Wheeler County Board of Education, Alamo, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2008

WHEELER COUNTY BOARD OF EDUCATION
ALAMO, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

WHEELER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

9

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

10

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

23

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

24

3 SCHEDULE OF STATE REVENUE

25

WHEELER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

26

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

27

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS 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 0MB CIRCULAR A-133

SECTION III 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

WHEELER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 15, 2009

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe Wheeler County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) ofthe Wheeler County Board of Education, as of and for the year ended June 30, 2008, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Wheeler County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Wheeler County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 opinions.

2008ARL-11

In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position ofthe governmental activities, each major fund, and the aggregate remaining fund information ofthe Wheeler County Board ofEducation, as ofJune 30, 2008, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The Wheeler County Board ofEducation has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not to be part of, the basic financial statements.
In accordance with GovernmentAuditing Standards, we have also issued our report dated September 15, 2009, on our consideration of the Wheeler County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 23, is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Wheeler County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 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 ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
~.m~-~ Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2008ARL-11

WHEELER COUNTY BOARD OF EDUCATION

WHEELER COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2008

EXHIBIT "A"

ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Local Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Short-Term Debt Deposits and Deferred Revenues
Total Liabilities
NET ASSETS
Invested in Capital Assets Restricted for
Bus Replacement Continuation of Federal Programs Capital Projects Unrestricted (Deficit)
Total Net Assets
Total Liabilities and Net Assets

GOVERNMENTAL ACTIVITIES

$

1,074,526.87

454,322.66 672,917.93 321,896.01
11,448.69 1,250.00
15,345.94 105,520.00 6,115,192.00

$ =====8=,7=7=2=,4=2=0=.1=0=

$

432,270.11

1,026,712.95

64,821.65

625,000.00

26,298.00

$

2,175,102.71

$

6,220,712.00

76,593.00 50,616.26 357,877.36 -108,481.23

$

6,597,317.39

$ ===8,=7=72=,4=2=0=.1=0

The notes to the basic financial statements are an integral part of this statement.
- 1-

WHEELER COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2008

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$

6,809,626.03 $

736,666.77 144,770.63 186,745.20 336,779.01 800,108.05 911,950.64 877,170.19 606,444.90 41,354.00 23,337.60

93,877.55 592,866.19

$ 12,161,696.76 $

81,756.58
99,815.72 73,612.70 255,185.00

The notes to the basic financial statements are an integral part of this statement. -2-

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

5,384,292.33

552,667.90 58,978.94 127,764.12
299,805.36 313,649.01 824,882.33 313,820.08 288,574.52 $

507 746.27

$

8,672,180.86 $

$ 44,220.00 44 220.00 $

-1,343,577.12
-183,998.87 -85,791.69 -58,981.08 -36,973.65
-486,459.04 -87,068.31
-563,350.11 -273,650.38 -41,354.00 -23,337.60
5,938.17 -11 507.22
-3, 190,110.90

$

1,817,051.82

5,026.06

415,624.58 22,672.81
527,096.00 7,888.01
283,540.57

$

3,078,899.85

$

-111,211.05

6,708,528.44

$ ===6'=,5=97..,,3=1=7=.3=9

-3 -

WHEELER COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2008

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Local Other Inventories
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Short-Term Debt Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Bus Replacement Continuation of Federal Programs Inventories Capital Projects
Unreserved Designated for Student Activities Undesignated Reported in: General Fund
Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$

772,525.44 $ 302,001.43 $

62,938.43 672,917.93 321,896.01
11,448.69 1,250.00
15 345.94

70,378.93

1,074,526.87
133,317.36 672,917.93 321,896.01
11,448.69 1,250.00
15 345.94

$ 1,858,322.44 $ 372,380.36 $ ===2'=23=0='7=0=2.=80=

$

417,767.11 $

1,026,712.95

64,821.65

625,000.00

26,298.00

$ 2,160,599.71 $

14,503.00 $ 14,503.00 $

432,270.11 1,026,712.95
64,821.65 625,000.00
26,298.00
2,175,102.71

$

76,593.00

$

35,270.32

15,345.94

$ 357,877.36

70,829.95

-500,316.48

$ -302,277.27 $ 357,877.36 $

76,593.00 35,270.32 15,345.94 357,877.36
70,829.95
-500,316.48
55,600.09

$ 1,858,322.44 $ 372,380.36 $ ===2,=23=0=,7=0=2.=80=

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

WHEELER COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2008

EXHIBIT"D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.
Net Assets of Governmental Activities (Exhibit "A")

$

55,600.09

$ 105,520.00 175,282.00
7,841,642.00 2,008,543.00 -3,910,275.00

6,220,712.00

321,005.30

$ 6,597,317.39

The notes to the basic financial statements are an integral part of this statement. -5-

WHEELER COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2008

EXHIBIT"E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Enterprise Operations Food Services Operation
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$ 1,671,080.99

$ 1,671,080.99

22,672.81 $ 415,624.58

438,297.39

6,454,491.41

6,454,491.41

2,789,005.45

2,789,005.45

255,185.00

255,185.00

7,003.81

884.20

7,888.01

283,540.57

283,540.57

$ 11,482,980.04 $ 416,508.78 $ 11,899,488.82

$ 6,527,454.03

$ 6,527,454.03

736,666.77 144,770.63 178,629.20 336,379.01 797,483.05 902,418.64
646,822.71 $
519,207.90 23,337.60 93,877.55
582,444.19

239,383.48

736,666.77 144,770.63 178,629.20 336,379.01 797,483.05 902,418.64 886,206.19 519,207.90
23,337.60 93,877.55 582,444.19

$ 11,489,491.28 $ 239,383.48 $ 11,728,874.76

$

-6,511.24 $ 177. 125.30 $

170,614.06

-295, 766.03

180,752.06

-115,013.97

$ -302,277.27 $ 357,877.36 $ ==5=5='=,6=0=0=.0=9

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

WHEELER COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2008

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.

