CITY OF BUFORD BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF BUFORD# GEORGIA
REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30# 2007
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION-SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

8

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

9

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERALFUND

21

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

22

3 SCHEDULE OF STATE REVENUE

25

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

26

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

29

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133

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

SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY - TABLE OF CONTENTS -
SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 12, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly Members ofthe State Board of Education
and Superintendent and Members of the City of Buford Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the City of Buford Board of Education, a component unit of the City of Buford, Georgia as of and for the year ended June 30, 2007, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe City ofBuford Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Buford Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 opinions.

2007ARL-11

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information ofthe City of Buford Board of Education, as of June 30, 2007, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated June 12, 2008, on our consideration ofthe City ofBuford Board ofEducation's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing ofinternal control over financial reporting and compliance and the results ofthat testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through ix and page 21 respectively, are not a required part ofthe basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Buford Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic 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,
~~m~.'~~ State Auditor
RWH:gp 2007ARL-11

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
The discussion and analysis of the City of Buford School District's financial performance provides an overall review of the School District's financial activities for the fiscal year ended June 30, 2007. The intent of this discussion and analysis is to look at the School District's financial performance as a whole. Readers should also review the financial statements and the notes to the basic financial statements to enhance their understanding of the School District's fmancial performance.
FINANCIAL HIGHLIGHTS
Key financial highlights for fiscal year 2007 are as follows:
The School District's financial status increased during fiscal year 2007. Net assets increased approximately $2.3 million. This increase was due to an increase in property taxes and an increase in the allotment received from City ofBuford Government.
General revenues accounted for $17.4 million in revenue, or 52.8 percent of all revenues. Program specific revenues in the form of charges for services and sales, grants and contributions accounted for $15.6 million or 47.2 percent of total revenues. Total revenues were $33.0 million.
The School District had $30.7 million in expenses related to governmental activities; only $15.6 million of these expenses were offset by program specific charges for services, grants or contributions. General revenues of $17.4 million were adequate to provide for these programs.
Among major funds, the general fund had $32.3 million in revenues and other financing sources and $30.3 million in expenditures. The general fund's balance increased to $5.2 million from $3.2 million.
USING THE BASIC FINANCIAL STATEMENTS
This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the City of Buford Board of Education as a financial whole, or as an entire operating entity.
The Statement ofNet Assets and Statement ofActivities provide information about the activities of the School District as a whole, presenting both an aggregate view of the School District's finances and a longer-term view of those finances. The fund financial statements provide the next level ofdetail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. The fund financial statements also look at the School District's most significant funds. In the case of the City of Buford Board of Education, the general fund is the most significant fund.
1

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
REPORTING THE SCHOOL DISTRICT AS A WHOLE
Statement ofNet Assets and Statement ofActivities
While these documents contain the large number of funds used by the School District to provide programs and activities, the view of the School District as a whole looks at all financial transactions and asks the question, "How did we do financially during fiscal year 2007?" The Statement ofNet Assets and the Statement ofActivities answer this question. These statements include all assets and all liabilities using the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all ofthe current year's revenues and expenses regardless ofwhen cash is received or paid.
These two statements report the School District's net assets and changes in those assets. This change in net assets is important because it tells the reader whether, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the result of many factors, some financial, some not. Nonfinancial factors include the School District's local allotments base, facility conditions, required educational programs and other factors.
In the Statement of Net Assets and the Statement of Activities, the School District has one distinct type ofactivity:
Governmental Activities - All of the School District's programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, food service, after school program, school activity accounts and various others.
REPORTING THE SCHOOL DISTRICT'S MOST SIGNIFICANT FUNDS
Fund Financial Statements
Fund financial reports provide detailed information about the School District's major funds. The School District uses two funds to account for a multitude of financial transactions. However, these fund financial statements focus on the School District's most significant funds. The School District's major governmental funds are the General Fund and the District-wide Capital Projects Fund.
Governmental Funds: Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out ofthose funds and the balances left at yearend available for spending in future periods. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The
11

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental/unds is reconciled in the financial statements.

Fiduciary Funds: The School District is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the school activity accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.

THE SCHOOL DISTRICT AS A WHOLE

The perspective of the Statement of Net Assets is of the School District as a whole. Table 1 provides a summary of the School District's net assets for fiscal year 2007 compared to fiscal year 2006.

Table 1 Net Assets

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

Assets Current and Other Assets Capital Assets, Net

$ 12,127,270 $ 9,000,729

31,367,756

31,321,490

Total Assets

$ 43,495,026 $ 40,322,219

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 4,465,360 $ 3,565,480

56,585

53,012

Total Liabilities

$ 4,521,945 $ 3,618,492

Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted

$ 31,367,756 2,132,816 5,472,509

$ 31,321,490 1,863,839 3,518,398

Total Net Assets

$ 38,973,081 $ 36,703,727

Total net assets increased approximately $2.3 million.

iii

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
Chart 1 provides a visual summary of the School District's net assets for fiscal year 2007.
Chart 1 Net Assets

9% 1% 65%

Current and Other Assets
Capital Assets, Net
Current and Other Liabilities
Long-Term Liabilities

Chart 2 shows revenues for fiscal year 2007.

