Audit report, Southwest Georgia Regional Educational Service Agency, Pelham, Georgia, year ended June 30, 1996

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AUDIT REPORT SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
PELHAM, GEORGIA YEAR ENDED JUNE 30, 1996

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

SOUTHWEST 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

ALL FUND TYPES AND ACCOUNT GROUPS

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

3

C

STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL AND SPECIAL REVENUE FUNDS

4

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

5

ADDITIONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

16

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

18

SCHEDULES

1 SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE

20

2 CASH AND CASH EQUIVALENTS

21

3 ACCOUNTS RECEIVABLE

22

SCHEDULE OF REVENUE

4

STATE

23

5

OTHER

24

SCHEDULE OF EXPENDITURES BY OBJECT

6

GOVERNMENTAL FUND TYPES

25

7

LOTTERY PROGRAM

26

8 SCHEDULE OF COMPENSATION AND TRAVEL OF BOARD MEMBERS

27

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

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 22,1997

Honorable Zell Miller, Governor Members of the General Assembly Members of the State Board of Education
and Director and Members of the Southwest Georgia Regional Educational Service Agency Board of Control
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
Ladies and Gentlemen:
We have audited the general purpose financial statements (Exhibits A through D) of the Southwest Georgia Regional Educational Service Agency, as of and for the year ended June 30, 1996, as listed in the table of contents. These financial statements are the responsibility of the Agency's management. Our responsibility is to express an opinion on these financial statements based on our audit.
Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of the Office of Management and Budget Circular A-128, "Audits of State and Local Governments". Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
We did not observe the taking of inventories for resale at June 30, 1996, 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:

96ARL-33

* The General Fixed Assets Account Group reported in the general purpose financial statements of
the Agency contained material discrepancies in the equipment inventory records.
The aggregate effects on the general purpose financial statements of this variance or omission have not been determined, but are believed to be material.
In our opinion, except for the effect of adjustments, if any, on the General Fund as might have been determined to be necessary had we been able to satisfy ourselves as to the accuracy of the inventories for resale as discussed in the third paragraph, and except for the effects on the general purpose financial statements of the matters referred to in the preceding paragraph, the general purpose financial statements present fairly, in all material respects, the financial position of the Southwest Georgia Regional Educational Service Agency as of June 30, 1996, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated May 22, 1997, on our consideration of the Agency's internal control structure and a report dated May 22, 1997, on its compliance with laws and regulations.
Our audit was conducted for the purpose of forming an opinion on the general purpose financial statements ofthe Southwest Georgia Regional Educational Service Agency taken as a whole. The combining statements (Exhibits E and F), the financial schedules (Schedules 1 through 8 which includes the Schedule of Federal Financial Assistance) and the Schedule of Salaries and Travel, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the Southwest 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 of adjustments, if any, on the General Fund, as might have been determined to be necessary had we been able to satisfy ourselves as to the accuracy of the inventories for resale as discussed in the third paragraph, and except for the effects of the matter referred to in the fourth paragraph, such information is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
CLV:dt 96ARL-33

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY - 1-

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

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 1996

EXHIBIT"B"

FUND BALANCE JUNE 30

$

277,005.23 $

0.00 $

277,005.23 $ ===22=0"",8==9=2=.6=7

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

SOUTHWEST 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, 1996

EXHIBIT"C"

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current Support Services Improvement of Instructional Services General Administration Business Administration Maintenance and Operation of Plant Central Support Services Other Operations of Non-Instructional Services
Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Other Sources Other Uses
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1, 1995
Adjustments

GENERAL FUND

BUDGET

ACTUAL

$ 601,907,00 $ 651,068,85

276,021.00

464,162.67

$ 877,928.00 $ 1,115,231.52

$ 292,819.90 $ 482,008.53

147,997.90

205,704.38

125,187.04

125,824.03

75,536.. 33

78,671.78

10.00

154,627.00

129,907.69

7,739,62

$ 796,168.17 $ 1,029,866.03

$

81,759.83 $

85,365.49

$ 150,477.00 $
$ 150,477.00 $

-25,007.93 -25,007.93

$ 232,236.83 $ 230,402,65 -506.67

60,357.56 216,647.67

FUND BALANCE JUNE 30, 1996

$ 462,132.81 $ 277,005.23

SPECIAL REVENUE FUND

BUDGET

ACTUAL

$ 194,031.00 $ 110,714.00

384,220.00

582,925.15

30,000,00

1,750.00

$ 608,251.00 $ 695,389.15

$ 609,884.79 $ 701,436.43

4,800.00

2,815,92

17,591.00

18,350.19

2,039.54
$ 632,275.79 $ 724,642.08 $ -24,024.79 $ -29,252.93

$

25,007.93

$

25,007.93

$ -24,024.79 $ 18,370.52 5,654.27

-4,245.00 4,245.00

$

0,00 $

0.00

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

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30,1996
Note 'J.: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Southwest Georgia Regional Educational Service Agency (Agency) was established pursuant to the Official Code of Georgia Annotated Sections 20-2-270 through 20-2-274 for the purposes 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.
With the exception of the departure from generally accepted accounting principles disclosed in these notes, the financial statements of the Agency have been prepared in conformity with generally accepted accounting principles as applied to governmental units and unless otherwise disclosed in these notes, the financial statements present all of the fund types and account groups of the Agency. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles.
The more significant of the Agency's accounting policies are described below.
REPORTING ENTITY
In evaluating how to define the governmental unit for financial reporting purposes, management has considered the criteria set forth in GASB Codification of Governmental Accounting and Financial Reporting Standards, Section 2100, "Defining the Financial Reporting Entity". Based upon the application of the above criteria, the Southwest 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 Southwest Georgia Regional Educational Service Agency are as follows: Baker County, Calhoun County, Colquitt County, Decatur County, Early County, Grady County, Lee County, Miller County, Mitchell County, Seminole County, Terrell County, Thomas County, Worth County, City of Pelham and the City of Thomasville.
FUND ACCOUNTING
The Agency uses funds and account groups 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.
-5-

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1996
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
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 account groups presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are used to account for all or most of a regional educational service agency's general activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources of the Agency except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a regional educational service agency.
SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. These funds are primarily received from the Georgia Department of Education and from the Federal government to accomplish specific objectives and are required to be accounted for separately.
ACCOUNT GROUPS
GENERAL FIXED ASSETS ACCOUNT GROUP - used to account for all general fixed assets acquired for use by the Agency. Land and buildings, other than storage facilities used in the operations of the Agency are owned by Calhoun County Board of Education.
GENERAL LONG-TERM DEBT ACCOUNT GROUP - used to account for accrued compensated absences and material capital lease obligations.
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 financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
-6-

