ClTY OF BUFORD BOARD OF EDUCATION
A COMPONENT UNIT OF THE ClTY OF BUFORD, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED
JUNE 30,2010
(Including Independent Auditor's Reports)

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

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

E

STATEMENT OF REVENUES, EXPENDITURESAND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGETAND ACTUAL
GENERAL FUND

Page

CITY OF BUFORD BOARD OF EDUCATION - GWINNET COUNTY - TABLE OF CONTENTS -
SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAlTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WlTH GOVERNMENT AUDlUNG STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133
SECTION Ill AUDITEE'S RESPONSETO 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 - G W I N N E l l COUNTY - TABLE OF CONTENTS -
SECTION V MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
August 12,2011

Honorable Nathan Deal, 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
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 of the 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, 2010, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Buford 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 of America and the standards applicable to financial audits contained in Government Auditng Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and the 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.
In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Buford Board of Education, as of June 30, 2010, 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 GovernmentAuditing Standads, we have also issued our report dated August 12, 2011, on our consideration of the City of Buford Board of Education'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 of internal control over financial reporting and compliance and the results of that 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 Auditng Standards and should be considered in assessingthe results of our audit.

Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through ix and page 2 1 respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures, to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during the audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

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 financial statements as a whole. The accompanying supplementary information consists 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 of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements 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,

. .

RusseI ll W. Hinton, CPA, CGFM State Auditor

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010

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, 2010. 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 financial performance.

Financial Highlights

Key financial highlights for fiscal year 2010 are as follows:

J

The School District's financial status increased during fiscal year 2010. Net assets increased

approximately $3.35 million related to governmental activities.

J

General revenues accounted for $21.1 million in revenue, or 5 6 percent of all revenues.

Program specific revenues in the form of charges for services and sales, grants and

contributions accounted for $16.7 million or 44 percent of total revenues. Total revenues

were $37.8 million.

J

The School District had $34.5 million in expenses related to governmental activities; only

$16.7 million of these expenses were offset by program specific charges for services, grants

or contributions. General revenues of $21.1 million were adequate to provide for these

programs.

J

Among major funds, the general fund had $34.4 million in revenues and other financing

sources and $33.6 million in expenditures. The general fund's balance increased $755,104

from fiscal year 2009.

Usingthe 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 o f NetAssetsand Statement ofAdivities 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 of detail. 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.

CITYOF BUFORD BOARD OF EDUCATION- GWINNEll COUNTY
MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010

Reportingthe School District as a Whole

Statemento fNetAssets and Statemento fActivitls

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 2010?" The Statement o f Net Asseh and the Statement o f Activities answer this question. These statements include all assets and alllbbilitles usingthe accrual basis o f accountingsimilar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when 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 of activity:

>

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.

Reportingthe School District's Most Significant Funds

FundFinancialStatemen&
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 of those funds and the balances left at year-end available for spending in future periods. These funds are reported using an accounting method called modifiedaccrualaccounting,which measures cash and all other financialassetsthat 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 relationship (or differences) between governmental adivities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds is reconciled in the financial statements.

Fiduciary Funds: The School District is the trustee, or fiduciay, 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-widefinancial statements because it cannot use these assets to finance its operations.

CITY OF BUFORD BOARD OF EDUCATION- GWINNEll COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YE4R ENDED JUNE 30,2010

The School District as a Whole
The perspective of the Statement of Net Assets is of the School District as a whole. Table 1provides a summary of the School District's net assets for fiscal year 2010 compared to fiscal year 2009.
Table 1 Net Assets

Governmental Activities

Fiscal

Fiscal

Year 2009

Year 2010

Assets Current and Other Assets Capital Assets, Net

Total Assets

Liabilities Current and Other Liabilities Long-Term Liabilities

Total Liabilities

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

Total Net Assets

- CITY OF BUFORD BOARDOF EDUCATION GWINNmCOUNTY MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010
Chart 1provides a visual summary of the School Dlstrlds netassetsfor flscetl year 20L0.
Chart 1 Statement of Net Assets
Current and Other &sets
r Qpltal Assel, Met
8 Current and Other Uablllfles H Long-Term Uablltles

Ghart 2 show revenues for fhcal year 2010.
-.
Chart 2 Revenues and Special Item

3m01.1%%\

a Chargesfor Sewices and Sales
' O p r m t tngGrantsand
.bntributions
m Property T8x
SPtOST
a Investment Earnlngs
Mhellaneous
m Transfer fmrn Government

- CrrV OF BUFORDBOARD OF EDUCAllON GWINNEll COUNTY MANAGEMENPS DISCUSSIONAND ANALYSIS FOR ME FISCALYEAR ENDED JUNE 30,2010
Chart 3 shows expensesfor the School Distrlctfor W s l year 2010.
Chart 3 Expenses

- o . ~ ~ ,
I
1,4% 0.9%

Ilnstruction
IPupll Services tmprovement of Instructional Services
IEducational Mdia
Sewlces
IGeneral Admlnlstration
8 School Administration
r Bustnes Admlnlstratlon
0 Maintenance and
Operation of Plant r Student Transportation
Servlcu Other Support Services
IEnterprb Operattons
Imrnmunlty Senrlces

