Tattnall County Board of Education, Reidsville, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2006

TATTNALL COUNTY BOARD OF EDUCATION
REIDSVILLE, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

TATTNALL COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

8

H

STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

9

I

NOTES TO THE BASIC FINANCIAL STATEMENTS

11

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

29

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

30

3 SCHEDULE OF STATE REVENUE

32

TATTNALL COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

34

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

35

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-133

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

SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

TATTNALL COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 658-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 5, 2007

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members of the State Board of Education
and Superintendent and Members of the Tattnall 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 ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through I) of the Tattnall County Board of Education, as of and for the year ended June 30, 2006, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Tattnall County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States 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 opm1ons.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information ofthe Tattnall County Board ofEducation, as ofJune 30, 2006, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States ofAmerica.
2006ARL-11

The Tattnall County Board of Education has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not to be part of, the basic financial statements.
In accordance with Government Auditing Standards, we have also issued our report dated June 5, 2007, on our consideration of the Tattnall County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat 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 assessing the results of our audit.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 29, 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, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Tattnall County Board of Education's basic financial statements. The accompanying supplementary information which consist 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 ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken 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, .
~w-~
Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2006ARL-11

TATTNALL COUNTY BOARD OF EDUCATION

TATTNALL COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2006
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Prepaid Items Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries Payable Retainages Payable Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Bus Replacement Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets
The notes to the basic financial statements are an integral part of this statement. - 1-

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

2,653,405

1,875,989

813,003 1,938,169
646,578 16,204 500 42,572

169,006 594,500 2,316,400 29,028,947 4,125,115 -11,957,245

$ ===3.2.,.=26=3=1, =4==3

$

2,020

2,683,322

56,922

875,307 4,032,073

$

7,649,644

$

19,389,053

40,993 424,604 2,657,700 235,254 1,865,895

$

24,613,499

$ ===3=2,=26=3=1'=43=

TATTNALL COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2006

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services 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 For Debt Services Sales Taxes Special Purpose Local Option Sales Tax For Debt Services For Capital Projects Intangible Recording Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$

17,616,928 $

1,497,418 777,297 477,667 760,109
1,510,540 170,216
1,787,279 1,271,344
16,425 28,024

194,026 90,707 1,720,823 121 976

$

28,040,779 $

660,727
83,151 82,158 362,947 1,188,983

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

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

13,774,078

548,022 280,454 310,541 556,421 812,728

862,442 578,430 $

6,335

1,360,268

$

191089?19 $

$ 98,576 98 576 $

-3,182,123
-949,396 -496,843 -167,126 -203,688 -697,812 -170,216 -924,837 -594,338 -16,425 -21,689
-110,875 -8,549 2,392
-121 976
-7,663,501

$

3,653,527

244,867

1,213,249 456,776 60,386
2,435,944 156,089 175 065

$

8,395,903

$

732,402

23,881,097

$ ===2==4'=61=3=.4=9=9

-3-

TATTNALL COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2006

EXHIBIT"C"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 1,911,209 $ 26,614
250,910 1,938,169
646,578 16,204 500 42 572

296,624 $

445,572 $ 1,849,375
334,912

2,653,405 1,875,989
585,822 1,938,169
646,578 16,204 500 42572

Total Assets

$ 4,832,756 $

296,624 $ 2,629,859 $

7,759,239

blABILITIES AND FUND BALANCE
LIABILITIES
Accounts Payable Salaries Payable Retainages Payable
Total Liabilities
FUND BALANCES
Reserved for: Bus Replacement Continuation of Federal Programs Debt Service Inventories Capital Projects
Unreserved Undesignated Reported in: General Fund
Total Fund Balances

$

2,020

$

2,683,322

$

56,922

$ 2,685,342 $

56,922

$

$

40,993

$

382,032

$ 2,629,859

42,572

$

239,702

1,681,817 $ 2,147,414 $

239,702 $ 2,629,859 $

2,020 2,683,322
56,922 2,742,264
40,993 382,032 2,629,859 42,572 239,702
1,681,817 5,016,975

Total Liabilities and Fund Balances

$ 4,832,756 $

296,624 $ 2,629,859 $

7,759,239

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

TATTNALL COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2006

EXHIBIT"D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable Capital Leases
Total Long-Term Liabilities
Net Assets of Governmental Activities (Exhibit "A")

$ 5,016,975

$

169,006

594,500

2,316,400

29,028,947

4,125,115

-11,957,245

24,276,723

227,181

$ -4,810,000 -97 380

-4,907,380

$ 24,613,499

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

TATTNALL COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2006

EXHIBIT"E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services 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

TOTAL

$ 3,739,849 56,690 $
17,689,165 3,935,074 1,188,983 64,412 179 668
$ 26,853,841 $

$ 252,911 $

456,776

1,216,945

7,248

84,429

464,024 $ 1,554,285 $

3,992,760 1,730,411 17,689,165 3,935,074 1,188,983
156,089 179 668
28,872,150

$ 16,870,279 $

2,595

$ 16,872,874

1,497,418 777,297 451,814 758,771
1,485,555 168,078
1,740,008 1,162,662
16,425 28,024 194,026 90,707 1,636,050

