Audit report, Heart of Georgia School Systems Regional Educational Service Agency, Eastman, Georgia, year ended June 30, 1996

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AUDIT REPORT HEARTOF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
EASTMAN, GEORGIA YEARENDEDJUNE 30, 1996

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

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 RECEIVABLE

22

SCHEDULE OF REVENUE

4

STATE

23

5

OTHER

24

SCHEDULE OF EXPENDITURES BY OBJECT

6

GOVERNMENTAL FUND TYPES

25

7

LOTTERY PROGRAM

26

8 SCHEDULE OF COMPENSATION OF BOARD MEMBERS

27

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
-TABLE OF CONTENTS-
SECTION II 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
SECTION IV 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
SECTION V FINDINGS AND IMPROPER OR QUESTIONED COSTS SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
- TABLE OF CONTENTS -
SECTION VI PERTINENT VIEWS OF RESPONSffiLE OFFICIALS PERTINENT VIEWS OF RESPONSffiLE OFFICIALS

SECTION I FINANCIAL

CLAUDE L. VICKERS
STATEAUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
June 30, 1997

Honorable Zell Miller, Governor Members of the General Assembly Members of the State Board of Education
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, 1996, as listed in the table of contents. These fmancial 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 OMB 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.
96ARL-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, 1996, and the results of its 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 June 30, 1997, on our consideration of the Agency's internal control structure and a report dated June 30, 1997, 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 ofthe general purpose fmancial statements and, in our opinion, except for the effects of the 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 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.

CLV:cm 96ARL-33

Claude L. Vickers State Auditor

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
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HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
COMBINED BALANCE SHEET ALL FUND TYPES JUNE 3D, 1996

EXHIBIT "A"

ASSETS Cash and Cash EqUivalents Accounts Receivable Inventories for Resale
Total Assets

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTALS (Memorandum Only) JUNE 30,1996 JUNE 30,1995

$

73,956.83

$

73,956.83 $

128,905.72

32,778.35 $ 105,415.96

138,194.31

44,567.61

12,071.99

12,071.99

11,844.56

$============ $

118,807.17 $

s 105,415.96

224,223.13

185,317.89

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 Program

For Inventories for Resale

$

For Sick and Personal Leave

$ Unreserved
Undesignated

Total Fund Equity

$

$ 10,322.45 39,925.84
50,248.29 $

84,822.63 $ 10,443.78
3,607.05
98,873.46 $

84,822.63 $ 20,766.23 39,925.84
3,607.05
149,121.75 $

$ 12,071.99 5,670.00
17,741.99 $
50,816.89
68,558.88 $

6,542.50 $
6,542.50 $ 0.00
6,542.50 $

6,542.50 12,071.99 $ 5,670.00
24,284.49 $
50,816.89
75,101.38 $

40,232.57 11,363.76 42,157.26
93,753.59
11,844.56 5,670.00 17,514.56 74,049.74 91,564.30

Total Liabilities and Fund Equity $

$============= 118,807.17 $ 105,415.96 $ 224,223.13

185,317.89

The notes to the general purpose financial statements are an integral part of this statement.
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HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30,1996

EXHIBIT "B"

FUND BALANCE JUNE 30

$

68,558.88 $

6,542.50 $

$========= 75,101.38

91,564.30

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

THIS PAGE LEFT BLANK

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, 1996

EXHIBIT"C"

REVENUES
State Funds Federal Funds 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, 1995
Adjustments Inventory for Resale
Net Change in Period

GENERAL FUND

BUDGET

ACTUAL

$ 557,965,00 $ 578,837.60

226,928,00

430,945.68

$ 784,893.00 $ 1,009,783.28

$ 102,932.00 $ 387,787.00 168,684,00

133,026.64 464,661.36 189,275.68

47,566.00 80,970,00
4,000,00 77,954.00

45,744.01 85,497.64
2,679.14 70,724.84 40,443.32

$ 869,893.00 $ 1,032,052.63

$ -85,000.00 $ -22,269.35

$

-963.50

$

-963.50

$ -85,000.00 $ 92,204.54 -2,167,54

-23,232.85 91,564,30
227.43

FUND BALANCE JUNE 30, 1996

$

5,037.00 $

68,558.88

SPECIAL REVENUE FUND

BUDGET

ACTUAL

$ 11,660,26

$ 73,691.19

729,210,12

225.62

$ 73,691.19 $ 741,096.00

$ 68,753.00 $ 331,661,57

181,148.83

102,535.34

112,964,18

4,919.00

1,988.01

5,219.07

$ 73,672,00 $ 735,517.00

$

19.19 $

5,579.00

$

963.50

$

963.50

$

19.19 $

6,542.50

-19.19

$

0;00 $

6,542,50

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, 1996

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 of Georgia 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 oflocal 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 ofmembers and terms ofoffice are prescribed by the State Board of Education; provided, however, that at least one-third of the membership of each Board shall be individuals who hold no other public office, who are not employees of any local unit of administration, and who are not employees of the Georgia Department of Education.
With the exception of the departures from generally accepted accounting principles disclosed in these notes, the fmancial statements of the Agency have been prepared in conformity with generally accepted accounting principles as applied to governmental units and unless otherwise disclosed in these notes, the financial statements present all of the fund types and account groups of the Agency. 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 governmental 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 of the above criteria, the Heart of Georgia 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.

