Audit report, Towns County Board of Education, Hiawassee, Georgia, year ended June 30, 1998

AUDIT REPORT TOWNS COUNTY BOARD OF EDUCATION
ErrAVVASSEE,GEORGD\ YEAR ENDED JUNE 30, 1998

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 EXPENDITURES OF FEDERAL AWARDS

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

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON"GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

6

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

7

ADDmONAL FINANCIAL INFORMATION

COMBINING AND INDIVIDUAL FUND STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

18

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

19

G

FIDUCIARY FUND TYPE

STATEMENT OF CHANGES IN ASSETS AND LIABILmES

AGENCY FUND

20

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

21

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

22

3 SCHEDULE OF STATE REVENUE

24

4 SCHEDULE OF EXPENDITURES

LOTTERY PROGRAMS

25

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

5

OVERALL

27

6

BY PROGRAM

28

TOWNS COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE Wl1H GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE Wl1H REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE Wl1H OMB CIRCULAR A-133
SECTION ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOFI (404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
June 4, 1999

Honorable Roy E. Barnes, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Towns County Board of Education
INDEPENDENT Al JDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATIONSCHEDULE OF EXPENDITIJRES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general purpose financial statements of the Towns County Board of Education, as of and for the year ended June 30, 1998, as listed in the table of contents. These general purpose financial statements are the responsibility of the Towns County Board of Education's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 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.

98ARL-13B

* School activity accounts maintained at the individual schools are not included in the general purpose
financial statements. To confonn to generally accepted accounting principles, these accounts should be included in the general purpose financial statements.
The aggregate effects on the general purpose financial statements of these variances or omissions have not been detennined, 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 [mancial statements referred to above present fairly, in all material respects, the financial position of the Towns County Board of Education as of June 30, 1998, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles.
In accordance with Goyemment Auditing Standards, we have also issued our report dated June 4, 1999, on our consideration ofthe Towns County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions oflaws, regulations, contracts and grants.
The year 2000 supplementary infonnation on Schedule "I" is not a required part of the basic financial statements but is supplementary infonnation required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally ofinquiries of management regarding the methods of measurement and presentation of the supplementary infonnation. However we did not audit the infonnation and do not express an opinion on it. In addition, we do not provide assurance that Towns County Board of Education is or will become year 2000 compliant, that the Board's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Towns County Board ofEducation does business are or will become year 2000 compliant.
Our audit was perfonned for the purpose of forming an opinion on the general purpose financial statements of the Towns County Board ofEducation taken as a whole. The accompanying combining and individual fund statements (Exhibits E through G) and the financial schedules (Schedules 2 through 6), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part ofthe general purpose financial statements. Such infonnation has been subjected to the auditing procedures applied in the audit ofthe general purpose financial statements and in our opinion, except for the effects of the matters referred to in the third paragraph, such infonnation is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.
98ARL-13B

A copy of this report has been filed as a pennanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,
tA.~
RWH:gp 98ARL-13B

TOWNS COUNTY BOARD OF EDUCATION

TOWNS COUNTY BOARD OF EDUCATION COMBINED BAlANCE SHEET
All FUND TYPES AND ACCOUNT GROUP JUNE 30 1998

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

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$

1,324,223,20 $

101,843,55 $

0.00

200,000.00

748,056.26

16,381.91

$

2,272,279.46 $

118,225.46 $

0.00

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salaries Payable Expired Grant Balances Payable Contracts Payable Retainages Payabie Deferred Compensation Plan General Obligation Bonds Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Bus Replacement Funds For Continuation of Federal Programs For Debt Service For Expired Grant Balances/Questioned Costs Unreserved Designated for Self-Insurance Undesignated
Total Fund Equity
Total Liabilities and Fund Equity

$

131,973.60 $

8,953.26

437,811.13

27,811.07

2,491.04

$

569,784.73 $

39,255.37

$

52,621.00

$

1,650.45

23,209.31 1,625,013.97

$

1,702,494.73 $

12,999.62 319.31
65,651.16 $ 78,970.09 $

$

2,272,279.46 $

118,225.46 $

0.00 0.00
0.00

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

EXHIBIT "A"

DEBT SERVICE
FUND

FIDUCIARY FUND TYPE AGENCY FUND

ACCOUNT GROUP GENERAl
LONG-TERM DEBT

TOTALS

(Memorandum Only)

JUNE 30, 1998

JUNE 30, 1997

$

1,426,066.75 $

679,764.95

$

300,000.00

500,000.00

550,000.00

$

326,350.66

328,350.66

303,670.56

764,436.17

490,262.62

$

300,000.00

300,000.00

352,496.33

20,000.00

20,000.00

7,503.67

$

300,000.00 $

326,350.66 $

320,000.00 $

3,338.655.60 $

2,583,696.13

$

326,350.66

$

$

326,350.66 $

$
320,000.00 320,000.00 $

140,926.66 $ 465,622.20
2,491.04
328,350.66 320.000.00
1,257,390.76 $

129,319.69 407,556.55
2,511.41 6,303.65 54,665.65 303,870.56 360,000.00
1,264,247.71

