Audit report, Towns County Board of Education, Hiawassee, Georgia, year ended June 30, 1996

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1995 -'it:,

AUDIT REPORT TOWNS COUNTY BOARD OF EDUCAnON
RIAWASSEE, GEORGIA YEAR ENDED JUNE 30, 1996

STATE OF GEORGIA DEPARTMENT OF AUDITS
254 WASHINGTON STREET
ATLANTA. GEORGIA 30334

TOWNS COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE

EXHIBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

5

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

7

ADDITIONAL FINANCIAL INFORMATION

COMBINING AND INDIVIDUAL FUND STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

20

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

22

G

FIDUCIARY FUND TYPE

STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUND

24

SCHEDULES

1 SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE

25

2 CASH AND CASH EQUIVALENTS

27

3 ACCOUNTS RECEIVABLE

28

4 DEBT SERVICE REQUIREMENTS TO MATURITY

29

SCHEDULE OF REVENUE

5

STATE

30

6

TAXES AND OTHER

31

TOWNS COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

ADDITIONAL FINANCIAL INFORMATION

SCHEDULES

SCHEDULE OF EXPENDITURES BY OBJECT

7

GENERAL, SPECIAL REVENUE AND CAPITAL PROJECTS FUNDS

32

8

LOTTERY PROGRAMS

33

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

9

OVERALL

35

10

BY PROGRAM

36

11 SCHEDULE OF COMPENSATION OF BOARD MEMBERS

38

SECTION II
COMPLIANCE
COMPLIANCE REPORT BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
SINGLE AUDIT REPORT ON COMPLIANCE WITH THE GENERAL REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS
SINGLE AUDIT REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS

SECTION III
INTERNAL CONTROL
REPORT ON INTERNAL CONTROL STRUCTURE IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
SINGLE AUDIT REPORT ON THE INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS

TOWNS COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS-
SECTION IV FINDINGS AND IMPROPER OR QUESTIONED COSTS SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS .

SECTION I FINANCIAL

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
March 21, 1997

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Superintendent and Members of the Towns County Board ofEducation
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
Ladies and Gentlemen:
We have audited the general purpose financial statements (Exhibits A through D) of the Towns County Board of Education, as of and for the year ended June 30, 1996, as listed in the table of contents. These financial statements are the responsibility of the Board's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of the Office of Management and Budget Circular A-128, "Audits of State and Local Governments". Those standards and OMB CircularA-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and 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 opinion.
As described in the notes to the general purpose financial statements, the Board's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:
* The general purpose financial statements of the Board did not contain a General Fixed Assets
Account Group to account for property and equipment owned by the Board which should be included to conform to generally accepted accounting principles.
96ARL-13

* School activity accounts maintained at the individual schools are not included in the general purpose
financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general purpose financial statements.
v
The aggregate effects on the general purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects on the general purpose financial statements of the matters referred to in the preceding paragraph, the general purpose financial statements present fairly, in all material respects, the financial position of the Towns County Board of Education as of June 30, 1996, and the results of its
operations for the year then ended, in conformity with generally accepted accounting principles. In accordance
with Government Auditing Standards, we have also issued a report dated March 21, 1997, on our consideration ofthe Board's internal control structure and a report dated March 21, 1997, on its compliance with laws and regulations.
Our audit was conducted for the purpose offorming an opinion on the general purpose financial statements of the Towns County Board of Education taken as a whole. The combining and individual fund statements (Exhibits E through G) and the financial schedules (Schedules 1 through 11 which includes the Schedule of Federal Financial Assistance) are presented for purposes of additional analysis and are not a required part of the general purpose financial statements ofthe Towns County Board ofEducation. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, except for the effects of the matters referred to in the third paragraph, such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.
A copy ofthis 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.

CLV:gp 96ARL-13

Claude L. Vickers State Auditor

TOWNS COUNTY BOARD OF EDUCATION
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TOWNS COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 1996

ASSETS Cash and Cash Equivalents Investments Held by Trustee Accounts Receivable Amount Available in Debt Service Fund Amountto be Provided in Future Years
For Payment of Bond Debt

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$

890,873.88 $

48,130.84

323,148.96

25,166.96 $

92,419.47

Total Assets

$ 1,214,022.84 $

73,297.80 $ ===92=,4=1.9..=.4=7

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Retainages Payable Deferred Compensation Plan General Obligation Bonds Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs For Debt Service For Expired Grant Balances/Questioned Costs For State Capital Outlay Projects
Unreserved Designated for Self-Insurance Undesignated
Total Fund Equity

$

99,769.19 $

326,479.34

$ 4,669.25 15,866.74 9,519.04

999.51 6,990.20

$

426,248.53 $

30,055.03 $ _ _....;7'"'-,9::.;;8;.;;.9"'-.7...;..1

$

$

45,000.26

$

45,000.26 $

18,586.43 724,187.62

$

787,774.31 $

461,32 319.31
$ 780.63 $
42,462.14 43,242.77 $

84,429.76 84,429.76
0.00 84,429.76

Total Liabilities and Fund Equity

$ 1,214,022.84 $

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

73,297.80 $ ===92=,4=1.9..=.4=7

EXHIBIT "A"

" DEBT SERVICE
FUND

FIDUCIARY FUND TYPE AGENCY FUND

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS (Memorandum Only} JUNE 30, 1996 JUNE 30, 1995

$

392,675.93

$ 1,331,680.65 $ 1,350,755.54

$

295,308.42

295,308.42

291,659.51

440,735.39

400,957.n

$

392,675.93

392,675.93

431,980.22

7,324.07

7,324.07

8,019.78

$

392,675.93 $

295,308.42 $

400,000.00 $ 2,467,724.46 $ 2,483,372.82

$

999.51

104,438.44 $

117,456.37

342,346.08

295,007.27

9,519.04

6,990.20

$

295,308.42

295,308.42

291,659.51

$

400,000.00

400,000.00

440,000.00

$

295,308.42 $

400,000.00 $ 1,159,601.69 $ 1,144,123.15

$

392,675.93

$

392,675.93

0.00

$

392,675.93

$

461.32 $

5,273.75

392,675.93

431,980.22

45,319.57

48,892.78

84,429.76

114,528.69

$

522,886.58 $

600,675.44

18,586.43 766,649.76

15,372.54 723,201.69

$ 1,308,122.77 $ 1,339,249.67

$

392,675.93 $

295,308.42 $

400,000.00 $ 2,467,724.46 $ 2,483,372.82

-3-

TOWNS COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30. 1996

EXHIBIT "eo

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

TOWNS COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30. 1996

EXHIBITC

REVENUES
State Funds Federal Funds Taxes and Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation Community Service Operations Other Operations of Non-Instructional Services
Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Other Sources Other Uses
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1, 1995

GENERAL FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

$ 2,074,793.00 $ 2,291,704.35

84,610.00

28,519.42

1,519,840.00 1,834,403.53

$ 3,679,243.00 $ 4,154,627.30

$ 2,458,053.40 $ 2,669,196.29

127,341.00 21,761.00 96,071.00 131,237.00 241,123.00 43,054.00 313,204.00 275,272.00
5,441.00

159,570.78 20,124.70 112,304.27 127,604.14 295,566.18 25,903.79 354,262.27 297,713.50
5,398.08