Chart 2 Revenues

Charges for Services and Sales 6% Operating Grants and Contributions
Capital Grants and Contributions
Property Tax

41%

SPLOST

Allotment from City Government
Investment Earnings
.3% Miscellaneous

lV

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
Chart 3 shows expenditures for the School District for fiscal year 2007.

2%
6% 4% 2%

Chart 3 Expenditures
Instruction
Pupil Services
Improvement of Instructional Services
Educational Media Services
General Administration
School Administration
Iii Business Administration
Maintenance and Operation of Plant
Student Transportation Services
l!!!!!I Central Support Services
Enterprise Operations
Food Services

Table 2 shows the changes in net assets for fiscal year 2007 compared to the changes in net assets for fiscal year 2006.

V

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

Table 2 Change in Net Assets

Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

$ 1,975,555 13,493,837 112,512

$ 1,658,159 11,263,855 18,568

Total Program Revenues

$ 15,581,904 $ 12,940,582

General Revenues:

Tax.es

Property Tax.es

For Maintenance and Operations

$ 9,958,050 $ 7,931,965

Sales Tax.es

Special Purpose Local Option Sales Tax

For Capital Projects

602,331

602,405

Grants and Contributions not Restricted to

Specific Programs

479,941

Investment Earnings

143,146

59,182

Miscellaneous

776,690

698,555

Special Item

Transfer from City Government

5,943,406

4,858,614

Total General Revenues and Special Item

$ 17,423,623 $ 14,630,662

Total Revenues

$ 33,005,527 $ 27,571,244

Program Expenses Instruction Support Services Pupil Services
Improvement oflnstructional Services Educational Media Services General Administration School Administration Business Administration
Maintenance and Operation ofPlant Student Transportation Services Central Support Services Operations ofNon-Instructional Services Enterprise Operations Community Services Food Services

$ 20,543,650
1,310,514 473,163 517,844
1,171,245 1,912,077
193,698 2,231,079
422,196 62,795
564,399
1,333,513

$ 17,442,287
1,093,441 596,559 471,224 908,834
1,861,614 241,014
2,180,311 568,242
1,090,782 96,088
1,177,323

Total Expenses

$ 30,736,173 $ 27,727,719

Increase (Decrease) in Net Assets

$ 212691354 $ -1561475

VI

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

GOVERNMENTAL ACTIVITIES

The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services comparing fiscal year 2007 with fiscal year 2006. That is, it identifies the cost ofthese services supported by tax revenue and unrestricted State entitlements.

Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2007 Year 2006

Net Cost of Services

Fiscal

Fiscal

Year 2007 Year 2006

Instruction Support Services
Pupil Services hnprovement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Operations ofNon-Instructional Services Enterprise Operations Community Services Food Services

$ 20,543,650 $ 17,442,287 $ 9,433,466$ 7,920,664

1,310,514 473,163 517,844
1,171,245 1,912,077
193,698 2,231,079
422,196 62,795

1,093,441 596,559 471,224 908,834
1,861,614 241,014
2,180,311 568,242

1,232,762 285,210 178,639 693,748
1,244,283 187,767
1,465,473 131,711 62,795

993,526 402,902 255,646 549,422 1,373,542 241,014 1,593,261 399,798

564,399 1,333,513

1,090,782 96,088
1,177,323

99,087 139,328

879,788 96,088 81486

Total Expenses

$ 30,736,173 $ 27,727,719 $ 15.154,269 $ 14,787,137

THE SCHOOL DISTRICT'S FUNDS

The School District's governmental funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues of $27.2 million and an allotment from the City in the amount of $5.9 million for a total of $33.1 million in receipts. General Fund expenditures totaled $30.3 million. There was an increase of $0.3 million in the capital projects fund. The general fund had an increase of $2.0 million. The increase in the fund balance of the general fund for the year indicates that the School District had lower than expected cost.

GENERAL FUND BUDGETING HIGHLIGHTS

The School District's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund.

For the General Fund, the actual revenues and other financing sources were $32.3 million. The final actual expenditures were $30.3 million. The School District was able to increase its financial reserves during fiscal year 2007 budget. The actual revenues and expenditures were above School District's final budget amounts.

vii

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

At the end of fiscal year 2007, the School District had $31.4 million invested in capital assets, all in governmental activities. Table 4 indicates balances at June 30, 2007.

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

Construction in Progress Buildings Equipment Land Improvements

$

426,111

29,675,301

1,146,085

120,259

$ 30,298,159 869,333 153,998

Total

$ 31.367.756 $ 31.321.490

Debt

Table 5 shows the School District's debt for compensated absences.

Table5 Debt at June 30

Governmental Activities

Fiscal

Fiscal

Year 2007

Year 2006

Compensated Absences CURRENT ISSUES

$

56585 $====53""'.0===1==2

The City of Buford School District is buffered from some of the financial hardships other school districts experience by the financial support of a well run and fiscally responsible city government. However, changes in the student clientele, State and Federal regulations, and legal requirements continue to impact system operations and finance.

