Review report, Southwest Georgia Regional Educational Service Agency, Pelham, Georgia, year ended June 30, 1997

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

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

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

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

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

14

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

15

SCHEDULES

1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

16

2 SCHEDULE OF STATE REVENUE

17

3 SCHEDULE OF SALARIES AND TRAVEL

18

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

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY - TABLE OF CONTENTS -
SECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

CLAUDE L. VICKERS
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
January 16, 1998

Honorable Zell Miller, Governor Members of the General Assembly of Georgia Members of the State Board of Education
and Director and Members of the Southwest 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) of Southwest 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 financial statements is the representation of the management of Southwest 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, 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.
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 (Exhibits E and F and Schedules 1 through 3) is presented only for supplementary analysis purposes. Such information has been subjected

97ARL-RESA-1

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,
~~
Claude L. Vickers State Auditor
CLV:dt 97ARL-RESA-I

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30 1997

EXHIBIT "A"

&fl.
Cash and Cash Equivalents
Accounts Receivable
Prepaid Items
Inventories for Resale
Amount to be Provided in Future Years For Payment of: Capital Lease Agreements Compensated Absences
General Fixed Assets Buildings Equipment

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

$ 206,906.11

22,680.84 $

58,984.61

326.00

111,985.51

ACCOUNT GROUPS

GENERAL

GENERAL

FIXED

LONG-TERM

ASSETS

DEBT

TOTALS (Memorandum Only) JUNE 3D, 1997 JUNE 3D, 1996

$ 206,906.11 $ 192,253.27

81,665.45

130,965.34

326.00

2,660.95

111,985.51

130,134.44

$ 33,182.41 13,757.69

$

15,382.51

255,572.33

33,182.41 13,757.69
15,382.51 255,572.33

16,423.56 14,528.15
18,757.51 257,615.86

Total Assets

$ 341,898.46 $

58,984.61 $ 270,954.84 $ 46,940.10 $ 718?78.01 $ 763,339.08

LIABILITIES AND FUND EQUITY

LIABILITIES

Cash Overdraft

Accounts Payable

$

Salaries Payable

Expired Grant Balances Payable

Capital Lease Agreements

Compensated Absences

Total Liabilities

$

FUND EQUITY

Investment in General Fixed Assets

Fund Balances

Reserved

For Inventories for Resale

$

For Sick and Personal Leave

Unreserved

Undesignated

Total Fund EqUity

$

$ 13,432.38 11,584.39
25,016.77 $
111,985.51 204,896.18 $ 316,881.69 $

35,629.14 1,714.57 8,620.83 13,020.07
58,984.61

$
$ 33,182.41 13,757.69

35,629.14 15,146.95 $ 20,205.22 13,020.07 33,182.41 13.757.69

98,412.33 20,842.13 59,754.31 16,423.56 14,528.15

$ 46,940.10 $ 130,941.48 $ 209,960.48

$ 270,954.84

$ 270,954.84 $ 276,373.37

0.00 0.00 $

270,954.84

111,985.51

130,134.44 1,416.57

204,896.18

145,454.22

$ 587,836.53 $ 553,378.60

Total Liabilities and Fund Equity $ 341,898.46 $

58,984.61 $ 270,954.84 $ 46,940.10 $ 718?78.O1 $ 763,339.08

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, 1997

EXHIBIT "B"

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

SOUTHWEST 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 Improvement of Instructional Services General Administration Business Administration Maintenance and Operation of Plant Central Support Services Other Support Services
Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Other Sources
Excess of Revenues and Other Financing Sources over (under) Expenditures
FUND BALANCE JULY 1,1996
Adjustments