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HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 self-balancing set of accounts.
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 and Other funds under control of the 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 of Education 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.
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HEART OF GEORGIA SCHOOL SYSTEMS

EXHffiIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 ofthe current period. Those revenues considered susceptible to accrual are intergovernmental grants, sales and services and investment income.
Expenditures are generally recognized when the related fund liability is incurred.
BUDGET
The Heart of Georgia 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 of the 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 of general 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 fmal budget is then submitted, in accordance with provisions ofthe Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year end.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofdeposits (including 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 State or other grantors 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 general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
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HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES
GOODS FOR RESALE Inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). 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 offund 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
Reserves represent those portions of fund equity that are legally segregated for a specific future use.
Reserved fund balances include $5,670.00 in unexpended funds received in prior years from -the Georgia Department of Education for sick and personal leave to be paid to substitute personnel. These funds will be used for the original purpose until exhausted.
INTERFUND TRANSACTIONS
The Agency has the following types of interfund transactions:
Reimbursements of expenditures 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.

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HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general purpose fmancial 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 of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value ofthe 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 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 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

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HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 2: DEPOSITS

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation ofthe 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, 1996, the bank balances were $121,916.37. The amounts ofthe 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, 1996, as follows:

Risk Category

Bank Balance

I

$ 100,000.00

2

21,916.37

3

0.00

Total

$ 121.916.37

Note 3: RISK MANAGEMENT

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

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.

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HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 3: RISK MANAGEMENT
The Agency has elected to self-insure for all losses related to natural disaster. In addition, the Agency has elected to self-insure for errors or omissions, which includes, among other risks, risks for sexual harassment and discrimination. 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 of workers' compensation self-insurance for its member organizations. The Agency pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Continental Insurance Company to provide coverage for potential losses sustained by the Trust in excess of $250,000.00 loss per occurrence, up to $1,000,000.00.
Note 4: ON-BEHALF PAYMENTS
The Agency has recognized revenues and expenditures in the amount of $20,872.60 for health insurance paid on the Agency's behalf by the following State Agency:
Georgia Department of Education Paid to the State Merit System of Personnel Administration For Health Insurance of Non-Certified Personnel In the amount of $20,872.60
Note 5: 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 6: 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 of compensation 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 ofthe 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.
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HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Note 6: DEFERRED COMPENSATION PLAN
It is the opinion ofthe Agency that the Agency has no liability for losses under the plan but does have the duty of due 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.
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 fmancial statements. To conform to generally accepted accounting principles, these amounts should be recorded in the general purpose fmancial statements.
Note 7: 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 8: 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 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 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 ofthe 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.

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HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30,1996

Note 8: RETIREMENT PLANS

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 TRSfor the year ended June 30,1996, was $794,213.39; total payroll was $804,456.35.

TRS CONTRIBUTIONS REQUIRED AND MADE Employees of the Agency who are covered by TRS are required by State statute to contribute 5% of their 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 1996 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 1996 amounted to $133,507.42, of which $93,796.72 was made by the Agency and $39,710.70 was made by employees. These contributions represented 11.81% (Agency) and 5% (employees) of covered payroll.

TRS FUNDING STATUS AND PROGRESS 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 of the 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 of June 30, 1995, was as follows:

Total pension benefit obligation

$17,442,607,000.00

Net assets available for benefits, at cost

15,857,066,000.00

Unfunded pension benefit obligation

$ 1.585.541.000.00

The measurement ofthe total pension benefit obligation is based on an actuarial valuation as of June 30, 1995. Net assets available to pay pension benefits were valued as of the same date. TRS does not make separate measurements of assets and pension benefit obligation for individual employers.

- 14-

HEART OF GEORGIA SCHOOL SYSTEMS

EXHIBIT "D"

REGIONAL EDUCATIONAL SERVICE AGENCY

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996 .

Note 8: RETIREMENT PLANS
Total contributions from all employers to TRS for fiscal year ended June 30, 1996 were $607,275,000.00. The Agency's contribution for the year ended June 30, 1996 of $93,796.72 was actuarially determined and represented 00.0154% of total contributions made by all participating employers.
Ten year historical trend information is presented in the 1996 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.
Note 9: SURETY BONDS
The Director, Ms. June D. Bradfield, is bonded in the amount of$100,000.00 with the United States Fidelity and Guaranty Company, Baltimore, Maryland, their Bond No. 02-0170-10877-94-9, on which premium was paid through July 1, 1997.