CITY OF BUFORD BOARD OF EDUCATION - GWINNElT COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010

Table 2 shows the changes in net assets for fiscal year 2010 compared to the changes in net assets for fiscal year 2009.
Table 2 Change in Net Assets

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

Governmental Activities

Fiscal

Fiscal

Year 2009

Year 2010

Total Program Revenues

General Revenues: Taxes Property Taxes For Maintenanceand Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Investment Earnings Insurance Proceeds Miscellaneous
Special ltem Transfer from City Government

Total General Revenues and Special ltem

Total Revenues

Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenanceand Operation of Plant Student Transportation Services Other Support Services Operations of Non-InstructionalServices Enterprise Operations Community Services Food Services

Total Expenses

Increase in Net Assets

CITY OF BUFORD BOARD OF EDUCATION - GWINNElT COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010

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 2010 with fiscal year 2009. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements.

Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2009

Year 2010

Net Cost of Services

Fiscal

Fiscal

Year 2009

Year 2010

Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Med~aServ~ces General Adm~n~strat~on School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Commun~tyServices Food Services

Total Expenses

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 $32.5 million and an allotment from the city in the amount of $4.8 million for a total of $37.3 million in receipts. General Fund expenditures totaled $33.6 million and Capital Projects expenditures totaled $3.3 million. There was a decrease of $6.5 million in the Capital Projects fund expenditures compared to the prior year. This is due to completion of the addition to Buford High School and the new Central Office. The general fund's ending balance increased by $755,104 million from fiscal year 2009 to fiscal year 2010.
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 $34.4 million. The final actual expenditures were $33.6 million. The School District was able to maintain its financial reserves despite the precipitous decline of the economy during the fiscal year 2010 budget.

- CITY OF BUFORD BOARD OF EDUCATION GWINNEll COUNTY
MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDEDJUNE 30,2010

Capital Assets and Debt Administration

Capital Assets
At the end of fiscal year 2010, the School District had $50.03 million invested in capital assets, all in governmental activities. Table 4 indicates balances at June 30, 2010.

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2009

Year 2010

Land Construction in Progress Land Improvements Buildings and Improvements Equipment
Total

$

145,000 $

145,000

11,913,908

104,960

64,689

132,872

37,031,682

48,721.571

1,129,414

929,829

Debt -Table5 shows the School District's debt for compensated absences.

Table 5 Debt at June 30

Governmental Activities

Fiscal

Fiscal

Year 2009

Year 2010

Compensated Absences Intergovernmental Agreement
Total

$

61,193 $

11,635,680

42,777 8,899,381

Current Issues
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.

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010
With 2010 state mandates but flexibility in state expenditure controls, the school system was able t o provide the same level of service to our students. The school system saw an increase in operating grants and contributions of $974,584 related to Federal stimulus funds.
With cuts to the expenditures in 2010 and the influx of Federal stimulus funds, the school system was able to maintain 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.
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, 2625 Sawnee Avenue, Buford, Georgia 30518. You may also email your questions to angela.adams@bufordcityschools.org.

CITY OF BUFORD BOARD OF EDUCATION - GWINNET COUNTY

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY STATEMENT OF NET ASSETS JUNE 30.2010
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Local Government Other Inventories Prepaid Items Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Funds Held for Others LongTerm Liabilit~es
Due Within One Year Due in More Than One Year
Total Liabilit~es
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Bus Replacement Continuation of Federal Programs Capital Projects Debt Service Unrestricted
Total Net Assets
Total Liabilities and Net Assets

GOVERNMENTAL ACTIVITIES

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

CITY OF BUFORD BOARD OF EDUCATION- GWlNNEn COUNTY STATEMENT OF ACTIVITIES
FOR THE YEAR ENDEDJUNE 30.2010

GOVERNMENTAL ACTIVITIES
Instruction Support Sewlces
Pupil Sewices Improvement of lnstructlonal S e ~ l c e s Educat~onaMl ed~aS e ~ l c e s General Adm~n~stratlon School Administration Business Admlnlstratlon Maintenance and Operation of Plant Student Transportation S ~ N I C ~ S Other Suppon Services Operations of Non-Instructional Services Enterpr~seOperations Comrnun~tySewlces Food Sew~ces
Total Governmental Actlv~t~es
General Revenues Taxes Property Taxes For Ma~ntenanceand Operat~ons Sales Taxes Speclal Purpose Local Optlon Sales Tax For Capital Projects Investment Earnings M~scellaneous
Specla1 ltem Transfer from Clty Government
Total General Revenuesand Spec~alltem
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

The notes to the bas~cfinancial statements are an Integral part of this statement.
- 2 -

CITY OF BUFORD BOARD OF EDUCATION- GWINNEn COUNTY
BALANCE SHEET GOVERNMENTAL FUNDS
JUNE 30,2010

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

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

Total Assets

LIABILITIES AND FUND BALANCES
LIABILITIES
Cash Overdraft Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Funds Held for Others Deferred Revenue
Total L~abilities
FUND BALANCES
Reserved for: Bus Replacement Continuation of Federal Programs Debt Service Capital Projects
Unreserved Designated for Student Activities Undesignated Reported In: General Fund
Total Fund Balances

