Whitfield County Board of Education, Dalton, Georgia, annual financial report for the fiscal year ended June 30, 2014 (including independent auditor's reports)

Collection:
Georgia Government Publications
Title:
Whitfield County Board of Education, Dalton, Georgia, annual financial report for the fiscal year ended June 30, 2014 (including independent auditor's reports)
Creator:
Georgia. Department of Audits
Publisher:
Atlanta, Ga. : Dept. of Audits and Accounts, 2014-06-30
Date of Original:
2013/2014
Subject:
Auditors' reports--Georgia
Financial statements--Georgia
Whitfield County (Ga.). Board of Education--Appropriations and expenditures
Location:
United States, Georgia, Whitfield County, 34.80561, -84.96722
Medium:
state government records
Type:
Text
Format:
application/pdf
Metadata URL:
http://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-be26-bw59-b2014-belec-p-btext
Digital Object URL:
http://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-ba800-b-pr1-be26-bw59-b2014-belec-p-btext
Rights Holder:
© Georgia Department of Audits
Holding Institution:
University of Georgia. Map and Government Information Library
Rights:
Rights Statement information

WHITFIELD COUNTY BOARD OF EDUCATION
DALTON, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2014
(Including Independent Auditor's Reports)

WHITFIELD COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET POSITION

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

H NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

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

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM

Page
1 2 4 5 6 7 9 10
27 28 30 31 33

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WHITFIELD COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S 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 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB 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

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SECTION I FINANCIAL

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Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
May 17, 2016

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Whitfield County Board of Education
INDEPENDENT AUDITOR'S REPORT
Ladies and Gentlemen:
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Whitfield County Board of Education as of and for the year ended June 30, 2014, and the related notes to the financial statements (Exhibits A through H), which collectively comprise the Board's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
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 Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
2014ARL-11

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effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the basic financial statements referred to above 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 Whitfield County Board of Education, as of June 30, 2014, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 2 to the financial statements, in 2014 the Whitfield County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Management has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing 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. Our opinion on the basic financial statements is not affected by this missing information.
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 27, 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 regarding 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 our 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.
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Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Whitfield County Board of Education's basic financial statements. The accompanying supplementary information, consisting of Schedules 2 through 5, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements.
The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic 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 basic financial statements as a whole.
The Department of Audits and Accounts provided basic accounting assistance limited to services such as preparing draft financial statements that were based on the School District's chart of accounts and general ledgers including any adjusting, correcting, and closing entries that have been approved by the School District's management; prepare draft notes to the financial statements based on information determine and approved by the School District's management; and prepared trial balances on the School District's chart of accounts.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated May 17, 2016, on our consideration of the Whitfield 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 Standards in considering Whitfield County Board of Education's internal control over financial reporting and compliance.
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,

GSG:cb 2014ARL-11

Greg S. Griffin State Auditor

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WHITFIELD COUNTY BOARD OF EDUCATION

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WHITFIELD COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2014
ASSETS
Cash and Cash Equivalents Investments 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 Claims Incurred but not Reported (IBNR) Interest Payable Contracts Payable Retainages Payable Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET POSITION
Net Investment in Capital Assets Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Position

EXHIBIT "A"
GOVERNMENTAL ACTIVITIES
$ 19,017,033.35 25,476,548.09 3,424,389.76 9,456,734.01 2,140,560.41 314,538.50 30,290.67 184,429.39 11,353,752.95
195,921,858.56 267,320,135.69
386,753.65 7,229,423.61
159,542.60 326,322.13
67,675.52 243,239.84 9,992,149.80 21,365,255.13 39,770,362.28
181,153,056.83 3,714,993.67 326,322.12
15,278,996.78 27,076,404.01 $ 227,549,773.41

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

WHITFIELD COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2014

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 Community Services Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Other Taxes 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 Position
Net Position - Beginning of Year
Net Position - End of Year

EXPENSES

CHARGES FOR SERVICES

$

69,638,028.52 $

5,592,195.72 3,440,426.67 2,432,091.39
978,311.92 8,101,689.55
719,849.26 8,251,947.59 5,294,307.38 3,904,040.25
326,687.70

361,289.26 10,624,829.54
1,042,079.15

$ 120,707,773.90 $

479,032.68
144,553.79 1,415,778.43 2,039,364.90

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

EXHIBIT "B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET POSITION

$ 55,141,659.81 $
792,495.65 2,241,060.94 1,741,905.83 2,276,610.60 3,742,800.96
10,001.67 4,048,911.68 1,535,055.36
36,547.90 210,302.36
134.91 7,448,983.45

4,250,850.55 $ 231,660.00

$ 79,226,471.12 $

4,482,510.55

-9,766,485.48
-4,799,700.07 -1,199,365.73
-690,185.56 1,298,298.68 -4,358,888.59
-709,847.59 -4,058,482.12 -3,527,592.02 -3,867,492.35
-116,385.34
-361,154.35 -1,760,067.66 -1,042,079.15
-34,959,427.33

28,804,475.58 768,476.25

10,962,415.20 437,613.05
11,083,451.00 13,775.14
5,621,811.99
57,692,018.21
22,732,590.88
204,817,182.53

$

227,549,773.41

- 3 -

WHITFIELD COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2014

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Local Other Inventories
Total Assets