6,212.00 13,720.00

4,680.72 7,060.38
475.00 17,964.78

$ 3,732,489.40 $ 4,097,824.88

$ -53,246.40 $ 56,802.42

$

-6,370.42

$

-6,370.42

$ -53,246.40 $ 846,169.97

50,432.00 737,342.31

SPECIAL REVENUE FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

$ 196,154.00 $ 353,912.00 127,200.00
$ 6n,266.00 $

193,638.97 447,792.84 110,310.22
751,742.03

$ 306,412.38 $ 412,993.90

26,335.00 1,000.00 2,371.00 1,525.00 1,000.00

26,584.11 11,082.69
n3.55 467.80 495.30

904.00 5,112.00 24,816.00
500.00 290,267.00

2,326.12 693.62
22,759.86
292,091.18

100,000.00 $ 760,242.38 $ nO,268.13 $ -82,976.38 $ -18,526.10

$

6,370.42

$

6,370.42

$ -82,976.38 $ -12,155.68

56,931.44

55,398.45

FUND BALANCE JUNE 30.1996

$ 792,923.57 $ 787,n4.31

$ -26,044.94 $ 43,242.n

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

THIS PAGE LEn BLANK

TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1996

Notel: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Towns County Board ofEducation (Board) was established under the laws of the State of Georgia and operates under the guidance of a school board and Superintendent, both elected by the voters. With the exception ofthe departures from generally accepted accounting principles disclosed in these notes, the financial statements of the Board have been prepared in conformity with generally accepted accounting principles as applied to governmental units and unless otherwise disclosed in these notes, the financial statements present all of the fund types and account groups of the Board. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting standards.
The more significant of the Board's accounting policies are described below.
REPORTING ENTITY
In evaluating how to define the governmental unit for financial reporting purposes, management has considered the criteria set forth in GASB Codification of Governmental Accounting and Financial Reporting Standards, Section 2100, "Defining the Financial Reporting Entity". The primary government consists of all the organizations that compose the legal entity of the Towns County Board ofEducation.
Based upon the application of the above criteria, the Towns County Board ofEducation is determined to be the lowest level of government exercising oversight responsibility and control over all activities related to public education in Towns County, Georgia. The Board is not included in any other governmental "reporting entity" as defined by GASB Codification of Governmental Accounting and Financial Reporting Standards.
Board members were elected by the public and have decision making authority, the power to designate management, except for the Superintendent who was also elected, the ability to significantly influence operations, and primary accountability for fiscal matters. The Board determines the millage rate at which school taxes are levied and may incur bonded indebtedness with voter approval.
FUND ACCOUNTING
The Board uses funds and an account group 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. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
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TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1996

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded in the general purpose financial statements.
The general purpose financial statements account for all State, Federal, Taxes and Other funds under control ofthe Board, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most of a Board's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources of the Board except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education.
SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are primarily received from the Georgia Department of Education and from the Federal government to accomplish specific objectives and are required to be accounted for separately.
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of Towns County Comprehensive School, Georgia State Financing and Investment Commission Project No. 96-739-067.
DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees.
FIDUCIARY FUND TYPE - the agency fund used to account for assets held by a government unit in a trustee capacity or as an agent for individuals, private organizations, other government units and/or other funds. This fund includes:
AGENCY FUND - the fund used to account for assets held for the Deferred Compensation Plan.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - used to account for general obligation bonds outstanding.

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TOWNS COUNTY BOARD OF EDUCATION

EXIllBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30.1996

Note "1: SUM:MARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
Agency funds are purely custodial in nature and do not involve measurement of results of operations.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Those revenues considered susceptible to accrual are property taxes, local option sales taxes, intergovernmental grants and investment income. Property taxes are considered available ifthey are collected and remitted by the collecting agent to the Board within 60 days after fiscal year-end.
Expenditures are generally recognized when the related fund liability is incurred.
A substantial number of personnel of the Board were employed for a one hundred and ninety day period beginning in late August of 1995 and ending in early June 1996. Employment contracts for these employment periods typically specifY that compensation be paid in twelve equal monthly payments beginning in September 1995 and ending in August 1996. State grants to fund the State's share of these contracts are disbursed to the Board in the same twelve month period. In accordance with generally accepted accounting principles, salary and fringe benefit expenditures and the related revenue from the State to fund these contracts are recorded in the fiscal period covered by these financial statements.
Agency funds are accounted for using the modified accrual basis of accounting in recognizing assets and liabilities.
BUDGET
The Towns County Board ofEducation's budget is a complete financial plan for the Board's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is
- 9-

TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1996

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
prepared by fund, function and object. The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.
The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school
budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act,
OCGA Section 20-2-167, to the Georgia Department ofEducation. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS
Cash and cash equivalents consist ofdeposits (including certificates of deposit, savings ~d N.O.W. accounts)
in authorized financial institutions. Georgia Laws authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations. The placement of proceeds from bond issues in certificates of deposit is limited to financial institut~ons located within this State.
INVESTMENTS HELD BY TRUSTEE
Investments held by trustee consist of contributions from employees who have elected to participate in the Board's deferred compensation plan. See Note 9 - Deferred Compensation Plan
RECEIVABLES
Receivables consist ofgrant reimbursements due from Federal, State or other grantors for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The Towns County Board of Commissioners fixed the property tax levy for the 1995 tax year (calendar year) on November 2, 1995 (levy date). Taxes were due on January 15, 1996. The lien date for property taxes was January 1, 1995. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1996 since their collection meets the criteriaofGASB codification section P70.103.

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TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30.1996

.,..
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Towns County Tax Commissioner bills and collects the property taxes for the Board of Education, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the Board.

The tax millage rate levied for the 1995 tax year (calendar year) for the Towns County Board ofEducation was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

4.0 mills

INVENTORIES

FOOD INVENTORIES Inventories of purchased foods and donated food commodities used in the preparation of meals are not reported on the Combined Balance Sheet. Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase.

GENERAL OBLIGATION BONDS

The Board issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. 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 General Long-Term Debt Account Group.

INTERFUND TRANSACTIONS

The Board has the following types of interfund transactions:

Reimbursements of expenditures initially made from a fund that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.

Operating transfers are recorded for all interfund transactions other than reimbursements.

MEMORANDUM ONLY - TOTAL COLUMNS

Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.

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TOWNS COUNTY BOARD OF EDUCATION

EXlllBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1996

Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate of the face value of such surety bond and the market value ofsecurities shall be equal to not less than 110 percent of the public funds being secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone of or any combination of the following:
(1) Surety bond signed.by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities ofthe State of Georgia,
(5) Bonds ofany 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 and 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, 1996, the bank balances were $1,688,501.03. The amounts of the total bank balances are classified into three categories of credit risk:
Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the Board or by the Board's agent in the Board's name.
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TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 2: DEPOSITS AND INVESTMENTS

Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Board's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Board's name.)

The Board's deposits are classified by risk category at June 30, 1996, as follows:

Risk Category

Bank Balance

1

$ 200,000.00

2

0.00

3

1.488,501.03

Total

$ 1.688,501.03

CATEGORIZATION OF INVESTMENTS At June 30, 1996, the carrying amount of the Board's total investments was $295,308.42 and this entire amount is categorized as Unclassified- Deferred Compensation Plan pooled investments. The market value of these investments was $295,308.42.

Note 3: NON-MONETARY TRANSACTIONS

The Board receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories

Note 4: RISK MANAGEMENT

The Board is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; natural disaster; and unemployment compensation.

The Board has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and natural disaster. However, the errors or omissions policy excludes coverage for sexual harassment and discrimination. The Board has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any of the past three years.

The Board is self-insured with regard to unemployment compensation claims. The Board accounts for claims within the General Fund with expenditure and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

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TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 4: RISK MANAGEMENT

Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

1995 1996

$

0.00 $

124.00 $

124.00 $

0.00

$

0.00 $

2,836.00 $

2,836.00 $

0.00

The Board 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 of workers' compensation self-insurance for its member organizations. The Board pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreementby the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $250,000.00 loss per occurrence, up to the statutory limit. Also, should losses within the retained limit of $250,000.00 aggregate to more than eighty-five percent (85%) of the standard experience rated premium during the policy term, the policy with Safety National Casualty Corporation will pay the next $1,000,000.00 ofloss.

Note 5: GENERAL LONG-TERM DEBT

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

Purpose

Interest Rates

Amount

General Government - Series 1974 Bond Issue

5.90%

$ 400000.00

The changes in General Long-Term Debt during the fiscal year ended June 30, 1996, were as follows:

General Obligation
Bonds

Balance July 1, 1995

$ 440,000.00

Deductions

40,000.00

Balance June 30, 1996

$ 400,000.00"

- 14 -

TOWNS COUNTY BOARD OF EDUCATION

EXIllBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30,1996

Note 5": GENERALLONG-TERMDEBT

At June 30, 1996, payments due, by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

General Obligation
Bonds

1997 1998 1999 2000 2001 2002 and thereafter

$ 51,800,00 61,240,00 63,880.00 61,225,00 63,570,00
201.830,00

Total Principal and Interest

$ 503,545,00

Note 6: ON-BEHALF PAYMENTS

The Board has recognized revenues and expenditures in the amount of $1 03,045.67 for health insurance and retirement contributions paid on the Board's behalfby the following State Agencies,

Georgia Department ofEducation Paid to the State Merit System ofPersonnel Administration For Health Insurance ofNon-Certified Personnel In the amount of$88,708.57

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of$I,333.10

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 $13,004,00

Note 7: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the Board as of June 30, 1996, together with funding available:

- 15 -

TOWNS COUNTY BOARD OF EDUCATION

EXIllBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 7: SIGNIFICANT COMMITMENTS

Project

Unearned Executed Contracts

Funding Available From State

96-739-067

$ 70696749 $ 658,530.47

The amounts described in this note are not reflected in the general purpose financial statements.

