Audit report, Warren County Board of Education, Warrenton, Georgia, year ended June 30, 1998

AUDIT REPORT WARREN COUN1Y BOARD OF EDUCATION
WARRENTON, GEORGIA YEAR ENDED JUNE 30, 1998

WARREN 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

EXlllBITS

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

AND EXPENDABLE TRUST FUND

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

18

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

19

FIDUCIARY FUND TYPES

G

COMBINING BALANCE SHEET

20

H

COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUNDS

21

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

24

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

25

3 SCHEDULE OF STATE REVENUE

27

4 SCHEDULE OF EXPENDITURES

LOTTERY PROGRAMS

28

WARREN COUNTY BOARD OF EDUCATION TABLE OF CONTENTS -

SECTION I

FINANCIAL

ADDITIONAL FINANCIAL INFORMATION

SCHEDULES

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND QUALITY BASIC EDUCATION PROGRAMS

5

OVERALL

29

6

BY PROGRAM

30

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

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

SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
June 3,1999

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Warren County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMAnON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general purpose financial statements of the Warren County Board of Education, as of and for the year ended June 30, 1998, as listed in the table of contents. These general purpose financial statements are the responsibility ofthe Warren 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 generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentatiorL We believe that our audit provides a reasonable basis for our opinion.
As described in the notes to the general purpose financial statements, the Board's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:
* The general purpose financial statements of the Board did not contain a General Fixed Assets
Account Group to account for property and equipment owned by the Board which should be included to conform to generally accepted accounting principles.

98ARL-13B

The Board did not recognize as expenditures, in the year ended June 30, 1998, a portion of salaries and the corresponding employer's cost ofrelated benefits earned for contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department ofEducation for the State's share 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, 1997, were improperly recorded in the year ended June 30, 1998. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed.
The aggregate effects on the general purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects 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 fmancial position of the Warren County Board ofEducation as ofJune 30, 1998, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated June 3, 1999, on our consideration of the Warren County Board ofEducation's internal control over fmancial reporting and our tests of its compliance with certain provisions oflaws, regulations, contracts and grants.
The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally ofinquiries of management regarding the methods of measurement and presentation ofthe supplementary information. However we did not audit the information and do not express an opinion on it. In addition, we do not provide assurance that Warren County Board of Education is or will become year 2000 compliant, that the Board's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Warren County Board of Education does business are or will become year 2000 compliant.
Our audit was performed for the purpose of forming an opinion on the general purpose financial statements of the Warren County Board of Education taken as a whole. The accompanying combining statements (Exhibits E through H) and the financial schedules (Schedules 2 through 6), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-l33, Audits o/States. Local Governments. and Non-Profit Organizations, are presented for purposes ofadditional 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 of the general purpose financial statements and in our opinion, except for the effects of the matters referred to in the third paragraph, such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.
98ARL-l3B

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

WARREN COUNTY BOARD OF EDUCATION

EXHIBIT "A"

DEBT SERVICE
FUND

FIDUCIARY FUND TYPES TRUST AND AGENCY FUNDS

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS

(Memorandum Only)

JUNE 30, 1998

JUNE 30, 1997

$

146,298.53 $

32,242.92

$ 1,030,479.41 $ 1,104,687.90

20,000.00

20,000.00

5,255.53

343,386.07

175,510,99

$

151,554.06

19,896.68 2,141.69
151,554.06

8,222,37 992.38
143,146.14

408,445,94

408,445,94

506,853.86 76.717.06

151,554.06 $

52,242.92

560,000.00 $ 1,975,903.85 $ 2,016,130.70

32,163.41

$

32,163,41 $

560.000.00 560,000,00 $

$ 145,841.60 74,890.22 22,141.06 32,163,41
560,000.00
835,036.29 $

10,428.52 23,790.20 84,131.95
3,330.99 39,300.63 76,717.06 650,000.00
887,699,55

$

151,554.06

0.00 $ 151,554.06 $

20,079.51 20,079.51

$

151,554.06 $

52,242.92

1,010.44 151,554.06 $
98,294.12

143,146.14 101,496.07

19,896.68 2,141.69
880.84

8,222.37 992.38 880.84

867,089.73

873,693.35

$ 1,140,887.56 $ 1128.431.15

560,000.00 $ 1,975.903.85 $ 2:016130.70 -3-

EXHIBIT-B-

TYPES DEBT
SERVICE FUND

TOTAL

FIDUCIARY FUND TYPE EXPENDABLE TRUST FUND

TOTALS

(Memorandum Only)

YEAR ENDED

JUNE 30 1998

JUNE 30, 1997

$ 4,034,014.30

1,116,788.03

$

142,073.67

1,587,458.86

249.362.96 $

$

142,073.67 $ 6,987.622.15 $

$
1,050.00 1,050.00 $

4,034,014.30 $ 1,118,788.03 1,587,458.88
250,412.96
6,988,672.15 $

4,051,487.01 952,856.78
1,601 ,448.09 256.387.51
6.882,179.39

$ 3.968,006.40
182,968.71 2n,018.28 138,251.10 223,630.07 $ 570,594.05
97,333.09 451,222.13 423,167.42
5,902.00 12,907.56 405,086.66 16,144.62