GENERAL FUND

BUDGET

ACTUAL

$ 734,730.00 $ 754,985.59

459,485.00

339,591.27

$ 1,194,215,00 $ 1,094,576.86

$ 561,337.00 $ 528,528.02

143,536.00

97,559.19

127,414.00

126,006.48

105,527.00

139,360.50

9,800.00

143,194.00

156,970.33

8,000.88

$ 1,081,008.00 $ 1,066,225.40

$ 113,207.00 $

28,351.46

$

11,525.00

$ 113,207.00 $

39,876.46

318,613.71

277,005.23

-69,609.34

SPECIAL REVENUE FUND

BUDGET

ACTUAL

$ 101,421.00 $ 95,421,00

483,335.00

458,467.18

18,000,00

$ 602,756.00 $ 553,888,18

$ 560,712.63 $ 511,924.68

6,575.00

5,660.37

56,225.00

47,972.50

1,690.64 $ 623,512.63 $ 567,248,19 $ -20,756.63 $ -13,360.01

$ 13,360,01

$ -20,756.63 $

0.00

72,744.88

0.00

-51,988.25

FUND BALANCE JUNE 30.1997

$ 362,211.37 $ 316,881.69

$

0,00 $ ======.....,;;0;;,;;;.0,;,,0

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, 1997

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REPORTING ENTITY

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 of office are prescribed by the State Board of Education; provided, however, that at least one-third ofthe membership ofeach 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 ofthe 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 ofthe primary government ofthe State of Georgia, Inclusion in the State's fmancial reporting entity is based on application of criteria defined in Section 2100 ofthe 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 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 fmancial management by segregating transactions related to certain governmental functions or activities.

A fund is a separate accounting entity with a self-balancing set of accounts, An account group is a financial

reporting device designed to provide accountability for certain assets and liabilities that are not recorded in

the funds because they do not directly affect expendable available financial resources.

'

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:

-5-

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1997
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 received primarily from the Georgia Department ofEducation and from the Federal government to accomplish specific objectives and are required to be accounted for separately,
ACCOUNT GROUPS
GENERAL FIXED ASSETS ACCOUNT GROUP - A financial reporting device used to account for all general fixed assets acquired or constructed for use by the Agency. Land and buildings other than storage facilities used in the operations of the Agency are owned by KCH Enterprises Incorporated and Calhoun County Board of Education.
GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for material 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 (Le., revenues and other financing sources) and decreases (Le., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
Governmental funds 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-

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXIllBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1997
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 funding sources. There is no statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Agency at the aggregate level. The budget for governmental funds was prepared in accordance with generally accepted accounting principles.
The budget process begins when the Agency's administration prepares a tentative budget for the Board's approval. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. This 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.
INVENTORIES
GOODS FOR RESALE Inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). The Agency records inventories on its fmancial 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.
-7-

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXIDBIT liD" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1997
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PREPAID ITEMS
Payments made to vendors for services that will benefit periods subsequent to June 30, 1997, 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.
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 fmancial statements.
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.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate fmancial 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. Certain reclassifications have been made to the comparative data to conform to the current year classifications.
-8-

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1997
Note 2: DEPOSITS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value ofthe securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds ofany public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use ofthe 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, 1997, the bank balances were $371,685.36. 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.
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SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1997

Note 2: DEPOSITS

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, 1997, as follows:

Risk Category

Bank Balance

1

$ 200,000.00

2

17,593.22

3

154,092.14

Total

$ 371.685.36

Note 3: GENERAL FIXED ASSETS

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

Buildings

Equipment

Total

Balance July 1, 1996

$ 18,757.51 $ 257,615.86 $ 276,373.37

Additions

70,278.58

70,278.58

Deductions

3.375.00

72,322.11

75,697.11

Balance June 30, 1997

$ 15.382.51 $ 255.572.33 $ 270.954.84

Note 4: RISK MANAGEMENT

The Agency is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related 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.

