Wilkes County Board of Education, Washington, Georgia, annual financial report for the fiscal year ended June 30, 2009 (including independent auditor's report)

WILKES COUNTY BOARD OF EDUCATION
WASHINGTON, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2009
(Including Independent Auditor's Reports)

WILKES COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

8

H

STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

9

NOTES TO THE BASIC FINANCIAL STATEMENTS

11

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

25

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

26

3 SCHEDULE OF STATE REVENUE

28

WILKES COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

29

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

31

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDIDNG STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133

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

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

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

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1156 Atlanta, Georgia 303348400
June 28, 2010

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Wilkes County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through I) of the Wilkes County Board of Education, as of and for the year ended June 30, 2009, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Wilkes County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Wilkes County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Wilkes County Board of Education, as of June 30, 2009, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

2009ARL-11

The Wilkes County Board of Education has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not to be part of, the basic financial statements.
In accordance with Government Auditing Standards, we have also issued our report dated June 28, 2010, on our consideration of the Wilkes 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 and should be considered in assessing the results of our audit.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 25, is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Wilkes County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits of States/ Local Governments/ and Non-Profit Organizations/ are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
w.~~
Ru ell W. Hinton, CPA, CGFM State Auditor
RWH:as 2009ARL-11

WILKES COUNTY BOARD OF EDUCATION

WILKES COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2009
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Contracts Payable Retainages Payable Deposits and Deferred Revenues Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Bus Replacement Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

3,174,722.96

468,399.40 943,912.00 292,161.64
16,036.40 36,674.96 457,581.77 28,512,422.54

$ 33,901,911.67
=======

$

58,139.35

1,825,506.87

850.89

440,811.05

100,000.00

40,861.58

489,624.97 14,235,375.03

$ 17,191,169.74

$ 14,928,405.47
181,613.00 487,287.69 396,844.71 195,780.30 520,810.76
$ 16,710,741.93

$ 33,901,911.67
=============

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

WILKES COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2009

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

EXPENSES

CHARGES FOR SERVICES

$ 9,800,637.79 $
729,276.22 572,457.34 341,657.49 350,777.02 944,714.89 207,260.38 1,150,330.16 945,854.91 186,111.26
24,830.41
133,606.65 970,640.31 571,767.08
$ 16,929,921.91 $

183,794.35
133,606.65 208,035.06 525,436.06

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 ASSETS

$ 7,035,104.44
121,614.45 386,505.78 185,555.55 438,967.28 493,212.03
18,227.72 418,602.56 460,395.30 $
5,577.26
835,805.35
$ 10,399,567.72 $

$ 71,378.00 71,378.00 $

-2,581, 739.00
-607,661.77 -185,951.56 -156,101.94
88,190.26 -451,502.86 -189,032.66 -731,727.60 -414,081.61 -186,111.26
-19,253.15
0.00 73,200.10 -571,767.08
-5,933,540.13

$

4,660,793.19

4,567.81

1,098,873.39 43,400.07
146,235.00 31,216.07
155,714.98

$

6,140,800.51

$

207,260.38

16,503,481.55

-3-

WILKES COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2009

EXHIBIT "C"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 2,222,340.27 $ 952,382.69 $

286,114.03 943,912.00 292,161.64
16,036.40 36,674.96

182,285.37

0.00 $

3,174,722.96
468,399.40 943,912.00 292,161.64
16,036.40 36,674.96

Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Contracts Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Bus Replacement Continuation of Federal Programs Debt Service Capital Projects
Unreserved Designated for Student Activities Undesignated Reported in: General Fund
Total Fund Balances

$ 3,797,239.30 $ 1,134,668.06 $

$

56,907.35 $

1,825,506.87

850.89

40,861.58

1,232.00
440,811.05 100,000.00
56,787.58

$ 1,924,126.69 $ 598,830.63

$ 181,613.00 487,287.69 $ 396,844.71 $ 138,992.72
100,218.70
1,103,993.22
$ 1,873,112.61 $ 535,837.43 $

0.00 $

4,931,907.36

=======

$

58,139.35

1,825,506.87

850.89

440,811.05

100,000.00

97,649.16

$

2,522,957.32

$ 0.00
0.00 $

181,613.00 487,287.69 396,844.71 138,992.72
100,218.70
1,103,993.22
2,408,950.04

Total Liabilities and Fund Balances

$ 3,797,239.30 $ 1,134,668.06 $

0.00 $ ==4='=93=1=,9=0=7=.3=6

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

WILKES COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2009

EXHIBIT "D"

Total Fund Balances Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Taxes that are not available to pay for current period expenditures are deferred in the funds.
Long-Term Liabilities, including Bonds and Notes Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds.

