Review report, state of Georgia, North Georgia Regional Educational Service Agency, Ellijay, Georgia, year ended June 30, 1997

REVIEW REPORT STATE OF GEORGIA NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY ELLIJAY, GEORGIA YEAR ENDED JUNE 30, 1997
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT ACCOUNTANTS COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

EXlllBITS

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

ALL GOVERNMENTAL FUND TYPES

3

C

COMBINED 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

SCHEDULES

1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

13

2 SCHEDULE OF STATE REVENUE

14

3 SCHEDULE OF SALARIES AND TRAVEL

15

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

SECTIONID CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
December 18, 1997

Honorable Zell Miller, Governor Members of the General Assembly of Georgia Members of the State Board of Education
and Director and Members ofthe North Georgia Regional Educational Service Agency Board of Control
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have reviewed the accompanying financial statements (Exhibits A through D) ofNorth Georgia Regional Educational Service Agency as of and for the year ended June 30, 1997, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these [mancial statements is the representation of the management of North Georgia Regional Educational Service Agency.
A review consists principally of inquiries of Agency personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, with the exception of the matter described in the following paragraph, we are not aware of any material modifications that should be made to the accompanying fmancial statements in order for them to be in conformity with generally accepted accounting principles.
* The 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 effects on the financial statements of this variance or omission have not been determined, but are believed to be material.
97ARL-RESA-l

Our review was made for the purpose of expressing limited assurance that there are no material modifications that, should be made to the fmancial statements in order for them to be in conformity with generally accepted accounting principles. The accompanying supplementary information (Schedules 1 through 3) is presented only for supplementary analysis purposes. Such information has been subjected to the inquiries and analytical procedures applied in the review of the financial statements and we are not aware of any material modifications which should be made thereto.
Respectfully submitted,

CLV:gp 97ARL-RESA-l

Claude L. Vickers State Auditor

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30,1997

EXHIBIT "A"

ASSETS Cash and Cash EqUivalents Accounts Receivable Prepaid Items Inventories for Resale Amount to be Provided in Future Years
For Payment of Compensated Absences

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS (Memorandum Only) JUNE 30, 1997 JUNE 30, 1996

$

236,356.09 $

148,598.36

$

384,954,45 $

635,497,08

162,581,75

31,428,00

194,009,75

298,285.32

9,200,00

9,200,00

266,655.98

266,655,98

327,247.95

$

57,501,27

57,501.27

53,992.40

Total Assets

$ 674,793.82 $ 180,026.36 $

57,501.27 $

912,321,45 $ 1,315,022,75

LIABILITIES AND FUND EQUITY

LIABILITIES

Cash Overdraft Accounts Payable Expired Grant Balances Payable Compensated Absences

$

59,686.87 $ 121,333.37

54,941.64

38,692.99

$

Total Liabilities

$

114,628,51 $

160,026.36 $

FUND EQUITY

Fund Balances Reserved For Sick and Personal Leave For Continuation of Federal Program For Inventories for Resale For Prepaid Items

$

1,225.00

$

266,655.98

9,200.00

20,000.00

Unreserved Deficit Designated For Self-Insurance Program Undesignated

$ 277,080.98 $

20,000.00

30,904.47

252,179.86

0,00

Total Fund EqUity

$ 560,165.31 $

20,000,00

$ 57,501.27 57,501.27 $

$ 181,020.24
93,634.63 57,501.27
332,156.14 $

256,305.67 242,604.92
34,201,95 53,992,40
587,104,94

$

1,225,00 $

1,225.00

20,000,00

5,420.48

266,655.98

327,247.95

9,200.00

$

297,080.98 $

333,893.43

-200,114.78

30,904.47 252,179.86

30,904,47 563,234.69

$

580,165,31 $

727,917,81

Total Liabilities and Fund Equity

$ 674,793,82 $ 180,026,36 $

57,501.27 $ 912,321.45 $ 1,315,022.75

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 YEAR ENDED JUNE 30,1997

EXHIBIT "B"

FUND BALANCE JUNE 30

$ 560,165,31 $

20,000,00 $ 580,165,31 $_....,;,,;72;;;;7..,.9=1.7.,;,;;;.8.1..

