Wheeler County Board of Education, Alamo, Georgia, annual financial report for the fiscal year ended June 30, 2010 (including independent auditor's reports)

WHEELER COUNTY BOARD OF EDUCATION
ALAMO, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED
JUNE 30,2010
(Including Independent Auditor's Reports)

WHEELER COLINTY 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

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FLINDS BALANCE SHEET

TO 'THE STATEMENT OF NET ASSETS

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERlVlVlElVTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVEIVUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AIVD CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL FUND

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE

WHEELER COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION I
SCHEDULES SUPPLEMENTARY INFORMATION
4 SCHEDULE OF APPROVED LOCAL OPTlOlV SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND -QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM
SECTION II COMPI-IANCE AND INTERNAL CONTROL REPORTS INDEPENDENT ALIDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAlTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WlTH GOVERNMENTAUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT OIV COlVlPLlANCE WlTH REQUIRENIENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPI-IAIVCE IIV ACCORDANCE WITH OMB CIRCULAR A-133
SECTION Ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AhlD QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

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

SECTION I FllVAlVClAL

Russell W. Hinton
STATE AUDITOR
(404)658-2174

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 2 1 , 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Wheeler County Board of Education
INDEPENDENT ALIDITOR'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 of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Wheeler County Board of Education, as of and for the year ended June 30, 2010, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Wheeler County Board of Education'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 of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and the 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.
In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Wheeler County Board of Education, as of June 30, 2010, 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 of Education 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 Government Auditing Standards, we have also issued our report dated June 21, 2011, 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 of that 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 Standardsand should be considered in assessing the results of our audit.
Accounting principles generally accepted in the United States of America require that the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 21, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures, to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during the audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Wheeler County Board of Education's financial statements as a whole. The accompanying supplementary information consists 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 of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements 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,
~ u s k e lWl . Hinton, CPA, CGFM State Auditor

WHEELER COLINTY BOARD OF EDUCATION

WHEELER COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30,2010
ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Local Inventories Capital Assets, Non-Depreciable Capital Assets. Depreciable(Net of Accumulated Depreciation)
Total Assets
LIABILITIES Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable
Total L~abilit~es NET ASSETS Invested in Capital Assets Restricted for Continuation of Federal Programs Capital Projects Unrestricted Total Net Assets
Total Liabilities and Net Assets

EXHIBIT "A"
GOVERNMENTAL ACTIVITIES

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 ENDEDJUNE 30.2010

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Servlces Improvement of Instructional Services Educational Media Servlces General Admlnlstration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Servlces Central Support Services Other Support Servlces Operat~onsof Non-lnstruct~onaSl ervices Enterprise Operations Food Services
Total Governmental Actlvlt~es
General Revenues Taxes Properly Taxes For Maintenance and Operatlons Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capltal Projects Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings M~scellaneous
Total General Revenues
Change In Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGESFOR SERVICES

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

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories

WHEELER COUNlY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30.2010

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

EXHIBIT "C" TOTAL

I IABlLlTlESAND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Continuationof Federal Programs Capital Projects
Unreserved Designated for Student Activities Undesignated Reported in: General Fund
Total Fund Balances
Total Liabilitiesand Fund Balances

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 30,2010
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 Build~ngs Equipment Accumulated Depreciation
Total Ca~itaAl ssets
Taxes that are not available to pay for current period ex~endituresare deferred in the funds.
Net Assets of Governmental Actlvltles (Exhibit " A )

EXHIBIT "DM

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 30,2010

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Servlces Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current lnstructlon 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 Enterprise Operations Food Services Operation
Capital Outlay
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Endlng

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

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. EXPENDITURESAND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 3 0 . 2 0 1 0
Total Net Change in Fund Balances - Governmental Funds (Exh~bi"tEM)
Amounts reported for Governmental Activities in the Statement of Activities are d~fferenbt ecause:
Capltal 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 per~od. these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Deprec~at~oEnxpense
Taxes reported In the Statement of Activities that do not prov~decurrent financial resources are not reported as revenues in the funds.
Change in Net Assets of Governmental Activities (Exh~bi"t 8")

EXHIBIT" F

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

WHEELER COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 3 0 , 2 0 1 0
ASSETS Cash and Cash Equivalents
ILIABILITIES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS

The notes to the basic financial statements are an integral part of this statement. - 8 -

WHEELER COLINTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 , 2 0 1 0

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 of lVet Assets and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
'The Statement of Activities 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 of the 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 of goods 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 of internal 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:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.

WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 , 2 0 1 0

EXHIBIT "H"

District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) and grants from Georgia State Financing and Investment Commission 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 of accounting 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 of when 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-balancingset of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. 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 of specific 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.
The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are contracted for the school year (July 1- June 30) and paid over a twelve month contract period, generally September 1through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liability for the July and August salaries a t June 30, the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.

WHEELER COUNTY BOARD OF EDUCATlOlV NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 , 2 0 1 0

EXHIBIT "H"

NEW ACCOUNTING PRONOUIVCEMENTS

In fiscal year 2010, the School District adopted the Governmental Accounting and Standards Board (GASB) Statement No. 51, Accounting and Reporting for Intangible Asse&. The provisions of this Statement generally require retroactive reporting for intangible assets acquired after June 30, 1980, with the exception of those intangible assets that have indefinite useful lives and those that are considered internally generated.

In addition, the School District adopted GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instrumen&. The provisions of this Statement impacts disclosure regarding derivative instruments entered into by the state and local governments. Derivative disclosures, if any, will be identified in Note 3.

CASH AND CASH EQUIVALENTS

Composition of Deposits Cash and cash equivalents consist of cash 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 of Georgia 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.

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 2009 tax digest year (calendar year) on December 8, 2009 (levy date). Taxes were due on February 8, 2010 (lien date). Taxes collected within the current fiscal year or within 6 0 days after year-end on the 2009 tax digest are reported as revenue in the governmental funds for fiscal year 2010. 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, 2010, for maintenance and operations amounted to $1,688,278.75.

The tax millage rate levied for the 2009 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 O~erations

15.50 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $496,863.63 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.

WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2010

EXHIBIT "H"

INVENTORIES

Food Inventories On the basic financial statements, inventories of donated food commodities used in the preparation of meals 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.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). 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 of art. 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

Estimated

Policy

Useful Life

Land Land Improvements Buildings and Improvements Equipment Construction in Progress Intangible Assets

$5,000.00 or more $5,000.00 or more $5,000.00 or more $5,000.00 or more $5,000.00 or more $50,000.00 or more

N/A 2 0 years Up t o 80 years 5 to 2 0 years
N/A 1 0 to 2 0 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.

Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets, generally 10 to 20 years.

NET ASSETS

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

Invested in capital assets - This represents the School District's total investment in capital assets.

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

WHEELER COUNTY BOARD OF EDUCATlOlV NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2010

EXHIBIT "H"

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.
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
Note 3: DEPOSITS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) 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 of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.
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) lnsurance on accounts provided by the Federal Deposit lnsurance 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 of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by 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.

WHEELER COUNTY BOARD OF EDUCATlOlV NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 , 2 0 1 0

EXHIBIT "H"

CATEGORIZATION OF DEPOSITS

Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned t o it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2010, the bank balances were $2,152,170.22. 'The bank balances were entirely covered by Federal depository insurance.

IVote 4: IVOIV-MONETARY TRANSACTIONS

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 Work In Progress

Balances July 1, 2009

Increases

Decreases

Balances June 30,2010

$

105.520.00 $

0.00

$

105,520.00

Total Capital Assets, Not Being Depreciated $

222,670.00 $

0.00 $ 117,150.00 $

105,520.00

Capital Assets, Being Depreciated: Buildings and lmprovements Equipment Land lmprovements

Less: Accumulated Depreciation: Buildings and Improvements Equipment Land lmprovements

Total Capital Assets, Being Depreciated, Net $ 5,756,524.00 $ 541,228.00 $

0.00 $ 6,297,752.00

Governmental Activity Capital Assets - Net

$ 5,979,194.00 $ 541.228.00 $ 117,150.00 $ 6,403,272.00

WHEELER COLINTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

Current year depreciation expense by function is as follows:

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

EXHIBIT "H" 221,528.00

Note 6: 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 of loss 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.