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXHIBIT "0" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1996
Note1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Governmental fimds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Those revenues considered susceptible to accrual are intergovernmental grants, sales and services and investment income.
Expenditures are generally recognized when the related fimd liability is incurred.
BUDGET
The Southwest 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 fimding sources. There is no statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental fimds is prepared by fimd, fimction and object. The legal level of budget control was established by the Agency at the fimctional 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 of the 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 ofdeposits (including savings and N.O.W. accounts) in authorized financial institutions. Georgia Laws authorize the Agency to deposit its fimds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.
RECEIVABLES
Receivables consist of grant reimbursements due from State or other grantors for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
-7-

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXlllBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1996
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES
GOODS FOR RESALE Inventories reported on the Combined Balance Sheet are valued at cost (first-in, first-out). The Agency records inventories on its financial statements as goods for resale are purchased and costs of goods sold are recorded as inventories are sold. 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, 1996, are recorded as prepaid items.
GENERAL FIXED ASSETS
General fixed assets purchased, including capital outlay costs, are recorded as expenditures in the various funds at the time of purchase. All purchased general fixed assets are valued at cost where historical records are available and at estimated historical cost where no historical records exist. Donated general fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded cost. No depreciation has been provided on General Fixed Assets. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. However, material discrepancies were noted in the equipment inventory records. To conform to generally accepted accounting principles, a General Fixed Assets Account Group, free of material discrepancies, should be maintained for reporting the cost of assets acquired by governmental fund types.
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 BALANCE
Reserves represent those portions of fund equity that are legally segregated for a specific future use.
Reserve for Sick and Personal Leave - this reserve includes $1,416.57 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.
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SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1996
Note "1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTERFUND TRANSACTIONS
The Agency has the following types of interfund transactions:
Reimbursements of expenditures initially made from a fund that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.
Operating transfers are recorded for all interfund transactions other than reimbursements.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general purpose fmancial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
Note 2: DEPOSITS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value 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 ofthe following:
(l) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
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SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXIDBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1996

Note 2: DEPOSITS

(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

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

CATEGORIZATION OF DEPOSITS At June 30, 1996, the bank balances were $363,987.30. The amounts ofthe total bank balances are classified into three categories of credit risk:

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

The Agency's deposits are classified by risk category at June 30, 1996, as follows:

Risk Category

Bank Balance

1

$ 100,000.00

2

0.00

3

263,987.30

Total

$ 363,987.30

- 10-

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXlllBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30,1996

Note j: GENERAL FIXED ASSETS

The following is a summary of changes in the General Fixed Assets Account Group during the fiscal year:

Balance July 1, 1995 Additions Deductions Balance June 30, 1996 Note 4: RISK MANAGEMENT

Buildings $ 18,757.51
$ 18.757.51

Equipment

Total

$ 224,615.47 $ 243,372.98

40,700.39

40,700.39

7,700.00

7,700.00

$ 257.615.86 $ 276.373.37

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 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. In addition, the Agency has elected to self-insure for errors or omissions, which includes, among other risks, risks for sexual harassment and discrimination. The Agency has not experienced any losses related to these risks in the past three years.

The Agency 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. The Agency has not experienced any unemployment claims during the last two fiscal years.

Note 5: GENERAL LONG-TERM DEBT

eAPITAL LEASES The Southwest Georgia Regional Educational Service Agency has entered into various lease agreements as lessee for copiers and machinery These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value ofthe future minimum lease payments as of the date oftheir inception. The following is an analysis of the carrying value of general fixed assets being acquired under capital leases as of June 30, 1996:

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SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXlllBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1996

Note 5: GENERAL LONG-TERM DEBT

General Fixed Assets

Equipment

$ 38.240.03

The changes in General Long-Term Debt during the fiscal year ended June 30, 1996, were as follows:

Balance July 1, 1995
Deductions Annual Leave Earned and Utilized (Net) Payments
Balance June 30, 1996

Capital Leases

Compensated Aosences

Total

$ 23,884.33 $ 14,618.64 $ 38,502.97

7,460.77

90.49

90.49 7,460.77

$ 16.423.56 $ 14.528.15 $ 30,951.71

At June 30, 1996, payments due, by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30
1997 1998 1999 2000
Total Principal and Interest
Deduct: Imputed Interest
Net Present Value of Future Minimum Lease Payments
Note 6: ON-BEHALF PAYMENTS

Capital Leases
$ 8,312.37 3,912.00 3,912.00 2,282.00
$ 18,418.37
1,994.81
$ 16.423.56

The Agency has recognized revenues and expenditures in the amount of$22,611.99 for health insurance paid on the Agency's behalf by the following State Agency.

Georgia Department of Education Paid to the State Merit System of Personnel Administration For Health Insurance of Non-Certified Personnel In the amount of $22,611.99

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SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30,1996
Note 7: CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grant terms. The Agency believes that such disallowances, if any, will be immaterial to its overall financial position.
Note 8: ACCUMULATED EMPLOYEES' LEAVE
The Agency's administrative staff and certain other full-time employees earn five-sixths of a day per month annual leave. Annual leave may be accumulated to a maximum of ten days. Employees are paid for accumulated vacation leave, up to the maximum accumulation, upon retirement or termination of employment at the current rate of pay. See Note 1 - Compensated Absences
Note 9: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by Agency's are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer public employee retirement system (PERS).
TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. A member is eligible for service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Amember 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.
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SOUTHWEST GEORGIA REGIONAL EDUCADONAL SERVICE AGENCY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1996

Note 9: RETIREMENT PLANS

The Agency's payroll for employees covered byTRS for the year ended June 30, 1996, was $867,731.08; total

payroll was $874,000.48.

.

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. For fiscal year 1996 that rate for employer contributions was 11.81%. The interest rate assumption (rate of return on investments) was 7.50%.

Total contributions made during fiscal year 1996 amounted to $145,851.61, of which $102,464.96 was made by the Agency and $43,386.65 was made by employees. These contributions represented 11.81 % (Agency) and 5% (employees) of covered payroll.

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

Total unfunded pension benefit obligation ofTRS as of June 30, 1995, was as follows:

Total pension benefit obligation

$17,442,607,000.00

Net assets available for benefits, at cost

15,857,066,000.00

Unfunded pension benefit obligation

$ 1.585,541.000.00

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

Total contributions from all employers to TRS for fiscal year ended June 30, 1996 were $607,275,000.00" The Agency's contribution for the year ended June 30, 1996 of $1 02,464.96 was actuarially determined and represented .0169% of total contributions made by all participating employers.