$

300,000.00

0.00

$

300,000.00

$

52,621.00 $

46,302.00

12,999.62

771.21

300,000.00

352,496.33

1,969.76

1,969.76

23,209.31 1,690,665.13

21,562.16 694,548.96

$

2,061.464.62 $

1,319,650.42

$

300,000.00 $

326,350.66 $

320,000.00 $

3,338,655.60 $

2,583,698.13

-3-

TOWNS COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30 1998

REVENUES
State Funds Federal Funds Taxes 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 Enterprise Operations
Capital Outlay Debt Service
Principal Interest Paying Agent Fees
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES rUSES)
Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1

GENERAL FUND

SPECIAL REVENUE
FUND

$

3,061,658.29 $

200,206.80

2,304,928.51

194,216.08

$

5,761,019.58 $

77,38300 564,927.39
127,378.24
769.658.63

$

3,431,856.13 $

210,311.12 76,037.93
116,064.65 213,688.70 274,395.08
55,691.52 397,204.41 300,327.58

5,231.60 7,119.43 10,034.11

370,268.95
1,305.81 15,786.05
8,053.23 999.64
3,810.82
23,835.12
303,711.09

$

5,097,982.26 $

$

683,037.42 $

727,770.91 41,917.72

$

109,461.10 $

-6,564.86

$

102,896.24 $

$

765,933.58 $

936,561.07

6,459.35 6,459.35 48,377.07 30,593.02

FUND BALANCE JUNE 30

$

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

1,702,494.73 $

7.:.:8~!9:::7.:;0.~09~

EXHIBIT"B"

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTALS

(Memorandum Only)

YEAR ENDED

JUNE 3D, 1998

JUNE 3D, 1997

$

117,789.10

$

$

117,789.10 $

$
7,669.93 7,669.93 $

3,256,840.39 $ 765,134.19
2,304,926.51 329,264.25
6.656,167.34 $

3,260,542.85 433,030.01
1,891,373.80 337,271.11
5,922.217.77

$

3,802,125.08 $

3,272,115.64

$

8,328.00

211,616.93 91,823.98 116,084.65
221,741.93 275,394.92
55,691.52 401,015.23 300,327.56
23,835.12 5,231.60
310,830.52 10,034.11 8,328.00

129,313.16 35,595.39 106,056.84 149,037.66 237,151.05 44,278.75 417,040.49 267,605.61 20,625.75
335,357.26 7,207.59
826,546.93

$

40.000.00

20,060.00

211.77

40,000.00 20,060.00
211.77

40,000.00 22,420.00
337.80

$

8,328.00 $

60,271.77 $

5.894.352.94 $

5.910.690.12

$

109,461.10 $

-52.601.84 $

761.614.40 $

11,527.65

$

$

-109,461.10

$

-109,461.10 $

$

0.00 $

0.00

105.51 $ 105.51 $ -52,496.33 $ 352,496.33

116,025.96 $ -116,025.96
0.00 $
761,814.40 $ 1,319.650.42

163,171.04 -163.171.04
0.00
11,527.65 1.308,122.77

$

0.00 $

300,000.00 $

2,081,464.82 $

1,319,650.42

-5-

TOWNS CQUNTY BQARD OF EDUCATION COMBINED STATEMENT OF REVENUES EXPENPITURES AND CHANGES IN FUNP BALANCES
BUDGET AND ACTUAL - (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30 1998

EXHIBIT"C"

GENERAL FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

REVENUES

State Funds Federal Funds Taxes Other Funds
Total Revenues

$ 2,n5,334.00 47,865.00
1,983,750.00 48,000.00
4,854,949.00 $

3,061,668.29 200,206.80
2,304,928.51 194,216.08
5,761,019.68

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 Enterprise Operations
Capital Outiay

$ 3,246,072.64
168,605.78 25,004.00 104,029.00 213,745.00 251,7n.00 67,419.00 417,641.00 288,904.00
5,232.00 5,000.00 1,688.00 50,000.00

3,431,856.13
210,311.12 76,037.93 116,084.65 213,688.70 274,395.08 55,691.52 397,204.41 300,327.58
5,231.60 7,119.43 10,034.11

Total Expenditures Excess of Revenues over (under) Expenditures

4,845,117.42 $ 9,831.58 $

5,097,982.26 883,037.42

OTHER FINANCING SOURCES (USES)

Other Sources Other Uses
Total Other Financing Sources (Uses)

$

109,461.10

-6,564.86

$

102,896.24

Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financin9 Uses
FUND BALANCE JULY 1 1997
AdJusbnents