$

90,000.00

42,905.00

760.75

188,717.06 47,149.46
760.75

$

133,665.75 $ 6,987,059.36 $

$

8,407.92 $

562.79 $

$ 2,000.00
2.000.00 $ -950.00 $

3,968,006,40 $
182,988.71 277,018.28 138,251.10 225,830.07 570,594.05
97,333.09 451,222.13 423,167.42
5,902.00 12,907.56 405,086.88 16,144.62
166,717.06 47,149.46
760.75
8,989.059.38 $
-387.21 $

3,454,828.69
234,747.89 ' 243,570.31 147,264.53 214,638.92 551,004.72
87,118,45 374,645.41 333,999.81
10,034.00 19,917.72 456,063.57
9,356.81 6,858.05
144,322.57 57,319.02
2,440.89
6,347,931.16
514,248.23

$

6.407.92 $

582.79 $

143,148.14

1,107,401.64

11,674.31 1,149.31

$

$

-950.00 $ 21,029.51

-387.21 1,128,431.15

11,674.31 1,149.31

74,565.00 2,090.17 -2,090.17 74.565.00
568,813.23 539,678.63
-17.21 -43.50

$

151.554.06 $ 1:120:788.05 $

20,079.51 $ 1:140,867.56 $ 1.128,431.15

-5-

WARREN COUNTY BOARp OF EDUCATION
COMBINED STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAl- (N0N-GMP BASIS) GENERAl AND SPECIAL REVENUE FUNDS
YEAR ENDEp JUNE 30 1998

EXHIBIT 'C'

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Cunent Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation 01 Plant StudenlTransporlation Services central Support Services Other Support Services Food Services Operation Community Services Operations
Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
FUND BAlANCE JULY 1 1997

GENERAl FUND

ACnJAl

(BUDGET

BUDGET

BASIS)

$ 6,656,912,00 $ 3,860,866.28 20,451.88
1,445,385.19 227,142.43
$ 6,656,912.00 $ 5,553,845.56

$ 3,247,983.10

3,302,583.16

178,893.61 280,672.82 132,316.71 177,503.80 420,825,28 108,885.68 431,110.42 445,863.11
6,000.00 2,500.00 60,284.68 13,500.00

142,887.71 249,881.74 135,940.44 163,151.03 570,594.05
97,333.09 440,554.15 422,884.94
5,902.00
42,804.09 16,144.62 80,961.52

$ 5,504,099.21 $ 5,671.622.54

$ 1,152,812.79 $ -117,776.98

782,124.04

917,293.32

SPECIAL REVENUE FUND

ACTUAl

(BUDGET

BUDGET

BASIS)

$ 1,145,688.50 $ 173,148.02 1,096,334.37
22,220.53
$ 1,145,688.50 $ 1,291,702.92

$ 881,132.16 $ 885,423.24

80,580.79 39,500.00
57,925.00

40,081.00 27,138.54 2,310.66 80,679.04

18,900.00
13,212.00 254,813.34

10,667.98 282.48
12,907.56 382,282.57

$ 1.126,083.29 $ 1,181,771.07

$

19,625.21 $ 109,931.85

-102,829.40

36,686.59

FUND BALANCE JUNE 30 1998

$ 1,934,936.83 $ 799,516.34

$

-83,204.19 $

148,798.44

The notes to the general purpose financial statements are an integral part of this statement. -6-

WARREN COUNTY BOARD OF EDUCATION

EXHIBIT "0"

NOTES TO lHE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30,1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Warren County Board ofEducation (Board) 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 Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the Board is a primary government and consists ofall the organizations that compose its legal entity.
FUND ACCOUNTING
The Board uses funds and an account group to report on its financial position and the results 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. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
General Fixed Assets are recorded as expenditures in the various funds at the time ofpurchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
The general purpose financial statements account for all State, Federal, Taxes and Other funds under control ofthe Board, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most ofa Board's educational activities.
Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources ofthe Board except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board of education.
SPECIAL REVENUE FUND - the fund used to account for the proceeds ofspecific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and from the Federal government to accomplish specific educational objectives.
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the . acquisition or construction ofmajor capital facilities.

-7 -

WARREN COUNTY BOARD OF EDUCATION

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNlFlCANT ACCOUNTING POLICIES
DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, generallong-tenn principal, interest and paying agent fees.
FIDUCIARY FUND TYPES - the funds 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. These funds include:
EXPENDABLE TRUST FUND Otis E. Williams Memorial Scholarship Fund - the fund used to account for the principal and earnings which may be expended to provide scholarship awards to be made at the discretion of the Board.
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 and material capital lease obligations.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental and expendable trust 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 of operations.
Governmental and expendable trust funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be detennined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are property taxes, intergovernmental grants and investment income.
-8-

WARREN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 Deparbnent of Education for the State's share of these contracts. During fIscal year 1998, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1997 and ending in early June 1998. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1997 and ending in August 1998. State grants to fund the State's share ofthese contracts were disbursed from the Georgia Deparbnent ofEducation to the Board in the same twelve months. As of June 30, 1998, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 1998, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30, 1998. Also, the State's portion of the compensation paid in July and August 1998 was received and recorded as revenue in the fIscal year subsequent to June 30, 1998. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were recorded in the year ended June 30, 1998. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.
Agency funds are accounted for using the modifIed accrual basis of accounting in recognizing assets and liabilities.
BUDGET
The Warren County Board ofEducation's budget is a complete fInancial plan for the Board's fIscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, function and object The legal level of budget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.
The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives cornments on the tentative budget, makes revisions as necessary and adopts a fInal school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department ofEducation. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.