GENERAL FUND

DISTRICT-WIDE CAPITAL PROJECTS FUND

DEBT SERVICE
FUND

TOTAL

$ 12,437,276.30 $ 6,579,757.05 12,046,501.73 13,430,014.82 $

2,474,405.52 9,456,734.01 2,140,560.41
314,538.50 30,290.67
184,429.39

949,984.24

$ 39,084,736.53 $ 20,959,756.11 $

$ 19,017,033.35 31.54 25,476,548.09
3,424,389.76 9,456,734.01 2,140,560.41
314,538.50 30,290.67
184,429.39
31.54 $ 60,044,524.18

LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes
FUND BALANCES
Nonspendable Restricted Assigned Unassigned
Total Fund Balances
Total Liabilities, Deferred Inflows of Resources, and Fund Balances

$ 386,753.65 7,229,423.61 32,026.52 $ 239,278.84
7,887,482.62

35,649.00 3,961.00
39,610.00

$ 386,753.65 7,229,423.61 67,675.52 243,239.84
7,927,092.62

1,308,162.82

1,308,162.82

155,355.17 3,559,638.50 1,439,260.37 24,734,837.05

20,920,146.11 $

29,889,091.09 20,920,146.11

$ 39,084,736.53 $ 20,959,756.11 $

31.54

155,355.17 24,479,816.15
1,439,260.37 24,734,837.05

31.54 50,809,268.74

31.54 $ 60,044,524.18

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

WHITFIELD COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION JUNE 30, 2014

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Position are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported as assets in governmental funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings and Improvements Equipment Accumulated Depreciation
Total Capital Assets
Taxes that are not available to pay for current period expenditures are deferred in the governmental funds.
Property Taxes
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable Accrued Interest Payable Compensated Absences Payable Bond Premiums, Net of Amortization Claims and Judgments Payable
Total Long-Term Liabilities

$ 50,809,268.74

$ 8,624,659.08 2,729,093.87 9,955,063.87
213,526,621.84 22,033,303.88 -49,593,131.03

207,275,611.51

1,308,162.82

$ -29,830,000.00 -326,322.13 -246,313.63
-1,281,091.30 -159,542.60

-31,843,269.66

Net Position of Governmental Activities (Exhibit "A")

$ 227,549,773.41

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

WHITFIELD COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2014

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 Central Support Services Other Support Services Community Services Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 29,690,377.01

437,613.05 $ 10,962,415.20

75,770,303.49

4,250,850.55

14,771,278.63

2,039,364.90

4,829.15

8,912.11 $

5,304,910.46

1,017,866.79

128,018,676.69 16,240,044.65

$ 33.88

29,690,377.01 11,400,028.25 80,021,154.04 14,771,278.63
2,039,364.90 13,775.14
6,322,777.25

33.88 144,258,755.22

66,419,133.33
5,592,577.41 3,435,937.72 2,249,619.92
880,702.69 7,874,664.38
674,888.94 8,022,696.26 5,022,872.46 1,764,679.98
326,687.70 361,289.26 10,279,566.45 2,744,508.05
115,649,824.55
12,368,852.14

12,019.16 288,386.85 2,134,498.00
586,214.38
3,021,118.39 13,218,926.26

9,160,000.00 1,557,188.50
10,717,188.50
-10,717,154.62

66,419,133.33
5,592,577.41 3,435,937.72 2,249,619.92
880,702.69 7,874,664.38
686,908.10 8,311,083.11 5,022,872.46 3,899,177.98
326,687.70 361,289.26 10,279,566.45 3,330,722.43
9,160,000.00 1,557,188.50
129,388,131.44
14,870,623.78

-10,717,155.27 -10,717,155.27

10,717,155.27 10,717,155.27

10,717,155.27 -10,717,155.27
0.00

12,368,852.14 17,520,238.95

2,501,770.99 18,418,375.12

0.65 30.89

14,870,623.78 35,938,644.96

$ 29,889,091.09 $ 20,920,146.11 $

31.54 $ 50,809,268.74

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

WHITFIELD 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, 2014

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
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, donations, and disposals) is to decrease net position.
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Position. In the current year, these amounts consist of:
Bond Principal Retirements
Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of:
Net Decrease in Accrued Interest on Issuance of Bonds Decrease in Compensated Absences Amortization of Bond Premium Decrease in Claims and Judgments
Total Additional Expenditures
Change in Net Position of Governmental Activities (Exhibit "B")

$ 14,870,623.78

$ 3,860,269.69 -4,920,338.32

-1,060,068.63

-700,965.26

-117,425.18

9,160,000.00

$

62,959.55

10,539.63

452,149.80

54,777.19

580,426.17

$ 22,732,590.88

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

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WHITFIELD COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS JUNE 30, 2014
ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net
Other
Total Assets LIABILITIES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS
$ 465,225.59 50,623.14 1,207.61
$ 517,056.34
$ 517,056.34

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

WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Whitfield 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.
The Northwest Georgia College and Career Academy (Charter School) is organized as a high school in Whitfield County, with a focus toward integrating academics and advanced career/technical education programs. The Charter School may serve students in grades 9 through 12, as well as post-secondary students through an agreement with Dalton State College. The financial statements of the Charter School have been included with the School District's General Fund.
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 Whitfield County Board of Education.
District-wide Statements:
The Statement of Net Position 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 non-exchange 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 and reports all financial resources not accounted for and reported in another fund.
District-wide Capital Projects Fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST), and grants from Georgia State Financing and Investment Commission that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. - 10 -

WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

Debt Service Fund accounts for and reports financial resources that are restricted, including taxes (sales) legally restricted for the payment of general long-term principal and interest.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various school activity accounts and flexible spending accounts.
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-balancing set 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. The School District considers all intergovernmental revenues to be available if they are collected within 120 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, except for principal and interest on general longterm debt, claims and judgments, and compensated absences which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities are reported as other financing sources.
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, both restricted and unrestricted resources are 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.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2014, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. The provisions of this statement establish accounting and financial reporting standards that reclassify, as deferred outflows or inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows or inflows of resources, certain items that were previously reported as assets and liabilities.
FUTURE ACCOUNTING PRONOUNCEMENTS
In fiscal year 2015, the School District will adopt Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this statement establish accounting and financial reporting standards for pensions that are provided to the

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WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

employees of state and local governmental employers through pension plans that are administered through trusts. Implementation of this statement will require the School District to record a liability for its proportionate share of the Net Pension Liability of pension plans in which it participates. Based on information provided by the Teachers' Retirement System of Georgia (TRS), the School District's proportionate share of the TRS plan's collective net pension liability is estimated to be $83.1 million at June 30, 2015.
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.
INVESTMENTS
Composition of Investments
Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year and equity investments are reported at fair value. The Official Code of Georgia 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 of return 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 (Georgia Fund 1) administered by the State of Georgia, Office of the State Treasurer,
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 quality risks, custodial credit risks, concentration of credit risks or interest rate risks.
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.

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WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

PROPERTY TAXES
The Whitfield County Board of Commissioners adopted the property tax levy for the 2013 tax digest year (calendar year) on October 20, 2013 (levy date) based on property values as of January 1, 2013. Taxes were due on December 20, 2013 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2013 tax digest are reported as revenue in the governmental funds for fiscal year 2014. The Whitfield 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, 2014, for maintenance and operations amounted to $27,670,357.14.

The tax millage rate levied for the 2013 tax year (calendar year) for the Whitfield County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

18.756 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $1,251,543.62 during fiscal year ended June 30, 2014.
SALES TAXES
Education Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $10,962,415.20 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
Consumable Supplies
On the basic financial statements, inventories of consumable supplies are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby consumable supplies are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.
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.
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WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

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

Capitalization Policy

Estimated Useful Life

Land

All

Land Improvements

$

20,000.00

Buildings and Improvements

$

100,000.00

Equipment

$

10,000.00

Intangible Assets

$

50,000.00

N/A 15 years 70 years
10 to 12 years 15 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.
DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to future periods and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. The School District did not have any items that qualified for reporting in this category for the year ended June 30, 2014.
In addition to liabilities, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time. The School District has one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes, and this amount is deferred and will be recognized as an inflow of resources in the period in which the amount becomes available.
COMPENSATED ABSENCES
Members of the Teachers' Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual school districts. Otherwise, sick leave does not vest with the employee, and no liability is reported in the School District's financial statements.
Vacation leave of 10 days is awarded on a fiscal year basis to all full time personnel employed on a twelve month basis. No other employees are eligible to earn vacation leave. Vacation leave not utilized during the fiscal year may be carried over to the next fiscal year, providing such vacation leave does not exceed 15 days. At the end of September, all vacation leave in excess of 15 days is forfeited.
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued.

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WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Position.
NET POSITION
The School District's Net Position in the District-wide Statements is classified as follows:
Net Investment in Capital Assets - This represents the School District's total Investment in Capital Assets, net of outstanding 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 Net Investment in Capital Assets.
Restricted Net Position - This represents resources for which the School District is legally or contractually obligated to spend resources for continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted Net Position - Unrestricted Net Position represents 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.
FUND BALANCES
The School District's fund balances are classified as follows:
Nonspendable Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.
Restricted Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.
Committed Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.
Unassigned The residual classification for the General Fund. This classification represents fund balances that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund.

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WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

Fund Balances of the Governmental Funds at June 30, 2014, are as follows:

Nonspendable Inventories
Restricted Continuation of Federal Programs Capital Projects Debt Service
Assigned Self-Insurance School Activity Accounts
Unassigned

$ 155,355.17

$ 3,559,638.50 20,267,533.40 652,644.25

24,479,816.15

$

390,293.45

1,048,966.92

1,439,260.37 24,734,837.05

Fund Balance, June 30, 2014

$ 50,809,268.74

When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.
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: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds is prepared and adopted by fund. The legal level of budgetary control was established by the Board at the aggregate fund level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America.
The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines, and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
See Schedule 1 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for a detail of any over/under expenditures during the fiscal year under review.

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WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

NOTE 4: DEPOSITS AND INVESTMENTS

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. 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 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.

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 to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2014, the School District had deposits with a carrying amount of $19,535,422.21, which includes $53,163.27 in Certificates of Deposit that are reported as Investments, and a bank balance of $23,737,031.79. The bank balances insured by Federal depository insurance were $1,278,332.94, and the bank balances collateralized with securities held by the pledging institution or by the pledging financial institution's trust department or agent in the School District's name were $146,913.08.

The amounts exposed to custodial credit risk are classified into three categories as follows:

Category 1 Category 2
Category 3

Uncollateralized, Cash collateralized with securities held by the pledging financial institution, or Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name.

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WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

The School District's deposits by custodial credit risk category at June 30, 2014, are as follows:

Custodial Credit Risk Category

Bank Balance

1

$

0.00

2

0.00

3

22,311,785.77

Total

$ 22,311,785.77

CATEGORIZATION OF INVESTMENTS
At June 30, 2014, the carrying value of the School District's total investments was $25,527,171.23, which is materially the same as fair value. This includes $53,163.27 invested in Certificates of Deposits, which are collateralized in the same manner as other cash deposits. The remaining investment of $25,474,007.96 consisted entirely of funds invested in the Georgia Fund 1 (local government investment pool) administered by the State of Georgia, Office of the State Treasurer is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.ga.gov/SGD/cafr.html.
The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company and does not operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAA rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2014, was 62 days.
NOTE 5: NON-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.