- 14 -

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXIllBIT liD" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1996
Note 9: RETIREMENT PLANS
Ten year historical trend infonnation is presented in the 1996 TRS Component Unit Financial Report. This infonnation is useful in assessing TRS's accumulation of sufficient assets to pay pension benefits as they become due. Note 10: SURETY BONDS Dr. Calfrey C. Calhoun, Director through June 30, 1996, was bonded in the amount of $10,000.00 with the Western Surety Company, Sioux Falls, South Dakota, their Bond No. 60235881. Ms. Deborah S. Day McLendon, Interim Director effective July 1, 1996, through September 15, 1996, was bonded in the amount of $10,000.00 with the Western Surety Company, Sioux Falls, South Dakota, their Bond No. 68521382. The Director, Mr. Milton Callaway, effective September 16, 1996, is bonded in the amount of $10,000.00 with the Western Surety Company, Sioux Falls, South Dakota, their Bond No. 68581656, on which premium is paid through July 1, 1997.
- 15 -

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 1996

ASSETS Cash and Cash Equivalents Accounts Receivable

RESA ANNUAL EVALUATION COORDINATION PROGRAM

LOTTERY PROGRAM

ACQUIRED IMMUNODEFICIENCY
SYNDROME (AIDS) ACTIVITY

$

5,115.69

$

2,637.76

$ 11,207.52

1,640.56

Total Assets

$

5,115.69 $

11,207.52 $

4,278.32

==========

LIABILITIES AND FUND EQUITY

LIABILITIES

Cash Overdraft

Accounts Payable

$

Salaries Payable

Expired Grant Balances Payable

Total Liabilities

$

FUND EQUITY

Fund Balances

Reserved

For Expired Grant Balances/Questioned Costs

Unreserved

Undesignated

$

Total Fund Equity

$

$ 800.74 4,314.95
5,115.69 $

11,207.52
$ 11,207.52 $

0.00 $ 0.00 $

0.00 $ 0.00 $

4,278.32 4,278.32
0.00 0.00

Total Liabilities and Fund Equity

$

5,115.69 $ 11,207.52 $ =====4=,2=7=8=.3=2

See notes to the general purpose financial statements.

- 16 -

EXHIBIT IIE"

"
SAFE AND DRUG-FREE SCHOOLS

GRIFFIN INITIATIVE IN MATHEMATICS AND SCIENCE

PUBLIC HEALTH AND SOCIAL SERVICES EMERGENCY FUND

SOUTHEASTERN REGIONAL VISION
FOR EDUCATION (SERVE)

TOTALS JUNE 30, 1996 JUNE 30, 1995

$ 67,358.48

$

0.00 $

75,111.93 $

7,175.22

652.39 $

13,772.23 $

5,000.00

32,272.70

36,197.22

$ 68,010.87 $

13,772.23 $

5,000.00 $=======0=,=,.0.=0 $ 107,384.63 $

43,372.44

$

$

5,752.61

6,782.27

55,475.99

$ 68,010.87 $

11,090.23 $ 2,682.00
13,772.23 $

5,000.00 5,000.00

$ 27,297.75 $ 9,235.35
11,097.22 59,754.31
$ 107,384.63 $

6,427.23 17,964.40
6,756.28 7,979.53
39,127.44

$

0.00 $

$

0.00 $

0.00 $ 0.00 $

$ 68,010.87 $

13,772.23 $

0.00 $ 0.00 $

0_.0_0 $ ...=.0;.;;.0.;;,.0 $

$

4,245.00

0.00

0.00

0.00 $ _ _4....:.,2_4_5_.0_0

5,000.00 $=====0=.0.=0 $ 107,384.63 $

43,372.44

- 17 -

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 1996

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current Support Services Improvement of Instructional Services General Administration Maintenance and Operation of Plant
Debt Service Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Operating Transfers In
Excess of Revenues and Other Financing Sources over (under) Expenditures
FUND BALANCE JULY 1

RESA ANNUAL EVALUATION COORDINATION PROGRAM

LOTTERY PROGRAM

ACQUIRED IMMUNODEFICIENCY
SYNDROME (AIDS) ACTIVITY

$

85,714.00 $ 25,000.00

$

$

85,714.00 $ 25,000.00 $

7,746.58 7,746.58

$

84,073.78 $ 26,866.45 $

1,640.22

433.31

$

85,714.00 $ 27,299.76 $

$

0.00 $ -2,299.76 $

2,299.76

$

0.00 $

0.00 $

0.00

0.00

16,270.58
16,270.58 -8,524.00 8,524.00
0.00 0.00

FUND BALANCE JUNE 30

$

0.00 $

0.00 $ = = = = = =0.= 00

See notes to the general purpose financial statements.

- 18 -

EXHIBIT"F"

SAFE AND DRUG-FREE SCHOOLS

GRIFFIN INITIATIVE IN MATHEMATICS AND SCIENCE

PUBLIC HEALTH AND SOCIAL SERVICES EMERGENCY FUND

SOUTHEASTERN REGIONAL VISION
FOR EDUCATION (SERVE)

TOTALS YEAR ENDED JUNE 30,1996 JUNE 30,1995

$ 516,234.34 $ $ 516,234.34 $

18,944.23 $ 1,750.00
20,694.23 $

5,000.00 $ 5,000.00 $

$ 35,000.00
35,000.00 $

110,714.00 $
582,925.15 1,750.00
695,389.15 $

119,792.65 489,428.64
609,221.29

$ 514,443.41 $ 2,815.92 15,176.66
1,561.75 477.79
$ 534,475.53 $
$ -18,241.19 $

19,594.23 $ 1,100.00
20,694.23 $ 0.00 $

5,000.00 $
5,000.00 $ 0.00 $

13,996.19

$

-4,245.00 $

4,245.00

0.00 $ 0.00

0.00 $ 0.00

$

0.00 $

0.00 $ =====0=.0=0 $

35,187.98 $
35,187.98 $ -187.98 $

701,436.43 $ 2,815.92 18,350.19
1,561.75 477.79
724;642.08 $
-29,252.93 $

577,651.97 8,524.49
23,927.35
1,674.71 983.68
612,762.20
-3,540.91

187.98

25,007.93

0.00 $ 0.00

-4,245.00 $ 4,245.00

7,785.91
4,245.00 0.00

0.00 $

0.00 $ ==4,;,;,,2=4==5==.0=0

- 19 -

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

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Education, U. S. Department of Through Georgia Department of Education Safe and Drug-Free Schools 1993 Carry-Over 1996 Grant Through Georgia Department of Human Resources Safe and Drug-Free Schools Contract No. 427-93-51463 Contract No. 427-93-615012
Total U. S. Department of Education
Health and Human Services, U. S. Department of Through Georgia Department of Education Acquired Immunodeficiency Syndrome (AIDS) Activity Implementation of a Program in Comprehensive Health Education Contract No. 95-0955 Contract No. 96-1428 Implementation of a Program to Focus on Teen Pregnancies, HIV/STD's Prevention Education Contract No. 96-1200 Through Georgia Department of Human Resources Public Health and Social Services Emergency Fund Contract No. 427-93-615012
Total U. S. Department of Health and Human Services
OTHER FEDERAL ASSISTANCE
Education, U. S. Department of Through University of North Carolina at Greensboro Southeastern Regional Vision for Education (SERVE) Contract No. R168R20001
National Science Foundation Through Griffin Regional Educational Service Agency Griffin Initiative in Mathematics and Science 1996 Grant

CFDA NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

* 84.186 $ * 84.186

-4,245.00 438,792.98 $

447,812.29 (1)

* 84.186 * 84.186
$

9,995.33 71,691.03
516,234.34 $

14,963.25 (1) 71,699.99 (1)
534,475.53

93.938 $ 93.938

1,156.02 $ 1,640.56

5,434.34 (1) 5,886.24 (1)

93.938

4,950.00

4,950.00

93.003 $

5,000.00 12,746.58 $

5,000.00 21,270.58

$

35,000.00 $

35,187.98 (1)

$

18,944.23 $

20,694.23 (1)

Total Federal Financial Assistance

$ 582,925.15 $===6=11=,6=2=8=:.3=2

The Major Programs are identified by an asterisk (*) in front of the CFDA number.