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 liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

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

Claims and

Beginning of Year

Changes in

Claims

End of Year

Liab~lity

Estimates

Paid

Liability

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

WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

provide coverage for potential losses sustained by the Trust in excess of $700,000.00 loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Fund in excess of $700,000.00 loss per occurrence, up to $1,000,000.00, with an aggregate limit of $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

Note 7: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $23,590.57 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 IVon-Certified Personnel In the amount of $19,732.27

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 $3,858.30

Note 8: 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.

Note 9: SUBSEOUENT EVENTS

The voters of Wheeler County approved, in a special election, held on July 20, 2010, to authorize the reimposition of a 1% sales tax, for a period of time not to exceed 2 0 calendar quarters, commencing upon the expiration of the special 1%sales and use tax currently being levied in Wheeler County and for the raising of not more than $2,700,000.00. At this time, the voters also authorized the Wheeler County School District to issue General Obligation Bonds in an amount not to exceed $1,500,000.00. The proceeds of the bonds are to be used, in whole or in part, for renovating, improving, repairing and equipping existing schools and facilities, including the capitalized interest on such debt.

WHEELER COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 , 2 0 1 0

EXHIBIT "H"

lVote 10: POST-ENIPLOYNIENTBENEFITS
GEORGIA SCHOOL PERSONNEL EMPLOYEES POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-Employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Insurance Plan administered by 'the Department of Community Health. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board).

Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. 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 25 percent of the cost of the health insurance coverage.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.

The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2010:
For certificated teachers, librarians and regional educational service agencies:

July 2 0 0 9 August 2 0 0 9 - October 2 0 0 9 November 2009 -June 2010

18.534% of covered payroll for August Coverage 14.492% of covered payroll for September - November Coverage 18.534% of covered payroll for December - July Coverage

For non-certificated school personnel:

July 2 0 0 9 -June 2010

$162.72 per member per month plus Department of Education contribution of $22,838,311.00

No additional contribution was required by the Board for fiscal year 2 0 1 0 nor contributed to the State OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other post-employment benefits and are subject to appropriation.

The School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows:

WHEELER COUNTY BOARD OF EDUCA-TIOIV NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 3 0 . 2 0 1 0

Fiscal Year

Percentage Contributed

Required Contribution

EXHIBIT "H"

Note 11: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1 9 4 3 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. 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.
On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 3 0 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 2 5 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 4 0 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 6 0 or by 7% for each year or fraction thereof by which the member has less than 3 0 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.
Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 1 0 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2010, were 5.25% of annual salary. The member contribution rate will increase to 5.53% effective July 1,2010. Employer contributions required for fiscal year 2010 were 9.74% of annual salary as required by the June 30, 2007, actuarial valuation. The employer contribution rate will increase to 10.28% effective July 1, 2010.

WHEELER COUNTY BOARD OF EDUCKTIOIV NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

(This page left intentionally blank)

WHEELER COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES. EXPENDITURESAND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30.2010

REVFNUFS
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnlngs Miscellaneous
Total Revenues

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

Current Instruct~on Support Servlces PU~ISI erv~ces Improvement of Instrucuonal Servlces Educat~onalMedia Servlces General Admlnistratlon School Admlnlstratlon Buslness Adminlstratlon Maintenance and Operation of Plant Student Transportation Servlces Central Support Servlces Other Support Servlces Enterprise Operations Food Servlces Operabon
Total Expend~tures
Excess of Revenues over (under) Expenditures
OTHER FINANCINGSOURCES (USFS1
Transfers In Transfers Out
Total Other Flnanclng Sources (Uses)
Net Change In Fund Balances
Fund Balances - Beginning
Adjustments
Fund Balances - Endlng

NQ&S to the Schedule of Revenues. Ex~endltureSand Changes in Fund Balances Budeet and Actual
(1) Orlginal and Final Budget amounts do not include budgeted revenues or expenditures of the various prlnclpal accounts The accompanying schedule of revenues, expenditures and changes In fund balances budget and actual IS presented on the modlfied accrual bas~sof accounting which IS the basls of accounting used In the presentation of the fund flnanc~asl tatements
See notes to the bas~cfinancial statements