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SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXIllBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1997

Note 4: RISK MANAGEMENT

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

The Agency 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

CAPITAL 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 of the future minimum lease payments as of the date oftheir inception. The following is an analysis of the carrying value of general fixed assets acquired under capital leases as of June 30, 1997:

General Fixed Assets

Equipment

$ 41.460.00

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

Capital Leases

Compensated Absences

Total

Balance July 1, 1996

$ 16,423.56 $ 14,528.15 $ 30,951.71

Additions

24,885.01

24,885.01

Deductions Annual Leave Earned and Utilized (Net) Payments

8,126.16

770.46

770.46 8,126.16

Balance June 30, 1997

$ 33.182.41 $ 13,757.69 $ 46,940.10

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SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1997

Note 5: GENERAL LONG-TERM DEBT

At June 30, 1997, payments due, by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

Capital Leases

1998 1999 2000 2001 2002

$ 10,565.76 10,565.76 8,935.76 6,085.18 2,431.71

Total Principal and Interest

$ 38,584.17

Deduct: Imputed Interest

5,401.76

Net Present Value of Future Minimum Lease Payments

$ 33,182.41

Note 6: ON-BEHALF PAYMENTS

The Agency has recognized revenues and expenditures in the amount of $20,255.59 for health insurance contributions paid on the Agency's behalf by the following State Agency.
Georgia Department of Education Paid to the State Merit System of Personnel Administration For Health Insurance of Non-Certified Personnel In the amount of $20,255.59
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 ofemployment at the current rate of pay. See Note 1 - Compensated Absences

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SOUTHWEST GEORGIA REGIONAL EDUCADONAL SERVICE AGENCY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30, 1997

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 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%

$ 99,796.82 $ 102,464.96 $ 94,259.53

- 13 -

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30.1997

EXHIBIT"E"

ASSETS Cash and Cash Equivalents Accounts Receivable

FEDERAL PROGRAMS

OTHER PROGRAMS

TOTALS JUNE 30, 1997 JUNE 30, 1996

$

75,111.93

$

48,771.61 $

10,213.00 $ _ _5;;.;;8~,9;..;;8....;.4;.;;,.6...;..1

32,272.70

Total Assets

$

48,771.61 $

10,213.00 $

58,984.61 $ 107,384.63

LIABILITIES AND FUND EQUITY
LIABILITIES
Cash Overdraft Accounts Payable Salaries Payable Expired Grant Balances Payable
Total Liabilities
FUND EQUITY
Fund Balances Unreserved Undesignated

$

30,867.99 $

833.72

4,049.83

13,020.07

4,761.15 $ 880.85
4,571.00

35,629.14 $ 1,714.57 8,620.83 13,020.07

27,297.75 9,235.35
11,097.22 59,754.31

$

48,771.61 $

10,213.00 $

58,984.61 $ 107,384.63

0.00

0.00

0.00

0.00

Total Liabilities and Fund Equity

$

48,771.61 $

10,213.00 $

58,984.61 $ 107,384.63

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

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY

EXHIBIT "F"

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

SPECIAL REVENUE FUND

YEAR ENDED JUNE 30, 1997

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
Capital Leases Operating Transfers In
Total Other Financing Sources
Excess of Revenues and Other Financing Sources over (under) Expenditures
FUND BALANCE JULY 1

FEDERAL PROGRAMS

OTHER PROGRAMS

TOTALS YEAR ENDED JUNE 30,1997 JUNE 30,1996

$ $ 458,467.18
$ 458,467.18 $

95,421.00 $ 95,421.00 $

95,421,00 $ 458,467.18
553,888.18 $

110,714.00 582,925,15
1,750.00
695,389.15

$ 416,503.68 $ 5,660.37
47,972.50
1,365.89 324.75
$ 471,827.19 $

95,421.00 $ 95,421.00 $

511,924.68 $ 5,660.37
47,972.50
1,365.89 324.75
567,248.19 $

701,436.43 2,815.92 18,350.19
1,561.75 477.79
724,642.08

$ -13,360.01 $

0.00 $ -13,360.01 $ -29,252.93

$

13,360.01

$

13,360.01

$

0.00 $

0,00

$

13,360.01

$

25,007.93

$

13,360.01 $

25,007.93

0.00 $ 0.00

0.00 $ 0.00

-4,245.00 4,245.00

FUND BALANCE JUNE 30

$

0.00 $

0.00 $

0.00 $ ====0,;,;.0,;,,0

See notes to the general purpose financial statements.