-9-

WARREN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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:

Special Revenue
Fund

FUND BALANCE JULY 1, 1997

$ 46,081.34

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

-8,222.37 -992.38

Fund Balance July 1, 1997 (Budget Basis)

$ 36,866.59

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

109,931.85

FUND BALANCE JUNE 30, 1998 (Budget Basis)

$ 14679844

CASH AND CASH EQUIVALENTS

COMPOSmON OF DEPOSITS
Cash and cash equivalents consist of deposits in authorized financial institutions. Georgia Laws authorize
the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.

INVESTMENTS

COMPOSmON OF INVESTMENTS Investments made by the Board in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Board to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofretum shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:

- 10-

WARREN COUNTY BOARD OF EDUCAnON

EXlllBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(l) Obligations issued by the State of Georgia or by other states,

(2) Obligations issued by the United States government,

(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,

(4) Obligations of any corporation of the United States government,

(5) Prime banker's acceptances,

(6) The Local Government Investment Pool administered by the State of Georgia, Office ofTreasury and Fiscal Services,

(7) Repurchase agreements, and

(8) Obligations of other political subdivisions of the State of Georgia.

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 Warren County Board ofCommissioners fixed the property tax levy for the 1997 tax year (calendar year) on November 20, 1997 (levy date). Taxes were due on January 20, 1998. The lien date for property taxes was January 1, 1997. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1998. The Warren County Tax Commissioner bills and collects the property taxes for the Board of Education, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance of taxes collected to the Board.

Tax millage rates levied for the 1997 tax year (calendar year) for the Warren County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations School Bonds

14.98 mills 1.54 mills

~mills

- 11 -

WARREN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30.1998

Norel: S~YOFSIG~CANTACCOUNTINGPOUCffiS
INVENTORIES
FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet for donared food commodities and for purchased foods are equally offset by reservations of fund balance which indicares that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.
GENERAL OBLIGATION BONDS
The Board issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the General Long-Term Debt Account Group.
INTERFUND TRANSACTIONS
The Board has the following types ofinterfund transactions:
Reimbursements of expenditures initially made from a fund that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results ofoperations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation 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 ren days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being
- 12 -

WARREN COUNTY BOARD OF EDUCATION

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30,1998

Note 2: DEPOSITS
secured after the deduction of the amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates ofindebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates ofindebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds ofany public authority created by the laws ofthe State ofGeorgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States govermnent, which are fully guaranteed by the United States govermnent both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30,1998, the bank balances were $1,635,278.00. The amounts of the total bank balances are classified into three categories of credit risk:
Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the Board or by the Board's agent in the Board's name.
Category 2 - Cash collateralized with securities held by the pledging fmancial institution's trust department or agent in the Board's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Board's name.)
- 13-

WARREN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30,1998

Note 2: DEPOSITS

The Board's deposits are classified by risk category at June 30, 1998, as follows:

Risk CategorY

Bank Balance

1

$ 266,298.53

2

1,368,979.47

3

0.00

Total

$163527800

Note 3: NON-MONETARY TRANSACTIONS

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

Note 4: RISK MANAGEMENT

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

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

The Board has elected to self-insure for all losses related to natural disaster. The Board has not experienced any losses related to this risk in the past three years.

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

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

1997 1998

Beginning of Year Liahility

Claims and Changes in Estimates

$

0.00 $

1,895.68 $

$

750.76 $

7,892.00 $

Claims Paid

End ofYear Liability

1.144.92 $ 3,009.19 $

750.76 5.633.57

- 14-

WARREN COUNTY BOARD OF EDUCATION

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 4: RISK MANAGEMENT

The Board participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991 to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The Board pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the United States Fidelity and Guaranty Company to provide coverage for potential losses sustained by the Trust in excess of $250,000.00 loss per occurrence, up to $2,000,000.00.

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

Position Covered

Superintendent Each Principal

$ 10,000.00 $ 10,000.00

Note 5: GENERAL LONG-TERM DEBT

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

Purpose

Interest Rates

Amount

General Goverument - Series 1988

5.40% -7.30%' $ 56000000

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

Capital Leases

General Obligation
Bonds

Total

Balance July 1, 1997

$ 76,717.06 $ 650,000.00 $ 726,717.06

Deductions Payments

76,717.06

90,000.00

166,717.06

Balance June 30,1998

$

000 $ 56000000 $ 56000000

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

- 15 -

WARREN COUNTY BOARD OF EDUCATION

EXlllBIT "D"

NOTES TO TIlE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30,1998

NoteS: GENERAL LONG-TERM DEBT

Fiscal Year Ended June 30
1999 2000 2001 2002 2003
Total Principal and Interest
Note 6: ON-BEHALF PAYMENTS

General Obligation
Bonds
$ 131,567.50 134,615.00 132,035.00 133,810.00 134,745.00
$ 66677250