9,831.58 $ 1,101,748.88
270.66

765,933.66 936,581.07

SPECIAL REVENUE FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

79,801.00 $ 77,383.00

405,673.00

564,927.39

123,200.00

127,378.24

$ 608,674.00 $ 769,688.63

$ 262,155.00 $ 370,288.95

2,000.00 11,434.00

1,305.81 15,786.05

100.00 1,000.00

8,053.23 999.84

3,810.82

23,447.00 100.00
317,875.00

23,835.12 303,711.09

$ 618,111.00 $ 727,nO.91

$ -9,437.00

41,917.72

$

6,459.35

$

6,459.35

$ -9,437.00 $ 48,3n.07

26,390.78

30,593.02

610.13

FUND BALANCE JUNE 30 1998

$ 1,111,851.12 $ 1,702,494.73

$ 19,583.91 $ 78,970.09

The notes to the general purpose financial statements are an Integral part of this statemenl
-6-

TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JlJNE3Q 1998

Note l' SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
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 elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the Board is a primary government and consists of all the organizations that compose its legal entity.
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 ofpurchase. 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.
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 ofthe 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 ofspecific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department ofEducation and from the Federal government to accomplish specific educational objectives.
-7-

TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30 1998

Note l' SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.
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 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 in a fiduciary capacity for other funds, governments, or individuals.
ACCOUNT GROUP
GENERAL LONGTERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debt outstanding.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is detennined 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 ofresnlts 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 ofthe current period. Those revenues considered susceptible to accrual are property taxes, local op~on sales taxes, intergovernmental grants and investment income.

- 8-

TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30 1998

NQte l' SlJMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures are generally recQgnized when the related fund liability is incurred.
A substantial number Qf persQnnel Qf the BQard were emplQyed fQr a Qne hundred and ninety day periQd beginning in late August Qf 1997 and ending in early June 1998. EmplQyment contracts fQr these emplQyment periQds typically specify that cQmpensatiQn be paid in twelve equal mQnthly payments beginning in September 1997 and ending in August 1998. State grants tQ fund the State's share Qfthese CQntracts are disbursed to the BQard in the same twelve mQnth periQd. In accordance with generally accepted accQunting principles, salary and fringe benefit expenditures and the related revenue frQm the State tQ fund these CQntracts are recQrded in the fiscal periQd CQvered by these financial statements.
Agency funds are accQunted fQr using the mQdified accrual basis Qf accQunting in recQgnizing assets and liabilities.
BUDGET
The TQwns CQunty BQard QfEducatiQn's budget is a cQmplete financial plan fQr the BQard's fiscal year and is based upQn estimates Qf expenditures tQgether with prQbab1e funding SQurces. There is nQ statutQry prohibitiQn regarding Qverexpenditure Qfthe budget at any level. The budget fQr all gQveromental funds is prepared by fund, functiQn and Qbject. The legal level Qfbudget cQntrQl was established by the BQard at the aggregate level. The budget fQr gQvermnental funds was prepared Qn a basis Qther than generally accepted acCQunting principles.
The budget process begins when the BQard's administratiQn prepares a tentative budget fQr the BQard's apprQval. After apprQval Qf this tentative budget by the BQard, such budget is advertised at least Qnce in a newspaper Qfgeneral circulation in the lQcality. At the next regular meeting Qfthe BQard after advertisement, the BQard receives comments Qn the tentative budget, makes revisiQns as necessary and adopts a final schQQl budget. This final budget is then submitted, in accordance with provisions Qf the Quality Basic EducatiQn Act, OCGA Section 20-2-167, tQ the Georgia Department QfEducatiQn. The BQard may increase Qr 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 of deposits in authQrized financial institutiQns. Georgia Laws authQrize the BQard tQ depQsit its funds in one Qr mQre sQlvent banks, insured Federal savings and lQan assQciatiQns, Qr insured State chartered building and lQan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the Board in nQnparticipating interest-earning contracts (such as certificates of depQsit) and repurchase agreements are repQrted at CQSt. Participating interest-earning CQntracts and mQney market
-9-

TOWNS COUNTY BOARD OF EPUCATION

EXHlBIT tip"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

WNE30 1998

Note l' SUMMARY OF SIGNIFICANT ACCOUNTING POUCIES
investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Board to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States govermnent,
(3) Obligations fully insured or guaranteed by the United States govermnent or a United States govermnent agency,
(4) Obligations ofany corporation of the United States govermnent,
(5) Prime banker's acceptances,
(6) The Local Govermnent Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations ofother political subdivisions of the State ofGeorgia.
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 8 - Deferred Compensation Plan
RECEIVABLES
Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The Towns County Board of Commissioners fixed the property tax levy for the 1997 tax year (calendar year) on January 5,1998 (levy date). Taxes were due on March 16, 1998. The lien date for property taxes was
- 10-

lOWS CQUNlY BOARD OF EDUCATION

EXHIBIT "D"

NQIES 10 TIlE GENERAL PURPOSE FINANCIAL STATEMENIS

JUNE 30 1998

Note l' SUMMARY OF SIGNIFICANI ACCQlJNTlNG POUClES

January 1, 1997. Taxes collected within the cutTent fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1998. 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 1997 tax year (calendar year) for the Towns County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

~mills

SALES TAXES

Local Option Sales Tax revenue during the fiscal year amounted to $1,197,310.02 and was recorded in the General Fund. Local Option Sales Tax is to be used for the maintenance and operation of the Board.

