AUDIT REPORT WALKER COUNTY BOARD OF EDUCATION
LAFAYETTE, GEORGIA YEAR ENDED JUNE 30, 1998

WALKER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATIONSCHEDULE 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

ADDITIONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

20

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

21

CAPITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

22

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

24

FIDUCIARY FUND TYPE

COMBINING STATEMENT OF CHANGES IN ASSETS AND UABILITIES

AGENCY FUNDS

26

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

27

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

28

3 SCHEDULE OF STATE REVENUE

30

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

31

5 SCHEDULE OF EXPENDITURES

LOTTERY PROGRAMS

32

WALKER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

ADDmONAL FINANCIAL INFORMATION

SCHEDULES

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

6

OVERALL

33

7

BY PROGRAM

34

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

SECTIONID 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 AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
July 8, 1999

Honorable Roy E. Bames, Governor Members of the General Assembly Members of the State Board ofEducation
and Superintendent and Members of the Walker County Board ofEducation
INDEPENDENT AUDITOR'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 fmancial statements of the Walker 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 ofthe Walker County Board of Education's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit.
Except as discussed in the following paragraph, we conducted our audit in accordance with genera11yaccepted auditing standards and the standards applicable to financial audits contained in 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 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 nsed 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.
We did not observe the taking of either the Federal donated commodities inventory or purchased foods inventory at June 30, 1998, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures.
As described in the notes to the general purpose financial statements, the Board's financial statements have been prepared nsing certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:

98ARL-13B

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.
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.
The Board did not recognize as expenditures, in the year ended June 30, 1998, a portion of salaries and the corresponding employers cost of related benefits earned for contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department ofEducation for the State's share of these unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were improperly recorded in the year ended June 30, 1998. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed.
The aggregate effects on the general purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects ofsuch adjustments, ifany, on the Special Revenue Fund, as might have been determined to be necessary had we been able to satisfy ourselves as to the accuracy of the food service inventories as discussed in the third paragraph and except for the effects on the general purpose fmancial statements of the matters referred to in the preceding paragraph, the general purpose fmancial statements referred to above present fairly, in all material respects, the fmancial position of the Walker County Board ofEducation as ofJune 30, 1998, and the results ofits operations for the year then ended, in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated July 8,1999, on our consideration ofthe Walker County Board ofEducation's interual control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.
The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation ofthe supplementary information. However we did not audit the information and do not express an opinion on it. In addition, we do not provide assurance that Walker 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 Walker County Board of Education does business are or will become year 2000 compliant.
Our audit was performed for the purpose offorming an opinion on the general purpose financial statements of the Walker County Board of Education taken as a whole. The accompanying combining statements (Exhibits E through I) and the financial schedules (Schedules 2 through 7), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133,
98ARL-13B

Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe general purpose financial statements and in our opinion, except for the effect of adjustments, if any, on the Special Revenue Fund, as might have been determined to be necessary had we been able to satisfY ourselves as to the accuracy of the food service inventories as discussed in the third paragraph and except for the effects ofthe matters referred to in the forth paragraph, such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.

A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24.

RWH:jb 98ARL-138

Respectfully submitted,
~4. Qf2 W.~ Russell W. Hinton State Auditor

WALKER COUNTY BOARD OF EDUCATION

WALKER COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET
AlL FUND TYPES AND ACCOUNT GROUP JUNE 30 1998

Cash and Cash Equivalents
Invesbnents
Accounts Receivable
Inventories Consumable Supplies Food Donated Commodities Purchased Food
Amount Available in Debt Service Fund
Amount to be Provided in Future Years For Payment of Bond Debt

GENERAL FUND

$

3,017,541.88

88,253.44 134,379.30

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

734,893.58

2,750,208.69

8,003,060.33

300,286.44

1,941,401.66

87,706.77 30,403.40

Tolal Assets

$ 3.240,174.62

1,153,290.19

12.694,670.68

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Salaries Payable Expired Grant Balances Payable Contracts Payable Retainages Payable Funds Held for others General Obligation Bonds Payable
Total L1abUilies
FUND EQUITY
Fund Balances ReselVed For Bus Replacement Funds For Continuation of Federal Programs For Debt service For Expired Grant Balances/Questioned Costs For Local Funds For Inventories Consumable Supplies Food Donatad Commodities Purchased Food For Purposes of Bond Issue For Stale Capital OUtlay Projects Unreserved Designated for SeW-Insurance Undesignated
Total Fund Equity

$

22,308.75 $

101,989.49

38,272.13

350,557.39

7,309.79

1,080,628.58

1,545,779.92

$

22,308.75

459,856.67 $

2,664,680.63

$

8,541.37

1,040.98

134,379.30
213,655.17 2,861,290.03 $ 3217,865.87 $

7,469.67

87,706.77 30,403.40

9,133,387.28 146.064.90

586,812.70 693,433.52 $

750,537.87 10,029,990.05

Total LJabililies and Fund Equity

$

3240.174.62 $

The notasto the general purpose finandal statements are an intagral part of this atstamenl

1153.290.19 $

12694,670.68

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EXHIBIT "A"

DEBT SERVICE
FUND

FIDUCIARY FUND TYPE AGENCY FUNDS

ACCOUNT GROUP GENERAL
LONGTERM DEBT

TOTALS

(Memorandum Only)