SCHEDULE "1"
ACTUAL AMOUNTS

WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURESOF FEDERALAWARDS
YEAR ENDED JUNE 30,2010

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrihon Cluster Pass-ThroughFrom Georgia Department of Education Food Servlces School Breakfast Program National School Lunch Program
Total Ch~ldNutrition Cluster
Other Programs Pass-ThroughFrom Georaa Department of Education Food Services ARRA - Ch~ldNutrition Discretionary Grants Limited Ava~lab~lity
Total U. S. Department of Agriculture
Education, U. S. Department of Education Technology State Grants Cluster Pass-Through From Georgia Department of Educat~on Education Technology State Grants
Special Education Cluster Pass-ThroughFrom Georgia Department of Education Spec~aEl ducation ARRA- Grants to States ARRA- Preschool Grants Grants to States Preschool Grants
Total Special Education Cluster
State Fiscal Stabilization Fund Cluster Pass-ThroughFrom Georgia Department of Educat~on
ARRA - Educatron State Grants
Title I, Part A Cluster PascThrough From Georgia Department of Education ARRA- Title I Grants to Local Educational Agenc~es Title I Grants to Local Educatronal Agenc~es
Total Title I. Part A Cluster
Other Programs Pass-ThroughFrom Georgia Department of Education
Career and Technical Educat~on- Basic Grants to States
lmprov~ngTeacher Quality State Grants Migrant Education -State Grant Program Reading First State Grants Rural Education
Total Other Programs
Total U. S. Department of Education
Total Federal Financial Assistance
N/A = Not Available

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30,2010

SCHEDULE "2"

Notes to the Schedule of Ex~endlturesof Federal Awards
(1) Includes the Federally assigned value of donated commodities for the Food Donat~onProgram in the amount of $40,063.70.
(2) Expendituresfor the funds earned on the School Breakfast Program ($145.784.18) were not maintained separately and are Included in the 2010 National School Lunch Program.
Major Programsare Identified by an asterisk (*) in front of the CFDA number.
The School District did not provide FederalAss~stanceto any Subrecipient.
The accompanylngschedule of expenditures of Federal awards Includes the Federalgrant activity of the Wheeler County Board of Educat~onand is presented on the modified accrual bass of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDEDJUNE 30,2010

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 ElementaryGrades Early lntervention (4-5) Program
Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities
Gifted Student - Category VI
Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Adm~nistration School Admlnistration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Sparsity Nursing Services Vocational Supervisors Mid-term Adjustment Hold-Harmless Education Equalization Funding Grant Food Services Vocational Education Amended FormulaAdjustment Other State Programs Health Insurance National Teacher Certification Preschool Handicapped Program Virtual Schools Grant
Georgia State Financing and Investment Commission Reimbursement on Construction Projects
Office of Treasury and Fiscal Services Public School Employees Retirement

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

SCHEDULE "3" TOTAL

See notes to the basic financial statements.

WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 3 0 . 2 0 1 0

SCHEDULE '4'

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3)

AMOUNT EXPENDED IN PRIOR YEARS (3)

PROJECT STATUS

Remodeling, renovabng. improving, furn~sh~nagnd equlpplng

exlstlng School Dlstrict facillt~es,includ~ngclassrooms.

lnstruct~onaal reas, support space, physlcal educat~onand

athletlc facilltles and grounds, purchase or construcbon of a

storage fac~lity,acquiring any necessary personal property,

including computers and other technology. purchase of school

buses and paylng expenses lncldent thereto.

$

~ . ~ ~ O . O O O . O$O ~ , ~ ~ O . O O O$. O O473,839.98 $

1,034,774.25

Ongoing

(1)The School Distr~ct'soriBnal cost estimate as specified in the resolut~oncallhng for the lmposltlon of the Local Opt~on Sales Tax.
(2) The School D~strlct'scurrent estimate of total cost for the project. Includes all cost from project lnceptlon to complebon.
(3) The voters of Wheeler County approved the lmposltion of a 1% sales tax to fund the above project. Amounts expended for thls project may include sales tax proceeds, state, local property taxes and/or other funds over the llfe of the project.

See notes to the bas~ctinanc~asl tatements.