INVENTORIES

FOOD INVENIORlES 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 food inventories are recorded as expenditures at the time ofpurchase.

GENERAL OBLIGATION BONDS

The Board issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit ofthe government. The outstanding amount ofthese 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.

-11-

TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO mE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30 1998

Note l' SUMMARY OF SIGNIFICANT ACCOUNTING POUCIES
Operating transfers are recorded for all interfund transactions and 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.
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 of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone of or any combination ofthe following:
(l) 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 ofindebtedness or other direct obligations ofthe United States or of the State ofGeorgia,
(4) Bonds, bills, notes, certificates ofindebtedness or other obligations ofthe counties or municipalities ofthe State ofGeorgia,
(5) Bonds ofany public authority created by the laws ofthe State ofGeorgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and

- 12-

TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30 1998

Note 2 DEPOSITS AND INVESTMENTS

(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, 1998, the bank balances were $2,416,372.90. The amounts of the total bank balances are classified into three categories of credit risk:

Category I - 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.
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, 1998, as follows:

Risk Category

Bank Balance

I

$ 209,334.49

2

2,207,038.41

3

0.00

Total

$ 2 416.372 90

CATEGORIZATION OF INVESTMENTS At June 30, 1998, the fair value of the Board's total investments was $328,350.68 and this entire amount is categorized as Unclassified - Deferred Compensation Plan pooled investments.

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

-13 -

TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30 1998

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. The Board has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any ofthe past three years.

The Board is self-insured with regard to unemployment compensation claims. The Board accounts for claims within the same fund that the employee's salary and benefits were paid. Claims are accounted for with expenditure and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated.

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

1997

$

000 $

537500 $

537500 $

000

1998

$

000 $

344000 $

344000 $

000

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 agreement by the Fund with the United States Fidelity and Guaranty Company to provide coverage for potential losses sustained by the Fund in excess of$350,000.00 loss per occurrence, up to the statutory limit. Also, should losses within the retained limit of $350,000.00 aggregate to more than seventy-five percent (75%) of the standard experience rated premium during the policy term, the policy with the United States Fidelity and Guaranty Company will pay the next $1,000,000.00 ofloss.

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

Position Covered

Superintendent Principal ofElementary School Principal ofHigh School Principal of Middle School

$ 25,000.00 $ 25,000.00 $ 25,000.00 $ 10,000.00

- 14-

TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "0"

NOTES TO THE GENERAL PlJRPOSE FINANCIAL STATEMENTS

JUNE 30 1998

Note 5: GENERAL LONG-TERM DEBT

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

Purpose

Interest Rate

Amount

General Government - Series 1974 Bond Issue

5.90%

$ 320000.00

The changes in General Long-Tenn Debt during the fiscal year ended June 30, 1998, were as follows:

General Obligation
Bonds

Balance July 1, 1997

$ 360,000.00

Deductions Payments
Balance June 30,1998

40000.00 $ 320.000.00

At June 30, 1998, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

General Obligation
Bonds

1999 2000 2001 2002 2003 2004

$ 54,440.00 61,225.00 63,570.00 65,620.00 67,375.00 68835.00

Total Principal and Interest

$ 381.06500

Note 6' ON-BEHALF PAYMENTS

The Board has recognized revenues and expenditures in the amount of$103,750.37 for health insurance and retirement contributions paid on the Board's behalfby the following State Agencies.

- 15-

TOWNS COUNTY BOARD OF EDUCATION

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30.1998

Note 6' ON-BEHALF PAYMENTS
Georgia Department ofEducation Paid to the State Merit System ofPersonnel Administration For Health Insurance of Non-Certified Personnel In the amount of$86,996.45
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of$I,729.92
Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of$15,024.00
Note 7' 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.
Note 8' 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 oftheir 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 of compensation 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 Board's 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 ofthe 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 of general 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 ofinvestment options, determined by the Board.

- 16-

TOWNS CmJNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JDNE30 1998

Note 9 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 defined benefit pension plan. IRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

IRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Board who are covered by IRS are required by State statute to contribute 5% oftheir gross earnings to IRS. The Board makes monthly employer contributions to IRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.81% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

1998 1997 1996

100% 100% 100%

$ 346,088.79 $ 310,175.92 $ 281,518.16

- 17-

TOWNS COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUNp JUNE 30 1998

EXHIBIT"E"

~ Cash and Cash Equivalents Accounts Receivable
Total Assets

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

FEDERAL PROGRAMS

TOTALS

JUNE 30,1998

JUNE 30, 1997

78,034,53 $

0.00 $

25,809.02 $

101,843.55 $

45,789.16

8.081.14

8,300.77

16,381.91

18,142.87

84,115.67 $

O.OP $ 34 109.79 $

118,225.46 $

63,932.03

LIABILITIES AND FUND EQUITY
~ Accounts Payable Salaries Payable Expired Grant Balances Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs For Expired Grant BalancesJQuestloned Costs Unreserved Undesignated
Total Fund Equity
Total Liabilities and Fund Equity

4,720.88 13,743.63 18.464.51
65,651.16 $ 65.651.16 $ 84,115.67 $

4,232.38 $ 14,067.44 2.491.04
20,790.86 $

8,963.28 $ 27,811.07
2.491.04
39,255.37 $

7,915.94 22,911,68
2,511.41
33,339.01

0.00 0.00 $

12,999.62 $ 319.31
0.00
13,316.93 $

12,999.62 $ 319.31
65,651.16
76,970.09 $

771.21 319,31
29,502.50
30,593.02

0.00 $

34,109.79 $

1161225.46 $

63,932.03

See notes to the general purpose financial statements.