JUNE 30,1998

JUNE 30, 1997

$

981,781.75 $

5,466.10

$ 7,489,892.00 $ 14,269,224.08

8,003,060.33

8,590,175.04

934,502.59

3,264,444.13

977,500.49

$

1,916,284.34

134,379.30
87,706.77 30,403.40
1,916,284.34

236,320.05
87,387.74 34,630.60
97,954.77

13,188,715.66

13,188,715.66

15.902,045.23

1,916,284.34

5.466.10 $

15.105.000.00 $ 34.114,885.93

40,195.238.00

$

162,570.37

113,614.05

350,557.39

332,909.50

7,309.79

5,349.58

1,060,628.58

464,408.22

1,545,779.92

770,603.00

$

5,466.10

5,466.10

4,584.10

$

15,105,000.00

15,105,000.00

16,000,000.00

$

5.466.10 $

15,105,000.00 $ 18,257,312.15 $ 17,691,448.45

$ 1,916,284.34
0.00 $ 1,916.284.34 $ 1,916.284.34 $

$

8,541.37 $

1,040.98

1,916.284.34

7,469.67

153,126.65 3,038.34
97,954.77 761.11
6.788.79

134,379.30

236,320.05

87,706.77 30,403.40 9,133,387.28 148,064.90

87,387.74 34,630.60 15,713,239.85 2,137,004.68

213,655.17 4,178,640.60

126,017.76 3,907,519.21

$ 15,657.573.78 $ 22.503,789.55

5,466.10 $

15.105.000.00 $ 34,114885.93 $ 40.195,238.00

-3-

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

REVENUES
Slate Funds Federal Funds Taxes Other Funds
Tetal 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 Plent Student Transportation Services Central Support Services Other Support Services Food Services Operation
Capital Outley Debt Service
Principal Interest
Total Expendilures
Excess of Revenues over (under) Expendilures
OTHER FINANCING SOURCES (USES)
Accrued Interest on Bonds Sold Proceeds from Generel Obligation Bonds
Par Value Premium on Bonds Sold Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and other Financing Sources over (under) Expendilures and Other Financing Uses
FUNp BALANCE JULY 1
InvenIllry - Net Change in Period Consumable Supplies Donated Commodities Purchased Food

GENERAL FUND

SPECIAL REVENUE
FUND

31,475,298.29 B9,414.70
10,403,730.69 617.050.69
42.585.484.37

739,072.55 4,014,644.58
1.241.773.00
5.995,490.13

$ 28,342,812.81 $
2,008,898.05 1,119,805.66 1,177,286.04
396,023.88 3,194,496.55
328,054.63 3,547,888.91 2,302,312.6B
262,293.43 93,908.40

1,980,105.63
320,638.23 185,786.46
180,655.19 35,940.82
15,041.15 18,693.15
158,900.89 2,931,637.92

$ 42.773.581.04 $

5.827.399.44

$

-188 096.67 $ _ _-,16",8"".090=",.89:;:.

$

$

-37.873.54

$

-37.873.54 $

$

-225,970.21 $

3,545,778.83

-101,940.75

37,873.54 37,873.54 205,964.23 491,377.46
319.03 -4,227.20

FUND BALANCE JUNE 30

$

3217 865.87 $_.....;893~,::;433~.52~

The nol8& to 1he general PI.<POOl' financial _ _ "",an integral pert of this - .

-4-

EXHIBIT "BOO

WALKER COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNpS
YEAR ENDED JUNE 30 1998

EXHIBIT"C"

REVENUES

GENERAL FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

State FUnds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES

30,133,191.00 $ 80,000.00
9,807,649.00 157,874.00

31,475,288.29 89,414.70
10,403,730.69 617,050.69

40,178,714.00

42,585,464.37

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 capiialOuUay

$ 28,083,089.00 $ 28,342,812.81

2,075,721.00 1,214,945.00 1,227,230.00
401,511.00 3.186,113.00
333,329.00 3,603,656.00 2.212,377.00
219,417.00 93.800.00

2.008,898.05 1.119.805.66 1.177.266.04
396.023.88 3,194,496.55
328,054.63 3.547,888.91 2,302,312.68
282.293.43 93.908.40

Total Expendijures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES)

$ 42,651,188.00 $ 42,773.581.04 -2,472.474.00 $ -188,098.67

Other Sources Other Uses
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expendijures and Other Financing Uses
FUND BALANCE JULY 1 1997
Adjustments

$ -103.712.00 $ $ -103.712.00 $
$ -2.576,166.00 $ 3.607,848.92 -34,800.12

-37,873.54 -37.873.54
-225,970.21 3,309.466.78

FUND BALANCE JUNE 30 1998

$

996.862.80 $ 3.083,486.57

SPECIAL REVENUE FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

$

818,827.00 $

739,072.55

3,296,963.00

4,014,644.58

1,408,251.00

1,241,773.00

5,524,041.00

5,995,490.13

2,064,099.00 236,023.00 194,480.00 1,000.00 221,144.00 20.000.00

1.980.105.63
320.638.23 185.786.46
180,655.19 35.940.82

24,427.00 26,394.00

15,041.15 18,693.15

183,550.00 3.002,544.00
500.00

158.900.89 2,931.637.92

$ 5,974.161.00 $ 5,827,399.44

-450,120.00 $

168,090.69

103,712.00 $

37,873.54

$

103,712.00 $

37,873.54

$ -348,408.00 342.786.24 37.647.34

205.964.23 369,359.12

$

34.025.58 $

575,323.35

The notes to the general PIJIllOSe flnancialstatements ara an Integral part 01 this statement. -6-

WALKER COUNTY BOARD OF EDUCAnON

EXIllBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Walker County Board of Education (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 fmancial 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 fmancial 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.
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 ofa 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 of Education and from the Federal government to accomplish specific educational objectives.
-7 -

WALKER COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: 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 of resources 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. TIIis fund includes:
AGENCY FUNDS - the funds used to account for assets held in a fiduciary capacity for other funds, governments, or individuals.
ACCOUNT GROUP
GENERAL LONG-TERM 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 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 ofavailable 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 ofoperations.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (Le., 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 option sales taxes, intergovernmental grants and investment income.
Expenditures are generally recognized when the related fund liability is incurred.
-8-

WALKER COUNTY BOARD OF EDUCAnON

EXlDBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A departure from the above definitions is the accounting treatment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 1998, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1997 and ending in early June 1998. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1997 and ending in August 1998. State grants to fund the State's share of these contracts were disbursed from the Georgia Department ofEducation to the Board in the same twelve months. As of June 30, 1998, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 1998, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30, 1998. Also, the State's portion of the compensation paid in July and August 1998 was received and recorded as revenue in the fiscal year subsequent to June 30, 1998. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were recorded in the year ended June 30, 1998. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.
Agency funds are accounted for using the modified accrual basis of accounting in recognizing assets and liabilities.
BUDGET
The Walker County Board of Education'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 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 cornments 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 of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
The Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual presents actual and budgeted data for the General Fund and Special Revenue Fund. 10 facilitate comparison with the budget, the following adjustments have been made to fund balance as reflected on Exhibit "B" of this report:

-9-

WALKER COUNTY BOARD OF EDUCATION

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30 1998

Note l' SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General Fund

Special Revenue
Fund

FUND BALANCE JULY 1,1997

$ 3,545,776.83 $ 491,377.46

Adjustments Inventories - July 1, 1997 Consumable Supplies Food Donated Commodities Purchased Foods

-236,320.05

-87,387.74 -34 630 60

Fund Balance July 1,1997 (Budget Basis)

$ 3,309,456.78 $ 369,359.12

Excess ofRevenues and Other Financing Sources over (under) Expenditures and Other Financing Uses

-225970.21

20596423

FUND BALANCE JUNE 30,1998 (Budget Basis)

$ 3 083 486,57 $ 575.323.35

CASH AND CASH EQUIVALENTS

COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofdeposits 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.