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WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

NOTE 6: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:

Balances July 1, 2013

Increases

Decreases

Balances June 30, 2014

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress

$ 8,624,659.08

$ 8,624,659.08

1,261,355.03 $ 2,480,111.05 $ 1,012,372.21

2,729,093.87

Total Capital Assets Not Being Depreciated

9,886,014.11

2,480,111.05

1,012,372.21

11,353,752.95

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

212,840,630.84 21,604,947.86 9,612,998.57

1,383,312.55 667,153.00 342,065.30

697,321.55 238,796.98

213,526,621.84 22,033,303.88 9,955,063.87

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

25,481,490.43 13,358,199.77
6,068,255.78

3,043,148.82 1,382,811.10
494,378.40

4,980.87 230,172.40

28,519,658.38 14,510,838.47
6,562,634.18

Total Capital Assets, Being Depreciated, Net

199,150,631.29

-2,527,807.47

700,965.26 195,921,858.56

Governmental Activity Capital Assets - Net $ 209,036,645.40 $

-47,696.42 $ 1,713,337.47 $ 207,275,611.51

Current year depreciation expense by function is as follows:

Instruction

$

Support Services

Improvements of Instructional Services

$

8,757.80

Educational Media Services

182,471.47

General Administration

96,417.35

School Administration

233,468.47

Business Administration

32,878.35

Maintenance and Operation of Plant

37,578.86

Student Transportation Services

599,426.60

Central Support Services

2,895.20

Food Services

$

3,244,355.81
1,193,894.10 482,088.41
4,920,338.32

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WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

NOTE 7: INTERFUND TRANSFERS
Interfund transfers for the year ended June 30, 2014, consisted of the following:

Transfers to

Transfers From District-wide
Capital Projects

Debt Service Fund

$ 10,717,155.27

EXHIBIT "H"

Transfers are used to move sales tax revenues collected by the District-wide Capital Projects Fund to Debt Service Fund for bond payments.

NOTE 8: 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 participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the system varies by line of coverage.

The School District has established a limited risk management program for workers' compensation claims prior to July 1, 2012. In connection with this program, a self-insurance reserve has been established within the General Fund by the School District. 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 workers' compensation claims liability during the last two fiscal years are as follows:

Beginning

Claims and

of Year

Changes in

Claims

End of Year

Liability

Estimates

Paid

Liability

2013 $ 2014 $

447,729.21 $ 214,319.79 $

0.00 $ 0.00 $

233,409.42 $ 54,777.19 $

214,319.79 159,542.60

The School District is self-insured with regard to unemployment compensation claims. In connection with this program, a self-insurance reserve has been established within the General Fund by the School District. 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.

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WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2013 $ 2014 $

0.00 $ 0.00 $

23,217.00 $ 16,961.95 $

23,217.00 $ 16,961.95 $

0.00 0.00

The School District participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July 1, 1992, 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 Fund for its Workers' Compensation insurance coverage. Excess insurance coverage is provided through an agreement by the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $550 thousand loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $550 thousand loss per occurrence, up to $2 million. In addition to the $550,000 per occurrence retention, the Fund also retains an additional $150,000 per year corridor retention.

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

Position Covered

Amount

Superintendent All Other Employees

$

100,000.00

$

100,000.00

NOTE 9: OPERATING LEASES

Whitfield County Board of Education has entered into various leases as lessee for office equipment. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2014, for governmental funds amounted to $206,125.20. Future minimum lease payments for these leases are as follows:

Year Ending

Governmental

2015 2016

$

206,125.20

206,125.20

Total

$

412,250.40

NOTE 10: LONG-TERM LIABILITIES
COMPENSATED ABSENCES
Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences.

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WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

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

Purpose

Interest Rates

Amount

General Government - Series 2006 General Government - Series 2009

3.61% $ 9,910,000.00

2.50% - 5.00%

19,920,000.00

$ 29,830,000.00

The changes in Long-Term Liabilities during the fiscal year ended June 30, 2014, were as follows:

Balance July 1, 2013

Additions

Governmental Activities

Balance

Deductions

June 30, 2014

Due Within One Year

G.O. Bonds

$ 38,990,000.00

Compensated Absences (1)

256,853.26 $

Bond Premiums Amortized

1,733,241.10

$ 230,410.44

9,160,000.00 $ 29,830,000.00 $

240,950.07

246,313.63

452,149.80 1,281,091.30

9,540,000.00 452,149.80

$ 40,980,094.36 $ 230,410.44 $ 9,853,099.87 $ 31,357,404.93 $ 9,992,149.80

(1) The portion of Compensated Absences due within one year has been determined to be immaterial to the basic financial statements.

At June 30, 2014, payments due by fiscal year which includes principal and interest for these items

are as follows:

General Obligation Debt

Unamortized

Fiscal Year Ended June 30:

Principal

Interest

Bond Premium

2015 2016 2017

$ 9,540,000.00 $ 9,935,000.00
10,355,000.00

1,305,288.50 $ 859,876.00 380,001.00

452,149.80 452,149.80 376,791.70

Total Principal and Interest $ 29,830,000.00 $ 2,545,165.50 $ 1,281,091.30

NOTE 11: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $7,266,189.73 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 Certificated Personnel In the amount of $7,021,320.00
Paid to the Teachers' Retirement System of Georgia For Teachers' Retirement System (TRS) Employer's Cost In the amount of $45,575.73

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WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

Office of the State Treasurer Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $199,294.00
Funds paid to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District are reported as part of the Quality Basic Education revenue allotments on Schedule 3 Schedule of State Revenue.