(This page left intentionally blank)

WHEELER COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITYBASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES- BY PROGRAM
YEAR ENDED JUNE 30.2010

SCHEDULE "5"

DESCRIPTION
D~recItnstructional Programs Kindergarten Program Kindergarten Program-Early lntervention Program Primary Grades (1-3) Program Primary Grades-Early lntervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early lntervention (4-5) Program Middle School (6-8) Program High School General Education ( 4 1 2 ) Program Vocat~onalLaboratory (9-12) Program Students with Disabilities Category II Category Ill Category IV Category V Gifted Student - Category VI Remed~aEl ducation Program Alternative Education Program
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2)
$

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

TOTAL QBE FORMULA FUNDS

(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.

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 2 1 , 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Wheeler County Board of Education
INDEPENDENT ALIDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COIVIPLIANCE AND OTHER MAlTERS BASED ON AN AUDIT OF FIlVANClAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Wheeler County Board of Education as of and for the year ended June 30, 2010, which collectively comprise Wheeler County Board of Education's basic financial statements and have issued our report thereon dated June 21, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Wheeler County Board of Education'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 of expressing 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.
A deficiency in internal control 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 and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

Com~lianceand 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 of laws, 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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of Wheeler County Board of Education in a separate letter dated June 21, 2011.
This report is intended solely for the information and use of management, members of the 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,
~ u d e lWl . Hinton, CPA, CGFM State Auditor

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

DEPARTMENOFTAUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 2 1 , 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Wheeler County Board of Education
INDEPENDENTAUDITOR'S REPORT ON COMPLIANCE WlTH REOUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133
Ladies and Gentlemen:

We have audited Wheeler County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010. Wheeler County Board of Education'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 of compliance in accordance with auditing standards generally accepted in ,the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits o f States, Local Governments, and Non-Profit Organizations. Those etandards 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 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.
In our opinion, the Wheeler County Board of Education complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30,2010.

Internal Control Over Com~liance
Management of Wheeler County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the 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 the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, 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.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
This report is intended solely for the information and use of management, members of the 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, ,
~ u & e l lW. Hinton, CPA, CGFM State Auditor

SECTION I l l AUDITEE'S RESPONSE TO PRIOR YEAR FllVDlNGS AND QUESrIONED COSTS

WHEELER COUNTY BOARD OF EDUCATIOIV AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QLIES'I-IONED COSTS YEAR ENDED JUNE 3 0 , 2 0 1 0

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7531-08-02 FS-753 1 - 0 9 - 0 1

Further Action Not Warranted Previously Reported Corrective Action Implemented

PRIOR YEAR FEDERAL AWARD FINDINGS AND OLIES'I-IONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-7531-07-01 FA-7531-07-02 FA-7531-07-04 FA-7531-08-01 FA-7531-08-02

Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses

ACTIVITIES ALLOWED OR UNALLOWED ALLOWABLE COSTS/COS'r PRllVClPLES Unsupported Costs U. S. Department of Education Safe Schools/Healthy Students Initiative (CFDA 84.184) Finding Control Number: FA-7531-07-01
We have implemented new accounting procedures to correct these deficiencies on any future funding, and should be cleared for any future funding. We are waiting for further instructions from the U. S. Department of Education regarding possible refund of Safe Schools/Healthy Students funds.
ACTIVITIES ALLOWED OR UNALLOWED ALLOWABLE COSTS/COST PRlNClPLES 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 Learning Centers (CFDA 84.287) Finding Control Number: FA-7531-07-02
We have implemented new accounting procedures to correct these deficiencies on any future funding, and should be cleared for any future funding. We are waiting for further instructions from the U. S. Department of Education regarding possible refund of Safe Schools/Healthy Students funds and the Georgia Department of Education regarding possible refund of Twenty-First Century Community Learning Centers funds.

