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WALKER 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 STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

20

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

22

CAPITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

24

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

26

I

FIDUCIARY FUND TYPE

COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUNDS

28

SCHEDULES

1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

29

2 SCHEDULE OF STATE REVENUE

31

3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

33

WALKER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

ADDITIONAL FINANCIAL INFORMATION

SCHEDULES

ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

4

BY PROGRAM

34

5

BY SITE

35

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 ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-l33

SECTIONm 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

lUSSELL \V. HINTON
STATE AUDITOR (404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 WJ~hIng\On Street, S W. SUite 214
Atl:.mta, Gcoq;lu 30334-X400
March 21, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Walker County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATIONSCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general-purpose financial statements of the Walker County Board of Education, as of and for the year ended June 30, 2001, as listed in the table of contents. These general-purpose financial statements are the responsibility of the 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 auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perfonn 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.
We did not observe the taking of either the Federal donated commodities inventory or purchased foods inventory at June 30, 2001, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures.

200lARL-13

As described in the notes to the general-purpose financial statements, the Board of Education's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:
* The general-purpose financial statements of the Board of Education did not contain a
General Fixed Assets Account Group to account for property and equipment owned by the Board of Education which should be included to conform to generally accepted accounting principles.
* 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 of Education did not recognize as expenditures, in the year ended
June 30, 2001, a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 2001. Also funds received, subsequent to June 30, 2001, from the Georgia Department of Education for the State's share ofthese unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2000, were improperly recorded in the year ended June 30, 2001. To conform to generally accepted accounting principles, revenues' should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed.
The aggregate effects on the general-purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects of such 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 on the general-purpose financial statements of the matters referred to in the preceding paragraph, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe Walker County Board ofEducation as ofJune 30, 2001, and the results ofits operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated March 21, 2002, on our consideration ofthe Walker County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
2001ARL-13

Our audit was performed for the purpose of forming 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 1 through 5),

which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of

Management and Budget Circular A-B3, Audits of States, 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 ofthe food service inventories

as discussed in the third paragraph, and except for the effects of the matters referred to in the fourth

paragraph, such information is fairly stated, in all material respects, in relation to the general-purpose

financial statements taken as a whole.

.

A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated Section 506-24.

Respectfully submitted,
W~

RWH:as 200lARL-13

WALKER COUNTY BOARD OF EDUCATION

WALKER COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30 2001

ASSETS
Cash and Cash Equivalents
Accounts Receivable
Inventones 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

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$ 1.924.839 88 $ 1.317,15480

651,646.11

389,25260 $

548.18637

149,73522

71,77859 45.72940

Total Assets

$ 2,726,221 21 $ 1,823,91539 $

548.18637

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salanes Payable Expired Grant Balances Payable Contracts Payable Retalnages Payable Deferred Revenue Funds Held for Others General Obligation Bonds Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Bus Replacement Funds For Continuation of Federal Programs For Debt Service For Local Funds For lnventones Consumable Supplies Food Donated CommodllJes Purchased Food For State Capital Outlay Projects Unreserved Designated for Self-Insurance Undesignated
Total Fund EqUity

$

486.459.97

$

120.537,08 $

151.83079

23.76140

492.48099

4.004 99

14,29368

$

120.53708 $

662,61045 $

510.221 37

$

28.177 74

$

7.12444

149,73522

71,77859 45,72940
$

254.59499 2,173,17618

1,036,672 51

$ 2,605.684 13 $ 1.161 ,30494 $

37.96500
000 37,96500

Total Liabilities and Fund EqUity

$ 2?26122121 $

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

1 823 91539
11

$

-2-

548,18637

EXHIBIT "A"

DEBT SERVICE
FUND

FIDUCIARY FUND TYPE AGENCY FUNDS

$ 2,387,19697 $

24,405 10

681,15112

ACCOUNT GROUP
GENERAL LONG-TERM
DEBT

TOTALS

(Memorandum Only)

JUNE 30, 2001

JUNE 30, 2000

$ 5,653,596 75 $ 4,424,20891

2,270,236 20

1,703,62149

$ 3,068.348 09

149,73522
71,77859 45,72940
3.068.348 09

162,97033
68.62545 45,86086
2,598.820 37

2,886,651 91

2,886,651.91

6,736,179 63

$ 3,068,34809 $

24,40510 $ 5,955,00000 $ 14,146,07616 $ 15,740,28704

$

486.45997

296,12927 $

197,25091

492,48099

415,92402

4.004 99

7.840.25

178.19000

101,59500

14.29368

$

24,40510

24.40510

5.46610

$ 5,955,00000

5.955,000 00

9,335,000 00

$

24,40510 $ 5,955,00000 $ 7,272,77400 $ 10,241,26628

$ 3.068,348 09
000 $ 3,068,348 09

$

28.177 74 $

80.84362

11.63633

3,068,348,09

2.598.820.37

7.124.44

7,46967

149,73522

162.97033

71,77859 45,72940 37,96500

68.62545 45,86086 173,07492

254.59499 3,209,848 69

228,00623 2,121,71298

$ 6,873,302 16 $ 5,499,020 76

$ 3.068,348 09 $

24,40510 $ 5.955,00000 $ 14,146,076 16 $ 15,740,28704

-3-

WALKER COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 2001

FUND BALANCE JUNE 30

$

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

-4-

2,605,684 13 $ ==1==,1=6==1~!3~04~94~

EXHIBIT"B"

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTALS

(Memorandum Only)

