GA A-goo
.,RI
l::.2{c/ N58'
1994 -<-15
STATE OF GEORGIA DEPARTMENT OF AUDITS
254 WASHINGTON STREET ATLANTA, GEORGIA 30334

AUDIT REPORT NORTH GEORGIA REGIONAL EDUCATIONAL
SERVICE AGENCY ELLIJAY, GEORGIA YEAR ENDED JUNE 30, 1995

NORTH GEORGIA 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

ALLFUNDTYPESANDACCOUNTGROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

AND EXPENDABLE TRUST FUND

3

C

STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL AND SPECIAL REVENUE FUNDS

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 CASH AND CASH EQUIVALENTS

20

3 ACCOUNTS RECEIVABLE

21

SCHEDULE OF REVENUE

4

STATE

22

5

LOCAL AND OTHER

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 I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
April 19, 1996

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 ofControl
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 North Georgia Regional Educational Service Agency, as of and for the year ended June 30, 1995, as listed in the table of contents. These financial statements are the responsibility of the Agency's management. Our responsibility is to express an opinion on these financial statements based on our audit.
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 ofthe 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 of inventories for resale at June 30, 1995, 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:
95ARL-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 aggregate effect on the general purpose financial statements of this variance or omission has not been determined, but is believed to be material.
In our opinion, except for the effect of adjustments, if any, on the General Fund and Special Revenue Fund as might have been determined to be necessaiy had we been able to satisfy ourselves as to the accuracy ofthe inventories for resale as discussed in the third paragraph, and except for the effects 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, 1995, and the results ofits operations for the year then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated April 19, 1996, on our consideration of the Agency's internal control structure and a report dated April 19, 1996, on its compliance with laws and regulations.
Our audit was conducted for the purpose offorming 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 1 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 ofthe 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 effect 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,
tr~~
Claude L. Vickers State Auditor
CLV:gp 95ARL-33*

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY - 1-

!':!QBTH ~!;;QBGIA REGIO!':!&, EDUCATIO~ ERVIQE A~ENQY QOMBIN!;;I:! BALANCE Hl;;ET
Al.b F!,,!NQ TYPES ~D ACCQ!,,!NT ~RO!,,!P
JUNE 30 1995

EXHIBIT"A"

~ Cash and Cash Equivalents
Accounts Receivable
Inventories
Amount to be Provided in Future Years For Payment of Compensated Absences

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

FIDUCIARY FUND TYPE EXPENDABLE TRUST FUND

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS (Memorandum On!l} JUNE 30, 1995 JUNE 30, 1994

$ 566,02321

$

34,219.47

$ 600,242.68 $

99,313.94

275,567.07 $

34,961.34

310,528.41

616,751.67

485,056.35

96,241.82

581,298.17

1,003,699.13

$

49,354.11

49,354.11

76,973.46

Total Assets

$ 1.326,646.63 $ 131,203.16 $

34.219.47 $

49354.11 $ 1,541.423.37 $ 1.796.738.20

blABILITIES AND F!,,!NDl;;;QUITY
blABILITIES
Cash Overdraft Accounts Payable Claims Liability Expired Grant Balances Payable Compensated Absences
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Sick and Personal Leave For Continuation of Federal Programs For Inventories for Resale
Unreserved Deficit Undesignated
Total Fund Equity

$ 198,072.18

$ 171,323.65

11,013.18

$

5,036.21

17,866.34

$ 176,359.86 $ 226,951.70 $

3,315.00 $
3,315.00 $

$

1,225.00

1,496.35 $ 485,056.35

2,388.57 96,241.82

$ 487,777.70 $

98,630.39

662,509.07

-194,378.93 $

$ 1,150,286.77 $ -95,748.54 $

30,904.47 30,904.47

$
49354.11 49354.11 $

198,072.18 $ 182,336.83
3,315.00 22,902.55 49,354.11
455,980.67 $

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

$

1,225.00 $

1,225.00

3,884.92 581,298.17

46,151.86 556,148.30

$ 586,408.09 $ 603,525.16

-194,378.93 693,413.54

-134,749.55 989,330.56

$ 1,085,442.70 $ 1,458,106.17

Total Liabilities and Fund Equity

$ 1,326,646.63 $ 131,203.16 $

34,219.47 $

49 354.11 $ 1.541 .423.37 $ 1.796.738.20

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

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUND YEAR ENDED JUNE 30. 1995

EXHIBIT"B"

R~NUES
State 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 of Revenues over (under) Expenditures
FUND BA!.t,NCE JULY 1
Net Change in Period Reserve for Inventories
Transfer of the Cooperative Purchasing Agency to Pioneer Regional Educational Service Agency (Note 7)

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

FIDUCIARY FUND TYPE EXPENDABLE TRUST FUND

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

$ 633,865.40 $ 1,170,328.70 316,835.58

101,838.50 $ 735,703.90 $

265,791.66 1,436,120.36

201,m.20

518,607.78

$ 2,121,029.68 $ 569,402.36 $ 2,690,432.04 $

0.00 $ 735,703.90 $ 794,265.11 1,436,120.36 1,219,239.24 518,607.78 1,230,659.62
0.00 $ 2,690,432.04 $ 3,244,163.97