- 15 -

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 3D. 1996

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 Program Unreserved Undesignated Total Fund Equity
Total Liabilities and Fund Equity

LOTTERY PROGRAM

ACQUIRED IMMUNODEFICIENCY
SYNDROME (AIDS) ACTIVITY

$

0.00

- - - - - $ - - - - - -46-2.8-3

$

0.00 $ = = = = =4= 62.8=3

$

462.83

$

462.83

$

0.00 $

0.00

$

0.00 $

0.00

$

0.00 $

462.83

============

See notes to the general purpose financial statements. - 16 -

EXHIBIT"E"

SAFE AND DRUG-FREE SCHOOLS

JOB TRAINING PARTNERSHIP
ACT

TOTALS JUNE 30,1996 JUNE 30, 1995

$

3,607.05

$

3,607.05 $

4,127.51

$ 104,953.13

105,415.96

44,567.61

$

3,607.05 $ 104,953.13 $ 109,023.01 $

48,695.12

$

$

3,607.05

$

3,607.05 $

87,966.85 $
10,443.78
98,410.63 $

88,429.68 $
10,44;3.78
3,607.05
102,480.51 $

44,360.08 921.80
3,413.24
48,695.12

$

$

0_.0_0

$ _ _~O.....:;'O..;;-.O $

6,542.50 $ 0.00
6,542.50 $

6,542.50 0.00 $
6,542.50 $

...0.;;..0,;"0,:.~ 0.0_0

$

3,607.05 $ 104,953.13 $ 109,023.01 $

48,695.12

- 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 3D. 1996

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current Support Services Pupil Services Improvement of Instructional Services General Administration School Administration Business Administration Other Support Services
Total 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 JUL Y 1
FUND BALANCE JUNE 30

LOTIERY PROGRAM

ACQUIRED IMMUNODEFICIENCY
SYNDROME (AIDS) ACTIVITY

$ 11,660.26 $
$ 11,660.26 $

9,070.72 9,070.72

$ 12,623.76 $

9,070.72

$ 12,623.76 $

$

-963.50 $

9,070.72 0.00

963.50

$

0.00 $

0.00

0.00

0.00

$

0.00 $ = = = = = =0.0=0

See notes to the general purpose financial statements.
-18 -

EXHIBIT"F"

SAFE AND DRUG-FREE SCHOOLS

JOB TRAINING PARTNERSHIP
ACT

TOTALS YEAR ENDED JUNE 30, 1996 JUNE 30, 1995

$ 69,248.33 $ $ 69,248.33 $

$ 650,891.07
225.62
651,116.69 $

11,660.26 $ 729,210.12
225.62
741,096.00 $

1,226.19 476,984.76
478,210.95

$ $ 62,777.76
6,470.57

$ 69,248.33 $

$

0.00 $

331,661.57 $ 96,676.59 96,064.77 112,964.18 1,988.01 5,219.07
644,574.19 $
6,542.50 $

331,661.57 $ 181,148.83 102,535.34 112,964.18
1,988.01 5,219.07
735,517.00 $
5,579.00 $

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

- - -9-63.5-0

640.24

$

0.00 $

6,542.50 $

6,542.50 $ -16,731.22

0.00

0.00

0.00

16,731.22

$

0.00 $

6,542.50 $

6,542.50 $=======0.=00=

- 19-

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
YEAR ENDED JUNE 30, 1996

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Education, U. S. Department of Through Georgia Department of Education Safe and Drug-Free Schools 1996 Grant
Health and Human Services, U. S. Department of Through Georgia Department of Education Attend the Comprehensive Education Foundation Program, "Get Real About AIDS" Cooperative Agreements to Support School Health Education to Prevent the Spread of Acquired Immunodeficiency Syndrome (AIDS) Georgia School Health Education Profiles Implementation of a Program in Comprehensive Health Education to Prevent Important Health Problems and Improve Educational Outcomes
Total U. S. Department of Health and Human Services
Labor, U. S. Department of Through Georgia Department of Labor Job Training Partnership Act 10-95-CO-1-1-22 10-95-93-1-1-22 10-95-94-1-1-22 15-95-CO-1-1-22 15-95-94-1-1-22 20-C5-94-1-1-22 20-C6-95-1-1-22 20-96-00-1-1-22 25-95-CO-1-1-22 94-IIC-03 95-1IA1I1C-01 95-IIC-01 Through Georgia Department of Technical and Adult Education Job Training Partnership Act 22-95-14-50-796 Through Heart of Georgia Regional Development Center Job Training Partnership Act 10-95-CO-1-1-22 94-IIA-02 94-IIC-02 94-IIC-03 95-IIAIIIC-01 95-IIB-01 95-IIC-01 Through Middle Georgia Consortium Job Training Partnership Act Title III
Total U. S. Department of Labor