(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.

- 20 -

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY CASH AND CASH EQUIVALENTS JUNE 30,1996
INTEREST BEARING ACCOUNTS
Jordan Banking Company, Leary, Georgia
N.OW. Account (3.50%) Passbook Savings Account (4.25%)

SCHEDULE "2"
$ 23,723.77 168,529.50
$ 192,253.27

See notes to the general purpose financial statements.

- 21 -

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY ACCOUNTS RECEIVABLE JUNE 30, 1996

SCHEDULE "3"

Education, Georgia Department of Lottery Program Education Technology Centers Contract Acquired Immunodeficiency Syndrome (AIDS) Implementation of a Program in Comprehensive Health Education
Griffin Regional Educational Service Agency Griffin Initiative in Mathematics and Science
Human Resources, Georgia Department of Contract Public Health and Social Services Emergency Fund
Various Boards of Education Reimbursement of Expenditures Sales and Services Tuition

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

11,207.52 $

11,207.52

1,640.56 12,022.23

1,640.56 12,022.23

$

94,852.64

3,840.00

5,000.00 2,402.39

5,000.00
2,402.39 94,852.64
3,840.00

$

98,692.64 $

32,272.70 $ ===13=0=,9:=6=5.=34=

See notes to the general purpose financial statements.

- 22 -

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 1996

SCHEDULE "4"

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

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$

22,611.99

601,907.00

$

$

22,611.99

601,907.00

85,714.00 25,000.00

85,714.00 25,000.00

26,549.86

26,549.86

$ 651,068.85 $ 110,714.00 $ 761,782.85

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

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF OTHER REVENUE YEAR ENDED JUNE 30,1996

SCHEDULE "5"

Compensation for Loss of Assets Contracted Services
Boards of Education Baker County Calhoun County Colquitt County Decatur County Early County Grady County Lee County Miller County Mitchell County Pelham, City of Seminole County Terrell County Thomas County Thomasville, City of Worth County
Interest Earned Sales and Services
Supplies, Printing, Equipment, and Other Less: Cost of Goods Sold Tuition Other

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

$

17,031,12

$

TOTAL 17,031,12

1,143,00 6,768,00 20,277.00 15,833,00 9,894.00 12,275,00 9,900,00 6,793.00 11,699.00 6,953,00 7,059,00 7,716.00 12,530,00 11,915.00 12,220,00 11,931.21
862,968.31 -690,322,28
96,230.60 13,348.71 $

1,750,00

1,143.00 6,768.00 20,277.00 15,833,00 9,894.00 12,275,00 9,900.00 6,793.00 11,699,00 6,953.00 7,059,00 7,716.00 12,530.00 11,915.00 12,220,00 11,931,21
862,968,31 -690,322,28
96,230.60 15,098.71

$ 464,162.67 $

1,750,00 $ 465,912.67

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

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

SCHEDULE "6"

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

GENERAL FUND

SPECIAL REVENUE
FUND

TOTAL

$ 575,795,71 $ 298,204.77 $ 874,000.48

132,963,09

60,101,09

193,064,18

22,220.70

27,819.02

50,039.72

81,583.30

115,812,60

197,395.90

1,227,00

1,227,00

864.90

372.95

1,237.85

41,873.51

4,021.36

45,894,87

736,95

736.95

7,504.00

1,611.00

9,115.00

17,715,18

9,094,55

26,809,73

28,365.05

28,365,05

54,055.63

120,836,09

174,891.72

8,253.14

3,250.33

11,503.47

3,800.19

12,107,00

15,907.19

52,635.55

15,928.42

68,563.97

7,739.62 20,897,56

2,039.54 25,078.31

9,779.16 45,975,87

Total Expenditures

$ 1,029,866.03 $ 724,642,08 $ 1,754,508.11

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

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF EXPENDITURES BY OBJECT LOTTERY PROGRAM YEAR ENDED JUNE 30,1996

SCHEDULE "7"

EXPENDITURES Operating Costs Repair and Maintenance Services Supplies Nonoperating Costs Equipment
Total Expenditures

EDUCATION TECHNOLOGY
CENTERS

$

433.31

1,788.14

25,078.31

$ ===27=,2:=9=9:=:.7.::6

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

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF COMPENSATION AND TRAVEL OF BOARD MEMBERS
YEAR ENDED JUNE 30, 1996

SCHEDULE "B"

BOARD MEMBER ADDRESS
Mr, Robert Aaron, Chairman (*) Terrell County Board of Education P.O. Box 151 Dawson, Georgia 31742
Dr. Corkin Cherubini (*) Calhoun County Board of Education P,O. Box 38 Morgan, Georgia 31766
Dr, Robert Clay (*) Lee County Board of Education P.O. Box 236 Leesburg, Georgia 31763
Mr. George Draine (*) 227 Cinderella Lane Dawson, Georgia 31742
Mr. Ric Hall (*) Early County Board of Education 503 Columbia Highway Blakely, Georgia 31723
Ms. Joanne Holland (*) 403 Cuthbert Street Colquitt, Georgia 31737
Mr. Alan Kimbro (*) Worth County Board of Education 204-A East Franklin Street Sylvester, Georgia 31791
Ms. Helen Manry (*) P.O. Box 95 Edison, Georgia 31746
Mr. Kenneth McLendon (*) 271 Robert Willis Road Cairo, Georgia 31728
Mr. Jesse McLeod (*) Seminole County Board of Education 800 South Woolfork Avenue Donalsonville, Georgia 31745
Ms. Deborah Morgan (*) P.O. Box 71628 Leesburg, Georgia 31708-1628
Dr. James Parker (*) Pelham City Board of Education 188 West Railroad Street, South Pelham, Georgia 31779

COMPENSATION

TRAVEL

$

125.00 $

22.50

175.00

150.00 250.00

125.00

- 27 -

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF COMPENSATION AND TRAVEL OF BOARD MEMBERS
YEAR ENDED JUNE 30,1996

SCHEDULE "8"