The Board has recognized revenues and expenditures in the amount of $94,596.22 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies.
GeorgiaDepartment of Education Paid to the State Merit System of Personnel Administration For Health Insurance of Non-Certified Personnel In the amount of $70,582.03

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $9,959.1 9

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$14,05S.00
Note 7: CONTINGENT LIABILITIES

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

- 16-

WARREN COUNTY BOARD OF EDUCATION

EXlDBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Nore8: RE~MENTPLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with Stare 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 of the Board who are covered by TRS are required by State stature to contribute 5% of their gross earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rare is 11.81% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

1998

100%

$ 415,636.22

1997

100%

$ 383,740.30

1996

100"10

$ 369,679.51

- 17 -

WARREN COUNTY BOARp OF EDUCATION
COMBINING BALANCE SHEET SPECIAL REVENUE FUND
JUNE 30 1998

EXHIBIT"E"

Cash and Cash Equivalents
Accounts Receivable
Inventories Food Donated Commodities Purchased Food

SCHOOL FOOD
SERVICES FUND

LOTIERY PROGRAMS

FEDERAL PROGRAMS

TOTALS JUNE 30, 1998 JUNE 30, 1997

$ 130,279.42 $

731.71

$ 131,011.13 $

45,447.42

55,813.44

$ 177,403.45

233,216.89

153,580.28

19,898.68 2,141.69

19,896.68 2,141.69

8,222.37 992.38

Total Assets

$ 208,131.23 $

731.71 $ 177,403.45 $ 386,266.39 $ 208,242.45

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balences Payable
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated
Total Fund Equity

$ 23,219.18 $ 17,085.68
$ 40,304.86 $
$ 19,898.68 2,141.69
145,788.00 $ $ 167,826.37 $

$ 533.43
198.28

70,474.90 $ 29,002.81 56,075.86 20,839.44

731.71 $ 176,393.01 $

70,474.90 $ 52,755.42 73,161.54 21,037.72
217,429.58 $

55,875.94 23,100.64 82,382.95
801.58
182,161.11

$ 1,010.44 $

1,010.44

0.00 0.00 $

0.00 1,010.44 $

19,898.68 $ 2,141.69
145,788.00
168,836.81 $

8,222.37 992.38
36,886.59
46,081.34

Total Liabilities and Fund Equity

$ 208,131.23 $

731.71 $ 177,403.45 $ 386,266.39 $ 208,242.45

See notes to the general purpose financial statements.

-18-

WARREN COUNTY BOARD Of EDUCATION
COMBINING STATEMENT Of RElIENUES EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL RElIENUE FUND
YEAR ENPED JUNE 30 1998

EXHIBIT"F"

RElIENUES
Slale funds federal funds Other funds
Total Revenues
EXPENDITURES
Cunent Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services food Services Operation
Total Expendilures
Excess of Revenues over (under) Expendilures
OTHER FINANCING SOURCES
Operating Transfers In
Excess of Revenues end Other financing Souroes over (under) Expendilures
FUND BALANCE JULY 1
food Inventory - Net Change in Period Donated CommodilieS Purchased food

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

FEDERAL PROGRAMS

TOTALS YEAR ENDED JUNE 30, 1998 JUNE 30, 1997

$ 31,412.00 $ 141,736.02

$ 173,148.02 $

417,571.45

$ 678,782.92 1,096,334.37

22,220.53

22,220.53

331,083.79 948,980.32
13,615.70

$ 471,203.98 $ 141,736.02 $ 678,762.92 $ 1,291,702.92 $ 1,291,679.81

93,399.41 $ 572,023.83 $ 665,423.24 $ 665,409.96

$ 362,282.57

37,496.00 172.63
10,667.98

2,585.00 26,963.91 2,310.68 60,679.04
282.48 12,907.58

40,081.00 27,136.54
2,310.66 60,679.04 10,667.98
282.48 12,907.58 362,282.57

49,406.32 8,136.74
56,954.73 20,868.84
11,658.20 456,063.57

$ 362,282.57 $ 141,736.02 $ 677,752.48 $ 1,181,771.07 $ 1,268.496.36

$ 108,921.41 $

0.00 $ 1,010.44 $ 109,931.85 $

23,183.45

----
$ 108,921.41 $ 46,081.34
11,674.31 ~

2,090.17

0.00 $ 0.00

1,010.44 $ 0.00

109,931.85 $ 46,081.34

25,273.62 20,868.43

11,674.31 1,149.31

-17.21 -43.50

FUND BALANCE JUNE 30

$~$

0.00 $ 1,010.44 $ 168,836.81

48,081.34

see notes to the general purpose financial statements.

-19-

WARREN COUNTY BOARD OF EDUCATION COMBINING BALANCE SHEET FIDUCIARY FUND TYPES JUNE30 1998

EXHIBIT"G"

ASSETS Cash end Cash Equivalents Investments
Total Assets

EXPENDABLE TRUST FUND
OTIS E. WILLIAMS MEMORIAL SCHOLARSHIP
FUND

AGENCY FUNDS

TOTALS JUNE 30, 1998 JUNE 30, 1997

$

79.51 $

32,163.41 $

32,242.92 $

60,330.34

20,000,00

20,000.00

$

20,079.51 $

32,163.41 $

52,242.92 $

60,330.34

LIABILITIES AND FUNp EQUITY
LIABILITIES
Funds Held for Others
FUND EQUITY
Fund Balances Unreserved Undesi9naled

$ $, _ _....20~,0'!!7.29=.5~1

32,163.41 $

32,163.41 $

39,300.63

0.00

20,079.51

21,029.51

Total LIabilities and Fund Equity

$

20p79.51 $

52,242.92 $ _ _.:60:::.:,33=O.;:;:34~

See notes to the general purpose financial statements.