18

TOWNS COUN1Y BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30 1998

EXHIBIT"P

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

FEDERAL PROGRAMS

TOTALS

YEAR ENDED

JUNE 30,1998

JUNE 30, 1997

REVENUES
State Funds Federal Funds Other Funds

19,980.00 $ 192,501.51 127,378.24

57,403.00 $

$ 372,425,88

77,383.00 $ 564,927.39 127,378,24

71,201.91 407,930.26 126,025.05

Total Revenues

339,859.75 $

57,403.00 $ 372,425.88 $

769,688.63 $

605,157.22

EXPENDITURES

Current Instruction Support Services Pupil Services Improvement of Instructional Services General Administration School Administration Maintenance and Operation of Plant central Support Services
Food Services Operation

303,711.09

57,452.90 $ 312,816.05 $
1,305.81 15,786.05
8,053.23 999.84
3,810.82 23,835.12

370,268.95 $
1,305.81 15,786.05
8,053,23 999.84
3,810,82 23,835.12 303,711.09

254,937.01
10,590.68 3,842.05
2,330,00 20,625.75 326,130,52

Total Expenditures

303,711.09 $

57,452.90 $ 366,606.92 $

727,770.91 $

618,456.01

Excess of Revenues over (under) Expenditures

36,148.66 $

-49.90 $

5,818.96 $

41,917.72 $

-13,298.79

OTHER FINANCING SOURCES

Operating Transfers In

49.90

6409.45

6,459.35

849.04

Excess of Revenues and Other Financing Sources

over (under) Expenditures

$ 36,148.66 $

FUND BALANCE JULY 1

29,502.50

0.00 $ 0.00

12,228.41 $ 1,090.52

48,377.07 $ 30593.02

-12,649.75 43,242.77

FUND BALANCE JUNE 30

65,651.16 $

0.00 $

13,318.93 $

78,970.09 $

30,593.02

see notes to the -general purpose financial statements.

-19-

TOWNS COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUND YEAR ENDED JUNE 30 1998

EXHIBIT"G"

DEFERRED COMPENSATION PLAN
ASSETS Investments Held by Trustee

BALANCE JULY 1,1997

ADDITIONS

DEDUCTIONS

BALANCE JUNE 30, 1998

$

303,870.56 $

34,943.14 $

10,463.02 $

328,350.68

LIABILITIES Deferred Compensation Plan

$

303,870.56 $

34,943.14 $

10,463.02 $ _ _..:3::;2:;::8,.::;35;::;0:;:;.6:::,8

See notes to the general purpose financial statements.

-20-

TOWNS COUNTY BOARD OF EDUCATION

SCHEDULE "1"

SCHEDULE OF REOUIRED SUPPLEMENTARY INFORMATION

.

YEAR 2000 DISCLOSURES

YEAR ENDED JUNE 30.1998

At June 30, 1998, the Towns County Board of Education had no outstanding contractual commitments for the purpose ofmaking computer systems and other electronic eqnipment year 2000 compliant. The year 2000 issue is the result ofshortcomings in many electronic data processing systems and other equipment that make operations beyond year 1999 troublesome. The year 2000 issue is ofprimary concem for the Board's financial accounting system. The following stages have been identified as necessary to implement a year 2000 compliant systems.
Awareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 issue.
Assessment Stage - The actual process of identifYing all of its systems and individual components of the systems to check for compliance.
Remediation Stage When changes are made to systems and equipment.
Validation/Testing Stage - The process of ensuring that the changes made to systems and equipment will produce a year 2000 compliant system.
It will be necessary for the Board to progress through all four of these stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected. As ofJune 30, 1998, the financial accounting system was determined to be at the Awareness Stage.
The Board's financial accounting software (GENESIS) and hardware (Wang VS) are owned by the State (Georgia Department of Education). These systems have been determined to be critical to the Board's ability to successfully conduct operations. As of June 30, 1998, the State had not contracted for the remediation of either the Wang VS operating system or the GENESIS accounting software. In the subsequent period, the Georgia Department of Education remediated the Wang VS operating system and the updated operating system was installed at all GENESIS sites as ofDecember 9, 1998. The Georgia Department of Education has remediated the GENESIS software and conducted tests at nine pilot sites. The remediated GENESIS software has been provided to all boards of education currently utilizing the GENESIS accounting software.