$

2,138

702,872

1,497,418 777,297 451,814 758,771
1,485,555 170,216
1,740,008 1,162,662
16,425 28,024 194,026 90,707 1,636,050 702,872

75,515 10 970

770,000 111 006

845,515 121 976

$ 26,877,114 $ 791,952 $ 883144 $ 28,552,210

$

-23,273 $ -327,928 $ 671,141 $

319,940

2,170,687

567,630

1,958,718

4,697,035

$ 2 147 414 $ 239,702 $ 2,629,859 $=====5,=01=6=,9=75=

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

TATTNALL 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, 2006

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital OuUay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.
In the Statement of Activities, only the gain on the sale of the equipment is reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the equipment sold.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Bond Principal Retirements Capital Lease Payments
Total Long-Term Debt Repayments

$

319,940

$

725,499

-1,059,583

-334,084 -94,366

-4,603

$

770,000

75 515

845,515

Change in Net Assets of Governmental Activities (Exhibit "B")

$===7,..32=,4=0=2

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

TATTNALL COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2006

EXHIBIT"G"

ASSETS Cash and Cash Equivalents Investments
Deferred Compensation Plan
Total Assets
LIABILITIES Funds Held for Others Deferred Compensation Plan
Total Liabilities

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

$ $ _____3_74_.,_0__4___1__

30,700

$

374,041 $==3=0=,7=00=

$ $ ______3_7_4__.,_0__4___1__

30,700

$

374,041 $==3=0=,7=00=

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

TATTNALL COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2006

EXHIBIT"H"

ADDITIONS Contributions Donors Investment Earnings Net Increase (Decrease) in Fair Value of Investments Interest Total Additions
DEDUCTIONS Refunds of Contributions Divesting of Trust Agreement Total Deductions Change in Net Assets
Net Assets - Beginning
Net Assets - Ending

PRIVATE PURPOSE TRUSTS

$

14,500

19,211 1 099

$

34.810

$

83,670

41.025

$

124.695

$

-89,885

463.926

$ =====37=4=0=41=

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

{This page left intentionally blank)

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Tattnall 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 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 Tattnall County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe 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 ofthe 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 ofgoods 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 ofinternal 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.

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TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) and Bond Proceeds to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
The School District reports the following fiduciary fund types:
Private Purpose Trust funds report trust arrangements under which principal and income may be expended to provide scholarships for selected students and for deferred compensation of employees of the School District.
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting 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 ofwhen the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable
- 12 -

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. Proceeds ofgeneral long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination ofspecific 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.
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 and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(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,
- 13 -

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(5) Prime banker's acceptances,

(6) The Local Government Investment Pool administered 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 ofcredit 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 Tattnall County Board ofCommissioners fixed the property tax levy for the 2005 tax digest year (calendar year) on September 12, 2005 (levy date). Taxes were due on December 20, 2005 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2005 tax digest are reported as revenue in the governmental funds for fiscal year 2006. The Tattnall 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, 2006, for maintenance and operations amounted to $3,739,849 and for school bonds amounted to $252,911.

Tax millage rates levied for the 2005 tax year (calendar year) for the Tattnall County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations School Bonds

12.27 mills 0.80 mills

13.07 mills

- 14 -

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SALES TAXES
Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,670,025 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 ofmeals 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, 2006, 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 ofassets 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.
Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:

- 15 -

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Capitalization Estimated

Policy

Useful Life

Land Land Improvements Buildings and Improvements Equipment

Any Amount

$

5,000

$

5,000

$

5,000

NIA 15 years 10 to 50 years 5 to 15 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

GENERAL OBLIGATION BONDS

The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial statements during the fiscal 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 of the government. The outstanding amount of these bonds is recorded in the Statement ofNet Assets.

Note 3: 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 ofthe 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. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. At June 30, $2,459,442 ofdeposits were not secured by surety bond, insurance or collateral as specified above. The School District is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the School District's deposits.

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,

- 16 -

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 3: DEPOSITS AND INVESTMENTS

(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, 2006, the bank balances were $4,266,226. The amounts ofthe total bank balances are classified into four categories of custodial credit risk:

Category 1 - Cash that is insured (e.g., Federal Deposit 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 - Cash collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.
Category 4 - Uncollateralized.