-20-

INSURANCE ASSETS cash and Cash Equivalents
LIABILITIES Funds Held for Others
KINDERGARTEN GRADUATION ASSETS Cash and Cash Equivalents
LlABlLmES Funds Held for Others
PAPER AND PENCIL FUND ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

$

21.50 $

$

21.50 $

0.00 $ 0.00 $

0.00 $

.:2;,:,1;::.50::,

0.00 $

~2;.:.1.::.50l:.

$

1,934.62 $

931.84 $

1,900.88 $

::96:::5;:;:.58::,

$

1,934.62 $

931.84 $

1,900.88 $

. .96=5.;;:56~

2 834.47 $ _ _~1,,;;,6~5~0.~53~

$ _ _~2i1:i,834=.4:.l.7

1:650.53 $

1.:.22=9. :44~

-21-

WARREN COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF CHANGES IN ASSETS AND L1ABIL!I!ES
FIDUCIARY FUND TYPE - AGENCY FUNDS YEAR ENDED JUNE 30 1998

EXHIBIT"H"

MILDRED E. FREEMAN ELEMENTARY SCHOOL
SPECIAL OLYMPICS FUNp
ASSETS Cash and Cash Equivalents

BALANCE JULY 1, 1997

ADD!I!ONS

DEDUCTIONS

BALANCE JUNE 30, 1998

39.21 $

0.00 $

36.00 $

3::o.2~1

LIABILITIES Funds Held for Others

$

39.21 $

0.00 $

36,00 $

~3~.2.1.1

WARREN COUNTY HIGH SCHOOL

FUTURE BUSINESS LEADERS OF AMERICA

ASSETS

Cash and Cash Equivalents

$

355.14 $

10,925.20 $

11:854,28 $

.;:-5;:,:7,:::3;::,94;:.

L1ABIL!I!ES Funds Held for Others

355.14 $

10.925.20 $

11.854.28 $

.;:-5;:,:7,:::3;::,94;:.

FUTURE FARMERS OF AMERICA ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

496.11 $

1.725.00 $

1.839.29 $

..:3ilii8~1;ll.8~2

496.11 $ _ _...,\;1,.:.:72~5:;,li'00~

1,839.29 $

..:3ilii8~1;li.8~2

FUTURE HOMEMAKERS OF AMERICA
ASSETS Cash and Cash Equivalents

$

481,66 $

0,00 $

0.00 $

:!l48~1;2.662..

LIABILITIES Funds Held for Others

$

481.66 $

0.00 $

0.00 $

.:i48l.l1;2.662..

YEARBOOK
ASSETS Cash and Cash Equivalents

260.96 $

3:776.00 $

3,344,73 $

.:8~9:102iili,2;;1.3

LIABILITIES Funds Held for Others

260,96 $ -22-

3,n6.00 $

3,344.73 $

..:6~9~2';li2",3

WARREN CQUNTY BOARD OF EDUCATION COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TyPE - AGENCY FUNDS
YEAR ENDED JUNE 30 1998

EXHIBIT~

TOTALS-AGENCY FUNDS
ASSETS Cash and Cash Equivalents

BALANCE JULY 1. 1997

ADDITIONS

DEDUCTIONS

BALANCE JUNE 3D. 1998

$

39300.83 $

61.681.95 $

68819,37 $ _ _..::;32[;0,1,:,:63:::.:.4.:,.1

LIABILITIES Funds Held for Others

$, _ _~39~.30~0.~83

61,681.95 $

68,819.37 $' _ _..::;32[;o.,:,:16l;;3:;:.4:,:.1

See notes to the general purpose financial statements.

-23-

WARREN COUNTY BOARD OF EDUCATION

SCHEDULE "1"

SCHEDULE OF REOUIRED SUPPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

YEAR ENDED JUNE 30, 1998

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

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

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

SCHEDULE "2"

FUNDING AGENCY pROGRAM/GRANT
Agriculture, U. S. Department of Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Braakfast Program 1998 Grant National School Lunch Program 1998 Grant Food Distribution Program (1)
Total U. S. Department of Agricultura
Corporation for National and Community Service Pass-Through From Georgia Department of Education Learn and Serve America-School and Community Based Programs 1998 Grant
Education, U. S. Department of Pass-Through From Georgia Department of Education Elementary and Secondary Education Ad Titie I Grants to Local Educational Agencies 1998 Grant Title II Eisenhower Professional Development 1998 Grant TIUeVl Innovative Education Program Strategies Goals 2000 Stale and Local Education Systemic Improvement Grant 1997 Grant 1998 Grent Individuals with Disabilities Education Ad Part B - Special Education Flow Through 1998 Grant Preschool 1998 Grant Safe and Drug-Free Schools 1998 Grant Vocational Education - Basic Grants to States High School Program Basic Grant 1998 Grant
Total U. S. Department of Education