See notes to the general purpose financial statements. - 21 -

TOWNS COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30 1998

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Pass-Through From Office of Treasury and Fiscal Services National Forest Reserve Funds Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program 1998 Grant National School Lunch Program 1998 Grant Food Disbibution Program (1)
Total U. S. Department of Agriculture
Appalachian Regional Commission Direct Towns County Middle School Computer Project ARC Grant GA-12935-96
Education, U. S. Department of Pass-Through From Georgia Department of Education Elementary and Secondary Education Act TIlle I Grants to Local Educational Agencies 1996 Grant Tmell Eisenhower Professional Development 1987 Grant 1998 Grant TItieVI Innovative Education Program Strategies 1998 Grant Goals 2000 State and Local Education Systemic Improvement Grants 1988 Grant IndMduals with Disabilities Education Act Part B - Special Education Flow Through 1998 Grant Preschool 1998 Grant Vocational Education - Basic Grants to Stales High School Program Basic Grant 1996Grent TechPrep Education 1996 Grant
Total U. S. Department of Education

CFDA NUMBER

PASS THROUGH
ENTITY 10
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

10.665

NIA $

20.206.80

(4)

10.553
10.555 10.550

NlA

60.963.00

NIA

113,280.04 $

NIA

18.258.47

$ 212.708.31

(2)
285,452.62 (3) 18,258.47
303.711.09

23.0FA

180.000.00

140.000.00

84.010
84.281 84.281
84.298

NlA $

96.546.00 $

NlA

NIA

11,117.25

NlA

4,384.00

104,735.08 (3)
771.21 8,087.85
4,400.73 (3)

84.276

NIA

110.000.00

100.029.98

84.027

NlA

84.173

NIA

48,279.30 5,554.66

46,279.30 5,554.66

84.048 84.243

NIA

6.000.00

NlA

5.000.00

$ 286.661.21 $

6.000.00 5,203.64 (3) 281,062.25

-22-

TOWNS COUNIY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30 1998

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Health and Human Services, U. S. Department of Pass-Through From Ninth District Opportunity, Incorporated Head Start 1997 Grant 1998 Grant
Total U. S. Department of Health and Human Services

CFDA NUMBER

PASSTHROUGH
ENTITY 10
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

93.600 93.600

N/A $ N/A

5,322.27 $ 80.222.40

$

85,544.67 $

5,322.27 80,222.40
~85~,544=.,!!,67!..

Total Federal Financial Asslstanoe

765,134.19 $ _ _....:8~1~0,.::3.::18;:;:.0::.:,1

N/A= Not Available

Notes to the Schedule of Expenditures of Federal AwardS

(1) The amounts shown for the Food Distribution Program represents the Federaliy assigned value of nonmonetary asslstanoe lor donated commodities reoeived 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 1998 National School Lunch Program.
(3) Expenditures for this program include State, and/or Other Funds. Expenditures are not maintained by lund souroe.
(4) Expenditures on this program were not maintained by lund souroe.

Major Programs are identified by an asterisk (") in front of the CFDA number.

The Board did not provide Federal Asslstanoe to any Subreclpienl

The accompanying schedule of expenditures of Federal awards Includes the Federal grant activity of the Towns County Board of Education and Is presented on the modified accrual basis of accounting which Is the same basis of accounting used in the presenlation of the general purpose flnancial statements.

See notes to the general purpose financlal statements.

-23-

TOWNS COUNTY BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE
YEAR ENDED JUNE 30 1998

SCHEDULE "3"

AGENCYIFUNDING
GRANTS Community Affairs, Georgia Department of Towns County Middle School Computer Project
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 Middle School Incentive Program Special Instructional Assistance In-SChool Suspension Counselors Grades 4 and 5 Technology Training Local Fair Share Deferred Summer Salaries (Prior Year) Deferred Summer Salaries (Current Year) Food Services Vocational Education Other State Programs Ad Valorem Tax Adjustment At-Risk Summer School Program Environmental Science Program Health Insurance Innovative Programs Mentor Teacher Program PSAT Exams Remedial Summer School Program Teachers' Retirement Lottery Programs Instructional Technology Assislive Technology Classroom Technology
Georgia State Financing and Investment Commission Reimbursement on Construction Projects
Office of Treasury and Fiscal Services Public School Employees Retirement

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL FUND

REVENUE FUND

PROJECTS FUND

TOTAL

$

70,000.00

$

70,000.00

1,857,376.00 412,966.00 52,355.00 78,834.00 25,004.00 551,475.00

168,S08.00 49,626.00 87,904.00 71,540.00 90,747.00 81,567.00 9,168.00 28,842.00
-842,762.00 -379,559.00 412,843.00
$ 60,000.00

19,980.00

56,424.00 4,674.14 500.00
86,996.45 5,000.00 1,692.00 79.66 3,114.12 1,729.92

4,403.00 53,000.00

1,857,376.00 412,966.00 52,355.00 78,834.00 25,004.00 551,475.00
168,508.00 49,626.00 87,904.00 71,540.00 90,747.00 81,567.00
9,168.00 28,842.00 -842,762.00 -379,559.00 412,843.00 19,980.00 60,000.00
56,424.00 4,674.14 SOO.OO
86,996.45 5,000.00 1,692.00 79.66 3,114.12 1,729.92
4,403.00 53,000.00

15.024.00

$ 117,789.10

117,789.10 15,024.00

$ 3,061,668.29 $ 77,353.00 $ 117?89.10 $ 3,256,840.39

See notes to the general purpose financial statementa.

