Audit report, Heart of Georgia School Systems Regional Educational Service Agency, Eastman, Georgia, year ended June 30, 1995

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STATE OF GEORGIA DEPARTMENT OF AUDITS
254 WASHINGTON STREET ATLANTA, GEORGIA 30334

AUDIT REPORT HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
EASTMAN, GEORGIA YEAR ENDED JUNE 30, 1995

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
- TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE

EXHIBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS-OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

3

C

STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL AND SPECIAL REVENUE FUNDS

5

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

6

ADDITIONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

16

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

18

SCHEDULES

1 SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE

20

2 CASH AND CASH EQUIVALENTS

21

3 ACCOUNTS RECENABLE

22

SCHEDULE OF REVENUE

4

STATE

23

5

LOCAL AND OTHER

24

SCHEDULE OF EXPENDITURES BY OBJECT

6

GENERAL AND SPECIAL REVENUE FUNDS

25

7

LOTTERY PROGRAM

27

8 SCHEDULE OF COMPENSATION OF BOARD MEMBERS

28

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
-- TABLE OF CONTENTS -
SECTION IT SUMMARY AND SCHEDULE OF SALARIES AND TRAVEL
SECTION ill COMPLIANCE
COMPLIANCE REPORT BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS SINGLE AUDIT REPORT ON COMPLIANCE WITH THE GENERAL REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS SINGLE AUDIT OPINION ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAMS SINGLE AUDIT REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS
SECTIONN INTERNAL CONTROL REPORT ON INTERNAL CONTROL STRUCTURE IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS SINGLE AUDIT REPORT ON THE INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS
SECTIONV FINDINGS AND IMPROPER OR QUESTIONED COSTS SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS

SECTION I FINANCIAL

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 14, 1996

Honorable Zell Miller, Governor Members of the General Assembly Members of the State Board ofEducation
and Director and Members of the Heart of Georgia School Systems Regional Educational Service Agency Board of Control
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
Ladies and Gentlemen:
We have audited the general purpose financial statements (Exhibits A through D) of the Heart of Georgia School Systems Regional Educational Service Agency, as of and for the year ended June 30, 1995, as listed in the table of contents. These financial statements are the responsibility of the Agency's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of the Office of Management and Budget Circular A-128, "Audits of State and Local Governments". Those standards and 0MB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in the notes to the general purpose financial statements, the Agency's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:
* The general purpose financial statements of the Agency did not contain a General Fixed Assets Account Group to account for equipment owned by the Agency which should be included to conform to generally accepted accounting principles.
95ARL-33*

* The Agency did not report the deferred compensation plan assets and liabilities within the general purpose financial statements. To conform to generally accepted accounting principles, these amounts should be included in the general purpose financial statements.
The aggregate effects on the general purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects on the general purpose financial statements of the matters referred to in the preceding paragraph, the general purpose financial statements present fairly, in all material respects, the financial position of the Heart of Georgia School Systems Regional Educational Service Agency as of June 30, 1995, and the results ofits operations for the year then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated May 14, 1996, on our consideration of the Agency's internal control structure and a report dated May 14, 1996, on its compliance with laws and regulations.
Our audit was conducted for the purpose of forming an opinion on the general purpose financial statements of the Heart of Georgia School Systems Regional Educational Service Agency taken as a whole. The combining statements (Exhibits E and F), the financial schedules (Schedules 1 through 8 which includes the Schedule of Federal Financial Assistance) and the Schedule of Salaries and Travel, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the Heart of Georgia School Systems Regional Educational Service Agency. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, except for the effects ofthe matters referred to in the third paragraph, such . information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.
A copy ofthis 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,
~
Claude L. Vickers State Auditor
CLV:dt 95ARL-33*

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
- 1-

~ Cash and Cash Equivalents Accounts Receivable Inventories for Resale
Total Assets
LIABILmE ~Q B,!ND EQUITY LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable
Total Liabilities FUNDEOUITY
Fund Balances Reserved For Continuation of Federal Programs For Inventories for Resale For Sick and Personal Leave
Unreserved Undesignated Total Fund Equity
Total Liabilities and Fund Equity

HEART OF GEORGIA SQHOOL SYTEM BE~IONAL EDUCATIONAL SERVICE AGENQY
COMBINED BALANCE SH!;;EI
ALL FUND TYPES JUNE30 1995

EXHIBIT"A"

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTALS
(Memorandum On~l
JUNE 301 1995 JUNE 301 1994

$ 128,905.72

$ 128,905.72 $ 257,678.80

$

44,567.61

44,567.61

53,78624

11,844.56

11,844.56

16,348.58

$ 140,750.28 $

44,567.61 $ 185,317.89 $ 327,813.62

$

40,232.57 $

40,232.57 $

20,909.64

$

10,441.96

921.80

11,363.76

13,791.05

38,744.02

3,413.24

42,157.26

38,722.92

7,951.00

$

49,185.98 $

44,567.61 $

93,753.59 $

81,374.61

$

11,844.56

5,670.00

$

17,514.56

74,049.74 $

$

91,564.30 $

$
$ 0.00 0.00 $

$ 11,844.56 5,670.00
17,514.56 $
74,049.74
91,564.30 $

16,73122 16,348.58 5,670.00
38,749.80
207,689.21
246,439.01

$ 140,750.28 $

44,567.61 $ 185,317.89 $ 327.813.62

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

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCAJK>NAL SERVJCE AGENCY COMBINED STATEMENT OF REVENUES EXPENPIJURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30. 1995

EXHIBIT"B"

REVENUES
State Funds FedenllFunds Local and Olher Funds
Total Revenues
EXPENPIIURES
Current Support Services Pupil Services Improvement d Instructional Services General Administration School Administration Business Administration
Maintenance and Operation of Plant Central Support Services Olher Support Services Olher Operations d Non-Instructional Services Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Operating Transfers In Operating Transfers Out
TOGtl Olher Financing Sources (Uses)
Excess of Revenues and Olher Financing Sources over (under) Expenditures and Olher Financing Uses
FUND BALANCE JULY 1
Inventory for Resale - Net Change in Period

GENERAL FUND

SPECIAL REVENUE
FUND

TOTALS (Memorandum On~}
YEAR ENDED JUNE 301 1995 JUNE 30, 1994

$ 506,042.75 $

1,226.19 $ 507,268.94 $ 547,278.29

476,984.76

476,984.76

477,202.50

241,137.91

241,137.91

214,457.37

$ 747,180.66 $ 478,210.95 $ 1,225,391.61 $ 1.238,938.16

$

79.469.75 $

431,704.97

184,345.49

34,780.30 77,807.73 3,812.69 65,628.81 2,630.15

$ 880,179.89 $ $ -132,999.23 $

106,544.49 $ 364,555.89
4,18126 15,627.58 4,673.19

186,01424 $ 796,260.86 188,526.75
15,627.58 39,453.49 77,807.73
3,812.69 65,628.81
2,630.15