YEAR ENDED

JUNE 30, 2001

JUNE 30, 2000

$ 38,167,764 02 $ 36,505,543 52

5,095,021 60

4,731,16226

$ 4,243,090 79

18,496,497.87

16,487,13265

$

592,406.72

50,261 93

2.981,347.17

2,378,522 59

$

592,406.72 $ 4,293,352 72 $ 64,740,63066 $ 60,102,36102

$ 38,009,146.44 $ 34,459,406.23

$

727,516.64

1,730,431.01 1,528,627.26 1,284,426 79
800,388.10 3,983,562.58
381,666.22 4,452,96961 2,668,604 00
392,04457 224,008.35 3,348,919.26
727,516.64

2,493,809.01 1,562.848.70 1,271.214.71
613,691.33 3,682.209.50
378,244.96 3,833,963.05 2,245,299.22
351,995.68 204,055.28 3,211,895.44
14,40376 4,645,337.67

$ 3,380,000.00 443,82500

3,380,000.00 443,82500

3,040,000 00 582,14500

$

727,51664 $ 3,823,825 00 $ 63,356,135.83 $ 62,590,519.54

$ -135,109.92 $

469,52772 $ 1,384,494.83 $ -2,488,158.52

$

15,613.25 $

58,237.23

-15,613.25

-58,237.23

$

0.00 $

0.00

$

-135,109.92 $

469,52772 $ 1,384,494.83 $ -2,488,158.52

173,074.92

2,598,820.37

5,499,020.76

7,972,907.46

-13,235.11 3,153.14 -131.46

11,826.68 -6.927.61 9,37275

$

37,96500 $ 3,068,348.09 $ 6,873.302.16 $ 5,499,020.76

-5-

WALKER COUNTY BOARD OF EDUCATION COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - INON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30 2001

EXHIBIT"C"

GENERAL FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

REVENUES

State Funds Federal Funds Taxes Other Funds

$ 35,248.273 00 $ 36,777,50446

95,63759

14.650,34500

14,253,407.08

114,24300

1,038,797 44

Total Revenues

$ 50,012,861 00 $ 52,165,34657

EXPENDITURES

Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business AdmlnlstralJon Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation

$ 34,533,881 00 $ 34,740,42286

1,507.85600 1,031.37400 1.340,939 00
421,809.00 3,935,743.00
302.232.00 4.396.224.00 2.503,00900
293.284 00 63,817 00

1,473,64247 1,309,651 54 1,284,426 79
584,017.79 3,981,31203
381.666.22 4,429,621 65 2,612,76991
392,04457 65,984 18 1,338 12

Total Expenditures

$ 50,330,168.00 $ 51,256,898 13

Excess of Revenues over (under) Expenditures

$ -317,30700 $ 908,44844

OTHER FINANCING SOURCES IUSES)

Other Sources Other Uses
Total Other FinanCing Sources (Uses)

$ -305,531 00 $ $ -305,53100 $

-15,61325 -15,61325

Excess of Revenues and Other FinanCing Sources over (under) Expenditures and Other FinanCing Uses $

-622.838.00 $

892,83519

FUND BALANCE JULY 1 2000

1.449.591 61

1,563,11372

FUND BALANCE JUNE 30, 2001

$ 826?5361 $ 2A55194891

SPECIAL REVENUE FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

$ 250,00000 $ 1,390,259 56

1,805,000 00

4,999.384 01

1,332,850 00

1,299,881 08

$ 3,387,85000 $ 7,689,52465

$ 148,02000 $ 3,268,72358

1,94000 49,33300

256,788.54 218.97572

1,02400

216,37031 2.25055

23,34796 55,834 09

3,387,85000

158,02417 3,347,581 14

$ 3,588,16700 $ 7,547,896 06

$ -200.31700 $ 141.62859

$

15,61325

$

15,61325

$ -200.317 00 $ 868,341 67

157,24184 886,55511

$ 668.02467 $ 11043?9695

The notes to the general-purpose finanCial statements are an Integral part of thiS statement. -6-

WALKER COUNTY BOARD OF EDUCAnON

EXHIBIT liD"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Notel: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Walker County Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The School District is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
FUND ACCOUNTING
The School District uses funds and an account group to report on its financial position and the results 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 accou~ting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the School District. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
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 of the School District, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most of a School District's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources of the School District except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education.

-7-

WALKER COUNTY BOARD OF EDUCAnON

EXHffiIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and from the Federal government to accomplish specific educational objectives.
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.
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 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 ofthese funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and:other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
Agency funds are purely custodial in nature and do not involve measurement ofresults ofoperations.
Governmental funds are accounted for using the modified accrual basis ofaccounting under which:

-8-

WALKER COUNTY BOARD OF EDUCAnON

EXHmIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The School District considers receivables collected within sixty days after yearend to be available and therefore susceptible to accrual. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, local option sales taxes, intergovernmental grants and donations. Revenue for property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year the resources are received or susceptible to accrual. Revenue from grants and. donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
Expenditures are generally recognized when the related fund liability is incurred.
A departure from the above definitions is the accounting treatment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 2001, a substantial number ofpersonnel ofthe School District were employed for a one hundred and ninety day period beginning in August 2000 and ending in early June 2001. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 2000 and ending in August 2001. State grants to fund the State's share of these contracts were disbursed from the Georgia Department of Education to the School District in the same twelve months. As of June 30, 2001, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 2001, had not been made. Payments for these two months were made and recorded as expenditures by the School District subsequent to June 30, 2001. Also, the State's portion ofthe compensation paid in July and August 2001 was received and recorded as revenue in the fiscal year subsequent to June 30, 2001. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2000, were recorded in the year ended June 30, 2001. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.
Agency funds are accounted for using the modified accrual basis ofaccounting in recognizing assets and liabilities.
BUDGET
The Walker County Board of Education's budget is a complete financial plan for the School District's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe 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.
- 9-

WALKER COUNTY BOARD OF EDUCATION

EXHffiIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The budget process begins when the School District's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.