$ 170,614.06

$ 3,853.00 -436,675.00

-432,822.00

150,996.89

Change in Net Assets of Governmental Activities (Exhibit "B")

$ -111 211.05

The notes to the basic financial statements are an integral part of this statement. -7-

(This page left intentionally blank)

WHEELER COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2008
ASSETS Cash and Cash Equivalents Investments
Total Assets
LIABILITIES Funds Held for Others

EXHIBIT"G"
AGENCY FUNDS
$ 18,306.26 2,376.15
$ 20,682.41
$ 20,682.41

The notes to the basic financial statements are an integral part of this statement. -9-

WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Wheeler County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Wheeler County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting ofinternal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement ofActivities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
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WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) to be used for the acquisition, construction or renovation of major capital facilities.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless ofwhen the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred. Capital asset acquisitions are reported as expenditures in governmental funds.
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
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WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code ofGeorgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone 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 ofGeorgia Annotated Section 36-83-4 authorizes the School District 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:
(1) 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 of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration ofcredit risks, interest rate risks or foreign currency risks.

- 12 -

WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

RECEIVABLES

Receivables consist of amounts due from property and sales taxes, 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 basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

PROPERTY TAXES

The Wheeler County Board of Commissioners fixed the property tax levy for the 2007 tax digest year (calendar year) on September 28, 2007 (levy date). Taxes were due on January 15, 2008 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2007 tax digest are reported as revenue in the governmental funds for fiscal year 2008. The Wheeler County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2008, for maintenance and operations amounted to $1,666,054.93.

The tax millage rate levied for the 2007 tax year (calendar year) for the Wheeler County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

14.50 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $415,624.58 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

INVENTORIES

FOOD INVENTORIES On the basic financial statements, inventories ofdonated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

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WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time ofpurchase. On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works ofart. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.

Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment Construction in Progress

Any Amount $5,000.00 or more $5,000.00 or more $5,000.00 or more $5,000.00 or more

NIA 20 to 80 years 10 to 80 years
3 to 20 years NIA

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

NET ASSETS

The School District's net assets in the District-wide Statements are classified as follows:

Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.

Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs and capital projects in accordance with restrictions imposed by external third parties.

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WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.

DEFICIT FUND BALANCES

The fund reporting a deficit fund balance at June 30, 2008, is as follows:

Fund Type/Fund Name

Deficit Balance

Governmental Funds General Fund

$ 500,316.48

The School District's plan to eliminate this deficit is as follows:

The Maintenance and Operations millage levies will be set as is necessary to provide enough local monies to (1) assure normal operations of the school system and (2) eliminate deficit financing as outlined in the plan below.

Maximum

Deficit

Date

Anticipated

June 30, 2009 June 30, 2010 June 30, 2011

$ -284,000.00

$ -100,000.00

$

0.00

Note 3: DEPOSITS

COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. At June 30, 2008, $111,811.56 of deposits were not secured by surety bond, insurance or collateral as specified above. The School District is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the School District's deposits.

- 15 -

WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 3: DEPOSITS
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws ofthe State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed 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, 2008, the bank balances were $1,478,472.75. The amounts ofthe total uninsured bank balances are classified into three categories of custodial credit risk:
Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the School District's name.
The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2008, as follows:

- 16 -

WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 3: DEPOSITS

Custodial Credit Risk Category

Bank Balance

1

$ 111,811.56

2

0.00

3

1,264,285.04

Total Note 4: NON-MONETARY TRANSACTIONS

$ 113762096.60

The School District 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 2 - Inventories

Note 5: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress
Total Capital Assets Not Being Depreciated
Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements
Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements
Total Capital Assets, Being Depreciated, Net
Governmental Activity Capital Assets - Net

Balances July 1, 2007

Increases

Decreases

Balances June 30, 2008

$ 105,520.00 1,614,740.00 $
$ 1,720,260.00 $

$ 105,520.00

51,625.00 $ 1,666,365.00

0.00

51,625.00 $ 1,666,365.00 $ 105,520.00

$ 6,234,044.00 $ 1,607,598.00 $

1,997,548.00

10,995.00

175,282.00

0.00 $ 7,841,642.00 2,008,543.00 175,282.00

2,448,420.00 909,598.00 115,582.00

121,617.00 308,787.00
6,271.00

2,570,037.00 1,218,385.00
121,853.00

$ 4,933,274.00 $ 1,181,918.00 $

0.00 $ 6,115,192.00

$ 6,653,534,QQ $ 1,233,543,QQ $ 1,666,365 ,QQ $ 6,22Q,712,QQ

Current year depreciation expense by function is as follows:

- 17 -

WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 5: CAPITAL ASSETS

Instruction Support Services
Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Food Services

$ 275,030.00

$

8,116.00

400.00

2,625.00

9,532.00

1,959.00

87,237.00

41,354.00

151,223.00 10,422.00

$ 436,675.00

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) are restricted assets in the Statement of Net Assets because their use is limited by applicable statutory provisions. Restricted assets at June 30, 2008, were as follows:

District-wide Capital Projects SPLOST

Restricted Cash and Cash Equivalents: Capital Acquisitions

$ 302,001.43

Note 7: RISK MANAGEMENT

The School District 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; acts of God and unemployment compensation.

