Audit report, North Georgia Regional Educational Service Agency, Ellijay, Georgia, year ended June 30, 1994

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

AUDIT REPORT NORTH GEORGIA REGIONAL EDUCATIONAL
SERVICE AGENCY ELLIJAY, GEORGIA YEARENDEDJUNE30, 1994

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY - TABLE OF CONTENTS -

SECTION!

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 AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

GOVERNMENTAL FUND TYPES

AND EXPENDABLE TRUST FUND

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - ACTUAL AND BUDGET

GOVERNMENTAL FUND TYPES

4

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

5

ADDITIONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

14

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

16

SCHEDULES

1 SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE

18

2 ANALYSIS OF CASH AND CASH EQUIVALENTS

20

3 ACCOUNTS RECEIVABLE

21

SCHEDULE OF REVENUE

4

STATE FUNDS

22

5

LOCAL AND OTHER FUNDS

23

SCHEDULE OF EXPENDITURES BY OBJECT

6

GOVERNMENTAL FUND TYPES

24

7

LOTTERY PROGRAM

25

8

FIDUCIARY FUND TYPE

EXPENDABLE TRUST FUND

26

9 SCHEDULE OF COMPENSATION OF BOARD MEMBERS

27

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY - TABLE OF CONTENTS -
SECTION II SUMMARY AND SCHEDULE OF SALARIES AND TRAVEL
SECTION III 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
SECTIONV FINDINGS AND IMPROPER OR QUESTIONED COSTS SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS

SECTION! FINANCIAL

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

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
June 16, 1995

Honorable Zell Miller, Governor Members of the General Assembly Members of the State Board ofEducation
and Director and Members of the North Georgia Regional Educational Service Agency Board of Control
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS A.1'ID SUPPLEMENTARY INFORMATION SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
Ladies and Gentlemen:
We have audited the general purpose financial statements (Exhibits A through D) of the North Georgia Regional Educational Service Agency, as of and for the year ended June 30, 1994, 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.
Except as discussed in the following paragraph, 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.
We did not observe the taking ofinventories for resale at June 30, 1994, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories for resale through alternative procedures.
As described in the notes to the general purpose financial statements, the Agency's financial statements have been prepared using a certain accounting practice and policy which, in our opinion, varies in some respects from generally accepted accounting principles. This variance is described as follows:
94ARL-33

* 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.
The effects on the general purpose financial statements of this omission have not been determined, but are believed to be material.
In our opinion, except for the effect of adjustments, ifany, on the General Fund and Special Revenue Fund as might have been determined to be necessary had we been able to satisfy ourselves as to the accuracy of the inventories for resale as discussed in the third paragraph, and except for the effect on the general purpose financial statements of the matter referred to in the preceding paragraph, the general purpose financial statements present fairly, in all material respects, the financial position of the North Georgia Regional Educational Service Agency as ofJune 30, 1994, and the results ofits operations for the year then ended, in conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the general purpose financial statements of the North Georgia Regional Educational Service Agency taken as a whole. The combining statements (Exhibits E and F), the financial schedules (Schedules I through 9 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 North Georgia Regional Educational Service Agency. Such information has been subjected to the auditing procedures applied in the audit ofthe general purpose financial statements and, in our opinion, except for the effects ofadjustments, ifany, on the General Fund and Special Revenue Fund, as might have been determined to be necessary had we been able to satisfy ourselves as to the accuracy of the inventories for resale as discussed 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:gp 94ARL-33

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY - 1-

NORJH Ql;QRGIA RfGIONAI fl'.)UCATIOI\IAL SERVICE; AGENCY COMBINED BAI ANCE Hf;l;T
All. FLJNP TYPES ANO Accqt INT GRQI IP
JUNE 30 1994

EXHIBIT"A"

Cash and Cash Equivalents Accounts Receivable
Amount to be PrOYided in Future Years For Payment of Compensated Aboences

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

FIDUCIARY FUND TYPE EXPENDABLE TRUST FUND

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS
(Memorandum OnM
JUNE 30 1994 JUNE 30 1993

63,339.47

35,974.47

99,313.94 $ 651,723.28

473,272.83 $ 143,478.84

616,751.67

171,811.81

457,942.55

545,756.58

1,003,699.13

791,678.31

76 973.46

76 973.46

61 915.95

Total Assets

994 554.85 $ 689 235.42 $

35 974.47 $

76 973.46 $ 1796738.20 $ 1 677129.35

LIABII ITlf ANQ FUND EQUITY
~
CoshClYeroraft Account. Payable Expired Grant Balances Payable Compensated Ab6ences
Total Liabilities
~
FuRnd _Ba_lan,ces
For Sick and Personal Leave For Continuation d Federal Programs For Expired Grant Balances/Questioned
Costs For ll'IYentories for Resale
UnreseNed Deficit Unde6ignated
Total Fund Equity

25.58 4,828.58

198,855.66 57,888.28 60.47

4 854.16 $ 256 804.41

1,225.00 46,077.52 $

74.34

457 942.55

98 205.75

505,245.07 $

98,280.09

484455.62

-134,749.55 468 900.47 $

989 700.69 $ 432 431.01 $

35 974.47 35 974.47

76 973.46 76973.46 $

198,855.66 $ 57,913.86 4,889.05 76 973.46
338 632.03 $

144,195.92 138,451.60
61 915.95
344 563.47

1,225.00 S 46,151.86

1,225.00 106,549.92

556148.30

25.58 345 253.14

603,525.16 $ 453,053.64

-134,749.55 989 330.56

-140,317.17 1019829.41

$ 1458106.17 $ 1332565.88

Total Liabilities and Fund Equity

994554.85 $ 689 235.42 $

35974.47 $

76 973.46 $ 1 796 738.20 $ 1 677129.35

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

t:lQBIH ~EQB~IA REG!Qt:W,. :;QUQA]]OOA!., EBVIQE AG!;NQY
~QM~lt::jf;Q SM!EMEfil QE BE~NYES EXP!;NQIT~lRl;;S ANQ CHAN~ES IN FlJ!:::jt:2 Ml ANQ!;S
~~BNM!;~&, EUNQ !YEES ANQ f;XPl;NDABL(; TRUST FUNQ
YEAR ENDED JUNE 30 1994

EXHIBIT"B"

~
Slate Funds Federal Funds Local and Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration Business Administration Maintenance and Operation of Plant
Total Expenditures
Excess d Revenues over (under) Expenditures
FYNQ ~ Q E JUI Y 1
Net Change in Period Inventories for Resale