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. To facilitate comparison with the budget, the following adjustments have been made to fund balance as reflected on Exhibit "B" of this report:

General Fund

Special Revenue
Fund

FUND BALANCE JULY 1, 2000

$ 1,726,084.05 $ 1,001,041.42

Adjustments Inventories - July 1,2000' Consumable Supplies Food Donated Commoditie.s Purchased Foods'

-162,970.33

-68,625.45 -45,860.86

Fund Balance July 1, 2000 (Budget Basis)

$ 1,563,113.72 $ 886,555.11

Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses

892,835.19

157,241.84

FUND BALANCE JUNE 30, 2001 (Budget Basis) $ 2.455,948,91 $ 1.043,796,95

CASH AND CASH EQUIVALENTS

COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions, Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan as.sociations.

- 10-

WALKER COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 Walker County Board of Commissioners fixed the property tax levy for the 2000 tax year (calendar year) on July 30, 2000 (levy date). Taxes were due on February 20, 2001 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 2001. The Walker County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues during the fiscal year ended June 30, 2001 for maintenance and operations amounted to $13,794,293.99.

The tax millage rate levied for the 2000 tax year (calendar year) for the Walker County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

14.91 mills

SALES TAXES

Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes and debt service. Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $4,243,090.79 and was recorded in the Debt Service Fund. The State will terminate collection of this tax once an additional $10,128,677.13 has been collected or on June 30, 2002, whichever occurs first.

INVENTORIES

FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time ofpurchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.

- 11 -

WALKER COUNTY BOARD OF EDUCAnON

EXHffiIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30. 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUPPLY INVENTORIES Supply inventories are valued at cost (first-in, first-out) on the Combined Balance Sheet. Supply inventories are recorded as expenditures at the time ofpurchase. The supply inventories reported on the balance sheet are equally offset by a reservation of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component ofnet current assets.
COMPENSATED ABSENCES
Compensated absences represent obligations of the School District 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 of this obligation as this amount is deemed immaterial to the general-purpose financial statements.
Additionally, the dollar value of accumulated compensated absences at June 30, which will be payable from future resources has not been recorded in the General Long-Term Debt Account Group as this liability is also deemed to be immaterial to the fair presentation ofthese financial statements.
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction ofmajor capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit ofthe government. The outstanding amount of these bonds is recorded in the General Long-Term Debt Account Group.
INTERFUND TRANSACTIONS
The School District has the following types of interfund transactions:
Reimbursements 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 pf expenditures in the fund that is reimbursed.
Operating transfers are recorded for all interfund transactions other than reimbursements.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general-purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not

- 12-

WALKER COUNTY BOARD OF EDUCATION

EXHffiIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
present financial position or results ofoperations in confonnity 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
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 ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intennediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
- 13-

WALKER COUNTY BOARD OF EDUCAnON

EXHmIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 2: DEPOSITS

CATEGORIZATION OF DEPOSITS At June 30, 2001, the bank balances were $9,089,806.76. The amounts ofthe total bank balances are classified into three categories of credit risk:

Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.)

The School District's deposits are classified by risk category at June 30, 2001, as follows:

Risk Category

Bank Balance

1

$ 2,284,895.11

2

0,00

3

6,804,911.65

Total

$ 9.089.806.76

Note 3: NON-MONETARY TRANSACTIONS

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

Note 4: RISK MANAGEMENT

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

The School District has obtained commercial insurance for risk ofloss associated with torts, assets and natural disaster. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.

- 14-

WALKER COUNfY BOARD OF EDUCATION

EXHmIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 4: RISK MANAGEMENT
'. The School District has elected to self-insure for errors or omissions, which includes, among other
risks, risks for sexual harassment and discrimination. The School District has not experienced any losses related to these risks in the past three years.

The School District 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 School District 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$l,OOO,OOO.OO loss per occurrence, up to the statutory limit.

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

2000 2001

Beginning of Year LiabIlity

Claims and Changes in Estimates

Claims Paid

End ofYear LiabilIty

$

0.00 $ 94,571.13 $ 94,571.13 $

0.00

$

0.00 $ 118,221.24 $ 118,221.24 $

0.00

The School District is self-insured with regard to unemployment compensation claims. The School District 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:

.

2000 2001

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

$

0.00 $

7,104.00 $

7,104.00 $

0.00

$

0.00 $

7,079.50 $

7,079.50 $

0.00

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

Position Covered

Amount

Superintendent

$ 50,000.00

- 15 -

WALKER COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 5: GENERAL LONG-TERM DEBT
GENERAL OBLIGAnON DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

Amount

General Government - Series 1997

4.00% - 5.00% $ 5,955.000.00

The changes in General Long-Term Debt during the fiscal year ended June 30, 2001, were as follows:

General Obligation
Bonds

Balance July 1,2000

$ 9,335,000.00

Deductions Debt Retired

3,380,000.00

Balance June 30, 2001

$ 5,955,000.00

At June 30, 2001, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

General Obligation
Bonds

2002 2003

$ 4,019,050.00 2.325,750.00

Total Principal and Interest

$ 6.344,800.00

Note 6: SHORT-TERM DEBT

The School District obtains temporary loans in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution ofthe State of Georgia limits the aggregate amount ofshort-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred.