Note 8: CONTINGENT LIABILITIES

Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies, This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grant terms. The Board believes that such disallowances, if any, will be immaterial to its overall financial pOSition.

The Board is a defendant in a legal proceeding pertaining to matters incidental to the performance of routine Board operations. The ultimate disposition ofthis proceeding is not presently determinable, but is not believed to be material to the general purpose financial statements.

Note 9; DEFERRED COMPENSATION PLAN

The Board offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all Board employees, permits them to defer a portion of their salary until future years. Participation in the plan is optional. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency.

All amounts ofcompensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights of the Board subject only to the claims of the Board1s general creditors. Participants' rights under the plan are equal to those of general creditors of the Board in an amount equal to the fair market value of the deferred account for each participant.

It is the opinion of the Board that the Board has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. The Board believes it is unlikely that it will use the assets to satisfy the claims ofgeneral creditors in the future.

Investments are managed by the plan's trustee, Lincoln National Pension Company. Under this plan, participants select from an investment option, or combination of investment options, determined by the Board.
"

- 16 -

TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1996

Note "10: 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 of Georgia (TRS), which is a cost-sharing multiple employer public employee retirement system (PERS).

TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. A member is eligible for service retirement after 30 years of creditable service, regardless ofage, or after 10 years of service and attainment of age 60. A member is el~gible for early retirement after 25 years of creditable service and attainment of age 55, at a reduced benefit. Retirement benefits paid to members are equal to 2% of the average of the member's two consecutive highest paid years of service multiplied by the number of years of creditable service up to 40 years. The normal retirement pension is payable monthly for life. Options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary.onthe member's death.

Retirement benefits also include death and disability benefits. A disabled member or surviving spouse is entitled to receive annually an amount equal to the member's service retirement benefit or disability retirement, whichever is greater. The death benefit is the amount that would be payable to the member's beneficiary had the member retired on the date of death on either a service retirement allowance or a disability retirement allowance, whichever is larger. The benefit is based on the member's creditable service (minimum of 10 years of service) and compensation up to the time of disability or death.

Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting of employer contributions occurs, but the member's contributions are refunded with interest.

The Board's payroll for employees covered by TRS for the year ended June 30, 1996, was $2,383,726.14; total payroll was $2,747,375.02.

TRS CONTRIBUTIONS REQUIRED AND MADE

Employees ofthe Board who are covered by TRS are required by State statute to contribute 5% of their gross

earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS

Board ofTrustees in accordance with State statute and as advised by their independent actuary. For fiscal year

1996 that rate for employer contributions was 11.81%. The interest rate assumption (rate of return on

investments) was 7.50%.

.

Total contributions made during fiscal year 1996 amounted to $400,705.37, of which $281,518.16 was made by the Board and $119,187.21 was made by employees. These contributions represented 11.81% (Board) and 5% (employees) of covered payroll.

- 17 -

TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 10: RETIREMENT PLANS

TRS FUNDING STATUS AND PROGRESS The amount of the total pension benefit obligation is based on a standardized measurement established by Statement No.5 ofthe Governmental Accounting Standards Board (GASB) that, with some exceptions, must be used by a PERS. The standardized measurement is the actuarial present value of credited projected benefits. This valuation method reflects the present value of estimated pension benefits that will be paid in future years as a result of employee services performed to date, and is adjusted for the effects of projected salary increases. A standardized measure ofthe pension benefit obligation was adopted by the GASB to enable readers of PERS financial statements to assess that PERS funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among other PERS and among other employers.

Total unfunded pension benefit obligation ofTRS as of June 30, 1995, was as follows:

Total pension benefit obligation

$17,442,607,000.00

Net assets available for benefits, at cost

15,857,066,000.00

Unfunded pension benefit obligation

$ 1.585,541.000.00

The measurement ofthe total pension benefit obligation is based on an actuarial valuation as of June 30, 1995. Net assets available to pay pension benefits were valued as of the same date. TRS does not make separate measurements of assets and pension benefit obligation for individual employers.

Total contributions from all employers to TRS for fiscal year ended June 30, 1996 were $607,275,000.00. The Board's contribution for the year ended June 30, 1996 of $281,518.16 was actuarially determined and represented .0463% of total contributions made by all participating employers.

Ten year historical trend information is presented in the 1996 TRS Component Unit Financial Report. This information is useful in assessing TRS's accumulation of sufficient assets to pay pension benefits as they become due.

PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA (PSERS)

PSERS PLAN DESCRIPTION Substantially all bus drivers, maintenance, custodial, and lunchroom personnel employed by local school systems are covered by the Public School Employees Retirement System of Georgia (PSERS). All employer's contributions are made by the State of Georgia in accordance with State statute.

PSERS provides, in accordance with State statute, service retirement, disability retirement and survivors benefits for its members. A member is eligible for normal service retirement after 10 years of service and attainment of age 65. A member applying for service retirement with 10 years of service and retires between

- 18 -

TOWNS COUNTY BOARD OF EDUCATION

EXIllBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1996

,. Note 10: RETIREMENT PLANS
the ages of60 and 65 receives a reduced benefit. Monthly retirement benefits paid to members are equal to $8.00 per month multiplied by the number ofyears of creditable service. Options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death.
Retirement provisions include death and disability benefits. Disability benefits are the same as ifthe employee had retired at age 65 as long as the employee has 15 or more years of creditable service. Death benefits are dependent upon the number ofyears of service. Ifthere are less than ten years of service, a lump sum refund of the employee's contributions and interest are made to the beneficiary. Ifthere are more than ten years of service, the beneficiary shall receive for life half of what the employee would have received upon retirement.
Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting ofemployer contributions occurs, but the member's contributions are refunded with interest.
There were 30 employees covered under PSERS for the year ended June 30, 1996.
PSERS CONTRIBUTIONS REQUIRED AND MADE Covered employees are required by State statute to contribute $4.00 a month for the nine month school year. Unlike TRS, the Board makes no contribution to PSERS. The State of Georgia is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS' Board of Trustees. Total contributions from employees ofthe Board made during fiscal year 1996 amounted to $1,016.00. Total contribution for all school systems made by the State of Georgia to PSERS for fiscal year ended June 30, 1996, was $9,817,769.80.
Note 11: SURETY BONDS
The School Superintendent, Mr. James Kimsey, was bonded in the amount of$25,000.00 with the Fidelity and Deposit Company ofMaryland, Baltimore, Maryland, their Bond No. 3044-11-83, on which premium was paid through December 31, 1996.
Mr. JeffIvey, School Superintendent effective January 1, 1997, is bonded in the amount of$25,000.00 with the Fidelity and Deposit Company ofMaryland, Baltimore, Maryland, their Bond No. 3044-02-85, on which premium is paid through December 31, 1997.

- 19 -

TOWNS COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30. 1996

ASSETS cash and cash Equivalents Accounts Receivable

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

ELEMENTARY AND SECONDARY EDUCATION ACT

TITLE I

TITLE VI

GRANTS TO

TITLE II

INNOVATIVE

LOCAL

EISENHOWER EDUCATION

EDUCATIONAL PROFESSIONAL PROGRAM

AGENCIES DEVELOPMENT STRATEGIES

$ 40,676.19 $

5.03 $

13,083.16

1,785.95

1,528.10 $

1,945.88 $

2,949.00

Total Assets

$ 42,462.14 $

5.03 $

14,611.26 $

1,945.88 $

2,949.00

LIABILITIES AND FUND EQUITY

LIABILITIES

cash Overdraft

Accounts Payable

Salaries Payable

Expired Grant Balances Payable

$

Total Liabilities

$

FUND EQUITY

Fund Balances

Reserved

For Continuation of Federal Programs

FQI' Expired Grant Balances/Questioned Costs

Unreserved

Undesignated

$ 42,462.14

Total Fund Equity

$ 42,462.14

$ 5.03 5.03 $

$ 3,478.92 11,132.34
14,611.26 $

1,945.88 $

2,949.00

1,945.88 $

2,949.00

Total Uabilities and Fund Equity

$ 42,462.14 $

5.03 $

14,611.26 $

1,945.88 $

2,949.00

See notes to the general purpose financial statements.