NOTE 12: SIGNIFICANT COMMITMENTS
The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2014, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

STEM Labs at the Middle Schools

$

Southeast Whitfield High School Athletic Projects

Dug Gap Elementary School New Parking Lot

CTAE Lab Modifications - Northwest Whitfield High School

CTAE Lab Modifications - Cohulla Creek High School

38,155.00 $ 21,655.90
5,633.20 107,433.36 175,865.50

349,899.11

$

348,742.96 $

349,899.11

The amounts described in this note are not reflected in the basic financial statements.
NOTE 13: 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 of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
NOTE 14: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL 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 Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) 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). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
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. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average,
- 23 -

WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

members with five years or more of service as of January 1, 2012, pay approximately 25% of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.

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 "payas-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, 2014:

For certificated teachers, librarians and regional educational service agencies and certain other eligible participants:

July 1, 2013 June 30, 2014

$945.00 per member per month

For non-certificated school personnel:

July 1, 2013 June 30,2014

$596.20 per member per month

No additional contribution was required by the Board for fiscal year 2014 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School 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:

Fiscal Year

Percentage Contributed

Required Contribution

2014 2013 2012

100% 100% 100%

$ 12,415,236.50 $ 12,270,194.76 $ 11,003,880.52

NOTE 15: RETIREMENT PLANS
TEACHERS' RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 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

- 24 -

WHITFIELD COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

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 30 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 25 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 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 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 10 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, 2014, were 6% of annual salary. Employer contributions required for fiscal year 2014 were 12.28% of annual salary as required by the June 30, 2011, actuarial valuation.
Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2014 2013 2012

100% 100% 100%

$ 7,774,377.02 $ 7,068,617.61 $ 6,368,009.68

PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS)
Bus drivers, lunchroom personnel, and maintenance and custodial personnel are members of the Public School Employees Retirement System of Georgia. The System is funded by contributions by the employees and by the State of Georgia. The School District makes no contribution to this plan.

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WHITFIELD COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2014

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 Central Support Services Other Support Services Community Services Food Services Operation
Capital Outlay Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Other Sources Other Uses
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$ 27,400,000.00 $ 28,661,350.00 $ 29,690,377.01 $ 1,029,027.01

437,613.05

437,613.05

73,358,059.00

66,651,285.00

75,770,303.49

9,119,018.49

13,269,378.00

16,506,419.00

14,771,278.63

-1,735,140.37

1,655,199.00

1,303,685.00

2,039,364.90

735,679.90

20,000.00

27,800.00

4,829.15

-22,970.85

260,775.00

231,575.00

5,304,910.46

5,073,335.46

115,963,411.00

113,382,114.00

128,018,676.69

14,636,562.69

74,998,730.00
4,139,475.00 3,036,209.00 2,474,122.00
502,059.00 7,845,472.00
669,092.00 8,238,437.00 5,747,432.00 1,807,073.00
192,947.00
8,542,232.00

75,761,055.00
4,179,033.00 4,644,368.00 2,711,147.00
701,740.00 7,212,904.00 1,176,960.00 8,344,932.00 5,353,064.00 1,730,671.00
457,786.00
7,710,118.00

66,419,133.33
5,592,577.41 3,435,937.72 2,249,619.92
880,702.69 7,874,664.38
674,888.94 8,022,696.26 5,022,872.46 1,764,679.98
326,687.70 361,289.26 10,279,566.45 2,744,508.05

9,341,921.67
-1,413,544.41 1,208,430.28
461,527.08 -178,962.69 -661,760.38 502,071.06 322,235.74 330,191.54
-34,008.98 131,098.30 -361,289.26 -2,569,448.45 -2,744,508.05

118,193,280.00 -2,229,869.00

119,983,778.00 -6,601,664.00

115,649,824.55 12,368,852.14

4,333,953.45 18,970,516.14

100,000.00 -100,000.00
0.00 -2,229,869.00 21,643,817.96

31,099.00 -31,099.00
0.00 -6,601,664.00 21,580,065.38

0.00 0.00 0.00 12,368,852.14 17,520,238.95

-31,099.00 31,099.00
0.00 18,970,516.14 -4,059,826.43

Fund Balances - Ending

$ 19,413,948.96 $ 14,978,401.38 $ 29,889,091.09 $ 14,910,689.71

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 principal accounts had actual revenues of $2,487,773.36 and actual expenditures of $2,420,766.46.
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.