The School District's deposits are classified by custodial credit risk category at June 30, 2006, as follows:

Custodial Credit
Risk Category

Bank Balance

1

$ 792,225

2

1,014,559

3

0

4

2,459.442

Total

$ 4,266.226

- 17 -

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 3: DEPOSITS AND INVESTMENTS
CATEGORIZATION OF INVESTMENTS Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure ofthe counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk.
Investments are classified as to custodial credit risk by the categories described below:
Category 1 - Insured or registered, or securities held by the School District or the School District's agent in the School District's name.
Category 2 - Uninsured or unregistered, with securities held by the counterparty's trust department or agent in the School District's name.
Category 3 - Uninsured or unregistered, with securities held by the counterparty's trust department or agent, but not in the School District's name.
Funds invested in an investment pool managed by another government are not required to be categorized unless the investing entity owns specific, identifiable investment securities in the pool.
At June 30, 2006, the carrying value ofthe School District's total investments was $2,223,416 which is materially the same as fair value. These investments included funds in the amount of$1,045,695 invested in the Local Government Investment Pool 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 ofTreasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description of the 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. 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 of the Investment Company Act of 1940. 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 daily and reported to the rating agency weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed at the pool's share price, $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost. The pool does not issue any legally binding guarantees to support the value of the 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.

- 18 -

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 3: DEPOSITS AND INVESTMENTS

Investments in Georgia Fund 1 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, 2006, was 28 days.

Funds invested in U.S. Treasury Money Market Mutual Funds (open-end mutual funds) are not required to be classified by categories of custodial credit risk.

At June 30, 2006, the carrying value of the School District's investments was $2,223,416 which is materially the same as fair value. Fair value is based on quoted market prices, unless otherwise noted. The investments are classified as to custodial credit risk categories as follows:

Type oflnvestment

Debt Securities Federal National Mortgage Association Discount Notes

$'===="'0

Other Investments 1). S. Treasury Money Market Mutual Funds (Open-End)

Investment Pools Office of Treasury and Fiscal
Services Georgia Fund l

Unclassified Deferred Compensation Plan Pooled Investments

Total Investments

Risk Categories

2

3

$ 803.255 $===-0

Carrying Amount
$ 803,255 425
1,045,695 374,041
$ 2.223.416

Fair Value
$ 803,255 451
1,045,695 374,041
$ 2.223 442

Interest Rate Risk Interest rate risk is the risk that changes in interest rates ofdebt investment will adversely affect the fair value ofan investment. The School District does not have a formal policy for managing interest rate risk.

- 19 -

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 3: DEPOSITS AND INVESTMENTS

Investments are classified as to investment maturity as follows:

Investment Type

Investment Maturity Less Than 1 Year

Debt Securities Federal National Mortgage Association Discount Notes

$==8-03-,2=5=5

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The School District does not have a formal policy for managing credit quality risk.

The Federal National Mortgage Association Discount Notes have a credit quality rating ofAAA by Moody's.

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The School District does not have a formal policy for managing concentration of credit risk.

Note 4: NON-MONETARY TRANSACTIONS

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

Note 5: CAPITAL ASSETS

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

- 20-

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 5: CAPITAL ASSETS

Balances July 1, 2005

Increases

Decreases

Balances June 30, 2006

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

$ 169,006 1,141,779 $

$ 526,678 $ 1,073,957

169,006 594 500

Total Capital Assets Not Being Depreciated $ 1,310,785 $ 526,678 $ 1,073,957 $ 763,506

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 27,969,897 $ 4,084,812 2,188,278

1,059,050 85,606 $ 128,122

$ 29,028,947

45,303

4,125,115

2,316,400

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

6,881,909 2,445,396 1,611,057

611,986 323,666 123,931

40,700

7,493,895 2,728,362 1,734,988

Total Capital Assets, Being Depreciated, Net $ 23,304,625 $ 213,195 $

4 603 $ 23,513,217

Governmental Activity Capital Assets - Net $ 24,615.410 $ 739.873 $ 1,078.560 $ 24,276.723

Capital assets being acquired under capital leases as of June 30, 2006, are as follows:

Governmental Funds

Equipment Less: Accumulated Depreciation

$ 259,380 77 814

$ 181!566

Current year depreciation expense by function is as follows:

Instruction Support Services
Educational Media Services General Administration School Administration Maintenance and Operation of Plant Student Transportation Services Food Services

$ 702,310

$

24,403

1,263

23,583

66,498

161,509

277,256 80 017

$ 1!059!583

- 21 -

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST), general obligation bond proceeds, Qualified Zone Academy Bonds (QZAB) escrow account (Debt Service Funds) and property tax levied specifically for retirement of outstanding bond principal, interest and paying agent's fees (Debt Service Funds) are reported as restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2006, were as follows:

District-wide Capital Projects

Bond

SPLOST

Proceeds

Debt Service Funds

Restricted Cash and Cash Equivalents: Debt Services Capital Acquisitions
Restricted Investments: Debt Services

$ 292,176 $

$
4,448

445,572

$ 1,849,375

Note 7: RISK MANAGEMENT

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

The School District has obtained commercial insurance for risk ofloss associated with automobiles. The School District has neither significantly reduced coverage for this risk nor incurred losses (settlements) which exceeded the School District's insurance coverage in any ofthe past three years.

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

- 22 -

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"I"

Note 7: RISK MANAGEMENT

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 ofthat loss can be reasonably estimated. The School District has not incurred any liabilities for unemployment compensation during the past two fiscal years.

The School District participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July 1, 1992, to develop, implement, and administer a program ofworkers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $400,000 loss per occurrence, up to $1,000,000.