WHEELER COUNTY BOARD OF EDUCA-l7ON AUDITEE'S RESPONSE
SUMMARY SCHEDLILE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010
PRIOR YEAR FEDERAL AWARD FINDINGS AND OLIESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
ALLOWABLE COSTS/COST PRINCIPLES Unsupported Compensation U. S. Department of Education Safe Schools/Healthy Students lnitiative (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-7531-07-04
We have implemented new accounting procedures to correct these deficiencies on any future funding, and should be cleared for any future funding. We are waiting for further instructions from the U. S. Department of Education regarding possible refund of Safe Schools/Healthy Students funds and the Georgia Department of Education regarding possible refund of Twenty-First Century Community Learning Centers funds.
ACTIVITIES ALLOWED OR LINALLOWED ALLOWABLE COSTS/COST PRllVClPLES Inadequate Internal Control Procedures U. S. Department of Education Safe Schools/Healthy Students lnitiative (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
We have implemented new accounting procedures to correct these deficiencies on any future funding, and should be cleared for any future funding. We are waiting for further instructions from the U. S. Department of Education regarding possible refund of Safe Schools/Healthy Students funds.
ALLOWABLE COSTS/COST PRINCIPLES Excessive and Unsupported Compensation U. S. Department of Education Safe Schools/Healthy Students lnitiative (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
We have implemented new accounting procedures to correct these deficiencies on any future funding, and should be cleared for any future funding. We are waiting for further instructions from the U. S. Department of Education regarding possible refund of Safe Schools/Healthy Students funds.

SECTIOIV IV FINDINGS AND QUESTIONED COSTS

WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Aggregate Remaining Fund Information

Internal control over financial reporting: Material weakness identified? Significant deficiency identified?

Noncompliance material to financial statements noted:

Federal Awards

Internal Control over major programs: Material weakness identified? Significant deficiency identified?

Type of auditor's report issued on compliance for major programs: All major programs

Any audit findings disclosed that are required to be reported in accordance with OMB Circular A-133, Section 510(a)?

Identification of major programs:

CFDA N um ber(s)

Name of Federal Program or Cluster

Title I, Part A Cluster Special Education Cluster State Fiscal Stabilization Fund Cluster

Dollar threshold used to distinguish between Type A and Type B programs:

Auditee qualified as low-risk auditee?

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported.

Unqualified IN 0
None Reported
No None Reported
Unqualified Yes

WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 3 0 , 2 0 1 0
Ill FEDERALAWARD FINDINGSAND QUESTIONED COSTS
ACTIVITIES ALLOWED OR UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES PROGRAIV IlVCONlE Improper Accounting for Banquet Activities Material Weakness Material Noncompliance U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-7531-10-01
Condition: The School Food Service Program did not have controls in place to adequately account for and operate a banquet related activity according to Federal and State guidelines. This activity was not maintained on the School District's accounting records.
Criteria: Provisions of the OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments,
require that 'to be allowable under Federal awards, cost must be... authorized or not prohibited
under state or local laws or regulations and supported by underlying documentation".
7 CFR Part 210.14(a) requires that "Revenues received by the nonprofit school food service be used
only for the operation or improvement of such food service..." Additionally, regulations require that
"Expenditures of nonprofit school food service revenues shall be in accordance with the financial management system established by the State Agency under 210.19(a)(2) of this part."
Georgia Department of Education School Nutrition Financial Management System Criteria and Procedure No: FM-01-01states in part:
"If a School Food Authority (SFA) decides to cater food services, it is recommended they consider three goals:
1. To provide a service to the School District, 2. to generate revenue over expenditures that can be used to enhance the SFA1snon-
profit school food service program, and 3. to promote positive public relations between the School Nutrition Program (SNP),
the school community and school-related organizations.
Criteria and/or Procedures o A separate bank account must be used for the catering account, Enterprise Fund 693. This account will track expenditures and income separately so that associated expenses and revenues of catering are purged from costs attributable to the school nutrition program and so potential and actual revenues may be tracked. o The full cost of all catering functions must be identified and recovered including clearly identifiable costs of food, labor, small and large equipment, and supplies and indirect costs.
o Co-mingling of labor or food costs must be minimized in an effort to separate the
two activities as much as possible.

