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',I ' \\ ' ,'":. . ,. ,, ,\f '. \ ' ' , TALBOT COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS- SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS EXHIBITS GENERAL-PURPOSE FINANCIAL STATEMENTS COMBINED STATEMENTS - OVERVIEW A COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP B COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUND C COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS D NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS ADDffiONAL FINANCIAL INFORMATION COMBINING AND INDNIDUAL FUND STATEMENTS SPECIAL REVENUE FUND E COMBINING BALANCE SHEET F COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES DEBT SERVICE FUND G COMBINING BALANCE SHEET H COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FIDUCIARY FUND TYPES I COMBINING BALANCE SHEET J STATEMENT OF CHANGES IN ASSETS AND LIABILmES AGENCY FUND SCHEDULES 1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 2 SCHEDULE OF STATE REVENUE 3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS Page 2 4 7 8 20 22 24 25 26 27 28 30 31 TALBOT COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS- SECTION I FINANCIAL ADDIDONAL FINANCIAL INFORMATION SCHEDULES ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) 4 BY PROGRAM 5 BY SITE Page 32 33 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WfTII REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 SECTION ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTIONN FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL w. SSELL HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400 May 16, 2002 Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Talbot County Board of Education INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying general-purpose financial statements ofthe Talbot County Board of Education, as of and for the year ended June 30, 2001, as listed in the table of contents. These general-purpose financial statements are the responsibility ofthe Talbot County Board ofEducation's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial 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 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 op1ruon. As described in the notes to the general-purpose financial statements, the Board of Education's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows: 2001ARL-13 The general-purpose financial statements of the Board of Education did not contain a General Fixed Assets Account Group to account for property and equipment owned by the Board of Education which should be included to conform to generally accepted accounting principles. The Board of Education did not recognize as 'expenditures, in the year ended June 30, 2001, a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 2001. Also funds received, subsequent to June 30, 2001, from the Georgia Department of Education for the State's share of these unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2000, were improperly recorded in the year ended June 30, 2001. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed. The aggregate effects on the general-purpose financial statements of these variances or omissions have not been determined, but are believed to be material. In our opinion, except for the effects on the general-purpose financial statements of the matters referred to in the preceding paragraph, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe Talbot County Board ofEducation as of June 30, 2001, and the results of its operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated May 16, 2002, on our consideration ofthe Talbot County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions oflaws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements of the Talbot County Board of Education taken as a whole. The accompanying combining and individual fund statements (Exhibits E through J) and the financial schedules (Schedules 1 through 5), which includes the Schedule ofExpenditures ofFederal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part ofthe general-purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general-purpose financial statements and in our opinion, except for the effects of the matters referred to in the third paragraph, such information is fairly stated, in all material respects, in relation to the general-purpose financial statements taken as a whole. 2001ARL-13 A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated Section 506-24. Respectfully submitted, RWH:gp 2001ARL-13 State Auditor TALBOT COUNTY BOARD OF EDUCATION TALBOT COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 2001 ASSETS Cash and Cash Equivalents Investments Accounts Receivable lnventones Food Donated Commodrt1es Purchased Food Amount Available m Debt Service Fund Amount to be Provided m Future Years For Payment of Bond Debt Total Assets GENERAL FUND GOVERNMENTAL FUND TYPES SPECIAL CAPITAL REVENUE PROJECTS FUND FUND $ 804,016.56 $ 116,296 14 11,208.39 65,000 00 $ 141,34945 32,178.62 94,676 59 15,014 97 2,082.41 $ 847 403.57 $ 293,070 11 $ 141 349.45 LIABILITIES AND FUND EQUITY LIABILITIES Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Contracts Payable Retainages Payable Funds Held for Others General Obhgabon Bonds Payable Total L1ablliltes FUND EQUITY Fund Balances Reserved For Bus Replacement Funds For Continuation of Federal Programs For Debt Service For Expired Grant Balances/Questioned Costs For lnventones Food Donated Commod1t1es Purchased Food For Purpose of Bond Issue Unreserved Undes,gnated Total Fund Equity $ 66,016.04 $ 34,76819 $ 21,584.52 57,781.52 1,687.20 $ 34 768.19 $ 81,053 24 $ 66,016.04 $ 122,852.00 7,350.00 $ 15,014 97 2,082 41 $ 682,433.38 194,919 49 $ 812,635.38 $ 212,016 87 $ 75,333.41 0.00 75 333 41 Total Liabilrttes and Fund Equity $ 847 403 57 $ 293,070 11 $ 141 349 45 The notes to the general-purpose financial statements are an integral part of this statement -2- EXHIBIT"A" DEBT SERVICE FUND FIDUCIARY FUND TYPES TRUST AND AGENCY FUNDS ACCOUNT GROUP GENERAL LONG-TERM DEBT TOTALS (Memorandum On~l JUNE 301 2001 JUNE 30, 2000 $ 858,759.21 $ 29,563.64 $ 1,808,635.55 $ 1,442,264.18 217,557.84 456,529.73 55,227.18 182,082.39 288,219.35 $ 913,986 39 1,011,013 61 15,014 97 2,082.41 913,986 39 1,011,013 61 17,339.59 1,934 68 622,797.04 1,527,202 96 $ 913,986.39 $ 29,563 64 $ 1,925,000.00 $ 4,150,37316 $ 