-24-

EXPENDITURES
Current Instruction

TOWNS COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS YEAR ENDED JUNE 30 1998

SCHEDULE "4"

INSTRUCTIONAL TECHNOLOGY

ASSISTIVE

CLASSROOM

TECHNOLOGY

TECHNOLOGY

TOTAL

$

4,452.90 $

53,000.00 $ ==~57;.;,4=5=2..9.",,0

See notes to the general purpose financial statements. -25-

TOWNS COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30.1998

SCHEDULE "5"

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
Amount of Underexpenditure for Total Allotment

FOURTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS

100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS

$

2,401.531.00 $

70,815.00

$

2,552,746.45

247,767.42 $

$

2,800,513.87

203,828.96

-35,886.81

$

2,764,627.06

$

0.00 $

0.00

Note: (1) Salary accruals (July and August 1998 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 1997 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. - 27 -

TOWNS COUNty BOARP OF EPUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - BY PROGRAM
GENERAL FUND - QUALITy BAS'C EDUCATION PROGRAMS YEAR ENDED JUNE 30 1998

GENERAL AND CAREER EDUCATION pROGRAMS
Kindergarten r)
Grade. 1 - 3 (.) Sub-Total K-3
Grades4-5()
Grade. 68 rl Grade. 9 12 rl r) High School Laboratories
Vocational Education Laboratories (.) Total General and Career Education Programs
SpeCIAL EPUCATION pROGRAMS Regular Programs Category III (.) Sub-Total Regular Category VI (Gifted) (.) Total Special Education Programs
REMEDIAL EDUCATION PROGRAM C)
Tolal Fourteen Weighted Programs MEDIA CENTER PROGRAMS
Salaries Operations
Total Media Center Programs
Total Fourteen Weighted and Media Center Programs

ALLOTMENTS FROM DEPARTMENT OF EDUCATION

ORIGINAL --!!-

REQUIRED ORIGINAL

MID-TERM

194,155.00

174,739.50

0.00

507,050.00

456,345.00

701,205.00 90

631,084.50

0.00

273,424.00 90

246,061.60

428,892.00 90

384,202.60

185,229.00 90

148,706.10

140,249.00 90

126,224.10

150,377.00 90

135,339.30

1,857,376.00

1,671.638.40

0.00

386,643.00

349,778.70

0.00

388,643.00 90

349,778.70

0.00

24.323.00 90

21,890.70

412,966.00

371,669.40

0.00

52,355.00 90

47.119.50

0.00

2,322,697.00

2,090.427.30

0.00

64.149.00 90

57,734.10

0.00

14,685.00 90

13,216.50

78,834.00

70,950.60

0.00

2,401,531.00

2,161.377.90 $

0.00

STAFF DEYELOfMENT PROGRAMS Cost of Instruction Professional Development
Total Staff Development Programs
(.) Identifies Fourteen Weighted Programs.
(1) Salary 8c:cnJalS (July and August 1998 Deferred Salaries) reported as expenditures In the General Purpose Financlal Statements are not Included on this analysis In order to comply with program guidelines.
See notes to the general purpose financial stalements.

7,250.00 17,754.00

7,250.00 17,754.00

25,004.00 100 $

25,004.00 $

(2) Salary accruals (July and August 1997 Deferred Salaries) reported as expenditures in the prior year General Purpose Financial Statements are included on this analysis as required by program guidelines.

- 28

0.00 0.00
..::0;::.0::,0

SCHEDULE "6"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES (1)(2)

OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED. ALLOTMENT

174.739.50 456,345.00 631,084.50 246.081,60 384.202,80 148,706,10 126,224,10 135,339.30 1,671,638.40

191,942.28 528.187.10 718,129,38 249,244,03 469,189,67 278.167,27 227,475,75 162,000.46 2,104.186.56

19,616.66 33,374.08 52.990,72 24,954,58 28,720,55 27,441,66
3.003,93 15,658.83 152,770.27

211,558.94 559.561.16 771,120.10 274,198.61 497,890,22 305,608,93 230,479.68 177,659.29 2,256,956,83

0,00 0,00 0,00 0,00 0,00 0,00

349,778.70
349.778,70 21.890.70
371.669.40 47,119.50
2,090,427.30

306,972.09 306,972,09
25.394,73 332,366.82
45,410.72 2,481,964.10

47,895,75 47.895,75
1,271.99 49,167.74
1,890.95 203,828.96

354.867.84 384,587,84
26,666.72 381,534.56
47.301.67 2,885,793,00

57.734,10 13,216,50
70,950.80

70,782,35 70,782,35

43,938,46 43,938.46

70,782,35 43.938,46
114,720.81

2.161,377.90 $

2,552.746.45 $

247,767.42 S 2.800,513.87 $

0,00 0.00 0,00
0,00 0,00
0.00

7.250,00 17,754.00
25,004.00

22,449,93 3.267,38

22,449,93 3.267.38

25,717,31 $

25,717,31 $

0;;,;,0;;,;;,0

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SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