77,529.38 918,920.99 165,647.95
31,344.85 42,896.66
4,088.99 56,179.57
30,000.00

495,582.41 $ 1,375,762.30 $ 1,326,608.39

-17371.46 $ -150,370.69 $ -87,670.23

$

$

-640.24

$

-640.24 $

64024 $ 640.24 $

640.24 -640.24
0.00

$ -133.639.47 $ 229,707.79 -4,504.02

-16,73122 $ 16,731.22

-150,370.69 $ 246,439.01
-4,504.02

-87,670.23 333,925.99
18325

FUND BALANCE JUNE 30

$

91,564.30 $

0.00 $

91,564.30 $ 246,439.01

The notes to the gener:31 purpose financial statements are an integral part of this statement. -3-

l)f\l1J\Si

HEART OF GEORGIA SCHOOL.SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 1995

EXHIBIT"C"

REVENUES
State Funds Federal Funds Local and Other Funds
Total Revenues
EXPENDITURES
Current Support Services Pupil Services
Improvement of Instructional Services
General Administration School Administration Business Administration Maintenance and Operation of Plant Central Support Services Other Support Services Other Operations of Non-Instructional Services
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES}
Other Sources Other Uses
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1, 1994
Adjustments

GENERAL FUND

BUDGET

ACTUAL

$ 389,143.00 $ 506,042.75

165,662.00

241,137.91

$ 554,805.00 $ 747,180.66

$ 81,886.00 $

79,469.75

2n,364.oo

431,704.97

128,082.00

184,345.49

39,244.00 56,200.00
6,500.00 75,984.00

34,780.30
n,ao1.13
3,812.69 65,628.81
2,630.15

$ 665,260.00 $ 880,179.89

$ -110,455.00 $ -132,999.23

$ _ _ _-640::..==2-"-4 $ _ _ _-640::..==2...:...4

$ -110,455.00 $ -133,639.47

222,196.29

213,359.21

25,381.11

SPECIAL REVENUE FUND

BUDGET

ACTUAL

$ 123,214.00 $

1,226.19

159,814.00

476,984.76

$ 283,028.00 $ 478,210.95

$ 19,679.00 $ 106,544.49

257,533.00

364,555.89

4,181.26

15,627.58

5,816.00

4,673.19

$ 283,028.00 $ 495,582.41

$

0.00 $ -17,371.46

$

640.24

$ _ _ _640~..;..2_4

$

0.00 $ -16,731.22

7,801.39

16,731.22

3,308.76

FUND BALANCE JUNE 30, 1995

$ 137,122.40 $

79,719.74

$

11,110.15 $ - = = =0-.0=0

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

HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1995

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Heart of Georgia School Systems Regional Educational Service Agency (Agency) was established pursuant to the Official Code ofGeorgia Annotated Sections 20-2-270 through 20-2-274 for the purposes of providing shared services designed to improve the effectiveness of educational programs and services of local school systems and for providing instructional programs directly to selected public school students in the state.
Each regional educational service agency is governed by a board. The number of members and terms of office are prescribed by the State Board ofEducation; provided, however, that at least one-third ofthe membership of each Board shall be individuals who hold no other public office, who are not employees of any local unit ofadministration, and who are not employees ofthe Georgia Department ofEducation.
With the exception of the departures from generally accepted accounting principles disclosed in these notes, the financial statements of the Agency have been prepared in conformity with generally accepted accounting principles as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles.
The more significant of the Agency's accounting policies are described below.
REPORTING ENTITY
In evaluating how to define the government unit for financial reporting purposes, management has considered the criteria set forth in GASB Codification of Governmental Accounting and Financial Reporting Standards, Section 2100, "Defining the Financial Reporting Entity". Based upon the application ofthe above criteria, the Heart ofGeorgia School Systems Regional Educational Service Agency is determined to be a jointly governed organization.
The members of the Board are elected by an annual caucus of an equal number of members of local boards of education from the respective member local school systems. Each Board appoints and contracts with a director who is the executive officer of the regional educational service agency. The director is responsible for the administration of the programs and services approved by the Board.
Member boards of education in the Heart of Georgia School Systems Regional Educational Service Agency are as follows: Bleckley County, City of Dublin, Dodge County, Laurens County, Montgomery County, Pulaski County, Telfair County, Treutlen County, Wheeler County, and Wilcox County.
FUND ACCOUNTING
The Agency 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 selfbalancing set of accounts.
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HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1995

Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the Agency. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
The general purpose financial statements account for all State, Federal, Local and Other Funds under control ofthe Agency, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most of a regional educational service agency's general activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources of the Agency except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a regional educational service agency.
SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. These funds are primarily received from the Georgia Department ofEducation and from the Federal government to accomplish specific objectives and are required to be accounted for separately.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Those revenues considered susceptible to accrual are intergovernmental grants, sales and services and investment income.

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HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1995

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures are generally recognized when the related fund liability is incurred.
BUDGET
The Heart ofGeorgia School Systems Regional Educational Service Agency's budget is a complete financial plan for the Agency's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Agency at the aggregate level. The budget for governmental funds was prepared in accordance with generally accepted accounting principles.
The budget process begins when the Agency's administration prepares a tentative budget for the Board's approval. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. This final budget is then submitted to the Georgia Department ofEducation. All unexpended budget authority lapses at fiscal year end.
The Statement ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual presents actual and budgeted data for the General Fund and Special Revenue Fund. To facilitate comparison with the budget, the following adjustments have been made to actual revenues, expenditures and fund balance as reflected on Exhibit "B" ofthis report:

Excess ofRevenues and Other Sources of Financial Resources over (under) Expenditures and Other Financing Uses
Fund Balance July 1, 1994
Adjustments: Inventories for Resale July 1, 1994
Fund Balance June 30, 1995

General Fund
$ -133,639.47 229,707.79
-16,348.58 $ 79 719 74

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HEART OF GEORGIA SCHOOL SYSTEMS

EXIIlBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1995

Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits (including certificates of deposit and N.O.W. accounts) in authorized financial institutions. Georgia Laws authorize the Agency to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.
RECEIVABLES
Receivables consist of grant reimbursements due from Federal and State grantors for expenditures made but not reimbursed. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
INVENTORIES
GOODS FOR RESALE Inventories are reported on the Combined Balance Sheet at cost. The Agency uses the purchases method to account for inventories whereby purchases for resale are recorded at the time of purchase. The inventory reported on the balance sheet is equally offset by a reservation of fund balance which indicates that it does not constitute "available spendable resources" even though it is a component of net current assets.
COMPENSATED ABSENCES
Compensated absences represent obligations of the Agency 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. No liability has been recorded in the individual funds for the current portion of this obligation as this amount is deemed immaterial to the general purpose financial statements.
Additionally, the dollar value of accumulated compensated absences at June 30, which will be payable from future resources has not been recorded in the General Long-Term Debt Account Group as this liability is also deemed to be immaterial to the fair presentation of these financial statements.
RESERVED FUND BALANCES
Reserved fund balances include $5,670.00 in unexpended funds received in prior years from the Georgia Department ofEducation for sick and personal leave to be paid to substitute personnel. These funds will be used for the original purpose until exhausted.
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HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1995

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTERFUND TRANSACTIONS
The Agency has the following types ofinterfund transactions:
Reimbursements ofexpenditures initially made from a fund that are properly applicable to another fund, are
recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.
Operating transfers are recorded for all interfund transactions other than reimbursements.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
Note 2: DEPOSITS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate of the face value of such surety bond and the market value of the 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. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of 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 ofindebtedness or other direct obligations of the United States or ofthe State of Georgia,
(4) Bonds, bills, notes, certificates ofindebtedness or other obligations of the counties or municipalities ofthe State of Georgia,
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HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1995

Note 2: DEPOSITS

(5) Bonds ofany public authority created by the laws ofthe 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 1995, the bank balances were $192,109.04. The amounts of the total bank balances are classified into three categories of credit risk:

Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the Agency or by the Agency's agent in the Agency's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Agency's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Agency's name.)

The Agency's deposits are classified by risk category at June 30, 1995, as follows:

Risk Category

Bank Balance

1

$ 179,178.98

2

12,930.06

3

0.00

Total

$ 192,109 04

Note 3: RISK MANAGEMENT

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

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HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1995

Note 3: RISK MANAGEMENT
The Agency has obtained commercial insurance for risk of loss associated with torts and assets. The Agency has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Agency's insurance coverage in any of the past three years.
The Agency has elected to self-insure for all losses related to errors or omissions, which includes, among other risks, risks for sexual harassment and discrimination. In addition the Agency has elected to self-insure for all losses related to natural disaster. The Agency has not experienced any losses related to these risks in the past three years.
The Agency participates in the Georgia Education and Government Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991 to develop, implement and administer a program ofworkers' compensation self-insurance for its member organizations. The Agency pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the Continental Insurance Company to provide coverage for potential losses sustained by the Fund in excess of$250,000.00 loss per occurrence, up to $1,000,000.00.
Note 4: CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grant terms. The Agency believes that such disallowances, if any, will be immaterial to its overall financial position.
Note 5: DEFERRED COMPENSATION PLAN
The Agency offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all Agency employees, permits them to defer a portion of their salary until future years. Participation in the plan is optional. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency.
All amounts ofcompensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights of the Agency subject only to the claims of the Agency's general creditors. Participants' rights under the plan are equal to those of general creditors of the Agency in an amount equal to the fair market value of the deferred account for each participant.
It is the opinion ofthe Agency that the Agency has no liability for losses under the plan but does have the duty ofdue care that would be required of an ordinary prudent investor. The Agency believes it is unlikely that it will use the assets to satisfy the claims of general creditors in the future.

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HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1995

Note 5: DEFERRED COMPENSATION PLAN
The Agency has designated an independent plan administrator to operate and maintain the plan. The assets and liabilities of the plan are not reflected in these financial statements. To conform to generally accepted accounting principles, these amounts should be recorded in the general purpose financial statements.
Note 6: ACCUMULATED EMPLOYEES' LEAVE
The Agency's administrative staff and certain other full-time employees earn one and one-quarter days per month of annual leave. Annual leave may be accumulated to a maximum of forty-five days, and an amount based on unused leave, up to 15 days, is paid to employees, at their current rate of pay, upon retirement or termination of employment. See Note 1 - Compensated Absences
Note 7: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by Agency's are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer public employee retirement system (PERS).
TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. A member is eligible for service retirement after 30 years of creditable service, regardless ofage, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service and attainment of age 55, at a reduced benefit. Retirement benefits paid to members are equal to 2% of the average of the member's two consecutive highest paid years of service multiplied by the number of years of creditable service up to 40 years. The normal retirement pension is payable monthly for life. Options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death.
Retirement benefits also include death and disability benefits. A disabled member or surviving spouse is entitled to receive annually an amount equal to the member's service retirement benefit or disability retirement, whichever is greater. The death benefit is the amount that would be payable to the member's beneficiary had the member retired on the date of death on either a service retirement allowance or a disability retirement allowance, whichever is larger. The benefit is based on the member's creditable service (minimum of 10 years of service) and compensation up to the time of disability or death.
Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting of employer contributions occurs, but the member's contributions are refunded with interest.
The Agency's payroll for employees covered by TRS for the year ended June 30, 1995, was $666,847.46 total payroll was $690,297.21.
- 13 -

HEART OF GEORGIA SCHOOL SYSTEMS

EXIIlBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1995

Note 7: RETIREMENT PLANS

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Agency who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. The Agency makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. For fiscal year 1995 that rate for employer contributions was 11.81%. The interest rate assumption (rate of return on investments) was 7.50%.

Total contributions made during fiscal year 1995 amounted to $112,096.93, ofwhich $78,754.49 was made by the Agency and $33,342.44 was made by employees. These contributions represented I I.Si% (Agency) and 5% (employees) of covered payroll.

TRSFUNDINGSTATUSANDPROGRESS The amount of the total pension benefit obligation is based on a standardized measurement established by Statement No. 5 ofthe Governmental Accounting Standards Board (GASB) that, with some exceptions, must be used by a PERS. The standardized measurement is the actuarial present value of credited projected benefits. This valuation method reflects the present value of estimated pension benefits that will be paid in future years as a result of employee services performed to date, and is adjusted for the effects of projected salary increases. A standardized measure ofthe pension benefit obligation was adopted by the GASB to enable readers of PERS financial statements to assess that PERS funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among other PERS and among other employers.

Total unfunded pension benefit obligation ofTRS as ofJune 30, 1994, was as follows:

Total pension benefit obligation

$15,313,743,000.00

Net assets available for benefits, at cost

14,254,785,000.00

Unfunded pension benefit obligation

$ 1.058.958.000.00

The measurement ofthe total pension benefit obligation is based on an actuarial valuation as of June 30, 1994. Net assets available to pay pension benefits were valued as of the same date. TRS does not make separate measurements ofassets and pension benefit obligation for individual employers.

Total contributions from all employers to TRS for fiscal year ended June 30, 1995 were $565,117,811.00. The Agency's contribution for the year ended June 30, 1995 of $78,754.49 was actuarially determined and represented .0139% of total contributions made by all participating employers.