$ 2,408,950.04

$ 457,581.77 166,383.00
28,551,416.04 2,857,529.50 -3,062,906.00

28,970,004.31

56,787.58

-14,725,000.00

Net Assets of Governmental Activities (Exhibit "A")

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

WILKES COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2009

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 Enterprise Operations Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Proceeds of Long-Term Capital Related Debt Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 4,613,685.41

$

43,400.07 $ 1,042,085.81

8,273,833.78

2,343,346.94

525,436.06

19,955.66

11,260.41

153,490.19

2,224.79

$ 15,973,148.11 $ 1,055,571.01 $

0.00 $

4,613,685.41 1,085,485.88 8,273,833.78 2,343,346.94
525,436.06 31,216.07
155,714.98

0.00 $ 17,028,719.12

$ 9,692,121.58

$ 9,692,121.58

729,276.22 572,457.34 336,169.56 350,777.02 943,088.83 207,260.38 1,140,670.23 810,865.08 186,111.26
24,830.41 133,606.65 954,612.67
$ 5,682,559.37

729,276.22 572,457.34 336,169.56 350,777.02 943,088.83 207,260.38 1,140,670.23 810,865.08 186,111.26
24,830.41 133,606.65 954,612.67 5,682,559.37

$ 320,000.00 131,362.01 440,405.07

320,000.00 571,767.08

$ 16,081,847.23 $ 5,813,921.38 $ 760,405.07 $ 22,656,173.68

$ -108,699.12 $ -4,758,350.37 $ -760,405.07 $ -5,627,454.56

$ 5,000,000.00

$ 5,000,000.00

575,000.00 $ 760,405.07

1,335,405.07

$ -575,000.00

-760,405.07

-1,335,405.07

$ -575,000.00 $ 4,814,594.93 $ 760,405.07 $ 5,000,000.00

$ -683,699.12 $ 56,244.56 $

0.00 $ -627,454.56

2,556,811.73

479,592.87

0.00 3,036,404.60

Fund Balances - Ending

$ 1,873,112.61 $ 535,837.43 $

0.00 $ 2,408,950.04

=====

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

WILKES 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, 2009

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")

$ -627 ,454.56

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

$ 5,744,059.77 -316,514.00

5,427,545.77

Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.

Property Taxes Special Purpose Local Option Sales Tax
Total Taxes Reported

$

51,675.59

56,787.58

108,463.17

In the Statement of Activities, only the gain on the sale of the building and equipment is reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the building and equipment sold.

-21,294.00

Debt proceeds provide current financial resources to Governmental Funds; however, issuing debt increases Long-Term Liabilities in the Statement of Net Assets. In the current period, proceeds were received from:

Promissory Note Issued

-5,000,000.00

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 Assets. In the current year, these amounts consist of:

Bond Principal Retirements

320,000.00

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

$ 207,260.38

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

ASSETS Cash and Cash Equivalents Investments
Certificate of Deposit
Total Assets

WILKES COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2009

EXHIBIT "G"

PRIVATE PURPOSE TRUSTS

AGENCY FUNDS

$ 37,645.45 $ 22,836.03 19,363.54

$ 57,008.99 $ 22,836.03

LIABILITIES Funds Held for Others
NET ASSETS Held in Trust for Private Purposes
Total Liabilities and Net Assets

$ 22,836.03 $ 57,008.99 $ 57,008.99 $ 22,836.03

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

WILKES COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2009
ADDITIONS Contributions Donors Investment Earnings Interest Total Additions
DEDUCTIONS Scholarships Change in Net Assets
Net Assets Beginning
Net Assets Ending

EXHIBIT "H"

PRIVATE PURPOSE TRUSTS

$

125.00

1,396.80

$

1,521.80

1,742.73

$

-220.93

57,229.92

$ 57,008.99

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

(This page left intentionally blank)

WILKES COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "I"

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

-11-

WILKES COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT 11I"

District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and Promissory Note Proceeds to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
The School District reports the following fiduciary fund types:
Private Purpose Trust funds report trust arrangements under which principal and income may be expended to provide scholarships for selected students.
Agency funds account for assets held by the School District as an agent for various school activity 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. 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 long-term debt, 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, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.