- 16-

WALKER COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 6: SHORT-TERM DEBT

Beginnmg Balance

AddItIOns

Payments

Endmg Balance

Temporary Loans

$==dO!=l'O~O $ 9,000,000,00 $ 9,000,000.00 $,==~O~.O~O

Note 7: ON-BEHALF PAYMENTS

The School District has recognized revenues and expenditures in the amount of $834,427.18 for health insurance and retirement contributions paid on the School District's behalfby the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of$674,314.18

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $26,047.00

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 $134,066.00

Note 8: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2001:

Project

Unearned Executed Contracts

Rossville Middle School

$ 463.485.81

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

Note 9: CONTINGENT LIABILITIES

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

- 17 -

WALKER COUNTY BOARD OF EDUCATION

EXHffiIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 9: CONTINGENT LIABILITIES
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the general-purpose financial. statements.
Note 10: SUBSEQUENT EVENTS
On March 19, 2002, the voters of Walker County voted in favor of a Special Purpose Local Option Sales Tax Referendum for educational purposes. The imposition of the tax by the voters, as stated on the Official Ballot of Walker County, is as follows:
"Shall a one percent sales and use tax be imposed in Walker County for a period oftime not to exceed twenty calendar quarters and for the raising of not more than $27,500,000 (a) $23,925,000 of which shall be received by the Walker County School District for the purposes of (i) constructing and equipping a new Chattanooga Valley Middle School, a new Rossville Middle School and a new K-5 elementary school in north Walker County, (ii) construction of additions to Lafayette Middle School, Naomi Elementary School, Ridgeland High School, Rock Spring Elementary School, Gilbert Elementary School and North LaFayette Elementary School, (iii) construction of a new planetarium, (iv) rehabilitation, repairing and equipping ofexisting lafayette Middle School and existing Naomi Elementary School, and (v) acquiring, constructing, repairing, improving and equipping other buildings and facilities useful or desirable in connection therewith, including acquiring any necessary property therefor, both real and personal.
Ifimposition ofthe tax is approved by the voters, such vote shall also constitute approval of(i) the issuance of general obligation debt of the Walker County School District in the principal amount of$18,000,000 for the purpose of financing the costs ofthe capital outlay projects of the Walker County School District described above (excluding the projects described in subsection (a)(iv) above, which projects shall not be financed with general obligation debt)."
Note 11: ACCUMULATED EMPLOYEES' LEAVE
Twelve month employees earn annual leave at the rate often days per year. Employee leave policies ofthe Walker County Board ofEducation provide for payments to employees for a maximum often days leave at retirement or termination of employment at their current rate of pay. See Note 1 Compensated Absences

- 18 -

WALKER COUNTY BOARD OF EDUCAnON

EXHIBIT "D"

NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS

JUNE 30, 2001

Note 12: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school districts are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.29% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2001 2000 1999

100% 100% 100%

$ 3,646,703.58 $ 3,507,679.82 $ 3,512,458.71

- 19-

WALKER COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 2001

ASSETS
Cash and Cash Equivalents
Accounts Receivable
Inventones Food Donated Commodities Purchased Food

SCHOOL FOOD
SERVICES FUND

LOTIERY PROGRAMS

$ 1,271,07492 $

109,420.89

6,525.65

71,778.59 45,72940

Total Assets

$ 1,395,108 56 $==1=0~9!:,;,,4=20=8=9==

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salanes Payable Expired Grant Balances Payable Deferred Revenue
Total liabilities
FUND EQUITY
Fund Balances Reserved For Contmuatlon of Federal Programs For Local Funds For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity
Total Liabilities and Fund EqUity

$

49,792.22 $

191,135.84

32,025.05 73,669.32
3,726.52

$

240,92806 $

109,420.89

$

71,778.59

45,72940

1,036,672.51 $

$ 1,154,18050 $

0.00 0.00

$ 1,395,108.56 $ ==1=0~9=,4=20=.8=9==

See notes to the general-purpose financial statements. -20 -

EXHIBIT "E"

FEDERAL PROGRAMS

TOTALS

JUNE 30, 2001

JUNE 30, 2000

$ 1,380,495 81 $ 1,156,569.60

$

382,726.95

389,25260

274,81800

71,778.59 45,72940

68,625.45 45,860.86

$

382,726.95 $ 1,887,256 40 $ 1,545,873.91

$

63,341.01 $

63,34101

70,013.52

151,83079 $

123,38142

227,675.83

492,480.99

415,924.02

27847

4,004.99

5,527.05

14,293.68

14,293.68

$

375,602.51 $

725,95146 $

544,83249

$

11,636.33

$

7,124.44 $

7,124.44

7,469.67

71,778.59 45,72940

68,625.45 45,86086

0.00

1,036,672 51

867,449.11

$

7,12444 $ 1,161,304.94 $ 1,001,04142

$

382,726.95 $ 1,887,25640 $ 1,545,873.91

21

WALKER COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2001

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services 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
Operating Transfers In
Excess of Revenues and Other FinanCing Sources over (under) Expenditures
FUND BALANCE JULY 1
Food Inventory - Net Change In Penod Donated Commodities Purchased Food
FUND BALANCE JUNE 30

SCHOOL FOOD
SERVICES FUND

LOTIERY PROGRAMS

$

241,71800 $

1,973,214,11

1,299,881 08

$ 3,514,81319 $

953,07056 953,07056

$

$ 3,345,589.79

$ 3,345,58979 $

$

169,223.40 $

856,927.47
46,71784 2,942,15 22,27
23,347.96 23,33011
312.37 1,83019
955,43036
-2,359,80

$.