$ 40,425.00

$ 40,425.00

$ 135,934.18

135,934.18

1,505,103.07
276,640.31 99,272.22 66,116.80

138,801.06 5,450.54 49,914.96
286,404.68 10,212.09

1,643,904.13 5,450.54
326,555.27 $ 385,676.90
76,328.89

$ 1,987,557.40 $ 626,717.51 $ 2,614,274.91 $

$

40,425.00 $

50,325.00

135,934.18

128,316.56

5,070.00

1,643,904.13 5,450.54
331,625.27 385,676.90
76,328.89

1,788,933.18 10,972.52
277,159.36 942,982.33 130,829.89

5,070.00 $ 2,619,344.91 $ 3,329,518.84

$ 133,472.28 $ -57,315.15 $ 76,157.13 $

989,700.69

432,431.01 1,422,131.70

-5,070.00 $ 71,087.13 $ -as,354.87 35,974.47 1,458,106.17 1,332,565.88

27,113.80

-1,963.93

25,149.87

25,149.87

210,895.16

-468,900.47 -468,900.47

-468 900.47

FUND BALANCE JUNE 30

$ 1,150,286.77 $ -95,748.54 $ 1,054,538.23 $ 30,904.47 $ 1,085,442.70 $ 11458,106.17

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

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

EXHIBITc

REVENUES
State 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 of Revenues over (under) Expenditures
FUND BALANCE JULY 1, 1994
Adjustments Net Change in Period
Reserve for Inventories Transfer of the Cooperative Purchasing Agency
to Pioneer Regional Educational Service
Agency (Note 7)

GENERAL FUND

BUDGET

ACTUAL

s $ n2,465.38

633,865.40

1,278,098.91

1,170,328.70

4961156.00

316,835.58

$ 2,546,720.29 $ 211211029.68

$ 50,000.00 $

40,425.00

1,866,372.14 1,505,103.07

369,828.00 71,558.00 67,149.00

276,640.31 99,272.22 66,116.80

$ 2,424,907.14 $ 1,987,557.40

$ 121,813.15 $ 133,472.28

359,180.04

989,700.69

1,628.46

178,861.75

27,113.80

SPECIAL REVENUE FUND

BUDGET

ACTUAL

$ 75,195.00 $ 101,838.50

170,272.00

265,791.66

4421350.00

201 1n2.20

$ 6871817.00 $ 5691402.36

$ 136,471.00 $ 135,934.18

72,452.00

138,801.06

5,478.00

5,450.54

44,941.00

49,914.96

445,371.50

286,404.68

9,000.00

10,212.09

$ 713,713.50 $ 626,717.51

$ -25,896.50 $ -57,315.15

380,504.53

432,431.01

-409.60

-1,963.93

-468,900.47

FUND BALANCE JUNE 30, 1995

$ 661,483.40 $ 1.1so.28s.n

$ 354,198.43 $ -95,748.54

The notes 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
JUNE 30, 1995

EXHIBIT "D"

Note I: SUM:MARY 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 of the Georgia Department ofEducation.
With the exception of the departure from generally accepted accounting principles disclosed in these notes, the financial statements ofthe 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 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 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.
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.
- 5-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30, 1995

EXHIBIT"D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the Agency. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
The general purpose financial statements account for all State, Federal, Local and Other Funds under control ofthe Agency, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most of a regional educational service agency's general activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources of the Agency except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a regional educational service agency.
SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. These funds are primarily received from the Georgia Department ofEducation and from the Federal government to accomplish specific objectives and are required to be accounted for separately.
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 included on the balance sheet. Operating statements ofthese 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.
- 6-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30, 1995

EXHIBIT"D"

Note I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 suscepti'ble 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'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 statutocy prohibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Agency at the aggregate level. The budget for governmental funds was prepared in accordance with generally accepted accounting principles.
The budget process begins when the Agency's administration prepares a tentative budget for the Board's approval. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting 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, in accordance with provisions ofthe Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department ofEducation. 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 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
JUNE 30, 1995

EXHIBIT "D"

Note 1: 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 are reported on the Combined Balance Sheet at cost. The Agency uses the purchases method to account for inventories whereby purchases for resale are recorded at the time of purchase. The inventory reported on the balance sheet is equally offset by a reservation 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 setvice 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 ofthis 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.
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
- 8-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30, 1995

EXHIBIT"D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 ofthis data.

DEFICIT FUND BALANCE

The following fund reported a deficit fund balance position at June 30, 1995, which is not readily apparent on the general purpose financial statements:

Fund Type/Fund Name

Deficit Balance

Special Revenue Fund Equipment Repair Fund

$ 194,378.93

Note 2: DEPOSITS

COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate of the face value of such surety bond and the market value of the securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.