With 2007 state mandates the School District had to substantially increase the budget for fiscal year 2007 by approximately four million dollars.

viii

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007
With the increase in 2007 ofrevenues, the School District was able to increase the ending fund equity to provide for a stable financial future and absorb some of the downturn in the economy.
The School District has employed appropriate personnel and funded all programs adequately.
The SPLOST has been approved by the voters in Gwinnett and Hall counties. Intergovernmental agreements have been signed and will provide the School District with the appropriate parameters to follow.
The School District began to receive payments from SPLOST in July of fiscal year 2008. The amount to be received from Hall County is three million dollars and approximately eighteen million dollars from Gwinnett County.
Contacting the School District's Financial Management This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional information, contact Mrs. Angela Adams, Director of Finance, City of Buford School District, 70 Wiley Drive, Buford, Georgia 30518. You may also email your questions to angela.adams@bufordcityschools.org.
ix

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY STATEMENT OF NET ASSETS JUNE 30, 2007

EXHIBIT"A"

ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Local Government Inventories Prepaid Items Capital Assets Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Funds Held for Others Long-Term Liabilities
Due Within One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets

GOVERNMENTAL ACTIVITIES

$

4,428,468

995,779 1,601,079
178,656 4,885,386
24,668 13,234

426,111 584,027 34,696,307 2,408,093 -6,746,782

$ ===4=3,..,49=5=,0=2=6

$

918,056

2,892,215

354,954

6,157

293,978

56 585

$

4,521,945

$

31,367,756

34,237 2,098,579 5,472,509

$

38,973,081

$ ====4=3,=4=95=,0=2=6

The notes to the basic financial statements are an integral part of this statement. - 1-

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2007

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Operations of Non-Instructional Services Enterprise Operations Food Services
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Investment Earnings Miscellaneous
Special Item Transfer from City Government
Total General Revenues and Special Item
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$ 20,543,650 $
1,310,514 473,163 517,844
1,171,245 1,912,077
193,698 2,231,079
422,196 62,795
564,399 1,333,513
$ 30,736,173 $

1,108,962
461,738 404 855 1,975,555

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

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

10,001,222

77,752 187,953 339,205 477,497 667,794
5,931 765,606 177,973 $

3,574 789 330

$

13,493,837 $

$ 112,512 112 512 $

-9,433,466
-1,232,762 -285,210 -178,639 -693,748
-1,244,283 -187,767
-1,465,473 -131,711 -62,795
-99,087 -139 328
-15, 154,269

$

9,958,050

602,331 143,146 776,690

5 943 406

$

17,423,623

$

2,269,354

36,703,727

$ ====3,,.8,=97=3='=,0=8=1

-3-

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2007

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Accounts Receivable, Net
Taxes State Government Federal Government Local Government Inventories Prepaid Items

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$

4,523,378

$

540,789 $ 1,601,079
178,656 2,126,018
24,668 13 234

100,000 2,759,368

4,523,378
640,789 1,601,079
178,656 4,885,386
24,668 13234

Total Assets

$

9,007,822 $

2,859,368 $====11..,8..e...,.1...1...,90.,.

LIABILITIES AND FUND BALANCES
LIABILITIES
Cash Overdraft Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Funds Held for Others
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Encumbrances Inventories Capital Projects
Unreserved Designated for Student Activities Undesignated Reported in: General Fund
Total Fund Balances

$

$

907,266

2,892,215

$

3,799,481 $

94,910 $ 10,790
354,954 6,157
293,978
760,789 $

94,910 918,056 2,892,215 354,954
6,157 293 978
4,560,270

$

9,569

$

165,691

24,668

$

2,098,579

488,728

4,519,685

$

5,208,341 $

2,098,579 $

9,569 165,691 24,668 2,098,579
488,728
4,519,685
7,306,920

Total Liabilities and Fund Balances

$

9,007,822 $

2,859,368 $===1.1...,.8..6=7=1, =9=0

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

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2007

EXHIBIT"D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.
Long-Term Liabilities are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Compensated Absences

$

7,306,920

$

426,111

584,027

34,696,307 .

2,408,093

-6,746,782

31,367,756

354,990

-56,585

Net Assets of Governmental Activities (Exhibit "A")

$ 38,973,081

The notes to the basic financial statements are an integral part of this statement. -5-

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2007

EXHIBIT"E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Enterprise Operations Food Services Operation
Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Transfer from City Government
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$ 10,056,593 $
11,911,373 1,694,976 1,975,555 26,116 708,132
$ 26,372,745 $

$ 602,331
117,030 68,558 787,919 $

10,056,593 602,331
11,911,373 1,694,976 1,975,555 143,146 776,690
27,160,664

$ 19,682,923
1,305,287 473,163 517,159
1,169,021 1,908,038
193,248 2,266,504
916,209 62,795
564,399 1,253,309
$
$ 30,312,055 $
$ -3,939,310 $

$
466,811 466,811 $ 321,108 $

19,682,923
1,305,287 473,163 517,159
1,169,021 1,908,038
193,248 2,266,504
916,209 62,795 564,399 1,253,309 466,811
30,778.866
-3,618,202

5,943,406

$ 2,004,096 $

321,108 $

3,204.245

1,777,471

5,943.406 2,325,204 4,981,716

$ 5,208,341 $ 2,098,579 $ ==-7_.,==30..,6,..,9_2_0

The notes to the basic financial statements are an integral part of this statement. -6-

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2007

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")

$

2,325,204

Amounts reported for Governmental Activities in the Statement of Activities are different because:

Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:

Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense

$

917,461

-806,228

111,233

Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.