- 27 -

WHITFIELD COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2014

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
Schools and Roads Cluster Pass-Through From Office of the State Treasurer Schools and Roads - Grants to States
Other Programs Pass-Through From Georgia Department of Education Food Services Fresh Fruit and Vegetable Program
Total U. S. Department of Agriculture
Education, U. S. Department of Education of Homeless Children and Youth Cluster Pass-Through From Georgia Department of Education Education for Homeless Children and Youth
Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education ARRA - Race-to-the-Top Incentive Grants Career and Technical Education - Basic Grants to States English Language Acquisition Grants Improving Teacher Quality State Grants Migrant Education - State Grant Program Striving Readers Title I Grants to Local Educational Agencies
Total Other Programs
Total U. S. Department of Education
Total Expenditures of Federal Awards
N/A = Not Available

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555

N/A

(2)

N/A

$

9,759,744.89 (1)

9,759,744.89

10.665

N/A

(3)

10.582

N/A

204,963.74 9,964,708.63

84.196

N/A

24,893.71

84.027

N/A

84.173

N/A

2,626,751.23 52,224.84
2,678,976.07

84.395 84.048 84.365 84.367 84.011 84.371 84.010

N/A

21,797.31

N/A

96,883.52

N/A

295,462.89

N/A

322,151.51

N/A

65,411.37

N/A

123,893.43

N/A

3,725,528.21

4,651,128.24

7,354,998.02

$ 17,319,706.65

- 28 -

WHITFIELD COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2014

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $212,606.19.
(2) Expenditures for the funds earned on the School Breakfast Program ($1,869,739.98) were not maintained separately and are included in the 2014 National School Lunch Program.
(3) Funds earned on this program, in the amount of $10,041.33, do not require reporting of expenditures.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Whitfield 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.

See notes to the basic financial statements.

- 29 -

WHITFIELD COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2014

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education (1) 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 Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) 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 Nursing Services Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Move On When Ready Preschool Handicapped Program Pupil Transportation - State Bonds Teachers' Retirement Technology to Support Digital Learning Vocational Construction Related Equipment - State Bonds
Georgia State Financing and Investment Commission Reimbursement on Construction Projects
Office of the State Treasurer Public School Employees Retirement
Technical College System of Georgia Vocational-Technology School

GOVERNMENTAL

FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

831,344.21

$ 831,344.21

3,817,630.00 1,536,068.00 9,362,916.00 2,876,562.00 4,464,445.00 1,375,074.00 8,205,108.00 7,586,085.00 2,088,755.00 9,306,026.00 4,380,662.00
13,549.00 583,891.00 3,428,556.00 1,542,404.00 450,464.00 308,456.00
1,663,948.00 3,287,250.00 3,548,793.00
1,186,640.00 260,502.00
11,083,451.00 216,963.00 187,417.02
-9,684,354.00
1,600.00 147,415.57 231,660.00
45,575.73 74,055.00 453,489.90

3,817,630.00 1,536,068.00 9,362,916.00 2,876,562.00 4,464,445.00 1,375,074.00 8,205,108.00 7,586,085.00 2,088,755.00 9,306,026.00 4,380,662.00
13,549.00 583,891.00 3,428,556.00 1,542,404.00 450,464.00 308,456.00
1,663,948.00 3,287,250.00 3,548,793.00
1,186,640.00 260,502.00
11,083,451.00 216,963.00 187,417.02
-9,684,354.00
1,600.00 147,415.57 231,660.00
45,575.73 74,055.00 453,489.90

$ 4,250,850.55

4,250,850.55

199,294.00

199,294.00

708,608.06

708,608.06

$ 75,770,303.49 $ 4,250,850.55 $ 80,021,154.04

(1) Payments to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District in the amount of $7,021,320.00 are included as part of the Quality Basic Education revenue allotments above.

See notes to the basic financial statements.

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WHITFIELD COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2014

SCHEDULE "4"

PROJECTS
Acquisition, construction, equipping, and furnishing of new school buildings and facilities, including but not limited to, a new high school and a new elementary school; the addition, renovation, repair and improvement to existing school buildings and facilities; the acquisition and purchase of technology and safety equipment, including but not limited to, computer hardware and software and security and safety equipment; the acquisition and purchase of school buses and other transportation or maintenance vehicles; the acquisition of land; acquisition and purchase of any property necessary and desirable therefore; both real and personal.
Paying all or a portion of the debt service on outstanding Series 2006 and Series 2009 General Obligation Bonds previously issued by the Whitfield County School District; acquiring new technology equipment, safety and security equipment and other school equipment; adding to, renovating, repairing, improving, equipping and furnishing existing school buildings or other buildings or facilities useful or desirable in connection therewith, including but not limited to HVAC, roofing, electrical, plumbing and paving; acquiring land; purchasing textbooks and band instruments; purchasing school buses and school vehicles; acquiring any property necessary or desirable therefore, both real and personal.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED IN PRIOR YEAR (3) (4)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED

ESTIMATED COMPLETION
DATE

$ 96,100,000.00 108,658,852.54 1,340,391.14

86,811,380.28 `

Ongoing

68,649,000.00

68,649,000.00 1,575,121.85

0.00

$ 164,749,000.00 $ 177,307,852.54 $ 2,915,512.99 $ 86,811,380.28

0.00

Ongoing 0.00

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. (2) Changes from the original estimated costs reflect actual ESPLOST revenue, state capital grants, investment earnings and current estimated costs. (3) The voters of Whitfield County approved the imposition of a 1% sales tax to fund the above projects.
Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. (4) In addition to the expenditures shown above, the School District has incurred interest to provide advance funding for the above projects as follows:

Prior Years

$ 11,811,537.89

Current Year

1,557,188.50

Total

$ 13,368,726.39

See notes to the basic financial statements.