Acceptable security for deposits consists of any one of or any combination of the following:

(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,

(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,

(3) Bonds, bills, notes, certificates 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 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

- 9-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30, 1995

EXHIBIT"D"

Note 2: DEPOSITS

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS At June 30, 1995, the bank balances were $564,700.45. The amounts ofthe total bank balances are classified into three categories or credit risk:

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

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

Risk Category

Bank Balance

I

$ 100,000.00

2

464,700.45

3

0.00

Total

$ 564.700.45

Note 3: RISK MANAGEMENT

The Agency is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illnesses or injuries to employees; natural disaster; and unemployment compensation.
The Board has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and job related illnesses or injuries to employees. The Board has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Agency's insurance coverage in any of the past three years.

The Agency has elected to self-insure for all losses related to natural disaster. The Agency has not experienced any losses related to natural disaster in the past three years.

- 10 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30, 1995

EXHIBIT"D"

Note 3: RISK MANAGEMENT

The Agency is self-insured with regard to unemployment compensation claims. A premium is charged by the Expendable Trust Fund to each user fund on the basis of the percentage ofthat fund's payroll to total payroll in order to cover estimated claims budgeted by management based on known claims and prior experience. The Agency accounts for claims with expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

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

Beginning of Year Liability

Claims and Changes in Estimates

1994 1995

$

0.00 $

7,030.00 $

$

0.00 $

5,070.00 $

Note 4: GENERAL LONG-TERM DEBT

Claims Paid

End of Year Liability

7 030.00 $ 1,755.00 $

0.00 3,315.00

The changes in General Long-Term Debt during the fiscal year ended June 30, 1995, were as follows:

Balance July 1, 1994 Additions Deductions Balance June 30, 1995 Note 5: CONTINGENT LIABILITIES

Compensated Absences
$ 76,973.46
9,743.55
37,362.90
$ 49 354.11

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 of these proceedings is not presently determinable, but are not believed to be material to the general purpose financial statements.

Note 6: ACCUMULATED EMPLOYEES' LEAVE

The Agency's administrative staff and certain other full-time employees earn one and one-quarter days per month of annual leave. Annual leave may be accumulated to a maximum of forty-five days. Employees are

- 11 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30, 1995

EXHIBIT"D"

Note 6: ACCUMULATED EMPLOYEES' LEAVE
paid,.at their current rate ofpay, for unused annual leave up to a maximum accumulation of fifteen days upon retirement or termination ofemployment. See Note 1 - Compensated Absences
Note 7: SIGNIFICANT EVENT
On July 1, 1994, the North Georgia Regional Educational Service Agency transferred the fund equity and all operations ofthe Cooperative Purchasing Agency to the Pioneer Regional Educational Service Agency.
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 ofage, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service and attainment of age 55, at a reduced benefit. Retirement benefits paid to members are equal to 2% of the average of the member's two consecutive highest paid years of service multiplied by the number of years of creditable service up to 40 years. The normal retirement pension is payable monthly for life. Options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death.
Retirement benefits also include death and disability benefits. A disabled member or surviving spouse is entitled to receive annually an amount equal to the member's service retirement benefit or disability retirement, whichever is greater. The death benefit is the amount that would be payable to the member's beneficiary had the member retired on the date of death on either a service retirement allowance or a disability retirement allowance, whichever is larger. The benefit is based on the member's creditable service (minimum of 10 years of service) and compensation up to the time of disability or death.
Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting of employer contributions occurs, but the member's contributions are refunded with interest.
The Agency's payroll for employees covered by TRS for the year ended June 30, 1995, was $944,121.41; total payroll was $982,077.88.
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
- 12 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30, 1995

EXHIBIT"D"

Note 8: RETIREMENT PLANS

TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. For fiscal year 1995 that rate for employer contributions was 11.81%. The interest rate assumption (rate of return on
investments) was 7.50%.

Total contributions made during fiscal year 1995 amounted to $158,707.31, ofwhich $111,500.84 was made by the Agency and $47,206.47 was made by employees. These contributions represented 11.8 I% (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 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 of June 30, 1994, was as follows:

Total pension benefit obligation Net assets available for benefits, at cost Unfunded pension benefit obligation

$15,313,743,000.00 14,254,785,000.00
$ 1 058,958 000 00

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

Total contributions from all employers to TRS for fiscal year ended. June 30, 1995 were $565,117,811.00. The Agency's contribution for the year ended June 30, 1995 of$1 l l,500.84 was actuarially determined and represented .0197% of total contributions made by all participating employers.

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

Note 9: SURETY BONDS

The Director, Mr. Charles Gibson and the bookkeepers, Ms. Alice Ellis and Ms. Linda Williamson, are bonded in the amount of$100,000.00 with the Hartford Insurance Company of the Southeast, Orlando, Florida, their Bond No. RN-4542273, on which premium is paid through September 15, 1996.
- 13 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 1995

ASSETS Cash and Cash Equivalents Accounts Receivable Inventories
Total Assets
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

GEORGIA LEARNING RESOURCES
SYSTEM

LOTTERY PROGRAM

DRUG-FREE SCHOOLS AND COMMUNITIES
ACT

$ 29,467.88

$

0.00

$

1,100.00

- - - - - $ 29,467.88 $

1,100.00 $

0.00

$

9,226.23 $

17,866.34

$ 27,092.57 $

1,100.00 1,100.00

$

2,375.31

$

2,375.31

0.00 $

0.00 $

0.00

$

2,375.31 $

0.00 $

0.00

Total Liabilities and Fund Equity

$ 29,467.88 $

1,100.00 $ -=====-==0=.0=0=

See notes to the general purpose financial statements. -14-

EXHIBIT"E"