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

The School District has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years.

- 18 -

WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note7: RISKMANAGEMENT

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liabilities being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated.

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

Beginning ofYear Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

2007 2008

$

0.00 $

4,836.32 $

4,836.32 $

0.00

$

0.00 $

6,244.62 $

6,244.62 $

0.00

The School District 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 School District 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 Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $500,000.00 loss per occurrence, up to $2,000,000.00.

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

Position Covered

Amount

All Employees

$ 100,000.00

Note8: SHORT-TERMDEBT

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

Short-term debt activity for the fiscal year is as follows:

Beginning Balance

Issued Redeemed

Ending Balance

Tax Anticipation Notes $ 450,000.00 $ 286,000.00 $ 111,000.00 $ 625,000.00

- 19 -

WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 9: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $259,361.65 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of$258,177.65
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 $1,184.00
Note 10: SIGNIFICANT 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 costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
Note 11: POSTEMPLOYMENT BENEFITS
Georgia Retiree Health Benefit Fund
Plan Description. The School District contributes to the Georgia Retiree Health Benefit Fund ("GRHBF"), a cost-sharing multiple-employer defined benefit postemployment healthcare plan administered by the Department ofCommunity Health. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries. Pursuant to Title 45, Chapter 18 ofthe Official Code of Georgia Annotated, the authority to establish and amend the benefit provisions ofthe plan is assigned to the Board of Community Health. The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department ofCommunity Health at 2 Peachtree Street, Atlanta, Georgia 30303.
Funding Policy. The contribution requirements of plan members and participating employers are established and may be amended by the Board of Community Health. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) of the cost of health insurance coverage.
- 20 -

WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "H"

Note 11: POSTEMPLOYMENT BENEFITS

Participating employers are statutorily required to contribute in accordance with the employer contribution rate established by the Board of Community Health. This contribution rate is established to fund both the active and retired employee health insurance plans based on projected pay-as-you-go financing requirements. The employer contribution rates for the combined active and retiree plans for the fiscal year ended June 30, 2008, were as follows:

Teachers Non-Certificated Employees

18.534% of state-based salaries $162.72 per month

The School District's contribution to the health insurance plans for the fiscal year ended June 30, 2008, was $1,041,763.21, which equaled the required contribution.

Note 12: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$ 538,581.01 $ 539,582.30 $ 533,135.00

- 21 -

(This page left intentionally blank)

WHEELER COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2008

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Enterprise Operations Food Services Operation
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Other Sources
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

$

1,621,000.00 $

1,621,000.00 $

1,671,080.99

22,672.81

6,043,341.00

6,302,702.65

6,454,491.41

1,334,003.00

1,791,509.00

2,789,005.45

73,441.00

73,441.00

255,185.00

6,715.00

6,715.00

7,003.81

367,646.00

375,564.00

283,540.57

$

9,446,146.00 $ 10,170,931.65 $ 11,482,980.04

$

5,802,957.00 $

6,873,467.67 $

6,527,454.03

466,057.00 143,571.00 182,446.00 218,585.00 816,772.00 304,677.00 526,776.00 569,180.00 23,105.00
590,165.00

599,922.63 175,932.70 189,417.12 282,270.31 839,904.42 341,073.70 533,623.18 733,394.92
58,542.00
597,725.00

736,666.77 144,770.63 178,629.20 336,379.01 797,483.05 902,418.64 646,822.71 519,207.90
23,337.60 93,877.55 582,444.19

$

9,644,291.00 $ 11,225,273.65 $ 11,489,491.28

$

-198,145.00 $ -1,054,342.00 $

-6,511.24

30.00

30.00

$

-198,115.00 $ -1,054,312.00 $

-6,511.24

-295,766.03

-295,766.03

-295,766.03

9 770.63

8,527.32

Fund Balances - Ending

$

-484 110.40 $ -1,341,550.71 $ ==-=3=02=,2=7=7=.2=7

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 23 -

WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2008

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U.S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1)
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Direct Safe Schools/Healthy Students Initiative Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Improving Teacher Quality State Grants Migrant Education Reading First State Grants Rural Education State Grants for Innovative Programs Title I Grants to Local Educational Agencies Twenty-First Century Community Learning Centers
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

N/A

(2)

N/A $ _ _~5=2~7~,5~82=-~4~1

$

527,582.41

10.550

NIA

29,096.39

$ _ _-=5~56.,.,6::..:7..=8.:.:.8.=..0

84.027 84.173

N/A $
N/A
$

186,385.60 8 866.00
195,251.60

84.184
84.048 84.367 84.011 84.357 84.358 84.298 84.010 84.287

752,670.69 (3)

N/A

12,516.00

N/A

64,330.42

N/A

27,625.00

N/A

203,701.00

N/A

32,350.00

N/A

1,843.00

N/A

301,285.81

N/A

721 863.75 (4)

$ 2,313,437.27

Total Federal Financial Assistance

$

N/A = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($140,759.87) were not maintained separately and are included in the 2008 National School Lunch Program.
(3) Includes Federal Assistance of $450,037.91 provided to subgrantees. (4) Includes Federal Assistance of $207,157.13 provided to subreceipients.

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

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Wheeler County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

2,870,116.07

See notes to the basic financial statements.

- 24-

WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2008
AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Vocational Supervisors Mid-term Adjustment Hold Harmless Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Health Insurance High School Graduation Coach Middle School Remediation and Intervention Grant National Teacher Certification Preschool Handicapped Program Virtual Schools State Grant
Office of Treasury and Fiscal Services Public School Employees Retirement

See notes to the basic financial statements.