- 20-

EXHIBIT"E"

INDIVIDUALS WITH DISABILITIES EDUCATION ACT
PARTB SPECIAL EDUCATION FLOW THROUGH PRESCHOOL

$ 7,165.32 $

2,532.34

389.89

$

HEAD START

DROPOUT PREVENTION
PROGRAM

VOCATIONAL EDUCATION
FEDERAL

TOTALS JUNE 30,1996 JUNE 30, 1995

$

301.62 $

63,763.66 $

53,801.39

2,553.30 $ 14,014.84

25,166.96

64,977.88

$ 7,555.21 $

2,532.34 $

2,553.30 $ 14,014.84 $

301.62 $

88,930.62 $ 118,n9.27

$

$

7,555.21

$ 7,555.21 $

$ 278.46 596.70 1,657.18
2,532.34 $

1,n2.67 $ 1,n2.67 $

8,965.27 911.87
4,137.70 $
14,014.84 $

$
301.62 301.62 $

15,632.82 $ 4,669.25 15,866.74 9,519.04
45,687.85 $

46,072.17 3,869.81 13,438.84
63,380.82

$

461.32

319.31

$ _ _7.:...:80=.6~3

$

461.32 $

5,273.75

319.31

42,462.14

50,124.70

$

43,242.n $

55,398.45

$ 7,555.21 $

2,532.34 $

2,553.30 $ 14,014.84 $

301.62 $

88,930.62 $ 118,n9.27

- 21 -

TOWNS COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES. EXPENPITURES ANp CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENPEP JUNE 30.1996

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

ELEMENTARY AND SECONDARY EDUCATION ACT

TITLE I

TITLE VI

GRANTS TO

TITLE II

INNOVATIVE

LOCAL

EISENHOWER

EDUCATION

EDUCATIONAL PROFESSIONAL

PROGRAM

AGENCIES

DEVELOPMENT STRATEGIES

REVENUES

State Funds Federal Funds Taxes and Other Funds

$ 18,644.00 $ 155,126.40 110,310.22

174,994.97 $

91,072.06 $

1,870.83 $

4,749.00

Total Revenues

$ 284,080.62 $ 174,994.97 $

91,072.06 $

1,870.83 $

4,749.00

EXPENPITURES

Current Instruction Support 5ervic:es PUpil5ervic:es Improvement of Instructional Services Educational Media Services General Administration SChool Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation

$ 174,994.97 $

85,374.54
3,221.33 $
n3.55
272.26
388.76 693.62

$ 291,743.18

348.00

$
6,834.21 16.24

1,246.85
3,491.44 10.71

Total Expenditures
Excess Of Revenues over (under) Expenditures

$ 291,743.18 $ 174,994.97 $

$ -7,662.56 $

0.00 $

91,072.06 $ 0.00 $

6,850.45 $ -4,979.62 $

4,749.00 0.00

OTHER FINANCING SOURCES

Operating Transfers In

Excess of Revenues and Other Financing Sources

over (under) Expenditures

$ -7,662.56$

0.00 $

0.00 $

-4,979.62 $

0.00

FUND BALANCE JULY 1

50,124.70

0.00

0.00

4,979.62

0.00

FUND BALANCE JUNE 30

$ 42,462.14 $

0.00 $

0.00 $

0.00 $

0.00

....

See notes to the general purpose financial statements.

- 22-

EXHIBIT"F"

INDIVIDUALS WITH

DISABILITIES EDUCATION ACT

PARTB

SPECIAL EDUCATION

FLOW

THROUGH

PRESCHOOL

HEAD START

DROPOUT PREVENTION
PROGRAM

VOCATIONAL EDUCATION
FEDERAL

TOTALS YEAR ENDED JUNE 30, 1996 JUNE 30,1995

$ 32,120.79 $ $ 32,120.79 $

5,926.82 $ 66,007.56 $ 63,521.00 $ 5,926.82 $ 66,007.56 $ 63,521.00 $

$ 27,398.38
27,398.38 $

193,638.97 $ 447,792.84 110,310.22
751,742.03 $

32,815.00 467,205.85 132,765.81
632,786.66

$

6,281.50 $

1,658.50 757.04

168.59 495.30

22,759.86

$ 32,120.79 $

$

0.00 $

$

0.00 $

0.00

$ _ _......,;O~.OO~ $

5,926.82 $

63,583.70 $

46,935.00 $ 21,704.28

1,937.36

5,926.82 $ 0.00 $

65,521.06 $ 486.50 $

68,639.28 $ -5,118.28 $

28,650.52 $
28,650.52 $ -1,252.14 $

412,993.90 $
26,584.11 11,082.69
n3.55
467.80 495.30 2,326.12 693.62 22,759.86
0.00 292,091.18
nO,268.13 $
-18,526.10 $

269,n9.55
22,901.59 2,119.38 1,376.23 938.06 1,908.72 2,965.78
22,653.76 21,354.00
302.03 267,658.31
613,957.41
18,829.25

0.00 $ 0.00

5,118.28

486.50 $ 294.13

0.00 $ 0.00

1,252.14

6,370.42

3,736.40

0.00 $ 0.00

-12,155.68 $ 55,398.45

22,565.65 32,832.80

0.00 $

780.63 $

0.00 $

0.00 $

43,242.n $ 55,398.45

- 23-

TOWNS COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUND YEAR ENDED JUNE 30,1996

EXHIBIT"G"

LIABILITIES Deferred Compensation Plan

$ 291,659.51 $

28,742.18 $

25,093.27 $ 295,308.42

....

See notes to the general purpose financial statements.

-24 -

TOWNS COUNTY BOARD OF EDUCATION SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
YEAR ENDED JUNE 30, 1996

SCHEDULE "1"

FUND1NG AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Through Georgia Department of Administrative Services, Fiscal Division National Forest Reserve Funds Through Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program 1996 Grant National School Lunch Program 1996 Grant Food Distribution Program (1)
Total U. S. Department of Agriculture
Appalachian Regional Commission Direct Dropout Prevention Program 94-68 GA-11517-94-1-302-0328
Education, U. S. Department of Through Georgia Department of Education Elementary and Secondary Education Act Title I Grants to Local Educational Agencies 1995 Summer 1996 Grant Title II Eisenhower Professional Development 1995 Regular 1996 Grant Title VI Innovative Education Program Strategies 1996 Grant Individuals with Disabilities Education Act Part B - Special Education Flow Through 1996 Grant Preschool 1996 Grant Vocational Education - Basic Grants to States High School Program Basic Grant 1996 Grant Tech-Prep Education 1996 Grant
Total U. S. Department of Education

CFDA NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

10.665 $

27,347.92

(4)

10.553

43,971.25

10.555 10.550

95,069.36 $ 16,085.79

$ 182,474.32 $

(2)
275,657.39 (3) 16,085.79
291,743.18

23.001 $

63,521.00 $

68,639.28 (3)

84.010 $ 84.010

6,893.96 $ 84,178.10

6,893.96 84,178.10

84.281 84.281

-75.05 1,945.88

4,904.57 1,945.88

84.298

4,749.00

4,749.00

84.027 84.173

32,120.79 5,926.82

32,120.79 5,926.82

84.048

2,398.38

84.243

25,000.00

$ 163,137.88 $

2,398.38 26,252.14 (3) . 169,369.64

- 25 -

TOWNS COUNTY BOARD OF EDUCATION SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
YEAR ENDED JUNE 30,1996

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Health and Human Services, U. S. Department of Through Ninth District Opportunities, Incorporated Head Start 1995 Grant 1996 Grant
Total U. S. Department of Health and Human Services
OTHER FEDERAL ASSISTANCE
Federal Emergency Management Agency Through Office of the Governor Disaster Assistance

CFDA NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

93.600 $ 93.600
$

11,040.08 $ 54,967.48
66,007.56 $

11,014.90 54,506.16
65,521.06

83.516 $

1,171.50

(4)

Total Federal Financial Assistance

$ 476,312.26 $ ====5=95=r.;.2=7..3..=1=6

The Board had no major programs as defined by the Single Audit Act of 1984.

(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal'year.
(2) Expenditures for the School Breakfast Program were not maintained separately and are included in the 1996 National School Lunch Program.
(3) Expenditures for this program include State and/or Other Funds. Expenditures are not maintained by fund source.
(4) Funds earned on this program do not require reporting of expenditures.

See notes to the general purpose financial statements.