Ten year historical trend information is presented in the 1995 TRS Component Unit Financial Report. This information is useful in assessing TRS's accumulation of sufficient assets to pay pension benefits as they become due.

- 14 -

HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1995

Note 8: SURETY BONDS
The Director, Ms. JuneD. Bradfield, is bonded in the amount of$100,000.00 with the United States Fidelity and Guaranty Company, Baltimore, Maryland, their Bond No. 02-170-10877-94-9, on which premium is paid through July 1, 1996.

- 15 -

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 1995

ASSETS Cash and Cash Equivalents Accounts Receivable
Total Assets
LIABILITIES AND FUND EQUITY LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable
Total Liabilities FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs Unreserved Unclesignated Total Fund Equity
Total Liabilities and Fund Equity

LOTTERY PROGRAM

ACQUIRED IMMUNODEFICIENCY
SYNDROME (AIDS) ACTIVITY

$

0.00

_ _ _ _ $ _ _ _ _ _643_.oo_

$

o.oo s _ _ _ _ _6_43_.oo_

$

643.00

$

643.00

$

0.00 $

0.00

$

0.00 $

0.00

$

------- 0.00 $

643.00

See notes to the general purpose financial statements.

-16-

EXHIBITE

DRUG-FREE SCHOOLS AND COMMUNITIES
ACT

JOB TRAINING PARTNERSHIP
ACT

TOTALS JUNE 30, 1995 JUNE 30, 1994

$

4,127.51

$

4,127.51 $

32,230.25

207.53 $

43,717.08

44,567.61

53,786.24

$

4,335.04 $

43,717.08 $

- - - - - 48,695.12 $

86,016.49

$

43,717.08 $

44,360.08 $

53,139.89

$

921.80

921.80

2,921.00

3,413.24

3,413.24

5,375.00

7,849.38

$

4,335.04 $

43,717.08 $

48,695.12 $

69,285.27

$

16,731.22

$ _ _ _ _ _0.;...00;_ $

o.oo $ _ _ _"""0.;....00_

0.00

$ _ _ _ _ _0._00_$ _ _ _ _0_.00_$ _ _ _ _0_.00_$ _ _1~s._~_1_.22_

$

4,335.04 $

43,717.08 $

48,695.12 $ _ _86_._01_s_.4_s

- 17 -

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 1995

REVENUES
State Funds Federal Funds
Total Revenues
EXPENDITURES
Current Support Services Pupil Services Improvement of Instructional Services General Administration School Administration Business Administration
Tolal Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Operating Transfers In
Excess of Revenues and Other Financing Sources over (under) Expenditures
FUND BALANCE JULY 1
FUND BALANCE JUNE 30

LOTTERY PROGRAMS

ACQUIRED IMMUNODEFICIENCY
SYNDROME (AIDS) ACTIVITY

$

1,226.19

$

$

1,226.19 $

3,159.13 3,159.13

$

1,226.19 $

$

1,226.19 $

$

0.00 $

3,159.13
3,159.13
0.00

$

0.00 $

0.00

0.00

0.00

$

o.oo s______o._oo_

See notes to the general purpose financial statements.

- 18-

EXHIBIT p

DRUG-FREE SCHOOLS AND COMMUNITIES
ACT

JOB TRAINING PARTNERSHIP
ACT

TOTALS YEAR ENDED JUNE 30, 1995 JUNE 30, 1994

$ 136,829.00 $ $ 136,829.00 $

$
336,996.63
336,996.63 $

1,226.19 $ 476,984.76
478,210.95 $

48,706.91 474,032.50
522,739.41

$ $ 133,265.10

3,563.90

$ 136,829.00 $

$

0.00 $

106,544.49 $ 226,905.47
4,181.26 15,627.58
1,109.29
354,368.09 $
-17,371.46 $

106,544.49 364,555.89 $
4,181.26 15,627.58
4,673.19
495,582.41 $
-17,371.46 $

508,130.08
5,899.91 514,029.99
8,709.42

640.24

640.24

$

0.00 $

-16,731.22 $

-16,731.22 $

8,709.42

0.00

16,731.22

16,731.22

8,021.80

$

o.oo s____o._oo_ s____o._oo_ s 16,731.22

-19-

HEART OF GEORGIA SCHOOL SYSTEMS
REGIONAi., EDUCATIONAL SERVICE AGENCY SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
YEAR ENDED JUNE 30 1995

SCHEDULE 1

FUNDING AGENCY
PROGRAM/GRANT
Education, U. S. Department cA Through Georgia Department cA Education 0rug-FAl8 Schools and Communities Act 1994Grant 1994 Carry-Over 1995Grant
Total U.S. Department cA Education
Health and Human Services, U. S. Department cA Through Georgia Department cA Education Cooperative Agreements to Support Comprehensive School Health Programs to Prevent the Spread cA HIV and Olher Important Health Problems Georgia School Health Education Profiles 1994 Contract 1995 Contract
Total U.S. Department of Health and Human Services
Labor,U.S.Departmentof Through Georgia Department of Technical and Adult Education Job Training Partnership Act 22~1fKi0.796 22-4-15-50-796 Through Heart cA Georgia Regional Development Center Job Training Partnership Act 22-1-12-35-995/22-1-12-43-993 22-2-12-43-343/22-2-12-35-335 22-3-16-42-121 22~20-33-210/22~20-30-310 94-IIA-02 94-IIC-02 94-IIC-03 95-118-01
Total U. S. Department of Labor

CFDA NUMBER

AWARDS IN PERIOD

FEDERAL FUNDS RECEIVED IN PERIOD(NET OFREFUNDSl

FEDERAL REVENUE INPERIOD

EXPENDITURES INPERIOD

84.186 84.186 $ 84.186

$ 38,996.00 101,139.00

$ 140,135.00 $

-7,699.n 38,996.00 $ 97,625.47
128,921.70 $

38,996.00 $ 97,833.00
136,829.00 $

38,996.00 97,833.00
136,829.00

93.938 93.938 $

$ 6,200.00

$

6,200.00 $

6,500.00 $ 449.11

2,067.02 $ 1,092.11

6,949.11 $

3,159.13 $

2,067.02 1,092.11
3,159.13

17.250 17.250 $

$ 26,438.00

17.250 17.250 17.250 17.250 17.250 17.250 17.250 17.250
$

-35,632.57
24,na.os 10,236.94 67,227.10 165,000.00
257,997.52 $

176.99 22,837.46 $

23,463.35 $

24,084.40 (1)

-234.30 469.36 17,063.82 174,568.79 19,226.35 8,643.49 50,790.03
293,541.99 $

17,213.43 174,568.79 24,sn.ss
10,173.40 64,033.10 22,9n.01
336,996.63 $

1,395.10 17,213.43 189,904.91 24,578.05 (1) 10,174.94 (1) 64,045.25 (1) 22,972.01
354,368.09

Total Federal Financial Assistance

$ 404,332.52 $

The major program is identified by an asterisk (*) in front of the CFDA number.