JOB TRAINING

AIDS

COOPERATIVE EQUIPMENT

PARTNERSHIP HEALTH

PURCHASING

REPAIR

TOTALS

ACT

EDUCATION

AGENCY

FUND

JUNE 30, 1995 JUNE 30, 1994

$

0.00

$ 29,467.88 $ 18,660.51

$

5,230.82 $ 1,089.89

$ 27,540.63

34,961.34

143,478.84

96,241.82

96,241.82

545,756.58

$

5,230.82 $

- - - - - 1,089.89 $

0.00 $ 123,782.45 $ 160,671.04 $ 707,895.93

$

5,230.82 $ 1,076.63

$

5,230.82 $ 1,076.63

$ 221,232.61 $ 686.95
$ 221,919.56 $

227,540.06 $ 11,013.18 17,866.34
256,419.58 $

217,516.17 57,888.28 60.47
275,464.92

$

13.26

$ $ 96,241.82

2,388.57 $ 96,241.82

74.34 98,205.75

$

13.26

$ 96,241.82 $ 98,630.39 $ 98,280.09

$

0.00

0.00 $

-194,378.93

0.00

0.00

-194,378.93 0.00

-134,749.55 468,900.47

$

0.00 $

13.26 $

0.00 $ -98,137.11 $ -95,748.54 $ 432,431.01

$

5,230.82 $

1,089.89 $ -=======0.=00= $ 123,782.45 $ 160,671.04 $ 707,895.93

-15-

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

REVENUES
State Funds Federal Funds 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 Reserve for Inventory for Resale
Transfer of the Cooperative Purchasing Agency to Pioneer Regional Educational Service Agency (Note 7)

GEORGIA LEARNING RESOURCES
SYSTEM

LOTTERY
PROGRAM

DRUG-FREE
SCHOOLS AND
COMMUNITIES ACT

$ 70,195.00 $
187,153.66

1,100.00 $

$ 257,348.66 $

1,100.00 $

20,000.00 20,000.00

$ 135,934.18 64,503.32 $
5,450.54 43,516.22
5,569.09

1,100.00 $

$ 254,973.35 $

$

2,375.31 $

0.00

1,100.00 $ 0.00 $ 0.00

18,546.00 1,454.00
20,000.00 0.00 0.00

FUND BALANCE JUNE 30

$

2,375.31 $

0.00 $ -=----=0.0=0

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, 1995 JUNE 30, 1994

$ 51,88721 $ $ 51,887.21 $

$ 6,750.79

0.00 $

6,750.79 $ - - - -0.0-0 $

30,543.50 $ 201,772.20 232,315.70 $

101,838.50 $ 115,216.35

265,791.66

160,276.55

201,772.20 1,033,900.51

569,402.36 $ 1,309,393.41

$ 48,335.09 $ 3,552.12

$ 51,887.21 $

$

0.00 $

0.00

$ 6,316.65
495.22
6,811.87 $ -61.08 $ 74.34

0.00 $
0.00 $ 0.00 $ 468,900.47

$
897.40 280,835.59
10,212.09 291,945.08 $ -59,629.38 $ -36,543.80

135,934.18 $ 138,801.06
5,450.54 49,914.96 286,404.68 10,212.09

128,316.56 98,643.39 10,972.52 32,003.00
877,228.03 65,576.94

626,717.51 $ 1,212,740.44

-57,315.15 $ 96,652.97

432,431.01

319,063.43

-1,963.93

-1,963.93

16,714.61

-468,900.47

-468,900.47

$

0.00 $

13.26 $

0.00 $ -98,137.11 $ -95,748.54 $ 432,431.01

-17 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
YEAR ENDED JUNE 30 1995

SCHEDULE 1

FUNDING AGENCY PROGRAM/GRANT

CFDA NUMBER

AWARDS IN PERIOD

FEDERAL FUNDS RECEIVED IN PERIOD(NET OF REFUNDS)

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

Education, U. S. Department of

Through Georgia Department of Education

Drug-Free Schools and Communities Act

1995Grant

84.186 $

Individuals with Disabilities Education Act

TltleVl,B

Georgia Leaming Resources System

Special Projects

1995 Regular

84.027

Special Education

Instruction and Services for

Handicapped Preschool

1994 Carry-Over

84.173

1995 Regular

84.173

TltleVI, D

Special Education Personnel Development

and Parent Training

1995 Regular

84.029

Vocational Education - Basic Grants to States

High School Program

Basic Grant

1994Grant

* 84.048

1995Grant

* 84.048

Research and Curriculum Development

1994 Contract

* 84.048

1995 Contract

* 84.048

Consumer and Homemaking Education

1995 Contract

84.049

Tech-Prep Education

1994Grant

84.243

1995Grant

84.243

20,000.00 $
124,812.00
45,460.00 21,028.00
13,720.00
90,742.97 997,245.00 175,157.00
48,068.00
34,426.01