BOARD MEMBER ADDRESS
Dr. Leon Pate (*) Decatur County Board of Education P.O. Drawer 1406 Bainbridge, Georgia 31717
Mr. R. D. Rambeau (*)
615 South Henerson Avenue Donalsonville, Georgia 31745
Mr. Larry Rawlins (*) Grady County Board of Education P.O. Box 300 Cairo, Georgia 31728
Mr. Tommy Rogers (*) Baker County Board of Education P.O. Box 40 Newton, Georgia 31770
Dr. Lee Shiver (*) Thomasville City Board of Education 915 East Jackson Street Thomasville, Georgia 31792
Dr. Terrel Solana (*) Thomas County Board of Education P.O. Box 2300 Thomasville, Georgia 31799-2300
Ms. Harriett Summerford (*) 707 Barrow Avenue, Southwest Pelham, Georgia 31779
Mr. Kelley Summers (*) Miller County Board of Education P.O. Box 188 Colquitt, Georgia 31737
Mr. Bobby Tabb (*) Mitchell County Board of Education P.O. Box 588 Camilla, Georgia 31730
Mr. Bill Yearta (*) Colquitt County Board of Education P.O. Box 1806 Moultrie, Georgia 31768

(*) Denotes Board Members Serving as of June 30, 1996 See notes to the general purpose financial statements.

- 28 -

COMPENSATION

TRAVEL

$

175.00

200.00 $

4.50

$

1,200.00 $ ======2=7=.0=io0

SECTION II SUMMARY AND SCHEDULE OF SALARIES AND TRAVEL

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SUMMARY OF SALARIES AND TRAVEL YEAR ENDED JUNE 30,1996

Total Salaries
TRAVEL GENERAL FUND Support Services Improvement of Instructional Services General Administration Business Administration Central Support Services Other Operations of Non-Instructional Services Total General Fund SPECIAL REVENUE FUND
Total Travel

$

874,000.48 $

17,344.23 $

-20,842.13 $

870,502.58

$

17,198.53

$

-125.75 $

17,072.78

4,839.57 $

159.53

4,999.10

58.00

58.00

191.94

191.94

124.60

124.60

$

22,220.70 $

351.47 $

-125.75 $

22,446.42

27,819.02

2,128.37

29,947.39

$

50,039.72 $

2,479.84 $

-125. 75 $==~52~,3=9=3=.8==1

NAME
BEAL,RICHARD R BEAL,RICHARD R BEVAN,ROBERT STEVEN BROWN,DAVID T CALHOUN,CALFREY C CALHOUN,CALFREY C CLAY,RAY E DAVIS,DUANE M DAVIS,DUANE M DAVIS,DUANE M DOCKERY,SUSAN GAIL DRINKWATER,CHARLES D ERWIN,SARAH C ERWIN,SARAH C FLEMING,CAROL H FOLSOM,KAREN M HAGAN,J FRANK HOUSTON,WALLACE R HOUSTON,WALLACE R HOUSTON,WALLACE R HOUSTON,WALLACE R KELLY,JANE S KELLY,JANE S LATIMER,JEAN C LATIMER,JEAN C LAWHORN,IVERSON T JR LAWHORN, IVERSON T JR LEE ,CHESTER MARTIN,EUGENIA W MARTIN,EUGENIA W MCCOY,LYNN B MCCOY,LYNN B MCLENDON,DEBORAH D MCLENDON,DEBORAH D MOORE,BRENDA C PAUL,RHONDA G R PAUL,~ONALD PHILLIPS,THOMAS S JR ROBERTS, JEANE P ROBERTS,JEANE P SANDERS,CHRISTINE L SEYMOUR, LINDA D TABOR,ERIC J TABOR,ERIC J THOMAS,ARTHUR L JR THOMPSON,W WOODROW JR THOMPSON,W WOODROW JR TYE,THOMAS DUDLEY WILLIAMS,A KENNETH JR WILLIAMS,A KENNETH JR

SOUTHWEST GEORGIA R.E.S.A. SCHEDULE OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 1996

TITLE CATEGORY

SUPPORT SERVICES - INSTRUCTIONAL

$

SPECIAL REVENUE FUND - OTHER PROGRAMS

OTHER OPERATIONS OF NONINSTRUCT. SERVo

SUPPORT SERVICES - BUSINESS

DIRECTOR

GENERAL ADMINISTRATION

SUPPORT SERVICES - BUSINESS

SUPP SRVS - IMPROV INSTR & ED MED SRVS

SUPPORT SERVICES - CENTRAL

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

OTHER OPERATIONS OF NONINSTRUCT. SERVo

SUPPORT SERVICES - INSTRUCTIONAL STAFF

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPP SRVS - IMPROV INSTR & ED MED SRVS

OTHER OPERATIONS OF NONINSTRUCT. SERVo

SUPPORT SERVICES - INSTRUCTIONAL STAFF

GENERAL ADMINISTRATION

SUPPORT SERVICES - BUSINESS

OTHER OPERATIONS OF NONINSTRUCT. SERVo

SUPPORT SERVICES - INSTRUCTIONAL STAFF

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPPORT SERVICES - BUSINESS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPPORT SERVICES - BUSINESS

OTHER OPERATIONS OF NONINSTRUCT. SERVo

SUPPORT SERVICES - BUSINESS

SUPPORT SERVICES - BUSINESS

OTHER OPERATIONS OF NONINSTRUCT. SERVo

SUPP SRVS - IMPROV INSTR & ED MED SRVS

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPPORT SERVICES - INSTRUCTIONAL STAFF

SPECIAL REVENUE FUND - OTHER PROGRAMS

SPECIAL REVENUE FUND - OTHER PROGRAMS

GENERAL ADMINISTRATION

OTHER OPERATIONS OF NONINSTRUCT. SERVo

SUPP SRVS - IMPROV INSTR & ED MED SRVS

MAINTENANCE & OPER. OF PLANT SERVICES

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPP SRVS - IMPROV INSTR & ED MED SRVS

SUPPORT SERVICES - BUSINESS

SUPPORT SERVICES - INSTRUCTIONAL STAFF

OTHER OPERATIONS OF NONINSTRUCT. SERVo

OTHER OPERATIONS OF NONINSTRUCT. SERVo

SUPPORT SERVICES - INSTRUCTIONAL STAFF

SPECIAL REVENUE FUND - OTHER PROGRAMS

SUPPORT SERVICES - BUSINESS

SUPP SRVS - IMPROV INSTR & ED MED SRVS

SPECIAL REVENUE FUND - OTHER PROGRAMS

TOTALS

$

SALARIES AMOUNT

TRAVEL EXPENSE

4,503.44 41,812.08 $
3,666.68 337.00
72,846.36
960.00 55,785.60
1,000.00 11,016.00 13,595.33
266.37 35,230.78 51,542.36 29,210.25 14,838.00
13,680.00 13,680.00 6,840.00 15,250.85 30,415.37 23,747.84 7,872.00 18,788.00 2,102.00 11,014.00 19,356.00 2,160.00 44,342.89
1,000.00 1,254.28 50,150.76 2,937.48 26,880.00 31,560.00 31,500.00 2,070.00 20,172.00 23,736.00 5,000.00 14,087.01
27,528.00 1,632.24
40,715.00 520.00
43,900.61