- 15-

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30. 1997

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Education, U. S. Department of Through Georgia Department of Education Safe and Drug-Free Schools 1997 Grant Youth Risk Behavior Survey Through Georgia Department of Human Resources Safe and Drug-Free Schools Contract No. 427-93-715012
Total U. S. Department of Education
Health and Human Services. U. S. Department of Through Georgia Department of Education AIDS School Health Education Implementation of a Program In Comprehensive Health Education Contract No. 96-1428 Through Georgia Department of Human Resources Public Health and Social Services Emergency Fund Contract No. 427-93-715012
Total U. S. Department of Health and Human Services
OTHER FEDERAL ASSISTANCE
National Science Foundation Through Griffin Regional Educational Service Agency Griffin Initiative in Mathematics and Science 1997 Grant

CFDA NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

84.186 $ 84.186

356.093.30 $ 900.00

356,093.30 (1) 900.00

84.186 $

61,700.00 418.693.30 $

61,700.00 418,693.30

93.938 $

113.76 $

113.76

93.003 $

34.560.12 34.673.88 $

34.560.12 34,673.88

$

5.100.00 $

5;:.:...;.;10;.;::0..:.;:.0;,:..0

Total Federal Financial Assistance

$ 458.467.18 $ ==4=5=8=.4.6..7....=18=

The Agency had no major programs as defined by the Single Audit Act of 1984.
The Agency did not provide Federal Assistance to any subrecipient.
(1) Expenditures in the amount of $13.360.01 associated with the inception of a capital lease have been excluded from this schedule.

See notes to the general purpose financial statements.

- 16 -

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF STATE REVENUE
YEAR ENDED JUNE 30,1997

SCHEDULE "2"

AGENCY/FUNDING

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

GRANTS

Education, Georgia Department of

Other State Programs

Health Insurance

$

Regional Educational Service Agencies

Supervision and Assessment of Student and

Beginning Teachers and Performance-

Based Certification

20,255.59 734,730.00
$

$ 85,208.00

CONTRACTS Education, Georgia Department of Through First District Regional Educational Service Agency Leadership Academy Program

10,213.00

TOTAL
20,255.59 734,730.00 85,208.00
10,213.00

$

754,985.59 $ =====95=.4:::2:=1=.:::= $ ====8=50=.4=0::6=.5:::=9

See notes to the general purpose financial statements.
- 17 -

.
PERSONNEL
BEAL,RICHARD R BEVAN,ROBERT STEVEN CALHOUN,CALFREY C CALLAWAY,MILTON E CALLAWAY,MILTON E DAVIS,DUANE M DOCKERY,SUSAN GAIL DOCKERY,SUSAN GAIL ERWIN,SARAH C ERWIN,SARAH C FLEMING,CAROL H FLEMING,CAROL H FOLSOM,KAREN M HOUSTON,WALLACE R HOUSTON,WALLACE R KELLY,JANE S LATIMER,JEAN C LAWHORN,IVERSON T JR LEE,CHESTER MARTIN,EUGENIA W MCCOY,LYNN B MCLENDON,DEBORAH D MCLENDON,DEBORAH D MCLENDON,DEBORAH D MCLENDON,DEBORAH D MITCHELL,ARTHUR L PAUL,RHONDA G PAUL,RONALD R PHILLlPS,T JR POLLOCK,JENNY M ROBERTS,JEANE P ROBERTS,JEANE P SANDERS,CHRISTINE L SANDERS,CHRISTINE L SEYMOUR,L1NDA D TABOR,ERIC J THOMAS,ARTHURL JR THOMAS,ARTHURL JR THOMPSON,WILBUR W JR WARREN,ALlSON P WILKINS,ANDREA L WILLlAMS,A KENNETH JR

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

SCHEDULE "3"