- 26 -

TOWNS COUNTY BOARD OF EDUCATION CASH AND CASH EQUIVALENTS JUNE 30. 1996

SCHEDULE "2"

INTEREST BEARING ACCOUNTS
Bank of Hiawassee, Hiawassee, Georgia
Certificates of Deposit No.4202412 (5.85%) No. 4202420 (5.85%)
Insured Investment Account (2.90%) N.O.W. Accounts (2.85%)
Towns County Bank, Hiawassee, Georgia
Certificates of Deposit No. 59077030 (6.25%) No.59077031 (6.25%) No. 59077032 (6.25%) No. 59077033 (6.25%)
N.O.W. Account (2.75%)

$ 100,000.00 100,000.00 120,977.60 606,792.93 $ 927,770.53

$ 100,000.00 100,000.00 100,000.00 100,000.00 2,910.61

402,910.61

$ 1,330,681.14

See notes to the general purpose financial statements. - 27 -

TOWNS COUNTY BOARD OF EDUCATION ACCOUNTS RECEIVABLE JUNE 30,1996

SCHEDULE "3"

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

Appalachian Regional Commission Dropout Prevention Program

$

14,014.84

$

Georgia Department of Education

Quality Basic Education

Deferred Summer Salaries - FY 1996

$

Food Services

National School Lunch Program

Vocational Education

State Funds

Federal Programs

Elementary and Secondary Education Act

Title I

Grants to Local Educational Agencies

Title II

Eisenhower Professional Development

TiUe VI

Innovative Education Program

Strategies

302,665.00 4,652.46

1,785.95
1,528.10 1,945,88 2,949.00

Georgia State Financing and Investment Commission Reimbursement on Construction Projects

$

92,419.47

Ninth District Opportunities, Incorporated Head Start

2,553.30

Pioneer Regional Educational Service Agency Credit Refund on Overpayment

389.89

Towns County Tax Commissioner County Wide School Tax

15,831.50

TOTAL 14,014.84
302,665.00 1,785.95 4,652.46
1,528.10 1,945.88 2,949.00
92,419,47 2,553.30 389.89 15,831.50

$

323,148.96 $

25,166.96 $

92,419.47 $ ==4=40=,7=3..5....3..==9

....

See notes to the general purpose financial statements.

- 28 -

TOWNS COUNTY BOARD OF EDUCATION DEBT SERVICE REqUIREMENTS TO MATURITY
JUNE 30, 1996

SCHEDULE "4"

PAYM.ENTS DUE IN FISCAL YEAR ENDING JUNE 30
1997 1998 1999 2000 2001 2002 2003 2004

TOTAL DEBT SERVICE

1974 ISSUE

INTEREST (*)

PRINCIPAL

$

51,800.00 $

61,240.00

63,880.00

.61,225.00

63,570.00

65,620.00

67,375.00

68,835.00

11,800.00 $
21,240.00 18,880.00 16,225.00 13,570.00 10,620.00
7,375,00 3,835.00

40,000.00 40,000.00 45,000.00 45,000.00 50,000.00 55,000.00 60,000.00 65,000.00

$ 503,545.00 $ 103,545.00 $ 400,000.00

(*) Interest due on July 1, 1996, was paid prior to June 30, 1996, and has been excluded from this schedule.

CHANGES IN GENERAL LONG-TERM DEBT Bonds Payable at July 1, 1995 Bonds Retired During Period

TOTAL $ 440,000.00
-40,000.00

Bonds Payable at June 30,1996

$ 400,000.00

MATURITY DATES Semi-Annual Interest Payment Dates Annual Debt Retirement Date

JAN 1 - JUL 1 JAN 1

See notes to the general purpose financial statements. - 29 -

TOWNS COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE
YEAR ENDED JUNE 30, 1996

SCHEDULE "5"

AGENCYIFUNDING
GRANTS Education, Georgia Department of Quality Basic Education General and Career Education Programs Special Education Programs Remedial Education Program Media Center Programs Staff Development Programs Indirect Cost Pupil Transportation Regular Bus Replacement Sparsity Grant Umited English Speaking Middle School Incentive Program Special Instructional Assistance In-School Suspension Counselors Grades 4 and 5 Midterm Adjustment Local Fair Share
Deferred Summer Salaries - FY 95 Deferred Summer Salaries - FY 96
Food Services Other State Programs
Apprenticeship Program Health Insurance Mentor Teacher Program Preschool Handicapped Program Remedial Summer School Program Special Education Low Incidence Grant Teachers' Retirement Lottery Programs Applied Technology Labs Instructional Technology Technology Installation
Georgia State Financing and Investment Commission . Reimbursement on Construction Projects
Governor, Office of the Disaster Assistance
Office of Treasury and Fiscal Services Public School Employees Retirement

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

TOTAL

$ 1,513,347.00 269,370.00 24,857.00 63,511.00 22,095.00 463,798.00
154,735.00 43,788.00 102,337.00 25,765.00 58,938.00 27,335.00 35,345.00
5,041.00 79,966.00 -753,398.00 -270,304.00 302,665.00
$
4,652.46 88,708.57
1,365.00 7,173.00 1,637.72 4,264.00 1,333.10

18,644.00
99,994.97 45,000.00 30,000.00

$ 1,513,347.00 269,370.00 24,857.00 63,511.00 22,095.00 463,798.00
154,735.00 43,788.00 102,337.00 25,765.00 58,938.00 27,335.00 35,345.00
5,041.00 79,966.00 -753,398.00 -270,304.00 302,665,00 18,644.00
4,652.46 88,708.57
1,365.00 7,173.00 1,637.72 4,264.00 1,333.10
99,994.97 45,000.00 30,000.00

$ 391,560.53

391,560.53

375.50

375.50

13,004.00

13,004.00

$ 2,291,704.35 $

193,638.97 $

.... 391,560.53 $ 2,876,903.85

See notes to the general purpose financial statements.

- 30 -

TOWNS COUNTY BOARD OF EDUCATION SCHEDULE OF TAXES AND OTHER REVENUE
YEAR ENDED JUNE 30, 1996

SCHEDULE "6"

GOVERNMENTAL FUND TYPES

SPECIAL

DEBT

GENERAL

REVENUE

SERVICE

FUND

FUND

FUND

TOTAL

Taxes County Wide School Tax Local Option Sales Tax Real Estate Transfer Tax

$ 804,188.87 788,312.18 18,038,65

$ 804,188,87 788,312.18 18,038.65

Other Sources Contributions for Unemployment Compensation from Other Funds Day Care Fees Donations Interest Earned Ninth District Opportunity, Incorporated Child and Adult Care Food Program Reimbursement for Salaries and Benefits Rents Revenue in Ueu of Taxes Tennessee Valley Authority Sales Lunches and Breakfast School Assets Other

3,089.89 8,524.00
500,00 33,764.86 $

1,312.47 $ 25,812.73

3,089.89 8,524.00
500.00 60,890.06

101,061.86 750,00
57,860.83
10,405.31 7,907.08

108,794.50 203.25

101,061,86 750.00
57,860.83
108,794.50 10,405.31
8,110.33

$ 1,834,403.53 $ 110,310.22 $ 25,812.73 $ 1,970,526.48

See notes to the general purpose financial statements. - 31 -

TOWNS COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES BY OBJECT GENERAL. SPECIAL REVENUE AND CAPITAL PROJECTS FUNDS
YEAR ENDED JUNE 30. 1996

SCHEDULE '7"

EXPENDITURES
Operating Costs Salaries Employee Benefits Travel of Employees Professional and Technical Services Compensation of Board Members Water, Sewer and Cleaning Services Repair and Maintenance Services Rents Insurance Communications Shared Services Other Purchased Services Supplies Energy Food Usage Books, Textbooks and Periodicals Dues and Fees Other Expenditures
Nonoperating Costs Building and Building Improvements Equipment

GENERAL FUND

SPECIAL REVENUE
FUND

CAPITAL PROJECTS
FUND

TOTAL

$ 2,532,112.09 $
852,511.36 6,289.11
65,834.30 7,100.00 9,956.45
84,423.68 10,486.35 17,503.94 18,031.01
5,398.08 23,185.24 135,556.76 148,605.71
60,482.57 7,076.75 475.00

215,262.93 64,154.16 1,279.84 805.37
6,571.80
22,759.86 3,221.33
95,456.09 10.00
165,042.70
1,301.50 420.00