CFDA NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

84.186 $ 69,248.33 $

69,248.33

93.938 $

3,500.00 $

3,500.00

93.938 93.938
$

5,107.89 462.83
9,070.72 $

5,107.89 462.83
9,070.72

* 17.250 $ * 17.250 * 17.250 * 17.250 * 17.250 * 17.250 * 17.250 * 17.250 * 17.250 * 17.250 * 17.250 * 17.250

88,854.15 $ 109,087.58
7,564.00 27,818.34 12,355.17
2,719.13 6,161.00 48,142.14 7,703.00
4.57 58,207.43 75,527.27

88,934.30 (1) 109,127.48 (1)
7,564.00 27,824.84 (1) 12,355.17
2,719.68 (1) 6,171.80 (1) 41,599.64 (1) 7,703.00
4.57 58,294.43 (1) 75,527.99 (1)

* 17.250

44,879.73

44,879.73

* 17.250 * 17.250 * 17.250 * 17.250 * 17.250 * 17.250 * 17.250

700.00 150.00
62.00 2,820.20 16,219.63 131,452.18 6,615.94

700.00 150.00 62.00 2,820.20 16,219.63 131,452.18 6,615.94

* 17.250 $

3,847.61 650,891.07 $

3,847.61 644,574.19

Total Federal Financial Assistance

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.

See notes to the general purpose financial statements.

- 20 -

$ 729,210.12 $

722,893.24

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
CASH AND CASH EQUIVALENTS JUNE 30. 1996
INTEREST BEARING ACCOUNTS
Bank of Eastman, Eastman, Georgia
N.O.W. Account (2.60%)

SCHEDULE "2" $ -10,865.80

See notes to the general purpose financial statements. - 21 -

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
ACCOUNTS RECEIVABLE JUNE 30,1996

SCHEDULE "3"

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

Education, Georgia Department of Federal Program Implementation of a Program in Comprehensive Health Education to Prevent Important Health Problems and Improve Educational Outcomes

$

462.83 $

462.83

Family and Children Services, Laurens County Department of Job Development Service Contract

$

18,938.66

18,938.66

Heart of Georgia Youth Science and Technology Center Reimbursement for Salaries and Other Expenditures

5,144.75

5,144.75

Labor, Georgia Department of Federal Program Job Training Partnership Act

101,844.78

101,844.78

Middle Georgia Consortium Federal Program Job Training Partnership Act

1,240.84

1,240.84

Technical and Adult Education, Georgia Department of Federal Program Job Training Partnership Act

1,867.51

1,867.51

Various Sources Sales and Services

8,694.94

8,694.94

$

32,778.35 $

105,415.96 $ 138,194.31

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, 1996

SCHEDULE "4"

AGENCY/FUNDING
GRANTS Education, Georgia Department of Other State Programs Health Insurance Regional Educational Service Agencies Supervision and Assessment of Student and Beginning Teachers and PerformanceBased Certification Lottery Programs Education Technology Center
CONTRACT Education, Georgia Department of Operation of an Instruction Training Technology Center

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

20,872,60

472,251.00

85,714,00
$

$ 20,872.60 472,251.00

10,000.00

85,714,00 10,000.00

1,660.26

1,660.26

$ 578,837.60 $

11,660.26 $ 590,497.86

See notes to the general purpose financial statements.
- 23 -

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY
SCHEDULE OF OTHER REVENUE YEAR ENDED JUNE 30,1996

SCHEDULE "5"

Author's Day Activities
Heart of Georgia Youth Science and Technology Center Contributions Boards of Education Dodge County Telfair County
Human Resources, Georgia Department of Through Various County Departments of Family and Children Services Assessment Service Contract Job Development Service Contract Indirect Cost Special Revenue Fund Interest Earned Insurance Proceeds 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 Reimbursement for Salaries and Other Expenditures Heart of Georgia Youth Science and Technology Center Rents Sales and Services Business Machine Repairs Less: Purchases For Resale Computer Repairs Less: Purchases For Resale Office Supplies Shared Services Psychological Services Boards of Education Dodge County Laurens County Treutlen County Wilcox County Other

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

4,734.50

$ 4,734.50

4,200.00 5,756.34

4,200.00 5,756.34

16,972.97 18,938.66
31,952.99 4,968,01 6,731.55
10,852.00 17,358.00 19,924.00 25,203.00
6,187.00 8,530.00 11,185.00 6,714.00 5,098.00 7,012.00 80,657.89
23,291.88 1,890.00
1,798.85 -1,316.65 16,661.70 -6,530.71
508.75

16,972.97 18,938.66
31,952.99 4,968.01 6,731.55
10,852.00 17,358.00 19,924.00 25,203.00
6,187.00 8,530.00 11,185.00 6,714.00 5,098.00 7,012.00 80,657.89
23,291.88 1,890.00
1,798.85 -1,316.65 16,661.70 -6,530.71
508.75

7,145.03 25,094.19 33,204.42 27,598.48
8,623.83 $ _ _-=2::2~5..:6:2..