Total Liabilities and Fund Balances

TOTAL

The notes to the basic financial statements are an integral p a n of this statement. -3-

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30.2010
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: Land Construction in Progress Land Improvements Bulldlngs Equipment Accumulated Deprec~atlon Total Caoital Assets Taxes that are not available t o pay for current period expenditures are deferred in the funds. Long-Term Liabilities are not due and payable in the current period and therefore are not reported as Ilabllltles in the funds. Long-Term Liabilities at year-end conslst of: Intergovernmental Agreement Compensated Absences Payable Total Long-Term Llabllltles
Net Assets of Governmental Activities (Exhibit "A")
The notes to the basic financial statements are an integral part of this statement.
- 4 -

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY
STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30,2010

REVENUES
Propew Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Sewices Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Serv~ces Enterpr~seOperations Community Services Food Services Operation
Capital Outlay Debt Servlces
Principal
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCINGSOURCES
Transfer from City Government
Net Change in Fund Balances
Fund Balances Beginning

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

Fund Balances - Ending

EXHIBIT "E" TOTAL

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

CITY OF BUFORD BOARD OF EDUCATION - GWINNEll COUNTY RECONCILIATIONOFTHE GOVERNMENTALFUNDS STATEMENT OF
REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30.2010
Total Net Change in Fund Balances - GovernmentalFunds (Exhibit" E )
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
Taxes reported in the Statement of Activitiesthat do not provide current financ~arlesourcesare not reported as revenues in thefunds.
The net effect of various miscellaneous transacbons involvingcapital assets (i.e., sales, trade-ins, donations, and d~sposals)is to decrease net assets.
Repaymentof Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-TermLiabil~t~einsthe Statement of Net Assets. In the current year, these amounts consist of:
Intergovernmental Agreement Retirements
Some items reported in the Statement of Activities do not require the use of current financial resourcesand therefore are not reported as expenditures in Governmental Funds. These activities conslst of:
Decrease in Compensated Absences
Change in Net Assets of GovernmentalActivities (Exhib~"tB")

EXHIBIT "F"

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

CIW OF BUFORD BOARD OF EDUCATION - GWINNElT COUNTY
STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30,2010
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS

The notes t o the basic financial statements are an integral part of this statement.

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010

EXHIBIT "H"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The City of Buford Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters 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 of the City of Buford Board of Education.
District- wide Statements:
The Statement of Net Assets and the Statement of Activities display information about the financial activities of the 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 of the 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 of goods 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 of internal 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.
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 of the School District, except those resources required to be accounted for in another fund.

CITY OF BUFORD BOARD OF EDUCATION - GWlNNEll COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010

EXHIBIT "H"

a 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 of accounting 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 of when 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 are 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 of accounting. 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 principal and interest on general long-term debt and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities are reported as other financing sources.
The School District funds certain programs by a combination of specific 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.
The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are contracted for the school year (July 1- June 30) and paid over a twelve month contract period, generally September 1through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.

CITY OF BUFORD BOARD OF EDUCATION - GWINNElT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010

EXHIBIT "H"

NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2010, the School District adopted the Governmental Accounting and Standards Board (GASB) Statement No. 51,Accounting and Reporting for Intangible Assets. The provisions of this Statement generally require retroactive reporting for intangible assets acquired after June 30, 1980, with the exception of those intangible assets that have indefinite useful lives and those that are considered internally generated.
In addition, the School District adopted GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. The provisions of this Statement impacts disclosure regarding derivative instruments entered into by the state and local governments. Derivative disclosures, if any, will be identified in Note 3.
CASH AND CASH EQUIVALENTS
Composition of Deposits Cash and cash equivalents consist of cash 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 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building 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 of Buford Board of Commissioners fixed the property tax levy for the 2009 tax digest year (calendar year) on August 3, 2009 (levy date). Taxes were due on November 20, 2009 (lien date). Taxes collected within the current fiscal year or within 6 0 days after year-end on the 2009 tax digest are reported as revenue in the governmental funds for fiscal year 2010. The City of Buford City Clerk bills and collects the property taxes for the School District and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30,2010, for maintenance and operations amounted to $11,694,276.60.
The tax millage rate levied for the 2009 tax year (calendar year) for the City of Buford Board of Educationwas as follows (a mill equals $ 1 per thousand dollars of assessed value):

School Operations

13.20 mills

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010

EXHIBIT "H"

SALESTAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $2,859,978.67 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.

INVENTORIES

Food Inventories On the basic financial statements, inventories of donated food commodities used in the preparation of meals 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, 2010, 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. Disposalsare deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. 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

Estimated

Policy

Useful Life

Land Land Improvements Buildings and Improvements Equipment

$ 50,000.00 $ 5,000.00 $ 5,000.00 $ 5,000.00

N/A 1 5 years 6 0 years 5 to 15 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.

CITY OF BUFORD BOARD OF EDUCATION - GWINNEll COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010

EXHIBIT "H"

COMPENSATED ABSENCES

Members of the Teachers Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual school districts. Otherwise, sick leave does not vest with the employee, and no liability is reported in the School District's financial statements.

