related capital assets records noted the following deficiencies:
1. The School District has not updated their capitalization policy to include the adoption of Governmental Accounting Standards Board (GASB) Statement No. 51, Accounting and Reporfing for Intangible Assefs.

SUMTER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONEDCOSTS
YEAR ENDED JUNE 30,2010
II FINANCIALSTATEMENT FINDINGSAND QUESTIONEDCOSTS
CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Material Weakness Finding Control Number: FS-7291-10-02
2. The subsidiary ledger did not agree to the general ledger. 3. Land Improvements were not depreciated according to the capital assets policy. 4. Several Building and Improvement additions in the prior year were not documented with
expenditure documentation and remain undocumented in fiscal year 2010. 5. Construction in Progress, Building and Improvements, and Equipment additions were not
supported with expenditure documentation. 6. Fiscal year 2010 deletions were not removed from the general ledger. 7. A Contracts Payable amount recorded in the prior year was not documented and remains in
the Construction in Progress balance. 8. Several assets are being depreciated incorrectly, causing immaterial misstatements.
Cause: The School District failed to properly maintain its capital assets records in accordance with the School District's approved capital assets policy and requirements set forth in Chapter 3 7 Implementing a &pita1 Assei3 Management System of the Financial Management for Georgia Local Units of Administration.
Effect: The failure of the School District to properly account for capital assets activity can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles.
Recommendation: The School District should review its capital assets activity and make appropriate adjustments to ensure that the capital assets activity conforms to the School District's approved capital assets policy and generally accepted accounting principles. The School District should update and approve the capitalization policy to include Intangible Assets. Any assets meeting the definition of an intangible asset should be capitalized according to the policy.
FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-7291-10-03
Condition: This is a repeat finding (FS-7291-09-03, FS-7291-08-03, and FS-7291-07-04) from the years ended June 30, 2009, June 30, 2008, and June 30, 2007, respectively. The School District did not have adequate controls in place over the financial statement reporting process.
Criteria: Chapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles.

SUMTER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONEDCOSTS
YEAR ENDED JUNE 30,2010
I1 FINANCIALSTATEMENT FINDINGSAND QUESTIONED COSTS
FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-7291-10-03
Questioned Cost: N/A
Information: During the audit, the following correcting entries were proposed and accepted by the client to properly present the entity's financial statements.
Several entries were necessary to tie beginning net assets and beginning fund balance to the prior year totals for the governmental activities and fund statements, respectively.
Entries were necessary to properly record Property Taxes, Sales Taxes, Long-Term Liabilities, and Contracts Payable.
Several entries were necessary to eliminate interfund activity and invalid receivables.
Numerous reclassification entries were made to improve financial statement presentation.
Supplemental Schedules and Notes to the Basic Financial Statements were prepared by the auditor.
Cause: The School District did not implement an adequate system of internal control over the financial statement reporting process.
Effect: The School District did not comply with the requirements of the Georgia Department of Education regarding financial reporting. Several adjustments were necessary in order for the School District's financial statements to be in conformity with generally accepted accounting principles, except for the cash or investments deficiencies identified in FS-7291-10-01 and Capital Assets deficiencies identified in FS-7291-10-02.
Recommendation: The School District should implement controls over the financial statement reporting process to ensure that all required activity is included in the financial statement information.

SUMTER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
BUDGET PREPARATION/EXECUTION Deficit Fund Balance Material Weakness Material Noncompliance Finding Control Number: FS-7291-10-04
Condition: The Capital Projects Fund of the School District reported a deficit fund balance.
Criteria: Chapter 25 Governmental Fund Deficits of the Financial ManaPement for Georgia Local Units of Administration states in part: "The seriousness of fund balance deficits cannot be overstated. The Georgia Department of Education requires those LUAs with deficit governmental fund balances to meet certain reporting requirements."
Questioned Cost: N/A
Information: The School District's Capital Projects Fund reported a deficit fund balance in the amount of $336,909.61.
Cause: The School District incurred expenditures in excess of revenues during the year under review in the Capital Projects Fund.
Effect: A financial statement irregularity in accordance with Official Code of Georgia Annotated (O.C.G.A.) 520-2-67.
Recommendation: The School District should establish policies and procedures designed to ensure that in future periods the School District does not report a deficit fund balance.
Ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.

SECTION V MANAGEMENT'S RESPONSES

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

Finding Control Number: FS-7291-10-01

We concur with the findings and will be putting appropriate procedures in place to record debt service and SPLOST receipt transactions to be done monthly rather than at the end of the year as previously executed.

Finding Control Number: FS-7291-10-02

We concur with the finding. Physical inventory was taken during FY2010 and will be taken annually going forward. Correcting entries will be made to resolve the balances and proper recording of capital assets and depreciation will be made going forward.

Finding Control Number: FS-7291-10-03

We concur with the audit finding. The accounting staff will go through training to prepare financial reports for FY2011.

Finding Control Number: FS-7291-10-04

We concur with the finding and the accounting staff will insure that all entries are appropriately made to insure that in the future the fund balances are not in a deficit balance.

Contact Person: Telephone: Fax: Email:

Mike Drahush, Finance Director (229) 931-8542 (229) 931-8555 mdrahush@sumterschooIs.org