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

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30,1997

EXHIBIT "c"

REVENUES
State Funds Federal Funds 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 Other Support Services
Total Expenditures
Excess of Revenues over (under) Expenditures
FUND BALANCE JULY 1,1996
Adjustments Net Change in Period
Inventories for Resale

GENERAL FUND

BUDGET

ACTUAL

$ 574,022.00 $ 738,417,76

117,200.33

698,139,33

609,144.43

$ 1,389,361.66 $ 1,347,562.19

$ 50,000.00 $ 42,682.07

354,797.00

451,894.35

342,814.89 666,981.07
41,042.65 270,000.00

378,679.71 533,053.50
34,509.74 75,792.78

$ 1,725,635.61 $ 1,516,612.15

$ -336,273.95 $ -169,049.96

370,960.18

722,497.33

5,428.95

6,717.94

SPECIAL REVENUE FUND

BUDGET

ACTUAL

$ 323,751.48 $ 108,275,20

1,233,928,00 1,204,103.77

141,000,00

4,800,00

$ 1,698,679.48 $ 1,317,178.97

$ 145,835.00 $ 146,409.44

1,301,623.67 1,031,850.91

2,196.00

1,627.02

138,218.86

121,822.33

139,780.60

889.75

$ 1,727,654.13 $ 1,302,599.45

$ -28,974.65 $ 14,579.52

392,619.50

5,420.48

-39,678.35

0.00

FUND BALANCE JUNE 30.1997

$ 40,115.18 $ 560,165.31

$ 323,966.50 $ 20,000.00

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, 1997

EXlllBIT "D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
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 ofproviding shared services designed to improve the effectiveness of educational programs and services of local school systems and for providing instructional programs directly to selected public school students in the state.
Each regional educational service agency is governed by a board. The number ofmembers and terms ofoffice are prescribed by the State Board of Education; provided, however, that at least one-third of the membership of each Board shall be individuals who hold no other public office, who are not employees of any local unit of administration, and who are not employees of the Georgia Department of Education.
The members ofthe 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.
For financial reporting purposes, the Agency is considered to be an organizational unit of the State, and therefore a part of the primary government ofthe State of Georgia. Inclusion in the State's financial reporting entity is based on application of criteria defmed in Section 2100 of the Governmental Accounting Standards Board Codification ofGovernmental and Financial Reporting Standards which indicates that the Agency does not have legal separate standing.
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 fmancial 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 and Other funds under control of the Agency, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:
-5-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30,1997

EXHIBIT"D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 fmancial 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 received primarily from the Georgia Department of Education and from the Federal government to accomplish specific objectives and are required to be accounted for separately.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for material accrued compensated absences.
BASIS OF ACCOUNTING
The accounting and fmancial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other fmancing 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 are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are intergovernmental grants, sales and services and investment income.
Expenditures are generally recognized when the related fund liability is incurred.

- 6-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30, 1997

EXillBIT "D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RESTATEMENT OF PRIOR YEAR FUND BALANCE
In the prior year the Equipment Repair Fund was reported as part of the Special Revenue Funds. The Equipment Repair Fund had a fund balance of$124,864.59 at June 30, 1996. For fiscal year 1997, this fund has been reported as part of the General Fund. The fund balance at July 1, 1996 has been restated as appropriate.
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 statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Agency at the aggregate level. The budget for governmental funds was prepared in accordance with generally accepted accounting principles.
The budget process begins when the Agency's administration prepares a tentative budget for the Board's approval. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a fmal 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 of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year end.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financial institutions. Georgia Laws authorize the Agency to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.
RECEIVABLES
Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

-7-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30, 1997

EXlllBIT "D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES
GOODS FOR RESALE Inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). The Agency uses the purchases method to account for inventories whereby purchases for resale are recorded at the time of purchase. The inventory reported on the balance sheet is equally offset by a reservation of fund balance which indicates that it does not constitute "available spendable resources" even though it is a component of net current assets.
PREPAID ITEMS
Payments made to vendors for services that will benefit periods subsequent to June 30, 1997, are recorded as prepaid items.
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
Reserves represent those portions of fund equity that are legally segregated for a specific future use.
Reserved fund balances include $1,225,00 in unexpended funds received in prior years from the Georgia Department of Education for sick and personal leave to be paid to substitute personnel. These funds will be used for the original purpose until exhausted.
INTERFUND TRANSACTIONS
The Agency has the following types of interfund transactions:
Reimbursements of expenditures initially made from a fund that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.