Prior to March 15, 2004, vacation leave not utilized during a fiscal year could be carried over to the next fiscal year. Vacation leave of 10 days was awarded on a fiscal year basis to all full time personnel employed on a twelve month basis until they have reached 15 fiscal years of service. After 15 fiscal years of service, employees earned 15 days per fiscal year. No other employees are eligible to earn vacation leave. After March 15, 2004, employees are no longer allowed to carry over unused vacation leave from one fiscal year to the next, except for the vacation days carried forward prior to these changes in the Vacation Leave Policy.

The amount of compensated absences reported at June 30, 2010, is for the unused vacation leave days for twelve month employees earned and carried forward prior to the change in the School District's Leave Policy as of June 30, 2010. The compensated absence balance was calculated by the School District using the individual employee's current daily pay rate.

Beginning of Year Liability

Increases

Decreases

End of Year Liability

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 of outstanding 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, debt service, 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, grants and contributions not restricted to specific programs, 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.

CITY OF BUFORD BOARD OF EDUCATION - GWINNElT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010

EXHIBIT "H"

USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
NOTE 3: DEPOSITS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the 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. lnsurance on accounts provided by the Federal Deposit lnsurance Corporation,
3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
5. Bonds of any public authority created by the laws 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 of the 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 or securities guaranteed 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
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. At June 30, 2010, the bank balances were $5,962,937.99. The bank balances were entirely covered by Federal depository insurance.

CITY OF BUFORD BOARD OF EDUCATION - GWINNElT COUNTY
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010

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 1,2009

Increases

Decreases

Balances June 30,2010

Governmental Activities Capital Assets. Not Being Depreciated:
Land Construction in Progress

Total Capital Assets Not Being Depreciated

$ 12,058,907.92 $ 702,627.96 $ 12,511,575.73 $ 249,960.15

Capital Assets Being Depreciated Buildings and lmprovements Equipment Land lmprovements

Less Accumulated Depreciationfor: Buildings and lmprovements Equipment Land lmprovements

Total Capital Assets, Being Depreciated, Net

$ 38,225.784.89 $ 11,583,499.82 $

25,012.17 $ 49,784,272.54

GovernmentalActivity Capital Assets - Net

$ 50,284,692.81 $ 12,286.127.78 $ 12,536,587.90 $ 50,034,232.69

Current year depreciation expense by function is as follows:

Instruction

Support Services

Pupil Services

$

General Administration

School Administration

Maintenance and Operation of Plant

Student Transportation Services

Food Services

$
3,481.20 29,707.39
8,532.55 20,589.64 105,180.80

830,334.54
167,491.58 55.682.48

CITY OF BUFORD BOARD OF EDUCATION - GWINNET COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010

EXHIBIT "H"

NOTE 6: INTERFUNDTRANSFERS Interfund transfers for the year ended June 30, 2010, consisted of the following:
Transfers From City of Buford
$ 4,758,180.07

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 of loss associated with torts, assets, errors or omissions, job related illness or injuries to employees, and acts of God. 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 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 are 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. The School District has not experienced any losses related to this risk in the past two years.
The School District has purchased surety bonds to provide additional insurance coverage as follows:

Position Covered

Amount

Superintendent Assistant Superintendent Each Principal

NOTE 8: LONG-TERM DEBT
COMPENSATED ABSENCES
Compensated absences represent obligations of the 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.

CITY OF BUFORD BOARD OF EDUCATION - GWINNElT COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010

EXHIBIT "H"

INTERGOVERNMENTAL CONTRACT

In March 2007, the Gwinnett County School District issued general obligation bonds in the amount of $425,000,000.00 to provide advance funding for Capital Outlay projects associated with the voters' approval of a Special Purpose Local Option Sales Tax ("SPLOST"). Per an Intergovernmental Agreement signed on August 4, 2006, between the Gwinnett County School District ("Gwinnett") and the City of Buford Board of Education ("Buford"). Gwinnett agreed to provide advance funding of $18,700,000.00 of proceeds from the general obligation bonds to Buford. In exchange, Buford agreed to relinquish upon receipt from the State of Georgia, its share of proceeds from the SPLOST. The agreement also allows for a reduction in this advance funding for any deficiency of collected funds from advance funds related to the prior SPLOST project.

In fiscal year 2008, Gwinnett provided the advance funding of $18,700,000.00. SPLOST proceeds of $1,398,555.41 were received and remitted by Buford to Gwinnett during the fiscal year. SPLOST proceeds of $1,337,742.66 were received but not yet remitted by Buford to Gwinnett. This balance is considered matured debt expense/expenditure and is reported as an accounts payable on the School District's Statement of Net Assets and Governmental Funds Balance Sheet. The remaining advance funding proceeds of $8,899,381.58 is reported as long-term debt on the School District's Statement of Net Assets.

The changes in Long-Term Debt during the fiscal year ended June 30,2010, were as follows:

Governmental Funds

Compensated

Intergovernmental

Absences

Agreement

BalanceJuly 1.2009
Additions Annual Leave Earned
Deductions Debt Retired
Balance June 30,2010

$ 61,193.44 $

11,635,679.65

$ 42,776.50 $

8,899,381.58

Portion of Long-Term Debt

Due within One Year

$ 42,776.50

(1)

(1)Per the lntergovernmentalAgreement with the Gwinnett County School District,the portion of long-term debt due within one year is equal to Special Purpose Local Option Sales Tax collections to be made by the School District in the subsequent fiscal year. It is not possible to determine the specific amount of these funds to be collected.
NOTE 9: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $60,280.24 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.