7,145.03 25,094.19 33,204.42 27,598.48
8,849.45

See notes to the general purpose financial statements.

- 24 -

$ 430,945.68 $===2=2=5,;,;;.6~2 $ 431,171.30

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF EXPENDITURES BY OBJECT
GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30,1996

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 Federal Indirect Costs Other Expenditures
Nonoperating Costs Equipment

GENERAL FUND

SPECIAL REVENUE
FUND

TOTAL

$ 552,732,56 $ 251,723,79 $ 804,456.35

171,531,55

75,019,12

246,550,67

39,503,31

15,456,00

54,959,31

83,069,02

271,036.49

354,105,51

2,450.00

2,450,00

509,50

509,50

6,538,98

2,226,65

8,765.63

26,390,87

3,687,05

30,077,92

2,335.38

265.50

2,600,88

19,103.68

7,086.18

26,189,86

2,702.01

1,137.91

3,839,92

33,630,32

11,526,81

45,157,13

19,352,62

1,586.45

20,939.07

7,224.56

7,224.56

7,387,14

1,720.00

9,107.14

31,952.99

31,952,99

48,679.98

50,281,54

98,961,52

8,911,15

10,810.52

19,721.67

Total Expenditures

$ 1,032,052.63 $ 735,517,00 $ 1,767,569.63

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

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF EXPENDITURES BY OBJECT
LOTIERY PROGRAM YEAR ENDED JUNE 30,1996
EXPENDITURES Operating Costs Travel of Employees Supplies Nonoperating Costs Equipment
Total Expenditures

SCHEDULE "7"

EDUCATION TECHNOLOGY
CENTER

$

1,448,57

2,817,29

8,357.90

12,623.76

See notes to the general purpose financial statements. - 26 -

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF COMPENSATION OF BOARD MEMBERS
YEAR ENDED JUNE 30.1996
BOARD MEMBER ADDRESS
Mr. Gary M. Walden, Chairman (*) Treutlen County Board of Education 202 Third Street Soperton, Georgia 30457
Dr. Bill Rowe, Vice-Chairman (*) Laurens County Board of Education P. O. Box 2128 Dublin, Georgia 31040
Mr. Ronny Clark (*) Wheeler County Board of Education P. O. Box 427 Alamo, Georgia 30411
Ms. Marjorie Edwards (*) Route 1, Box 124A Mount Vernon, Georgia 30445
Mr. Robert Gentry Pulaski County Board of Education P. O. Box 1138 Hawkinsville, Georgia 31036
Mr. Larry Gibbs (*) Wilcox County Board of Education Wilcox County Courthouse Abbeville, Georgia 31001
Mr. L. C. Hunter (*)
P. O. Box 311 Soperton, Georgia 30457
Ms. June Miller (*) 409 Daniel Street Hawkinsville, Georgia 31036
Mr. Jack Mullis (*) Pulaski County Board of Education P. O. Box 1138 Hawkinsville. Georgia 31036
Dr. Jim Paul Poole (*) Montgomery County Board of Education P. O. Box 315 Mount Vernon, Georgia 30445
Mrs. Ida Mae Rivers (*) P. O. Box 523 Alamo, Georgia 30411

SCHEDULE "8"

$

200.00

600.00 600.00

600.00

- 27 -

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF COMPENSATION OF BOARD MEMBERS
YEAR ENDED JUNE 30,1996
BOARD MEMBER ADDRESS
Mr. Jerry Rogers (*) Telfair County Board of Education
P. O. Box 240 McRae, Georgia 31055
Ms. Georgia Teague (*)
P. O. Box 722 Rochelle, Georgia 31079
Mr. Don Turknett (*) Bleckley County Board of Education P. O. Box 516 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. O. Box 1029 Eastman, Georgia 31023
(*) Denotes Board Members Serving as of June 3D, 1996

SCHEDULE "8"

$

450.00

$

2,450.00

See notes to the general purpose financial statements.