WHEELER COLINTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
Ill FEDERAL AWARD FINDINGSAND QUESTIONED COSTS
ACTIVITIES ALLOWED OR UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES PROGRAM INCOME Improper Accounting for Banquet Activities Material Weakness Material Noncompliance U. S. Department of Agriculture 'Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-7531-10-01
o Any payment due to a school nutrition program employee for work performed, including catering functions, must be processed through the payroll department, so that the appropriate withholdings are made and the gross income earned is recorded and reported correctly. Time records must be available to demonstrate that the SNP has not compensated employees for work done on catering functions.
o Calculate the cost of all food and supplies used; be sure to include the cost of
packaging used for catered items. Foods used for catering events should be ordered and inventoried separately from foods used for the service of reimbursable meals and should NOT be reported on the School IVutrition Form DE 1 0 6 Financial Data.
o Purchase orders must reflect applicable purchase of goods, time sheets must
reflect applicable personnel charges and invoices must reflect charges for events; these expenditures and revenue will be tracked in the appropriate accounts in the catering fund.
o USDA commodities can only be used (1) when the full cost of commodities are
recovered and accrue back to the nonprofit school nutrition account and (2) when students are the primary beneficiaries of the food service."
Questioned Cost: $17,772.53
Information: The School Food Service (SFS) Program's management and personnel failed to report banquet activity in accordance with Federal and State regulations. The following deficiencies were noted:
The School Food Service Banquet organization first established its bank account in year 1995 (fifteen years ago), using the Wheeler County Board of Education's Federal Employee Identification Number (FEI), but was never recorded on the School District's accounting records or financial statements. A separate fund was not used to track income and expenditures from costs attributable to the school nutrition program as required. An ineffective control environment exists for the entire Banquet organization. Control deficiencies include not having a catering policy in place, no limits of authority, inadequate separation of duties, incomplete bank reconciliations, lack of review and or verification of transactions, and lack of supporting documentation.

WHEELER COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
Ill FEDERAL AWARD FINDINGSAND QLIESTIONED COSTS
ACTIVITIES ALLOWED OR UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES PROGRAM INCOME Improper Accounting for Banquet Activities Material Weakness Material Noncompliance U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-7531-10-01
During the current fiscal year, the Banquet organization had $17,772.53 in bank deposits, of which $11,337.03 appeared to be cash generated from vending machines located in the school lunchroom. Income from these vending machines was not recorded as supplemental income (program income) to the School Food Service fund. The SFS Director and SFS Bookkeeper had exclusive control over the banquet bank account and both were authorized to sign checks. During the year under review, bonus compensation payments in the total amount of $1,600.00 were paid to the lunchroom managers, workers and custodians by this organization. Payroll taxes were not withheld by the organization for these payments. SFS employees used SFS equipment and facilities to cater events for this organization. Time records were not available to separate work performed for the SFS Program from activity performed for this organization. Documentation provided by the organization did not reveal any labor, equipment, supply or indirect cost reimbursements to the School Food Service Program. The full cost of the catering was not identifiable.
Cause: These deficiencies were a result of the School District's failure to properly manage the Child Nutrition Program and to ensure that activities and expenditures related to this program were allowable.
Effect: The School District's failure to ensure that the program was properly managed resulted in unallowable, inappropriate usage of Child Nutrition Program resources, lost program revenue and material noncompliance with the requirements of this Federal Program.
Recommendation: The School District should take the necessary steps to ensure that current catering service practices cease. If management decides to continue catering services they should implement procedures to ensure that this activity is recorded on the School District's general ledger and that, in line with Federal regulations, the Georgia Department of Education School Nutrition Financial Management System Criteria and Procedure No: FM-01-01 is followed. In addition, the School District should monitor the Child Nutrition Program to ensure that employees are not involved in activities that conflict with this Federal Program and that all salaries charged to the Child Nutrition Program are commensurate with actual time devoted to the program. The Georgia Department of Education should further review this matter to determine if a reclaim of funds is necessary.

SECTION V MANAGEMENT'S RESPONSES

WHEELER COLINTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 3 0 , 2 0 1 0

Finding Control INumber: FA-7531-10-01

We concur with this finding. As of May 10,2011, this account was closed and the funds have been moved into the Food Service account at the Middle/High level. We will no longer have an additional bank account for the banquet fund. The food service funding will be monitored more closely so this will not occur again. As of June 30, 2012 this finding should be closed.

Contact Person: Telephone: Fax: Email:

Helen Nunn, Finance Officer (912) 568-71 9 8 (912) 568-1985 hnunn@wheeler.kl2.ga.us

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