-98,543

In the Statement of Activities, only the loss on the sale of the building/equipment/land improvements is reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the building/equipment/ land improvements sold.

-64,967

Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of:

Increase in Compensated Absences

-3 573

Change in Net Assets of Governmental Activities (Exhibit "B")

$ =====2==,2=69=,3=5=4

The notes to the basic financial statements are an integral part of this statement. -7 -

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2007

EXHIBIT"G"

ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

AGENCY FUNDS
$ =====9=,0=0=8
$=====9=!:,0=0=8

The notes to the basic financial statements are an integral part of this statement. -8-

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT"H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The City ofBuford Board ofEducation (School District) was established under the laws ofthe State ofGeorgia and operates under the guidance ofa school board ofwhich four members are elected by the public and the fifth member is elected as the Chairman of the City Commission and a Superintendent appointed by the Board. The Board is not organized as a separate legal entity and does not have the power to levy taxes or issue bonds. Its budget is subject to approval by the City of Buford, Georgia. Accordingly, the City of Buford Board of Education is determined to be a component unit of the City of Buford, Georgia, which is the primary government.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements ofthe City of Buford Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.

-9-

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) to be used for the acquisition, construction or renovation of major capital facilities.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless ofwhen the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds.

- 10 -

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.

CASH AND CASH EQUIVALENTS

COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.

RECEIVABLES

Receivables consist of amounts due from property and sales taxes, 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 basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

PROPERTY TAXES

The City ofBuford Board ofCommissioners fixed the property tax levy for the 2006 tax digest year (calendar year) on September 5, 2006 (levy date). Taxes were due on November 20, 2006 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2006 tax digest are reported as revenue in the governmental funds for fiscal year 2007. The City of Buford City Clerk bills and collects the property taxes for the School District and remits the taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2007, for maintenance and operations amounted to $10,056,593.

The tax millage rate levied for the 2006 tax year (calendar year) for the City of Buford Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

15.35 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $602,331 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

- 11 -

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVENTORIES

FOOD INVENTORIES On the basic financial statements, inventories of donated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

PREPAID ITEMS

Payments made to vendors for services that will benefit periods subsequent to June 30, 2007, are recorded as prepaid items.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value ofassets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works ofart. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.

Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment

$

5,000

NIA

$

5,000

15 years

$

5,000

60 years

$

5,000 5 to 15 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

- 12 -

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
FUND BALANCES RESERVED
For Encumbrances - This reserve constitutes the unperformed portion ofpurchase orders, contracts and other commitments for goods and services at year end. Encumbrances outstanding are reported as a reservation of fund balance and do not constitute expenditures or liabilities in the current year because the commitments will be honored during the subsequent year.
Note 3: 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 ofthe 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 ofthe amount ofdeposit insurance.
Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe
securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
- 13 -

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT"H"

Note 3: DEPOSITS

(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,

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

(5) Bonds of any public authority created by the laws of the 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 ofthe State of Georgia, and

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or 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, 2007, the bank balances were $5,236,644. The amounts of the total uninsured bank balances are classified into three categories of custodial credit risk:

Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the School District's name.

The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2007, as follows:

Custodial Credit Risk Category

Bank Balance

1

$ 453,173

2

4,683,471

3

0

Total

$ 5,136.(144

- 14 -

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT"H"

Note 4: NON-MONETARY TRANSACTIONS

The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

Note 5: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

Balances July 1, 2006

Increases

Balances Decreases June 30, 2007

Governmental Activities

Capital Assets, Not Being Depreciated:

Construction in Progress

$

0 $ 426,111 $

0 $ 426,111

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 34,732,257 1,960,018 $ 618,235

$ 491,350

35,950 $ 34,696,307

43,275

2,408,093

34,208

584,027

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

4,434,098 1,090,685
464,237

586,908 202,685
16,635

31,362 17 104

5,021,006 1,262,008
463,768

Total Capital Assets, Being Depreciated, Net $ 31,321,490 $ -314878 $

64 967 $ 30,941,645

Governmental Activity Capital Assets - Net $ 31,321,490 $ 111,233 $

64,267 $ 31,361,756

Current year depreciation expense by function is as follows:

Instruction Support Services
Pupil Services Educational Media Services General Administration School Administration Maintenance and Operation of Plant Student Transportation Services Food Services

$ 646,087

$

3,481

514

667

2,725

9,459

83,141

99,987 60,154

$ 806,228

- 15 -

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT"H"

Note 6: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2007, consisted of the following:

Transfers From City of Buford

$ 5,943.406

The School District receives supplemental funding from the City of Buford.