4,356,287.53 $ 66,016 04 56,352.71 $ 132,631.29 57,781.52 91,923.76 1,687.20 29,424.99 41,940 00 43,700.00 $ 27,063.35 27,063.35 26,684.80 $ 1,925,000 00 1,925,000 00 2,150,000 00 $ 27,063 35 $ 1,925,000.00 $ 2,133,900 82 $ 2,516,304 84 $ 913,986.39 000 $ $ 913,986.39 $ 2,500 29 2,500 29 $ 122,852 00 $ 65,362.00 3,171 85 913,986.39 622,797.04 7,350 00 31,075.00 15,014.97 2,082 41 75,333 41 17,339 59 1,934 68 299,184 51 879,853.16 799,118 02 $ 2,016,472.34 $ 1,839,982 69 $ 913,986 39 $ 29,563 64 $ 1,925,000 00 $ 4,150,373.16 $ 4,356,287.53 - 3- TALBOT COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUND YEAR ENDED JUNE 30, 2001 REVENUES State Funds Federal Funds Taxes Other Funds Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of lnstructlonal Services Educallonal Media Services General Administration School Administration Business Admlmstrallon Maintenance and Operation of Plant Student Transportallon Services Central Support Services Other Support Services Food Services Operation Capital Outlay Debt Service Pnncipal Interest Paying Agent Fees Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USESI Operating Transfers In Operallng Transfers Out Total Other Financmg Sources (Uses) Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses FUND BALANCE JULY 1 Food Inventory - Net Change In Period Donated Commodities Purchased Food GENERAL FUND GOVERNMENTAL FUND SPECIAL CAPITAL REVENUE PROJECTS FUND FUND $ 3,936,113.98 $ 40,510.77 1,592,078.59 70,392.49 222,111.84 961,975.55 115,807.54 $ $ 5,639,095.83 $ 1,299,894.93 $ 11 750.17 11 750.17 $ 3,453,563.20 $ 260,842.60 109,504.58 115,221.14 235,776.93 316,194.08 61,359.07 424,379.11 ..443,862.09 18,860.50 8,514.55 709.00 554,262.78 43,248.18 100,061.71 58,293.79 14,977.60 4,146.69 13,413.67 147,741.15 441,042.58 1,736.87 $ 235,601.27 $ 5,448,786.85 $ 1,378,925.02 $ $ 190,308.98 $ -79,030.09 $ 235,601.27 -223,851.10 $ $ -98,492.80 $ -98,492.80 $ 98,492.80 98,492.80 $ 91,816.18 $ 19,462.71 $ -223,851.10 720,819.20 194,731.05 299,184.51 -2,324.62 147.73 FUND BALANCE JUNE 30 $ 812,635.38 $ 212ms.87 $-=-==7=-5=,3=33=r.4-=1= The notes to the general-purpose financial statements are an integral part of this statement. -4- EXHIBIT"B" TYPES DEBT SERVICE FUND TOTAL FIDUCIARY FUND TYPE EXPENDABLE TRUST FUND TOTALS (Memorandum Only) YEAR ENDED JUNE 30, 2001 JUNE 30,2000 $ 4,158,225.82 1,002,486.32 $ 576,189.05 2,168,267.64 26,404.66 224,354.86 $ $ 602,593.71 $ 7,553,334.64 $ $ 49.40 49.40 $ 4,158,225.82 $ 1,002,486.32 2,168,267.64 224,404.26 7,553,384.04 $ 3,964,157.24 1,169,778.23 2,021,134.40 327,802.89 7,482,872.76 $ 4,007,825.98 $ 304,090.78 209,566.29 115,221.14 294,070.72 331,171.68 61,359.07 428,525.80 457,275.76 18,860.50 156,255.70 441,751.58 237,338.14 $ 225,000.00 84,790.00 1,614.36 225,000.00 84,790.00 1,614.36 $ 311,404.36 $ 7,374,717.50 $ $ 291,189.35 $ 178,617.14 $ 0.00 $ 0.00 $ 49.40 $ 4,007,825.98 $ 304,090 78 209,566.29 115,221.14 294,070.72 331,171.68 61,359.07 428,525.80 457,275.76 18,860.50 156,255.70 441,751.58 237,338.14 225,000.00 84,790.00 1,614.36 7,374,717.50 $ 178,666.54 $ 3,939,826.47 376,249.02 243,518.91 112,550.95 326,497.55 269,487.86 50,532.55 418,456.67 392,116.55 19,037.26 183,240.11 461,074.14 842,538.81 70,000.00 90,907.50 1 600.14 7,797,634 49 -314,761.73 $ 98,492.80 -98,492.80 $ 0.00 $ 291,189.35 $ 178,617.14 $ 622,797.04 1,837,531.80 -2,324.62 147.73 $ 98,492.80 $ 197,283.38 -98,492.80 -197,283.38 $ 0.00 $ 0.00 49.40 $ 2,450.89 178,666.54 $ 1,839,982.69 -314,761.73 2,152,365.74 -2,324.62 147.73 1,832.69 545.99 $ 913,986.39 $ 2,013,972.05 $ 2,500.29 $ 2,016,472.34 $ 1,839.982.69 -5- TALBOT COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - !NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30. 2001 EXHIBIT "C" GENERAL FUND ACTUAL (BUDGET BUDGET BASIS) REVENUES State Funds Federal Funds Taxes Other Funds $ 3,TT1,468 00 $ 3,936,113.98 27,000.00 40,510.77 1,527,844.00 1,592,078.59 28,800.00 70,39249 Total Revenues $ 5,355,112 00 $ 5,639,095 83 EXPENDITURES Current lnstrucbon Support Services Pupil Services Improvement of lnstructronal Services Educallonal Media Services General Admlnlstrallon School Admlnistratlon Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operallon Capital Outlay $ 3,418,707.00 $ 3,453,563.20 396,646.00 125,949.00 107,51200 219,400.00 387,717 00 55,730 00 429,746.00 488,858.00 40,000.00 10,000.00 70900 260,842.60 109,504.58 115,221.14 235,TTS.93 316,194.08 61,359.07 424,37911 443,862.09 18,860.50 8,514.55 70900 Total Expenditures $ 5,680,974 00 $ 5,448,786.85 Excess of Revenues over (under) Expenditures $ -325,862.00 $ 190,308.98 OTHER EINANCING SOURCES !USES) Other Sources Other Uses $ -80,000.00 $ -98,492.80 Total Other Financing Sources (Uses) $ -80.000.00 $ -98,492.80 Excess of Revenues and Other Financmg Sources over (under) Expenditures and Other Financing Uses $ -405,862.00 $ 91,816 18 FUND BALANCE JULY 1, 2000 758,909.73 720,819 20 Adjustments Food Inventory - Net Change In Period Donated Commod1tles Purchased Food FUND BALANCE JUNE 30. 2001 $ 353,047.73 $ 8121635 38 SPECIAL REVENUE FUND ACTUAL (BUDGET BUDGET BASIS) $ 207,449.00 $ 1,044,320 00 222,111.84 961,975 55 40,356 00 115,807.54 $ 1,292,12500 $ 1,299,894 93 $ 568,302.00 $ 554,262 78 47,212.00 139,617 00 43,24818 100,061.71 61,546.00 58,293.79 14,977.60 2,600 00 4,146.69 13,413.67 2,000.00 485,102.00 147,741.15 441,042.58 173687 $ 1,306,379.00 $ 1,378,925 02 $ -14,254 00 $ -79,030.09 $ 80,000 00 $ 98,492 80 $ 80.000 00 $ 98,492 80 $ 65,746.00 $ 19,462.71 129,260.38 194,731.05 21,51115 -2,324 62 147 73 $ 216,517 53 $ 212.016 87 The notes to the general-purpose financial statements are an Integral part of this statement -7- TALBOT COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2001 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The Talbot County Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school 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. FUND ACCOUNTING The School District uses funds and an account group to report on its financial position and the results ofits 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. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources. General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the School District. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types. The general-purpose financial statements account for all State, Federal, Taxes and Other funds under control of the School District, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows: GOVERNMENTAL FUND TYPES - are used to account for all or most of a School District's educational activities. Governmental Fund Types include: GENERAL FUND - the fund used to account for all financial resources of the School District except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education. SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and from the Federal government to accomplish specific educational objectives. CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities. - 8- TALBOT COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2001 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees. FIDUCIARY FUND TYPES - the funds used to account for assets held by a government unit in a trustee capacity or as an agent for individuals, private organizations, other government units and/or other funds. These funds include: EXPENDABLE TRUST FUND Edna Pitts Finch Memorial Scholarship Fund - the fund used to account for the principal and earnings which may be expended to provide scholarships to business administration and business education students with junior standing at an accredited college or university. AGENCY FUND - the fund used to account for assets held in a fiduciary capacity for other funds, governments, or individuals. ACCOUNT GROUP GENERAL LONG-TERM DEBT ACCOUNT GROp - A financial reporting device used to account for general obligation debt outstanding. BASIS OF ACCOUNTING The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental and expendable trust funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources. Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group. Agency funds are purely custodial in nature and do not involve measurement ofresults ofoperations. Governmental and expendable trust funds are accounted for using the modified accrual basis of accounting under which: Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The School District considers receivables collected within sixty days after year- -9- TALBOT COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO TIIE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2001 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES end to be available and therefore susceptible to accrual. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, local option sales taxes, intergovernmental grants and donations. Revenue for property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year the resources are received or susceptible to accrual. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Expenditures are generally recognized when the related fund liability is incurred. A departure from the above definitions is the accounting treatment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 2001, a substantial number ofpersonnel ofthe School District were employed for a one hundred and ninety day period beginning in August 2000 and ending in early June 2001. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 2000 and ending in August 2001. State grants to fund the State's share of these contracts were disbursed from the Georgia Department of Education to the School District in the same twelve months. As of June 30, 2001, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 2001, had not been made. Payments for these two months were made and recorded as expenditures by the School District subsequent to June 30, 2001. Also, the State's portion ofthe compensation paid in July and August 2001 was received and recorded as revenue in the fiscal year subsequent to June 30, 2001. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2000, were recorded in the year ended June 30, 2001. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed. Agency funds are accounted for using the modified accrual basis ofaccounting in recognizing assets and liabilities. BUDGET The Talbot County Board ofEducation's budget is a complete financial plan for the School District's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles. The budget process begins when the School District's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe - 10- TALBOT COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 200i Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Board after advertisement, the Board receives comments oii the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end. CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations. INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone 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 at fair value. The Official Code ofGeorgia 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 ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (I) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State ofGeorgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and - 11 - TALBOT COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2001 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (8) Obligations of other political subdivisions of the State of Georgia. RECEIVABLES Receivables consist of 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 general-purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The Talbot County Board of Commissioners fixed the property tax levy for the 2000 tax year (calendar year) on October 20, 2000 (levy date). Taxes were due on December 20, 2000 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 2001. The Talbot County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues during the fiscal year ended June 30, 2001 for maintenance and operations amounted to $1,567,343.42 and for school bonds amounted to $145,444.97. Tax millage rates levied for the 2000 tax year (calendar year) for the Talbot County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value): School Operations School Bonds 13.66 mills 1.24 mills 14.90 mills SALES TAXES Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes and debt service. Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $430,744.08 and was recorded in the Debt Service Fund. The State will terminate collection ofthis tax once an additional $675,100.47 has been collected or on December 31, 2003, whichever occurs first. INVENTORIES FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded - 12 - TALBOT COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2001 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time ofpurchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets. GENERAL OBLIGATION BONDS The School District issues general obligation bonds to provide funds for the acquisition and construction ofmajor capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit ofthe government. The outstanding amount of these bonds is recorded in the General Long-Term Debt Account Group. INTERFUND TRANSACTIONS The School District has the following types of interfund transactions: Reimbursements ofexpenditures initially made from a fund that are properly applicable to another fund are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed. Operating transfers are recorded for all interfund transactions other than reimbursements. MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the general-purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results ofoperations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Note 2: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13 .1) the aggregate of the market value ofthe - 13 - TALBOT COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2001 Note 2: DEPOSITS AND INVESTMENTS securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts. 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 the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. CATEGORIZATION OF DEPOSITS At June 30, 2001, the bank balances were $2,163,395.01. The amounts ofthe total bank balances are classified into three categories of credit risk: Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name. Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name. Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.) - 14 - TALBOT COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2001 Note 2: DEPOSITS AND INVESTMENTS The School District's deposits are classified by risk category at June 30, 2001, as follows: Risk Category Bank Balance 1 $ 501,656.57 2 1,043,196.90 3 618,541.54 Total $ 2,163,395.01 CATEGORIZATION OF INVESTMENTS At June 30, 2001, the carrying value of the School District's total investments was $152,557.84 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State ofGeorgia, Office ofTreasury 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 ofthe State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows: The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the SEC as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to be a Rule 2a7 like pool. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value ofthe shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund. Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U.S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2001, was 39 days. The average investment duration for Fund 6 on June 30, 2001, was 6 months. - 15 - TALBOT COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2001 Note 3: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories Note 4: 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; natural disaster and unemployment compensation. The School District has obtained commercial insurance for risk ofloss associated with torts, assets and errors or omissions. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years. The School District has elected to self-insure for all losses related to natural disaster. The School District has not experienced any losses related to this risk in the past three years. The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenditure and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: 2000 2001 Beginning ofYear Liability Claims and Changes in Estimates Claims Paid End of Year Liability $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 9.154.69 $ 9.154.69 $ 0.00 The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the United States Fidelity and Guaranty Company to provide coverage for potential losses sustained by the Trust in excess of $250,000.00 loss per occurrence, up to $2,000,000.00. The School District has purchased surety bonds to provide additional insurance coverage as follows: - 16 - TALBOT COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2001 Note 4: RISK MANAGEMENT Position Covered Amount Superintendent School Food Service Director Bookkeeper/Clerk Payroll Clerk $ 30,000 00 $ 10,000.00 $ 10,000.00 $ 10,000.00 Note 5: GENERAL LONG-TERM DEBT GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: Pur.pose Interest Rates Amount General Government - Refunding - Series 1998 General Government - Series 1998 4.3%-4.5% 4.0% $ 885,000.00 1,040,000 00 $ 1925 ooo oo The changes in General Long-Term Debt during the fiscal year ended June 30, 2001, were as follows: General Obligation Bonds Balance July 1, 2000 $2,150,000.00 Deductions Debt Retired 225,000 00 Balance June 30, 2001 At June 30, 2001, payments due by fiscal year which includes principal and interest for these items are as follows: - 17 - TALBOT COUNTY BOARD OF EDUCATION EXHIBIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 200 I Note 5: GENERAL LONG-TERM DEBT Fiscal Year Ended June 30 General Obligation Bonds 2002 2003 2004 2005 2006 2007 - 2010 $ 388,757.50 390,610.00 391,847.50 426,777.50 116,700.00 486,103.75 Total Principal and Interest $ 2,200,796.25 Note 6: PRIOR YEAR DEFEASEMENT OF DEBT In fiscal year 1998, the School District defeased certain general obligation bonds by placing the proceeds ofnew bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and th~.liability for the defeased bonds are not included in the School District's general-pwpose financial statements. At June 30, 2001, $860,000.00 of bonds are outstanding and are considered defeased. Note 7: ON-BEHALF PAYMENTS The School District has recognized revenues and expenditures in the amount of $90,012.99 for health insurance and retirement contributions paid on the School District's behalfby 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 $73,118.41 Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $1,342.58 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 $15,552.00 - 18 - TALBOT COUNTY BOARD OF EDUCATION EXHIBIT "D11 NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2001 Note 8: 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 expenditures which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the general-purpose financial statements. Note 9: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school