20,000.00 $

20,000.00 $

20,000.00

124,812.00

122,051.69

122,051.69

45,460.00 21,028.00

45,460.00 5,921.97

45,460.00 5,921.97

13,no.oo

13,no.oo

11,344.69

736,437.49 383,502.85
78,135.58 74,348.62
11,333.25
35,245.95 10,945.92

522,215.15 431,882.51
33,608.93 100,129.64 48,066.46
34,426.01

553,541.04 (1) 431,882.51
65,487.75 (1) 124,633.29 (1)
48,066.46
34.426.01

Total U.S. Department of Education

$ 1,570,658.98 $

1,554,969.66 $ 1,377,482.36 $ 1,462,815.41

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 Immune Deficiency Syndrome Teacher Training - Aids Health Education 1993 Contract 1994 Contract 1995 Contract

93.938 93.938 93.938 $

$ 6,200.00

-60.47 4,413.86 $ 3,055.58

2,605.32 $ 4145.47

2,679.66 4,132.21

Total U.S. Department of Health and Human Services

$

6,200.00 $

7,408.97 $

6,750.79 $

6,811.87

- 18 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE YEAR ENDED JUNE 30. 1995

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Labor. U. S. Department of Through Georgia Department of Education
Job Training Partnership Act
1994Grant 1995Grant
Total U. S. Department of Labor

CFDA NUMBER

AWARDS IN PERIOD

FEDERAL FUNDS RECEIVED IN PERIOD(NET OF REFUN.DS)

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

17.250 17.250 $
$

$ 60,000.00
60,000.00 $

9.176.28 $ 46,766.16
55,942.44 $

-109.n $ 51,996.98
51,887.21 $

-109.n 51,996.98
51,887.21

Total Federal Financial Assistance

$ 1.636.858.98 $

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.

1.618.321.07 $ 1.436.120.36 $ 1.521.514.49

See notes to the general purpose financial statements.

- 19 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY CASH AND CASH EQUIVALENTS JUNE 30, 1995

SCHEDULE "2"

INTEREST BEARING ACCOUNTS
First National Bank of Gilmer County, Ellijay, Georgia
Public Funds Checking Account (Variable)

$ 402,170.50

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

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY ACCOUNTS RECEIVABLE JUNE 30, 1995

SCHEDULE "3"

Boards of Education Sales and Services
Education, Georgia Department of Contracts Development of Curriculum and Resource Guides Teacher Training -AIDS Health Education Vocational Education Federal Funds Lottery Program Distant Leaming Federal Program Job Training Partnership Act
Various Sources Sales and Services

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

35,470.57 $

26,964.08 $

62,434.65

41,929.00 198,084.50
83.00

1,089.89
1,100.00 5,230.82
576.55

41,929.00 1,089.89
198,084.50 1,100.00 5,230.82
659.55

$

275,567.07 $

34,961.34 $ ====31=0,=52=8.=41=

See notes to the general purpose financial statements.

- 21 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 1995

SCHEDULE "4"

AGENCY/FUNDING
GRANTS
Education, Georgia Department of Vocational Education Other State Programs Georgia Leaming Resources System Regional Educational Service Agency Staff Development Sex Education Grant Supervision and Assessment of Student and Beginning Teachers and PerformanceBased Certification Teachers' Retirement Lottery Program Distant Leaming
CONTRACTS
Education, Georgia Department of Development of Curriculum and Resource Guides Vocational Education Curriculum Center Service
OTHER Education, Georgia Department of Reimbursement for Printing Reimbursement for Rents

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

8,934.02

$
434,796.00

31,000.00

$
70,195.00

8,934.02
70,195.00 434,796.00
31,000.00

85,714.00 5,239.68

1,100.00

85,714.00 5,239.68
1,100.00

41,929.00 26,000.00

41,929.00 26,000.00

252.70

30,543.50

30,543.50 252.70

$ 633,865.40 $ 101,838.50 $ 735,703.90

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, 1995

SCHEDULE 5

Membership Contributions Boards of Education Cherokee County Dalton, City of 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 Georgia Youth Science and Technology Center Various Sources 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 Seminar Registration Other

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$ 66,010.38 $ 66,010.38

14,156.46

14,156.46

20,624.04

20,624.04

19,590.36

19,590.36

10,361.58

10,361.58

29,346.60

29,346.60

$ 19,243.00
4,074.00 325.00
6,362.00 5,859.00 3,252.00 10,273.00

19,243.00 4,074.00 325.00 6,362.00 5,859.00 3,252.00
10,273.00

30,000.00
20,805.21 22,683.60

30,000.00
20,805.21 22,683.60

1,050.00

1,050.00

40,425.00 321,076.13 -193,634.77
21,918.13 3,124.28

244,258.46 -202,575.68

40,425.00 565,334.59 -396,210.45
21,918.13 3,124.28

$ 316,835.58 $ 201,772.20 $ 518,607.78

See notes to the general purpose finan(?ial statements. - 23 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF EXPENDITURES BY OBJECT GOVERNMENTAL FUND TYPES
YEAR ENDED JUNE 30, 1995

SCHEDULE "6"