Note 7: RISK MANAGEMENT

The School District 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; acts of God and unemployment compensation.

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

The School District has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years.

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the same fund that the employee's salary and benefits were paid. Claims are accounted for with expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2006 2007

$

0 $

1 079 $

1 079 $

0

$

0 $

5 065 $

5,065 $

0

The School District has purchased surety bonds to provide additional insurance coverage as follows:

- 16 -

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT"H"

Note 7: RISK MANAGEMENT

Position Covered

Amount

Superintendent Assistant Superintendent Each Principal

$

50,000

$

50,000

$

3,000

Note 8: LONG-TERM DEBT

COMPENSATED ABSENCES Compensated absences represent obligations ofthe School District 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. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences.

The changes in Long-Term Debt during the fiscal year ended June 30, 2007, were as follows:

Governmental Funds
Compensated Absences

Balance July 1, 2006

$

53,012

Additions Annual Leave Earned

3 573

Balance June 30, 2007
Portion of Long-Term Debt Due within One Year

$====56""',5'='8==5 $_~5...;.,6,~58::..::;..5

Note 9: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $480,151 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $477,852

- 17 -

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT"H"

Note 9: ON-BEHALF PAYMENTS

Office ofTreasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $2,299

Note 10: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2007:

Project

Unearned Executed Contracts

Buford Academy Addition

$ 7,847.796

The amount described in this note is not reflected in the basic financial statements.

Note 11: SIGNIFICANT 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 costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.

Note 12: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System ofGeorgia (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 ofthe School District who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. The School District 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 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

- 18 -

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007

EXHIBIT "H"

Note 12: RETIREMENT PLANS
Fiscal Year
2007 2006 2005

Percentage Contributed
100% 100% 100%

Required Contribution
$ 1,473,726 $ 1,327,323 $ 1,222,290

- 19 -

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CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2007

SCHEDULE "1"

REVENUES
Property Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Food Services Operation Enterprise Operations Community Service Operations
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Transfers From City Government
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1 l

FINAL (1)

ACTUAL AMOUNTS

$

16,000,000 $

16,000,000 $

10,056,593

10,699,170

10,799,170

11,911,373

1,793,148

1,793,148

1,694,976

1,040,511

1,040,511

1,975,555

10,400

10,400

26,116

25,050

25,050

708,132

$

29,568,279 $

29,668,279 $

26,372,745

$

18,301,621 $

18,825,040 $

19,682,923

1,244,096 374,861 542,323
1,437,760 1,936,209
183,132 2,576,914
863,731
1,257,756 28,424 342 711

1,342,954 369,303 531,523
1,434,934 1,977,018
190,581 2,576,914
877,191 80,674
1,257,756 28,524
342 711

1,305,287 473,163 517,159
1,169,021 1,908,038
193,248 2,266,504
916,209 62,795
1,253,309 564,399

$

29,089,538 $

29,835,123 $

30,312,055

$

478,741 $

-166,844 $

-3,939,310

5,943,406

$

478,741 $

-166,844 $

2,004,096

1,537,577

1,537,577

3,204,245

26,856

-5 325

Fund Balances - Ending

$

2,043,174 $

1,365,408 $ ====5=12.o..a..134===-1

Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual

(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.

The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 21 -

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2007

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1)
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States
Other Programs Pass-Through From Georgia Department of Education English Language Acquisition Grants Enhancing Education Through Technology Program Improving Teacher Quality State Grants Migrant Education Safe and Drug-Free Schools and Communities State Grants for Innovative Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States
Total U. S. Department of Education
Labor, U.S. Department of Pass-Through From Georgia Department of Labor Workforce Investment Act Adult Program
Total Federal Financial Assistance
N/A = Not Available

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

N/A N/A $
$

(2) 1,133,667
1,133,667

10.550

N/A
$

53482 1187 149

84.027

N/A $

387,316

84.365 84.318 84.367 84.011 84.186 84.298 84.010 84.048

N/A
N/A
N/A
NIA N/A N/A N/A N/A
$

17.258

N/A $

50,186 14
121,122 25
9,293 3,591 378,263 28,506
978 316
7272

$ ======2..,1.,.1..2...,1.3..7=

- 22-

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2007

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($184,777) were not maintained separately and are included in the 2007 National School Lunch Program.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the City of Buford Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 23 -

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CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2007
AGENCY/FUNDING
GRANTS Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program Twenty Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facilities Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement State Bonds Sparsity Grant Nursing Services Principal Supplements Food Services Amended Formula Adjustment Other State Programs Health Insurance K-8 Statewide Reading and Math Grants Vocational Education Vocational Supervisors Middle School Summer Remedial Program Virtual Schools Grant Graduation Coaches
Office of Treasury and Fiscal Services Public School Employees Retirement

See notes to the basic financial statements.