169,223.40 $

981,935.42

3,153,14 -13146

2,359.80
0.00 0.00

$ 1,154,180.50 $ =======,0=.0;;:0;.,

See notes to the general-purpose financial statements. -22 -

EXHIBIT "F"

FEDERAL PROGRAMS

TOTALS

YEAR ENDED

JUNE 30, 2001

JUNE 30, 2000

$

195,471.00 $ 1,390,259.56 $ 1,121,652.56

3,026,16990

4,999,384 01

4,636,821.68

1,299,881.08

1,249,543 68

$ 3,221,640 90 $ 7,689,524.65 $ 7,008,017.92

$ 2,411,796.11 $ 3,268,723 58 $ 2,857,27374

210,07070 216,033.57 216,348.04
2,250.55
32,50398 157,711.80
161 16

256,788.54 218,975.72 216,370.31
2,250.55 23,347.96 55,834.09 158,024.17 3,347,581 14

339,356.33 225,654.11 187,636.09
6,947.86 24,688.62 105,844.08 3,210,09886

$ 3,246,875.91 $ 7,547,89606 $ 6,957,49969

$

-25,235.01 $

141,628.59 $

50,518.23

13,253.45

15,61325

58,237.23

$

-11,981.56 $

157,241.84 $

108,755.46

19,106.00

1,001,04142

889,840.82

3,15314 -13146

-6,927.61 9,372.75

$

7,124.44 $ 1,161,304.94 $ 1,001,04142

- 23-

WALKER COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 2001

ASSETS Cash and Cash Equivalents Accounts Receivable Due from Other Funds

BOND PROCEEDS

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$

0.00 $

37,965.00

Total Assets
LIABILITIES AND FUND EQUITY LIABILITIES
Cash Overdraft Accounts Payable Contracts Payable Retainages Payable Due to Other Funds
Total Liabilities FUND EQUITY
Fund Balances Reserved For State Capital Outlay Projects Unreserved Undesignated Total Fund Equity
Total Liabilities and Fund Equity

$

0.00 $ ===3=7=,9=6=5..0.0. ==

$

37,965.00

$

--'0::.:,.0=.:0....

0.00

$

0.00 $ _ _",;:3:.:,.7.r.,:,9..::65::.:,.::.,:00::..,.

$

0.00 $===3=7=,9.6.5.:;,;.=00=

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

EXHIBIT"G"

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

JUNE 30, 2001

JUNE 30, 2000

$

37.965.00 $ 3,595,076.10

$

548,186.37

548,186.37

378,214.87

3,595,076.10

$

548,186.37 $

586,151.37 $ 7,568,367.07

$

524,424.97 $

524,424.97 $ 3.520,431.05

23,761.40

23,761.40

178,190.00

101,595.00

3,595,076.10

$

548,186.37 $

548,186.37 $ 7,395,292.15

$

37,965.00 $

173,074.92

$

----'0;;.;..0=0;... _ _ _---:0::.:;.0:::,:0:....

0.00

$

0.00 $

37,965.00 $. 173,074.92

$

548,186.37 $

586,151.37 $ 7,568.367.07

- 25-

WALKER COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDED JUNE 3D. 2001

REVENUES State Funds Other Funds Total Revenues
EXPENDITURES Capital Outlay Land and Land Improvements Building and Building Improvements Equipment Total Expenditures
Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES)
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
FUND BALANCE JUNE 30

BOND PROCEEDS

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$

775.03 $

0.00

$

775.03 $

0.00

$

20,446.83

$

000

155,714.43

$

0.00 $

176,161.26

$

775.03 $ -176,161.26

$

66,844.95 $

67,619.98

-67,619.98

-26,568.64

$

-775.03 $

41.051.34

$

0.00 $ -135,109.92

0.00

173,074.92

$

o 00 $ ===3;;,;,7:,9~6~5.~00~

See notes to the general-purpose financial statements. - 26-

EXHIBIT"H"

SPECIAL PURPOSE LOCAL OPTION SALES TAX

TOTALS

YEAR ENDED

JUNE 30, 2001

JUNE 30, 2000

$ 1,603,371.05

$

591,631.69 $ _----'5::;.;:9=2z...:.A.::.;06:.:,..7:..:2~

289A35.40

$

591,631.69 $

592A06.72 $

$

20,446.83

$

551,355.38

707,069.81 $ 4,508,422.68

86,853.76

$

551,355.38 $

727,516.64 $ 4,595,276.44

$

40,276.31 $

-135,109.92 $ -2,702,469.99

$

4,694.01 $

139,158.94 $ 2,314,185.26

-44,970.32

-139,158.94

-2,314,185.26

$

-40,276.31 $

0.00 $

0.00

$

0.00 $

-135,109.92 $ -2,702,469.99

0.00

173,074.92

2,875,544.91

$

0.00 $

37,965.00 $ ==1=7=3=,0=74=.9=2=

- 27-

WALKER COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUNDS YEAR ENDED JUNE 30, 2001

EXHIBIT "I"

BALANCE JULY 1, 2000

ADDITIONS

DEDUCTIONS

BALANCE JUNE 30, 2001

HUGH CAMPBELL MEMORIAL FUND

ASSETS Cash and Cash EqUivalents

$

15000 $

0,00 $

000 $ ===1=5~0.~00~

. LIABILITIES Funds Held for Others

$

150.00 $

0.00 $

000 $ ===1=5=0=00==

SCHOLARSHIP FUND
ASSETS Cash and Cash EqUivalents

$

5,316.10 $ 30,000.00 $

11,061.00 $ =====2=4~,2;,;;;;5=5..:;1O~

LIABILITIES Funds Held for Others

$

5,316 10 $ 30,000.00 $

11,061 00 $ =====2=4.!:,2~55~10=

TOTALS - AGENCY FUNDS
ASSETS Cash and Cash EqUivalents

$

5,46610 $ 30,000.00 $

11,061 00 $=====2=4==,4~05~10=

LIABILITIES Funds Held for Others

$

5,46610 $ 30,000,00 $

11,061.00 $ ===24=,.4.0.=:5...1..0.....