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

GENERAL FUND

SPECIAL REVENUE
FUND

TOTAL

$ 618,871.18 $ 363,206.70 $ 982,077.88

159,638.17

81,639.60

241,277.77

22,523.24

11,251.53

33,774.77

917,817.27

105,211.88

1,023,029.15

1,850.00

1,850.00

8,613.00

8,613.00

3,442.39

6,442.85

9,885.24

40,718.07

40,718.07

7,033.58

2,218.95

9,252.53

30,264.20

7,873.17

38,137.37

129,415.44

15,936.25

145,351.69

8,112.32

3,851.37

11,963.69

5,196.83

1,600.00

6,796.83

15,399.79

422.00

15,821.79

20,805.21

20,805.21

2,434.02

2,434.02

16,227.90

6,258.00

22,485.90

Total Expenditures

$ 1,987,557.40 $ 626,717.51 $ 2,614,274.91

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, 1995

SCHEDULE "7"

EXPENDITURES
Operating Costs Supplies

DISTANT LEARNING
$ ==1=,1=0=0=.o=o

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, 1995

SCHEDULE "8"

EXPENDITURES
Operating Costs Unemployment Compensation Claims

$ ======5=,0=7=0.=00=

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. 1995
BOARD MEMBER ADDRESS
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 (j Fannin County Board of Education 2290 East First Street Blue Ridge, Georgia 30513
Mr. Robert Blalock (j 5845 Reinhardt College Parkway Waleska, Georgia 30183
Mr. Terry Cullifer(") Whitfield County Board of Education P. 0. Box2167 Dalton, Georgia 30722-2167
Mr. Don Hall C-) P. 0. Box698 Blue Ridge, Georgia 30513
Mr. James E. Hall Route 7, Box 7655 Chatsworth, Georgia 30705
Mr. Corky Jones (*) Cherokee County Board of Education P. 0. Box769 Canton, Georgia 30114
Dr. Mickey McNeil! C-) Murray County Board of Education P. 0. Box40 Chatsworth, Georgia 30143
Mr. Gary Middleton (*) 1n8 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 Blue Ridge, Georgia 30143

(*) Denotes Board Members Serving as of June 30, 1995 See notes to the general purpose financial statements.

- 27 -

SCHEDULE "9"

$

550.00

600.00

300.00 400.00
$ ___1_.a_so_._00_

SECTION II SUMMARY AND SCHEDULE OF SALARIES AND TRAVEL

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SUMMARY OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 1995

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, 1994 JUNE 30, 1995

TOTAL PER SCHEDULE (CASH BASIS)