districts are covered by the Teachers Retirement System ofGeorgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.29% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 2001 2000 1999 100% 100% 100% $ 396,896.15 $ 379,586.08 $ 408,222.08 - 19 - TALBOT COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 2001 ASSETS Cash and Cash Equivalents Investments Accounts Receivable Inventories Food Donated Commodities Purchased Food SCHOOL FOOD SERVICES FUND LOTTERY PROGRAMS $ 121,788.26 $ 21,941.40 65,000.00 2,497.31 15,014.97 2,082.41 Total Assets $ 206,382.95 $ ==::i2=1=,9=4=1...,40..,. LIABILITIES AND FUND EQUITY LIABILITIES Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Total Liabilities FUND EQUITY Fund Balances Reserved For Continuation of Federal Programs For Inventories Food Donated Commodities Purchased Food Unreserved Undes1gnated Total Fund Equity Total Liabilities and Fund Equity See notes to the general-purpose financial statements. - 20- $ 1,253.08 $ 3,910.59 17,314.49 18,030.81 $ 18,567.57 $ 21,941.40 $ 15,014.97 2,082.41 170,718.00 $ 0.00 $ 187,815.38 $ 0.00 $ 206,382.95 $ =-====2=1=9.4..1.,...4=0= EXHIBIT "E" FEDERAL PROGRAMS OTHER PROGRAMS TOTALS JUNE 30, 2001 JUNE 30, 2000 $ 11,235.68 $ 154,965.34 $ 145,087.75 65,000.00 65,000.00 $ 92,179.28 94,676.59 164,840.75 15,014.97 2,082.41 17,339.59 1,934.68 $ 92,179.28 $ 11,235.68 $ 331,739.31 $ ==3=94===,2=02==-=77= $ 38,669.20 16,420.85 22,436.22 1,687.20 $ 79,213.47 $ 38,669.20 21,584.52 $ 78,122.97 57,781.52 91,923.76 1,687.20 29,424.99 $ 119,722.44 $ 199,471.72 $ 3,171.85 $ 15,014.97 2,082.41 17,339.59 1,934.68 $ 12,965.81 $ 11,235.68 194,919.49 172,284.93 $ 12,965.81 $ 11,235.68 $ 212,016.87 $ 194,731.05 $ 92,179.28 $ 11,235.68 $ 331,739.31 $ =====-3=9=4=,2=0.2...=77= - 21 - TALBOT COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2001 REVENUES State Funds Federal Funds Other Funds 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 Other Support Services Food Services Operation Capital Outlay Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES Operating Transfers In Excess of Revenues and Other Financing Sources over (under) Expenditures FUND BALANCE JULY 1 Food Inventory - Net Change in Period Donated Commodities Purchased Food FUND BALANCE JUNE 30 See notes to the general-purpose financial statements. - 22- SCHOOL FOOD SERVICES FUND LOTTERY PROGRAMS $ 28,888.00 $ 193,223.84 384,637.57 35,484.08 $ 449,009.65 $ 193,223.84 $ 142,217.50 27,948.99 $ 564.82 441,042.58 12,653.98 546.27 12,135.24 $ 441,607.40 $ 195,501.98 $ 7,402.25 $ -2,278.14 $ 7,402.25 $ 182,590.02 -2,324.62 147.73 2,278.14 0.00 0.00 $ 1871815.38 $ ==-====o=..o.o.-= EXHIBIT NF" FEDERAL PROGRAMS OTHER PROGRAMS TOTALS YEAR ENDED JUNE 30, 2001 JUNE 30, 2000 $ 577,337.98 $ $ 577,337.98 $ $ 80,323.46 80,323.46 $ 222,111.84 $ 961,975.55 115,807.54 1,299,894.93 $ 267,409.75 1,135,054.51 112,556.61 1,515,020.87 $ 412,045.28 15,299.19 100,061.71 57,728.97 2,323.62 3,600.42 1,278.43 77,141.16 $ 1 736.87 $ 671,215.65 $ $ -93,877.67 $ $ 70,599.99 70,599.99 $ 9,723.47 $ 554,262.78 $ 43,248.18 100,061.71 58,293.79 14,977.60 4,146.69 13,413.67 147,741.15 441,042.58 1 736.87 1,378,925.02 $ -79,030.09 $ 718,852.24 85,804.96 81,444.82 5,799.70 108,539.36 6,226.35 4,200.00 1?3,699.36 21,307.33 164,597.11 461,074.14 1 558.11 1,723,103.48 -208,082.61 96,214.66 $ 2,336.99 $ 10,628.82 98A92.80 197,283.38 9,723.47 $ 1,512.21 19,462.71 $ 194,731.05 -10,799.23 203,151.60 -2,324.62 147.73 1,832.69 545.99 $ 12,965.81 $ 11,235.68 $ 212,016.87 $ =-==1=94..i:!:::7:,=3=1._05= - 23- TALBOT COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET DEBT SERVICE FUND JUNE 30. 2001 EXHIBITG ASSETS Cash and Cash Equivalents Accounts Receivable Total Assets FUND EQUITY Fund Balances Reserved For Debt Service Unreserved Undes1gnated Total Fund Equity PROPERTY TAXES FOR BOND DEBT SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS JUNE 30, 2001 JUNE 30, 2000 $ 229,706.96 $ 629,052.25 $ 858,759.21 $ 552,928.15 3,063.19 52,163.99 55,227.18 69,868.89 $ 232p0.15 $ 681,216.24 $ 913,986.39 $ -=--==6=-22o=J7,..9""'7=-04= $ 232,770.15 $ 0.00 681,216.24 $ 0.00 913,986.39 $ 0.00 622,797.04 0.00 $ 232,770.15 $ 681,216.24 $ 913,986.39 $ """"'...,.62=-2=7,==9-7=04= See notes to the general-purpose finane1al statements. -24- TALBOT COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES. EXPENDlTURES AND CHANGES IN FUND BALANCES DEBT SERVICE FUND YEAR ENDED JUNE 30, 2001 EXHIBIT "H" REVENUES Taxes Other Funds Total Revenues EXPENDITURES Debt Service Pnncipal Interest Paying Agent Fees Total Expenditures Excess of Revenues over (under) Expenditures FUND BALANCE JULY 1 PROPERTY TAXES FOR BOND DEBT SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS YEAR ENDED JUNE 30, 2001 JUNE 30, 2000 $ 145,444.97 $ 4 410.19 $ 149,855.16 $ 430,744.08 $ 21,994.47 452,738.55 $ 576,189.05 $ 26,404.66 602,593.71 $ 498,996.65 7,648.54 506,645.19 $ 75,000.00 $ 20,901.25 1,599.36 $ 97,500.61 $ $ 52,354.55 $ 180,415.60 150,000.00 $ 63,888.75 15.00 213,903.75 $ 238,834.80 $ 442,381.44 225,000.00 $ 84,790.00 1,614.36 311,404 36 $ 291,189.35 $ 622?97.04 70,000.00 90,907.50 1 600.14 162,507.64 344,137.55 278,659.49 FUND BALANCE JUNE 30 $ 232,770.15 $ 681,216.24 $ 913,986 39 $ 622,797.04 See notes to the general-purpose financial statements - 25- TALBOT COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET FIDUCIARY FUND TYPES JUNE 30. 2001 EXHIBIT"!" ASSETS Cash and Cash Equivalents EXPENDABLE TRUST FUND EDNA PITTS FINCH MEMORIAL SCHOLARSHIP FUND $ AGENCY FUND TOTALS JUNE 30. 2001 JUNE 30, 2000 s 291563.64 _=--2=9"1"1..,3,..5.,.,69.,,, LIABILITIES AND FUND EQUITY LIABILITIES Funds Held for Others FUNDECUl!Y Fund Balances Unreserved Undeslgnated $ $ _ _ _---=2._,500"""-.2=.;9;... 