(1) Expenditures for this program include State, and/or Local and Other Funds. Expenditures are not maintained by fund source.

429,412.80 $ 476,984.76 $

494,356.22

See notes to the general purpose financial statements.

- 20

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
CASH AND CASH EQUIVALENTS JUNE 30, 1995
INTEREST BEARING ACCOUNTS
Bank of Eastman, Eastman, Georgia
N.O.W. Account (2.60%)
Citizens Bank and Trust, Eastman, Georgia
Certificates of Deposit No. 504 (5.70%) No. 505 {5.70%) No. 506 {5.70%) No. 507 {5.70%)

SCHEDULE "2"
$ 18,673.15
10,000.00 10,000.00 25,000.00 25,000.00 $ 88,673.15

See notes to the general purpose financial statements.

- 21 -

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
ACCOUNTS RECEIVABLE JUNE 30.1995
Education, Georgia Department of Federal Programs Cooperative Agreements to Support Comprehensive School Health Programs to Prevent the Spread of HIV and Other Important Health Problems Drug-Free Schools and Communities Ad
Heart of Georgia Regional Development Center Federal Program Job Training Partnership Ad
Technical and Adult Education, Georgia Department.of Federal Program Job Training Partnership Ad

SCHEDULE "3"
GOVERNMENTAL FUND TYPE SPECIAL REVENUE FUND

$

643.00

207.53

43,091.19

625.89
s ___44_._567_.e_1

See notes to the general purpose financial statements.

- 22 -

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 1995

SCHEDULE "4"

AGENCY/FUNDING
GRANTS Education, Georgia Department of Other State Programs Regional Educational Service Agencies Staff Development Sex Education Grant Supervision and Assessment of Student and Beginning Teachers and PerformanceBased Certification Lottery Program Education Technology Center
OTHER Corrections, Georgia Department of Reimbursement for Technical Services
Education, Georgia Department of Reimbursement for Postage

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

389,136.00

31,000.00

85,714.00 $

$

389,136.00

31,000.00

1,226.19

85,714.00 1,226.19

159.00 33.75

159.00 33.75

$

506,042.75 $

1,226.19 $

507,268.94

See notes to the general purpose financial statements.

- 23 -

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF LOCAL AND OTHER REVENUE
YEAR ENDED JUNE 30, 1995

Author's Day Activities Georgia Youth Science Technology
Center Contributions Boards of Education Bleckley County Dodge County Dublin, City of Laurens County Montgomery County Pulaski County Telfair County Treutlen County Wheeler County Wilcox County
Interest Earned Participation by Boards of Education
Bleckley County Dodge County Dublin, City of Laurens County Montgomery County Pulaski County Telfair County Treutlen County Wheeler County Wilcox County Registration Fees Rents Sales and Services Business Machine Repairs
Less: Purchases for Resale Computer Repairs
Less: Purchases for Resale Office Supplies Photocopying Shared Services Psychological Services
Boards of Education Dodge County Laurens County Treutlen County Wilcox County
Other

See notes to the general purpose financial statements.

24

SCHEDULE "5"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

4,493.81

2,250.00 4,200.00 4,311.90 5,250.00 2,100.00 2,100.00 1,743.66 3,000.00 2,100.00 2,100.00 7,053.49
9,680.34 14,832.53 17,055.34 21,323.85 5,871.35 7,412.20 9,778.00 6,002.81 4,336.35 6,335.55 31,241.89 3,990.00
1,622.77 -1,614.06 11,983.76 -5,119.43 1,537.19
417.18

9,170.00 10,987.00 27,510.00 4,708.00
1,372.43

$ ___24_1_.1_3_7_.9_1

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF EXPENDITURES BY OBJECT
GENERAL AND SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30. 1995

SCHEDULE "6"

EXPENDITURES
Operating Costs Salaries Employee Benefits Travel of Employees Professional and Technical Services Compensation of Board Members Water, Sewer and Cleaning Services Repair and Maintenance Services Rents Insurance Communications Other Purchased Services Supplies Energy Books, Textbooks and Periodicals Dues and Fees Other Expenditures
Nonoperating Costs Equipment

GENERAL FUND

SPECIAL REVENUE
FUND

TOTAL

$ 495,213.95 $ 195,083.26 $

132,711.94

56,890.59

30,176.35

8,742.50

49,137.25

41,915.15

2,150.00

468.00

6,356.03

196.08

13,114.68

5,769.42

4,540.06

315.00

13,509.85

5,768.99

9,988.95

2,105.85

71,342.42

20,306.87

15,461.33

11,128.72

5,805.50

5,794.98

151,951.35

690,297.21 189,602.53 38,918.85 91,052.40
2,150.00 468.00
6,552.11 18,884.10
4,855.06 19,278.84 12,094.80 91,649.29 15,461.33 11,128.72 5,805.50 157,746.33

13,279.88

6,537.35

19,817.23

Total Expenditures

$ 880,179.89 $ 495,582.41 $ 1,375,762.30

See notes to the general purpose financial statements. - 25 -

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF EXPENDITURES BY OBJECT
LOTTERY PROGRAM YEAR ENDED JUNE 30, 1995
EXPENDITURES Operating Costs Supplies Nonoperating Costs Equipment
Total Expenditures

SCHEDULE "7''

EDUCATION TECHNOLOGY
CENTER

$

820.94

405.25

$ _ _ _12...;2.6._.1.;..9

See notes to the general purpose financial statements.

- 27 -

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERYJCE AGENCY SCHEDULE OF COMPENSATION OF BOARD MEMBERS
YEAR ENDED JUNE 30 1995
BOARD MEMBER
ADDRESS
Mr. Gary M. Walden, Chainnan (*) Trautlen County Board of Education 202 Third Street Soperton, Georgia 30457
Dr. Bill Rowe, Vice-Chainnan (*) Laurena County Board of Education P. 0. Box 2128
Dublin, Georgia 31040
Rev. Eugene Allen (*) 112 Mockingbird Lane Dublin, Georgia 31021
Mr. Ronny Clark(*) Wheeler County Board of Education P. 0. Box427 Alamo, Georgia 30411
Ms. Marjorie Edwards (*) Route 1 Box 124A Mount Vernon, Georgia 30445
Mr. Robert Gentry (*) Pulaski County Board of Education P. 0. Box 1138 Hawkinsville, Georgia 31036
Mr. Larry Gibbs(*)
Wilcox County Board of Education Wilcox County Courthouse Abbeville, Georgia 31001
Mrs. Jackie S. Harper(*) Route2 Cochran, Georgia 31014
Mr. L. C. Hunter (*)
P. 0. Box311
Soperton, Georgia 30457
Ms. Evon Mclendon P. 0. Box803 Mount Vernon, Georgia 30445
Mr. Charles Patterson 117 South Calhoun Street Dublin, Georgia 31021
Dr. Jim Paul Poole (*) Montogomery County Board of Education P. 0. Box315 Mount Vernon, Georgia 30445
Mrs. Ida Mae Rivers (*) P. 0. Box523 Alamo, Georgia 30411
- 28 -