CFDA ~

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

10.553
" 10.555
10.550

N/A $ 123,419.55

NlA

283,057.40 $

N/A

11.094.50

$ 417,571.45 $

(2)
351,188.07 (3) 11,094.50
362,282.57

94.004

NlA $

7.727.52 $

7,727.52

84.010
84.281 84.298

N/A $ 421,371.25 $

421,371.25

NlA

21,318.10

20,307.66

NlA

6,511.55

6,511.55

84.276

N/A

84.276

N/A

44,329.82 75,956.66

44,329.82 75,956.66

84.027

N/A

84.173

N/A

84.186

NlA

48,198.42 50,106.61
3,244.99

48,198.42 50,106.61 3,244.99

84.048

NIA

20,451.66

$ 691,487.06 $

20,451.66 690,476.62

Total Federal Financial Assistance N/A=Not Available

-25-

$ 1.116,786.03 $ 1,060,486.71

WARREN COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEPERAL AWARDS
YEAR ENDEp JUNE 30 1998

SCHEDULE "2"

Notes to the Schedule of El!!lenditures of Federal Awards
(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.
(2) ExpendRures for the School Breakfast Program were not maintained separately and are included in the 1998 National School Lunch Program.
(3) ExpendRuras for this program include State, and/or Othar Funds. ExpendRuras are not maintained by fund source.
Major Programs are identified by an asterisk rl in front of the CFDA number.
The Board did not provide Federal Assistance to any Subrecipienl
The accompanying schedule of expendRures of Federal Awards includes the Federal grant activity of the Warren Counly Board of Education and is presented on the modified accrual basis of accounting which is the same basis of accounting used in the presentation of the general purpose financial statements.

See notes to the general purpose financial statements.

-26-

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

SCHEDULE "3"

AGENCYIEUNDING
GRANTS Education, Georgia Department of Quality Basic Education General and Career Education Programs Special Education Programs Remedial Education Program Media Center Programs Staff Development Programs Indirect Cost Pupil Transportation Regular Bus Replacement Sparsity Grant Special Instructional Assistance In-School Suspension Mid-term Adjustment Counselors Grades 4 and 5 Technology Training Local Fair Share Educational Equalization Funding Grant Food Services Vocational Education Other State Programs Ad Valorem Tax Adjustment Health Insurance Innovative Programs Preschool Handicapped Program Teachers' Retirement Lottery Programs Instructional Technology Assistive Technology Classroom Technology
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$ 2,082,599.00 335,979.00 116,739.00 88,584.00 27,060.00 598,137.00
150,241.00 51,725.00
129,739.00 240,973.00
41,144.00 3,125,00 8,396.00
28,842.00 -435,688.00 195,630.00
$ 1,042.06
22,647.00 70,582.03
5,000.00 16,714.00
9,959.19

$ 31,412.00

2,082,599.00 335,979.00 116,739.00 88,584.00 27,060.00 598,137.00
150,241.00 51,725.00
129,739.00 240,973.00
41,144.00 3,125.00 8,396.00
28,842.00 -435,668.00 195,630.00
31,412.00 1,042.06
22,647.00 70,582.03
5,000.00 16,714.00
9,959.19

4,622.00 53,000.00

4,622.00 53,000.00

141,736.02

141,736.02

14,055.00

14,055.00

$ 3,860,866.28 $

173,148.02 $ 4,034,014.30

See notes to the general purpose financial statements.

-27-

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

SCHEDULE "4"

EXPENPITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Maintenance and Operation of Plant
Total Expenditures

PRE-KINDERGARTEN PROGRAM

$

93,399.41

37,496.00 172.63
10,667.98

$

...1..4.1..,.7;,;;3;;;,6,;;;,02;,

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

WARREN COUNTY BOARp OF EDUCATION ANALYSIS OF MINIMUM EXPENPITURE REQUIREMENTS - OVERALL
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30 1998

SCHEDULE "5"

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

FOURTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS

100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS

$

2,630.449,00 $

72,263.00

$

2,720,885.38

170,258.72 $

$

2,891,144.10

155,079.58

-45,823.02

$

2,845,321.08

$

0.00 $

0.00

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

WARREN COUNTY BOARD OF EDUCATION
ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - BY PROGRAM
GENERAL FUND - QUAUIY BASIC EDUCATION PROGRAMS
yEAR ENDED JUNE 30 1998

GENERAL AND CAREER EDUCATION PROGRAMS
Kindergarten ("l Gradas 1 - 3 ("J
Sub-Total- K-3
Grades 4 - 5 rJ Grades 6-8 rJ Grades 9 -12 rJ High School Laboratories rJ
Vocational Education Laboratories (0)
Total General and career Education Programs
SPECIAL EDUCATION PROGRAMS
Regular Programs Category I ("J
Category II ("l Cstegory III ("l
Cstegory IV ("l
Total Special Education Programs REMEDIAL EDUCATION PROGRAM r>
Total Fou_n weighted Programs
MEDIA CENTER PROGRAMS
Salaries Operations
Total Media Conlar Programs

ALLOTMENTS FROM DEPARTMENT OF EDUCATION

REQUIRED

ORIGINAL ~

ORIGINAL

MID-TERM

243,397.00 656,066.00 899,465.00 90 250,353.00 90 434,818.00 90 294,422.00 90
86,971.00 90 116,770.00 90 2,082,599.00