-12 -

WILKES COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "I"

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 interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the 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 Georgia Fund 1 administered by the State of Georgia, Office of Treasury and Fiscal Services,
7. Repurchase agreements, and
8. Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency 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.
-13 -

WILKES COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "I"

PROPERTY TAXES
The Wilkes County Board of Commissioners fixed the property tax levy for the 2008 tax digest year (calendar year) on March 31, 2009 (levy date). Taxes were due on June 8, 2009 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2008 tax digest are reported as revenue in the governmental funds for fiscal year 2009. The Wilkes 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, 2009, for maintenance and operations amounted to $4,609,117.60.

The tax millage rate levied for the 2008 tax year (calendar year) for the Wilkes County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

16.75 mills

SALES TAXES
Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $1,042,085.81 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.
INVENTORIES
Food Inventories On the basic financial statements, inventories 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.

-14-

WILKES COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "I"

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

Capitalization

Estimated

Policy

Useful Life

Land Land Improvements Buildings and Improvements Equipment

Any Amount $ 5,000.00 $ 5,000.00 $ 5,000.00

N/A
10 to 90 years 10 to 90 years 5 to 50 years

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

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 and 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. To conform to generally accepted accounting principles, bond premiums and discounts, as well as issuance costs, should be deferred and amortized over the life of the bonds using the straight-line method. The effect of this deviation is deemed immaterial to the fair presentation of the basic financial statements. 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 Assets.

NET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net 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 invested in capital assets, net of related debt.
Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal Programs, debt service, and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.

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WILKES COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "I"

FUND BALANCES
Unreserved - Designated Designated fund balances represent tentative plans for future use of financial resources.
NOTE 3: DEPOSITS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (0.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 (0.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. At June 30, 2009, the bank balances were $3,921,901.71. The bank balances were entirely covered by Federal depository insurance.

-16-

WILKES COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "I"

NOTE 4: 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
NOTE 5: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction Work In Progress
Total Capital Assets, Not Being Depreciated
Capital Assets, Being Depreciated: Building and Improvements Equipment Land Improvements
Less: Accumulated Depreciation: Building and Improvements Equipment Land Improvements
Total Capital Assets, Being Depreciated, Net
Governmental Activity Capital Assets, Net

Balance July 1, 2008

Additions

Reductions

Balance June 30, 2009

$

450,083.00 $

16,545,935.04

$ 16,996,018.04 $

7,498.77

$

$ 16,545,935.04

7,498.77 $ 16,545,935.04 $

457,581.77 0.00
457,581.77

$ 6,704,972.00 $ 21,868,759.04 $

2,712,438.50

413,737.00

166,383.00

22,315.00 $ 268,646.00

28,551,416.04 2,857,529.50 166,383.00

1,408,554.00 1,591,944.00
15,561.00

85,000.00 225,968.00
5,546.00

2,232.00 267,435.00

1,491,322.00 1,550,477.00
21,107.00

$ 6,567,734.50 $ 21,965,982.04 $

21,294.00 $ 28,512,422.54

$ 23,563,752.54 $ 21,973,480.81 $ 16,567,229.04 $ 28,970,004.31

Current year depreciation expense by function is as follows:

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

$

95,032.00

$

4,806.00

1,424.00

8,696.00

130,825.00

145,751.00 75,731.00

$

316,514.00

-17 -

WILKES COUN1Y BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "I"

NOTE 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) proceeds are restricted assets in the Statement of Net Assets because its use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2009, were as follows:

District-wide Capital Projects

SPL0ST

Restricted Cash and Cash

Equivalents:

Debt Services

$ 396,844.71

Capital Acquisitions $ 555,537.98

NOTE 7: INTERFUND TRANSFERS lnterfund transfers for the year ended June 30, 2009, consisted of the following:

Transfer to

Transfers From

District-wide

General Fund

Capital Projects

District-wide Capital Projects $ Debt Service Fund

575,000.00 $

760,405.07

Total

$ 575,000.00 $ 760,405.07

Transfers are used to move (1) property tax revenues collected by the General Fund to the Districtwide Capital Projects Fund as required match or supplemental funding source for capital construction projects and (2) Sales Taxes from Capital Projects to Debt Service to satisfy payments of principal and interest.
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 has obtained commercial insurance for risk of loss associated with vehicles and job related illness or injuries to employees. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.
The School District 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 or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups

-18-

WILKES COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT l11 11

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, and crime. Payment of excess insurance for the system varies by line of coverage.
The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

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

follows:

Beginning

Claims and

End

of Year

Changes in

of Year

Liability

Estimates

Claims Paid

Liability

2008 $
2009 $

0.00 $ 0.00 $

0.00 $ 747.55 $

0.00 $ 747.55 $

0.00 0.00

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

Position Covered

Amount

Superintendent All Employees

$

50,000.00

$ 100,000.00

NOTE 9: LONG-TERM DEBT GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

Amount

General Government - Series 2003

2.00% - 5.00% $

9,725,000.00

Promissory Notes - As authorized in a county-wide referendum, the School District has entered into a lending agreement with a commercial lending institution. The debt at June 30, 2009, associated with this agreement was as follows:

Purpose

Interest Rate

Amount

General Government- 2009

4.00%

$

5,000,000.00

-19-

WILKES COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "I"

The changes in Long-Term Debt during the fiscal year ended June 30, 2009, were as follows:

Balance July 1, 2008

Additions

Governmental Funds Deductions

Balance June 30, 2009

Due Within One Year

G.O. Bonds

$ 10,045,000.00

$

320,000.00 $

9,725,000.00 $

325,000.00

Promissory Notes

0.00 $

5,000,000.00

5,000,000.00

164,624.97

$ 10,045,000.00 $

5,000,000.00 $

320,000.00 $

14,725,000.00 $

489,624.97

At June 30, 2009, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30:

General Obligation Debt

Principal

Interest

Promissory Note

Principal

Interest

2010 2011 2012 2013 2014 2015-2019 2020-2024 2025 2029

$ 325,000.00 $ 428,047.50 $ 164,624.97 $

335,000.00

415,860.00

174,388.80

345,000.00

403,595.00

181,493.67

360,000.00

391,520.00

188,888.00

370,000.00

378,560.00

196,583.59

2,090,000.00

1,663,835.00

1,109,783.46

2,605,000.00

1,168,687.50

1,355,041.91

3,295,000.00

484,200.00

1,629,195.60

201,016.95 191,253.15 184,148.28 176,753.95 169,058.37 718,426.31 473,167.98 199,014.25

Total Principal and Interest $ 9,725,000.00 $ 5,334,305.00 $ 5,000,000.00 $ 2,312,839.24

NOTE 10: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $194.480.65 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $175,283.44
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $7,032.21
Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $12,165.00

-20-

WILKES COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT !'11 1

NOTE 11: SIGNIFICANT COMMITMENTS
The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2009:

Project

Unearned Executed Contracts

Washington-Wilkes Middle/High School Athletic Fieldhouse

$

423,258.00

=======

The amount described in this note was not reflected in the basic financial statements.

NOTE 12: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by granter agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.

NOTE 13: POSTEMPLOYMENT BENEFITS
GEORGIA RETIREE HEALTH BENEFIT FUND
Plan Description. The School District contributes to the Georgia Retiree Health Benefit Fund (GRHBF), a cost-sharing multiple-employer defined benefit postemployment healthcare plan administered by the Department of Community Health. The GRHBF is a cost-sharing multipleemployer defined benefit postemployment healthcare plan that covers retired employees of the State including all departments, agencies and local school systems. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries through the health insurance plan for State employees. Pursuant to Title 45, Chapter 18 of the Official Code of Georgia Annotated, the authority to establish and amend the benefit provisions of the employees' health insurance plan (including benefits to retirees) is assigned to the Board of Community Health (Board). The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department of Community Health at 2 Peachtree Street, Atlanta, Georgia 30303.
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) of the cost of health insurance coverage.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rate is established to fund both the active and retired employee health insurance plans based on projected "pay-as-you-go" financing requirements. The combined rates for the active and retiree plans for the fiscal year ended June 30, 2009, were as follows:

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WILKES COUN1Y BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT I11 11

Certified employees
July 2008 -July 2009 February 2009 Ma~h2009-May2009 June 2009

18.534% of state-based salaries for August - February coverage 8.579% of state-based salaries for March coverage 3.688% of state-based salaries for April - June coverage 0.000% of state-based salaries for July coverage

Non-Certificated Employees

$162.72 per month

No additional contribution was required by the Board for fiscal year 2009 nor contributed to GRHBF to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other postemployment benefits and are subject to appropriation.