- 25 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

325,063.76

371,377.00 30,879.00
781,875.00 38,136.00
295,318.00 98,199.00
636,706.00 461,832.00 190,387.00 636,045.00 252,973.00
48,979.00 108,517.00
34,672.00 20,131.00
313,776.00 256,759.00 260,139.00
216,334.00 44,220.00 27,802.00 35,753.00 8,663.00
127,538.00 527,096.00
32,170.00 19,168.00 -93,362.00
258,177.65 42,096.00 1,022.00 16,238.00 28,278.00 350.00
1 184.00
$ ==6:!=i:45=4:!:4=9=1.=4=1

WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2008

SCHEDULE "4"

PROJECT
Remodeling, renovating, improving, furnishing and equipping existing School District facilities, including classrooms, instructional areas, support space, physical education and athletic facilities and grounds, purchase or construction of a storage facility, acquiring any necessary personal property, including computers and other technology, purchase of school buses and paying expenses incident thereto.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

$ 1,950,000.00 $ 1,950,000.00 $ 239,383.48 $ 407,677.72 Ongoing

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the project. Includes all cost from project inception to completion.
(3) The voters of Wheeler County approved the imposition of a 1% sales tax to fund the above project. Amounts expended for this project may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project.

See notes to the basic financial statements.

- 26-

WHEELER COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2008

SCHEDULE "5"

DESCRIPTION

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION {1) {2)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Primary Grades (1-3) Program

Primary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Upper Elementary Grades-Early Intervention (4-5)

Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category II

Category Ill

Category IV

CategoryV

Remedial Education Program

Alternative Education Program

400,516.00 $ 34,047.00
861,936.00 49,772.00
329,011.00

380,561.52 $ 63,709.46 762,776.31 50,997.39 512,420.49

117,915.00 707,425.00 528,840.00 211,092.00 708,265.00
259,963.00 54 762.00

126.56 897,590.31 674,452.83 203,592.01
135,551.20 331,790.70 145,439.44
45,727.57 265,196.73 200,270.44

2,936.42 $ 756.90
17,667.02 1,289.67
14,406.91
1,289.67 16,683.20
5,089.49 15,999.85
25,357.50

383,497.94 64,466.36
780,443.33 52,287.06
526,827.40
1,416.23 914,273.51 679,542.32 219,591.86
160,908.70 331,790.70 145,439.44
45,727.57 265,196.73 200,270.44

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

4,263,544.00 $ 4,670,202.96 $ 101,476.63 $ 4,771,679.59

Media Center Program Staff and Professional Development

120,239.00 22 415.00

163,249.47

8,408.61 12,277.25

171,658.08 12,277.25

TOTAL QBE FORMULA FUNDS

$

4,406,198.00 $ 4,833,452.43 $ 122,162.49 $ 4,955,614.92

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment.

See notes to the basic financial statements.

- 27 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 15, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Wheeler County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information ofWheeler County Board ofEducation as of and for the year ended June 30, 2008, which collectively comprise Wheeler County Board of Education's basic financial statements and have issued our report thereon dated September 15, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Wheeler County Board ofEducation's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the Wheeler County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Wheeler County Board of Education's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies.
2008YB-60

A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Wheeler County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Wheeler County Board of Education's financial statements that is more than inconsequential will not be prevented or detected by the Wheeler County Board of Education's internal control. We consider items FS-7531-08-01 and FS-7531-08-02 in the accompanying Schedule of Findings and Questioned Costs to be significant deficiencies in internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Wheeler County Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, of the significant deficiencies described above, we consider item FS-7531-08-01 to be a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Wheeler County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed an instance ofnoncompliance or other matter that is required to be reported under Government Auditing Standards and which is described in the accompanying Schedule of Findings and Questioned Costs as item FS-7531-08-03.
We also noted certain matters that we have reported to management of Wheeler County Board of Education in a separate letter dated September 15, 2009.
Wheeler County Board ofEducation's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Wheeler County Board of Education's response and, accordingly, we express no opinion on it.
2008YB-60

This report is intended solely for the information and use of management, members ofthe Wheeler County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~LO-~k Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2008YB-60

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 15, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly Members ofthe State Board of Education
and Superintendent and Members of the Wheeler County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Wheeler County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2008. Wheeler County Board ofEducation's major Federal programs are identified in the Summary of Auditor's Results Section of 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 Wheeler County Board of Education's management. Our responsibility is to express an opinion on Wheeler County Board of Education's compliance based on our audit.
We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB 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 Wheeler County Board of Education's compliance

2008SA-65

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 Wheeler County Board of Education's compliance with those requirements.
As described in items FA-7531-08-01, FA-7531-08-02 and FA-7531-08-03 in the accompanying Schedule of Findings and Questioned Costs, Wheeler County Board of Education did not comply with requirements regarding Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Procurement and Suspension and Debarment that are applicable to its Safe Schools/Healthy Students Initiative and Twenty-First Century Community Learning Centers Programs. Compliance with such requirements is necessary, in our opinion, for Wheeler County Board of Education to comply with requirements applicable to those programs.
In our opinion, except for the noncompliance described in the preceding paragraph, the Wheeler County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2008.
Internal Control Over Compliance
The management of Wheeler 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 Wheeler County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Wheeler County Board of Education's internal control over compliance.
Our consideration ofthe internal control over compliance was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in the Board's internal control that might be significant deficiencies or material weaknesses as defined below. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be significant deficiencies and material weaknesses.
A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. We consider the deficiencies in internal control over compliance described in the accompanying Schedule ofFindings and Questioned Costs as items FA-7531-08-01, FA-7531-08-02 and FA-7531-08-03 to be significant deficiencies.
2008SA-65