See notes to the general-purpose financial statements. - 28-

WALKER COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2001

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

PASS THROUGH
ENTITY 10
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

Agriculture, U, S Department of Child Nutntlon Cluster Pass-Through From Georgia Department of Educabon Food and Nutrition Program Food Services School Breakfast Program National School Lunch Program

10553 10,555

NlA $ 380,03068

(2)

N/A

1,358,996,24 $ 3,111 ,402,60 (3)

Total Child Nutribon Cluster

$ 1,739,026.92 $ 3,111,402,60

Other Programs

Pass-Through From Georgia Department of Education

Food and Nutribon Program

Food Dlstnbutlon Program (1)

10.550

N/A

Pass-Through From U. S, Department of Defense

Food Nutnlion Program

Fresh Produce Program (1)

10.550

N/A

Pass-Through From Office of Treasury and Fiscal SelVlces

Nabonal Forest Reserve Funds

10,665

N/A

215,274.19
18,91300 445.98

215,27419
18.913,00 (4)

Total U. S. Department of Agnculture

$ 1,973,660.09 $ 3.345,589,79

Educabon, U S Department of SpeCIal Education Cluster Pass-Through From Georgia Department of Educabon IndiVIduals with Dlsabihbes Education Act Part B - SpeCIal Education CapaCIty Building Improvement Flow Through Preschool

84,027 84.027 84,173

NlA

$

19.808.27 $

NlA

781,364.86

NlA

59,096.72

19,808.27 781,364.86
59,096,72

Total SpeCIal Educabon Cluster

$ 860.26985 $

860.269.85

Other Programs Pass-Through From Georgia Department of Educabon ComprehenSive School Reform Demonstrabon Project Elementary and secondary Educabon Act Title I Accountabihty Grants Grants to Local Educabonal Agencies Title II Eisenhower ProfeSSional Development TItle III Technology literacy Challenge Fund Grants TrtleVI Innovabve Educabon Program Strategies Class Size ReduclJon Goals 2000 Slate and Local Education Systemic Improvement Grants Safe and Drug-Free Schools and Commumbes Vocabonal Educabon - BaSIC Grants to Slates High School Program BasIc Grant

84332
84.348 84.010 84.281 84 318 84.298 84.340 84.276 84.186
84.048

N/A
NlA NlA NlA NlA NlA NlA NlA NlA
NlA

2,079.00
51.34540 1.403,17110
51,54339 113,361.72 56.896 00 216,592.00 147.344.60 34.271.00
70,310.80

2,079.99 (3)
51.34540 1.403.171.10
51.543.39 124,998.05 56.896.00 216.929.42 (3) 147.34460 34.616,23 (3)
83.225.84 (3)

- 29-

WALKER COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2001

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Education, U S Department of Other Programs Pass-Through From Hall County Board of Education d/b/a Piedmont Migrant Educalion Agency Elementary and Secondary Education Act Title I Migrant Education
Total U S. Department of Educalion
Defense. U. S. Department of Direct Department of the Air Force R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

84 011

N/A

$

18.98504 $ _ _---:.;18:.:;.9::":8;,:;5-=04.,;,,

$ 3.026.16990 $ _---"'3.""05""1;.:...,4;.::04...;..;;.91.;..

$

95.191.61 $

292.084.20 (3)

Total Federal FinanCial Assistance
= N/A Not Available

$ 5.095.021.60 $ ==6.!,;,68;;,;9=.O=7=8=90=

Notes to the Schedule of Expenditures of Federal Awards

(1) The amounts shown for the Food DlstnbutJon Program and Fresh Produce Program represent the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system dunng the current fiscal year.
(2) Expenditures for the School Breakfast Program were not maintained separately and are induded in the 2001 National School Lunch Program.
(3) Expenditures for thiS program indude State. and/or Other Funds Expenditures are not maintained by fund source.
(4) Funds earned on thiS program do not require reporting of expenditures.

Major Programs are identified by an astensk (*) in front of the CFDA number.

The School District did not provide Federal AsSistance to any SubreCipient.

The accompanying schedule of expenditures of Federal awards Indudes the Federal grant actiVIty of the Walker County Board of Educalion and IS presented on the modified accrual baSIS of accounllng which is the baSIS of accounllng used In the presentallon of the general-purpose financial statements.

See notes to the general-purpose finanCial statements.

30 -

WALKER COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2001

SCHEDULE "2"

AGENCY/FUNDING
GRANTS Community Affairs, Georgia Department of R.O T.C Program
Education, Georgia Department of Quality BasIc EducalJon Direct InstruclJonal Cost Kindergarten Program Kindergarten Program - Early Intervention Program Pnmary Grades (1-3) Program Pnmary Grades - Early IntervenlJon (1-3) Program Upper Elementary Grades (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program VocalJonal Laboratory (9-12) Program Students With DisabililJes Category I Category II Category III Category IV Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program Staff and Professional Development Indirect Cost Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services PnnClpal Supplements Vocational Supervisors Education EqualizalJon Funding Grant Food Services Vocational Education Other State Programs Apprenticeship Program At-Risk Summer School Program Environmental SCience Program Health Insurance Innovative Programs Mentor Teachers Next Generation Schools Pay for Performance Preschool Handicapped Program Remedial Summer School Student Achievement Teachers' Retirement Lottery Programs Applied Technology Labs Computers In the Classroom