-25-

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

924,712

64,405

1,823,201

133,378

794,615

34,228

1,440,442

1,388,411

350,328

99,682 99,131 777,088 236,962 171,829 285,702 79,064 116,140 384,437 255,541 79,303 47,931

391,460 517,571 638,932

151,073 12,512
100,000 35,802 65,299 9,245 60,874
-256,983
477,852 32,783 35,094 9,429 1,501 25 40,075

2299

s=====1=1_.9_11.1.3_1_3

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2007

SCHEDULE "4"

PROJECT
Gwinnett County SPLOST Projects: ,equipping additional classrooms, instructional and support space and remodeling, renovating, and equipping existing classrooms, instructional and support space; acquiring, constructing and equipping a new middle school; additional classroom for elementary school; multi-purpose arena; technology improvements system-wide; purchasing buses; renovating existing building or administrative offices.
Gwinnett County SPLOST Projects: acquiring new sites for the construction of new schools, support facilities and athletic facilities and the expansion of existing school and support facilities; developing sites for constructing and equipping new schools, support facilities and athletic facilities; making additions to, acquiring or renovating, equipping and modernizing existing schools, support facilities and athletic facilities; making existing or new lease/purchase payments or payments with respect to the acquisition of new and existing schools and support facilities along with buses and other transportation vehicles; and modernizing technology and making system-wide technology improvements.
Hall County SPLOST Projects: acquiring new sites, constructing and equipping additional classrooms instructional and support space and remodeling, renovating, and equipping existing classrooms, instructional and support space; acquiring, constructing, and equipping a new middle school; additional classroom for elementary school; multi-purpose arena; technology improvements system-wide; renovating and existing building or administrative offices.
Hall County SPLOST Projects: acquiring, constructing and equipping additional classrooms, instructional and support space and remodeling, renovating, and equipping existing classrooms, instructional and support space; acquiring, constructing and equipping new middle schools; acquiring and installing technology improvements system-wide; and renovating existing school buildings and facilities.

ORIGINAL ESTIMATED
COST(1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED IN PRIOR YEARS (3)

PROJECT STATUS

$ 14,669,048 $ 16,346,270 $

393,104 $ 15,953,166 Completed

18,700,000

18,700,000

Ongoing

2,750,446

3,064,926

73,707

2,991,219 Completed

3,000,000

3,000,000

Ongoing

$ 39,119,494 $ 41,111,196 $ -26-

466 811 $ 18,944,385

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2007

SCHEDULE "4"

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.
(3) The voters of Gwinnett and Hall Counties approved the imposition of a 1% sales tax to fund the above projects. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

See notes to the basic financial statements.

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CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2007

SCHEDULE "5"

DESCRIPTION

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Primary Grades (1-3) Program

Primary Grades-Early Intervention (1-3) Program

Upper Elementary Grades (4-5) Program

Upper Elementary Grades-Early Intervention (4-5)

Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with Disabilities

Category I

Category II

Category Ill

Category IV

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

1,149,697 $ 78,177
2,286,808 166,698
1,015,088

1,401,751 $ 152,230
2,399,570 225,195
1,508,428

47,504 1,832,883 1,761,077
448,007 1,727,429
353,697 91,207
147,678 491 283

64,448 2,648,012 2,437,123
430,608
191,817 6,172
1,093,732 430,145 352,125 27,612 276,403 375,090

54,531 $
154,289
127,718
104,633 307,995
33,481
340,821 353
1,381
667 7,946
290

1,456,282 152,230
2,553,859 225,195
1,636,146
64,448 2,752,645 2,745,118
464,089
532,638 6,525
1,095,113 430,145 352,792 35,558 276,403 375 380

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$

11,597,233 $ 14,020,461 $

1,134,105 $

15,154,566

Media Center Program Staff and Professional Development

323,060 61 768

474,895 6 944

32,188 34,829

507,083 41 773

TOTAL QBE FORMULA FUNDS

$

11,982,061 $ 14,502,300 $

1,201,122 $ ===1=<5,=70=3=,4=2=2

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment.

See notes to the basic financial statements.

- 29-

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 12, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the City of Buford Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of City of Buford Board of Education as of and for the year ended June 30, 2007, which collectively comprise City of Buford Board of Education's basic financial statements and have issued our report thereon dated June 12, 2008. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered City of Buford Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the City of Buford Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City of Buford Board of Education's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies.
2007YB-30

A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the City ofBuford Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement ofthe City of Buford Board of Education's financial statements that is more than inconsequential will not be prevented or detected by the City of Buford Board of Education's internal control. We consider items FS-7641-07-01, FS-7641-07-02, FS-7641-07-03 and FS-7641-07-04 in the accompanying Schedule of Findings and Questioned Costs to be significant deficiencies in internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the City of Buford Board of Education's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we believe that none of the significant deficiencies described above are material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Buford Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of City of Buford Board of Education in a separate letter dated June 12, 2008.
City of Buford Board of Education's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit City ofBuford Board of Education's response and, accordingly, we express no opinion on it.
2007YB-30