INVESTMENTS

COMPOSITION OF INVESTMENTS Investments made by the Board in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase 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 ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:

(1) Obligations issued by the State ofGeorgia or by other states, .

(2) Obligations issued by the United States government,

- 10-

WALKER COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30.1998

NQte1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES

(3) ObligatiQns fully insured Qr guaranteed by the United States gQvernment Qr a United States gQvernment agency,

(4) ObligatiQns Qf any cQrpQratiQn Qf the United States gQvernment,

(5) Prime banker's acceptances,

(6) The Local GQvernment Investment PQQI administered by the State Qf GeQrgia, Office Qf Treasury and Fiscal Services,

(7) Repurchase agreements, and

(8) ObligatiQns Qf Qther pQlitical subdivisiQns Qf the State Qf GeQrgia.

RECEIVABLES

Receivables consist Qfgrant reimbursements due Qn Federal, State Qr Qther grants fQr expenditures made but nQt reimbursed and Qther receivables disclQsed frQm infQrmatiQn available. Receivables are recQrded when either the asset Qr revenue recognitiQn criteria has been met. Receivables recQrded Qn the general purpQse financial statements dQ nQt include any amQunts which WQuld necessitate the need fQr an allQwance fQr uncQllectible receivables.

PROPERTY TAXES

The Walker CQunty BQard QfCQmmissiQners fixed the property tax levy fQr the 1997 tax year (calendar year) Qn OctQber 20, 1997 (levy date). Taxes were due Qn December 20, 1997. The lien date fQr prQperty taxes was January I, 1997. Taxes CQllected within the current fiscal year Qr within 60 days after year-end are repQrted as revenue in fiscal year 1998. The Walker CQuntyTax CommissiQner bills and CQllects the property taxes fQr the BQard QfEducatiQn, withhQlds 2.5% Qftaxes CQllected as a fee fQr tax cQllectiQn and remits the balance of taxes cQllected tQ the BQard.

The tax millage rate levied fQr the 1997 tax year (calendar year) fQr the Walker CQunty BQard QfEducatiQn was as fQllQWS (a mill equals $1 per thQusand dQllars Qf assessed value):

School Operations

~mills

SALES TAXES

Special PurpQse Local OptiQn Sales Tax is to be used fQr capital outlay fQr educatiQnal purpQses and debt service. Special Purpose Local OptiQn Sales Tax revenue during the fiscal year amQunted tQ $3,246,002.44 and was recorded in the Debt Service Fund. The State will terminate collectiQn Qfthis tax once an additiQnal $22,026,423.56 has been collected Qr on June 30, 2002 whichever Qccurs first.

- 11 -

WALKER COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

TIJNE30.1998

Note l' SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES
FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.
SUPPLY INVENTORIES Supply inventories are valued at cost (first-in, first-out) on the Combined Balance Sheet. Supply inventories are recorded as expenditures when purchased. The supply inventories reported on the balance sheet are equally offset by a reservation offund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.
COMPENSATED ABSENCES
Compensated absences represent obligations of the Board relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion ofthis obligation as this amount is deemed immaterial to the general purpose financial statements.
Additionally, the dollar value ofaccumnlated compensated absences at June 30, which will be payable from future resources has not been recorded in the General Long-Tenn Debt Account Group as this liability is also deemed to be immaterial to the fair presentation of these financial statements.
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 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 ofinterfund tranSactions:
-12 -

WALKER COUNTY BOARD OF EDUCATION

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 fmancial analysis. Data in these columns do not present fmancial position or results ofoperations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation ofthis data.
Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code ofGeorgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum 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 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 ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists ofanyone of or any combination ofthe 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 ofindebtedness or other obligations of the counties or municipalities ofthe State of Georgia,
(5) Bonds ofany public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority anthor1zed 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
- 13-

WALKER COUNTY BOARD OF EDUCATION

EXInBIT "D"

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 $11,209,112.28. 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,
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

1

$ 1,381,781.75

2

6,810,091.68

3

3,017,238,85

Total

$11 209 11228

CATEGORIZATION OF INVESTMENTS Investments are classified as to risk by the three categories described below:

Category 1 - Insured or registered, or securities held by the Board or the Board's agent in the Board's
name. Category 2 - Uninsured or unregistered, with securities held by the counterparty's trust department or
agent in the Board's name.
Category 3 - Uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent but not in the Board's name,

- 14-

WALKER COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE30 1998

Note 2: DEPOSITS AND INVESTMENTS

At June 30,1998, the carrying value of the Board's total investments was $8,003,060.33. The investments are classified as to risk categories as follows:

Type ofInyestmeot U. S. Government

Risk Categories

Carrying Amount

Fair Value

===o~.o~o $ 8 003 060.33 $===O~.O~O $ 8 003 060.33 $ 8 003 060.33

Note 3: NON-MONETARY TRANSACTIONS

The Board receives food commodities from the United States Department ofAgriculture (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 of loss associated with torts and assets. 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 has elected to self-insure for all losses related to natural disaster. In addition, the Board has elected to self-insure for errors or omissions, which includes, among other risks, risks for sexual harassment and discrimination. The Board has not experienced any losses related to these risks in the past three years.

The Board has established a limited risk management program for workers' compensation claims. A premium is charged when needed by the General Fund to each user fund on the basis of the percentage of that fund's payroll to total payroll in order to cover estimated claims budgeted by management based on known claims and prior experience. The Board accounts for claims 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. An excess coverage insurance policy covers individual claims in excess of $200,000.00 loss per occurrence, up to the statutory limit.