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

FIDUCIARY FUND TYPE EXPENDABLE TRUST FUND

TOTALS {Memorandum On~
YEAR ENDED JUNE 30 1994 JUNE30 1993

679,048.76 $ 1,058,962.69
195 759.11

115,216.35 $ 160.276.55 1 033900.51

794,265.11 $ 1.219.239.24 1230 659.62

1 934 770.56 $ 1 309 393.41 $ 3 244163.97 $

0.00 $

794,265.11 $ 1.219,239.24 1230659.62

694,099.50 517,816.14 1104435.08

0.00 $ 3 244 163.97 $ 2 316 350.72

50,325.00

50,325.00

128,316.56

128,316.56

1,690,289.79
238,126.36 65,754.30

98,643.39 10,972.52 32,003.00 877,228.03

1,788,933.18 10,972.52
270,129.36 $ 942,982.33

65252.95

65576.94

130829.89

2 109 748.40 $ 1~12 740.44 $ 3 322 488.84 $

50,325.00 $

51,200.00

128,316.56

126,936.16

7,030.00

1,788,933.18 10,972.52
277,159.36 942,982.33

1,289,452.89 7,957.36
271,142.10 976,432.48

130829.89

143 574.78

7030.00 $ 3,329 518.64 $ 2866695.77

-174,977.84 $ 970,497.98

95,652.97 $ -78,324.87 $ 319,063.43 1,289,561.41

-7,030.00 $ -85,354.87 $ -550,345.05

43,004.47

1,332,565.88

1,979,429.70

194180.55

16714.61

210 895.16

210895.16

-96 518.77

R!NC1 ~ ANCE ~Ut:,JE 30

989,700.69 $ 432,431.01 $ 1422131.70 $

35.974.47 $ 1,456,106.17 $ 1 332565.88

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

NORTH S.EORGIA REGIONAL EQUCATIO!jAL SERVICE AGENCY !.QMBINEQ ST,!>,TEMENT OF REVENUES EXPENQITURES AND C~ANGES IN FUND BALANCES
ACTUAb ANQ BUDGET GOVERNME!!jTAL FU!,!D TYPES YEAR ENDED JUNE 30 1994

EXHIBIT"C"

REVENUES
S-Funds Federal Funds Local and other Funds
Total Revenoos
EXPE!lCllTUBE
Current lnatruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration Business Administration Maintenance and Operation of Piant
Total Expenditures
ExcMo of Reven,- CNer (u-.) Expenditures
QTHER FINANCINS. l,QUR!:,ES
other Sources
Exceu of Revenues and other Financing Sources - , (u_,) Expenditures
FUNQ 1!81,At:j~E JUI Y l 1993
AQJUTt,mm,
Prior Year (Net)
!jET !:;H,!',NS.E IN PEBIQCl
Inventories for Resa6e

ACTUAL PER
EXHIBIT"B"

ACTUAL PER
ADJUSTMENTS BUDGET BASIS

BUDGET

VARIANCE FAVORABLE (UNFAVORABLE)

$ 794,265.11 $ 1,219,239.24 1,230,659.62
$ 3,244,163.97 $

0.00 $ 794,265.11 $ 778,241.95 $

1,219,239.24

820,256.84

1,230,659.62 1,358,209.15

0.00 $ 3,244,163.97 $ 2,956,707.94 $

16,023.16 398,982.40 -127,549.53
287,456.03

50,325.00 $
128,316.56 1,788,933.18
10,972.52 270,129.36 942,982.33 130,829.89
3,322,488.84 $
$ -78,324.87 $

0.00 $

50,325.00 $ 50,000.00 $

128,316.56 1,788,933.18
10,972.52 270,129.36 942,982.33 130,829.89

124,959.00 1,296,661.98
1,000.00 272,358.79 1, 136,634.91 107,632.28

0.00 $ 3,322,488.84 $ 2,989,246.96 $

0.00 $ -78,324.87 $ -32,539.02 $

-325.00
-3,357.56 -492,271.20
-9,972.52 2,229.43 193,652.58 -23,197.61
-333,241.88
-45,785.85

39,375.00

$ -78,324.87 $ 1,289,561.41

0.00 $ -345,253.14

-78,324.87 $ 944,308.27

6,835.98 $ 961,484.83

--39,375.00
~.160.85 -17,176.56

22.32

-22.32

210,895.16

-210,895.16

0.00

0.00

FUND l!t,LA!!jCE JUNE 30 1994

$ 1,422,131.70 $ -556,148.30 $ 865,983.40 $ 968,343.13 $

-102,359.73

The noteg to the general purpose financial statements are an integral part of this statement. -4-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE30 1994

EXHIBIT "D"

Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The North Georgia 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 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 of members and terms of office are prescribed by the State Board ofEducation; 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 ofthe Georgia Department ofEducation.
With the exception ofthe departure from generally accepted accounting principles disclosed in the following paragraphs, 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 of the above criteria, the North Georgia Regional Educational Service Agency is determined to be a jointly governed organization.
The members ofthe Board are elected by an annual caucus ofan equal number of members oflocal 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 ofthe programs and services approved by the Board.
Member boards of education in the North Georgia Regional Educational Service Agency are as follows: Cherokee County, City of Dalton, Fannin County, Gilmer County, Murray County, Pickens County and Whitfield County.
FUND ACCOUNTING
The Agency uses funds and an account group 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.

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NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE30 1994

EXHIBIT"D"

Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
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 and the account group presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most ofa 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 traditionally 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.
FIDUCIARY FUND TYPE - the trust fund used to account for assets held by a government unit in a trustee capacity or as an agent for other funds. This fund includes:
EXPENDABLE TRUST FUND Self-Insured Employee Benefit Fund - the fund used to account for Unemployment Compensation contributions and expenditures.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - used to account for material accrued compensated absences.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds and the expendable trust fund are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are
- 6-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE30 1994

EXHIBIT"D"

Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
Governmental funds and the expendable trust fund 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.
Expenditures are generally recognized when the related fund liability is incurred.
BUDGET
The North Georgia Regional Educational Service Agency has a legally authorized nonappropriated budget which is formally approved by the Board at the aggregate level. Budgets are prepared to provide a basis for funding operations and there is no legal prohibition regarding overexpenditure of the aggregate budget. The budget process begins when the Agency's administration prepares a tentative aggregated budget for the Board's approval. After approval of this tentative budget by the Board, the budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting of the 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 of Education.
The Agency prepares its budget on the modified accrual basis, which is the same basis on which it presents its financial statements. The budget comparison on Exhibit "C" presents actual and budget data for all governmental funds on a combined basis. To facilitate comparison with the budget, inventories as reflected on Exhibit "B" have been eliminated from fund balance.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits (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.

- 7-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE30 1994

EXHIBIT "D"

Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RECEIVABLES
Receivables consist ofgrant reimbursements due from Federal, 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.
INVENTORIES
GOODS FOR RESALE Inventories for resale in the General Fund and Special Revenue Fund - Equipment Repair Fund are maintained on the purchases method and recorded as purchases for resale at the time of purchase. Inventories for resale for these funds are valued on the Combined Balance Sheet at cost. Inventories for resale for the Special Revenue Fund - Cooperative Purchasing Agency are recorded as assets at the time of purchase and the related cost ofgoods sold is recorded as the inventory items are sold. Inventories for resale for this fund are valued on the Combined Balance Sheet at cost, (first-in, first-out). Inventories reported on the balance sheet are equally offset by a reservation offund balance which indicates that these amounts do not constitute "available spending resources" even though they are 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.
RESERVED FUND BALANCES
Reserved fund balances include $1,225.00 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.
INTERFUND TRANSACTIONS
The Agency has the following type 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.
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NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE30 1994

EXHIBIT"D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

DEFICIT FUND BALANCE

The following fund reported a deficit fund balance position at June 30, 1994, which is not readily apparent on the general purpose financial statements:

Fund Type/Fund Name

Deficit Balance

Special Revenue Fund Equipment Repair Fund

$ -134 749 55

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 in an amount ofnot less than 110 percent ofthe public funds being secured after the deduction ofthe 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 ofthe State of Georgia,

(4) Bonds, bills, notes, certificates ofindebtedness or other obligations of the counties or municipalities ofthe State of Georgia,

(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,

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NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE30 1994

EXHIBIT"D"

Note 2: DEPOSITS

(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, 1994, the bank balances were $412,300.02. The amounts of the total bank balances are classified into three categories of credit risk:

Category I - 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, 1994, as follows:

Risk Category

Bank Balance

$ 176,940.61

2

235,359.41

3

0.00

Total

$ 41230002

Note 3: RISK MANAGEMENT

The Agency has established a limited risk management program for Unemployment Compensation. Estimated claims are budgeted by management based on known claims and prior experience. Each fund contributes their pro rata share to the Unemployment Compensation fund and claims are paid from this fund during the fiscal year. During fiscal year 1994, a total of$7,030.00 was paid in claims.

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NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE30 1994

EXHIBIT "D"

Note 4: GENERAL LONG-TERM DEBT

The changes in General Long-Term Debt during the fiscal year ended June 30, 1994, were as follows:

Compensated Absences

Balance July 1, 1993

$ 61,915.95

Additions Annual Leave Earned and Utilized (Net) Salaries Salary Related Fringe Benefits (*)

13,199.30 5,470.02

Deductions

3611.81

Balance June 30, 1994

$ 76 973 46

(*) Includes related fringe benefits applicable to compensated absences at July 1, 1993.

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.

The Agency is a defendant in a legal matter incidental to the performance of routine Agency operations. The ultimate disposition ofthis matter is not presently determinable, but is not believed to be material to the general purpose financial statements.

Note 6: SUBSEQUENT EVENTS

Effective July 1, 1994, the Pioneer Regional Educational Service Agency became the fiscal agent for the Cooperative Purchasing Agency and consequently will include all fiscal operations of the Cooperative Purchasing Agency as a part of their general purpose financial statements in subsequent fiscal periods.

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. Employees are paid, at their current rate ofpay, for unused annual leave up to a maximum accumulation of fifteen days upon retirement or termination of employment. See Note 1 - Compensated Absences

- 11 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE30 1994

EXHIBIT"D"

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. A member is eligible for service retirement after 30 years ofcreditable service, regardless of age, or after IO 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.
Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting ofemployer 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, 1994, was $1,396,849.86; total payroll was $1,453,272.73.
TRS CONTRIBUTIONS REQUIRED AND MADE Employees of the Agency who are covered by TRS are required to contribute 6% of their gross earnings to TRS. The Agency makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees as advised by their independent actuary. For fiscal year 1994 that rate for employer contributions was 11.81%. The interest rate assumption (rate ofreturn on investments) was 7.50%.
Total contributions made during fiscal year 1994 amounted to $248,778.75, of which $164,968.21 was made by the Agency and $83,810.54 was made by employees. These contributions represented 11.81% (Agency) and 6% (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
- 12 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE30 1994

EXHIBIT "D"

Note 8: RETIREMENT PLANS

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, 1993, was as follows:

Total pension benefit obligation

$13,912,014,000.00

Net assets available for benefits, at cost

12 821 722 000.00

Unfunded pension benefit obligation

$ 1 090 292 000 00

The measurement ofthe total pension benefit obligation is based on an actuarial valuation as of June 3o", 1993. 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.

Total contributions from all employers to TRS for fiscal year ended June 30, 1994 were $521,550,000.00. The Agency's contribution for the year ended June 30, 1994 of$164,968.21 was actuarially determined and represented .0316% oftotal contributions made by all participating employers.

Ten year historical trend information is presented in the 1994 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, Mr. Charles Gibson and the bookkeeper, Ms. Joyce Smith, are bonded in the amount of $100,000.00 each with the Hartford Insurance Company of the Southeast, Orlando, Florida, their Bond No. RN-4542273, on which premium was paid through September 15, 1994.

The Director ofthe Cooperative Purchasing Agency, Ms. Marilyn A Berrong and each of the Board Members of the Cooperative Purchasing Agency are bonded, in aggregate for each policy year, in the amount of $1,000,000.00 with the Tudor Insurance Company, Keene, New Hampshire, their Bond No. DOL0076142 on which premium was paid through January 1, 1995.

- 13 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICF AGENCY COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30 1994

Cash and Cash Equivalents Accounts Receivable Inventories
Total Assets

GEORGIA LEARNING RESOURCES
SYSTEM

LOTTERY PROGRAM

DRUG-FREE SCHOOLS AND COMMUNITIES
ACT

ELEMENTARY AND SECONDARY
EDUCATION ACT TITLE IIFOREIGN
LANGUAGES ASSISTANCE

0.00

$

0.00 $

0.00

$ 50,000.00

$

0.00 $ so,000.00 $ _ _ _ _ _0._00_$ _ _ _ _ _ _0._oo_

LIABILITIES AND FUND EQUITY LIABILITIES
Cash Overdraft Accounts Payable Expired Grant Balances Payable
Total Liabilities
FUND EQUITY Fund Balances Reserved For Continuation of Federal Programs For Inventory for Resale
Unreserved Deficit Undesignated
Total Fund Equity
Total Liabilities and Fund Equity

50,000.00 50,000.00

$ _ _ _~0-~00~$ _ _ _0~-~00~$ _ _ ____..cco.~00~$ _ _ _ _ _~0~.o~o

$

0.00 $ 50,000.00 $

0.00 $ _ _ _ _ _0;;;;;;00;.

See notes to the general purpose financial statements.

-14-

EXHIBIT"E"

JOB TRAINING PARTNERSHIP
ACT

AIDS HEALTH EDUCATION

COOPERATIVE PURCHASING
AGENCY

EQUIPMENT REPAIR FUND

TOTALS JUNE 30, 1994 JUNE 30, 1993

$

18,660.51

$

18,660.51 $ -144,195.92

$

9,286.05 $

1,808.54

60,485.89 $ 21,898.36

143,478.84

72,544.70

447,550.83

98,205.75

545,756.58

527,916.31

$

9,286.05 $

1,808.54 $ 526,697.23 $ 120,104.11 $ 707,895.93 $ 456,265.09

$

9,286.05 $

1,673.73

$ 156,556.39 $ 217,516.17

$

57,796.76

91.52

57,888.28 $ 137,201.66

60.47

60.47

$

9,286.05 $

1,734.20 $

57,796.76 $ 156,647.91 $ 275,464.92 $ 137,201.66

$

74.34

$ $ 98,205.75

74.34 $ 98,205.75

1,280.00 81,491.14

$

74.34

$ 98,205.75 $

98,280.09 $

82,771.14

$

0.00

0.00 $

468,900.47

-134,749.55

-134,749.55 468,900.47

-140,317.17 376,609.46

$

0.00 $

74.34 $ 468,900.47 $ -36,543.80 $ 432,431.01 $ 319,063.43

$

9,286.05 $

1,808.54 $ 526,697.23 $ 120,104.11 $ 707,895.93 $ 456,265.09

-15-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY COMBINING STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30 1994