$

3n,S03.58 $

174,275.13

63,192.47

3,600.00

$

618,871.18 $

363,206.70

0.00 $ 0.00 $

0.00 $ 0.00 $

3n,so3.58 174,275.13 63,192.47
3,600.00
618,871.18
363,206.70

Total Salaries

$

982,077.88 $

TRAVEL

GENERAL FUND

Support Services

Improvement of Instructional Services

$

General Administration

Business Administration

Total General Fund

$

SPECIAL REVENUE FUND

15,339.67 $ 6,578.82
604.75
22,523.24 $
11,251.53

Total Travel

$

33,774.77 $

0.00 $

0.00 $-===9=82=,=07=7=.8=8

0.00 $
0.00 $
0.00 $

$
-42.63
-42.63 $

15,339.67 6,536.19
604.75
22,480.61
11,251.53

------ -42.63 $

33,732.14

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

NAME

TITLE CATEGORY

ALLEN.ANGELA T

SUPP SRVS - IMPROV INSTR & ED MED

$

ALLEN.CAROLYN S

SUPP SRVS - IMPROV INSTR & ED MED SRVS

BELL,CEDERICK

INSTRUCTION

BELL,CEDERICK

SUPP SRVS - IMPROV INSTR & ED MED SRVS

BROCK,JR CHARLES B

INTERNAL SERVICES FUND

CANTRELL,WILLIAM L JR

INTERNAL SERVICES FUND

CARSON.JAMES KNOX

SUPP SRVS - IMPROV INSTR & ED MED SRVS

CARSON,JAMES KNOX

GEORGIA LEARNING RESOURCES SYSTEM FUND

CHAMPON,GAILS

INSTRUCTION

COX.RALPH N

INTERNAL SERVICES FUND

ELLIS,ALICE M

GENERAL ADMINISTRATION

ELLIS,ALICE M

SUPPORT SERVICES - BUSINESS

ENIS.DONALD

INSTRUCTION

ENIS.DONALD

SUPP SRVS - IMPROV INSTR & ED MED SRVS

ENIS.DONALD

GEORGIA LEARNING RESOURCES SYSTEM FUND

FOSTER.JAMES F

INSTRUCTION

GIBSON.CHARLES E

DIRECTOR

GIBSON.CHARLES E

INSTRUCTION

GIBSON.CHARLES E

GENERAL ADMINISTRATION

GIBSON,MARK

INSTRUCTION

HEFNER.ESTHER R

GENERAL ADMINISTRATION

JOHNSON,JOHNNY

INTERNAL SERVICES FUND

LEIGH,CAROL A

GENERAL ADMINISTRATION

MULKEY.CINDY

INSTRUCTION

MULKEY.CINDY

GENERAL ADMINISTRATION

MULKEY.CINDY

GEORGIA LEARNING RESOURCES SYSTEM FUND

NORRIS.MARCIA A

SUPP SRVS - IMPROV INSTR & ED MED SRVS

NORTON.LELAND EUGENE

SUPP SRVS - IMPROV INSTR & ED MED SRVS

NORTON,LELAND EUGENE

GENERAL ADMINISTRATION

NORTON;LELAND EUGENE

SPECIAL REVENUE FUND - OTHER PROGRAMS

PEREZ.RASHIDA A

SUPP SRVS - IMPROV INSTR & ED MED SRVS

QUARLES,MELISSA S

INSTRUCTION

ROPER,RHONDA

INSTRUCTION

RYAN,PAMELA A

SUPPORT SERVICES - BUSINESS

SMITH, JOYCE J

SUPPORT SERVICES - BUSINESS

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

VAIL,J PAUL

INSTRUCTION

WEAVER.CANDACE LYNN

INSTRUCTION

WEAVER.CARA

INSTRUCTION

WEAVER.CARA

GENERAL ADMINISTRATION

WEAVER.JOSEPH BENNY

INTERNAL SERVICES FUND

WEAVER.LINDA R

INSTRUCTION

WILLIAMS.ARTHUR M

INSTRUCTION

WILLIAMS,ARTHUR M

SUPP SRVS - IMPROV INSTR & ED MED SRVS

WILLIAMS,LORETTA I

SUPP SRVS - IMPROV INSTR & ED MED SRVS

WILLIAMSON,LINDA W

SUPPORT SERVICES - BUSINESS

TOTALS

$

SALARIES AMOUNT

TRAVEL EXPENSE

405.00 50,500.80 $
16,726.00 35,047.68 25,443.12
270.00 53,540.04
1,264.50 44,366.40
22,138.70
3,805.92 47,924.88 18,604.08 67,200.00
25,813.92 21,918.00 38,485.20 28,248.48
1,807.74 19,885.14
9,907.00 15,080.00 27,421.96 14,933.04
760.00 42,000.24 13,282.94 10,167.30 10,136.69 32,700.24 19,589.04
3,600.00 19,589.04 55,525.20 54,117.48 6,520.80 8,089.91 31,291.92 8,363.55 38,125.00 14,375.00 2,356.15 20,749.78

2,842.24 216.99 302.04
5,252.71
79.90 111 . 75 141. 69 718.65 5,000.00 200.55 717.54 4,411.78 260.91 39.36 122.22
868.99 968.02
1,769.12 48.60
655.41 2,454.12 3,312.75
58.68 41. 37 176.28 2,731.38
229.09

982,077.88 $ 33,732.14

SECTION III COMPLIANCE

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
April 19, 1996

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 ofControl
COMPLIANCE REPORT BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the general purpose financial statements ofthe North Georgia Regional Educational Service Agency as of and for the year ended June 30, 1995, and have issued our report thereon dated April 19, 1996. 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, 1995, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories for resale through alternative procedures.
Compliance with laws, regulations, contracts, and grants applicable to North Georgia Regional Educational Service Agency is the responsibility ofthe 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.

95CRL-10

The results ofour tests disclosed no instances of noncompliance that are required to be reported herein under Government Auditing Standards.
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:gp 95CRL-10

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
April 19, 1996

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

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, 1995, and have issued our report thereon dated April 19, 1996. 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, 1995:

(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 Agency's compliance with the requirements listed in the preceding paragraph. Accordingly, we do not express such an opinion.

95CRL-50

With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the $econd paragraph of this report. 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. However, the results of our procedures disclosed immaterial instances of noncompliance with those requirements, which are described in the Schedule of Findings and Improper or Questioned Costs.
This report is intended for the information of management, the Federal cognizant audit agency and other
Federal granter agencies. This restriction is not intended to limit the distribution of this report which is a
matter of public record.
Respectfully submitted,
c::t~~
Claude L. Vickers State Auditor
CLV:gp 95CRL-50

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
April 19, 1996

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 ofControl

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

Ladies and Gentlemen:

We have audited the general purpose financial statements of the North Georgia Regional Educational Service Agency as ofand for the year ended June 30, 1995, and have issued our report thereon dated April 19, 1996. 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, 1995. The management ofthe 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.

95CRL-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, 1995, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories for resale through alternative procedures. However, this matter has no affect on the Agency's compliance with the requirements listed in the second paragraph ofthis 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, 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,
c:r~~
Claude L. Vickers State Auditor
CLV:gp 95CRL-80

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
April 19, 1996

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 ofControl
SINGLE AUDIT REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS
Ladies and Gentlemen:
We have audited the general purpose :financial statements ofthe North Georgia Regional Educational Service Agency as ofand for the year ended June 30, 1995, and have issued our report thereon dated April 19, 1996. 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 1995 general purpose financial statements of the North Georgia
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 ofManagement and Budget (0MB) Circular A-128, "Audits of State and Local Governments", we selected certain transactions applicable to certain nonmajor Federal :financial assistance programs for the year ended June 30, 1995. As required by 0MB Circular A-128, we have performed auditing procedures on the selected transactions to test compliance with the requirements governing:
Types of Services Allowed or Unallowed
Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the North Georgia Regional Educational Service Agency's compliance with these requirements. Accordingly, we do not express such an opinion.
95CRL-120