- 28 -

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, 1996

SALARIES
GENERAL FUND Support Services Pupil Services 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 30,1995

JUNE 30,1996

TOTAL PER SCHEDULE (CASH BASIS)

$

89,156.95 $

9,481.34 $

-11,929.64 $

86,708.65

265,606.58

29,262.68

-27,996.20

266,873.06

114,224.51

114,224.51

34,962.72

34,962.72

48,781.80

48,781.80

$

552,732.56 $

38,744.02 $

-39,925.84 $

551,550.74

251,723.79

3,413.24

0.00

255,137.03

Total Salaries

$

804,456.35 $

42,157.26 $

-39,925.84 $=====8~0=6,=6=8=7.=7=7=

TRAVEL

GENERAL FUND

Support Services

Pupil Services

$

Improvement of Instructional Services

General Administration

Business Administration

Other Support Services

Total General Fund

$

SPEC~LREVENUEFUND

10,471.66 $ ' 17,434.42
6,257.93 139.52
5,199.78
39,503.31 $
15,456.00

0.00 $
0.00 $

$ -501.61
-501.61 $ -33.50

10,471.66 17,434.42
5,756.32 139.52
5,199.78
39,001.70
15,422.50

Total Travel

$

54,959.31 $

0.00 $

-535.11 $===:=;,5;,4=,=4=2=4=.2=0=

'. NAME
ASBELL,PAUL D BOUTWELL,BETTINA B BRADDY,JESSICA BRADFIELD,JUNE D BRADFIELD, JUNE D BREWER,WILLIAM JR BRYANT,RONALD R BURKE,WILLIAM W BURNSED, TINA CANNON,SHIRLEY CURRIE,JANE M CURRIE,JANE M FRAISER,PAULA M FRAISER,PAULA M GAPCZYNSKI,SELINA H GAPCZYNSKI,SELINA H GARNTO,MARLA M GORMAN,MICHELLE GUNDY,KYRA L HARRIS,GENEVA HEMPHILL,JUDYE R HEMPHILL,JUDYE R HEMPHILL,JUDYE R HERRINGTON,B ALANE HICKMAN,TRACY H HOLMES,LEROY A HORNE,LARRY GLYNN HOWELL,CONNIE A INGLEY,THERISA M IVEY,PATRICK L IVEY,PATRICK L JONES,ANN S JONES,ANN S KERCE,TONYA M KINCHEN,GLENDA LEWIS,JUNE G LOCKE,MARLYN P LOWTHER,CHESLEY D LOYD,MARION H MAYS,CRYSTAL G MCCRANIE,JUDY E MCDILDA,LORRAINE D PILCHER,JACQUELINE PITTMAN,SYLVIA PITTMAN, SYLVIA RHYMES,JEFFERY W RUSSELL,ERICA RENA SHEFFIELD,JOANNE E STANLEY,JOY S STANLEY,JOY S STOREY,DANIEL EDWARD STOREY,DANIEL EDWARD SUNDAY,TONYA WELLMAN,CHRISTINE N WELLMAN,CHRISTINE N WEST,CHERYL L WHIPPLE,DAVID J WICKER,PRINCESS L WILCOX,MILDRED J WILCOX,MILDREb J WILCOX,MILDRED J WILLIS,JAMES H JR 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, 1996

TITLE CATEGORY

SALARIES AMOUNT

TRAVEL EXPENSE

SPECIAL REVENUE FUND - OTHER PROG

$

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

DIRECTOR

GENERAL ADMINISTRATION

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPPORT SERVICES - INSTRUCTIONAL STAFF

OTHER SUPPORT SERV1CES

SPECIAL REVENUE FUND - OTHER PROGRAMS

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

SUPPORT SERVICES - PUPIL SERVICES

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPPORT SERVICES - PUPIL SERVICES

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPPORT SERVICES - INSTRUCTIONAL STAFF

GENERAL ADMINISTRATION

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPPORT SERVICES - PUPIL SERVICES

SUPPORT SERVICES - PUPIL SERVICES

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

SUPPORT SERVICES - PUPIL SERVICES

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPP SRVS - IMPROV INSTR & ED MED SRVS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

OTHER SUPPORT SERVICES

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPPORT SERVICES - PUPIL SERVICES

SPECIAL REVENUE FUND - OTHER PROGRAMS

GENERAL ADMINISTRATION

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

GENERAL ADMINISTRATION

SUPPORT SERVICES - BUSINESS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPP SRVS - IMPROV INSTR & ED MED SRVS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPPORT SERVICES - PUPIL SERVICES

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPP SRVS - IMPROV INSTR & ED MED SRVS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPPORT SERVICES - INSTRUCTIONAL STAFF

GENERAL ADMINISTRATION

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

GENERAL ADMINISTRATION

SUPPORT SERVICES - INSTRUCTIONAL STAFF

SPECIAL REVENUE FUND - OTHER PROGRAMS

277.28 22,092.00 $
206.86 64,961.64
595.00 16,458.35 24,380.40
873.48 18,163.68
3,413.26 3,413.24 46,011.86 4,592.55 6,339.00 5,142.36 21,252.00 1,096.50 9,000.00
399.50 5,474.21 1,514.11 6,988.44 12,101.30 12,038.80
683.93 3,392.00 39,171.56 6,876.50 1,612.64 26,419.36 1,294.81 22,785.19
867.00 15,838.80 43,040.80 38,177 .50
999.82 24,401.40
1,156.00 14,774.40 36,390.90
766.07
20,544.00 109.44
1,162.39 10,176.00 34,962.72
1,590.00 46,065.60
843.25 2,542.34
62.50 40,815.76
667.98 286.88 3,439.06 2,650.00 3,418.78 533.39 16,759.08 21,369.96 33,254.14