-8-

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30, 1997

EXIDBIT"D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general purpose fmancial statements are captioned "Memorandwn Only" to indicate that they are presented only to facilitate financial analysis. Data in these colwnns do not present fmancial 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. Certain reclassifications have been made to the comparative data to conform to the current year classifications.
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 swn of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of 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 anyone of or any combination of the following:
(1) Surety bond signed by a surety company du1y qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and

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NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT"D"

Note 2: DEPOSITS
,
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation ofthe United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS At June 30, 1997, the bank balances were $675,232,06. The amounts ofthe total bank balances are classified into three categories of credit risk:

Category 1 - Cash that is insured (e,g" Federal depository insurance) or collateralized with securities held by the Agency or by the Agency's agent in the Agency's name,
Category 2 - Cash collateralized with securities held by the pledging fmancial 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, 1997, as follows:

Risk Category
1 2 3
Total
Note 3: RISK MANAGEMENT

Bank Balance
$ 200,000,00 469,184.36 6,047.70
$ 675,232.06

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 illness or injuries to employees; natural disaster; and unemployment compensation.

The Agency has obtained commercial insurance for risk of loss associated with torts, assets, errors or omissions and job related illness or injuries to employees, The Agency has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Agency's insurance coverage in any of the past three years.

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

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NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30, 1997

EXlllBIT "D"

Note 3: RISK MANAGEMENT

The Agency is self-insured with regard to unemployment compensation claims. A premium is charged by the General Fund to each user fund on the basis ofthe 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 expenditure 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:

1996 1997

Beginning of Year Liability

Claims and Changes in Estimates

$

3.315.00 $

$

0.00 $

0.00 $ 0.00 $

Claims Paid

End ofYear Liability

3.315.00 $

0.00

0.00 $

0.00

Note 4: GENERAL LONG-TERM DEBT

The changes in General Long-Term Debt during the fiscal year ended June 30, 1997, were as follows:

Balance July 1, 1996
Additions Annual Leave Earned and Utilized (Net)
Balance June 30, 1997

Compensated Absences
$ 53,992.40
3,508.87 $ 57.501.27

Note 5: ON-BEHALF PAYMENTS

The Agency has recognized revenues and expenditures in the amount of $31,177.64 for health insurance and retirement contributions paid on the Agency's behalf by the following State Agencies.

Georgia Department of Education Paid to the State Merit System of Personnel Administration For Health Insurance ofNon-Certified Personnel In the amount of$25,319.48

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of$5,858.16

- 11 -

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT"D"

Note 6: 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 proceeding pertaining to a matter incidental to the performance ofroutine Agency operations. The ultimate disposition of this proceeding is not presently determinable, but is not believed to be material to the general purpose fmancial statements.

Note 7: ACCUMULATED EMPLOYEES' LEAVE

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

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 defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

TRS CONTRIBUTIONS REQUIRED AND MADE Employees of the Agency who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The Agency makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.81% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Contribution

1997 1996 1995

100% 100% 100%

$ 115,230.91 $ 114,152.46 $ 111,500.84

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NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 1997

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Corporation for National and Community Service Leam and Serve America School and Community Based Programs
Education, U. S. Department of Through Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Special Projects Georgia Leaming Resources System 1997 Grant Part D - Special Education Personnel Development and Parent Training Georgia Learning Resources System 1996 Grant 1997 Grant Safe and Drug-Free Schools 1997 Grant Vocational Education - Basic Grants to States High School Program Basic Grant 1997 Grant Consumer Homemaking 1997 Grant Research and Curriculum Development Basic Grant 1997 Grant
Total U. S. Department of Education
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 1997 Contract
Total Federal Financial Assistance