$ 2,747,375.02
916,665.52 7,568.95
66,639.67 7,100.00 9,956.45
90,995.48 10,486.35 17,503.94 18,031.01 28,157.94 26,406.57 231,012.85 148,615.71 165,042.70 60,482.57
8,378.25 895.00

17,964.78 94,831.70

$ 421,659.46
193,982.55

439,624.24 288,814.25

Total Expenditures

$ 4,097,824.88 $ 770,268.13 $ 421,659.46 $ 5,289,752.47

See notes to the general purpose financial statements. - 32 -

TOWNS COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES BY OBJECT
LOTTERY PROGRAMS YEAR ENDED JUNE 30. 1996

SCHEDULE "8"

EXPENDITURES
Operating Costs Supplies
Nonoperating Costs Equipment

APPLIED

TECHNOLOGY INSTRUCTIONAL

LABS

TECHNOLOGY

TECHNOLOGY INSTALLATION

TOTAL

$

$

99,994.97

14,143.18 $
30,856.82

30,000.00 $

44,143.18

130,851.79

Total Expenditures

$

99,994.97 $

45,000.00 $

30,000.00 $

174,994.97

See notes to the general purpose financial statements.
- 33 -

.,.. THIS PAGE LE" BLANK

TOWNS COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30. 1996

SCHEDULE "9"

Minimum Expenditure Requirements (Total Allotment)
Expenditures on Combined Program Basis Salaries (1) (2) Operations
Less: Expenditures for Media Center Programs in Excess of Total Media Allotment
Expenditures per Audit

THIRTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS

100% TEST FOR OPERATIONS PORTION OF THIRTEEN WEIGHTED PROGRAMS

$

1,951,051.00 $ _ _~64","".;;..;53;..;.9""".0~0

$ 2,095,320.60 207,899.41 $ _ _.....;1~7.;;.:5,..:...:77:..;:;6..:...:.4...;.,.4
$ 2,303,220.01

-15,786.09 $ 2,287,433.92

Amount of Underexpenditure for Total Allotment

$

0.00 $=====0=.0=0

Note: (1) Salary accruals (July and August 1996 Deferred Salaries) reported as expenditures in the General Purpose Financial Statements are not included on this analysis in order to comply with program guidelines.
(2) Salary accruals (July and August 1995 Deferred Salaries) reported as expenditures in the prior year General Purpose Financial Statements are included on this analysis as required by program guidelines.

See notes to the general purpose financial statements. - 35 -

TOWNS COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS BY PROGRAM
GENERAL FUND QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 1996

GENERAL AND CAREER EDUCATION PROGRAMS Kindergarten (') Grades 1 3 (") Sub-Total- K-3 Grades 4 5 (") Grades 6 8 (.) Grades 9 - 12 (') High School Laboratories (.) Vocational Education Laboratories (.) Total General and Career Education Programs
SPECIAL EDUCATION PROGRAMS Regular Programs Category III (') Sub-Total- RegUlar Category V (Gifted) (.) Total Special Education Programs
REMEDIAL EDUCATION PROGRAM (*) Total Thirteen Weighted Programs
MEDIA CENTER PROGRAMS Salaries Operations Total Media Center Programs
Total Thirteen Weighted and Media Center Programs

ALLOTMENTS FROM DEPARTMENT OF EDUCATION

REQUIRED

ORIGINAL

0/0

ORIGINAL

MID-TERM

$

141,231,00

$

127,107,90 $

385,808,00

347,227,20

$

527,039.00 90 $

474,335.10

211,936.00 90

190,742,40

347,799.00 90

313,019,10

67,480.00 90

60,732.00 $

223,982.00 90

201.583.80

135,111.00 90

121,599.90

$ 1.513,347.00

$ 1,362,012,30 $

0,00
79,966.00 79,966,00

$

248.220,00

$

223,398.00 $

$

248.220.00 90 $

223,398,00 $

21,150.00 90

19,035,00

$

269,370,00

$

242,433,00 $

$

24,857,00 90 $

22,371.30 $

$ 1,807,574,00

$ 1.626,816,60 $

0.00 0.00
0,00 0,00 79,966.00

$

50,178,00 90 $

45,160,20 $

13,333,00 90

11,999,70

$

63,511.00

$

57,159.90 $

0.00 0.00

$ 1,871,085.00

$ 1,683,976,50 $

79,966,00

STAFF DEVELOPMENT PROGRAMS Cost of Instruction Professional Development
Total Staff Development Programs (') Identifies Thirteen Weighted Programs, (1) Salary accruals (July and August 1996 Deferred
Salaries) reported as expenditures in the General Purpose Financial Statements are not included on this analysis in order to comply with program guidelines.
See notes to the general purpose financial statements,

$

5,446.00

16,649,00

$

5,446,00 $

16,649,00

$

22,095,00 100 $

22.095.00 $

(2) Salary accruals (July and August 1995 Deferred Salaries) reported as expenditures in the prior year General Purpose Financial Statements are included on this analysis as required by program guidelines,

0.00 0,00 0,00
....

- 36 -

SCHEDULE "10"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES (1)(2) OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$

127,107.90 $

142,548.05 $

9,343.10 $

151,891.15

347,227.20

438,219.92

22,881.63

461,101.55

$

474,335.10 $

580,767.97 $

32,224.73 $

612,992.70 $

0.00

190,742.40

304,981.70

21,982.54

326,964.24

0.00

313,019.10

357,796.11

18,030.20

375,826.31

0.00

140,698.00

235,224.21

43,652.70

278,876.91

0.00

201,583.80

210,144.05

7,928.23

218,On,28

0.00

121,599.90

115.661.79

20,354.82

136.016.61

0.00

$ 1.441,978.30 $ 1,804.575.83 $

144,173.22 $ 1.948.749.05

$

223,398.00

$

200,214.23 $

31.523.22 $

231,737.45

$

223,398.00 $

200,214.23 $

31,523.22 $

231,737.45

0.00

19.035.00

19,590.08

19.590.08

0.00

$

242.433.00 $

219.804.31 $

31;523.22 $

251.327.53

$

22.371.30 $

23.766.34 $

80.00 $

23.846.34

0.00

$ 1.706.782.60 $ 2.048.146.48 $

175.776.44 $ 2.223.922.92

$

45,160.20 $

47,174.12

$

47,174.12

0.00

11,999.70

$

32.122.97

32.122.97

0.00

$

57.159.90 $

47,174.12 $

32.122.97 $

79.297.09

$ 1.763.942.50 $ 2.095.320.60 $

207,899.41 $ 2,303.220.01 $

0.00

$

5,446.00

16,649.00

$

22_.095--..0..0..

$

9,713.38 $

9,713.38

10,731.17

10,731.17

$

20,444.55 $

20,444.55 $

1_.6.5..0...4..5..

37

TOWNS COUNTY BOARD OF EDUCATION SCHEDULE OF COMPENSATION OF BOARD MEMBERS
YEAR ENDED JUNE 30, 1996
BOARD MEMBER ADDRESS
Mr. Mitchell Rhinehardt, Chairman (*) 4991 U. S. Highway 76 Young Harris, Georgia 30582
Mr. David Hoodenpyle (*) P. O. Box 72 Hiawassee, Georgia 30546
Mr. Rickey Mathis (*) P. O. Box 438 Hiawassee, Georgia 30546
Ms. Anne Mitchell (*) P. O. Box 280 Hiawassee, Georgia 30546
Mr. Gary Walls (*) P. O. Box 673 Hiawassee, Georgia 30546

SCHEDULE "11"

$

1,350.00

1,450.00

1,550.00

1,300.00

1,450.00

$ ===7::::::,1=0=0=.0=0

(*) Denotes Board Members Serving as of June 30, 1996

See notes to the general purpose financial statements. - 38 -

SECTION II COMPLIANCE

'i
CLAUDE L. VICKERS
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
March 21, 1997

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Towns County Board ofEducation
COMPLIANCE REPORT BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the general purpose financial statements of the Towns County Board of Education as of and for the year ended June 30, 1996, and have issued our report thereon dated March 21, 1997. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.
We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement.
Compliance with laws, regulations, contracts, and grants applicable to the Towns County Board of Education is the responsibility ofthe Board's management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we performed tests of the Board's compliance with certain provisions oflaws, regulations, contracts, and grants. However, the objective of our audit of the financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion.
The results ofour tests disclosed no instances of noncompliance that are required to be reported herein under Government Auditing Standards.