REVENUES
State Funds Federal Funds Local and Other Funds
Total Revenues
EXPENDITURES
Current Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration Business Administration Maintenance and Operation of Plant
Total Expenditures
Excess of Revenues over (under) Expenditures
FUND BALANCE JULY 1
Net Change in Period Inventories for Resale
Residual Equity Transfer

GEORGIA LEARNING RESOURCES
SYSTEM

LOTTERY PROGRAM

DRUG-FREE SCHOOLS AND COMMUNITIES
ACT

ELEMENTARY AND SECONDARY
EDUCATION ACT TITLE 11FOREIGN
LANGUAGES ASSISTANCE

$

63,479.00 $ 50,000.00

119,662.00

$

$ 183,141.00 $ 50,000.00 $

20,000.00 $ 20,000.00 $

5,085.30 5,085.30

$ 128,316.56 9,520.00 $ 50,000.00 $
10,972.52 30,586.18
5,025.74

19,240.89 $ 759.11

$ 184,421.00 $ 50,000.00 $

$

-1,280.00 $

0.00 $

1,280.00

0.00

20,000.00 $ 0.00 $ 0.00

4,898.80 186.50
5,085.30 0.00 0.00

FUND BALANCE JUNE 30

$

0.00 $

0.00 $

0.00 $

0.00

See notes to the general purpose financial statements.

-16-

EXHIBIT"F"

JOB TRAINING PARTNERSHIP
ACT

AIDS HEALTH EDUCATION

COOPERATIVE PURCHASING
AGENCY

EQUIPMENT REPAIR FUND

TOTALS YEAR ENDED JUNE 30, 1994 JUNE 30, 1993

$

1,737.35 $

115,216.35 $

75,190.88

$

9,286.05 $

6,243.20

160,276.55

158,894.96

$

760,670.94

273,229.57

1,033,900.51

855,200.68

$

9,286.05 $

6,243.20 $ 760,670.94 $ 274,966.92 $ 1,309,393.41 $ 1,089,286.52

$

128,316.56 $

126,936.16

$

8,952.14 $

6,031.56

98,643.39

47,751.52

10,972.52

7,957.36

333.91

137.30

32,003.00

31,488.66

$ 610,856.69 $ 261,345.60

877,228.03

913,726.15

57,523.24

8,053.70

65,576.94

80,060.00

$

9,286.05 $

6,168.86 $ 668,379.93 $ 269,399.30 $ 1,212,740.44 $ 1,207,919.85

$

0.00 $

74.34 $

92,291.01 $

5,567.62 $

96,652.97 $ -118,633.33

0.00

0.00

376,609.46

-58,826.03

319,063.43

463,445.26

16,714.61

16,714.61

-25,824.09 75.59

$

0.00 $

74.34 $

468,900.47 $ -36,543.80 $

432,431.01 $ 319,063.43

-17-

NORTH GEORGIA REGIONAL EDUCATIONAL SERl(ICE AGENCY l,QHEQ!.!LE OF FEDERAi FINANCIAL ASSISTANCE YEAR ENDEn JUNE 30 1994

SCHEDULE 1

FUNDING AGENCY PROGRAM/GRANT

CFDA ~

Education, U. S. Department of Through Georgia Department of Education Drug-Free Schools and Communities Act 1992 Grant 1994 Grant Elementary and Secondary Education Act Tltle II Foreign Languages Assistance 1993Regular Individuals with Disabillties Education Act Tltle VI, B Georgia Leaming Resources System 1993 Garry-Over 1994 Regular Tltle VI, D Special Education Personnel Development and Parent Training 1993 Regular 1994Regular Vocational Education Basic Grants to Slates High School Program Basic Grant 1992 Grant 1993 Grant 1994Grant Research and Curriculum Development 1993 Grant 1994Grant Consumer and Homemaking Education 1992Grant Tech-Prep Education 1993 Grant 1994Grant

84.186 84.186
84.249
84.027 84.027
84.029 84.029
84.048 84.048 84.048 84.048 84.048 84.049 84.243 84.243

AWARDS IN PERIOD

FEDERAL FUNDS RECEIVED IN PERIOD (NET OF REFUNDS)

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

$ 20,000.00

-49.20 20,000.00 $

20,000.00 $

20,000.00

1,085.30

5,085.30

5,085.30

5,085.30

12,800.00 100,842.00

12,800.00 100,842.00

12,800.00 100,842.00

12,800.00 100,842.00

6,020.00

6,020.00

6,020.00

1,280.00 6,020.00

1,246,798.00 -446.75
219,713.00
40000.00

-253.46 61,088.68 445,158.67
80,285.44 149,938.63
-938.21

-48.05 59,160.22 718,054.66
55,801.90 194,465.28
-3,717.27 35245.95

133,426.05 (1) 712,707.79 (1)
74,402.56 (1) 250,670.05 (1)
27,286.82 35 245.95

Total U. S. Department of Education

$ 1,646 811.55

879,977.85 $ 1203709.99 $ 1 379,766.52

Health and Human Services, U. S. Department of Through Georgia Department of Education Cooperative Agreements to Support School Health Education to Prevent the Spread of Acquired Immunodeficiency Syndrome Teacher Training - AIDS Health Education 1992 Contract 1993 Contract 1994 Contract

93.938 93.938 93.938

$ 6500.00

-15.39 3,277.86 $ 2,084.09

2,350.57 $ 3 892.63

2,350.57 3 818.29

Total U. S. Department of Health aid Human Services

$

6,500.00 $

5,346.56 $

6243.20 $

6168.86

- 18 -

NORTH GEORGIA REGIONAL EDUCATIONAi SFRYJCE AGENCY
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
YEAR ENDED JUNE 30 1994

SCHEDULE 1

FUNDING AGENCY PROGRAM/GRANT
Labor, U. S. Department of Through Georgia Department of Education Job Training Partnership Act 1994 Grant

CFDA NUMBER

AWARDS IN PERIOD

FEDERAL FUNDS RECEIVED IN PERIOD (NET OF REFUNDS)

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

17.250 $ 60000.00

9 286.05 $ _ _ _9=286=.05~

Total Federal Financial Assistance

$ 1713311.55 $

885 324.41 $ 1 219 239.24 $ 1 395 221.43

Major Programs are identified by an asterisk C-) 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.