27,063.35 $ 27,063.35 $ 0.00 2,500.29 26,684.80 2,450.89 Total Liabilities and Fund Equity $ s 29.563.64 _===2=9i.1_35..,.6=9= See notes to the general-purpose finanaal statements. - 26- TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FIDUCIARY FUND TYPE AGENCY FUND YEAR ENDED JUNE 30, 2001 EXHIBIT"J" SCHOOL ACTIVITY FUNDS ASSETS Cash and Cash Equivalents LIABILITIES Funds Held for Others BALANCE JULY 1, 2000 ADDITIONS DEDUCTIONS BALANCE JUNE 30, 2001 $ 261684.80 $ 481387.52 $ 48,008.97 $ 27,063.35 $ 26,684.80 $ 481387.52 $ 48,008.97 $ ..,...,_.2;;,.7:!,,0;,;;6,..3.a:,3==,5 See notes to the general-purpose financial statements - 27 - TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2001 SCHEDULE "1" FUNDING AGENCY PROGRAM/GRANT Agriculture, U. S Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program Nabonal School Lunch Program Pass-Through From Office of School Readiness Food and Nutrition Program Summer Food Service Program for Children Total Child Nutrition Cluster Other Programs Pass-Through From Georgia Department of Education Food and Nutnt1on Program Food Distribution Program (1) Total U.S. Department of Agriculture Education, U S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disablhlles Education Act Part B - Special Education Capacity Building Improvement Flow Through Preschool Total SpeCIBI Education Cluster Other Programs Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Tille I Grants to Local Educational Agencies Tille II Eisenhower Professional Development TiUe Ill Technology Literacy Challenge Fund Grants TiUe VI Innovative Education Program Strategies Class Size Reduction Tille X Charter Schools Vocational Education - Basic Grants to States High School Program Basic Grant Total U S Department of Educabon Defense, U. S Department of Direct Department of the Anny R O.T.C Program CFDA NUMBER . 10.553 . 10 555 . 10.559 10 550 84 027 84.027 84.173 84.010 84.281 84 318 84 29B 84.340 84.282 84 048 PASSTHROUGH ENTITY ID NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD NIA $ 110,033 72 NIA 237,777 42 $ NIA 16,168 61 $ 363,979.75 $ (2) 420,949.58 (3) {2) 420,949.58 NIA 20,657.82 $ 384,637 57 $ 20,657.82 441,607 40 NIA $ 4,913 85 $ NIA 77,107 97 NIA 15,245 51 $ 97,267.33 $ 4,913.85 77,107.97 15,245.51 97,267.33 NIA 312,298 26 NIA 11,10522 NIA 115,777 84 NIA 16,856 36 NIA 11,469 91 NIA NIA 12,563 06 $ 577,337 98 $ 312,699.71 (3) 11,523 72 (3) 11B,94969 16,B56 36 11,469 91 89,819.87 (3) 12,629.06 (3) 671,215.65 $ 40,510 77 (4) Total Federal FinanC1BI Assistance NIA = Not Available - 28- $ 1,002,486 32 $ 1,112,823 05 TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30 2001 SCHEDULE 1 Notes to the Schedule of Expendrtures of Federal Awards (1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year. (2) Expendrtures for the School Breakfast Program and the Summer Food Service Program for Children were not maintained separately and are Included rn the 2001 National School Lunch Program (3) Expenditures for this program Include State, and/or Other Funds. Expenditures are not maintained by fund source. (4) Expenditures on this program were not maintained by fund source. Major Programs are identified by an asterisk <> In front of the CFDA number The School District did not provide Federal Assistance to any Subrecip1ent The accompanying schedule of expenditures of Federal awards includes the Federal grant activrty of the Talbot County Board of Education and Is presented on the modified accrual basis of accounbng which 1s the basis of accounting used in the presentation of the general-purpose financial statements See notes to the general purpose-financial statements. -29 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2001 SCHEDULE "2" AGENCY/FUNDING GRANTS Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Primary Grades (1-3) Program Upper Elementary Grades (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category II Category Ill Remedial Education Program Alternative Education Program Media Center Program Staff and Professional Development Indirect Cost Categoncal Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Principal Supplements Vocational Supervisors Mid-term AdJustment Hold-Harmless Education EqualizabOn Funding Grant Food Services Vocational Education Other State Programs Health Insurance Preschool Handicapped Program Statewide Local Education Improvement Teachers' Retirement Lottery Programs Computers in the Classroom Office of School Readiness Pre-Kindergarten Program Office of Treasury and Fiscal Services Public School Employees Retirement CONTRACTS Education, Georgia Department of Georgia's Reading Challenge Reading First Program Human Resources, Georgia Department of Family Connection GOVERNMENTAL FUND TYPES SPECIAL GENERAL REVENUE FUND FUND TOTAL $ 130,946.00 559,401.00 241,294.00 408,668.00 346,400.00 86,410.00 121,214.00 191,330.00 44,878.00 31,913.00 70,725.00 18,652.00 544,049.00 $ 130,946.00 559.401.00 241,294.00 408,668.00 346,400.00 86,410.00 121,214.00 191,330.00 44,878.00 31,913.00 70,725.00 18,652.00 544,049.00 202,503.00 57,490.00 143,600.00 35,137.00 3,342-00 3,746.00 181,402.00 113,569.00 $ 20,980.00 73,11841 17,948.39 28,252.00 1,342.58 28,888.00 13,166.15 202,503.00 57,490.00 143,600.00 35,137.00 3,342.00 3,746.00 181,402.00 113,569.00 28,888.00 20,980.00 73,118.41 17,948.39 28,252.00 1,342.58 13,166.15 180,057.69 180,057.69 15,552.00 15,552.00 121,560.00 18,601.00 102,090.60 121,560.00 18,601.00 102,090.60 See notes to the general-purpose financial statements. $ 3,936,113.98 $ 222,111.84 $ 4,158,225.82 - 30- TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2001 SCHEDULE "3" PROJECT Payments on previously incurred bonded indebtedness, indilding payments of pnncipal and interest due on Talbot County School DIstnct's Senes 1989 General Obligation Bonds (or any bonds issued to refund those bonds), from February 1, 2000 through and induding August 1, 2004 The expansion, remodeling and renovation of eX1sting school d1Stnct facihties, induding dassrooms, instructJonal areas, support space, physical education and athletic faahlles and grounds and to provide furnishings, equipment and fixtures for such areas, acquIsItIon of real estate for a central office complex and an athletic faahty and construction of new athlellc and storage faalrties and paying any expenses inadent thereto, induding capitahzed interest dunng construction, at an estimated cost to be funded with sales and use tax proceeds ORIGINAL ESTIMATED COST (1) CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR(3)(4) AMOUNT EXPENDED IN PRIOR YEARS (3) (4) PROJECT STATUS $ 125,000.00 $ 136,091.25 $ 115,190.00 $ 20,901.25 Ongoing 1,470,000.00 1,470,000.00 235,601.27 933,816 11 Ongoing $ 1,595,00000 $ 1,606,091.25 $ 350,791.27 $ 954,717.36 (1) The School Olstnct's onginal cost estimate as soeafied in the resolution calhng for the ImpositIon of the Local Option Sales Tax (2) The School DIstnct's current esllmate of total cost for the proJects. lndudes all