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

- 15-

WALKER COUNTY BOARD OF EDUCATION

EXHIBIT OlD"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 4: RISK MANAGEMENT

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

1997 1998

$

0.00 $

13,983.23 $

13.983.23 $

0.00

$

0.00 $

52,362.59 $

52,362.59 $

0.00

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 of that 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 1998

$

0.00 $

14,362.68 $

14,362.68 $

0.00

$

0.00 $

4,686.00 $

4,686.00 $

0.00

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

Position Covered

Superintendent Note 5: GENERAL LONG-TERM DEBT

$ 50,000.00

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

Purpose General Government - Series 1997

Interest Rates 4,00% - 5,00%

Amount $1510500000

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

- 16-

WALKER COUNTY BOARD OF EDUCATION

EXHlBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 5' GENERAL LONG-TERM DEBT

General Obligation
Bonds

Balance July 1, 1997

$16,000,000.00

Deductions Payments

895000.00

Balance June 30, 1998

$15 105000.00

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

$ 3,399,163.75 3,616,571.25 3,817,211.25 4,018,168.75 236782500

Tota! Principal and Interest

$1721894000

Note 6: ON-BEHALF PAYMENTS

The Board has recognized revenues and expenditures in the amount of$784,252.37 for health insurance and retirement contributions paid on the Board's behalf by 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$631,955.35

Paid to the Teachers Retirement System ofGeorgia For Teachers Retirement System (IRS) Employer's Cost In the amount of$19,502.02

- 17-

WALKER COUNTY BOARD OF EDUCATION

EXHIBIT ''D''

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30 1998

Note 6: ON-BEHALf PAYMENTS

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$132,795.00

Note 7: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the Board as ofJune 30, 1998, together with funding available:

Unearned Executed Contracts

Funding Available From State

GSFIC 746-001 96/96S-746-045 96/96S-746-046 97/97S-746-097 97/97S-746-098 98/97S-746-099
Rock Spring Elementary School Rossville Elementary School Kitchen HVAC at Rossville Elementary School
and Gilbert Elementary School

$ 181,858.92 947,473.19 182,622.29
4,754,132.47 3,014,086.76 2,916,192.55 4,008,816.79
7,920.00

$ 588,686.00 941,406.34 199,338.20
3,245,751.00 2,037,869.00 1,192,054.00

5712960

$16.070232.57 $ 8,205.104.54 The amounts described in this note are not reflected in the general putpOse 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 various legal proceedings pertaining to matters incidental to the performance of routine Board operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the general purpose financial statements.

- 18-

WALKER COUNTY BOARD OF EDUCATION

EXHIBIT I'D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 9: ACCUMULATED EMPLOYEES' LEAVE

Twelve month employees earn annual leave at the rate of ten days per year. Employee leave policies of the Walker County Board ofEducation provide for payments to employees for a maximum often (l0) days leave at retirement or termination of employment at their current rate of pay. See Note 1 - Compensated Absences

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

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Board who are covered by TRS are required by State statute to contribute 5% oftheir 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. 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%

$ 3,233,940.32 $ 2,957,108.03 $ 2,794,419.05

- 19-

WALKER COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE3Q 1998

EXHIBIT"E"

ASSETS Cash and Cash Equivalents Accounts Receivable Inventories
Food Donated Commodities Purchased Food
Total Assets

SCHOOL FOOD
SERVICES FUND
$ 757,650.07
17,269.63

LOnERY PROGRAMS

FEDERAL PROGRAMS

42,837.37

$

283,016.81

TOTALS JUNE 30, 1998 JUNE 30, 1997

800,487.44

551,534.28

300,286.44

435,229.57

87,706.77 30,403.40

87,706.77 30,403.40

87,387.74 34,630.60

893,029.87 $

42,837.37

283,016.81 $ - 1,218,884.05 $ 1,106,782.19

LIABILITIES AND FUND EQUITY

LIABILITIES

Cash Overdraft Accounts Payable Saiaries Payable Expired Grant Balances Payable

Total Uabilities

FUND EQUITY

Fund Balances

Reserved

For Continuation of Federal Programs

For Local Funds

For Inventories

Food

Donated Commodities

$

Purchased Food

Unreserved

Undesignated

Total Fund Equity

$

44,584.97 $ 163,542.03 208,107.00 $
87,706.77 30,403,40 588,812.70 $ 684,922.87 $

$ 10,021.00 32,723.88
92.49
42,837.37 $

65,593.86 $ 47,403.52 154,291.48
7,217.30
274,506.16

65,593.86 $ 101,989.49 350,557.39
7,309.79
525,450.53 $

177,504.10 106,554.27 332,909.50
436.86
617,404.73

$
0.00 0.00 $

1,040.98 $ 7,469.67

1,040.98 $ 7,469.67

3,038.34 6,788.79

0.00 8,510.65 $

67,706.77 30,403.40
588,812.70
693,433.52 $

87,387.74 34,630.60
359,531,99
491,377.46

Total Usbililies and Fund Equily $

893,029.87

42,837.37

283,016.81 $ 1,218,884.05

1,108,782.19

see notes to the general purpose financial stetements.

-20-

WALKER COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE30 1998

EXHIBlT"P

REVENUES
State Funds Federa; Funds Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional services General Administration School Administration Maintenance and Operation of Plant Student Transportation Services Other Support services Food Services Operation
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Operatln9 Transfers In
Excess of Revenues and Other Flnandng Sources over (under) Expenditures
FUND BALANCE JULY 1
Food Inventory - Net Change In Pertod Donated Commodities Purchased Food

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

FEDERAL PROGRAMS

TOTALS YEAR ENDED JUNE 30. 1998 JUNE 30, 1997

214,756.00 $ 1,681,419,23 1,240,743.00
3,136,918,23 $

524,316.55 $

$ 2,333,225,35
1,030.00

739.072.55 4,014.644.58 1,241,773.00

859.132.20 3,255,088.80 1,074.644.51

524,316.55 $ 2,334,255.35 $ 5,995,490.13 $ 5,188,865.51

2,929,637.52 2,929,637.52 $
207,280,71 $

482,040,27 $ 1,498,065.36 $ 1,980,105.63 $ 1,758,391.31

34,093,64 1,537.63 5,464.33
6,450,95 109.90 425.15
2,000,40

286,544,39 164,248,83 175,190.86
35,940.82 8,590.20
18,583,25 158,475.74

320,638,23 185,786,46 180,655.19
36,940,82 15,041,15 18,693,15 158,900.89 2,931,637.92