- 19 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY ANALYSIS OF CASH AND CASH EQUIVALENTS JUNE 30 1994

SCHEDULE 2

INTEREST BEARING ACCOUNTS
First National Bank of Gilmer County, Ellijay, Georgia
Public Funds Checking Account (Variable)
First National Bank of White County, Cleveland, Georgia
N.O.W. Account (2.28%)

$ -118,202.23

18,660.51

$

-99,541.72

See notes to the general purpose financial statements. - 20 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY ACCOUNTS RECEIVABLE JUNE 30 1994

SCHEDULE "3"

Boards of Education Sales and Services
Education, Georgia Department of Contract Teacher Training - AIDS Health Education Vocational Education State Funds Federal Funds Lottery Program Education Technology Centers Federal Program Job Training Partnership Act
Various Sources Insurance Premiums Sales and Services

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

69,694.53 $

82,302.25 $

151,996.78

49,749.21 353,564.29
264.80

1,808.54
50,000.00 9,286.05 82.00

1,808.54 49,749.21 353,564.29 50,000.00
9,286.05
264.80 82.00

$

473,272.83 $

143,478.84 $

616,751.67

See notes to the general purpose financial statements. - 21

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30 1994

SCHEDULE "4"

AGENCY/FUNDING
GRANTS Education, Georgia Department of Vocational Education Other State Programs Georgia Learning Resources System Regional Educational Service Agency Staff Development Supervision and Assessment of Student and Beginning Teachers and PerformanceBased Certification Teachers' Retirement Lottery Program Education Technology Centers
CONTRACTS Education, Georgia Department of Elementary School Foreign Languages Model Program
OTHER Education, Georgia Department of Reimbursement for Printing

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

111,234.89

$ 422,930.00
31,000.00

85,016.75 9,840.12

$ 63,479.00

111,234.89
63,479.00 422,930.00
31,000.00

50,000.00

85,016.75 9,840.12
50,000.00

8,777.00 10,250.00

1,737.35

8,777.00 11,987.35

$

679,048.76 $

115,216.35 $

794,265.11

See notes to the general purpose financial statements. - 22 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF LOCAL AND OTHER REVENUE YEAR ENDED JUNE 30 1994

SCHEDULE 5

Membership Contributions Boards of Education Cherokee County Dalton, City of Fannin County Gilmer County Murray County Pickens County Whitfield County
Shared Services Boards of Education Cherokee County Dalton, City of Fannin County Gilmer County Murray County Pickens County Whitfield County
Other Indirect Cost Special Revenue Fund Interest Earned Reimbursements For Staff Development Various Sources For Summer Honors Program Various Sources Sales and Services Less: Purchases for Resale Sales and Services Less: Cost of Goods Sold Seminar Registration Other

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

62,976.60 $

62,976.60

13,721.04

13,721.04

10,032.36

10,032.36

9,735.00

9,735.00

19,116.00

19,116.00

9,798.72

9,798.72

28,915.90

28,915.90

$

41,180.84

200.00.

10,584.91

3,084.08

5,400.00

7,895.81

16,799.11

41,180.84 200.00
10,584.91 3,084.08 5,400.00 7,895.81
16,799.11

7,084.05 20,802.49

1,444.87

7,084.05 22,247.36

2,803.59
14,850.00 300,217.73 -267,864.67
28,429.80 5,291.37

331,637.27 -212,703.32 2,201,696.41 -1,442,470.34

2,803.59
14,850.00 631,855.00 -480,567.99 2,201,696.41 -1,442,470.34
28,429.80 5,291.37

$ 196,759.11 $ 1,033,900.51 $ 1,230,659.62

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

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF EXPENDITURES BY OBJECT GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30 1994

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 Supplies Energy Books, Textbooks and Periodicals Dues and Fees Federal Indirect Costs Other Expenditures
Nonoperating Costs Equipment

GENERAL FUND

SPECIAL REVENUE
FUND

TOTAL

$ 678,901.49 $ 774,37124 $ 1,453,272.73

171,976.30

212,393.99

384,370.29

30,046.24

11,606.80

41,653.04

925,661.85

30,295.70

955,957.55

1,650.00

1,650.00

7,650.05

50.63

7,700.68

2,452.48

21,035.73

23,488.21

38,137.13

606.00

38,743.13

8,064.92

21,197.61

29,262.53

32,511.82

9,619.58

42,131.40

128,894.76

34,780.34

163,675.10

7,148.98

43,554.45

50,703.43

10,827.00

10,827.00

9,597.60

489.00

10,086.60

7,084.05

7,084.05

4,970.48

4,970.48

51,257.30

45,655.32

96,912.62

Total Expenditures

$ 2,109,748.40 $ 1,212,740.44 $ 3,322,488.84

See notes to the general purpose financial statements. - 24 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF EXPENDITURES BY OBJECT LOTTERY PROGRAM YEAR ENDED JUNE 30 1994

SCHEDULE '7"

EXPENDITURES
Operating Costs Supplies
Nonoperating Costs Equipment

EDUCATIONAL TECHNOLOGY
CENTERS

$

6,955.86

43,044.14

Total Expenditures

$ ==,;;,50;;,i,;;;DD;;;:0~.0;,;;,,0

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

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF EXPENDITURES BY OBJECT
FIDUCIARY FUND TYPE - EXPENDABLE TRUST FUND YEAR ENDED JUNE 30 1994

SCHEDULE "8"

EXPENDITURES
Operating Costs Unemployment Compensation Claims

$==7=-=03~0;;,;.0;;;,0

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

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF COMPENSATION OF BOARD MEMBERS YEAR ENDED JUNE 30 1994

SCHEDULE "9"

BOARD MEMBER ADDRESS
NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Mr. Frank Thomason, Chairman (*) City of Dalton Board of Education P. 0. Box 1408 Dalton, Georgia 30722-1408
Mr. Ben Arp(*) Gilmer County Board of Education 275 Bobcat Trail Ellijay, Georgia 30540
Mr. Morgan Arp (*) Fannin County Board of Education P. 0. Box606 Blue Ridge, Georgia 30513
Mr. Robert Blalock (*) Route 2, Box 76 Waleska, Georgia 30183
Mr. Terry Cullifer(*) Whitfield County Board of Education P. 0. Box 2167 Dalton, Georgia 30722-2167
Mr. James E. Hall (*) Route 7, Box 7655 Chatsworth, Georgia 30705
Mr. Corky Jones (*) Cherokee County Board of Education
P. o. Box769
Canton, Georgia 30114
Mr. Paul Kiker P. 0. Box 1116 Ellijay, Georgia 30540
Dr. Mickey McNeil (*) Murray County Board of Education
P. o. Box40
Chatsworth, Georgia 30705

$

550.00

500.00

- 27 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF COMPENSATION OF BOARD MEMBERS YEAR ENDED JUNE 30 1994

SCHEDULE "9"

BOARD MEMBER ADDRESS
NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Mr. Gary Middleton (*) 1778 Dug Gap Battle Rocky Face, Georgia 30740
Mr. Gary Reece(*) P. 0. BoxG Ellijay, Georgia 30540
Mr. Kimsey Wood (*) Pickens County Board of Education 488 Stegall Drive Jasper, Georgia 30143
COOPERATIVE PURCHASING AGENCY
Mr. Dock Sisk, Chairman(*) Banks County Board of Education Highway 51, Box 248 Homer, Georgia 30547
Mr. Morgan Arp (*) Fannin County Board of Education
P. 0. Box606
Blue Ridge, Georgia 30513
Dr. John Burks (*) City of Social Circle Board of Education 140 N. Cherokee Road Social Circle, Georgia 30279
Mr. Tom Harris(*) Oglethorpe County Board of Education P.O.Box190,Hwy. 78 Lexington, Georgia 30648
Mr. H. F. Johnson (*) Hall County Board of Education 711 Green Street Gainesville, Georgia 30505-0298

$

250.00

350.00

- 28 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF COMPENSATION OF BOARD MEMBERS YEAR ENDED JUNE 30 1994

SCHEDULE "9"