CITY OF BUFORD BOARD OF EDUCATION - GWINNEll COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010

EXHIBIT "H"

Georgia Department of Education Paid to the Georgia Department of Community Health For Health lnsurance of Non-Certified Personnel In the amount of $49,178.90
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $2,557.12
Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $8,544.22
NOTE 10: 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.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
NOTE 11: SUBSEQUENT EVENTS
In the subsequent fiscal year, the School District entered into a lease agreement with Apple, Inc. for the purchase of personal computers, servers, and networking equipment at a cost not to exceed $543,945.56. Under the terms of the agreement, the School District will make annual payments for 3 6 months at a total cost of $15,621.97 in interest. This lease agreement qualifies as a capital lease for accounting purposes.
NOTE 12: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL EMPLOYEES POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fun provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health lnsurance Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, t o the Board of Community Health (Board).
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 of the cost of health insurance coverage.

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY NOTES TO THE BASIC FINANCIALSTATEMENTS JUNE 30.2010

EXHIBIT "H"

Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30,2010:
For certificated teachers, librarians and regional educational service agencies:

July 2009 August 2009 - October 2009 November 2009 -June 2010

18.534% of covered payroll for August Coverage 14.492% of covered payroll for September - November Coverage
18.534% of covered payroll for December - July Coverage

For non-certificated school personnel:

July 2009 -June 2010

$162.72 per member per month plus Department of Education contribution of $22,838,311.00

No additional contribution was required by the Board for fiscal year 2010 nor contributed to the State OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other post-employment benefits and are subject to appropriation.

The School District's combined active and retiree contributions to the health insurance plans, which

equaled the required contribution, for the current fiscal year and the preceding two fiscal years were

as follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

NOTE 13: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1 9 4 3 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. 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.
On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The

CITY OF BUFORD BOARD OF EDUCATION - GWlNNEll COUNTY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010

EXHIBIT "H"

purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1,1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.

TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 3 0 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.

Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 6 0 or by 7% for each year or fraction thereof by which the member has less than 3 0 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.

Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 1 0 years of service. If a member terminates with less than 1 0 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2010, were 5.25% of annual salary. The member contribution rate will increase to 5.53% effective July 1,2010. Employer contributions required for fiscal year 2010 were 9.74% of annual salary as required by the June 30, 2007, actuarial valuation. The employer contribution rate will increase to 10.28% effective July 1,2010.

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

(This page left intentionally blank)

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY
GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL YEAR ENDEDJUNE 30,2010

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Chargesfor S e ~ l c e s Investment Earnlngs M~scellaneous
Total Revenues
EXPENDITURES
Current Instruction Support S e ~ l c e s Pup11S e ~ l c e s Improvement of lnstructlonal S e ~ l c e s Educational Medla S e ~ i c e s General Admlnlstrat~on School Admlnlstratlon Buslness Admlnlstratlon Maintenance and Operatlon of Plant Student Transportation S e ~ l c e s Other Support Servlces Enterprise Operations Community Servlces Food S e ~ l c e sOperatlon
Capltal Outlay
Total Expendltures
Excess of Revenues over (under) Expendltures
OTHER FINANCING SOURCES (USES1
Transfers From C~fyGovernment Operating Transfers to Other Funds
Total Other Financing Sources (Uses)
Net Change In Fund Balances
Fund Balances - Beginning

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

Fund Balances - Ending
Notes to the Schedule of Revenues. Exoendltures and ChanPes In Fund Balances Budeet and Actual (1) OriBnal and Final Budget amounts do not Include budgeted revenues or expenditures of the various principal accounts. The accompanylng schedule of revenues, expend~turesand changes ~nfund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used ~nthe presentation of the fund financial statements.
See notes to the baslc financial statements.

ACTUAL AMOUNTS

CITY OF BUFORD BOARD OF EDUCATION - GWlNNEn COUNTY
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30.2010

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-ThroughFrom Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-ThroughFrom Georgia Department of Education ARRA- Child Nutrition Discretionary Grant Limited Availability
Total U. S. Department of Agriculture
Education, U. S. Department of Education Technology States Grant Cluster Pass-ThroughFrom Georgia Department of Education Education Technology State Grants
Special Education Cluster Pass-ThroughFrom Georgia Department of Education Special Education ARRA - Grants to States Grants t o States
Total Special Education Cluster
State Fiscal Stabilization Fund Cluster Pass-ThroughFrom Georgia Department of Education ARRA- Education State Grants
Title I. Part A Cluster Pass-ThroughFrom Georgia Department of Education
ARRA - Title I - Grants to Local Educational Agencies
Title I - Grants to Local Educational Agencies
Total Title I. Part A Cluster
Other Programs Pass-ThroughFrom Georgia Department of Education
Career and Technical Education - Basic Grants to States
English Language Acquisition Grant ImprovingTeacher Quality State Grants
Safe and DrugFree School and Communities - State Grants
Total Other Programs
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

Total Federal Financial Assistance N/A = Not Available

- CITY OF BUFORD BOARD OF EDUCATION GWINNETT COUNTY
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30,2010

SCHEDULE "2"

Notes to the Schedule of Exaendituresof Federal Awards
(1) Includes the Federally assigned value of donated cornmodltles for the Food Donation Program in the amount of $120,382.71.
(2) Expendituresfor the fund earned on the School Breakfast Program ($269,185.92w)ere not maintained separately and are included in the 2010 National School Lunch Program.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide FederalAssistance to any Subrecipient.
The accompanyingschedule of expenditures of Federal awards includes the Federalgrant 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.