The School District's contributions to the health insurance plans for the years ended June 30, 2008, and June 30, 2009, were $1,401,059.97, and $726,680.28, respectively, which equaled the required contribution.

NOTE 14: 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 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 lRC 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.

- 22 -

WILKES COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "I"

Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. 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, 2009, were 5% of annual salary. The member contribution rate will increase to 5.25% effective July 1, 2009, and to 5.53% effective July 1, 2010. Employer contributions required for fiscal year 2009 were 9.28% of annual salary as required by the June 30, 2006, actuarial valuation. The employer contribution rate will increase to 9.74% effective July 1, 2009, and to 10.28% effective July 1, 2010.
Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2009 2008 2007

100% 100% 100%

$

889,095.89

$

850,541.32

$

816,687.00

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(This page left intentionally blank)

WILKES COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2009

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 Service Central Support Services Other Support Services Enterprise Operations Food Services Operation
Total Expenditures
Excess of Revenues over (under) Expenditures
QTHER FINANCING SOURCES (USES)
Other Source Operating Transfers To Other Funds
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances Beginning
Adjustments
Fund Balances - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

$ 5,127,360.00 $ 5,127,360.00 $

4,613,685.41

6,000.00

6,000.00

43,400.07

8,985,451.23

8,627,526.23

8,273,833.78

2,088,886.00

2,311,766.00

2,343,346.94

219,659.98

219,659.98

525,436.06

19,045.00

19,045.00

19,955.66

13,175.00

12,875.00

153,490.19

$ 16,459,577.21 $ 16,324,232.21 $ 15,973,148.11

$ 10,286,087.17 $ 10,093,777.24 $

9,692,121.58

701,051.67 720,562.41 376,541.53 381,022.51 976,773.30 203,555.65 1,154,094.76 1,027,034.17 355,074.08
70,691.25
910,127.98

730,383.67 631,302.03 368,186.53 363,570.41 971,459.30 209,055.65 1,174,594.76 1,004,431.68 355,074.08
76,762.25
910,127.98

729,276.22 572,457.34 336,169.56 350,777.02 943,088.83 207,260.38 1,140,670.23 810,865.08 186,111.26
24,830.41 133,606.65 954,612.67

$ 17,162,616.48 $ 16,888,725.58 $ 16,081,847.23

$

-703,039.27 $

-564,493.37 $

-108,699.12

$

703,039.27 $

703,039.27

-575,000.00 $

$

703,039.27 $

128,039.27 $

$

0.00 $

-436,454.10 $

2,889,955.43

2,889,955.43

2,683.78

2,683.78

-575,000.00 -575,000.00 -683,699.12 2,556,811.73

$ 2,892,639.21 $ 2,456,185.11 $

1,873,112.61

Notes to the Schedule of Revenues Expenditures and Changes in Fund Balances Budget and Actual

(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.

The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

-25-

WILKES COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2009

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U.S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Summer Food Service Program For Children
Total u. S. Department of Agriculture
Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
State Fiscal Stabilization Fund Cluster Pass-Through From Georgia Department of Education
ARRA- Education State Grants
Title I, Part A Cluster Pass-Through From Georgia Department of Education Title I Grants to Local Educational Agencies
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education Basic Grants to States English Language Acquisition Grants Improving Teacher Quality State Grants Mathematics and Science Partnerships Reading First State Grants Rural Education Safe and Drug-Free Schools and Communities - State Grants State Grants for Innovative Programs
Total U. S. Department of Education

CFDA NUMBER

PASS-
THROUGH ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553
* 10.555

N/A N/A $
$

(2)
943,278.26 (1)
943,278.26

10.559

N/A $

(2)
943,278.26

* 84.027
* 84.173

N/A $ N/A
$

316,793.02 16,543.01
333,336.03

* 84.394

N/A

84.010

N/A

173,843.00 509,812.30

84.048 84.365 84.367 84.366 84.357 84.358 84.186 84.298

N/A

35,539.00

N/A

554.00

N/A

96,108.19

N/A

85,834.00

N/A

284,914.91

N/A

41,673.26

N/A

8,224.36

N/A

984.00

$ 1,570,823.05

Total Federal Financial Assistance N/A = Not Available

$ 2,514,101.31

26

WILKES COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2009

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 $60,497.76.
(2) Expenditures for the funds earned on the School Breakfast Program ($186,048.61) and Summer Food Service Program For Children ($6,566.35) were not maintained separately and are included in the 2009 National School Lunch Program.
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 Wilkes 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.