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

Position Covered

Amount

Superintendent All Employees

$

50,000

$ 100,000

Note 8: LONG-TERM DEBT

CAPITAL LEASES The Tattnall County Board of Education has entered into various lease agreements as lessee for equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value ofthe future minimum lease payments as ofthe date oftheir inception.

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

Purpose

Interest Rates

Amount

General Government - Refunding - Series 1999 General Government - Series 2002A General Government - QZAB Series 2002B

3.10% -4.00% 2.79% 0%

$ 1,265,000 1,545,000 2,000,000

$ 4,810.000

-23 -

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"!"

Note 8: LONG-TERM DEBT

The changes in Long-Term Debt during the fiscal year ended June 30, 2006, were as follows:

Governmental Funds

General

Capital

Obligation

Leases

Bonds

Total

Balance July 1, 2005

$ 172,895 $ 5,580,000 $ 5,752,895

Deductions Debt Retired

75,515

770.000

845.515

Balance June 30, 2006

$==9-7.""=38"'=0 $ 4,810.000 $ 4,907.380

Portion of Long-Term Debt Due within One Year

$_ _____.;::8;.:.,0.:;..:30a.:.7 $ 795.000 $ 875.307

At June 30, 2006, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

Ca12ital Leases

Princi12al

Interest

2007 2008

$

80,307 $

17.073

6,179 1,083

Total Principal and Interest

$

97.380 $

7,262

Fiscal Year Ended June 30

General Obligation

Debt

Princi12al

Interest

2007 2008 2009 2010 2017

$ 795,000 $ 825,000 855,000 335,000
2,000.000

86,436 60,771 33,794 13,400

Total Principal and Interest

$ 4,810,000 $ 194_401

-24-

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 9: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $572,767 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 $568,462

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 $4,305

Note 10: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2006:

Project

Unearned Executed Contracts

Tattnall County High School - Additional Classrooms Tattnall County High School - Flooring

$

13,700

92.494

$ H)6,194

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 ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.

- 25 -

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 12: SUBSEQUENT EVENTS
On November 7, 2006, the voters of Tattnall County voted in favor of a Special Purpose Local Option Sales Tax referendum for educational purposes. The imposition of the tax approved by voters, as stated on the Official Ballot of Tattnall County is as follows:
"Shall a one percent sales and use tax for educational purposes be imposed in the Tattnall County School District for a period oftime not to exceed 20 consecutive calendar quarters in order to raise not more than $9,800,000 for the purposes of (a) retiring previously incurred general obligation debt ofthe School District in a maximum amount of$1,265,000 and/or (b) funding the following capital outlay projects: adding to, remodeling, renovating, improving and equipping existing educational buildings, properties, and facilities ofthe School District, acquiring any necessary personal property and equipment relating thereto, including band instruments, textbooks, school buses, computers and related technology, copiers, energy 1 management systems, heating and air conditioning systems, lighting, and similar equipment, in a maximum amount of$9,800,000?
If imposition of the tax is approved by the voters, such vote shall also constitute approval of the issuance of general obligation debt of the Tattnall County School District in a principal amount not to exceed $6,500,000 for the above purposes and for the payment of capitalized interest on such debt."
Note 13: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems 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 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

-26-

TATTNALL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "I"

Note 13: RETIREMENT PLANS
Fiscal Year
2006 2005 2004

Percentage Contributed
100% 100% 100%

Required Contribution
$ 1,362,255 $ 1,310,792 $ 1,295,695

- 27 -

(This page left intentionally blank)

TATTNALL COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

Fl,NAL (1)

ACTUAL AMOUNTS

$

3,536,674 $

3,536,674 $

3,739,849

25,000

25,000

56,690

16,900,845

16,900,845

17,689,165

3,661,637

3,661,637

3,935,074

366,400

366,400

1,188,983

33,800

33,800

64,412

388120

388 120

179 668

$

24,912,476 $

24,912,476 $

26,853,841

$

15,835,014 $

15,835,014 $

16,870,279

1,490,137 771,174 448,548 606,739
1,468,436 171,527
1,652,016 1,162,990
17,500 38,260
105,817 1,665,650

1,490,137 771,174 448,548 606,739
1,468,436 171,527
1,652,016 1,162,990
17,500 38,260
105,817 1,665,650

1,497,418 777,297 451,814 758,771
1,485,555 168,078
1,740,008 1,162,662
16,425 28,024 194,026 90,707 1,636,050

$

25,433,808 $

25,433,808 $

26 877114

$

-521,332 $

-521 332 $

-23 273

$

151,100 $

151,100

-151100

-151100

$

0 $

0

$

-521,332 $

-521,332 $

-23,273

1979457

1979457

2 170 687

Fund Balances - Ending

$

1,458,125 $

1458125 $===2=1=4=7=4=14=

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

See notes to the basic financial statements.