SCHEDULE"8"

$

400.00

100.00

500.00 550.00 50.00
550.00

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF COMPENSATION OF BOARD MEMBERS
YEAR ENDED JUNE 30. 1995
BOARD MEMBER
ADDRESS
Mr. Jerry Rogers (") Telfair County Board of Education P.O. Box240 McRae, Georgia 31055
Mr. Don Turknett (*) Bleckley County Board of Education P.O. Box516 Cochran, Georgia 31014
Dr. Charles Warnock (")
City of Dublin Board of Education 207 Shamrock Drive Dublin, Georgia 31021
Mrs. Charlotte Williams (*) Dodge County Board of Education
P. 0. Box 1029
Eastman, Georgia 31023
(*) Denotes Board Members Serving as of June 30, 1995

SCHEDULE "8" $ _ _ _2_,1_so_.oo_

)

See notes to the general purpose financial statements.

- 29 -

SECTION II SUMMARY AND SCHEDULE OF SALARIES AND TRAVEL

HEART OF GEORGIA SCHOOL SYSTEMS
REGIONAL EDUCATIONAL SERVICE AGENCY SUMMARY OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30 1995

SALARIES
GENERAL FUND Support Services PupilServices Improvement of Instructional Services General Administration Business Administration other Support Services
Total General Fund
SPECIAL REVENUE FUND

TOTAL PER FINANCIAL STATEMENTS (ACCRUAL BASIS)

ADJUSTMENTS FOR ACCRUALS JUNE 301 1994 JUNE 301 1995

TOTAL PER SCHEDULE (CASH BASIS)

$

56,888.04 $

6,574.66 $

-9,481.34 $

53,981.36

261,959.46

26,773.26

-29,262.68

259,470.04

104,210.61

104,210.61

26,135.36

26,135.36

46,020.48

46,020.48

$

495,213.95 $

33,347.92 $ -38,744.02 $ 489,817.85

195,083.26

5,375.00

-3,413.24

197,045.02

Total Salaries

$

690,297.21 $

38,722.92 $

686,862.87

TRAVEL
GENERAL FUND Support Services Pupil Services Improvement of Instructional Services General Administration Business Administration other Support Services
Total General Fund
SPECIAL REVENUE FUND
Total Travel

$

4,416.58

$

17,517.57

4,089.45 $

233.52

149.80

4,002.95

$

30,176.35 $

233.52 $

8 742.50

93.45

$

38,918.85 $

326.97 $

0.00 $ 0.00 $

4,416.58 17,517.57
4,322.97 149.80
4,002.95
30,409.87
8,835.95

0.00 $ _ _3_9..,,2_4_5..,82_

NAME
BOUTWELL.BETTINA B BRADFIELD.JUNE D BRADFIELD,JUNE D BRADFIELD,JUNE D BURKE, WILLIAM W CANNON,SHIRLEY CURRIE.JANE M CURRIE.JANE M FRAISER.PAULA M FRAISER.PAULA M GRAHAM,MANDY MICHELE HEMPHILL,JUDYE R HORNE,LARRY GLYNN HOWELL.CONNIE A INGLEY,THERISA M IVEY,PATRICK L IVEY,PATRICK L LEWIS,JUNE G LOCKE,MARLYN P LOYD.MARION H MASHBURN,MARLA MAYS.CRYSTAL G PERSINGER,DEBBIE D PITTMAN,SYLVIA SHEFFIELD,JOANNE E SMITH.CHERRIE STANLEY,JOY S STANLEY.JOYS STOREY.DANIEL EDWARD WADE,BENNY B WELLMAN,CHRISTINE N WEST,CHERYL L WILCOX,MILDRED J WILCOX.MILDRED J WYNN,DEBRA T WYNN.DONNA L WYNN,DONNA L

HEART OF GEORGIA SCHOOL SYSTEM R.E.S.A. SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 1995

TITLE CATEGORY

SALARIES AMOUNT

TRAVEL EXPENSE

SPECIAL REVENUE FUND - OTHER PROG

$

DIRECTOR

SUPPORT SERVICES - INSTRUCTIONAL STAFF

GENERAL ADMINISTRATION

OTHER SUPPORT SERVICES

GENERAL ADMINISTRATION

SUPP SRVS - IMPROV INSTR & ED MED SRVS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPP SRVS - IMPROV INSTR & ED MED SRVS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPP SRVS - IMPROV INSTR & ED MED SRVS

SUPPORT SERVICES - PUPIL SERVICES

SUPP SRVS - IMPROV INSTR & ED MED SRVS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPP SRVS - IMPROV INSTR & ED MED SRVS

SPECIAL REVENUE FUND - OTHER PROGRAMS

OTHER SUPPORT SERVICES

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

GENERAL ADMINISTRATION

SUPP SRVS - IMPROV INSTR & ED MED SRVS

SUPPORT SERVICES - BUSINESS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPP SRVS - IMPROV INSTR & ED MED SRVS

GENERAL ADMINISTRATION

SUPPORT SERVICES - PUPIL SERVICES

SUPP SRVS - IMPROV INSTR & ED MED SRVS

SUPPORT SERVICES - INSTRUCTIONAL STAFF

GENERAL ADMINISTRATION

GENERAL ADMINISTRATION

SUPP SRVS - IMPROV INSTR & ED MED SRVS

SPECIAL REVENUE FUND - OTHER PROGRAMS

20,844.00 $ 55,074.48
3,633.52
23,000.28 17,135.52 17,066.30 17,066.20 51,477.68 2,234.90
940.32 13,185.60 9,600.00 31,190.80 40,957.16
6,424.00 45,219.74 36,835.78 23,020.20 19,776.00
. 340.00 1,323.88 19,200.00 5,720.00 6,012.00 26,135.36 6,848.32 51,342.46 5,970.25 13,024.20 30,041.30 6,440.80 4,500.00 15,810.36 17,045.44 42,426.02

1,304.08
2,977.06 2,189.51
186.51 760.58 1,894.77 4,437.00 232.23
458.64 1,431.28 2,117.30
773.28 608.98 2,761.29 146.48 1,813.44 340.83
378. 13
149.80
4,204.93 735.77
2,299.28 1,882.63
10.71 179.76 243.87 1,255.87 3,471.81

TOTALS

$ 686,862.87 $ 39,245.82

SECTION III COMPLIANCE

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 14, 1996

Honorable Zell Miller, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Director and Members ofthe Heart of Georgia School Systems Regional Educational Service Agency Board ofControl
COMPLIANCE REPORT BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the general purpose financial statements ofthe Heart of Georgia School Systems Regional Educational Service Agency as of and for the year ended June 30, 1995, and have issued our report thereon dated May 14, 1996. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.
We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perfonn the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement.
Compliance with laws, regulations, contracts, and grants applicable to Heart of Georgia School Systems Regional Educational Service Agency is the responsibility of the Agency's management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we perfonned tests of the Agency's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit of the financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion.
The results ofour tests disclosed no instances of noncompliance that are required to be reported herein under Government Auditing Standards.