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WHITFIELD COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)
ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2014

SCHEDULE "5"

DESCRIPTION
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 I Category II Category III Category IV Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development
TOTAL QBE FORMULA FUNDS

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

4,371,580.00 $ 4,873,348.40 $ 109,304.59 $ 4,982,652.99

1,703,832.00

301,341.87

777.19

302,119.06

10,550,134.00 12,073,626.88

355,496.13

12,429,123.01

3,284,303.00 1,452,723.99

4,436.65

1,457,160.64

5,057,522.00 5,321,852.16

152,984.04

5,474,836.20

1,539,605.00 9,262,611.00 8,505,957.00 2,387,880.00 10,342,701.00
4,894,255.00 13,785.00
670,718.00 3,836,156.00

688,078.66 7,838,655.99 8,778,189.31 1,940,204.71
213,482.80 748,359.46 5,330,433.00 285,739.55 182,356.60 4,282,829.05
888,896.21 3,381,036.44

1,201.36 322,670.04 366,345.48
98,041.78
7,728.68 3,543.48 10,490.50 8,679.02
168.81 7,964.18
3.00 11,007.19
9,918.59

689,280.02 8,161,326.03 9,144,534.79 2,038,246.49
221,211.48 751,902.94 5,340,923.50 294,418.57 182,525.41 4,290,793.23
3.00 899,903.40 3,390,955.03

66,421,039.00 58,581,155.08

1,470,760.71

60,051,915.79

1,739,442.00 340,953.00

1,996,370.76 45,622.69

152,520.97 311,529.35

2,148,891.73 357,152.04

$

68,501,434.00 $ 60,623,148.53 $ 1,934,811.03 $ 62,557,959.56

(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.

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SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

(This page left intentionally blank)

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
May 17, 2016

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Whitfield County Board of Education
INDEPENDENT AUDITOR'S 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, 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, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Whitfield County Board of Education as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise Whitfield County Board of Education's basic financial statements and have issued our report thereon dated May 17, 2016.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Whitfield County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances 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 Whitfield County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Whitfield County Board of Education's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses.

2014YB-42

(This page left intentionally blank)

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. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS-2014-001 and FS-2014-002 to be material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Whitfield County Board of Education's financial statements are free from 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 Whitfield County Board of Education in a separate letter dated May 17, 2016.
Whitfield County Board of Education's Response to Findings
Whitfield County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Whitfield County Board of Education's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,

GSG:cb 2014YB-42

Greg S. Griffin State Auditor

(This page left intentionally blank)

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
May 17, 2016

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Whitfield County Board of Education
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
Ladies and Gentlemen:
Report on Compliance for Each Major Federal Program
We have audited Whitfield 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, 2014. Whitfield 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.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of Whitfield County Board of Education's major federal programs based on our audit of the types of compliance requirements referred to above. 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 of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types 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 Whitfield County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

2014SA-10

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We believe that our audit provides a reasonable basis for our opinion on compliance for each major Federal program. However, our audit does not provide a legal determination of Whitfield County Board of Education's compliance.
Opinion on Each Major Federal Program
In our opinion, the Whitfield County Board of Education complied, in all material respects, with the types of 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, 2014.
Report on Internal Control over Compliance
Management of Whitfield County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Whitfield County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program 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 Whitfield 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. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
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 material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,

GSG:cb 2014SA-10

Greg S. Griffin State Auditor

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

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WHITFIELD COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS- 7551-12-01 FS- 7551-13-01 FS- 7551-13-02

Further Action Not Warranted Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

FINANCIAL REPORTING Inadequate controls over Financial Reporting Finding Control Number: FS-7551-13-01

The School District has finance department personnel who are working in new roles. Additional training will be given to those employees to assist in accurate posting and financial statement preparation. The District has also encountered significant posting issues in its new accounting software and is working with the vendor to get those corrected.

CAPITAL ASSETS Failure to Maintain Adequate Capital Asset Records Finding control Number: FS-7551-13-02

The District has transitioned from tracking fixed assets on a spreadsheet to a more automated module within our new financial software. Corrections will be made for errors noted during the 2013 audit. Procedures will be put into place to validate District-wide additions and disposals going forward.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA- 7551-11-01

Previously Reported Corrective Action Implemented

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SECTION IV FINDINGS AND QUESTIONED COSTS

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WHITFIELD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014
I SUMMARY OF AUDITOR'S RESULTS
Financial Statements
Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information
Internal control over financial reporting: Material weaknesses 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

Unmodified
Yes None Reported
No
No None Reported
Unmodified

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 Numbers

Name of Federal Program or Cluster

10.553, 10.555

Child Nutrition Cluster

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

Auditee qualified as low-risk auditee?

No
$519,892.44 No

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WHITFIELD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS-2014-001 Financial Statement Preparation

Control Category:

Financial Reporting

Internal Control Impact:

Material Weakness

Description: This is a repeat finding (FS-7551-12-02 and FS-7551-13-01) for the years ended June 30, 2012 and June 20, 2013. The School District's accounting procedures were insufficient to provide for adequate controls over the financial statement preparation process.

Criteria: The School District is required to maintain a system of controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). The School District's internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills and experience to prepare GAAP based financial statements and include all disclosures as required by the Governmental Accounting Standards Board (GASB).
GASB Statement No. 34, Basic Financial Statements Management's Discussion and Analysis for State and Local Governments (statement), requires governments to present government-wide and fund financial statements as well as a summary reconciliation of the (a) total governmental funds balances to the net position of governmental activities in the Statement of Net Position, and (b) total change in governmental fund balances to the change in the net position of governmental activities in the Statement of Activities. In addition, the statement requires information about the government's major and nonmajor funds in the aggregate, to be provided in the fund financial statements.
Chapter 22A 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.

Condition: The Department of Audits and Accounts provided basic accounting assistance limited to services such as preparing draft financial statements that were based on the entity's chart of accounts and general ledgers including any adjusting, correcting, and closing entries that have been approved by the entity's staff; prepared draft notes to the financial statements based on information determined and approved by management; and prepared trial balances based on the entity's chart of accounts.