2,156.50
5,088.53 1,962.44 2,296.08
139.52
3,534.52 1,338.02
865.00 449.25 171.75 2,480.50
28.50 1,562.28 2,664.03
266.75 1,699.50
643.45 2,530.54
713.50 568.75 3,241 .61 268.75 2,903.70 2,367.75 3,024.85
60.00 692.00
139.52 1,865.36 1,448.57
2,793.63
134.75
305.02 1,693.91 2,325.37

TOTALS

$

806,687.77 $ 54,424.20

SECTIONID COMPLIANCE

CLAUDE L. VICKERS
STATEAUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
June 30, 1997

Honorable Zell Miller, Governor Members of the General Assembly Members of the State Board of Education
and Director and Members of the Heart of Georgia School Systems Regional Educational Service Agency Board of Control
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 of the Heart of Georgia School Systems Regional Educational Service Agency as of and for the year ended June 30, 1996, and have issued our report thereon dated June 30, 1997. 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 ofthe 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.
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 performed 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 of our tests disclosed no instances of noncompliance that are required to be reported herein under Government Auditing Standards.

96CRL-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,

CLV:cm 96CRL-IO

Claude L. Vickers State Auditor

CLAUDE L. VICKERS
STATEAUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
June 30, 1997

Honorable Zell Miller, Governor Members of the General Assembly Members of the State Board of Education
and Director and Members of the 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, 1996, and have issued our report thereon dated June 30, 1997. 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, 1996:

(1) 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 Heart of Georgia School Systems Regional Educational Service Agency's compliance with the requirements listed in the preceding paragraph. Accordingly, we do not express such an opinion.

96CRL-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,
~~
Claude 1. Vickers State Auditor
CLV:cm 96CRL-40

CLAUDE L. VICKERS
STATEAUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
June 30, 1997

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

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, 1996, and have issued our report thereon dated June 30, 1997. 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 the requirements governing:

(1) Types of Services Allowed or Unallowed

(5) Applicable Special Tests and Provisions

(2) Eligibility

(6) Monitoring Subrecipients

(3) Matching, Level of Effort, and/or Earmarking
(4) Reporting

(7) Other Requirement Claims for Advances and Reimbursements

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, 1996. The management ofthe Heart of Georgia School Systems Regional Educational Service Agency is responsible for the Agency's compliance with those requirements. Our responsibility is to express an opinion on compliance with those requirements based on our audit.

96CRL-80

We conducted our audit of compliance in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States; and Office of Management and Budget (OMB) Circular A-128, "Audits of State and Local Governments". Those standards andOMB 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 its major Federal fmancial assistance program for the year ended June 30, 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,
~
Claude L. Vickers State Auditor
CLV:cm 96CRL-80

CLAUDE L. VICKERS
STATEAUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
June 30, 1997

Honorable Zell Miller, Governor Members of the General Assembly Members of the State Board of Education
and Director and Members of the 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 of the Heart of Georgia School Systems Regional Educational Service Agency as of and for the year ended June 30, 1996, and have issued our report thereon dated June 30, 1997. 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 1996 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 (OMB) 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, 1996. As required by OMB 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.
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
96CRL-120

came to our attention that caused us to believe that the 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:cm 96CRL-120

Claude L. Vickers State Auditor

SECTION IV INTERNAL CONTROL

CLAUDE L. VICKERS
STATEAUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
June 30, 1997

Honorable Zell Miller, Governor Members of the General Assembly Members of the State Board of Education
and Director and Members of the Heart of Georgia School Systems Regional Educational Service Agency Board of Control
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, 1996, and have issued our report thereon dated June 30, 1997. 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.

96ICL-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, 1996, we obtained an understanding of the 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) Accounting Controls (Overall)
(2) General Fixed Assets
(3) General Ledger
A material weakness is a reportable condition in which the design or operation of one or more of the specific internal control structure elements does not reduceto 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 June 30, 1997.
96ICL-3

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:cm 96ICL-3

CLAUDE L. VICKERS
STATEAUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
June 30, 1997

Honorable Zell Miller, Governor Members of the General Assembly Members of the State Board of Education
and Director and Members of the Heart of Georgia School Systems Regional Educational Service Agency Board of Control
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, 1996, and have issued our report thereon dated June 30, 1997. 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 fmancial assistance programs and have issued our opinion thereon dated June 30, 1997.
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 (OMB) Circular A-l28, "Audits of State and Local Governments". Those standards and OMB Circular A-l28 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 of Georgia 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, 1996, 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 fmancial statements and on its compliance with requirements applicable to major Federal financial assistance programs and to report on the internal control structure in accordance with OMB 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.
96ICL-7

We have addressed internal control structure policies and procedures relevant to our audit of the general purpose financial statements in a separate report dated June 30, 1997.