-27-

WILKES COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2009
AGENCY /FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category 111 Category IV
Category v
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 Bus Replacement Sparsity Nursing Services Mid-term Adjustment Hold-Harmless Education Equalization Funding Grant Food Services Vocational Education Other State Programs Health Insurance High School Graduation Coach Middle School Graduation Coach National Teacher Certification Preschool Handicapped Program Teachers' Retirement
Office of Treasury and Fiscal Services Public School Employees Retirement
See notes to the basic financial statements.
28-

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

466,715.71

480,628.00 26,715.00
1,104,196.00 220,714.00 510,544.00 66,645.00
1,009,730.00 647,528.00 476,631.00
92,148.00 234,762.00 398,088.00
64,493.00 129,012.00 127,580.00
99,029.00 81,867.00 -3,897.00 163,773.00 51,513.00 31,188.00
340,778.00 434,528.00 397,911.00
407,890.00 71,378.00 17,915.00 45,635.00
-600,680.00 146,235.00
44,508.00 163,277.00
175,283.44 37,913.15 36,334.51 11,877.76 44,250.00 7,032.21
12,165.00

WILKES COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2009

SCHEDULE "4"

PROJECT
For acquiring, constructing and equipping new school buildings and other buildings or facilities useful or desirable in connection therewith, including, but not limited to a new middle school and a new high school; adding to, renovating, repairing, improving, and equipping existing school buildings and other buildings and facilities useful or desirable in connection therewith; acquiring, installing, and equipping system-wide technology improvements, and; acquiring any property useful or desirable therefor, both real and personal.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3)

AMOUNT EXPENDED IN PRIOR YEARS (3)

PROJECT STATUS

$ 5,500,000.00 $ 28,215,557.00 $ 6,254,326.45 $ 21,745,567.05 Ongoing

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

See notes to the basic financial statements.

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WILKES COUNTY BOARD OF EDUCATION GENERAL FUND QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2009

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 Elem 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 Ill Category IV Gifted Student - Category VI Remedial Education Program Alternative Education Program
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

$

594,732.00 $ 652,615.17 $

6,236.86 $

658,852.03

34,031.00

82,518.63

82,518.63

1,350,476.00 1,366,834.50

20,927.87

1,387,762.37

268,160.00

192,903.80

197.41

193,101.21

640,364.00

582,179.56

26,158.65

608,338.21

80,870.00

136,107.28

65.00

136,172.28

1,221,222.00 1,396,355.02

80,896.37

1,477,251.39

798,183.00 1,104,928.87

124,445.25

1,229,374.12

586,417.00

460,189.77

32,092.58

492,282.35

1,121,938.00

8,188.97

8,188.97

440,447.68

440,447.68

363,363.22

363,363.22

30,179.59

30,179.59

163,419.00

137,068.16

598.00

137,666.16

117,261.00

100,875.63

100,875.63

99,804.00

108,652.85

8,388.39

117,041.24

$

7,076,877.00 $ 7,155,219.73 $ 308,195.35 $ 7,463,415.08

201,057.00 38,142.00

297,476.24 -5,021.32

16,910.77 12,752.61

314,387.01 7,731.29

$

7,316,076.00 $ 7,447,674.65 $ 337,858.73 $ 7,785,533.38

(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 financial statements. 31

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 28, 2010

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Wilkes County Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Wilkes County Board of Education as of and for the year ended June 30, 2009, which collectively comprise Wilkes County Board of Education's basic financial statements and have issued our report thereon dated June 28, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Wilkes County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Wilkes County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Wilkes County Board of Education's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies.