- 29 -

TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2006

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1) Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning Child and Adult Care Food Program
Total U.S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education English Language Acquisition Grants Enhancing Education Through Technology Program Hurricane Education Recovery Improving Teacher Quality State Grants Migrant Education Rural Education State Grants for Innovative Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States
Total U.S. Department of Education
Total Federal Financial Assistance
N/A = Not Available

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

N/A

N/A

$

$

(2) 1,465,006
1,465,006

10.550 10.558

N/A
N/A $

73,868
(2) 1,538,874

84.027 84.173

N/A $
NIA
$

531,143 7 946
539,089

84.365 84.318 84.938 84.367 84.011 84.358 84.298 * 84.010 84.048

N/A N/A NIA
N/A NIA N/A NIA NIA NIA
$

26,588 60,617 (3) 241,535 137,091 99,$40 13,992 1,459,539 56185
2,633,976

$ ===4='=17=2==,8=50=

- 30 -

TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2006

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on Child and Adult Care Food Program ($5,745) and the School Breakfast Program ($318,652) were not maintained separately and are included in the 2006 National School Lunch Program.
(3) Funds earned on the Hurricane Education Recovery program, in the amount of $8,945, do not require reporting of expenditures.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Tattnall County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 31 -

TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2006
AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Leaming Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Principal Supplements Migrant Education Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs K-8 Statewide Reading and Mathematics Program Health Insurance National Teacher Certification Preschool Handicapped Program Special Education Low Incidence Grant Virtual Schools State Grant
- 32-

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

859,970

1,033,364 156,425
2,081,201 433,152 993,444 159,532
2,039,313 1,534,167
616,791
57,966 229,771 914,314 302,702
92,544 285,488
44,322 158,204 151,756 310,541 100,566 61,641
456,200 800,539 859,566
554,369 98,576 20,000 73,571 10,862 30,276
1,868,205 94,468
149,936 -740,069
59,242 568,462
52,138 54,850 15,137
475

TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2006
AGENCY/FUNDING GRANTS Office of Treasury and Fiscal Services Public School Employees Retirement CONTRACT Human Resources, Georgia Department of Family Connection

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

4,305

40883

$ ======17=!:i,6=8=9'=1=65=

See notes to the basic financial statements.

- 33 -

TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2006

SCHEDULE "4"

PROJECT
Retiring previously incurred general obligation debt of the School District in a maximum amount of $500,000 and thereby reduce ad valorem property taxes by such amount.
Funding of an Escrow Account to pay a portion of previously incurred general obligation debt and acquiring, constructing, repairing, improving, retrofitting, upgrading and equipping buildings and facilities in the Tattnall County School District, useful or desirable in connection therewith including acquiring any necessary property therefore, both real and personal, specifically, all schools in the Tattnall County School District, including the Tattnall County High School, Glennville Middle School, Collins Middle School, Reidsville Middle School, Collins Elementary School, Reidsville Elementary School and Glennville Elementary School, such improvements and renovations to include paving, additional classrooms, new roofs and covered walkways, updated electrical wiring, new kitchen and cafeteria, new air conditioning units, new floor coverings, renovation of physical education facilities and purchase of new technology equipment and school buses at a maximum cost of $6,500,000.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

$ 500,000 $ 500,000

Ongoing

6,500,000

9,000,000 $

841,823 $ 5 447 477 Ongoing

$ 7,000,000 $ 9,500,000 $

841 823 $ 5 447 477

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.
(3) The voters of Tattnall County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

See notes to the basic financial statements.

- 34-

TATTNALL COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2006

SCHEDULE "5"

DESCRIPTION

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Primary Grades (1-3) Program

Primary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Upper Elementary Grades-Early Intervention (4-5)

Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category I

Category II

Category Ill

Category IV

CategoryV

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

1,118,076 $ 170,550
2,270,660 489,154
1,093,821
182,921 2,245,177 1,685,352
677,599 1,738,516
306,055 54,184
173,457 163 737

1,176,161 $ 142,437
1,956,731 474,058
1,412,446
116,268 2,086,140 1,938,251
559,014
52,564 456,024 790,714 170,908
74,582 273,916
21,669 219,025 166,193

27,137 $ 1,314
75,399 1,375
46,872
10 57,211 101,142 36,030
513 2,829
43
11,680
318 1 985

1,203,298 143,751
2,032,130 475,433
1,459,318
116,278 2,143,351 2,039,393
595,044
52,564 456,537 793,543 170,951
74,582 285,596
21,669 219,343 168178

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

12,369,259 $ 12,087,101 $

363,858 $

12,450,959

Media Center Program Staff and Professional Development

340,768 68 021

393,553 22,300

38,516 52 717

432,069 75017

TOTAL QBE FORMULA FUNDS

$

12,778,048 $ 12,502,954 $

455,091 $=====1,..2,=9=58;.i;,04...,.5

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State budget austerity reduction.

See notes to the basic financial statements.