177,823.77 140,168.99 164,596.10
5,008.38 15,942.77 71,628.05 2,923,909.86

532,122,47 $ 2,365,639.45 $ 5,827,399.44 $ 5,257,469.23

-7.805,92 $ -31.364.10 $

168,090.69 $

-68,603.72

207,280,71 $ 481,550,33
319.03 -4,227.20

7,805.92

30,067.62

37,873.54

0.00 $ 0.00

-1,316.48 $ 9,827.13

205,964.23 491.377.46

319.03 -4,227.20

11,836.61
-56,767.11 525,437.83
15,829,45 6,877.29

FUND BALANCE JUNE 30

$ 664,922.87 $

0.00 $

8;510.65 $

693.433.52 $

491,377.46

see notes 10 the general purpose financial statements.

-21-

WALKER COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30 1998
See notes to the general purpose financial statements. -22-

EXHIBIT"G"

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

JUNE 30,1998

JUNE 30, 1997

$ 5,8n,902.04 $ 10,994,130.43

8,003,060.33

8,590,175.04

$

1,941,401.66

1,941,401.66

19,386.24

3,571 ,528.12 $

425,509.10

3,997,037.22

$

5,512,929.78 $

425,509.10 $ 19,819,401.25 $ 19,603,691.71

$

2,702,184.25 $

38,272.13

1,080,628.58

1,545,n9.92

$

5,366,864.88 $

425,509.10 $ 425,509.10 $

3,127,693.35 38,272.13
1,080,628.58 $ 1,545,n9.92 3,997,037.22
9,789,411.20 $

464,408.22 nO,603.00
1,235,011.22

$

146,064.90

0.00 $

$

146,064.90 $

$
0.00 0.00 $

9,133,387.28 $ 146,064.90
750,537.87
10,029,990.05 $

15,713,239.85 2,137,004.68
518.435.96
18,368,680.49

$

5,512,929.78 $

425,509.10 $ 19,819,401.25 $ 19,603,691.71

-23-

WALKER COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDED JUNE 30 1998

REVENUES
State Funds Other Funds
Total Revenues
EXPENDITURES
Current Support Services Business Administration
Capital Outlay Land and Land Improvements Building and Building Improvements Equipment
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Proceeds from General Obligation Bonds Par Value Premiums on Bonds Sold
Operating Transfers In Operating Transfers Out
Total Olher Financing Sources (Uses)
Excess of Revenues and Olher Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1
FUND BALANCE JUNE 30

REGULAR

BOND PROCEEDS

$

234,482,31 $

658,114,65

$

234,482,31 $

658,114,65

$

0,00

$

2,380,40

$

2,380,40 $

0,00

$

232,101,91 $

658.114,65

$ -7,237,967,22 $ -7,237,967,22

$

232,101,91 $ -6,579,852,57

518,435,96

15,713,239,85

$

750,537,87 $

9,133,387,28

See notes to the general purpose financial statements, -24-

EXHIBIT"H"

GEORGIA STATE FINANCING AND
INVESTMENT
COMMISSION

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

YEAR ENDED

JUNE 30, 1998

JUNE 30, 1997

$ 4,026,260.46 1,929,159.76 $
$ 5,955,420.22 $

$ 0.00
0.00 $

4,026,260.46 $ 2,821,756.72
6,848,017.18 $

4,987,522.85 701,093.92
5,686,616.77

$

29,613.62 $

14,729,004.50

$ 14,758,818.12 $ $ -8,803,397.90 $

90,000.00 $ 108,160.06 227,349.02
425,509.10 $
-425,509.10 $

$
119,613.62 14,839,544.98
227,349.02
15,186,707.62 $
-8,336,690.44 $

290,669.92 391,646.60 7,913,764.65
6,596,281.37 -2,907,664.60

$ 6,812,458.12 $ $ 6,812,458.12 $ $ -1,990,939.78 $
2,137,004.68

425,509.10 $ 425,509.10 $

$
7,237,967.22 -7,237,967.22
0.00 $

16,000,000.00 3,440.05
2,453,674.00 -453,674.00
18,003,440.05

0.00 $ 0.00

-8,338,690.44 $ 18,368,680.49

15,095,775.45 3,272,905.04

$

146,064.90 $

0.00 $ 10,029,990.05 $ 18,368,680.49

-25-

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

EXHIBIT"'"

ELBERT CAMPBELL MEMORIAL FUND

BALANCE JULY 1, 1997

ADDITIONS

DEDUCTIONS

BAlANCE JUNE 30. 1998

ASSETS Cash and Cash Equivalents

$

150.00 $

9.00 $

159.00 $

0.00

LIABILITIES Funds Held for Others

$

150.00 $

9.00 $

159.00 $

0.00

HUGH CAMPBELL MEMORIAL FUND

ASSETS

Cash and Cash Equivalents

$

150.00 $

0.00 $

0.00 $

150.00

LIABILITIES Funds Held for Others

$

150.00 $

0.00 $

0.00 $

150.00

SCHOlARSHIP FUND
ASSETS Cash and Cash EqUivalents

$

4.264.10 $

11:061 .00 $

10,009.00 $

5,316.10

LIABILITIES Funds Held for Others

$

4,264.10 $

11,061.00 $

10,009.00 $

5,316.10

TOTALS - AGENCY FUNDS
ASSETS Cash and Cash Equivalents

$

4,564.10 $

11,070.00 $

10,166.00 $

5.466.10

LIABILITIES Funds Held for others

$

4,564.10 $

11,070.00 $

10.166.00 $

5.466.10

See notes to the general purpose financial statements.