PROGRAM
SPECIAL REVENUE FUND - OTHER PROGRAMS INTERNAL SERVICES FUND DIRECTOR DIRECTOR GENERAL ADMINISTRATION SUPPORT SERVICES -INSTRUCTIONAL STAFF SUPPORT SERVICES -INSTRUCTIONAL STAFF SPECIAL REVENUE FUND - OTHER PROGRAMS SUPPORT SERVICES -INSTRUCTIONAL STAFF SPECIAL REVENUE FUND - OTHER PROGRAMS SUPPORT SERVICES -INSTRUCTIONAL STAFF SPECIAL REVENUE FUND - OTHER PROGRAMS SUPPORT SERVICES -INSTRUCTIONAL STAFF SUPPORT SERVICES -INSTRUCTIONAL STAFF INTERNAL SERVICES FUND SPECIAL REVENUE FUND - OTHER PROGRAMS SUPPORT SERVICES - BUSINESS INTERNAL SERVICES FUND INTERNAL SERVICES FUND INTERNAL SERVICES FUND SUPPORT SERVICES - INSTRUCTIONAL STAFF DIRECTOR SUPPORT SERVICES -INSTRUCTIONAL STAFF GENERAL ADMINISTRATION SPECIAL REVENUE FUND - OTHER PROGRAMS INTERNAL SERVICES FUND GENERAL ADMINISTRATION INTERNAL SERVICES FUND SUPPORT SERVICES - INSTRUCTIONAL STAFF SPECIAL REVENUE FUND - OTHER PROGRAMS
MAINTENANCE &OPER. OF PLANT SERVICES
SPECIAL REVENUE FUND - OTHER PROGRAMS SUPPORT SERVICES -INSTRUCTIONAL STAFF SPECIAL REVENUE FUND - OTHER PROGRAMS SUPPORT SERVICES - BUSINESS INTERNAL SERVICES FUND
MAINTENANCE &OPER. OF PLANT SERVICES
INTERNAL SERVICES FUND SPECIAL REVENUE FUND - OTHER PROGRAMS SPECIAL REVENUE FUND - OTHER PROGRAMS SPECIAL REVENUE FUND - OTHER PROGRAMS SUPPORT SERVICES -INSTRUCTIONAL STAFF

SALARIES

TRAVEL

$

48,597,96 $

22,000,08

2,356,80

30,400,00

59,099,04 1,175.20
12,683,41 38,442,75
2,959.31

54,595,95 45,988.57

36,421,63 48,371.09
2,415,78 21,288.00 15,750,00 22,380.00 49,760.33 13,922.45 42,666,84

4,049,83 192,00
27,960,00 32,820.00 42,837,98
490.50 1,800,00 20,988.00 21,125.00 3,559.00 30,000,00 4,719.58 1,105.00 28,632,00 43,550,04
943,25 939,00 46,501,87

3,852,62
4,643,85 2,940,89
3,630,44 301.25
2,012.34 2,984.22 2,958,20 4,133,74
14,50 14.60 3,165.06 837,53 260,93 774.21 156,50 3,566.27
31.50 30,00 1,446,43
3,393,99
2,369,50

Accruals June 30, 1996 June 30, 1997

$ 883,488.24 $

43,518.57

-20,842.13 20,205.22

-125,75

$ 882,851,33 $

43,392,82

See notes to the general purpose financial statements.

- 18 -

SECTIONll AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

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

PRI9R YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

8844-93-02 8844-95-01 8844-96-01

Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Response Unresolved - See Corrective Action/Response

CORRECTIVE ACTIONIRESPONSES

ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties Finding Control Number 8844-95-01

Procedures have been put into place to separate employee duties in the performance of accounting functions and related procedures for all funds in the following year. These procedures are outlined in the employee handbook including additional administrative staff made responsible for accounting functions.

EMPLOYEE COMPENSATION Salary Overpayment Audit Control Number 8844-96-01

The Southwest Georgia RESA has not received reimbursement of this salary overpayment but procedures are in place to avoid a repeat occurrence.

PRIOR YEAR FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

8844-93-04 8844-96-02

Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented

SECTIONllI CURRENT YEAR FINDINGS AND QUESTIONED COSTS

SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1997
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUNALENTS Uncollateralized Deposits Finding Control Number: FS-8844-97-01
As of June 30, 1997, the 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 ofthe public funds being secured after the deduction of the amount of deposit insurance".
This noncompliance occurred because ofmanagement'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.