- 35-

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 5, 2007

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members ofthe Tattnall County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Tattnall County Board of Education as ofand for the year ended June 30, 2006, which collectively comprise Tattnall County Board of Education's basic financial statements and have issued our report thereon dated June 5, 2007. 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 Reporting
In planning and performing our audit, we considered Tattnall County Board ofEducation's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to provide an opinion on the internal 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 of the internal control over financial reporting that, in our judgment, could adversely affect Tattnall 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-7321-06-02, FS-7321-06-03, FS-7321-06-04, FS-7321-06-05 and FS-7321-06-06.
2006YB-30

A material weakness is a reportable condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud 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, we believe none of the reportable conditions described above are material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Tattnall 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 grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of the management and members of the Tattnall County Board of Education and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~~~~
Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2006YB-30

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 5, 2007

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Tattnall 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 of Tattnall County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to its major Federal program for the year ended June 30, 2006. Tattnall County Board of Education's major Federal program is identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements oflaws, regulations, contracts and grants applicable to its major Federal program is the responsibility of Tattnall County Board of Education's management. Our responsibility is to express an opinion on Tattnall 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 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 Tattnall County Board ofEducation's compliance with

2006SA-15

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 Tattnall County Board of Education's compliance with those requirements.
In our opinion, the Tattnall County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to its major Federal program for the year ended June 30, 2006. However, the results of our auditing procedures disclosed an instance of noncompliance with those requirements which is described in the accompanying Schedule of Findings and Questioned Costs as item FA-7321-06-01.
Internal Control Over Compliance
The management of Tattnall 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 Tattnall 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 reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level ofrisk that noncompliance with applicable requirements oflaws, regulations, contracts and grants caused by error or fraud 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 of performing 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 of the management, members of the Tattnall 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,
~~-~~
Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2006SA-15

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

TATTNALL COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7321-04-01 FS-7321-05-01 FS-7321-05-02

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

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Finding Control Number: FS-7321-05-01

We concur with this finding. On June 30, 2006, new policies and procedures for the student activity funds were put into process that addressed the current findings. Within that time there have been several position changes including two different financial officers. Beginning July 1, 2007, the policies that were made on June 30, 2006, will be reinforced. Along with the new financial officer, the central office bookkeepers and the school bookkeepers will have a meeting to ensure that proper procedures will be carried out. However, due to current budget constraints the School District is unable to hire additional administrative staff to address the concern of separation of duties.

EXPENDITURES/LIABILITIES/DISBURSEMENTS Accounting/Internal Control Deficiencies Finding Control Number: FS-7321-05-02

We concur with this finding. Procedures will be implemented immediately to ensure that all payments are made from original invoices. Any payments processed from copies will be indicated by the accounts payable staff. We will also implement procedures to be sure that all vouchers contain purchase approvals. The new financial officer and the central office bookkeepers will have a meeting to ensure that proper procedures will be carried out within the new school year.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-7321-04-01

Further Action Not Warranted

SECTION IV FINDINGS AND QUESTIONED COSTS

TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Tattnall County Board ofEducation's financial statements was unqualified.

2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Tattnall County Board of Education disclosed financial statement reportable conditions related to the following control categories.

Cash and Cash Equivalents Revenues/Receivables/Receipts Accounting Controls (Overall)

Expenditures/Liabilities/Disbursements General Ledger

None ofthe reportable conditions described above are considered to be material weaknesses.

3. Noncompliance Material to the Financial Statements The audit of the Tattnall County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.

4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Tattnall 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 Tattnall 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 Tattnall County Board ofEducation's audit did not disclose an audit finding required to be reported by section .5 lO(a) ofOMB Circular A-133; however, we noted a certain instance of nonmaterial noncompliance which is included in section IV of this report.

7. Major Programs Federal awards audited as major programs are as follows: 84.010 Title I Grants to Local Educational Agencies

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.

9. Low Risk Auditee The Tattnall County Board of Education qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133.

- 1-

TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS Failure to Meet State Collateralization Requirements Nonmaterial Noncompliance Finding Control Number: FS-7321-06-01

Condition:

The School District failed to meet state collateralization requirements.

Criteria:

Official Code ofGeorgia 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 of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance.

Questioned Cost: NIA

Information:

At June 30, 2006, deposits in the amount of$2,459,442 were not secured by surety bond, insurance, or collateral.

Cause:

Management failed to monitor the amount ofcollateral pledged to the School District's accounts.

Effect:

Noncompliance with respect to OCGA 45-8-12.

Recommendation:

The School District should work with their financial institutions to ensure appropriate levels ofcollateral are maintained for all ofthe School District's deposits.

-2-

TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Reportable Condition Finding Control Number: FS-7321-06-02

Condition:

This is a repeat finding (FS-7321-05-01 and FS-7321-04-01) from the years ended June 30, 2005, and June 30, 2004, respectively. The accounting procedures of the School District were insufficient to provide for adequate internal controls over the school activity accounts.

Criteria:

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

Questioned Cost: NIA

Information:

Cash and Cash Equivalents One certificate of deposit was not recorded on the general ledger. An
audit entry was proposed and made to record the certificate ofdeposit on the general ledger.

Revenues/Receivables/Receipts Deposit preparation was not separated from the record keeping and cash
custody functions. Based on a review of twenty-seven items, ten receipts were not
deposited in a timely manner and thirteen receipts lacked sufficient, substantiating documentation.