-26-

WALKER COUNTY BOARD OF EDUCATION

SCHEDULE "1"

SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

YEAR ENDED JUNE 30 1998

At June 30, 1998, the Walker County Board of Education had no outstanding contractual commitments for the purpose ofmaking computer systems and other electronic equipment year 2000 compliant. The year 2000 issue is the result of shortcomings in many electronic data processing systems and other equipment that make operations beyond year 1999 troublesome. The year 2000 issue is ofprimary concern for the Board's financial accounting system, school lunchroom receipts system and administrative software (MacIntosh G-3 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.
Validationtresting 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 of June 30, 1998, the financial accounting system, energy management system, school lunchroom receipts system and administrative software (MacIntosh G-3 system) were 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 ofEducation). 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. 10 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 hoards of education currently utilizing the GENESIS accounting software.

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

WALKER COUNIY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 3D 1998

SCHEDULE 'X'

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of PaSSwThrough 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 1996 Grant Food Plsbibulion Program (1) Pass-Through from Office of SChool Readiness Food and Nutrition Program Child and Adult care Food Program 1998 Contract
Total U. S. Department of Agriculture
Education, U. S. Department of Pass-Through from Georgia Department of Education Elementary and 5econdary Education Act Tolle I Grants 10 Local Educational Agencieo 1996 Grant 1996 Grant Tltien Eisenho'Mtr Professional Development 1997 Grant 1998 Grant TIlle VI Innovative Education Program Strategies 1996 Grant Goals 2D00 State and Local Education Systamic Improvement Grants 1997 Grant 1996 Grant Individuals with Disabilities Educalion Act Part B - Spacial Education Flow Through 1996 Grant Preschool 1996 Grant Bale and Drug-Fraa Schools 1996 Grant Vocational Education - Basic Grants 10 States High School Program Basic Grant 1996 Grant T~p Education 1996 Grant Pass-Through from Han County Board of Educalion d/b/a Piedmont Migrant education Agency Elementary and llecondary education Act TItle I Migra'll education 1996 Grant
Total U. S. Deparlment of Education

CFDA NUMBER
10.665
10.553 10.555 10.550
10.558
84.010 84.010 84.281 84.281 84.298
84.276 84.276
84.027 84.173 84.186
84.048 84.243
84.011 -28-

PASST1iROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

NlA

6,617.84

(5)

NlA

358,084.11

(2)

NlA

1,124,632.64 $ 2,732,421.05 (3)

NlA

197.216.47

197,216.47

NlA

1,476.01

$ 1,688,037.07

(2) 2,929,637.52

NlA

$

-4.607.94

NlA

1,336,640.22 $ 1,336,640.22

NlA

3,038.34

NlA

36,800.00

35,759.02

NlA

43.355.00

43.355.00

NlA

200,000.00

_,000.00

NlA

58,760.33

58,760.33

NlA

345.125.86

345.139.00 (3)

NlA

64,664.81

64.664.81

NlA

146,007.00

146.356.12 (3)

NlA

89,833.00

119,887.48 (3)

NlA

4.800.16

4,800.16

NlA

17,248.97

17,248.97

$ 2.328,617.41 $ 2,365.639.45

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

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
OTHER FEDERAL ASSISTANCE
Defense, U. S. Deparbnent 01 Direct Department of the Air Force R.O.T.C. Program Defense Activity for NonTraditional Support Troops to Teachers Incentive Grant
Total Other Federal Assistance

CFDA NUMBER

PASS THROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

82,404.80

(4)

5,000.00

(4)

87,404.80

Total Federal Financial Assistance NJA = Not Available

$ 4,104,059.28 $

Notes to the SChedule of Expenditures of Federal Awards
(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities receiVed and/or consumed by the system during the current fiscal year.
(2) Expenditures for the Child and Adun care Food Program and 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 fund source.
(4) Expenditures on this program were not maintained by fund source. (5) Funds earned on this program do not raquire reporting of expenditures.
Major Programs are Idantified by an asterisk r) In front 01 the CFDA number.

The Board did not provide FaderaJ Asslstence to any Subreciplenl

The accompanyln9 schadule 01 expendlturas 01 Faderal awards includes the Fedaral grant activny of the Walksr County Board 01 Education and Is presentad on the modified accrual basis 01 accounting which is the sarna basis 01 accounting usad in the presentation 01 the goneral purpose financial statemants.

5,295,276.97

see notes to the go......1purpose financial slatements.

-29-

WALKER COUNTY BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE
'fEAR ENDEp JUNE 30 1998

SCHEDULE "3"

AGENevlFUNDING
GRANTS Education, Georgia Department of Quality Basic Education General and Career Education Programs Special Education Programs Remedial Education Program Media Center Programs Stall' Developmenl Programs Indirect Cost Pupil Transportation Regular Bus Replacement Limited English Speaking Mddle School Incentive Program Speciallnstructional Assistance In..school Suspension Md~lerm Adjustment Mgrant Mid-term Adjustment Counselors Grades 4 and 5 Technology Training Local Fair Share Educational Equalization Funding Grant Food Services Vocational Education Other State Programs Ad Valorem Tax Adjustmenl Alternative Program Apprenticeship Pmgram At~Rtsk Summer School Program Environmental Science Program Gtfted Technology Governor's Emergency Funds (1) Health Insurance Innovative Programs Mentor Teacher Program Pay for Performance Program Preschool Handicapped Program PSATElalms Remedial Summer School Program Student Records Teachers' Retirement lottety Programs Atlemative School Program Instructional Technology _ _ Technology
C1...lOOIII Technology
Georgia State Financing and Investment Commission Reimbwsement on Construction Projecta
0ftIce of School Roodl..... Pra-Klnde~Pmgram
0fIi0e of Treasury .nd Fi&cal ServIces Public School Employees Retirement
CONTRACT Education, GeMgIa Department 01 Continuation 0 1 _ I_hlp dlW8lopmont._ In those schools represented to the 1996-1997 Governor's School Laaderahipl_(GSLI)

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

TOTAL

18,713,307.00 2,786,334.00
307,815.00 767,971.00 225,113.00 4,821,963.00
914,073.00 245,157,00
26,031.00 633,357.00 1,280,301.00 213,018.00 207,189.00
8,315.00 80,824.00 115,369.00 -3,376,711.00 1,796,824.00
119,223.32
209,901,00 124,200,00
75,000,00 35,010.00
1,500.00 10,000.00 2,000.00 631,955.35 4,491.56 14,664.00 90,000.00 113,466.23
45.00 9,541.31 14,868.50 19,502.02