This report is intended solely for the information and use ofthe management, members ofthe City of Buford Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:gp 2007YB-30

~w-~ Russell W. Hinton, CPA, CGFM State Auditor

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 12, 2008

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members ofthe City of Buford Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance ofCity ofBuford Board ofEducation with the types ofcompliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2007. City of Buford Board of Education's major Federal programs are identified in the Summary ofAuditor's Results Section ofthe accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of City of Buford Board of Education's management. Our responsibility is to express an opinion on City of Buford Board of Education's compliance based on our audit.
We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the City ofBuford Board ofEducation's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on City of Buford Board of Education's compliance with those requirements.
2007SA-10

In our opinion, the City of Buford Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2007.
Internal Control Over Compliance
The management of City of Buford Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered City ofBuford Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose ofexpressing an opinion on the effectiveness ofinternal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City of Buford Board of Education's internal control over compliance.
A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control.
Our consideration ofthe internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
This report is intended solely for the information and use ofthe management, members ofthe City of Buford Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~~.~_k
Russell W. Hinton, CPA, CGFM State Auditor
RWH:gp 2007SA-10

SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7641-05-01 FS-7641-06-01 FS-7641-06-02

Further Action Not Warranted Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Separation of Duties Finding Control Number: FS-7641-06-01

The School District has implemented steps to ensure that internal controls and adequate separation of duties exist. Management is in the process of revising and monitoring controls. Meetings with school administration and staffhave occurred to review controls for adequate separation ofduties. The school activity fund policy and procedure manual is in the process of a revision to address issues related to separation of duties.

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-7641-06-02

The School District has implemented steps to ensure that capital assets are adequately maintained. These steps include a more in depth review of possible capital asset items from the fiscal year records. Management has communicated with staffat all locations to obtain documentation when an asset or possible asset is donated. In addition, the School District's capital asset policy and procedures manual will be revised.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007

I SUMMARY OF AUDITOR'S RESULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the City of Buford Board of Education's financial statements was unqualified.

2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the City of Buford Board of Education disclosed financial statement significant deficiencies related to the following control categories.

Cash and Cash Equivalents Revenues/Receivables/Receipts Capital Assets

Expenditures/Liabilities/Disbursements General Ledger

None of the significant deficiencies described above are considered to be material weaknesses.

3. Noncompliance Material to the Financial Statements The audit ofthe City ofBuford Board ofEducation disclosed no instances ofnoncompliance that were deemed to be material to the financial statements.

4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the City of Buford Board of Education did not disclose any significant deficiencies in internal control over major programs.

5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the City ofBuford Board ofEducation's report on compliance with requirements applicable to major programs was unqualified.

6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The City ofBuford Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) of 0MB Circular A-133.

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.

9. Low Risk Auditee The City ofBuford Board ofEducation qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133.

- 1-

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls and Separation of Duties over School Activity Accounts Significant Deficiency Finding Control Number: FS-7641-07-01

Condition:

This is a repeat finding (FS-7641-05-01 and FS-7641-06-01) from the years ended June 30, 2005, and June 30, 2006, respectively. The accounting procedures of the School District were insufficient to provide for adequate internal controls and separation of duties over the school activity accounts.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures and provide assurance of proper separation of duties, which would limit any one individual's assess to both physical assets and the related accounting records.

Questioned Cost: NIA

Information:

Cash and Cash Equivalents The bank reconciliation function was not separated from record keeping and voucher payment functions.

Revenues/Receivables/Receipts The deposit preparation function was not separated from record keeping and cash custody.

Expenditures/Liabilities/Disbursements The check writing functions were not separated from record keeping or processing of signed checks. Based upon a review of ten expenditure voucher packages, nine expenditures did not utilize a purchase order and prior approval could not be verified.

Cause:

These deficiencies were a result of management's failure to ensure that internal controls were established, implemented and functioning at the school level. The School District also has not assigned responsibilities to achieve appropriate separation of duties nor utilized management oversight of the incompatible activities to properly safeguard assets.

-2-

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls and Separation of Duties over School Activity Accounts Significant Deficiency Finding Control Number: FS-7641-07-01

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation:

Management should revise and monitor controls to provide reasonable assurance that transactions are processed according to established procedures and ensure that the key accounting functions ofcustody, record keeping and authorization are separated and/or utilize management oversight of these incompatible activities.

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Significant Deficiency Finding Control Number: FS-7641-07-02

Condition:

This is a repeat finding (FS-7641-06-02) from the year ended June 30, 2006. Adequate policies and procedures are not in place to ensure that capital assets are properly maintained.

Criteria:

Chapter 37 Fixed Assets of the Financial Management for Georgia Local Units of Administration indicates that School Districts must establish fixed asset policies, define system requirements, implement a fixed asset system and maintain fixed asset inventory records.