219,057.30 590,461.20 809,518.50 225,317.70 391,156.20 284,979.80
78,273.90 105,093.00 1,874,339.10

-22,630.00 -18,795.00 -41,425.00
9,489.00 7,590.00 -50,343.00 13,620.00 9,811.00 -51,258.00

335,979.00

302,381.10 $

70,174.00

335,979.00 116,739.00 2,535,317.00

90 90 $

302,381.10 105,085.10 2,281,785.30

72,255.00 18,329.00
88,584.00

90 $ 90
$

65,029.50 14,696.10
79,725.80

70,174.00 -11,238.00
7,678.00
-902.00 -228.00 -1,130.00

Total Fourteen Weighted and Media Conter Programs

$ 2,623,901.00

$ 2,381,510.90 $

6,548.00

STAFF DEVELOPMENT PROGRAMS Cost of Instruction ProfessIonal Development

7,852.00 19,208.00

7,652.00 19,208.00

31.00 0.00

Total Staff Development Programs (") Identifies Fou_n Weighted Programs. See notes to the general purpose financial statements.

27,080.00 100 $

27,060.00 $

.:3~1;::.0;;,0

- 30 -

SCHEDULE"fl"

TOTAL REQUIRED

ACTUALEXPEN~TURES

SALARIES

OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED AUOTMENT

$

196,427,30

177,027,79

2,D01,52

179,029,31

571,666.20

569,233.50

20,547.52

589,761.02

768,093.50

746,261.29

22,549.04

768,810.33

O.DO

234,806.70

254,055.04

10,339.14

264,394.18

0.00

398,746.20

508,958.71

50,611.13

559,569.84

0.00

214,636.80

360,043.80

26,650.67

386,694.47

O.DO

91,893.90

96,224.10

6,821.62

103,046.72

O.DO

114,904.DO

131,433.27

30,117.63

161,550.90

O.DO

1.623.081.10

2,096,976,21

147,069.23

2.244,085.44

372.555.10 $

$ 146,473,86 249,895,05
2,341.45

84,00 2,984.61 4,941.74

84.DO 149,458.47 254,836.79
2,341.45

372.555.10 $

398,710.36 $

7,990,35

406,700.71

0.00

93.827,10 $

107,100.93 $

O,DO

107,100.93

0.00

2,289,463.30 $ 2.602,787.50 $

155,079.58 $ 2.757,867,08

64.127.50 $

118,097.86

$

116,097,88

O.DO

14,468.10

15.179.14

15,179,14

O.DO

$

78,595,60

118.097,88

15,179.14

133,277.02

$ 2,368,058.90 $ 2,720.885.38 $

170,258.72 $ 2,891,144.10 $

O.DO

7,883.00 19,208.00
27,091,00

24,563.01 10,900.04

24.563,01 10,900.04

35,463,05 $

35,463,05 $

.::O~.O::.O

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SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street. S.W., Suite 214 Atlanta. Georgia 30334-8400
June3,1999

Honorable Roy E. Barnes, Governor Members of the General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe Warren 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 Warren County Board of Education as ofand for the year ended June 30, 1998, and have issued our report thereon dated June 3, 1999. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether Warren County Board of Education's financial statements are free of material misstatement, we performed tests ofits compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective ofour audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Warren County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its
98YB-40

operation that we consider to be reportable conditions. 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 ourjudgement, could adversely affect Warren County Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule of Findings and Questioned Costs as items FS-7491-98-01, FS-7491-98-02 and FS-7491-98-04.
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 normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, all ofthe reportable conditions noted above are also considered to be material weaknesses.
TIlls report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. TIlls restriction is not intended to limit the distribution ofthis report which is a matter of public record.
Respectfully submitted,

RWH:gp 98YB-40

Russell W. Hinton State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
June 3,1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe Warren County Board of Education
REPORT ON COMPLIANCE WITH REOUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Warren County Board of Education with the types of compliance
u.s. requirements described in the Office ofManagement and Budget (OMB) Circular A-133 Compliance
Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1998. Warren County Board of Education's major Federal programs are identified in the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Warren County Board of Education's management. Our responsibility is to express an opinion on Warren County Board ofEducation's compliance based on our audit.
We conducted our audit of compliance in accordance with generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and OMB Circular A-133,Audits ofStates, 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 of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Warren 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 Warren County Board of Education's compliance with those requirements.

98SA-IO

In our opinion, the Warren 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, 1998.
Internal Control Over Compliance
The management of Warren 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 Warren 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-l33.
Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level ofrisk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass through entities. This restriction is not intended to limit the distribution ofthis report which is a matter of public record.
Respectfully submitted,

RWH:gp 98SA-I0

Russell W. Hinton State Auditor

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

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

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

7491-93-03 7491-93-08 7491-95-01 7491-95-02 7491-96-02 FS-7491-97-01 FS-7491-97-02

Unresolved - See Corrective ActionlResponses Further Action Not Warranted Previously Reported Corrective Action Implemented Unresolved - See Corrective ActionlResponses . Previously Reported Corrective Action Implemented Unresolved - See Corrective ActionlResponses Unresolved - See Corrective ActionlResponses

CORRECTIVE ACTIONIRESPONSES

EXPENDITURES/LIABILITIESIDISBURSEMENTS Failure to Meet Expenditure Requirements Amount: $3,981.24 Finding Control Number: 7491-93-03

We concur with this finding. This finding will be resolved by the Georgia Department ofEducation through a future increase in the Board's local fair share portion of the QBE Allotment.