214,756.00
4,129,00 9,795.64 232,358.00

18,713,307.00 2,766,334.00
307,815.00 767,971.00 225,113.00 4,821,963.00
914,073.00 245,157.00
26,031.00 633,357.00 1,280,301.00 213,018.00 207,189.00
8,315.00 80,824.00 115,369.00 -3,375,711.00 1,796,824,00 214,758,00 119,223.32
209,901.00 124,200.00
75,000.00 35,010.00
1,500,00 10,000.00 2,000,00 631,955,35 4,491,56 14,8&4,00 90,000.00 113,466.23
45.00 9,541.31 14,868.50 19,502.02
4,129,00
9,795.64 232,358,00

132,795,00

278,033.91

4,028,260,46

4,026,280.46 278,033.91 132,795.00

121,075,00

121,075.00

(1) Tho _

oIltla lunda ora lor RldgaIand High _

Sao _ to ltla ganaraI purpoae fina.-J a1a1omonta.

$ 31,475.288.29 " lllS7 0e0r1lIa SchaoI 01 ExcaIIanca.

"30-

'739.072.55 $ 4,026,260.46 $ 36.240.621.30

WALKER COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30 1998

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

System-wide technology improvements

$

1,076,406.00 $

Completion of construction of LaFayette High School

2,479,852.00

Construction of new elementary school on Johnson Road

2,622,300.00

Construction of new North LaFayette Elementary School

2,984,687.00

Additions and modifications to Chattanooga Valley Elementary School

1,378,230.00

Additions and renovations to Happy Valley Elementary School

1,038,468.00

Additions and renovations to Fairyland Elementary School

1,322,549.00

Construction of new Rock Spring Elementary School
Additions to Rossville Elementary School

4,321,988.00 355,211.00

Additions and modifications to LaFayette Middle School

3,232,915.00

Additions and modifications to Rossville Middle School

1,702,092.00

Additions and modifications to Chattanooga Valley Middle School

2,259,737.00

Modifications to Ridgeland High School

497,991.00

CURRENT ESTIMATED
COST (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

400,000.00 $

240,834.30

15,350,240.00

5,448,559.16

AMOUNT EXPENDED IN PRIOR
YEARS

5,770,121.00

4,285,417.18

5,816,235.00

880,544.05

4,595,833.00

3,975,978.84

3,268,506.00

139,844.79

3,354,054.00

28,674.10

4,495,855.00

176,754.80 $

850.00

279,840.00 3,232,915.00

7,920.00

1,702,092.00

2,259,737.00

497,991.00

$

25,272,426.00 $

51,023,419.00 $

15,184[327.22 $

(1) The Board's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The Board's current estimate of total cost for the project. Includes all cost from project inception
to completion.
(3) The voters of Walker County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project.
(4) In addition to the expenditures shown above, the Board incurred current year interest expenditures in the amount of $550,477.50 to provide advanced funding for the above projects.

850.00

See notes to the generel purpose financial statements.

-31-

WALKER COUNTY BOARD OF EDUCAnON SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS YEAR ENDED JUNE 30 1998

SCHEDULE "5"

EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services General Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Food Services Operation

ALTERNATIVE SCHOOL PROGRAM

INSTRUCTIONAl TECHNOLOGY

ASStSTIVE

CLASSROOM

TECHNOLOGY TECHNOLOGY

PRE-KINDERGARTEN PROGRAM

4,129.00 $

9,795.64 $

229,726.00 $

2,632.00

238,389.53
34,093.84 1,537.53 5,464.33 3,818.95 109.90 425.15 2,000.40

TOTAl
482,040.27
34,093.84 1,537.53 5,464.33 5,450.95 109.90 425.15 2,000.40

Total Expenditures

4,129.00 $ _ _-,9~,7",9::105.2;64~

232,358.00

285,839.83 $

532,122.47

RECAP: Salaries and Benefits Pre-Kindergarten Program other Expenditures Alternative SChool Program Instructional Technology Assistive Technology Classroom Technology PJ'e.Kindergsrten Program

272,078.48
4,129,00
9,795.64 232,358.00
13,751.35

532,122.47

see notes to the general purpose _ I statements.

-32-

WALKER COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30 1998

SCHEDULE ''6"

Minimum Expenditure Requirements (Total Allotment) Expenditures on Combined Program Basis
Salaries 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

$

22,762,616.00 $

635,948.01

$

25,002,446.29

U93,657.56 $

1,059,903.35

$

26,196,103.85

-363,336.12

$

25,832,767.73

$

0.00 $

O.PO

See notes to the general purpose financial statements. 33

WALKER COUNTY BOARD OF EDUCATION ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS _BY PROGRAM
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30 1998

GENERAL AND CAREER EDUCATION PROGRAMS Kindergarten (.)
Grades 1 - 3 (.)
Sub-Total- K-:J Grades 4 - 5 (0) Grades 6 - 8 (0)
Grades 9 -12 r)
High School Laboratories r)
Vocational Education Laboratories (.)
Total General and Career Education Programs SPECIAL EDUCATION PROGRAMS
Regular Programs
C2leQOlY I r)
CateQOlY II ("J
Category III (.)
Category IV ("J
CategoryVrl Sut>-.Total - RegUlar
Category VI (Gifted) (.)
Total Special Education Programs REMEDIAL EDUCATION pROGRAM (.)
Total Fourteen Weighted Programs MEDIA CENTER PROGRAMS
salaries Operations
Total Media Center Programs

Total Fou'-' Weighted and Media center Programs

STAFF DEVELOPMENT PROGRAMS Cost of Instruction ProfessioneJ Development

Total SlaIf Development Programs
r) Identifies Fourteen Weighted Programs. see notes to the general purpose financial s1atllments.