CFDA NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

94.004 $

19,410.00 $

19,410.00

* 84.027 $ 135,441.00 $

135,441.00

84.029 84.029
84.186

-318.62 4,587.00
20,681.27

5,101.86 4,587.00
20,681.27

* 84,048 * 84.048

972,942,54 46,134.00

997,295.74 (1) 46,134.00

* 84.048

3,750.77

$ 1,183,217.96 $

3,750.77 1,212,991.64

93.938 $

1,475.81 $

1,475.81

$ 1,204,103.77 $ 1,233,877.45

* This program has been defined as a major program on a statewide basis in accordance with OMB Circular A-133. Internal control and compliance testing for this program has been conducted at other organizational units of the State of Georgia.
The Agency did not provide Federal financial assistance to any subrecipient.
(1) Expenditures for this program include State and/or Other Funds. Expenditures are not maintained by fund source.

See notes to the general purpose financial statements.

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NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 3D. 1997

SCHEDULE "2"

AGENCY/FUNDING

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

GRANTS

Education, Georgia Department of

Vocational Education

Other State Programs

Georgia Learning Resources System

Health Insurance

$

Regional Educational Service Agencies

Supervision and Assessment of Student and

Beginning Teachers and Performance-

Based Certification

Teachers' Retirement

$
25,319.48 476,924.00
85,208.00 5,858.16

39,553.20 $ 68,722.00

CONTRACTS Education, Georgia Department of Archiving Activities Development of Curriculum and Resource Guides Regional Leadership Development Teachers in Elementary School Foreign Languages Model Program

12,705.00
52,667.36 50,000.00
28,437.48

OTHER Education, Georgia Department of Reimbursement for Printing

1,298.28

TOTAL
39,553.20 68,722.00 25,319.48 476,924.00
85,208.00 5,858.16
12,705.00 52,667.36 50,000.00 28,437.48
1,298.28

$

738,417.76 $ ===1=08=,=27=5...2.==0 $ ===84=6=,6=:9=2.=9=6

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

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 1997

SCHEDULE "3"

PE~SONNEL
BROCK,CHARLES B JR CANTRELL,WILLIAM L JR CARSON,JAMES KNOX CARSON,JAMES KNOX CHAMPION,GAIL S COX,RALPH N ELLlS,ALlCE M ENIS,DONALD F ENIS,DONALD F ENIS,DONALD F ENIS,DONALD F FOSTER,JAMES F GIBSON,CHARLES E GIBSON,CHARLES E GIBSON,MARK JOHNSON,JOHNNY LEIGH,CAROL A LOUDERMILK,CAROLYN LOUDERMILK,CAROLYN LOUDERMILK,CAROLYN LOUDERMILK,CAROLYN MULKEY,CINDY MULKEY,CINDY MULKEY,CINDY MULKEY,CINDY NORTON,LELAND EUGENE NORTON,LELAND EUGENE PEREZ,RASHIDA A TANKERSLEY,EVELYN P TANKERSLEY,WILLIAM LARRY TANKERSLEY,WILLIAM LARRY TANKERSLEY,WILLIAM LARRY VAIL,J PAUL VAIL,J PAUL WEAVER,CANDACE LYNN WEAVER,CARA WEAVER,CARA WEAVER,CARA WEAVER,CARA WEAVER,JOSEPH BENNY WILLlAMS,ARTHUR M WILLIAMSON,L1NDA W

PROGRAM
INTERNAL SERVICES FUND INTERNAL SERVICES FUND SUPP SRVS - IMPROV INSTR & ED MED SRVS GEORGIA LEARNING RESOURCES SYSTEM FUND GENERAL ADMINISTRATION INTERNAL SERVICES FUND SUPPORT SERVICES - BUSINESS SUPP SRVS - IMPROV INSTR & ED MED SRVS OTHER SUPPORT SERVICES GEORGIA LEARNING RESOURCES SYSTEM FUND INTERNAL SERVICES FUND SPECIAL REVENUE FUND - OTHER PROGRAMS DIRECTOR GENERAL ADMINISTRATION INTERNAL SERVICES FUND INTERNAL SERVICES FUND GENERAL ADMINISTRATION SUPPORT SERVICES - PUPIL SERVICES SUPP SRVS - IMPROV INSTR & ED MED SRVS SPECIAL REVENUE FUND - OTHER PROGRAMS GEORGIA LEARNING RESOURCES SYSTEM FUND GENERAL ADMINISTRATION OTHER SUPPORT SERVICES GEORGIA LEARNING RESOURCES SYSTEM FUND INTERNAL SERVICES FUND GENERAL ADMINISTRATION SPECIAL REVENUE FUND - OTHER PROGRAMS SPECIAL REVENUE FUND - OTHER PROGRAMS INTERNAL SERVICES FUND GENERAL ADMINISTRATION MAINTENANCE & OPER. OF PLANT SERVICES INTERNAL SERVICES FUND SUPP SRVS - IMPROV INSTR & ED MED SRVS SPECIAL REVENUE FUND - OTHER PROGRAMS SUPP SRVS - IMPROV INSTR & ED MED SRVS SUPP SRVS - IMPROV INSTR & ED MED SRVS GENERAL ADMINISTRATION OTHER SUPPORT SERVICES INTERNAL SERVICES FUND INTERNAL SERVICES FUND SUPP SRVS - IMPROV INSTR & ED MED SRVS SUPPORT SERVICES - BUSINESS