5,758.72
2,688.48
4,655.42 191.94
35.00 52.00 3,646.05 3,811.05 2,844.44
395.82 2,159.12
21.00 6,070.06
17.50
3,704.13 14.49
5,325.22
151.50 3,074.67
54.00
40.50 119.00 50.00
18.60 158.00 4,697.26 2,054.81 585.03

870,502.58 $ 52,393.81

SECTION III COMPLIANCE

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

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 22,1997

Honorable Zell Miller, Governor Members of the General Assembly Members of the State Board of Education
and Director and Members of the Southwest Georgia Regional Educational Service Agency Board of Control
COMPLIANCE REPORT BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the general purpose financial statements of the Southwest Georgia Regional Educational Service Agency as of and for the year ended June 30, 1996, and have issued our report thereon dated May 22, 1997. This report was qualified for a scope limitation and a departure from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.
Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement.
We did not observe the taking of inventories for resale at June 30, 1996, 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 Southwest Georgia Regional Educational Service Agency is the responsibility of the Agency's management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we performed tests ofthe Agency's compliance with certain provisions oflaws, regulations, contracts, and grants. However, the objective of our audit ofthe financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance that are required to be reported herein under Government Auditing Standards.
96CRL-I0

This report is intended for the infonnation of management, the Federal cognizant audit agency and other Federal grantor agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.
"
Respectfully submitted,
~
Claude L. Vickers State Auditor
CLV:dt 96CRL-IO

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

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 22, 1997

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

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

Ladies and Gentlemen:

We have audited the general purpose financial statements of the Southwest Georgia Regional Educational Service Agency as of and for the year ended June 30, 1996, and have issued our report thereon dated May 22, 1997. This report was qualified for a scope limitation and 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 Southwest Georgia Regional Educational Service Agency's compliance with the following requirements applicable to its Federal financial assistance program, which is listed in the Schedule of Federal Financial Assistance, for the year ended June 30, 1996:

(1) Political Activity

(5) Allowable Costs/Cost Principles

(2) Civil Rights

(6) Audit Follow-UplResolution

(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.

96CRL-50

With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the second paragraph of this report. With respect to items not tested, nothing came to our attention that caused us to believe that the Southwest Georgia Regional
Educa"tional Service Agency had not complied, in all material respects, with those requirements. However,
the results ofour procedures disclosed immaterial instances ofnoncompliance 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 grantor agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
CLV:dt 96CRL-50

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

DEPARTMENT OF AUDITS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 22,1997

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

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

Ladies and Gentlemen:

We have audited the general purpose financial statements of the Southwest Georgia Regional Educational Service Agency as of and for the year ended June 30, 1996, and have issued our report thereon dated May 22, 1997. This report was qualified for a scope limitation and 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 Southwest Georgia Regional Educational Service Agency's compliance with the requirements governing:

(1) Types of Services Allowed or Unallowed

(5) Applicable Special Tests and Provisions

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

(6) Other Requirement Claims for Advances and Reimbursements

(4) Reporting

These requirements are applicable to the major Federal financial assistance program, which is identified in the Schedule of Federal Financial Assistance, for the year ended June 30, 1996. The management of the Southwest Georgia Regional Educational Service Agency is responsible for the Agency's compliance with

96CRL-80

those requirements. Our responsibility is to express an opinion on compliance with those requirements based on our audit.
Excep"t 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 (OMB) Circular A-128, "Audits of State and Local Governments". Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether 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, 1996, 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 of this report.
In our opinion, the Southwest 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, 1996.
This report is intended for the information of management, the Federal cognizant audit agency and other Federal grantor agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,
~
Claude L. Vickers State Auditor
CLV:dt 96CRL-80

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

DEPARTMENT OF AUDITS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 22,1997

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

SINGLE AUDIT REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS

Ladies and Gentlemen:

We have audited the general purpose financial statements of the Southwest Georgia Regional Educational Service Agency as of and for the year ended June 30, 1996, and have issued our report thereon dated May 22, 1997. This report was qualified for a scope limitation and 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 of the fiscal year 1996 general purpose financial statements of the Southwest 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 of Management and Budget (OMB) Circular A-128, "Audits of State and Local Governments", we selected certain transactions applicable to certain nonmajor Federal financial assistance programs for the year ended June 30, 1996. As required by OMB Circular A-128, we have performed auditing procedures on the selected transactions to test compliance with the requirements governing:

(l) Types of Services Allowed or Unallowed

(2) Eligibility

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 these requirements. Accordingly, we do not express such an
OpInIOn.

96CRL-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 Southwest Georgia Regional Educational Service Agency had not complied, in all material respects, with those requirements.
This report is intended for the information of management, the Federal cognizant audit agency and other Federal grantor agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record.
Respectfully submitted,
~
Claude 1. Vickers State Auditor
CLV:dt 96CRL-120

SECTION IV INTERNAL CONTROL

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

DEPARTMENT OF AUDITS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 22,1997

Honorable Zell Miller, Governor Members of the General Assembly Members of the State Board of Education
and Director and Members of the Southwest Georgia Regional Educational Service Agency Board of Control
REPORT ON INTERNAL CONTROL STRUCTURE IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the general purpose financial statements of the Southwest Georgia Regional Educational Service Agency as of and for the year ended June 30, 1996, and have issued our report thereon dated May 22, 1997. This report was qualified for a scope limitation and a departure from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements.
Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards, and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement.
We did not observe the taking of inventories for resale at June 30, 1996, nor could we satisfy ourselves as to the accuracy of the amounts stated as inventories for resale through alternative procedures.
The management of the Southwest 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 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
96ICL-3

irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate.
" In planning and performing our audit of the general purpose financial statements of the Southwest Georgia Regional Educational Service Agency for the year ended June 30, 1996, we obtained an understanding of the internal control structure. With respect to the internal control structure, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide an opinion on the internal control structure. Accordingly, we do not express such an opinion.
We noted certain matters involving the internal control structure and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report fmancial data consistent with the assertions of management in the general purpose financial statements.
As described in the Schedule of Findings and Improper or Questioned Costs, reportable conditions were noted in the following control categories:
(1) Accounting Controls (Overall)
(2) General Fixed Assets
A material weakness is a reportable condition in which the design or operation of one or more of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the general purpose financial statements being audited may occur and not be detected within 'a timely period by employees in the normal course of performing their assigned functions.
Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, we believe that the reportable conditions disclosed above are also considered to be material weaknesses.
These conditions were considered in determining the nature, timing, and extent of the procedures to be performed in our audit of the Southwest Georgia Regional Educational Service Agency's financial statements and this report does not affect our report thereon dated May 22, 1997.
96ICL-3