With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the second paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the 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.
c::r~~ Respectfully submitted,
Claude L. Vickers State Auditor
CLV:gp 95CRL-120

SECTION IV INTERNAL CONTROL

CLAUDE L. V1cKERS
STATE AIJDllOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
April 19, 1996

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 ofControl
REPORT ON INTERNAL CONTROL STRUCTURE IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the general purpose financial statements of the North Georgia Regional Educational Service Agency as ofand for the year ended June 30, 1995, and have issued our report thereon dated April 19, 1996. 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, 1995, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories for resale through alternative procedures.
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, and that transactions are executed in accordance with management's authorization and recorded properly to permit
95ICL-3

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 ofthe design and operation of policies and procedures may deteriorate.
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, 1995, we obtained an understanding of the internal control structure. With respect to the internal control structure, we obtained an understanding of the design ofrelevant 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 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 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 ofthe internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions.
Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, we believe that the reportable 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 general purpose financial statements and this report does not affect our report thereon dated April 19, 1996.
95ICL-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:gp 95ICL-3

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
April 19, 1996

Honorable Zell Miller, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Director and Members ofthe North Georgia Regional Educational Service Agency Board ofControl
SINGLE AUDIT REPORT ON THE INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS
Ladies and Gentlemen:
We have audited the general purpose financial statements of the North Georgia Regional Educational Service Agency as ofand for the year ended June 30, 1995, and have issued our report thereon dated April 19, 1996. 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 its major Federal financial assistance program and have issued our opinion thereon dated April 19, 1996.
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, 1995, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories for resale through alternative procedures.
In planning and performing our audit for the year ended June 30, 1995, we considered the Agency's internal control structure in order to determine our auditing procedures for the purpose of expressing our opinions on the Agency's general purpose financial statements and on its compliance with requirements applicable to major Federal financial assistance programs and to report on the internal control structure in accordance with
95ICL-7

0MB Circular A-128. This report addresses our consideration of internal control structure policies and procedures relevant to compliance with requirements applicable to Federal financial assistance programs. We have addressed internal control structure policies and procedures relevant to our audit ofthe general purpose financial statements in a separate report dated April 19, 1996.

The management ofthe 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 ofinherent 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 REOIBREMENTS

SPECIFIC REOIBREMENTS

(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, 1995, the North Georgia Regional Educational Service Agency expended 76% ofits total Federal financial assistance under a major Federal financial assistance program.

95ICL-7

We performed tests of controls, as required by 0MB Circular A-128, to evaluate the effectiveness of the design and operation of internal control structure policies and procedures that we considered relevant to preventing or detecting material noncompliance with general requirements and specific requirements as described above that are applicable to the Agencys major Federal financial assistance program, which is identified in the Schedule ofFederal Financial Assistance. Our procedures were less in scope than would be necessmy 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 ofCertified 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 Agencys 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 performing their assigned functions.
Our consideration of the internal control structure policies and procedures used in administering Federal financial assistance would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, we believe that the reportable condition described above is also considered to be a material weakness.
This condition was considered in determining the nature, timing, and extent of the procedures to be performed in our audit 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, 1995, and this report does not affect our report thereon dated April 19, 1996.
This report is intended for the information of management, the Federal cognizant audit agency and other Federal grantor agencies and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
CLV:gp 95ICL-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, 1995
PRIOR YEAR/CURRENT YEAR
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Financial Statements Reportable Condition - Material Weakness Audit Control Number 8524-93-01
The audit report for the year ended June 30, 1994, noted that the management ofthe 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 Nonmaterial Noncompliance Audit Control Number 8524-93-03
The audit report for the year ended June 30, 1994, noted that the Agency had an unexpended balance of $48,655.39 in the Vocational Educational - Basic Grants to States Program (Curriculum Development Contract - CFDA 84.048) at the end ofthe 1994 fiscal year. At June 30, 1995, the unexpended balance of this program had been reduced to $1,496.25. This balance resulted from excess funds requisitioned from the Georgia Department of Education on DE form 0447 and certified to have been expended for the purpose indicated and in accordance with applicable regulations. Federal regulations (34 CFR 80.20 (b) (1)) states as follows:
"Accurate, current and complete disclosure of the financial results of financially assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant."

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1995
PRIOR YEAR/CURRENT YEAR
FEDERAL FINANCIAL REPORTS Reimbursement Requisitions not Supported by Accounting Records Federal Financial Assistance Major Program Reportable Condition - Material Weakness Nonmaterial Noncompliance Audit Control Number 8524-93-03
All requests for reimbursement by the Agency should follow the aforementioned Federal Regulations and the provisions set forth on DE form 0447 from the Georgia Department ofEducation. Reimbursement requisitions submitted by the Agency should be for actual expenditures incurred and should be reconciled to the accounting records. The Georgia Department ofEducation 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.