95CRL-10

This report is intended for the information of management, the Federal cognizant audit agency and other Federal grantor agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
CLV:dt 95CRL-10

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 14, 1996

Honorable Zell Miller, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Director and Members ofthe Heart of Georgia School Systems Regional Educational Service Agency Board of Control

SINGLE AUDIT REPORT ON COMPLIANCE WITH THE GENERAL REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS

Ladies and Gentlemen:

We have audited the general purpose financial statements of the Heart of Georgia School Systems Regional Educational Service Agency as of and for the year ended June 30, 1995, and have issued our report thereon dated May 14, 1996. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.

We have applied procedures to test the Heart of Georgia School Systems Regional Educational Service Agency's compliance with the following requirements applicable to each of its Federal financial assistance programs, which are listed in the Schedule of Federal Financial Assistance, for the year ended June 30, 1995:

(I) Political Activity

(5) Allowable Costs/Cost Principles

(2) Civil Rights

(6) Audit Follow-Up/Resolution

(3) Cash Management

(7) Administrative Requirements

(4) Federal Financial Reports

Our procedures were limited to the applicable procedures described in the Office of Management and Budget's "Compliance Supplement for Single Audits of State and Local Governments" and other additional procedures as deemed necessary. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the Agency's compliance with the requirements listed in the preceding paragraph. Accordingly, we do not express such an opinion.

95CRL-40

With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the second paragraph of this report. With respect to items not tested, nothing came to our attention that caused us to believe that Heart of Georgia School Systems Regional Educational Service Agency had not complied, in all material respects, with those requirements.
This report is intended for the information of management, the Federal cognizant audit agency and other Federal grantor agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,

CLV:dt 95CRL-40

Claude L. Vickers State Auditor

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 14, 1996

Honorable Zell Miller, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Director and Members ofthe Heart of Georgia School Systems Regional Educational Service Agency Board ofControl

SINGLE AUDIT OPINION ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAMS

Ladies and Gentlemen:

We have audited the general purpose financial statements of the Heart of Georgia School Systems Regional Educational Service Agency as of and for the year ended June 30, 1995, and have issued our report thereon dated May 14, 1996. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.

We have also audited the Heart ofGeorgia School Systems Regional Educational Service Agency's compliance with the requirements governing:

(I) Types of Services Allowed or Unallowed

(5) Applicable Special Tests and Provisions

(2) Eligibility
(3) Matching, Level of Effort, and/or Earmarking

(6) Other Requirement Claims for Advances and Reimbursements

(4) Reporting

These requirements are applicable to the major Federal financial assistance program, which is identified in the Schedule of Federal Financial Assistance, for the year ended June 30, 1995. The management of the Heart

95CRL-80

ofGeorgia School Systems Regional Educational Setvice Agency is resp~msible for the Agency's compliance with those requirements. Our responsibility is to express an opinion on compliance with those requirements based on our audit.
We conducted our audit ofcompliance in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General ofthe United States; and Office ofManagement and Budget (0MB) Circular A-128, "Audits of State and Local Governments". Those standards and 0MB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether material noncompliance with the requirements referred to above occurred. An audit includes examining, on a test basis, evidence about the Agency's compliance with those requirements. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the Heart of Georgia School Systems Regional Educational Service Agency complied, in all material respects, with the requirements as disclosed in the second paragraph that are applicable to the Federal
financial assistance programs for the year ended June 30, 1995.
This report is intended for the information of management, the Federal cognizant audit agency and other Federal grantor agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
CLV:dt 95CRL-80

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 14 1996

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Director and Members ofthe Heart of Georgia School Systems Regional Educational Service Agency Board of Control
SINGLE AUDIT REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS
Ladies and Gentlemen:
We have audited the general purpose financial statements ofthe Heart of Georgia School Systems Regional Educational Service Agency as of and for the year ended June 30, 1995, and have issued our report thereon dated May 14, 1996. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.
In connection with our audit of the fiscal year 1995 general purpose financial statements of the Heart of Georgia School Systems Regional Educational Service Agency and with our consideration of the Agency's control structure used to administer Federal financial assistance programs, as required by Office of Management and Budget (0MB) Circular A-128, "Audits of State and Local Governments", we selected certain transactions applicable to certain nonmajor Federal financial assistance programs for the year ended June 30, 1995. As required by 0MB Circular A-128, we have performed auditing procedures on the selected transactions to test compliance with the requirements governing:
Types of Services Allowed or Unallowed
Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the Heart of Georgia School Systems Regional Educational Service Agency's compliance with these requirements. Accordingly, we do not express such an opinion.

95CRL-120

With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the second paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the Heart ofGeorgia School Systems Regional Educational Service Agency had not complied, in all material respects, with those requirements.
This report is intended for the information of management, the Federal cognizant audit agency and other Federal grantor agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,
L~
Claude L. Vickers State Auditor
CLV:dt 95CRL-120

SECTION IV INTERNAL CONTROL

CLAUDE L. VICKERS
STATE AUDllOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 14, 1996

Honorable Zell Miller, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Director and Members ofthe Heart of Georgia School Systems Regional Educational Service Agency Board ofControl
REPORT ON INTERNAL CONTROL STRUCTURE IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the general purpose financial statements of the Heart of Georgia School Systems Regional Educational Service Agency as of and for the year ended June 30, 1995, and have issued our report thereon dated May 14, 1996. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.
We conducted our audit in accordance with generally accepted auditing standards, and 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 general purpose financial statements are free of material misstatement.
The management ofthe Heart ofGeorgia School Systems Regional Educational Service Agency is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate.

95ICL-3

In planning and performing our audit of the general purpose financial statements of the Heart of Georgia School Systems Regional Educational Service Agency for the year ended June 30, 1995, we obtained an understanding ofthe internal control structure. With respect to the internal control structure, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide an opinion on the internal control structure. Accordingly, we do not express such an opinion.