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

CLV:dt 96ICL-3

Claude L. Vickers State Auditor

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

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
May 22, 1997

Honorable Zell Miller, Governor Members of the General Assembly Members of the State Board of Education
and Director and Members of the Southwest Georgia Regional Educational Service Agency Board of Control
SINGLE AUDIT REPORT ON THE INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS
Ladies and Gentlemen:
We have audited the general purpose financial statements of the Southwest Georgia Regional Educational Service Agency as of and for the year ended June 30, 1996, and have issued our report thereon dated May 22, 1997. This report was qualified for a scope limitation and 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 Agency's compliance with requirements applicable to the major Federal financial assistance program and have issued our opinion thereon dated May 22, 1997.
Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States; and the provisions of Office of Management and Budget (OMB) Circular A-128, "Audits of State and Local Governments". Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement and about whether the Southwest Georgia Regional Educational Service 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 of inventories for resale at June 30, 1996, 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, 1996, we considered the Agency's internal control structure in order to determine our auditing procedures for the purpose of expressing our opinions on the Agency's general purpose financial statements and on its compliance with requirements applicable to
96ICL-7

the major Federal financial assistance program and to report on the internal control structure in accordance
with OMB Circular A-128. This report addresses our consideration of internal control structure policies and
procedures relevant to compliance with requirements applicable to Federal financial assistance programs. ."
We have addressed internal control structure policies and procedures relevant to our audit of the general
purpose financial statements in a separate report dated May 22, 1997.

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

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

GENERAL REQUIREMENTS

SPECIFIC REQUIREMENTS

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

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

(5) Allowable Costs/Cost Principles

(4) Reporting

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

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

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

96ICL-7

During the year ended June 30, 1996, the Southwest Georgia Regional Educational Service Agency expended 89% of its total Federal financial assistance under a major Federal financial assistance program.
We p~rformed tests of controls, as required by OMB Circular A-128, to evaluate the effectiveness of the
design and operation of internal control structure policies and procedures that we considered relevant to preventing or detecting material noncompliance with general requirements and specific requirements as described above that are applicable to the Agency's major Federal fmancial assistance program, which is identified in the Schedule of Federal Financial Assistance. Our procedures were less in scope than would be necessary to render an opinion on these internal control structure policies and procedures. Accordingly, we do not express such an opinion.
We noted certain matters involving the internal control structure and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the Agency's ability to administer Federal financial assistance programs in accordance with applicable laws and regulations.
As described in the Schedule ofFindings and Improper or Questioned Costs, reportable conditions were noted in the following control category:
Administrative Requirements
A material weakness is a reportable condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that noncompliance with laws and regulations that would be material to a Federal financial assistance program may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions.
Our consideration of the internal control structure policies and procedures used in administering Federal financial assistance would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defmed above. However, we believe that the reportable conditions described above are also considered to be material weaknesses.
These conditions were considered in determining the nature, timing, and extent of the procedures to be performed in our audit of the Southwest Georgia Regional Educational Service Agency's compliance with requirements applicable to its major Federal financial assistance program for the year ended June 30, 1996, and this report does not affect our report thereon dated May 22, 1997.
96ICL-7

This report is intended for the infonnation 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 !he distribution of this report which is a matter of public record.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
CLV:dt 96ICL-7

SECTION V FINDINGS AND IMPROPER OR QUESTIONED COSTS

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS YEAR ENDED JUNE 30, 1996
PRIO"R YEAR
AUDIT FOLLOW-UP/RESOLUTION Inadequate Accounting Procedures Financial Statements Finding Resolved Audit Control Number 8844-93-01
The audit report for the year ended June 30, 1995, stated that the accounts receivable as reported on the Agency's financial statements for the General Fund were not supported by accurate subsidiary records. During the year under review, the Agency implemented procedures to provide for accurate subsidiary records.
AUDIT FOLLOW-UP/RESOLUTION Delinquent Completion Report Federal Financial Assistance Finding Resolved Audit Control Number 8844-93-03
The audit report for the year ended June 30, 1995, stated that the Agency failed to file a completion report, by the required date, for the Drug-Free Schools and Communities Act Program (CFDA 84.186) in accordance with regulations established by the Georgia Department of Education. For the year under review, the aforementioned report was filed by the required due date.
AUDIT FOLLOW-UP/RESOLUTION Inaccurate Indirect Cost Calculation Federal Financial Assistance Finding Resolved Audit Control Number 8844-94-02
The audit report for the year ended June 30, 1994,reported an error in the calculation of indirect cost which resulted in an overpayment of $372.79 by the Drug-Free Schools and Communities Act Program (CFDA 84.186) to the General Fund. This questioned cost had not been resolved as of June 30, 1996. However, a refund of $372.79 was made by the Agency in the subsequent fiscal period and this amount is included in Accounts Payable as shown on the Combined Balance Sheet, Exhibit "A", of this report.
- 1-

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS YEAR ENDED JUNE 30, 1996
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Failure to Refund Unexpended Balance Financial Statements Finding Resolved Audit Control Number 8844-95-02
The audit report for the year ended June 30, 1995, reported that the Agency failed to refund the unexpended balance of $4,588.39 for the State Student Support Team Program, a cost reimbursement basis program. This unexpended balance had not been resolved as of June 30, 1996. However, a refund of $4,588.39 was made by the Agency in the subsequent fiscal period and this amount is included in Accounts Payable as shown on the Combined Balance Sheet, Exhibit "A", of this report.
AUDIT FOLLOW-UP/RESOLUTION Outstanding Loan Financial Statements Finding Resolved Audit Control Number 8844-95-03
The audit report for the year ended June 30, 1995, disclosed that the Agency's General Fund had an unpaid loan outstanding on December 31,1994, in the amount of$2,669.98. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia provides, in part, as follows:
"The governing authority of any county, municipality or other political subdivisionof this state may incur debt by obtaining temporary loans in each year to pay expenses...Such loans shall be payable on or before December 31 of the calendar year in which such loan is made..."
During the year under review, the Agency implemented procedures to ensure compliance with Article IX, Section V, Paragraph V of the Constitution of the State of Georgia.
AUDIT FOLLOW-UP/RESOLUTION Expired Grant Balance/Questioned Cost Federal Financial Assistance Finding Resolved Audit Control Number 8844-95-04
The audit report for the year ended June 30, 1995, disclosed that the project completion report submitted by the Agency for the year ended June 30, 1994, for the Drug-Free Schools and Communities Act Program (CFDA 84.186), 1994 Regular project included disbursements of $16,598.07 which were subsequently refunded to the Agency by various resources during the year ended June 30, 1995. The Agency failed to return these unearned funds to the Georgia Department of Education as requi~ed. As a result, an unexpended
-2-

