I .. '!t - WALTON 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 EXHffiITS 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 7 D NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS 8 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 SCHEDULES 1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 28 2 SCHEDULEOFSTATEREVENUE 30 3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 33 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) 4 BY PROGRAM 34 5 BY SITE 35' WALTON COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE 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-133 SECTION ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL RlJSSELL W. HINTON STATE AUDITOR (404) 6562174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S. w., Suite 2 I4 Atlanta, Georgia 30334-8400 May 24,2002 Honorable Roy E. Barnes, Governor Members of the General Assembly Members ofthe State Board ofEducation and Superintendent and Members of the Walton County Board ofEducation INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying general-purpose financial statements ofthe Walton 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 ofthe Walton County Board ofEducation's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit. We conducted our audit in accordance with 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 ofthe United States. Those standards require that we plan and perfonn the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our oplmon. 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: 2001ARL-13 * 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 oWIied 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 aggregate effects on the general-purpose financial statements of these variances or omissions have not been determined, but are believed to be material. In our opinion, except for the effects on the general-purpose financial statements of the matters referred to in the preceding paragraph, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position of the Walton County Board of Education 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 May 24, 2002, on our consideration ofthe Walton County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions oflaws, 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. Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements of"the Walton County Board of Education taken as a whole. The accompanying combining statements (Exhibits E through H) 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-133, 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 effects ofthe matters referred to in the third paragraph, such information is fairly stated, in all material respects, in relation to the general-purpose financial statements taken as a whole. 2001ARL-13 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, ~----. UJ~~ Ru ell W. Hinton State Auditor RWH:gp 2001ARL-13 " WALTON COUNTY BOARD OF EDUCATION WALTON COUNTY BOARD OF EDUCATION COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 2001 ASSETS Cash and Cash Equivalents Investments Accounts Receivable Inventories 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 $ 4,355,942.85 $ 3,191,083.47 14,000,000.00 9,000,000.00 5,992,536.38 $ 977,737.15 887,038.57 .44,963.01 26,137.41 Total Assets $ 24,348,479.23 $ 1,048,837.57 $ 13,078,122.04 LIABILITIES AND FUND EQUITY LIABILITIES Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable Contrads Payable Retainages Payable General Obligation Bonds Payable Total Liabilities FUND EqUITY Fund Balances Reserved For Debt Service For Encumbrances For Expired Grant Balances/Questioned Costs For Inventories Food Donated Commodities Purchased Food For Purpose of Bond Issue For SPLOST Projeds For State Capital Outlay Projeds Unreserved Designated for Self-Insurance Designated for Land Purchases Undesignated Total Fund Equity $ $ 4,394,527.82 5,150,321.64 824.38 40,844.78 312,593.64 $ 519,941.95 305,461.94 842,362,00 371,899.66 $ 9,545,673.84 $ 873,380.37 $ 1,519,723.60 $ 81,168.84 $ 1,254.67 $ 8,442,516.31 31,328.57 100,000,00 6,745,152.00 7,845,155.98 $ 14,802,805.39 $ 44,963.01 26,137.41 2,563,519.78 407,310.00 103,102.11 145,052.35 175A57.20 $ 11 ,558,398.44 Total Liabilities and Fund Equity $ 24,348A79.23 $ 1,048,837.57 $ 13,078,122.04 The notes to the general-purpose financial statements are an integral part of this statement. -2- EXHIBIT "A" DEBT SERVICE FUND ACCOUNT GROUP GENERAL LONG-TERM DEBT TOTALS (Memorandum Only) JUNE 30, 2001 JUNE 30, 2000 $ 381,415.04 $ 7,928,441.36 $ 20,295,223.29 23,000,000.00 46,145.44 54,104.55 7,911,416.65 8,321,172.90 $ 435,519.59 11 ,044,480.41 44,963.01 26,137.41 435,519.59 11 ,044,480.41 39,758.78 31,387.87 446,997.46 11,848,002.54 $ 435,519.59 $ 11,480,000.00 $ 50,390,958.43 $ 41,028,688.28 $ 40,844.78 $ 20,592.23 5,012,583.40 913,892.81 5,670,263.59 5,030,411.96 824.38 842,362.00 419.348.62 371,899.66 60,402.23 $ 11,480,000.00 11,480,000.00 12,295,000.00 $ 11,480,000.00 $ 23,418,777.81 $ 18,739,647.85 $ 435,519.59 0.00 $ 435,519.59 $ 435,519.59 $ 8,524,939.82 31,328.57 446,997.46 31,328.57 44,963.01 26,137.41 2,563,519.78 407,310.00 39,758.78 31,387.87 117,806.44 9,792,625.71 404,291.16 100,000.00 6,745,152.00 8,093,310.44 11,424,844.44 $ 26,972,180.62 $ 22.289,040.43 $ 435,519.59 $ 11,480,000.00 $ 50.390,958.43 $ 41p28,688.28 -3- ,-------~---~--------------~~._-_._------- WALTON 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 $ 14,802,805,39 $ ==1=7,,;;,5=.4=57=,2;:0,= The notes to the general-purpose financial statements are an integral part of this