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY
SCHEDULE OF STATE REVENUE YEAR ENDEDJUNE 30,2010
GRANTS Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program
- Kindergarten Program Early lntewent~onProgram
Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper ElementaryGrades (4-5) Program Upper ElementaryGrades Early lnte~ention(4-5) Program Middle Grades ( 6 8 ) Program High School General Education (9-12) Program Vocat~onalLaboratory(9-12) Program Students with D~sab~lit~es Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 2 0 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration Schwl Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Sparsity Nursing Services Vocational Supervisors Food Services Vocational Education Amended Formula Adjustment Other State Programs CTAE - M~ddleSchool Support Grant Dual Enrollment Health Insurance Teachers' Ret~rement
Office of Treasuly and Fiscal Services Public School Employees Retirement

SCHEDULE" 3
GOVERNMENTAL FUND TYPE GENERAL FUND

See notes to the basic financial statements.

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30.2010

SCHEDULE " 4

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

Gwlnnett County SPLOST Projects acquiring new sltes

for the construction of new schools, support facllltles

and athletlc facllltles and the expansion of eXlStlng

school and support facllltles, develop~ngsltes for

constructlng and equlpplng new schools, support

facll~t~easnd athletlc facll~t~ems,aklng add~t~ontos,

acqulrlng or renovatlng, equlpplng and modernlz~ng

exlstlngschools, support facll~tlesand athletlc

fac~l~t~meask, lng exlstlngor new lease/purchase

payments or payments wlth respect to the acqulsltlon

of new and exlstlng schools and support facllltles

alongwlth buses and other transportat~onvehicles.

and modernlzlngtechnology and maklngsystem-wlde

technology ~mprovements

$

18,700.000 00 $

15.700.000.00

Hall County SPLOST Projects: acqulrlng. constructlng and equlpplng add~t~oncalal ssrooms, lnstructlonal and support space and remodeling, renovatlng, and equlpplngexlstlngclassrooms, instruct~onaland support space; acqulrlng, constructlng and equlpplng new m~ddleschools; acqulrlng and ~nstalllng technology improvements system-wide; and renovatingexistingschool buildingsand facilit~es.

AMOUNT EXPENDED IN CURRENT YEAR (3)

AMOUNT EXPENDED IN PRIOR YEARS (3)

PROJECT STATUS

5 15,909,670.21 Completed

(1) The School Dlstrlct's orlglnal cost estlmate as spec~f~eIndthe resolution calllngfor the lmposltlon of the Local Optlon Sales Tax.
(2) The School D~strict'scurrent estimate of total cost for the projects. Includes all cost from project lnceptlon to completion.
(3) The voters of Gw~nnetat nd Hall Counties approved the impos~tionof a 1%sales tax to fund the above projects and retire assoc~ateddebt. 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 notesto the baslc financial statements.

(This page left intentionally blank)

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY
GENERAL FUND - QUALITYBASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES BY PROGRAM
YEAR ENDED JUNE 30.2010

SCHEDULE "5"

DESCRIPTION
Dlrect lnstructlonal Funds Kindergarten Program
K~ndergartenProgram - Early lntervent~onProgram
Primary Grades (1-3) Program
Prlmary Grades - Early Intervention (1-3) Program
Upper Elementary Grades (4-5) Program Upper Elementary Grades-EarlyIntervention (4-5)
Program Middle School (6-8) Program H ~ g hSchool General Educatlon (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities
Category I Category II Category Ill Category IV Gified Student - Category VI Remedral Educatron Program Alternative Educatlon Program English Speakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONALPROGRAMS
Med~aCenter Program Staff and Professional Development

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

TOTAL QBE FORMULA FUNDS
(1)Comprised of State Funds plus Local Flve M ~ lSl hare. (2) Allotments do not Include the Impact of the State amended formula adjustment.

See notes t o the basic financial statements

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
August 1 2 , 2 0 1 1

Honorable Nathan Deal, 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
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAlTERS 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, 2010, which collectively comprise City of Buford Board of Education's basic financial statements and have issued our report thereon dated August 12, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reoorting
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 of expressing 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 first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses and other deficiencies that we consider to be significant deficiencies.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a

material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider items FS-7641-10-03 and FS-7641-10-05 to be material weaknesses.
A signficant deficlncyis a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider items FS-7641-10-01, FS-7641-10-02, and FS-7641-10-04 in the accompanying Schedule of Findings and Questioned Costs to be significant deficiencies in internal control over financial reporting.
Com~lianceand 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 of laws, 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 August 12,2011.
City of Buford Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit City of Buford Board of Education's response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of management, members of the City of Buford Board of Education, others within the entity, 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,
~ u d s e lWl . Hinton, CPA, CGFM State Auditor

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
August 1 2 , 2 0 1 1

Honorable Nathan Deal, 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
INDEPENDENT AUDITOR'S REPORT ON COM PLlANCE WlTH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited City of Buford Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010. City of Buford Board of Education's major Federal programs are identified in the Summary of Auditor's Results section of the 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 of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB 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 of Buford Board of Education'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.