96CRL-10

This report is intended for the information of management. the Federal cognizant audit agency and other Federal grantor agencies. This restriction is not intended to limit the distribution of this report which is a
matter,.of public record.
Respectfully submitted.

CLV:gp 96CRL-IO

Claude L. Vickers State Auditor

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
March 21, 1997

Honorable Zell Miller, Governor Members of the General Assembly
Members ofthe State Board ofEducation
and Superintendent and Members of the Towns County Board ofEducation

SINGLE AUDIT REPORT ON COMPLIANCE WITH THE GENERAL REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS

Ladies and Gentlemen:

We have audited the general purpose financial statements of the Towns County Board of Education as of and for the year ended June 30, 1996, and have issued our report thereon dated March 21, 1997. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.

We have applied procedures to test the Towns County Board ofEducation's compliance with the following requirements applicable to each of its Federal financial assistance programs, which are listed in the Schedule of Federal Financial Assistance, for the year ended June 30, 1996:

(1) Political Activity

(5) Allowable Costs/Cost Principles

(2) Civil Rights

(6) Drug-Free Workplace Act

(3) Cash Management

(7) Audit Follow-UplResolution

(4) Federal Financial Reports

(8) Administrative Requirements

Our procedures were limited to the applicable procedures described in the Office of Management and Budget's "Compliance Supplement for Single Audits of State and Local Governments" and other additional procedures as deemed necessary. Our procedures were substantially less in scope than an audit, the objective of which is the expression ofan opinion on the Towns County Board ofEducation's compliance with the requirements listed in the preceding paragraph. Accordingly, we do not express such an opinion.

96CRL-50

With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the second paragraph ofthis report. With respect to items not tested, nothing came to our attention that caused us to believe that the Towns County Board ofEducation had not cOmplied, in all material respects, with those requirements. However, the results of our procedures disclosed immaterial instances ofnoncompliance with those requirements, which are described in the Schedule ofFindings and Improper or Questioned Costs.
This report is intended for the information of management, the Federal cognizant audit agency and other Federal grantor agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,

CLV:gp 96CRL-50

Claude L. Vickers State Auditor

,.
CLAUDE L. VICKERS
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
March 21, 1997

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Towns County Board ofEducation

SINGLE AUDIT REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS

Ladies and Gentlemen:

We have audited the general purpose financial statements of the Towns County Board of Education as of and for the year ended June 30, 1996, and have issued our report thereon dated March 21, 1997. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.

In connection with our audit ofthe fiscal year 1996 general purpose financial statements of the Towns County Board of Education and with our consideration of the Board's control structure used to administer Federal financial assistance programs, as required by Office of Management and Budget (OMB) Circular A-128, "Audits of State and Local Governments", we selected certain transactions applicable to certain nonmajor Federal financial assistance programs for the year ended June 30, 1996. As required by OMB Circular A-128, we have performed auditing procedures on the selected transactions to test compliance with the requirements governmg:

(1) Types of Services Allowed or Unallowed

(2) Eligibility

Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the Towns County Board of Education's compliance with these requirements. Accordingly, we do not express such an opinion.

96CRL-120

With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the second paragraph. With respect to items not tested, nothing . came to our attention that caused us to believe that the Towns County Board ofEducation had not complied, in all thaterial respects, with those requirements.
This report is intended for the information of management, the Federal cognizant audit agency and other Federal grantor agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,
c7~~
Claude L. Vickers State Auditor
CLV:gp 96CRL-120

...
SECTION III INTERNAL CONTROL

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
March 21, 1997

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Towns County Board ofEducation
REPORT ON INTERNAL CONTROL STRUCTURE IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the general purpose financial statements of the Towns County Board ofEducation as of and for the year ended June 30, 1996, and have issued our report thereon dated March 21, 1997. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.
We conducted our audit in accordance with generally accepted auditing standards, and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement.
The management ofthe Towns County Board ofEducation is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation ofgeneral purpose financial statements in accordance with generally accepted accounting principles. Because ofinherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate.

96ICL-3

In planning and perfonning our audit ofthe general purpose financial statements of the Towns County Board ofEdueation for the year ended June 30, 1996, we obtained an understanding of the internal control structure. . With respect to the internal control structure, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide an opinion on the internal control structure. Accordingly, we do not express such an opinion.

We noted certain matters involving the internal control structure and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements.

As described in the Schedule ofFindings and Improper or Questioned Costs, reportable conditions were noted in the following control categories:

(1) Accounting Controls (Overall)

(2) General Fixed Assets

A material weakness is a reportable condition in which the design or operation of one or more of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the general purpose 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 structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, we believe that the reportable conditions disclosed above are also considered to be material weaknesses.

These conditions were considered in determining the nature, timing, and extent of the procedures to be performed in our audit of the Towns County Board ofEducation's financial statements and this report does not affect our report thereon dated March 21, 1997.

This report is intended for the information of management, the Federal cognizant audit agency and other Federal grantor agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.

Respectfully submitted,

CLV:gp 96ICL-3

Claude L. Vickers State Auditor

.,..
CLAUDE L. VICKERS
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
March 21, 1997

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Towns County Board ofEducation
SINGLE AUDIT REPORT ON THE INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS
Ladies and Gentlemen:
We have audited the general purpose financial statements of the Towns County Board of Education as of and for the year ended June 30, 1996, and have issued our report thereon dated March 21, 1997. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.
We conducted our audit in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States; and the provisions of Office of Management and Budget (OMB) Circular A-128, "Audits of State and Local Governments". Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement.
In planning and performing our audit for the year ended June 30, 1996, we considered the Board's internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the Board's general purpose financial statements and to report on the internal control structure in accordance with OMB Circular A-128. This report addresses our consideration of internal control structure policies and procedures relevant td compliance with requirements applicable to Federal financial assistance programs. We have addressed internal control structure policies and procedures relevant to our audit of the general purpose financial statements in a separate report dated March 21, 1997.
The management ofthe Towns County Board ofEducation is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute,
96ICL-15

assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of
general purpose financial statements in accordance with generally accepted accounting principles, and that Federal financial assistance programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal control structure, errors, irregularities, or instances of noncompliance may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate.

For the purpose of this report, we have classified the significant internal control structure policies and procedures used in administering Federal financial assistance programs in the following control categories:

GENERAL REQUIREMENTS

SPECIFIC REQUIREMENTS

(1) Political Activity (2) Civil Rights (3) Cash Management (4) Federal Financial Reports

(1) Types of Services Allowed or Unallowed
(2) Eligibility
(3) Matching, Level ofEffort, and/or Earmarking

(5) Allowable Costs/Cost Principles

(4) Reporting

(6) Drug-Free Workplace Act (7) Audit Follow-UplResolution (8) Administrative Requirements

(5) Applicable Special Tests and Provisions
(6) Qther Requirement . Claims for Advances and Reimbursements

For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and determined whether they have been placed in operation, and we assessed control risk.

During the year ended June 30, 1996, the Towns County Board of Education had no major Federal financial assistance programs and expended 55% of its total Federal financial assistance under the following nonmajor Federal financial assistance programs:

Food and Nutrition Program Food Services National School Lunch Program
Elementary and Secondary Education Act Title I Grants to Local Educational Agencies
Head Start

961CL-15

We performed tests of controls, as required by OMB Circular A-128, to evaluate the effectiveness of the design and operation of internal control structure policies and procedures that we considered relevant to preventing or detecting material noncompliance with general requirements and specific requirements as descn'bed above that are applicable to the aforementioned nonmajor programs. Our procedures were less in scope than would be necessary to render an opinion on these internal control structure policies and procedures. Accordingly, we do not express such an opinion.
We noted a certain matter involving the internal control structure and its operation that we consider to be a reportable condition under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the Board's ability to administer Federal financial assistance programs in accordance with applicable laws and regulations.
As described in the Schedule ofFindings and Improper or Questioned Costs, a reportable condition was noted in the following control category:
Administrative Requirements
A material weakness is a reportable condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that noncompliance with laws and regulations that would be material to a Federal financial assistance program 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 structure policies and procedures used in administering Federal financial assistance would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, we believe that the reportable condition described above is also considered to be a material weakness.
This report is intended for the information of management, the Federal cognizant audit agency and other Federal grantor agencies and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,