2009YB-40

A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Wilkes County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Wilkes County Board of Education's financial statements that is more than inconsequential will not be prevented or detected by the Wilkes County Board of Education's internal control. We consider items FS-7571-09-01, FS-7571-09-02 and FS-7571-09-03 in the accompanying Schedule of Findings and Questioned Costs to be significant deficiencies in internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Wilkes County Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, of the significant deficiencies described above, we consider item FS-7571-09-02 to be a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Wilkes County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted a certain matter that we have reported to management of Wilkes County Board of Education in a separate letter dated June 28, 2010.
Wilkes County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Wilkes County Board of Education's response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of management, members of the Wilkes County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~~
Ru ell W. Hinton, CPA, CGFM State Auditor
RWH:as 2009YB-40

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 28, 2010

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Wilkes County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of Wilkes County Board of Education with the types of compliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2009. Wilkes County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Wilkes County Board of Education's management. Our responsibility is to express an opinion on Wilkes County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Wilkes County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Wilkes County Board of Education's compliance with those requirements.
In our opinion, the Wilkes County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2009.
2009SA-10

Internal Control Over Compliance
The management of Wilkes County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Wilkes County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Wilkes County Board of Education's internal control over compliance.
A control deficiency in an entity's internal control over compliance 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 noncompliance with a type of compliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control.
Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
This report is intended solely for the information and use of management, members of the Wilkes County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
aj_.tj~
Ru ell W. Hinton, CPA, CGFM State Auditor
RWH:as 2009SA-10

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

WILKES COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2009

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7571-07-01 FS-7571-07-02 FS-7571-07-03 FS-75 7 1 - 0 7 - 0 4 FS-7571-08-01 FS-7571-08-02 FS-75 71-08-03 FS-75 7 1 - 0 8 - 0 4

Previously Reported Corrective Action Implemented Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Partially Resolved See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control over School Activity Accounts Finding Control Number: FS-7571-08-02

This repeat finding from many previous years has been partially resolved and continues to improve. The School District takes every precaution to provide reasonable assurance that transactions are processed accurately and will continue to improve on controls already in place. The bookkeeping responsibilities have been reviewed and re-assigned for fiscal year 2011 and increased guidance from the central office is also being implemented by June 30, 2010.

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-7571-08-03

While the School District does maintain a capital asset system that is updated yearly and strives to comply with generally accepted accounting principles and Board policies, we are continuing to refine this requirement with limited staff. We will implement a new plan to include, number, and properly tag all new assets by June 30, 2010.

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Finding Control Number: FS-7571-08-04

Although the School District does take precaution to provide reasonable assurance that transactions are processed accurately and continues to improve on controls in place, the financial statements have not been adequately prepared by the School District due to limited time and personnel. We will continue to improve the process and have made arrangements with an outside consultant to assist in the preparation of the statements for the year ending June 30, 2010.

WILKES COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2009
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
-2 -

SECTION IV FINDINGS AND QUESTIONED COSTS

WILKES COUN1Y BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2009

SUMMARY OF AUDITOR'S RESULTS

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

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

Cash and Cash Equivalents Revenues/Receivables/Receipts Financial Reporting

Expenditures/Liabilities/Disbursements Capital Assets

Of the significant deficiencies described above, Capital Assets is considered to be a material weakness.

3. Noncompliance Material to the Financial Statements The audit of the Wilkes County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.

4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Wilkes County Board of Education did not disclose any significant deficiencies in internal control over major programs.

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

6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The Wilkes County Board of Education's audit did not disclose audit findings required to be reported by section .510(a) of 0MB Circular A-133.

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 84.027 Special Education - Grants to States 84.173 Special Education - Preschool Grants 84.394 ARRA Education State Grants

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

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

- 1-

WILKES COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2009

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Significant Deficiency Finding Control Number: FS-7571-09-01

Condition:

This is a repeat finding (FS-7571-08-02, FS-7571-07-02 and FS-7571-06-01) from the years ended June 30, 2008, June 30, 2007, and June 30, 2006, respectively. The accounting procedures of the School District were insufficient to provide adequate separation of duties and internal controls over school activity accounts.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and provide reasonable assurance that transactions are processed according to established procedures. Such internal controls would limit any one individual's access to both physical assets and the related accounting records.

Questioned Cost:

N/A

Information:

Cash and Cash Equivalents
The bank reconciliation function was not separated from the record keeping function.
Bank reconciliations for the Middle School were not properly reconciled.
No administrative review was consistently performed to determine that the bank reconciliations for the Middle School were correct and that all required adjustments had been made.