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

3,750.00

$

3,750.00

1,909.275.00 419.779.00
5.269,082.00 1.441.388.00 3.055.120.00
42.107,00 4.515,891.00 3.563.920.00 1,086.731.00
92.529.00 878.604.00 1,826.261.00 591,282.00 46.134.00 493.652.00 270,057.00 332.142.00
18.957.00 823.847.00 214,672.00 4.794.038.00

1,909.275.00 419.779.00
5.269,082.00 1,441.388.00 3.055.120.00
42.107.00 4,515.891.00 3.563,920.00 1.086.731.00
92.529.00 878.604.00 1.826.261.00 591.282.00 46,134.00 493.652.00 270.057.00 332.142.00
18,957.00 823.847.00 214,672.00 4.794.038.00

963.563.00 266.922.00 181.396.00
36,597.00 42,494.00 1.934.620.00
$ 102.797.00

241.718.00

55,000.00 13,101.94
750.00 674.314.18
5.000.00 11.247.00 75.000.00 92.000.00 154,191.00 6,748.88 25.732.60 26.047.00

75.000.00 181,114.00

963.563.00 266.922.00 181.396.00
36.597.00 42.494.00 1.934.620.00 241.718.00 102.797.00
55.000.00 13.101.94
750.00 674,314.18
5,000.00 11,247.00 75.000.00 92,000.00 154.191,00 6.748.88 25.732.60 26.047,00
75,000.00 181,114.00

- 31 -

WALKER COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2001

SCHEDULE "2"

AGENCY/FUNDING

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

GRANTS

Natural Resources, Georgia Department of

Georgia Underground Storage Tank Program

$

156,651.86

$

Office of School Readiness Pre-Kindergarten Program

$ 696,956.56

Office of Treasury and Fiscal Services Public School Employees Retirement

134,066.00

CONTRACTS Education, Georgia Department of Georgia's Reading Challenge Reading First Program To provide intensive services for school improvement and ongoing, long-term assistance to Rossville Elementary School

80,047.00 50,000.00

195,471.00

TOTAL
156,651.86 696,956.56 134,066.00
80,047.00 195,471.00
50,000.00

$ 36,777,504.46 $ 1,390,259.56 $ 38,167,764.02

See notes to the general-purpose financial statements.

- 32-

WALKER COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2001

SCHEDULE "3"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

System-WIde technology Improvements

$ 1,076,406 00 $ 320,09712

$ 320,09712 Completed

Completion of constructIOn of LaFayette High School

2,479,852 00 15,411,39600 $ 20,44683

6,051,33903 Ongoing

Construction of new Cherokee Ridge Elementary School on Johnson Road

2,622,30000 5,770,70900

3,05000

5,583,61917 Ongoing

ConstruC1Jon of new North LaFayette Elementary School

2,984,687 00

5,800,78800

6,61870

5,798,547.93 Ongoing

Additions and modifications to Chattanooga Valley Elementary School

1,378,230 00 4,613,06500

1.77500 4,501,003 03 Ongoing

Additions and renovabons to Happy Valley Elementary School

1,038,468,00 3,588.037 14

76,65075

3,588,037 14 Ongoing

Additions and renovabons to Fairyland Elementary School

1.322,54900 3,473.98664

67,61998

3,473,98664 Ongoing

Construction of new Rock Spnng Elementary School

4,321,988 00 4,389,187.38

4,69401

4,389,187 38 Ongoing

Addlbons to ROSSVille Elementary School

355,211.00

7,92000

7,92000 Completed

Addlbons and mochficatlons to laFayette Middle School

3,232,91500 3,232.91500

Ongoing

Addlbons and modifications to ROSSVille Middle School

1.702.09200 1,200.00000

546,661.37

44,97032 Ongoing

Additions and modifications to Chattanooga Valley Middle School

2,259,737 00 2,259.737 00

Ongoing

Modifications to Ridgeland High School

497,99100

121.03393

121,03393 Completed

$ 25.272.42600 $ 50.188,87221 $ 727,51664 $ 33,879,74169

(1) The School Dlstnct's onglnal cost esbmate as speCIfied In the resolubon calling for the Imposibon of the Local Opbon Sales Tax

(2) The School Dlstnct's current estimate of total cost for the projects Indudes all cost from projectlnoepbon to completion

(3) The voters of Walker County approved the Imposition of a 1% sales tax to fund the above projects and rebre assOCIated debt Amounts expended for these projects may Indude sales tax proceeds, state, local property
taxes and/or other funds over the life of the projects

(4) In addition to the expenditures shown above, the School Dlstnct has Incurred Interest to proVIde advanoe funding for the above projects as follows

Pnor Years

$ 1.830,792,52

Current Year

443,82500

Total

$ 2.274,617 52

See notes to the general-purpose finanCIal statements.