BOARD MEMBER ADDRESS
COOPERATIVE PURCHASING AGENCY
Mr. Gorky Jones () Cherokee County Board of Education P. 0. Box769 Canton, Georgia 30114
Mr. Boyd Outz () Franklin County Board of Education P.O. Box99 Carnesville, Georgia 30521
Mr. Donald Rooks() City of Jefferson Board of Education P. 0. Box507 Jefferson, Georgia 30549
Mr. Kimsey Wood () Pickens County Board of Education 488 Stegall Drive Jasper, Georgia 30143

$===1=,6=5=0.=00=

() Denotes Board Members Serving as of June 30, 1994

See notes to the general purpose financial statements. - 29 -

SECTION II SUMMARYANDSCHEDULEOFSALARIESANDTRAVEL

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SUMMARY OF SALARIES AND TRAVEL YEAR ENDED JUNE 30 1994

SALARIES
GENERAL FUND Support Services Improvement of Instructional Services General Administration Business Administration Maintenance and Operation of Plant
Total General Fund
SPECIAL REVENUE FUND

TOTAL PER FINANCIAL STATEMENTS (ACCRUAL BASIS)

ADJUSTMENTS FOR ACCRUALS

JUNE 30, 1993

JUNE 30, 1994

TOTAL PER SCHEDULE (CASH BASIS)