Expenditures/Liabilities/Disbursements Based on a review oftwenty-five items, the following deficiencies were
noted: 1. Nine vouchers were not approved by authorized personnel prior to
the disbursement of funds. 2. One voucher did not have an original invoice attached. 3. Ten vouchers lacked purchase orders or check requests. 4. One voucher included a charge for sales tax.

Cause:

These deficiencies were the result of management's failure to ensure that internal controls were established, implemented and functioning at the school level.

-3-

TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Reportable Condition Finding Control Number: FS-7321-06-02

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation:

The School District should implement procedures to ensure that the key accounting functions of custody, record keeping and authorization are separated and or utilize oversight for these incompatible activities. In addition, management should revise and monitor controls to provide reasonable assurance that transactions are processed according to established policies and implement procedures deemed necessary to strengthen internal controls over the accounting functions.

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Internal Controls over Central Office Accounts Reportable Condition Finding Control Number: FS-7321-06-03

Condition:

The accounting procedures ofthe School District were insufficient to provide for adequate internal controls over the central office accounts.

Criteria:

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

Questioned Cost: NIA

Information:

Cash and Cash Equivalents The bank reconciliations were not reviewed by an administrator not
directly connected with cash operations. The bank reconciliation function was not separated from the record
keeping and voucher payment functions for the Capital Projects and Debt Service Funds.

-4-

TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUESIRECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Internal Controls over Central Office Accounts Reportable Condition Finding Control Number: FS-7321-06-03

Revenues/Receivables/Receipts Deposit preparation was not separated from the record keeping and cash
custody functions.

Expenditures/Liabilities/Disbursements The check signing function was not separated from the check
preparation function. Based on a review offorty-six vouchers, the following deficiencies were
noted: 1. Four items did not have original invoices attached. 2. Two items lacked proper receiving evidence. 3. Three items lacked purchase approval. 4. One voucher was not written for the correct amount due to an
addition error.

General Ledger The School District failed to record the Deferred Compensation Plan on
the general ledger. An audit entry was proposed and made to correct this omission from the Private Purpose Trust Funds.

Cause:

These deficiencies were the 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.

Recommendation:

The School District should implement procedures to ensure that the key accounting functions of custody, record keeping and authorization are separated and or utilize oversight for these incompatible activities. In addition, management should revise and monitor controls to provide reasonable assurance that transactions are processed according to established policies and implement procedures deemed necessary to strengthen internal controls over the accounting functions.

-5-

TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

ACCOUNTING CONTROLS (OVERALL) Inadequate General Controls Reportable Condition Finding Control Number: FS-7321-06-04

Condition:

Our examination ofthe School District included a review ofgeneral controls related to their financial information systems. We noted weaknesses in internal controls which we consider relevant to the School District's financial statements for the Fiscal Year Ended June 30, 2006.

Criteria:

Policies and procedures should be in place to reasonably mitigate the risk of loss, manipulation or corruption of data due to internal or external threats.

Questioned Cost: NIA

Information:

Weaknesses in internal control over financial information systems were identified at the School District.

Cause:

Management did not implement proper policies or controls over access to financial information systems and separation of duties.

Effect:

Without satisfactory controls in place, losses, changes or misuses of data could occur and possibly not be detected.

Recommendation:

Management should perform a complete risk assessment to identify internal and external threats that could cause loss, manipulation or corruption ofdata maintained in the financial information system. Policies and procedures should be developed and implemented to address the weaknesses.

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over Procurement Card Transactions Reportable Condition Finding Control Number: FS-7321-06-05

Condition:

School District personnel did not ensure that purchases made with the School District's procurement cards were properly authorized and documented.

Criteria:

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

-6-

TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over Procurement Card Transactions Reportable Condition Finding Control Number: FS-7321-06-05

Questioned Cost: NIA

Information:

Weaknesses in internal controls related to procurement card usage were noted as follows: The School District did not have a written policy regarding the use ofthe
procurement cards. There were no procedures in place to ensure that charges were allowable
prior to the use of the procurement cards. The School District did not maintain a log of when procurement cards
were issued, returned or to whom the card was issued. This deficiency resulted in the School District not being able to locate one of the procurement cards. A review of ten procurement card transactions revealed that three transactions did not have supporting documentation.

Cause:

These deficiencies were a result of management's failure to ensure that internal controls were established, implemented and functioning with regard to the procurement cards.

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation:

The School District should establish written policies and procedures to ensure that procurement card expenditures are authorized, documented and utilized for educational purposes only. In addition, the School District should establish appropriate controls over issuance and usage ofprocurement cards.

EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Follow State Travel Regulations Reportable Condition Nonmaterial Noncompliance Finding Control Number: FS-7321-06-06

Condition:

The School District did not comply with Georgia Statewide travel regulations which are included in the Georgia Department of Education's Financial Management for Georgia Local Units of Administration issued to Local Education Agencies.