Revenues/Receivables/Receipts Numerous receipts were not supported by adequate documentation to determine if receipts were deposited in a timely manner or properly recorded.

Expenditures/Liabilities/Disbursements Numerous vouchers contained no evidence of approval prior to purchase. Several vouchers did not include an approved purchase order or evidence indicating receipt of goods or merchandise. Several vouchers had no invoice attached to document the expenditure.

-2 -

WILKES COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2009

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Significant Deficiency Finding Control Number: FS-7571-09-01

Cause:

These deficiencies were a result of management's failure to ensure that internal controls were established, implemented and functioning at the school level and to assign responsibilities to achieve appropriate separation of duties and utilize management oversight of the incompatible activities to properly safeguard assets.

Effect:

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

Recommendation:

The School District should revise and monitor controls to provide reasonable assurance that transactions are processed according to established procedures and implement procedures to ensure that key accounting functions of custody, record keeping and authorization are separated and/or utilize management oversight of these incompatible activities.

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Material Weakness Finding Control Number: FS-7571-09-02

Condition:

This is a repeat finding (FS-7571-08-03, FS-7571-07-03 and FS-7571-06-03) from the years ended June 30, 2008, June 30, 2007 and June 30, 2006, respectively. The School District failed to adequately maintain the capital assets records.

Criteria:

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

Questioned Cost:

N/A

Information:

A review of the School District's capital asset records noted deficiencies as discussed below:
The School District lacked proper internal controls to detect significant errors on the Capital Assets listing.
The Capital Assets listing as presented, while inaccurate, was also incomplete and failed to provide all elements of information as required by Chapter 37 Implementing a Capital Assets Management System of the Financial Management for Georgia Local Units of Administration, such as correct descriptions.
A physical inspection of inventory items revealed that some items were not properly tagged.

-3-

WILKES COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2009

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Material Weakness Finding Control Number: FS-7571-09-02

The Construction in Progress analysis contained significant misstatements due to errors by School District personnel. The analysis did not adjust for prior period contracts and retainages payable balances. This resulted in a misstatement of $692,322.30. An audit adjustment was proposed and made to correct this error in the School District's basic financial statements.

Cause:

The School District failed to ensure adequate procedures were in place to process, record and report capital assets and related activity.

Effect:

The School District's failure to maintain a complete and accurate capital assets listing can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles.

Recommendation:

The School District should implement adequate internal controls and make appropriate adjustments to ensure the accuracy of capital asset records.

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Significant Deficiency Finding Control Number: FS-7571-09-03

Condition:

This is a repeat finding (FS-7571-08-04 and FS-7571-07-04) from the years ended June 30, 2008, and June 30, 2007, respectively. The School District did not have adequate controls in place to ensure that all required activity was included in the financial statement information presented for audit.

Criteria:

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

Questioned Cost:

N/A

Information:

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

Cause:

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

WILKES COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2009

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Significant Deficiency Finding Control Number: FS-7571-09-03

Effect:

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

Recommendation:

The School District should strengthen controls over the financial statement reporting process to ensure that all required activity is included in the financial statement information.

Ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

5

SECTION V MANAGEMENT'S RESPONSES

WILKES COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2009

Finding Control Number: FS-7571-09-01

We concur with this finding. The School District continues to take every precaution to provide reasonable assurance that transactions are processed accurately and will continue to improve on procedures in place. The bookkeeping responsibilities have been re-assigned beginning in August 2010 and increased guidance from the central office is being implemented by June 30, 2010.

Finding Control Number: FS-7571-09-02

We concur with this finding. While the School District does maintain a capital asset system that is updated yearly, we are continuing to refine this process with limited staff. We will implement a new plan to include more accurate descriptions, numbers, and properly tagged assets by June 30, 2010.

Finding Control Number: FS-7571-09-03

We concur with this finding. Although the School District does take precaution to provide reasonable assurance that transactions are processed accurately and continues to improve on controls in place, the financial statements have not been adequately prepared by the School District due to limited time and personnel. We have made arrangements with an outside consultant to assist in the preparation of the statements for the year ending June 30, 2010.

Contact Person: Telephone: Fax: Email:

Elaine Wheatley, Director of Finance (706) 678-2718 (706) 678-3799 wheat1eye@wilkes.k12.ga.us