$

463,629.09 $

159,196.91

52,475.49

3,600.00

$

678,901.49

n4.371.24

0.00 $ 0.00 $

0.00 $ 0.00 $

463,629.09 159,196.91 52,475.49
3,600.00
678,901.49
n4,371.24

Total Salaries

$

1 453 272.73 $

0.00 $

0.00 $ 1,453,272.73

TRAVEL

GENERAL FUND

Support Services

Improvement of Instructional Services

$

General Administration

Business Administration

Total General Fund

SPECIAL REVENUE FUND

23,261.37 $ 6,756.52 28.35
30,046.24 $
11,606.80

0.00 $ 0.00 $

0.00 $ 0.00 $

23,261.37 6,756.52 28.35
30,046.24
11,606.80

Total Travel

$

41,653.04 $

0.00 $

0.00 $

41,653.04

NORTH GEORGIA R.E.S.A. SCHEDULE OF SALARIES AND TRAVEL
YEAR ENDED UUNE 30, 1994

NAME

TITLE CATEGORY

ALLEN, ANGELA T

SUPP SRVS - IMPROV INSTR & ED MEO

ALLEN, CAROLYN

SUPP SRVS - IMPROV INSTR & ED MED SRVS

ALLEN, CAROLYN

SPECIAL REVENUE FUND - OTHER PROGRAMS

AVERY, VIRGINIA C

SUPP SRVS - IMPROV INSTR & ED MED SRVS

BELL, CEDER I CK K

SUPP SRVS - IMPROV INSTR & ED MED SRVS

BERRONG.MARILYN A

INTERNAL SERVICES FUND

BLACK, PHI LL! P

INTERNAL SERVICES FUND

BOGGS, CAROLYN

INTERNAL SERVICES FUND

BROCK,CHARLES B JR

INTERNAL SERVICES FUND

CANTRELL, WILLIAM L JR

INTERNAL SERVICES FUND

CARMICHAEL,WILLIAM L

SUPP SRVS - IMPROV INSTR & ED MEO SRVS

CARSON, JAMES KNOX

SUPP SRVS - IMPROV INSTR & ED MEO SRVS

CARSON, JAMES KNOX

GEORGIA LEARNING RESOURCES SYSTEM FUND

COCHRAM, BONNIE L

INTERNAL SERVICES FUND

COLLINS, LAMAR

INTERNAL SERVICES FUND

COX, RALPH N

INTERNAL SERVICES FUND

DORSEY, SUE

INTERNAL SERVICES FUND

ENIS, DONALD F

SUPP SRVS - IMPROV INSTR & ED MED SRVS

ENIS, DONALD F

GEORGIA LEARNING RESOURCES SYSTEM FUND

ENIS.GERTRUDE A

SUPPORT SERVICES - INSTRUCTIONAL STAFF

ENIS,GERTRUDE A

GENERAL ADMINISTRATION

FOSTER, JAMES F

SUPPORT SERVICES - INSTRUCTIONAL STAFF

GIBSON,CHARLES E

DIRECTOR

GIBSON,CHARLES E

GENERAL ADMINISTRATION

GIBSON,MARK

SUPPORT SERVICES - INSTRUCTIONAL STAFF

GIBSON, MATTHEW

SUPPORT SERVICES - INSTRUCTIONAL STAFF

GREEN, WILLIAM T

SUPP SRVS - IMPROV INSTR & ED MED SRVS

GREEN, WILLIAM T

SPECIAL REVENUE FUND - OTHER PROGRAMS

HEFNER, ESTHER R

SUPPORT SERVICES - INSTRUCTIONAL STAFF

HEFNER, ESTHER R

GENERAL ADMINISTRATION

HOLLINGSWORTH, CAROLYN F SUPP SRVS - IMPROV INSTR & ED MED SRVS

HULSEY, CURT! S

INTERNAL SERVICES FUND

HULSEY, J TELFORD

INTERNAL SERVICES FUND

HULSEY, WENDY S

INTERNAL SERVICES FUND

JOHNSON, JOHNNY

INTERNAL SERVICES FUND

KINSEY, BUFORD 0

INTERNAL SERVICES FUND

LEIGH,CAROL A

GENERAL ADMINISTRATION

MULKEY, CI NOY

GENERAL ADMINISTRATION

MULKEY, CINDY

GEORGIA LEARNING RESOURCES SYSTEM FUND

NORTON, LELAND EUGENE

SUPP SRVS - IMPROV INSTR & ED MED SRVS

NORTON, LELAND EUGENE

GENERAL ADMINISTRATION

NORTON, LELAND EUGENE

SPECIAL REVENUE FUND - OTHER PROGRAMS

PALMER, DANNY C

INTERNAL SERVICES FUND

PALMER, DARREN J

INTERNAL SERVICES FUND

QUARLES.MELISSA S

SUPPORT SERVICES - INSTRUCTIONAL STAFF

RAVAN,LARRY W

INTERNAL SERVICES FUND

ROGERS, CARL

INTERNAL SERVICES FUND

ROPER, RHONDA

SUPPORT SERVICES - INSTRUCTIONAL STAFF

RYAN, JAMES A

SUPPORT SERVICES - INSTRUCTIONAL STAFF

RYAN, PAMELA A

SUPPORT SERVICES - BUSINESS

SEGERS, YVONNE

INTERNAL SERVICES FUND

SMITH,JOYCE J

SUPPORT SERVICES - BUSINESS

SQUIRES,SHERI A

INTERNAL SERVICES FUND

STANCIL,RUSSELL 0

INTERNAL SERVICES FUND

TANKERSLEY, EVELYN P

INTERNAL SERVICES FUND

TANKERSLEY, WILLIAM LARRY GENERAL ADMINISTRATION

TANKERSLEY, WILLIAM LARRY MAINTENANCE & OPER. OF PLANT SERVICES

TANKERSLEY, WILLIAM LARRY INTERNAL SERVICES FUND

THOMAS, C RONALD

INTERNAL SERVICES FUND

VAIL,J PAUL

SUPPORT SERVICES - INSTRUCTIONAL STAFF

WEAVER, CANDACE LYNN

SUPPORT SERVICES - INSTRUCTIONAL STAFF

WEAVER, CARA

GENERAL ADMINISTRATION

WEAVER, JOSEPH BENNY

INTERNAL SERVICES FUND

WEAVER, LINDA R

SUPPORT SERVICES - INSTRUCTIONAL STAFF

WILLIAMS ,ARTHUR M

SUPPORT SERVICES - INSTRUCTIONAL STAFF

WILLIAMS, LORETTA I

SUPP SRVS - IMPROV INSTR & EO MEO SRVS

TOTALS

$

SALARIES AMOUNT
14,962 50 48,097 68
2,282 50 4,356.60 58,000.08 9,844.80 35,496.96 32,451.84 23,525.76 48,672.64
270.00 51,042.96 25,721.52 40,972.08 42,348.96 21,468.96
3,624 84 45,702 84 18,103 27
17,351.10 63,999 96
23,868 72 5,908 50
40,559 31 3,052 86
10,133 28 10,133.28
4,580.00 23,965.92
3,375.00 300. 11
36,652.56 25,603.92 26,374.80
1,721.68 18,938.48 13,948.56 26,529.48 14,222.04 25,565.92 23,965.92 37,676.16 18,874 71 24,565 92
3,483.92 2,749.50 24,827.01 21,468.96 27,648 48 18,246 00 25,603 92 30,236.16 18,618.00 3,600.00 18,618.24 25,603.92 44,067.40 51,540.36 11,819.71 28,933.92 31,663.92 33,333.28 2,395.05
1,453,272 73

TRAVEL EXPENSE
3,078 52 19 32
1,071.39
10 so
3,474 40 499 62
3,510 99 145 77
290 38 4,956 25
15 00 227 30 4,737 96
35 48 4,291.50
171. 78 254 82
63 46
152 43 1,685 28
886 27
1,175.13
801 .98
28 35 118 .23
716 30 3,13206 3,379 66
335. 46 2,387.45
41,653.04

SECTION III COMPLIANCE

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

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
June 16, 1995

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Director and Members of the North Georgia 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 North Georgia Regional Educational Service Agency as of and for the year ended June 30, 1994, and have issued our report thereon dated June 16, 1995. This report was qualified for a scope limitation and for a departure from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.
Except as discussed in the following paragraph, 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.
We did not observe the taking of inventories for resale at June 30, 1994, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures.
Compliance with laws, regulations, contracts, and grants applicable to North Georgia 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 ofthe Agency's compliance with certain provisions oflaws, 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.
94CRL-10

The results ofour tests indicate that, with respect to the items tested, the North Georgia Regional Educational Service Agency complied, in all material respects, with the provisions referred to in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the Agency had not complied, in all material respects, with those provisions.
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 ofpublic record.
Respectfully submitted,
tt~~
Claude L. Vickers State Auditor
CLV:gp 94CRL-10

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

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
June 16, 1995

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Director and Members of the North Georgia 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 North Georgia Regional Educational Service Agency as of and for the year ended June 30, 1994, and have issued our report thereon dated June 16, 1995. This report was qualified for a scope limitation and for a departure 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 North Georgia 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 ofFederal Financial Assistance, for the year ended June 30, 1994:

(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 ofManagement 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.

94CRL-60

Material instances of noncompliance consist offailures to follow the general requirements that caused us to conclude that the misstatements resulting from those failures are material to the Federal financial assistance programs. The results of our tests of compliance disclosed a material instance of noncompliance that is described in the Schedule of Findings and Improper or Questioned Costs.
We considered this material instance of noncompliance in forming our opinion on whether the North Georgia Regional Educational Service Agency general purpose financial statements are presented fairly, in all material respects, in conformity with generally accepted accounting principles, and this report does not affect our report dated June 16, 1995, on those financial statements.
Except as described above, the results of our procedures to determine compliance indicate that, with respect to the items tested, the North Georgia Regional Educational Service Agency, complied, in all material respects, with the requirements listed in the second paragraph of this report, and with respect to items not tested, nothing came to our attention that caused us to believe that the 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.

CLV:gp 94CRL-60

Claude L. Vickers State Auditor

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

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
June 16, 1995

Honorable Zell Miller, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Director and Members of the North Georgia 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 North Georgia Regional Educational Service Agency as ofand for the year ended June 30, 1994, and have issued our report thereon dated June 16, 1995. This report was qualified for a scope limitation and for a departure from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.

We have also audited the North Georgia Regional Educational Service Agency's compliance with the requirements governing:

(1) Types of Services Allowed or Unallowed

(4) Applicable Special Tests and Provisions

(2) Eligibility (3) Reporting

(5) 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, 1994. The management of the North Georgia 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.

94CRL-80

Except as discussed in the following paragraph, 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 (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.
We did not observe the taking of inventories for resale at June 30, 1994, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures. However, this matter has no affect on the Agency's compliance with the requirements listed in the second paragraph of this report.
In our opinion, the North Georgia 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 financial assistance program for the year ended June 30, 1994.
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 ofpublic record.
Respectfully submitted,
~~/~
Claude L. Vickers State Auditor
CLV:gp 94CRL-80

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

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
June 16, 1995

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Director and Members ofthe North Georgia 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 North Georgia Regional Educational Service Agency as ofand for the year ended June 30, 1994, and have issued our report thereon dated June 16, 1995. This report was qualified for a scope limitation and for a departure from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.
In connection with our audit ofthe fiscal year 1994 general purpose financial statements of the North Georgia Regional Educational Service Agency and with our consideration of the Agency's internal control structure used to administer Federal financial assistance programs, as required by Office ofManagement and Budget (0MB) Circular A-128, "Audits ofState and Local Governments", we selected certain transactions applicable to certain nonmajor Federal financial assistance programs for the year ended June 30, 1994. 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 North Georgia Regional Educational Service Agency's compliance with these requirements. Accordingly, we do not express such an opinion.

94CRL-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 North Georgia 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,
~/A
Claude L. Vickers State Auditor
CLV:gp 94CRL-120

SECTION IV INTERNAL CONTROL

CLAUDE L. VICKERS
STATE AUDITOR (404) 6562174

DEPARTMENT OF AUDITS
254 Washington Street, S.W.. Suite 214 Atlanta, Georgia 30334-8400
June 16, 1995

Honorable Zell Miller, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Director and Members of the North Georgia 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 North Georgia Regional Educational Service Agency as ofand for the year ended June 30, 1994, and have issued our report thereon dated June 16, 1995. This report was qualified for a scope limitation and for a departure from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.
Except as discussed in the following paragraph, 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.
We did not observe the taking ofinventories for resale at June 30, 1994, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories through alternative procedures.
In planning and performing our audit of the general purpose financial statements of the North Georgia Regional Educational Service Agency for the year ended June 30, 1994, we considered the internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal control structure.
The management of the North Georgia 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,
94ICL-3

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 ofthe 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.