Questioned Cost: NIA

Information:

A review ofthe School District's capital assets records noted deficiencies as discussed below:
The School District's capital assets policy does not properly address the following items: o Asset categories o Method of valuation of assets at time of acquisition o Depreciation methods o Estimated useful lives of assets o Physical inventory count requirements

-3-

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Significant Deficiency Finding Control Number: FS-7641-07-02

The capitalized costs of two security systems only included individual pieces of equipment that exceeded $5,000 and did not include all costs associated with the installation of the systems.
Two copiers that were replaced with similar copiers were inappropriately added at the original cost of the disposed copiers instead of fair market value at the time of trade-in.

Cause:

The School District failed to develop adequate accounting policies and procedures necessary to accurately process, record and report capital assets and related activity.

Effect:

The failure ofthe School District to develop a complete capital assets policy can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles.

Recommendation:

The School District should develop a formal capital assets policy which establishes asset categories (including estimated useful lives), asset valuation methods, depreciation methods, and physical inventory count requirements.

GENERAL LEDGER Inadequate Documentation and Approval of Journal Entries Significant Deficiency Finding Control Number: FS-7641-07-03

Condition:

School District personnel did not ensure that journal entries were properly approved and documented based on the policies and procedures established.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that journal entries are properly approved, documented and processed.

Questioned Cost: NIA

-4-

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Inadequate Documentation and Approval of Journal Entries Significant Deficiency Finding Control Number: FS-7641-07-03

Information:

The following deficiencies were noted related to the journal entry process: Evidence that journal entries were reviewed and approved by someone independent of the general ledger journal entry process was not maintained. Journal entry documentation and descriptions were not adequate to support all journal entries.

Cause:

These deficiencies were a result of management's failure to adequately monitor and implement procedures to ensure that journal entries are properly documented and approved before posting to the accounting records.

Effect:

The lack of adequate control over the journal entry process may result in errors in financial reporting and increases the risk ofmaterial misstatements.

Recommendation:

The School District should strengthen internal controls over the journal entry process to ensure that journal entries are properly approved, documented and posted in the accounting records.

REVENUESIRECEIVABLES/RECEIPTS Inadequate Controls over Tuition Revenues Significant Deficiency Finding Control Number: FS-7641-07-04

Condition:

The accounting procedures ofthe School District were insufficient to ensure proper accounting and reporting for tuition revenues.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions processed are complete and accurate.

Questioned Cost: NIA

-5-

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

REVENUES/RECEIVABLES/RECEIPTS Inadequate Controls over Tuition Revenues Significant Deficiency Finding Control Number: FS-7641-07-04

Information:

A review of tuition revenues revealed that the School District did not have proper internal controls in place to detect errors and ensure the completeness of tuition revenues. Tuition revenues for students attending Buford City Schools and the Buford City Employee Child Care Center are collected at decentralized locations (school level). Funds collected at the school level are remitted to the Central Office to be recorded on the General Ledger. There are no formal control procedures in place to ensure that all funds collected at the school level are properly accounted for and recorded on the Central Office's general ledger.

Cause:

These deficiencies were a result of management's failure to ensure that tuition revenues were properly accounted for.

Effect:

Errors and/or irregularities may not be detected in a timely matter and the potential exists for the misstatement ofrevenues on the financial statements, including the risk of misstatement due to fraud.

Recommendation:

The School District should establish adequate accounting procedures to ensure that tuition revenues are completely and accurately reported within the Board's financial statements.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

-6-

SECTIONV MANAGEMENT'S RESPONSES

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDED JUNE 30, 2007
Finding Control Number: FS-7641-07-01
We concur with this finding. The School District has implemented steps to ensure that internal controls and adequate separation of duties exist. These steps include meetings with individual school administration staffs to review the procedures necessary to ensure separation ofduties exist. In addition, the school activity fund policy and procedure manual will be issued to all administrative personnel. The School District anticipates correcting this inadequate separation ofduties by August 2008.
Finding Control Number: FS-7641-07-02
We concur with this finding. The School District has implemented steps to ensure that capital assets are adequately maintained. These steps include a more in depth review of possible capital assets items from the fiscal year expenditure records. In addition, the School District capital asset policy and procedure manual will be revised to establish asset categories (including estimated useful lives), asset valuation methods, depreciation methods, and physical inventory count requirements. The School District anticipates correcting this failure to adequately maintain capital assets by July 2008.
Finding Control Number: FS-7641-07-03
We concur with this finding. The School District has implemented steps to ensure adequate documentation and approval ofjournal entries occur. These steps include utilizing journal entry forms and attaching backup documentation. Each journal entry form has a place for preparer, entry and approval signatures. The School District has implemented actions to correct inadequate documentation and approval ofjournal entries as of June 2008.
Finding Control Number: FS-7641-07-04
We concur with this finding. The School District will implement steps to establish adequate accounting procedures to ensure that tuition revenues is completely and accurately reported within the financial statements. These steps include creating a master tuition student list for the School District. Each student will have a total amount due. When the school submits tuition each month the student account will be updated. The school will be sent an updated balance for each student. The School District anticipates correcting inadequate control over tuition revenues by August 2008.
Contact Person: Angela D. Adams, Director of Finance Telephone: (770) 945-5035 Fax: (770) 945-4629 Email: angela.adams@bufordcityschools.org