statement. -4- EXHIBIT"B" CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTALS (Memorandum Only) YEAR ENDED JUNE 30, 2001 JUNE 30, 2000 $ 3,410,272.59 $ 42,319,106.50 $ 34,840,749.29 4,516,797.73 4,347,025.47 5,358,530.65 $ 1,383,285.25 29,628,758.87 25,864,276.49 654,097.89 30,804.28 3,328,982.85 2,519,212.44 $ 9.422,901.13 $ 1.414,089.53 $ 79,793,645.95 $ 67,571,263.69 $ 42,599,741.83 $ 36,560,930.79 $ 9,197,265.66 1,904,409.82 1,414,640.73 1,169,357.77 1,532,105.04 3,411,863.90 483,498.26 4,897,083.79 2,609.420.62 364,414.25 895,073.21 3,205,767.25 250.00 9,197,265:66 2,594,097.13 1,032,940.85 1,093,141.99 1,387,141.99 3,282,553.21 510,495.75 3,666,572.55 2,398,279.30 849,654.24 116,296.70 2,994,452.26 1,412,458.66 $ 815,000.00 609,770.00 797.40 815,000.00 609,770.00 797.40 770,000.00 646,180.00 801.65 $ 9,197,265.66 $ 1,425,567.40 $ 75,110,459.53 $ 59,315,997.07 $ 225,635.47 $ -11.477.87 $ 4,683,186.42 $ 8,255,266.62 $ 872,987.31 $ 872,987.31 $ 1,019,162.98 $ -1,019,162.98 $ 0.00 $ 147,499.43, -147,499.43 0.00 $ 1,098,622.78 $ 10,459,775.66 -11.477.87 $ 4,683,186.42 $ 8,255,266.62 446,997.46 22,289,040.43 14,019,317.75 5,204.23 -5,250.46 6,138.09 8,317.97 $ 11,558,398.44 $ 435,519.59 $ 26,972,180.62 $ 22,289,040.43 - 5- ,.,' \, WALTON 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" The notes to the general-purpose financial statements are an integral part of this statement. -7- WALTON COUNTY BOARD OF EDUCATION EXHmIT liD" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS . JUNE 30. 2001 . Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The Walton 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 leg~l 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 ofits 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. Ail account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources. General Fixed Assets are recorded as expenditures in the various funds at the time ofpurchase. A General Fixed Assets Account Group is not presently maintained by the School District. To conform to generally accepted accounting principles, a General Fixed AssetsAccount 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 u~ed 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. -8- ~ .i: . . >. . WALTON COUNTY BOARD OF EDUCATION EXHmIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 200 i 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. 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 fiDancing 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. Governmental funds are accounted for using the modified accrual basis ofaccounting under which: 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 exch"ange, 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. - 9- I. WALTON COUNTY BOARD.OF EDUCATION EXHffiIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2001 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES . . Expenditures are generally recognized when the related fund liability is incurred. ' . A substantial n"QIIlber of personnel of the School District were employed for a one hundred and ninety day period beginning in August 2000 and ending in early June 2001. Employment contracts for these employment periods typically 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 are disbursed to the School District in the same twelve month period. In accordance with generally accepted accounting principles, salary and fringe benefit expenditures and the related revenue from the State to fund these contracts are recorded in the fiscal period covered by these financial statements: BUDGET The Walton County Board of Education's budget is a complete financial plan for th~ 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. - - 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. . -CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investrnents with original maturities of three months or less from the date of acquisition in authorized financial institutions. 'Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations. 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 - 10- .... . ' ,-."~: WALTON COUNTY BOARD OF EDUCATION EXHffiIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2001 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 Walton County Board of Commissioners fixed the property tax levy for the 2000 tax year (calendar year) on August 14,2000 (levy date). Taxes were due on November 15, 2000 (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 Walton 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 $21,925,512.82 and for school bonds amounted to $1,333,345.99. Tax millage rates levied for the 2000 tax year (calendar year) for the Walton County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value): School Operations School Bonds 18.04 mills 1.05 mills 19.09 mills SALES TAXES Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes. Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $5,358,530.65 and was recorded in the Capital Projects Fund. The State will terminate collection of this tax once an additional $14,569,860.70 has been collected or on December 31, 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 Iood 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 - WALTON COUNTY BOARD OF EDUCATION EXHffiIT"D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2001 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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-Teim Debt Account Group as this liability is also deemed to be immaterial to the fair presentation ofthese financial statements. GENERAL OBLIGATION BONDS I 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