-7-

TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Follow State Travel Regulations Reportable Condition Nonmaterial Noncompliance Finding Control Number: FS-7321-06-06

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions comply with the travel regulations as set forth in the Financial Management for Georgia Local Units of Administration.

Questioned Cost: NIA

Information:

A review of charges made to the School District's credit card used for management's travel revealed that meals were charged in excess ofmeal limit amounts. In addition to these meals being paid with the School District's credit card, members ofmanagement also claimed reimbursements for these meals on travel reimbursement forms resulting in duplicate payments.

A review of travel reimbursement forms filed by management revealed that management received reimbursement for expenditures which violated travel regulations.

Cause:

Management failed to implement internal controls to ensure that employee travel expenditures were in compliance with Georgia Statewide travel regulations included in the Georgia Department of Education's Financial Management for Georgia Local Units of Administration.

Effect:

Noncompliance with Georgia Statewide travel regulations.

Recommendation:

The School District should review current policies regarding travel expenditures and implement controls to ensure that expenditures are in compliance with the travel regulations as set forth in the Financial Management for Georgia Local Units of Administration.

-8-

TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Deficiencies in Hiring "Highly Qualified" Personnel Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA-7321-06-01

Condition:

The School District failed to ensure that teachers met the requirements of "Highly Qualified" personnel for those individuals working in a program supported with Title I Grants to Local Educational Agencies (CFDA 84.010) funds.

Criteria:

"Highly Qualified" requirements are set forth in 34 CFR section 200.58, which states, in part, as follows: "An LEA must ensure that all teachers hired after the first day of the 2002 year who teach a core academic subject be highly qualified. Additionally, all teachers ofcore academic subjects must be highly qualified by the end of 2005-2006 school year. To be a highly qualified teacher, the individual must: (1) Hold at least a bachelor's degree (2) Be certified by the State, including alternative routes to certification (3) Pass a rigorous State test on subject knowledge that the teacher teaches and on teaching skills."

Questioned Cost: NIA

Information:

The School District made class assignments for teachers before verifying "highly qualified" status and, after identifying that the employee was not "highly qualified", continued to allow the employee to work in a Schoolwide Program supported with Title I funds.

Cause:

The School District failed to assign "highly qualified" teachers to teach core academic subjects in class.

Effect:

The School District is not ensuring that students' needs of instruction from "highly qualified" teachers are being met in the classrooms.

Recommendation:

The School District should implement procedures to ensure that class assignments are made so that only "highly qualified" teachers are providing the instruction of core academic subjects. The Georgia Department of Education should further review this matter to determine ifa reclaim ofTitle I funds is necessary.

-9-

SECTIONV MANAGEMENT'S RESPONSES

TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-7321-06-01
We concur with this finding. The School District will work with our financial institutions to ensure appropriate levels ofcollateral are maintained for all ofthe School District's deposits. Protocol will be developed with personnel from the financial institutions to document compliance. Procedures will be implemented beginning July 2007.
Finding Control Number: FS-7321-06-02
We concur with this finding. On June 30, 2006, new policies and procedures for the student activity funds were put into process that addressed the current findings. Within that time there have been several position changes including two different financial officers. Beginning July 2007, the policies that were made on June 30, 2006, will be reinforced. Along with the new financial officer, the central office bookkeepers and the school bookkeepers will have a meeting to ensure that proper procedures will be carried out. However, due to current budget constraints the School District is unable to hire additional administrative staff to address the concern of separation of duties.
Finding Control Number: FS-7321-06-03
We concur with this finding. The School District will define protocol to ensure the proper management offinancial transactions at the central office level. Proper separation ofresponsibilities will be clearly delineated amongst staffmembers. Procedures will be implemented immediately to ensure that all payments are made from original invoices. Any payments processed from copies will be indicated by the accounts payable staff. We will also implement procedures to be sure that all vouchers contain purchase approvals. Procedures will be implemented beginning July 2007.
Finding Control Number: FS-7321-06-04
We concur with this finding. The School District will establish protocols to alleviate weaknesses in data control in the financial information system. Procedures will be established to ensure proper usage ofpassword controls. Procedures will be implemented beginning July 2007.
Finding Control Number: FS-7321-06-05
We concur with this finding. The School District will establish written policies and procedures to ensure proper usage ofprocurement cards. Protocol will be established to record the issuance/return of procurement cards, and to ensure that expenditures are properly authorized. These procedures will be invoked beginning in July 2007.
Finding Control Number: FS-7321-06-06
We concur with this finding. The School District revised the system travel regulations during the 2006-2007 school year. These procedures will be reviewed in 2007, with the system personnel to ensure compliance.
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TATTNALL COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006 Finding Control Number: FA-7321-06-01 We concur with this finding. There will be a review of highly qualified procedures with the administrative staffs to ensure compliance with Federal and State guidelines. The School District will work with each school to verify and validate that all students are receiving instruction from highly qualified personnel. Contact Person: Dr. Glenn Purcell, Financial Director Phone: (912) 557-4726 Fax Number: (912) 557-3036 E-mail Address: gpurcell@tattnall.kl2.ga.us
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