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control. However, all of the significant deficiencies noted above are also considered to be material weaknesses.
Wheeler County Board ofEducation's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Wheeler County Board of Education's response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use ofmanagement, members ofthe Wheeler County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
--:~_ ~-~
Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2008SA-65

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

WHEELER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

FS-7531-07-01 Unresolved- See Corrective Action/Responses FS-7531-07-02 Unresolved- See Corrective Action/Responses FS-7531-07-03 Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

BUDGET PREPARATION/EXECUTION Deficit Fund Balance Finding Control Number: FS-7531-07-01

The School District's plan to eliminate this deficit is as follows:

The Maintenance and Operation millage levies will be set as is necessary to provide enough local monies to (1) assure normal operations of the school system and (2) eliminate deficit financing as outlined in the plan below:

Date

Maximum Anticipated Deficit

June 30, 2009 June 30, 2010 June 30, 2011

$-284,000.00

$-100,000.00

$

0.00

FINANCIAL REPORTING Inadequate Controls Finding Control Number: FS-7531-07-02

We prepared the Financial Statements in fiscal year 2008, but are still building our knowledge on mistakes we made and will work to implement controls to verify that the financial statements properly reflect activity reported in the general ledger and monitor the process to evaluate the accuracy of the Financial Statements.

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls Finding Control Number: FS-7531-07-03

This finding should be resolved at the close of fiscal year 2009. The new school Superintendent implemented an accounting manual which focuses on correcting this finding.

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WHEELER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FA-7531-06-01 FA-7531-07-01 FA-7531-07-02 FA-7531-07-03 FA-7531-07-04 FA-7531-07-05 FA-7531-07-06

Further Action Not Warranted

Unresolved - See Corrective Action/Responses

Partially Resolved - See Corrective Action/Responses

Further Action Not Warranted

(1)

Partially Resolved - See Corrective Action/Responses

Unresolved - See Corrective Action/Responses

Previously Reported Corrective Action Implemented

CORRECTIVE ACTION/RESPONSES

SUBRECIPIENT MONITORING Inadequate Monitoring of Subrecipients Finding Control Number: FA-7531-06-01

This finding has been partially resolved. This has been discussed in length with the Director of the programs. This finding should be resolved in fiscal year 2009.

ACTMTIES ALLOWED OR UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Unsupported Costs U. S. Department of Education Safe Schools/Healthy Students Initiative (CFDA 84.184) Finding Control Number: FA-7531-07-01

This should be resolved in fiscal year ending June 30, 2009. A new financial handbook has been introduced to the system by the Superintendent and following these should alleviate these problems.

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WHEELER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
ACTIVITIES ALLOWED OR UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control Procedures U.S. Department of Education Safe Schools/Healthy Students Initiative (CFDA 84.184) U.S. Department of Education Through Georgia Department of Education Twenty-First Century Community Leaming Centers (CFDA 84.287) Finding Control Number: FA-7531-07-02
We have implemented new accounting procedures and this should be cleared in fiscal year 2009.
ALLOWABLE COSTS/COST PRINCIPLES Unsupported Compensation U.S. Department of Education Safe Schools/Healthy Students Initiative (CFDA 84.184) U.S. Department of Education Through Georgia Department of Education Twenty-First Century Community Leaming Centers (CFDA 84.287) Finding Control Number: FA-7531-07-04
The approved budgets will be monitored more closely to ensure that payments do not exceed budgeted amounts. All payments will have supporting documents approved by the Superintendent and director ofprograms. The required time and distribution records will be maintained for all employees and all employees will be contracted when required. This finding should be cleared by June 30, 2009.
PROCUREMENT AND SUSPENSION AND DEBARMENT Failure to Implement Procurement Procedures U.S. Department of Education Safe Schools/Healthy Students Initiative (CFDA 84.184) U. S. Department of Education Through Georgia Department of Education Twenty-First Century Community Leaming Centers (CFDA 84.287) Finding Control Number: FA-7531-07-05
This should be cleared by June 30, 2009. Procedures have been followed to alleviate this problem.
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WHEELER COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS AUDITOR'S COMMENTS (1) Findings/internal control deficiencies of this nature, that are not deemed significant deficiencies or material weaknesses and do not require reporting in the audit report in accordance with Office ofManagement and Budget (0MB) Circular A-133, will be communicated in a management letter.
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SECTION IV FINDINGS AND QUESTIONED COSTS

WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the Wheeler County Board ofEducation's financial statements was unqualified.

2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Wheeler County Board of Education disclosed financial statement significant deficiencies related to the following control categories.

Expenditures/Liabilities/Disbursements Financial Reporting

Of the significant deficiencies described above, Expenditures/Liabilities/Disbursements is considered to be a material weakness.

3. Noncompliance Material to the Financial Statements The audit of the Wheeler County Board of Education disclosed one instance of noncompliance deemed material to the financial statements. This noncompliance involved the Board's deficit fund balance in the General Fund.

4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Wheeler County Board of Education disclosed significant deficiencies in internal control over major programs for the following compliance requirements.

Activities Allowed or Unallowed Allowable Costs/Cost Principles

Procurement and Suspension and Debarment

All ofthe significant deficiencies described above are considered to be material weaknesses.

5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Wheeler County Board of Education's report on compliance with requirements applicable to major programs was qualified.

6. Audit Findings Required to be Reported by Section .510(a) ofOMB Circular A-133 The Wheeler County Board of Education's audit disclosed audit findings required to be reported by section .510(a) ofOMB Circular A-133. These audit findings are included in section IV of this report.