- 34

ALLOTMENTS FROM DEPARTMENT OF EDUCATION

REQUIRED

ORIGINAL ~

ORIGINAL

MID-TERM

2.194.355.00 5,630,673.00 7,825,028.00 90 2,408,014.00 90 3,623,190.00 90 2,375,919.00 90 1,233.076.00 90 1,048,080.00 90 18,713,307.00

1,974,919.50 5,067,605.70 7,042,525.20 2,167,212.60 3,440,871.00 2,138,327.10 1,109,768.40
943,272.00 16,841,976.30

207,189.00 207,189.00
207,189.00

2,454,476.00

2,209,028.40 $

0.00

2,454,478.00 90 311,858.00 90
2,766,334.00 307,815.00 90
21,787,456.00

2,209,028.40 $ 280,672.20
2,489,700.60 277,033.50
19,608,710.40

0.00
0.00 0.00 207,189.00

630,340,00 90 $

567,306.00 $

0,00

137,631.00 90

123,867.90

767,971.00

691,173.90

0.00

22,555,427.00

201299,684.30 $

207,189.00

65,354.00 159,769.00

65,354.00 159,759.00

225,113,00 100 $

225.113.00 $

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

SCHEDULE "7"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES

OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

1.974,919.50

2,240,400,67

78,110.48

2,318,511.15

5,274,794.70

5,308,577.59

264,239.96

5,572,817.55

7.249,714.20

7,548,978.26

342,350.44

7,891,328.70

0.00

2,167,212.60

2,863,063.70

124,891.90

2,987,955.60

0.00

3,440,871.00

4,977,666.89

312,785.64

5,290,452.53

0.00

2,138,327.10

2,348,565.02

124,981.34

2.473,546.36

0.00

1,109,768.40

1,251,209.88

45,429.83

1,296,639.71

0.00

943,272.00

992,986.83

64,738.56

1,057,725.39

0.00

17,049,165.30

19,982,470.58

1,015,177.71

20,997,648.29

2,209,028.40 $

330,267.57 2,694,492.82
283,079.15 15,946.13

5,393.50 9,551.24 20,277.89 3,233.55

5.393.50 339,818.81 2,714,770.71 286,312.70
15,946.13

$ 2,209,028.40

3,323,785.67

38,456.18 $ 3,362,241.85

0.00

280,672.20

394,398.34

5,590.85

399,989.19

0.00

2,489.700.60

3,718.184.01

44,047.03

3,762,231.04

277,033.50

304,138.79

678.61

304,817.40

0.00

19,815,899.40

24,004,793,38

1,059,903.35

25,064,696.73

567,306.00 $

997,652,91

997,652.91

0.00

123.867.90

133,654.21

133,654.21

0.00

691,173.90 $

997,652.91 $

133.654.21

1.131,307.12

$ 20,507,073.30 $ 25,OO2A46.29

1.193,557.56 $ 26.196,003.85

0.00

65,354.00 159,759.00
225,113.00

187,890.76 37,228.95

187,890.76 37,228.95

$

2251119.71

2251119.71 $

0.00

- 35 -

SECTIONn COMPLIANCE AND INTERNAL CONTROL REPORTS

RUSSELL W. H,NTON
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
July 8,1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members of the State Board of Education
and Superintendent and Members of the Walker County Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the fInancial statements of Walker County Board of Education as of and for the year ended June 30, 1998, and have issued our report thereon dated July 8, 1999. This report was qualifIed for a scope limitation and for various departures from generally accepted accounting principles, as identifIed in the auditor's report on the general purpose fInancial statements. Except as discussed in the following paragraph, 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.
We did not observe the taking of either the Federal donated commodities inventory or the purchased foods inventory at June 30, 1998, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures.
Compliance
As part of obtaining reasonable assurance about whether Walker County Board of Education's fInancial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and 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.

98YB-40

Internal Control Over Financial Reporting
In planning and performing our audit, we considered Walker County Board of Education's internal control over fmancial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the fmancial statements and not to provide assurance on the internal control over fmancial reporting. However, we noted a certain matter involving the internal control over fmancial reporting and its 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 Walker County Board of Education's ability to record, process, summarize and report fmancial data consistent with assertions of management in the financial statements. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FS-7461-98-01.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the fmancial 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 noted above is considered to be a material weakness.
This report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intendedto limit the distribution ofthis report which is a matter of public record.
Respectfully submitted,
~, . ,OQ ~.~
Russell W. Hinton State Auditor
RWH:jb 98YB-40

RUSSELL W. HINTON
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
July 8,1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe Walker County Board ofEducation
REPORT ON COMPLIANCE WITH REOUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULARA-l33
Ladies and Gentlemen:
Compliance
We have audited the compliance of Walker County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (OMB) Circular A-I33 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1998. Walker County Board ofEducation's major Federal programs are identified in the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Walker County Board of Education's management. Our responsibility is to.express an opinion on Walker County Board ofEducation'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 Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-l33,Audits ofStates, Local Governments, andNon-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Walker 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 Walker County Board of Education's compliance with those requirements,

98SA-IO

In our opinion, the Walker 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.
Internal Control Over Compliance
The management of Walker 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 Walker County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 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 ofone or more of the 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 for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended to limit the distribution ofthis report which is a matter of public record.
Respectfully submitted,
~~ ae LV.<i::l:1s Russell W. Hinton State Auditor
RWH:jb 98SA-10

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

WALKER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

7461-93-02 7461-95-02 FS-7461-97-01 FS-7461-97-02

Further Action Not Warranted Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Umesolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-7461-97-02

Corrective action plan states that due to funding limitations and current inadequate accounting staff to maintain system-wide assets, this finding cannot be resolved at this time.

SECTIONlV FINDINGS AND QUESTIONED COSTS

WALKER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND OUESTIONED COSTS
YEAR ENDED JUNE 30, 1998
SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the Walker County Board ofEducation's financial statements was qualified for a scope limitation and for various departures from generally accepted accounting principles.
2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Walker 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 Walker County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.
4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Walker County Board ofEducation did not disclose any reportable conditions in internal control over major programs.
5. Type ofReport Issued on Compliance for Major Programs The auditor's opinion on the Walker County Board of Education's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .5 I O(a) ofOMB Circular A-l33 The Walker County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-l33.
7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk Auditee The Walker County Board of Education was audited as a low risk auditee based on a waiver granted by the U. S. Department of Education.
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WALKER COUNTY BOARD OF EDIJCATIQN SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED ruNE 30. 1998
n 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-7461-98-01 The Walker CountyBoard ofEducation 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 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 ofall additions and deletions to the General Fixed Asset Account Group.
ill FEDERAL AWARD FINDINGS AND OUESTIONED COSTS
No matters were reported.
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