The management of the Heart of Georgia 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 fmancial statements in accordance with generally accepted accounting principles, and that Federal fmancial 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 ofthe structure to future periods is subject to the 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.

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

(1) 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) Monitoring Subrecipients

(7) Other Requirement Claims for Advances and Reimbursements

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

96ICL-7

During the year ended June 30, 1996, the Heart of Georgia School Systems Regional Educational Service Agency expended 89% of its total Federal financial assistance under a major Federal fmancial assistance program.
We performed tests of controls, as required by OMB 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 of Federal 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 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 of the 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, reportable conditions were noted in the following control category:
Administrative Requirements
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 conditions described 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 compliance with requirements applicable to its major Federal financial assistance programs for the year ended June 30, 1996, and this report does not affect our report thereon dated June 30, 1997.
96ICL-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,
tf'~
Claude L. Vickers State Auditor
CLV:cm 96ICL-7

SECTION V 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, 1996
pmORYEMVCURRENTYEAR
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, 1995, noted that the management ofthe 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 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.
ACCOUNTING CONTROLS (OVERALL) - Financial Statements ADMINISTRATIVE REQUIREMENTS - Federal Financial Assistance Inadequate Separation of Duties Reportable Condition - Material Weakness Audit Control Number 8764-95-01
The audit report for the year ended June 30, 1995, stated that the Agency did not provide for adequate separation of employee duties in the performance ofaccounting functions and related procedures for all funds. For the year under review, the Agency made some improvements regarding separation of employee's duties but still did not achieve an adequate degree of internal control. This condition was a result of management's decision to limit the number of administrative staff made 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 of Federal Financial Assistance, Schedule" 1" of this report are affected by this finding.
- 1-

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
CURRENT YEAR GENERAL LEDGER - Financial Statements ADMINISTRATIVE REQUIREMENTS - Federal Financial Assistance Inadequate Accounting Procedures Major Program Reportable Condition - Material Weakness Audit Control Number 8764-96-01 In the year under review, accounting procedures were insufficient to provide adequate control over the Job Training Partnership Act Program (CFDA 17.250). Examination ofthe Job Training Partnership Act Program (lTPA) records revealed the following deficiencies:
(1) Revenues and expenditures relating to individual contracts were not accounted for in the individual ledgers established for them.
(2) Initial postings ofrevenue and expenditures were coded incorrectly which resulted in the JTPA personnel having to make numerous correcting journal entries.
(3) A review ofthe subsidiary records revealed unsupported expenditures were charged to individual contracts.
(4) Accounts Receivable, as reported on the general ledger, were not supported by the subsidiary records.
Extensive audit procedures were necessary to correct the fmancial statements utilizing source documentation. These deficiencies existed due to a lack of communication between JTPA program personnel and the bookkeeper, as well as a failure to post all activity to individual subsidiary accounting records. The Heart of Georgia School Systems Regional Educational Service Agency should implement internal controls to provide for the maintenance of the JTPA records accurately and on an individual contract basis.
-2-

SECTION VI PERTINENT VIEWS OF RESPONSIBLE OFFICIALS

HEART OF GEORGIA SCHOOL SYSTEMS REGIONAL EDUCATIONAL SERVICE AGENCY PERTINENT VIEWS OF RESPONSIBLE OFFICIALS
YEAR ENDED JUNE 30,1996
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Financial Statements Reportable Condition - Material Weakness Audit Control Number 8764-93-01
We concur with this recommendation. Due to current staffing limitations and budgetary considerations prohibiting the hiring of additional administrative staff, the Board has decided not to pursue the recording of general fixed assets on the financial statements.
ACCOUNTING CONTROLS (OVERALL) - Financial Statements ADMINISTRATIVE REQUIREMENTS - Federal Financial Assistance Inadequate Separation of Duties Reportable Condition - Material Weakness Audit Control Number 8764-95-01
Additional staff has been hired to assist in the accounting function. The Board feels it has provided for the most appropriate assignment of duties with the number of personnel available to perform the accounting functions, due to budget limitations.
GENERAL LEDGER - Financial Statements ADMINISTRATIVE REQUIREMENTS - Federal Financial Assistance Inadequate Accounting Procedures Major Program Reportable Condition - Material Weakness Audit Control Number 8764-96-01
Steps have been taken in FY 97 to clear all questionable entries. An additional staff person is available beginning in FY 98 to perform the JTPA accounting functions.