CLV:gp 96ICL-15

Claude L. Vickers State Auditor

SECTION IV FINDINGS AND IMPROPER OR QUESTIONED COSTS

TOWNS COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR OUESTIONED COSTS
YEAR ENDED JUNE 30. 1996
PRIOR YEAR
AUDIT FOLLOW-UPIRESOLUTION Failure to Meet Expenditure Requirements Financial Statements Finding Resolved Audit Control Number 7391-93-03
The audit report for the year ended June 30, 1993, reported that the Board had underexpenditures of Quality Basic Education (QBE) funds of$313.20 for the operations portion ofthe Special Education - Gifted Program and $820.89 for the salaries portion of the Remedial Education Program. For the year under review, an adjustment was made to the Board's local fair share by the Georgia Department ofEducation to refund the underexpenditure of$1,134.09 as required.
AUDIT FOLLOW-UPIRESOLUTION Failure to Meet Expenditure Requirements Financial Statements Finding Resolved Audit Control Number 7391-93-04
The audit report for the year ended June 30, 1993, reported that the Board had an underexpenditure of Quality Basic Education (QBE) funds of$4,408.88 for the StaffDevelopment - Professional Development Stipends Program. For the year under review, an adjustment was made to the Board's local fair share by the Georgia Department ofEducation to refund the underexpenditure of$4,408.88 as required.
AUDIT FOLLOW-UPIRESOLUTION Failure to Meet Expenditure Requirements Financial Statements Amount: $5,218.73 Audit Control Number 7391-94-01
The audit report for the year ended June 30, 1994, reported that the Board had underexpenditures of Quality Basic Education (QBE) funds of $4,806.58 and $376.47 for the operations portions of the General and Career - Vocational Educational Laboratories, and Special Education - Gifted Programs, respectively; and $35.68 for the StaffDevelopment - Cost ofInstruction Program. For the year under review, no adjustment was made to the Board's local fair share by the Georgia Department of Education to refund these underexpenditures as required. The underexpenditures totaling $5,218.73 should be returned to the Georgia Department of Education through an increase in the Board's local fair share for the QBE programs in a subsequent fiscal period.
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TOWNS COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR OUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Failure to Meet Expenditure Requirements Financial Statements Amount: $38,131.08 Audit Control Number 7391-94-02
The audit report for the year ended June 30, 1994, reported that the Board had an underexpenditure of Quality Basic Education (QBE) funds of$38,131.08 for the salaries portion of Special Education - Regular Programs. For the year under review, no adjustment was made to the Board's local fair share by the Georgia Department of Education to refund this underexpenditure as required. The underexpenditure of $38,131.08 should be returned to the Georgia Department ofEducation through an increase in the Board's local fair share for the QBE programs in a subsequent fiscal period.
AUDIT FOLLOW-UP/RESOLUTION Salary Overpayment Financial Statements Finding Resolved Audit Control Number 7391-95-01
The Board entered into a contract with an employee for which services were to be rendered during the months ofAugust, 1993 through June, 1994 with compensation in the amount of$42,372.80. However, the employee received an additional salary payment on August 26, 1994 in the amount of $2,425.06. Appropriate action was taken by the Board and the reimbursement of$2,425.06 was secured and deposited to the Board's General Fund.
PRIOR YEAR/CURRENT YEAR
ACCOUNTING CONTROLS (OVERALL) - Financial Statements ADMINISTRATIVE REQUIREMENTS - Federal Financial Assistance Inadequate Separation ofDuties Reportable Condition - Material Weakness Audit Control Number 7391-93-01
The audit report for the year ended June 30, 1995, stated that the Board did not provide for adequate separation ofemployee duties in the performance ofaccounting functions and related procedures for all funds. For the year under review, the Board made some improvements regarding separation of employee's duties for the School Food Services Fund, but still did not achieve an adequate degree of internal control. This deficiency was a result ofmanagement's decision to limit the number of administrative staff made responsible for accounting functions. Management should periodically review this decision to determine if employee duties can be reassigned to achieve a higher degree of internal control with existing staff.
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TOWNS COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR OUESTIONED COSTS
YEAR ENDED JUNE 30. 1996
PRIOR YEAR/CURRENT YEAR
ACCOUNTING CONTROLS (OVERALL) - Financial Statements ADMINISTRATIVE REQUIREMENTS - Federal Financial Assistance Inadequate Separation ofDuties Reportable Condition - Material Weakness Audit Control Number 7391-93-01
Note: All Federal financial assistance programs listed in the Schedule of Federal Financial Assistance, Schedule "1 " of this report are affected by this finding.
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Financial Statements Reportable Condition - Material Weakness Audit Control Number 7391-93-02
The audit report for the year ended June 30, 1995, noted that the management of the Towns County Board of Education had chosen not to maintain a system-wide General Fixed Assets Account Group within, the formal accounting records as required by generally accepted accounting principles. In the year under review, , the Board did not establish a General Fixed Assets Account Group within the formal accounting records. This condition results in the general purpose financial statements of the Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Board to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account, Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the Board and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group,
CURRENT YEAR
EXPENDITURESILIABILITIESIDISBURSEMENTS Improper Expenditures Financial Statements Nonmaterial Noncompliance Amount: $1,980.00 Audit Control Number 7391-96-01
In the year under review, expenditures of$1,980.00 were made from the Board's General Fund for the clearing ofland that did not belong to the Towns County Board of Education. The Board's management authorized this expenditure believing that the land would be purchased soon after this clearing process.
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TOWNS COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR OUESTIONED COSTS
YEAR ENDED JUNE 30. 1996
CURRENT YEAR
EXPENDITURESILIABILITIESIDISBURSEMENTS Improper Expenditures Financial Statements Nonmaterial Noncompliance Amount: $1,980.00 Audit Control Number 7391-96-01
The Official Code of Georgia Annotated Section 20-2-411 provides, in part, as follows:
"...school funds shall be used for educational purposes and may be used to pay the salaries of personnel and to pay for the utilization of school facilities, including school buses; for extracurricular and interscholastic activities, including literary events, music and athletic programs within individual schools and between schools in the same or different school systems when such activities are sponsored by local boards of education as an integral part of the total school program; and for no other purposes..."
An expenditure ofthis nature is considered to be beyond the customary scope of expenditures for "educational purposes". Appropriate action should be taken to secure reimbursement ofthe $1,980.00 and to ensure this practice is discontinued.
EXPEN,DITURESILIABILITIESIDISBURSEMENTS Failure to Meet Expenditure Requirements Financial Statements Nonmaterial Noncompliance Amount: $1,650.45 Audit Control Number 7391-96-02
For the year under review, the Board had underexpenditures of Quality Basic Education (QBE) funds of $1,650.45 for the StaffDevelopment Programs. The questioned cost resulted from management's failure to expend the required minimum allotment for the aforementioned program as provided in the Official Code of Georgia 20-2-167. These funds should be returned to the Georgia Department of Education through an increase in the Board's local fair share for the QBE program in a subsequent fiscal period.
...
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TOWNS COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30. 1996
cURRENT YEAR
FEDERAL FINANCIAL REPORTS Expired Grant Balance Federal Financial Assistance Nonmaterial Noncompliance Amount: $319.31 Audit Control Number 7391-96-03
An examination of the accounting records for the Head Start Program revealed that an unexpended grant balance in the amount of$319.31 remained on hand after the close of the grant period at September 30, 1995. Instructions pertaining to this project require unexpended grant balances to be refunded to the Ninth District Opportunities, Incorporated along with the completion report. This noncompliance resulted from the Board's failure to monitor the grant requirements. The Board should implement procedures to ensure compliance with established guidelines and regulations. The unexpended grant balance of $319.31 should be refunded to the Nmth District Opportunities, Incorporated as required.
AUDIT FOLLOW-UPIRESOLUTION Failure to File Corrective Action Plan Federal Financial Assistance Nonmaterial Noncompliance Audit Control Number 7391-96-04
Our audit disclosed that the Board failed to submit a corrective action plan for the 1995 audit report as required by Office ofManagement and Budget Circular A-128, to the Georgia Department ofEducation from whom the Board received Federal financial assistance. This condition occurred because management disregarded the requirements ofOffice ofManagement and Budget Circular A-128. The Board should submit a corrective action plan for the 1995 audit report to the Georgia Department ofEducation as required, and implement procedures to submit corrective action plans in a timely manner.
Note: The Towns County Board ofEducation was provided an opportunity to include pertinent comments from the Board's management concerning these audit findings, conclusions and recommendations. The Board has elected not to provide comments for inclusion in this report.
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