RUSSELL W. HINTON
STAlE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
June 4,1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members of the Towns County Board ofEducation
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GO\'ERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements ofTowns County Board of Education as of and for the year ended June 30, 1998, and have issued our report thereon dated June 4, 1999. 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 the standards applicable to financial audits contained in Government Auditing Standards. issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether Towns County Board of Education's financial statements are free ofmaterial misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reportjng
In planning and performing our audit, we considered Towns County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its
98YB-40

operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgement, could adversely affect Towns County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. The reportable condition is described in the accompanying Schedule ofFindings and Questioned Costs as item FS-739l-98-01.
A material weakness is a condition in which the design or operation of one or more ofthe intemal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, the reportable condition described above is considered to be a material weakness.
This report is intended solely for the information and use of management, members ofthe Towns County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
~...~.~
Russell W. Hinton State Auditor
RWH:gp 98YB-40

RUSSELL W. HINTON
STATE AUDITOR (404)656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
June 4,1999

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board ofEducation
and Superintendent and Members ofthe Towns County Board ofEducation
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MNOR PROGRAM
AND INTERNAL CONTROL OVER COMPLIANCE lNACCQRDANCE WITH OMB ClRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Towns County Board of Education with the types of compliance
requirements described in the u.s. Office ofManagement and Budget (OMB) Circular A-133 Compliance
Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1998. Towns County Board of Education's major Federal programs are identified in the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements ofiaws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Towns County Board of Education's management. Our responsibility is to express an opinion on Towns County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with generally accepted auditing standards; the standards applicable to financial audits contained in Government AuditinQ: Standards, issued by the Comptroller General of the United States; and OMB Circular A-B3, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-B3 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Towns County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Towns County Board of Education's compliance with those requirements.

98SA-10

In our opinion, the Towns County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 1998.
Intemal Control Over COIDllljance
The management of Towns County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Towns County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compljance and to test and report on internal control over compliance in accordance with OMB Circular A-133.
Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more ofthe internal control components does not reduce to a relatively low level ofrisk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of management, members of the Towns County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
2~i<J*State Auditor
RWH:gp 98SA-1O

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

TOWNS COUNTY BOARD OF EDUCATION
AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

7391-93-02 7391-96-01 7391-96-02 FS-7391-97-01

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

CORRECTIVE ACTIONIRESPONSES

EXPENDITURESIUABILITIESIDISBURSEMENTS Failure to Meet Expenditure Requirements Amount: $1,650.45 Finding Control Number: 7391-96-02

The Board is waiting for the Georgia Department of Education to apply this refund to the Board's local fair share.

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-7391-97-01

Due to current staffing limitations and budgetary considerations prohibiting the hiring of additional administrative staff, the Board has decided not to pursue the recording of general fixed assets on the financial statements.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED CQSTS

FINDING CONTROL NUMBER AND STATUS

7391-96-03

Unresolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

FEDERAL FINANCIAL REPORTS Expired Grant Balance Amount: $319.31 Finding Control Number: 7391-96-03

The unexpended grant balance wi!! be applied against the fiscal year ended June 30, 1999 requisition as per directions from Ninth District Opportunity, Incorporated.

SECTION IV FINDINGS AND QUESTIONED COSTS

TOWNS COUNTy BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30 1998
SUMMARy OF AUDITOR'S RESULTS
1. T)!pe ofR!;port Issued on the Financial Statements The auditor's opinion on the Towns County Board of Education's financial statements was qualified for various departures from generally accepted accounting principles.
2. Reportable Conditions in Internal Control Disclosed by the Audjt of the Financial Statements The audit report for the Towns County Board of Education disclosed a financial statement reportable condition related to the following control category.
General Fixed Assets
The reportable condition described above is considered to be a material weakness.
3. Noncompliance Material to the Financial Statements The audit of the Towns County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.
4. Reportable Conditions in Internal Control Oyer Mlijor Programs The audit report for the Towns County Board ofEducation did not disclose any reportable conditions in internal control over major programs.
5. Type of Report Issued on Compljance for Major Programs The auditor's opinion on the Towns County Board of Education's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findin~s ReQllired to be Reported by Section 5 lOra) ofQMB Circular A-133 The Towns County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133.
7. Mlijor Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk: Audjtee The Towns County Board of Education was audited as a low risk auditee based on a waiver granted by the U. S. Department of Education.
- 1-

TOWNS COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND mreSTIQNED COSTS YEAR ENDED JUNE 30 1998
IT FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-739l-98-01 The Towns County Board of Education did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general purpose financial statements 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 ofland, 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 FixedAssets Account Group.
ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.
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