In our opinion, the City of Buford Board of Education complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010. However, the results of our auditing procedures disclosed instances of noncompliance with those requirements, which are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying Schedule of Findings and Questioned Costs as items FA-7641-10-01, FA-7641-10-02, FA-7641-100 3 and FA-7641-10-04.
Internal Control Over Comrsliance
Management of City of Buford Board of Education is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal programs. In planning and performing our audit, we considered City of Buford Board of Education's internal control over compliance with the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal 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.
Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses and other deficiencies that we consider to be significant deficiencies.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiency in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as item FA-7641-10-02 to be a material weakness.
A signfimnt deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as items FA-7641-10-01, FA-7641-10-03 and FA-7641-10-04to be significant deficiencies.
City of Buford Board of Education's responses to the findings identified in our audit are described in the accompanying Schedule of Management's Responses. We did not audit City of Buford Board of Education's responses and, accordingly, we express no opinion on the responses.

This report is intended solely for the information and use of management, members of the City of Buford Board of Education, others within the entity, 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,
~ u s s dWl . Hinton, CPA, CGFM State Auditor

SECTION Ill AUDITEE'S RESPONSETO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONEDCOSTS YEAR ENDED JUNE 30,2010
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
FINDING CONTROL NUMBER AND STATUS
Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses
CORRECTIVE ACTION/RESPONSES
CASH AND CASH EQUIVALENTS lnadequate Internal Control Procedures Finding Control Number: FS-7641-09-01
The School District reviewed all bank accounts for reconciliations from ledger to account. Due to budget constraints and personnel, the School District does not have an employee independent of the ledger reconciling the bank statement. However, controls exist so that an error due to fraud or misstatement is reduced.
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DlSBURSEMENTS GENERAL LEDGER lnadequate Internal Controls over School Activity Accounts Finding Control Number: FS-7641-09-02
The School District is implementing controls to reduce the risk of misstatements to the financial statements. New software is being implemented in Fiscal Year 2011. Principals open the bank statement and sign prior to the bookkeeper reconciling. The principal signs each bank statement. All cash funds collected are receipted. All cash funds collected are collected by someone other than the school bookkeeper. Each school has someone independent of the bookkeeper make the deposit into the bank.
REVENUES/RECEIVABLES/RECEIPTS lnadequate Internal Controls over Tuition Revenue Finding Control Number: FS-7641-09-03
The School District hired additional personnel to account for tuition. The operations manager is now collecting all tuition. A list is centrally maintained. All information going out to parents is consistent from parent to parent. The operations manager works closely with the principals to ensure that all non-resident children are properly classified and funds are collected according to procedures.

CITY OF BUFORD BOARD OF EDUCATION - GWINNEll COUNTY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTION/RESPONSES
CAPITAL ASSETS Failure to Properly Maintain Capital Assets Finding Control Number: FS-7641-09-04
The School District has allotted personnel for this area. The Operations Manager is responsible for maintaining the capital asset listing and performing an annual inventory. The capital asset list is reviewed every June and July.
GENERAL LEDGER lnadequate Approval of Journal Entries Finding Control Number: FS-7641-09-05
Journal entries are documented. If entries are proposed by Accounts Payable/Payroll Clerk or by the Operations Manager, the Financial Director approves them.
FINANCIAL REPORTING lnadequate Controls over Financial Reporting Finding Control Number: FS-7641-09-06
The School District has prepared the financial statements.
PRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS
No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

CITY OF BUFORD BOARD OF EDUCATION - GWlNNEl7 COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Aggregate Remaining Fund Information

Unqualified

Internal control over financial reporting:

Material weaknesses identified?

Yes

Significant deficiencies identified?

Yes

Noncompliance material to financial statements noted:

Federal Awards

Internal Control over major programs:

= Material weakness identified?

Yes

Significant deficiencies identified?

Yes

Type of auditor's report issued on compliance for major programs: All major programs

Unqualified

Any audit findings disclosed that are required to be reported in

accordance with OMB Circular A-133, Section 510(a)?

Yes

Identification of major programs:

CFDA Num ber(s)

Name of Federal Program or Cluster

Title I, Part A Cluster Special Education Cluster State Fiscal Stabilization Fund Cluster

Dollar threshold used to distinguish between Type A and Type B programs:

Auditee qualified as low-risk auditee?

II FINANCIALSTATEMENT FINDINGS AND QUESTIONEDCOSTS

CASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Significant Deficiency Finding Control Number: FS-7641-10-01

Condition: This is a repeat finding (FS-7641-09-01)from the fiscal year ended June 30, 2009. The accounting procedures of the School District were insufficient to provide adequate internal controls over Cash and Cash Equivalents.