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS YEAR ENDED JUNE 30, 1996
PRIO"R YEAR
AUDIT FOLLOW-UP/RESOLUTION Expired Grant Balance/Questioned Cost Federal Financial Assistance Finding Resolved Audit Control Number 8844-95-04
grant balance in the amount of$16,598.07 remained on hand at June 30, 1995. This questioned cost had not been resolved as of June 30, 1996. However, a refund of $16,598.07 was made by the Agency in the subsequent fiscal period and this amount is included in Accounts Payable as shown on the Combined Balance Sheet, Exhibit "A", of this report.
AUDIT FOLLOW-UP/RESOLUTION Time and Attendance Records Not Utilized Federal Financial Assistance Finding Resolved Audit Control Number 8844-95-05
The audit report for the year ended June 30, 1995, disclosed that split funded salaries charged to the DrugFree Schools and Communities Act Program (CFDA 84.186) were not supported by time and attendance records as required by Chapter 41 of the Financial Management for Georgia Local Units of Administration (FMGLUA). These improper expenditures resulted in a questioned cost of$8,358.59. This question cost had not been resolved as of June 30, 1996. However, a refund of $8,358.59 was made by the Agency in the subsequent fiscal period and this amount is included in Accounts Payable as shown in the Combined Balance Sheet, Exhibit "A", of this report.
AUDIT FOLLOW-UP/RESOLUTION Expenditure After Grant Period Federal Financial Assistance Finding Resolved Audit Control Number 8844-95-06
The audit report for the year ended June 30, 1995, stated that the Agency received $4,245.00 from the Georgia Department of Education for the Drug-Free Schools and Communities Act Program (CFDA 84.186), 1993 Carry-Over project. A review of the underlying documentation supporting the expenditures for this project disclosed that the Agency expended the entire grant award subsequent to the expiration of the grant period. This matter had not been resolved as of June 30, 1996. However, a refund of $4,245.00 was made by the Agency in the subsequent fiscal period and this amount is included in Accounts Payable as shown in the Combined Balance Sheet, Exhibit "A", of this report.
-3-

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS YEAR ENDED JUNE 30,1996
PIDORYEAWCURRENTYEAR
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Financial Statements Reportable Condition - Material Weakness Audit Control Number 8844-93-02
The audit report for the year ended June 30, 1995, disclosed that the equipment inventory records for the Agency's general fixed assets were found to be deficient. For the year under review, the records for the Agency's general fixed assets were again found to be deficient as follows:
(1) Equipment inventory records were not updated for additions and deletions.
(2) Physical inventory counts were not conducted and compared to equipment inventory records.
This condition occurred as a result of management's failure to ensure proper controls and procedures were maintained between the recording of items in the property inventory records and the general ledger. As a result of the deficiencies identified in the review of general fixed assets, we were unable to determine the validity of the total asset valuation contained in the General Fixed Asset Account Group.
ADMINISTRATIVE REQUIREMENTS Inadequate Inventory Records Federal Financial Assistance Reportable Condition - Material Weakness Nonmaterial Noncompliance Audit Control Number 8844-93-04
The audit report for the year ended June 30, 1995, stated that the Agency's property management records for the Safe and Drug-Free Schools Program (CFDA 84.186) were incomplete and failed to meet property management standards as set forth in Chapter 41, of the Financial Management for Georgia Local Units of Administration (FMGLUA). For the year under review, the Agency's property management records again failed to meet these requirements. The inventory records as presented for audit did not correctly identify the program's percentage ofparticipation in the cost of equipment. This condition occurred because management disregarded the provisions ofFMGLUA that an inventory system should be implemented that provides for the identification of all equipment purchased as outlined in Chapter 41. Perpetual inventory records should include historical information regarding additions and deletions made to the equipment inventory during each fiscal year when applicable. Periodic physical inventory counts should be performed and reconciled to the property records to ensure the accuracy of inventory records.
-4-

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS YEAR ENDED JUNE 30, 1996
PRIOR YEAR/CURRENT YEAR
ACCOUNTING CONTROLS (OVERALL) - Financial Statements ADMINISTRATIVE REQUIREMENTS - Federal Financial Assistance Inadequate Separation ofDuties Reportable Condition - Material Weakness Audit Control Number 8844-95-01
The audit report for the year ended June 30, 1995, stated that the Agency had not provided for adequate separation ofemployee duties in the performance ofaccounting functions and related procedures for all funds. In the year under review, no improvement in adequate separation of employee duties was noted. This condition was a result ofmanagement's decision to limit the number of administrative staffmade responsible for accounting functions. Management should periodically review this decision to determine if employee duties can be reassigned to achieve a higher degree of internal control with existing staff.
Note: All Federal financial assistance programs listed in the Schedule of Federal Financial Assistance, Schedule "1 " of this report are affected by this finding.
CURRENT YEAR
EMPLOYEE COMPENSATION Salary Overpayment Financial Statements Nonmaterial Noncompliance Amount: $2,874.10 Audit Control Number 8844-96-01
For the year 1,lIlder review, a sample of ten employees was selected to test employee compensation. The results ofthis sample revealed one instance where an employee was overpaid $2,874.10. This overpayment occurred because the Director, Dr. Calfrey C. Calhoun, was paid for personal leave in excess of the 3 day maximum allowed by Agency policy and for 20 days of accrued annual leave upon retirement when the Agency policy includes a limit often days. The overpayment was the result of the Agency's failure to adhere to Agency policies regarding personal and annual leave. The Agency should seek reimbursement of this overpayment for deposit to the Agency's General Fund.
CASH MANAGEMENT Excessive Cash Balances Federal Financial Assistance Nonmaterial Noncompliance Audit Control Number 8844-96-02
A review of cash management procedures for the Safe and Drug-Free Schools Program (CFDA 84.186) revealed the accumulation of excessive cash balances as follows:
-5-

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30,1996
CURRENT YEAR CASH MANAGEMENT Excessive Cash Balances Federal Financial Assistance Nonmaterial Noncompliance Audit Control Number 8844-96-02
(1) Cash draws from the Georgia Department of Education for the 1996 Grant, utilizing DE Form 0147, "Quarterly Report of Expenditures and Estimated Requirements for Grant Funds", were made in advance of immediate cash needs. During fiscal year 1996, the project had an average cash balance of $74,094.80, with excessive ending monthly cash balances in seven months.
(2) Cash draws from the Georgia Department ofHuman Resources for Contract No. 427-93-615012, utilizing the "Monthly Income and Expense Report", were made in advance of immediate cash needs. During fiscal year 1996, the project had an average cash balance of $7,189.96, with excessive ending monthly cash balances in seven months.
Procedures should be implemented to minimize the time elapsing between the transfer of funds from the grantor and disbursement of such funds by the Agency.
Note: The Southwest Georgia Regional Educational Service Agency was provided an opportunity to include pertinent comments from the Agency's management concerning these audit fmdings, conclusions and recommendations. The Agency has elected not to provide comments for inclusion in this report.
- 6-