cost from pro1ect inception to completion (3) The voters of Talbot County approved the imposition of a 1% sales tax to fund the above proJects and retire assoaated debt Amounts expended for these pro1ects may 1ndude sales tax proceeds, state, local property taxes and/or other funds over the hfe of the proJects (4) In add11lon to the expenditures shown above, the School District has incurred interest to provide advance funding for the above proJects as follows. PnorYears $ 67,433.00 Current Year 44,600 00 Total $ 112,033 00 See notes to the general-purpose finanaal statements - 31 - TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND QUALITY BASIC EDUCATION PROGRAM (QBE} ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2001 SCHEDULE 4 DESCRIPTION Direct Instructional Programs Kindergarten Program Kmdergarten Program-Early lnterventJon Program Pnmary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabililtes Category II Category Ill Remedial Educabon Program AltematJve Education Program TOTAL DIRECT INSTRUCTIONAL PROGRAMS Media Center Program Staff and Professional Development ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) ELIGIBLE QBE PROGRAM COSTS SALARIES OPERATIONS TOTAL $ 156,400.00 $ 134,328 60 $ 3,945.93 $ 138,274.53 65,089.65 794 03 65,883 68 668,139.00 589,923.63 13,731.51 603,655.14 67,372 68 2,872.76 70,245 44 288,198.00 348,193.37 23,246.20 371,439.57 585,558.33 18,590.97 604,149.30 488,106 00 413,734 00 574,236.95 20,661 00 594,897.95 103,207.00 262,771.79 22,209 77 284,981.56 373,297.00 118,833 18 118,833 18 132,894 42 132,894 42 53,601 00 10,210.41 1,288 00 11,498 41 38,116.00 69,464 53 6,62564 76 090 17 $ 2,582,798 00 $ 2,958,877 54 $ 113,965.81 $ 3,072,843 35 84,473.00 22,277.00 75,599.52 8,523.08 17,16838 10,569 09 92,767 90 19 092 17 TOTAL QBE FORMULA FUNDS $ 2,689,54800 $ 3,043,00014 $ 141,703.28 $ 3,184,70342 (1) Comprised of State Funds plus Local Five Mill Share See notes to the general-purpose financial statements 32 TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND-QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30, 2001 SCHEDULE "5" SITE Central Elementary/High School Central Office (Alternative Education Program) TOTAL (1) Comprised of State Funds plus Local Five Mill Share. ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) ELIGIBLE QBE PROGRAM COSTS $ 2,544,682.00 $ 3,072,843.35 38 116.00 $ 2,582,798.00 $ =-==3=,0=72=,84=====3=.3=5 See notes to the general-purpose financial statements. - 33 - SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS w. lJSSELL HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street. S.W., Suite 214 Atlanta, Georgia 30334-8400 May 16, 2002 Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Talbot County Board of Education REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladies and Gentlemen: We have audited the financial statements ofTalbot County Board ofEducation as ofand for the year ended June 30, 2001, and have issued our report thereon dated May 16, 2002. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general-purpose financial statements. 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. Compliance As part of obtaining reasonable assurance about whether Talbot County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grants, 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 ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered Talbot County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal 2001YB-40 control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Talbot County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-7301-01-01, FS-7301-01-02 and FS-7301-01-03. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, ofthe reportable conditions described above, we consider item FS-7301-0103 to be a material weakness. This report is intended solely for the information and use ofthe management, members ofthe Talbot County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these}pecified parties. Respectfully submitted, RWH:gp 2001YB-40 w. tJSSELL HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400 May 16, 2002 Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Talbot County Board of Education REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 Ladies and Gentlemen: Compliance We have audited the compliance ofTalbot County Board ofEducation with the types ofcompliance requirements described in the US. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2001. Talbot County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule ofFindings 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 Talbot County Board of Education's management. Our responsibility is to express an opinion on Talbot County Board of Education's compliance based on our audit. We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perfonn the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance 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 Talbot County Board of Education's compliance with those requirements and perfonning 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 Talbot County Board of Education's compliance with those requirements. / 2001SA-10 In our opinion, the Talbot County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2001. Internal Control Over Compliance The management of Talbot County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Talbot County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133. Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level of risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course ofperforming their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. This report is intended solely for the information and use ofthe management, members ofthe Talbot County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, RWH:gp 2001SA-10 State Auditor SECTION ID AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-7301-99-01 FS-7301-00-01 FS-7301-00-02 Further Action Not Warranted Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses CORRECTIVE ACTION/RESPONSES EXPENDITURES/LIABILITIES/DISBURSEMENTS Lack of Expenditure/Obligation Documentation Finding Control Number: FS-7301-00-01 Unresolved for Fiscal Year 2001 because this Fiscal Year was almost over at the time of the audit for Fiscal Year 2000. The following procedures are in place for Fiscal Year 2002. All payments for services rendered will have the original invoice submitted to the accounts payable clerk before disbursing funds. Failure to submit an invoice will delay payment for services rendered. No exceptions. GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-730 l-00-02 Accounting controls and procedures to provide for maintenance ofa General Fixed Assets Account Group are not required by the Georgia Department of Education. Due to the expense that we would incur to establish this account group, we do not feel that this is economically feasible at this time. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FA-7301-00-01 Resolved SECTION IV FINDINGS AND QUESTIONED COSTS TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 2001 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the Talbot County Board of Education's financial statements was qualified for various departures from generally accepted accounting principles. 2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Talbot County Board of Education disclosed financial statement reportable conditions related to the following control categories. Cash and Cash Equivalents General Fixed Assets Employee Compensation Of the reportable conditions described above, General Fixed Assets is considered to be a material weakness. 3. Noncompliance Material to the Financial Statements The audit ofthe Talbot County Boar4 ofEducation disclosed no instances ofnoncompliance that were deemed to be material to the financial statements. 4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Talbot County Board of Education did not disclose any reportable conditions in internal control over major programs. 5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Talbot County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified. 6. Audit Findings Required to be Reported by Section .510(a) ofOMB Circular A-133 The Talbot County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) of 0MB Circular A-133. 7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program 10.559 Food and Nutrition Program - Food Services - Summer Food Service Program for Children 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00. -I - TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 I SUMMARY OF AUDITOR'S RESULTS 9. Low Risk Auditee The Talbot County Board of Education qualified as a low risk auditee based on a waiver granted by the U. S. Department of Education. II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUNALENTS Uncollateralized Deposits Reportable Condition Nonmaterial Noncompliance Finding Control Number: FS-7301-01-01 As ofJune 30, 2001, the School District failed to have a bank balance fully collateralized as provided for by the Official Code of Georgia Section 45-8-12 which states, in part, as follows: "The collecting officer or officer holding public funds may not have on deposit at any one time in any depository for a time longer than ten days a sum ofmoney belonging to the public body when such depository has not given bond to the public body as set forth in this code section. The aggregate ofthe face value ofsuch surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction of the amount of deposit insurance." This noncompliance occurred because of management's failure to adequately monitor the collateralization of balances at individual banks. The School District should implement adequate procedures to monitor the collateralization ofbank balances to ensure compliance at all times with State Laws governing deposits and investments. EMPLOYEE COMPENSATION Improper Salary Payments Reportable Condition Amount: $5,200.00 Finding Control Number: FS-7301-01-02 Employee compensation testing procedures revealed that three administrative employees were paid salaries from the Reading Challenge program. Program guidelines, issued by the Georgia Department ofEducation requires that all staff should have experience in teaching and/or working with children in grades 4 through 8. This condition occurred because management did not adhere to the program's guidelines as required. This questioned cost of$5,200.00 should be refunded to the Georgia Department of Education. -2- TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 2001 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-7301-01-03 The Talbot County Board of Education did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general-purpose financial statements ofthe School District being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the School District to establish accounting controls and procedures to provide for maintenance ofa General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the School District and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained ofall additions and deletions to the General Fixed Assets Account Group. ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ALLOWABLE COSTS/COST PRINCIPLES Improper Staff Development Payments Reportable Condition Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Amount: $7,350.00 Repeated From Prior Year Finding Control Number: FA-7301-01-01 An examination of expenditures revealed that thirty nine employees were paid professional development stipends totaling $13,200.00 for one Staff Development Service Units (SDU) from Technology Literacy Challenge Grant (CFDA 84.318) program funds. The current policy of the Talbot County Board ofEducation limits professional development stipends to a rate of$150.00 per SDU, or in this case a maximum of $5,850.00 for thirty nine employees. The cost allowability criteria of A-87, states, in part: "Costs must be consistent with policies, regulations, and procedures that apply uniformly to both Federal awards and other activities of the government unit." -3- TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 2001 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ALLOWABLE COSTS/COST PRINCIPLES Improper StaffDevelopment Payments Reportable Condition Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Amount: $7,350.00 Repeated From Prior Year Finding Control Number: FA-7301-01-01 This condition occurred because management did not adhere to School District policy and Circular A-87 regulations for payment of professional development stipends. The questioned cost of $7,350.00 should be reviewed by the Georgia Department of Education to determine appropriate resolution to this matter. -4 -