For the purposes of this report, we have classified the significant internal control structure policies and procedures in the following categories:

(1) Cash and Cash Equivalents

(6) Employee Compensation

(2) Inventories

(7) General Ledger

(3) Revenue/Receivables/Receipts

(8) General Fixed Assets

(4) Procurement

(5) Expenditures/Liabilities/ Disbursements

For all ofthe internal control categories listed above, 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.

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 of the 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, a reportable condition was noted in the following control category:

General Fixed Assets

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 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

94ICL-3

reportable conditions that are also considered to be material weaknesses as defined above. However, we believe that the reportable condition disclosed 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 North Georgia Regional Educational Service Agency's financial statements and this report does not affect our report thereon dated June 16, 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,
a~/.d
Claude L. Vickers State Auditor
CLV:gp 94ICL-3

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

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
June 16, 1995

Honorable Zell Miller, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Director and Members of the North Georgia 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 North Georgia Regional Educational Service Agency as ofand for the year ended June 30, 1994, and have issued our report thereon dated June 16, 1995. This report was qualified for a scope limitation and for a departure from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. We have also audited the North Georgia Regional Educational Service Agency's compliance with requirements applicable to major Federal financial assistance programs and have issued our opinion thereon dated June 16, 1995.
Except as discussed in the following paragraph, 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 ofOffice 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 Agency complied with laws and regulations, noncompliance with which would be material to a major Federal financial assistance program.
We did not observe the taking ofinventories for resale at June 30, 1994, nor could we satisfy ourselves as to the accuracy ofthe amounts stated as inventories through alternative procedures.
In planning and performing our audit for the year ended June 30, 1994, we considered the Agency's internal control structure in order to deterniine our auditing procedures for the purpose of expressing our opinion 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 with 0MB
94ICL-7

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 June 16, 1995.

The management of the North Georgia 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 of changes in conditions or that the effectiveness ofthe 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 (5) Allowable Costs/Cost Principles

(1) Types of Services Allowed or Unallowed
(2) Eligibility
(3) Reporting
(4) Applicable Special Tests and Provisions

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

(5) 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.

During the year ended June 30, 1994, the North Georgia Regional Educational Service Agency expended 83% ofits total Federal financial assistance under one 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

94ICL-7

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 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:
Federal Financial Reports
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 perfonning 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 of the North Georgia Regional Educational Service Agency's compliance with requirements applicable to its major Federal financial assistance program for the year ended June 30, 1994, and this report does not affect our report thereon dated June 16, 1995.
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 ofthis report which is a matter of public record.
Respectfully submitted,
ff~~
Claude L. Vickers State Auditor
CLV:gp 94ICL-7

SECTIONV FINDINGS AND IMPROPER OR QUESTIONED COSTS

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30 1994
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Excessive Cash Balances Federal Financial Assistance Finding Resolved Audit Control Number 8524-93-02
The audit report for the year ended June 30, 1993, stated that a review of cash management procedures for the Vocational Education - Basic Grants to States -High School Program (CFDA 84.048) disclosed that cash draws utilizing DE form 0147, "Quarterly Report of Expenditures and Estimated Requirements for Grant Fund", were made in advance of immediate cash needs, resulting in the accumulation of excessive cash balances. For the year under review, audit test of cash management procedures revealed no excessive cash balance accumulations by the Agency.
AUDIT FOLLOW-UP/RESOLUTION Excessive Cash Balances Federal Financial Assistance Finding Resolved Audit Control Number 8524-93-04
The audit report for the year ended June 30, 1993, stated that a review of cash management procedures for the Vocational Education - Tech-Prep Education Program (CFDA 84.242) disclosed that cash draws utilizing DE form 0147, "Quarterly Report ofExpenditures and Estimated Requirements for Grant Fund", were made in advance of immediate cash needs, resulting in the accumulation of excessive cash balances. For the year under review, audit test of cash management procedures revealed no excessive cash balance accumulations by the Agency.
AUDIT FOLLOW-UP/RESOLUTION Inaccurate Indirect Cost Calculation Federal Financial Assistance Finding Resolved Audit Control Number 8524-93-05
The audit report for the year ended June 30, 1993, stated that a review of the indirect cost calculations of the Agency revealed an error in the calculation resulting in an overpayment of $25.58 by the Acquired Immunodeficiency Syndrome (AIDS) Activity Program (CFDA 93.938) to the General Fund. This overpayment had not been refunded to the Georgia Department of Education at June 30, 1994. However, in the subsequent fiscal year, refund of$25.58 was made by the Agency to the Georgia Department of Education and this amount is included in Accounts Payable as shown on the Combined Balance Sheet, Exhibit "A", of this report.

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30 1994

PRIOR YEAR

AUDIT FOLLOW-UP/RESOLUTION Inadequate Accounting Records Federal Financial Assistance Finding Resolved Audit Control Number 8524-93-06

The audit report for the year ended June 30, 1993, stated that the accounting records applicable to the Acquired Immunodeficiency Syndrome (AIDS) Activity Program - 1992 Contract (CFDA 93.118) and Health Education to Prevent the Spread of Acquired Immunodeficiency Syndrome - 1993 Contract (CFDA 93.938) were not maintained on an individual project basis according to requirements of 45 CFR 74.42. For the year under review, the accounting records applicable to these programs were segregated to ensure identification of revenues and expenditures by specific project as required.

PRIOR YEAR/CURRENT YEAR

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Financial Statements Reportable Condition - Material Weakness Audit Control Number 8524-93-01

The audit report for the year ended June 30, 1993, noted that the management of the North Georgia 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.

FEDERAL FINANCIAL REPORTS

Reimbursement Requisitions not Supported by Accounting Records

Federal Financial Assistance



Major Program

Reportable Condition - Material Weakness

Material Noncompliance

Audit Control Number 8524-93-03

The audit report for the year ended June 30, 1993, noted that the Agency had an unexpended balance of $105,269.92 in the Vocational Education - Basic Grants to States Program at the end of the fiscal year. For

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30 1994
PRIOR YEAR/CURRENT YEAR
FEDERAL FINANCIAL REPORTS Reimbursement Requisitions not Supported by Accounting Records Federal Financial Assistance Major Program Reportable Condition - Material Weakness Material Noncompliance Audit Control Number 8524-93-03
the year under review, the Agency again had an unexpended balance of$48,655.39 which included $29,325.89 for the Basic Grant Program (CFDA 84.048) and $19,329.50 for the Research and Curriculum Development Program (CFDA 84.048). These balances resulted from excess funds requisitioned from the Georgia Department ofEducation on DE form 0447 and certified by the Agency to have been expended for the purpose indicated and in accordance with applicable regulations. Federal Regulation (34 CFR 80.20 (b) (I)) states as follows:
"Accurate, current and complete disclosure ofthe financial results offinancially assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant."
All requests for reimbursement by the Agency should follow the aforementioned Federal Regulation and the provisions set forth on requisition DE form 0447 from the Georgia Department of Education. Reimbursement requisitions submitted by the Agency should be for actual expenditures incurred and be reconciled to the accounting records. The Georgia Department of Education should review this matter to determine if any refund is due.
Note: The North Georgia 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 comments for inclusion in this report.