We noted certain matters involving the internal control structure and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control structure that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements.

As described in the Schedule ofFindings and Improper or Questioned Costs, reportable conditions were noted in the following control categories:

( 1) General Fixed Assets

(2) Accounting Controls (Overall)

A material weakness is a reportable condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions.

Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, we believe that the reportable conditions disclosed above are also considered to be material weaknesses.

These conditions were considered in determining the nature, timing, and extent of the procedures to be performed in our audit of the Heart of Georgia School Systems Regional Educational Service Agency's_ financial statements and this report does not affect our report thereon dated May 14, 1996.

This report is intended for the information of management, the Federal cognizant audit agency and other Federal grantor agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.

Respectfully submitted,

CLV:dt 95ICL-3

Claude L. Vickers State Auditor

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 14, 1996

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Director and Members ofthe Heart of Georgia School Systems Regional Educational Service Agency Board ofControl
SINGLE AUDIT REPORT ON THE INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS
Ladies and Gentlemen:
We have audited the general purpose financial statements of the Heart of Georgia School Systems Regional Educational Service Agency as of and for the year ended June 30, 1995, and have issued our report thereon dated May 14, 1996. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. We have also audited the Heart of Georgia School Systems Regional Educational Service Agency's compliance with requirements applicable to major Federal financial assistance programs and have issued our opinion thereon dated May 14, 1996.
We conducted our audit in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States; and the provisions of Office of Management and Budget (0MB) Circular A- 128, "Audits of State and Local Governments". Those standards and 0MB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement and about whether the Heart ofGeorgia School Systems Regional Educational Service Agency complied with laws and regulations, noncompliance with which would be material to a major Federal financial assistance program.
In planning and performing our audit for the year ended June 30, 1995, we considered the Agency's internal control structure in order to determine our auditing procedures for the purpose of expressing our opinions on the Agency's general purpose financial statements and on its compliance with requirements applicable to major Federal financial assistance programs and to report on the internal control structure in accordance

95ICL-7

with 0MB Circular A-128. This report addresses our consideration of internal control structure policies and procedures relevant to compliance with requirements applicable to Federal financial assistance programs. We have addressed internal control structure policies and procedures relevant to our audit of the general purpose financial statements in a separate report dated May 14, 1996.

The management ofthe Heart ofGeorgia School Systems Regional Educational Service Agency is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that, assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles, and that Federal financial assistance programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal control structure, errors, irregularities, or instances of noncompliance may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because ofchanges in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate.

For the purpose of this report, we have classified the significant internal control structure policies and procedures used in administering Federal financial assistance programs in the following control categories:

GENERAL REQUIREMENTS

SPECIFIC REQUIREMENTS

(1) Political Activity (2) Civil Rights (3) Cash Management (4) Federal Financial Reports

(I) Types of Services Allowed or Unallowed
(2) Eligibility
(3) Matching, Level of Effort, and/or Earmarking

(5) Allowable Costs/Cost Principles

(4) Reporting

(6) Audit Follow-Up/Resolution (7) Administrative Requirements

(5) Applicable Special Tests and Provisions
(6) Other Requirement Claims for Advances and Reimbursements

For all of the internal control structure categories listed above, we obtained an understanding ofthe design of relevant policies and procedures and determined whether they have been placed in operation, and we assessed control risk.

95ICL-7

During the year ended June 30, 1995, the Heart of Georgia School Systems Regional Educational Service Agency expended 72% of its total Federal financial assistance under a major Federal financial assistance program.
We performed tests of controls, as required by 0MB Circular A-128, to evaluate the effectiveness of the design and operation of internal control structure policies and procedures that we considered relevant to preventing or detecting material noncompliance with general requirements and specific requirements as described above that are applicable to the Agency's major Federal financial assistance program, which is identified in the Schedule ofFederal Financial Assistance. Our procedures were less in scope than would be necessary to render an opinion on these internal control structure policies and procedures. Accordingly, we do not express such an opinion.
We noted a certain matter involving the internal control structure and its operation that we consider to be a reportable condition under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control structure that, in our judgment, could adversely affect the Agency's ability to administer Federal financial assistance programs in accordance with applicable laws and regulations.
As described in the Schedule ofFindings and Improper or Questioned Costs, a reportable condition was noted in the following control category:
Accounting Controls (Overall)
A material weakness is a reportable condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that noncompliance with laws and regulations that would be material to a Federal financial assistance program may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions.
Our consideration of the internal control structure policies and procedures used in administering Federal financial assistance would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, we believe that the reportable condition described above is also considered to be a material weakness.
This condition was considered in determining the nature, timing, and extent of the procedures to be performed in our audit ofthe Heart ofGeorgia School Systems Regional Educational Service Agency's compliance with requirements applicable to its major Federal financial assistance program for the year ended June 30, 1995, and this report does not affect our report thereon dated May 14, 1996.
95ICL-7

This report is intended for the information of management, the Federal cognizant audit agency and other Federal grantor agencies and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
CLV:dt 95ICL-7

SECTIONV FINDINGS AND IMPROPER OR QUESTIONED COSTS

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1995
PRIOR YEAR/CURRENT YEAR
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Financial Statements Reportable Condition - Material Weakness Audit Control Number 8764-93-01
The audit report for the year ended June 30, 1994, noted that the management of the Heart of Georgia School Systems Regional Educational Service Agency had chosen not to maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. In the year under review, the Agency did not establish a General Fixed Assets Account Group within the formal accounting records. This condition results in the general purpose financial statements of the Agency being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Agency to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the Agency and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group.
CURRENT YEAR
ACCOUNTING CONTROLS (OVERALL)-Financial Statements ADMINISTRATIVE REQUIREMENTS - Federal Financial Assistance Inadequate Separation ofDuties Reportable Condition - Material Weakness Audit Control Number 8764-95-01
Our audit disclosed that the Heart of Georgia School Systems Regional Educational Service Agency did not provide for adequate separation of employee duties in the performance of accounting functions and related procedures for all funds. Separation of employee duties involving key accounting functions is the basis for achieving an adequate system ofinternal control. This deficiency was a result of management's decision to limit the number ofadministrative staffmade responsible for accounting functions. Management should periodically review this decision to determine if employee duties can be reassigned to achieve a higher degree of internal control with existing staff.
Note: All Federal financial assistance programs listed in the Schedule ofFederal Financial Assistance, Schedule "1" of this report, are affected by this finding.
Note: The Heart of Georgia School Systems Regional Educational Service Agency was provided an opportunity to include pertinent comments from the Agency's management concerning these audit findings, conclusions and recommendations. The Agency has elected not to provide pertinent comments for inclusion in this report.