SALARIES

$

4,873,98

30,329,04

90.00

18,499.73 $

24,627.12

49,602.72

42,920.10

5,082,66

55,909.92

20,448.59 98,715.96

32,176.08 43,242.00 31,628.64 4,748.56 17,634.22
600.00 36,202.27
2,154,96

23,703,60

51,624.24 12,906.00 14,840.50 38,979.60 21,996.24 3,825,60 21,996.24 61,005.05
1,377.55 60,539.40

17,273.04

15.00 37,300.80 59,289.12 44,052.85

TRAVEL
542,10 500.75
584.42
141,63 4,362,77
449.29
1,147.07
15.00 428.85 1,047.24
1,857,13
50,00
210.25 1,658.18 1,397.99
28.00 15.00
239.04 1,508.99
85.00 3,516,53
15.00
58,00 40.75 15.00 1,036.25 781,00

$ 990,211,38 $ =====2:::.i1,=73=:1=.2:=3

See notes to the general purpose financial statements,

- 15 -

SECTION II AUDlTEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1997

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

8524-93-01 8524-96-01

Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number 8524-93-01

It is not cost effective for North Georgia Regional Educational Service Agency to implement the General Fixed Assets Account Group within its general ledger. North Georgia RESA's Board of Control does not require this account to be maintained at this time.

CASH AND CASH EQUIVALENTS Uncollateralized Deposits Finding Control Number 8524-96-01

During the year under review, an agreement was entered into between North Georgia Regional Educational Service Agency and Regions Bank to provide for the collateralization ofbank balances to ensure compliance with State laws. The under collateralization of deposits at Gilmer County Bank was unknown to Agency personnel until pointed out by current year auditors. In the future, North Georgia Regional Educational Service Agency will transfer, on a monthly basis, amounts in excess of $1 00,000.00 from Gilmer County Bank and deposit to Regions Bank.

PRIOR YEAR FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

8524-96-02

Unresolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

CASH MANAGEMENT Excessive Cash Balances Finding Control Number 8524-96-02

Due to the timing of the Fiscal Year 1996 audit, the corrective action plan was not implemented until Fiscal Year 1998.

SECTIONID CURRENT YEAR FINDINGS AND QUESTIONED COSTS

NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 1997
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Uncollateralized Deposits Finding Control Number FS-8524-97-01
As of June 30, 1997, the North Georgia Regional Educational Service Agency failed to have its bank balances fully collateralized as provided for by the Official Code of Georgia Annotated Section 45-8-12 which states, in part, as follows:
"The collecting officer or officer holding public funds may not have on deposit at any time in any depository for a time longer than ten days a sum of money belonging to the public body when such depository has not given bond to the public body as set forth in this code section... The aggregate of the face value of such surety bond, and the market value of securities pledged, shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. "
This noncompliance occurred because of management's failure to adequately monitor the collateralization of balances at individual banks. The Agency should implement procedures to monitor the collateralization of bank balances to ensure compliance at all times with State laws governing deposits and investments.
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number FS-8524-97-02
For the year under review, the North Georgia Regional Educational Service Agency did not maintain a General Fixed Assets Account Group within the formal accounting records. This condition resulted 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.