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WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

I SUMMARY OF AUDITOR'S RESULTS

7. Major Programs Federal awards audited as major programs are as follows: 84.184 Safe Schools/Healthy Students Initiative 84.287 Twenty-First Century Community Leaming Centers

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

9. Low Risk Auditee The Wheeler County Board of Education did not qualify as a low risk auditee as defined by Section .530 of 0MB Circular A-133.

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls at the Central Office Material Weakness Finding Control Number: FS-7531-08-01

Condition:

This is a repeat finding (FS-7531-07-03) from the year ended June 30, 2007. The accounting procedures ofthe School District were insufficient to provide for adequate internal controls at the Central Office.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: NIA

Information:

A review of expenditures revealed that voucher packages did not contain purchase orders approved with the Superintendent's signature and were not properly approved for payment. Additional testing of Federal program expenditures showed that unapproved expenditures were pervasive. Management stated that all expenditures are reviewed and approved; however numerous unallowable, questionable and unsupported expenditures were noted. See Finding Control Number: FA-7531-08-01.

Cause:

The School District failed to ensure that appropriate internal controls were established, implemented and functioning at the Central Office.

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WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls at the Central Office Material Weakness Finding Control Number: FS-7531-08-01

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation:

The School District's management should develop and implement procedures sufficient to ensure that all expenditures are properly approved, adequately documented, follow State and local procurement policies, and are recorded in the proper accounting period.

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Significant Deficiency Finding Control Number: FS-7531-08-02

Condition:

This is a repeat finding (FS-7531-07-02) from the year ended June 30, 2007. The School District did not have adequate controls in place to ensure that all required activity was included in the financial statement information presented for audit.

Criteria:

Chapter 22 Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles.

Questioned Cost: NIA

Information:

During the audit, the following correcting entries were proposed and accepted by the client to properly present the entity's financial statements:

Invalid accounts receivable were included on the Statement ofNet Assets and the Governmental Funds Balance Sheet. Audit adjustments were necessary to correct for $193,161.81 of invalid accounts receivable.

Accounts Receivable for Special Purpose Local Option Sales Tax (SPLOST) was overaccrued. An audit adjustment was necessary to reduce accounts receivable in the District-wide Capital Projects Fund in the amount of $8,866.59.

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WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Significant Deficiency Finding Control Number: FS-7531-08-02

Cause:

The School District did not implement an adequate system ofinternal control over the financial statement reporting process.

Effect:

The School District did not comply with the requirements for the Georgia Department ofEducation regarding financial reporting. Several adjustments were necessary in order for the School District's financial statements to be properly stated.

Recommendation:

The School District should implement internal controls over the financial statement reporting process to ensure that all required activity is included and properly recorded in the financial statement information.

BUDGET PREPARATION/EXECUTION Deficit Fund Balance Material Noncompliance Finding Control Number: FS-7531-08-03

Condition:

This is a repeat finding (FS-7531-07-0 I) from the year ended June 30, 2007. Deficit Fund Balance

Criteria:

Chapter 25 Reporting/or LUAs with General Fund Deficit Balances of the Financial Management for Georgia Local Units of Administration states in part: "The seriousness of fund balance deficits cannot be overstated. The Georgia Department of Education requires those LUAs with deficit fund balances to meet certain reporting requirements."

Questioned Cost: NIA

Information:

The School District's General Fund reported a deficit fund balance in the amount of $500,316.48.

Cause:

The School District's General Fund began the fiscal year with a deficit fund balance and incurred expenditures in excess of revenues during the year under review.

Effect:

A financial statement irregularity in accordance with O.C.G.A. 20-2-67.

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WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

BUDGET PREPARATION/EXECUTION Deficit Fund Balance Material Noncompliance Finding Control Number: FS-7531-08-03

Recommendation:

The School District should establish policies and procedures designed to ensure that in future periods the School District does not report a deficit fund balance.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED OR UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control Procedures Material Weakness Material Noncompliance U.S. Department of Education Safe Schools/Healthy Students Initiative (CFDA 84.184) U. S. Department of Education Through Georgia Department of Education Twenty-First Century Community Leaming Centers (CFDA 84.287) Finding Control Number: FA-7531-08-01

Condition:

This is a repeat finding (FA-7531-07-02) from the year ended June 30, 2007. A review ofexpenditures charged to various Federal programs revealed that costs were not adequately documented to ensure compliance with grant requirements.

Criteria:

Provisions of the 0MB Circular A-87, Cost Principles for Determining Allowable Costs, require that "to be allowable under Federal awards, costs must be ... authorized or not prohibited under state or local laws or regulations and supported by underlying documentation."

Questioned Cost: $57,339.82

Safe Schools/Healthy Students Initiative (CFDA 84.184) $54,326.90

Twenty-First Century Community Leaming Centers (CFDA 84.287) $3,012.92

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WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED OR UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control Procedures Material Weakness Material Noncompliance U.S. Department of Education Safe Schools/Healthy Students Initiative (CFDA 84.184) U.S. Department of Education Through Georgia Department of Education Twenty-First Century Community Leaming Centers (CFDA 84.287) Finding Control Number: FA-7531-08-01

Information:

A review of direct program expenditures of Wheeler County Board of Education revealed several deficiencies resulting in Questioned Costs of $72.00. The deficiencies were noted as follows:

1. Numerous vouchers lacked purchase orders approved by an appropriate supervisor.
2. Numerous voucher packages, including travel reimbursement forms, were not approved by an appropriate supervisor.
3. A travel reimbursement exceeded the State Travel Regulations' allowable meal allowance.