EMPLOYEE COMPENSATION Salary Overpayment Amount: $4,525.00 Finding Control Number: 7491-95-02

We concur with this finding. The Board is se-eking reimbursement of this overpayment to be deposited into the Board's general fund.

EXPENDITURES/LIABILITIESIDISBURSEMENTS Failure to Meet Expenditure Requirements Amount: $94,312.88 Finding Control Number: FS-7491-97-01

July 29, 1998 a Corrective Action Plan (CAP) was written to Mr. Frank Adair with Financial Review. This finding will be resolved by the Georgia Department of Education through a future increase in our Board of Education's local fair share portion of the QBE allotment.

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

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETS Failure to Maintain A General Fixed Assets Account Group Finding Control Number: FS-749l-97-02

The fmding is not corrected. We have no General Fixed Assets Account Group.

PRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

7491-95-05

Further Action Not Warranted

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SECTION IV FINDINGS AND QUESTIONED COSTS

WARREN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND OUESTIONED COSTS
YEAR ENDED JUNE 30. 1998

SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Warren County Board ofEducation's financial statements was qualified 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 Warren County Board of Education disclosed financial statement reportable conditions related to the following control categories.

Employee Compensation General Fixed Assets

General Ledger

All of the reportable conditions described above are considered to be material weaknesses.

3. Noncompliance Material to the Financial Statements The audit of the Warren 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 Warren 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 Warren County Board of Education's report on compliance with requirements applicable to major programs was unqualified.

6. Audit Findings Required to be Reported by Section .510(a) ofOMB Circular A-l33 The Warren County Board ofEducation's audit did not disclose audit findings reqUired to be reported by section .51O(a) ofOMB Circular A-l33.

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.

9. Low Risk Auditee The Warren County Board of Education was audited as a low risk auditee based on a waiver granted by the U. S. Department ofEdUcation.

-I-

WARREN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND OUESTIONED COSTS
YEAR ENDED JUNE 30. 1998
II FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS
EMPLOYEE COMPENSATION Payroll Reporting Reportable Condition - Material Weakness Amount: $3,143.84 Finding Control Number: FS-7491-98-01
A sample of compensation payments to 24 employees disclosed the following deficiencies in regard to the payroll process:
1. Salary overpayments in the total amount of $2,447.05 were made to five employees in excess of their approved salary schedules. The Board used an incorrect salary base rate in calculating pay for these employees.
2. Salary overpayments in the total amount of $637.32 were made to four employees which resulted from the Board's failure to deduct excess sick, personal and/or vacation leave.
3. A salary underpayment in the amount of $59.47 was made to one employee which resulted from using the incorrect base pay rate in calculating the employee's salary.
Appropriate action should be taken by the Board to ensure that all personnel are paid in accordance with approved salary schedules and approved Board policies. The Board should remit $59.47 to the appropriate employee for the salary underpayment and secure reimbursement of$3,084.37 for the salary overpayments from the employees involved.
GENERAL LEDGER Inadequate Internal Control Procedures Reportable Condition - Material Weakness Finding Control Number: FS-7491-98-02
A review of the Board's internal control policies and procedures noted deficiencies in providing for adequate internal control in the separation of employee duties as noted below:
Journal entry documentation and descriptions could not be provided by the Board.
Journal entries were not reviewed and approved by someone independent ofthe general ledger journal entry function.
These conditions were a result of management's decision to limit the number of administrative staff made responsible for accounting functions and their failure to institute proper controls over these areas. The Board should review the accounting procedures in place, design procedures which would enhance segregation of duties and proper internal controls relative to the above control category and implement those procedures to strengthen the intemal control over the accounting functions.
-2-

WARREN COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 1998
II FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS
GENERAL LEDGER Inadequate Reporting Procedures Nonmaterial Noncompliance Amount: $57,622.00 Finding Control Number: FS-7491-98-03
The Classroom Technology and the Assistive Technology lottery programs were not maintained by fund source and program codes as required in the FY 98 Guidelines for Georgia Lottery Grants established by the Georgia Department of Education. The Warren County Board of Education was unable to provide documentation ensuring expenditure ofthese grant funds. This condition resulted from management's failure to comply with Georgia Department of Education guidelines. The Board should take appropriate action to restructure its accounting records and maintain them in compliance with instructions contained in the Georgia Department of Education's guidelines for lottery funds. The Georgia Department ofEducation should review this matter to determine if a refund is warranted.
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-7491-98-04
The Warren County Board ofEducation did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general purpose financial statements of the Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Board to establish
accounting controls and procedures to provide for the maintenance ofa General Fixed Assets Account Group.
These subsidiary records should include an inventory of land, buildings and equipment owned by the Board and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained ofall additions and deletions to the General Fixed Assets Account Group.
ill FEDERAL AWARD FINDINGS AND OUESTIONED COSTS
No matters were reported.
-3-