33

WALKER COUNTY BOARD OF EDUCATION GENERAL FUND - aUALITY BASIC EDUCATION PROGRAM laBEl
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30. 2001

SCHEDULE "4"

DESCRIPTION

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE aBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Pnmary Grades (1-3) Program

Pnmary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Middle Grades (6-8) Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students With Disabilities

Category I

Category II

Category III

Category IV

Category V

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

2,180,218.00 $ 479.351.00
6.016.81000 1,645,933 00 3,488,667 00
48,08200 5.156,73400 4.069,670.00 1,240,948.00 3,932,381.00

2,097,10748 $ 467,437.28
5,701.811.62 1.856.843.75 3,842.005.50
67,752.83 5.739,82288 4,347,764 56 1,204,264.51

553.561.00 308,380.00 379,276.00
21.647.00

403.082.47 3,731,842.11
336.725.22 82,784.81
360,779.38 357,528.04 592,907.72 106,43793

53,28913 $ 1,16759
131.617 45 5.059.95
75,095.60 87,83981
276,128.69 105.172 48
4,184.93 6.052.85 23.597.33 7,254 79
4,384 80 26707
14355

2,150,396.61 468.604.87
5,833.429.07 1.861,903.70 3,917,101.10
155.592.64 5,739,822.88 4,623,893 25 1.309,436.99
4,184.93 409.13532 3.755.439.44 343,980.01
82,784.81 365,164.18 357,79511 592,907.72 106,581.48

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

29,521,658.00 $ 31.296,898.09 $ 781,256.02 $ 32,078,154.11

Media Center Program Staff and Professional Development

940.758.00 245.135.00

1,072.717.07 85.06211

149,596.66 160.072 89

1,222,313.73 245,135.00

TOTAL aBE FORMULA FUNDS

$

30.707,551.00 $ 32,454,677.27 $ 1.090.925.57 $ 33,545,602.84

(1) Comprised of State Funds plus Local Five Mill Share.

See notes to the general-purpose financial statements.

- 34-

WALKER COUNlY BOARD OF EDUCATION GENERAL FUND - aUALIlY BASIC EDUCATION PROGRAM (aBE)
ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30. 2001

SCHEDULE "5"

Rock Spnng Elementary School LaFayette Middle School Ridgeland High School Rossville Elementary School Gilbert Elementary School LaFayette High School Cherokee Ridge Elementary North LaFayette Elementary School Chattanooga Valley Middle School Rossville Middle School Fairyland Elementary School Naomi Elementary School Chattanooga Valley Elementary School Stone Creek Elementary School Walker County Alternative Education Center Central Office (Alternative Education Program)
TOTAL
(1) Comprised of State Funds plus Local Five Mill Share.

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE aBE PROGRAM COSTS

$

1,242,661.00 $

1,362,058.53

2,766,194.00

2,920,133.73

3,779,131.00

4,152,817.21

2,094,587.00

2,205,096.15

1,809,796.00

2,019,166.54

2,838,497.00

3,120,871.50

2,734,300.00

2,656,102.26

1,630,637.00

1,712,041.89

1,599,606.00

1,916,229.66

2,176,696.00

2,493,275.72

960,985.00

1,139,864.25

1,543,189.00

1,638,988.59

2,343,275.00

2,354,176.15

1,622,828.00

1,850,089.25

265,773.26

379,276.00

271,469.42

$

29,521,658.00 $ 32,078,154.11

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

SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS

:USSELL W. HINTON
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 W,!';hmgton Street. S W. SUIIC 2 J 4 AllantJ. Georgia 11LB4-X400
March 21, 2002

Honorable Roy E. Barnes, Governor Members of the 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, 2001, and have issued our report thereon dated March 21,2002. 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 o~ audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
We did not observe the taking ofeither the Federal donated commodities inventory or the purchased foods inventory at June 30, 2001, 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 oflaws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective ofour audit, and accordingly, we do not express such an opinion. The results ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.
2001YB-41

Internal Control Over Financial Reporting

In planning and perfonning our audit, we considered Walker County Board of Education's internal control over financial reporting in order to detennine 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 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 ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Walker County Board ofEducation'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-7461-01-01.

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 financial statements being audited may occur and not be detected within a timely period by employees in the nonnal course of perfonning their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we consider item FS-7461-01-01 to be a material weakness.

This report is intended solely for the infonnation and use of the management, members of the Walker 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,

.-

W~

Rus ell W. Hinton State Auditor

RWH:as 2001YB-41

'\T. 1USSELI.

HINTON

STATE AUDITOR

(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Wd~hlng\()n Street. S W. SUite 214 AtbnloJ. Georgia 30334-X400
March 21, 2002

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Walker County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance ofWalker County Board ofEducation with the types ofcompliance requirements described in the Us. Office of Management and Buq.get (OMB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2001. Walker County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section ofthe 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 of Education's compliance based on our audit.
We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and OMB Circular A133, Audits of States. Local Governments, and Non-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 ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the 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.
2001SA-10

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 ofits major Federal programs for the year ended June 30, 2001.
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-B3.
Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level of risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course ofperforming their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the management, members of the Walker 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,
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Rus ell W. Hinton State Auditor
RWH:as 2001SA-IO

SECTIONID AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

WALKER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7461-99-0 I FS-7461-00-0 I

Further Action Not Warranted Unresolved - No Corrective Action hnplemented

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-7461-00-01

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

SECTION IV FINDINGS AND QUESTIONED COSTS

WALKER COUNTY BOARD OF EDUCAnON SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the Walker County Board of Education'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 ofEducation 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 of Report Issued on Compliance for Major Programs The auditor's opinion on the Walker County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .510(a) ofOMB Circular A-B3 The Walker County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-B3.
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 qualified 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 EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
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-7461-01-01 The Walker County Board of Education did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general-purpose financial statements ofthe School District being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the School District to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the School District and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained ofall additions and deletions to the General Fixed Assets Account Group. Management's Response: We concur with this recommendation. Due to staffing limitations and budgetary considerations prohibiting the hiring of additional staffat that time to maintain system assets the Board decided not to pursue the recording ofgeneral fixed assets on the financial statements during the fiscal year. We will be implementing fixed assets as of July 1,2002. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
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