A review ofreimbursement payments to Montgomery and Treutlen Counties revealed numerous errors in reimbursement requests resulting in Questioned Costs of $32,465.65 and $24,802.17, respectively. The deficiencies were noted as follows:

1. Numerous reimbursements were not approved by the Fiscal Agent (Superintendent).
2. Numerous reimbursements lacked supporting receipts, invoices and evidence of receipt of goods.
3. Numerous reimbursements lacked timesheets supporting employee and contracted services pay.
4. Numerous reimbursements were for unallowable and/or unapproved travel, including commuting miles.
5. All reimbursements were fully charged to Purchased Professional and Technical Services (object 300).
6. A reimbursement was for charges to the wrong Board of Education.

In many cases the absence of supporting documentation resulted in the auditors' inability to determine the nature and purpose of charges.

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WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ACTIVITIES ALLOWED OR UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control Procedures Material Weakness Material Noncompliance U.S. Department of Education Safe Schools/Healthy Students Initiative (CFDA 84.184) U.S. Department of Education Through Georgia Department of Education Twenty-First Century Community Learning Centers (CFDA 84.287) Finding Control Number: FA-7531-08-01

Questionable travel was noted on many of the Director's travel vouchers. These vouchers were approved and paid by the Montgomery County Board ofEducation, and subsequently reimbursed by the Wheeler County Board of Education. In addition, the vouchers were not reviewed or approved by the Fiscal Agent (Superintendent) or an appropriate supervisor. Salary and contracted services amounts are questioned at FA-7531-08-02.

Cause:

Management failed to adequately monitor compliance with Federal guidelines to ensure that expenditures for these Federal programs were allowable, properly approved, and adequately documented.

Effect:

Failure to ensure that program costs were allowable, approved and properly documented resulted in material noncompliance with Federal grant requirements.

Recommendation:

The School District should implement procedures to ensure that all costs are allowable under 0MB Circular A-87, approved by appropriate management and properly documented. The School District should contact the U. S. Department of Education and the Georgia Department of Education to determine the amount of refund for these questioned expenditures.

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WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES Excessive and Unsupported Compensation Material Weakness Material Noncompliance U.S. Department of Education Safe Schools/Healthy Students Initiative (CFDA 84.184) U.S. Department of Education Through Georgia Department of Education Twenty-First Century Community Leaming Centers (CFDA 84.287) Finding Control Number: FA-7531-08-02

Condition:

This is a repeat finding (FA-7531-07-04) from the year ended June 30, 2007. Unsupported reimbursements and compensation were paid to employees and vendors charged to the Safe Schools/Healthy Students Initiative (CFDA 84.184) and the Twenty-First Century Community Leaming Centers program (CFDA 84.287). Employees were not paid according to the number of days worked and there were employees and contractors paid in amounts exceeding the approved program budget.

Criteria:

Provisions of 0MB Circular A-87, Cost Principles for Determining Allowable Costs, require that costs charged to a Federal award be program necessary and reasonable for proper and efficient performance and administration ofthe Federal award. A cost should be allocable to the Federal award in accordance with the benefits received. Furthermore, consideration should be given as to whether ( 1) individuals acted with prudence in the circumstances considering their responsibilities to the government unit and the Federal government and (2) significant deviations from established practices would unjustifiably increase the cost of the Federal award.

Questioned Cost: $155,676.04

Safe Schools/Healthy Students Initiative (CFDA 84.184) $135,252.11

Twenty-First Century Community Leaming Centers (CFDA 84.287) $20,423.93

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WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

ALLOWABLE COSTS/COST PRINCIPLES Excessive and Unsupported Compensation Material Weakness Material Noncompliance U. S. Department of Education Safe Schools/Healthy Students Initiative (CFDA 84.184) U.S. Department of Education Through Georgia Department of Education Twenty-First Century Community Leaming Centers (CFDA 84.287) Finding Control Number: FA-7531-08-02

Information:

A review of employee compensation revealed the following deficiencies:

Employees were not paid according to the number of days worked, resulting in overpayments of $10,694.65.
Reimbursement testing revealed unsupported, personnel reimbursements of $143,802.89 to Montgomery County Board of Education and Treutlen County Board of Education. Issues noted included lack of approved contracts, lack of timesheets, and unapproved timesheets.
Both of the Twenty-First Century Community Leaming Centers Program Directors were paid without a contract or pay rate approved in writing by the Fiscal Agent. One of the program directors was paid for six months when he only worked 5 months in fiscal year 2008 resulting in an overpayment of $1,178.50.
In fiscal year 2009, Federal funds were used to pay $3,449.16 in compensation to the Twenty-First Century Community Leaming Centers Program Director for work completed in July 2008 even though the program had ended at June 30, 2008. The U. S. Department ofEducation should review this expenditure to determine if it was valid.

Cause:

Management did not have controls and procedures in place to assure that compensation charged to Federal programs and paid to personnel, employees or contractors were supported by approved contracts, pay scales, timesheets, and accurate calculations.

Effect:

A substantial amount ofexcessive and unsupported costs were charged to the Safe Schools/Healthy Students Initiative Project and the Twenty-First Community Leaming Centers Project.