Cause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the previous finance director being terminated and the lack of time and resources to train current Board personnel to accomplish the preparation of financial statements.

Effect or Potential Effect: The School District did not comply with the requirements of GAAP or the Georgia Department of Education regarding financial reporting. Adjustments were necessary in order for the School District's financial statements to be in conformity with generally accepted accounting principles.

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WHITFIELD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Recommendation: As part of internal control over the preparation of financial statements, including disclosures, the School District should continue to implement comprehensive preparation and/or review procedures to ensure that the financial statements are complete and accurate. These procedures should be performed by a properly trained individual possessing a thorough understanding of the applicable GAAP, GASB pronouncements, and knowledge of the School District's activities and operations.
Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The Board of Education engaged with an outside consultant for Financial Statement preparation for fiscal year 2014. The consultant failed to perform the contracted duties; therefore, the Board requested statement preparation assistance from the Department of Audits. Beginning with fiscal year 2015, the Board successfully engaged with a consultant for Financial Statement preparation and training for the Finance Director.
Contact Person: Kelly Johnson Coon, Finance Director Telephone: (706) 217-6704 Fax: (706) 217-6703 E-mail: kelly_coon@whitfield.k12.ga.us

FS-2014-002 Inadequate Controls over Capital Assets

Control Category:

Capital Assets

Internal Control Impact:

Material Weakness

Description: This is a repeat finding (FS-7551-12-01 and FS-7551-13-02) for the years ended June 20, 2012 and June 30, 2013. The School District did not adequately maintain capital asset inventory records.

Criteria: Chapter 37 Implementing a Capital Asset Management System of the Financial Management System
for Georgia Local Units of Administration provides that the School Districts must establish fixed asset
policies, define system requirements, implement a fixed asset system, and maintain fixed asset
inventory records.

Condition: A review of the School District's capital assets policies, procedures, and the related capital assets records revealed the following errors:

Construction in progress additions for the STEM Labs at the High and Middle Schools were not recorded resulting in a calculated understatement of $94,606.14. An entry was proposed and accepted by management to record these omissions.

Construction in progress additions for the CTAE Labs at Northwest Whitfield and Coahulla Creek High Schools were not recorded resulting in a calculated understatement of $39,610.00. An entry was proposed and accepted by management to record these omissions.

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WHITFIELD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Construction in progress additions for the Southeast Whitfield High School Track, Tennis, and Football Field projects were not recorded resulting in a calculated understatement of $122,941.52. Current year expenditures for this project were included in additions to Land Improvements by the School District resulting in a calculated understatement of $952,646.02 for the Construction in Progress balance and an overstatement in Land Improvements. An entry was proposed and accepted by management to correct these errors.
Construction in progress additions for the Dug Gap Elementary School Parking Lot were not recorded resulting in a calculated understatement of $621,490.81. An entry was proposed and accepted by management to record these omissions.
Buildings and Building Improvements were understated by $1,012,372.21 due to the completed STEM Labs at Southeast Whitfield and Northwest Whitfield High Schools and the Northwest Georgia College and Career Academy not being added and deleted from Construction in Progress. An entry was proposed and accepted by management to correct this error.
Buildings and Building Improvements were understated in the amount of $98,386.26 for prior year expenditures for the HVAC system at Coahulla Creek High School that were omitted from the capital asset listing. An entry was proposed and accepted by management to record these omissions.
The current year listing of Building and Building Improvement additions included assets in the amount of $92,649.97 that were recorded as Equipment on the capital asset listing. An entry was proposed and accepted by management to correct this error.
Buildings and Buildings Improvements that did not meet the $100,000.00 threshold were included in current year additions in the amount of $172,346.17. An entry was proposed and accepted by management to correct these errors.
Equipment meeting the $10,000.00 threshold purchased during the year was omitted from the capital asset listing resulting in an understatement of $163,908.00. A duplicate asset was recorded resulting in an overstatement of $14,920.00. An entry was proposed and accepted by management to correct these errors.
Equipment was recorded on the Capital Asset listing which did not meet the $10,000.00 threshold resulted in an overstatement of $11,172.96. An entry was proposed and accepted by management to correct these errors.
Land Improvements were recorded on the Capital Asset listing which did not meet the $20,000.000 threshold resulted in an overstatement of $12,725.00. An entry was proposed and accepted by management to correct these errors.
Depreciation expense was understated by $221,768.50 as a result of the above errors to Capital Assets. An entry was proposed and accepted by management to correct this error.
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WHITFIELD COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Cause: In discussing these deficiencies with the School District, they stated the cause was a result of the School District not thoroughly implementing policies and procedures that ensured all Capital Assets were properly recorded. Effect or Potential Effect: Material misstatements in Capital Assets were included in the financial statements presented for audit. In addition, the lack of controls and monitoring could impact the reporting of the School District's financial position and results of operations. Recommendation: The School District should review the accounting controls and procedures currently in place, identify weaknesses, and design and implement procedures necessary to strengthen of controls over the recording of Capital Assets. Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The Districts Capital Asset inventory was transferred from an Excel spreadsheet to our financial software in fiscal year 2013. Due to transition in the Finance Director position, the Capital Asset inventory was not monitored and updated. During the fiscal year 2014 audit field work, the District put procedures in place to properly record and maintain asset details. Contact Person: Kelly Johnson Coon, Finance Director Telephone: (706) 217-6704 Fax: (706) 217-6703 E-mail: kelly_coon@whitfield.k12.ga.us III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
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Locations