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WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ALLOWABLE COSTS/COST PRINCIPLES Excessive and Unsupported Compensation Material Weakness Material Noncompliance U.S. Department of Education Safe Schools/Healthy Students Initiative (CFDA 84.184) U. S. Department of Education Through Georgia Department of Education Twenty-First Century Community Learning Centers (CFDA 84.287) Finding Control Number: FA-7531-08-02 Recommendation: The School District should establish procedures to ensure that:
1. Employees are properly paid according to the number of days worked,
2. pay rates are supported in writing through the use of contracts or School District approved pay scales, and
3. all hourly workers are paid based on timesheets, approved in writing by their supervisor, and those approved timesheets and the approved pay scales reconcile to the amount paid.
The School District should contact the U.S. Department of Education and the Georgia Department of Education to determine the amount ofrefund for these questioned costs.
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WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

PROCUREMENT AND SUSPENSION AND DEBARMENT Failure to Implement Procurement Procedures Material Weakness Material Noncompliance U.S. Department of Education Safe Schools/Healthy Students Initiative (CFDA 84.184) U.S. Department of Education Through Georgia Department of Education Twenty-First Century Community Leaming Centers (CFDA 84.287) Finding Control Number: FA-7531-08-03

Condition:

This is a repeat finding (FA-7531-07-05) from the year ended June 30, 2007. The School District did not have adequate control procedures in place over the procurement process for the Safe Schools/Healthy Students Initiative (CFDA 84.184) and the Twenty-First Century Community Leaming Centers program (GFDA 84.287).

Criteria:

The Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments Subpart C - Post-Award Requirements _.36 Procurement establishes procurement standards for grantees and subgrantees. Specifically, "Grantees and subgrantees will use their own procurement procedures which reflect applicable State and local laws and regulations."

Questioned Cost: NIA

Information:

Testing revealed that the School District was not following the State Procurement guidelines and there were numerous instances where voucher packages did not contain the required documentation. See FA-7531-08-01.

Numerous purchases were made on the Program Director's personal credit cards and payments were made directly to the credit card companies by Montgomery County Board of Education, thereby, circumventing normal procurement procedures. No approval was obtained prior to these purchases and many of them were not supported with receipts, invoices or packing slips. Several cell phones and a post office box paid for by the programs were held in the Program Director's name instead ofbeing registered to the School District. Montgomery County Board ofEducation subsequently invoiced and was reimbursed by Wheeler County Board of Education for these expenditures.

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WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

PROCUREMENT AND SUSPENSION AND DEBARMENT Failure to Implement Procurement Procedures Material Weakness Material Noncompliance U.S. Department of Education Safe Schools/Healthy Students Initiative (CFDA 84.184) U.S. Department of Education Through Georgia Department of Education Twenty-First Century Community Leaming Centers (CFDA 84.287) Finding Control Number: FA-7531-08-03

Cause:

Management failed to establish and exercise adequate control procedures over the procurement process related to purchases and/or contracts procured with these Federal funds.

Effect:

Failure to ensure that proper procurement procedures were followed resulted in a material noncompliance with the requirements of these Federal grants.

Recommendation: The School District should establish and implement adequate controls and procedures over the procurement process for Federal program purchases.

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SECTIONV MANAGEMENT'S RESPONSES

WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2008
Finding Control Number: FS-7531-08-01
The Wheeler County Schools are under new direction with our current Superintendent who has implemented a new financial handbook which includes a more efficient sign-offsystem. Although we are a small system, we are using the hand-off system or the relinquish of solitary control; one person does the opening ofthe mail and another person receipts any funds received; each program director is responsible for processing their invoices for payment and this is signed by the appropriate administrator and Superintendent before payment is made. Once the checks are processed they are given to the Superintendent for final approval for mailing. Ifone person writes the deposits another person is responsible for taking the deposit to the bank. No processing of funds or invoices is handled by the same person throughout the process. With the staffavailable the duties are separated as much as possible and everyone is a part ofthe process. We are carrying out our responsibilities as segregated as possible with the size (or lack there of) of staff that we have in the Central Office. This finding should be closed year ending June 30, 2009.
Finding Control Number: FS-7531-08-02
We concur with this finding. We are gradually getting used to the process of doing the Financial Statements since we are still in the early years of the process. We have implemented controls to verify that the financial statement properly reflects activity reported in the general ledger and monitor the process to evaluate the accuracy ofthe Financial Statements. We have policies in place for guidance in the processing ofthe Financial Statements. This finding is expected to be closed as of June 30, 2009.
Finding Control Number: FS-7531-08-03
We concur with this finding. We have reported our monthly DE396 financial reports to the Board and to the State Financing Committee each month. The Superintendent and Board have made cuts in salaries and operating. Although it has been a thankless task with the austerity cuts and the decline in the economy, we have diligently worked and brought our finances back into a balanced budget. As of June 30, 2009, this finding should be closed.
Finding Control Number: FA-7531-08-01
We concur with this finding. We have been in constant contact with the U. S. Department of Education, working to rectify these findings and to be in compliance with the grant requirements. We have not received a clearance from the U.S. Department of Education, but we do not intend to relinquish defeat. This finding will still be on the books as of June 30, 2009. We do not have closure on this finding as of September 16, 2009. We are expecting the finding to be closed, fiscal year ending June 30, 2010.
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WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2008

Finding Control Number: FA-7531-08-02

The approved budgets are being monitored more closely to ensure that payments do not exceed budgeted amounts. All payments have supporting documents approved by the Superintendent and director of program. These particular programs are no longer in our school system and should be closed fiscal year ending June 30, 2009.

Finding Control Number: FA-7531-08-03

Procedures have been implemented to follow the procurement guidelines for State and Local Governments. These programs are no longer a part of the Wheeler County Board of Education's curriculum and therefore should be closed, fiscal year ending June 30, 2009.

Contact Person: Telephone: Fax: Email:

Helen Nunn, Financial Officer (912) 568-7198 (912) 568-1985 hnunn@whee1er.kl2.ga.us

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