CIW OF BUFORD BOARD OF EDUCATION - GWINNElT COUNTY SCHEDULE OF FINDINGS AND QUESTIONEDCOSTS YEAR ENDED JUNE 30,2010
II FINANCIALSTATEMENT FINDINGSAND QUESTIONEDCOSTS
CASH AND CASH EQUIVALENTS lnadequate Internal Control Procedures Significant Deficiency Finding Control Number: FS-7641-10-01
Criteria: The School District's management is responsible for designing and maintaining internal controls over Cash and Cash Equivalents.
Questioned Cost: N/A
Information: Weaknesses in internal controls relating to Cash and Cash Equivalents were noted as follows:
o Bank reconciliations were not performed by someone independent of the general ledger function.
o The School District could not provide evidence that someone reviews and/or approves bank reconciliations.
Cause: The School District did not design internal controls to properly maintain cash activity on the general ledger.
Effect: Failure to maintain adequate internal controls over cash activity increases the risk that significant misstatements could occur in the financial statements due to error or fraud.
Recommendation: The School District should design and implement controls over cash to ensure that bank reconciliations are performed by someone independent of the general ledger function and a supervisory review is performed over bank reconciliations.
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER lnadequate Internal Controls over School Activity Accounts Significant Deficiency Finding Control Number: FS-7641-10-02
Condition: This is a repeat finding (FS-7641-09-02, FS-7641-08-01, and FS-7641-07-01) from the fiscal years ended June 30,2009, June 30,2008, and June 30,2007, respectively. The accounting procedures of the School District were insufficient to provide adequate internal controls over school activity accounts.

CITY OF BUFORD BOARD OF EDUCATION - GWINNEll COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDlTURES/LIABILlTlES/DISBURSEMENTS GENERAL LEDGER Inadequate Internal Controls over School Activity Accounts Significant Deficiency Finding Control Number: FS-7641-10-02
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 access to both physical assets and the related accounting records.
Questioned Cost: N/A
Information: Cash and Cash Equivalents
The bank reconciliation function was not separate from record keeping and voucher payment functions. Bank accounts were not properly reconciled to the general ledger resulting in unidentified variances.
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.
General Ledger School activity account balances used for financial statement reporting did not agree with school activity general ledgers.
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.
Effect: Failure to maintain adequate internal controls over school activity accounts increases the risk that misstatements could occur in the financial statements due to error or fraud.
Recommendation: The School District should revise and implement internal controls to ensure that proper separation of duties is established, account processes are adequately monitored, and the central office ledger is reconciled to any subsidiary school ledgers.

CITY OF BUFORD BOARD OF EDUCATION - GWINNElT COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010
I1 FINANCIALSTATEMENT FINDINGSAND QUESTIONEDCOSTS
CAPITAL ASSETS Failure to Properly Maintain Capital Assets Material Weakness Finding Control Number: FS-7641-10-03
Condition: This is a repeat finding (FS-7641-09-04, FS-7641-08-02, and FS-7641-07-02) from the fiscal years ended June 30, 2009, June 30, 2008, and June 30, 2007, respectively. Adequate policies and procedures are not in place to ensure that capital assets are properly maintained.
Criteria: Chapter 37 Implementing a Capital Assets Management System of the Financial Management for Georgia Local Units of Administration provides that School Districts must establish fixed asset policies, define system requirements, implement a fixed asset system, and maintain fixed asset inventory records.
Questioned Cost: N/A
Information: A review of the School District's capital assets records noted deficiencies as discussed below:
The School District's capital asset 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 o Impairment of Capital Assets o IntangibleAssets
Numerous misstatements were noted due to the following: o The School District's failure to capitalize items with costs which exceeded $5,000.00, o failure to accurately maintain an ongoing analysis of capital projects resulting in addition and deletions to construction in progress, o failure to consider correcting prior year misstatements, and o failure to record the gain/loss on disposal/sale of an asset.
Cause: The School District failed to develop accounting policies and procedures necessary to accurately process, record, and report capital assets and related activity.
Effect: The failure of the 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.

CITY OF BUFORD BOARD OF EDUCATION - GWINNElT COUNTY SCHEDULE OF FINDINGS AND QUESTIONEDCOSTS YEAR ENDED JUNE 30,2010
II FINANCIALSTATEMENT FINDINGS AND QUESTIONEDCOSTS
CAPITAL ASSETS Failure to Properly Maintain Capital Assets Material Weakness Finding Control Number: FS-7641-10-03
Recommendation: The School District should develop a formal capital assets policy which establishes asset categories (including estimated useful lives), asset valuation methods, depreciation methods, physical inventory count requirements, and criteria for accounting for the impairment of capital assets. In addition, the School District should review capital assets records and make appropriate adjustments.
GENERAL LEDGER Inadequate Approval of Journal Entries Significant Deficiency Finding Control Number: FS-7641-10-04
Condition: This is a repeat finding (FS-7641-09-05, FS-7641-08-03, and FS-7641-07-03) from the fiscal years ended June 30, 2009, June 30, 2008, and June 30, 2007, respectively. School District personnel did not ensure that journal entries were properly approved based on the policies and procedures established.
Criteria: The School District's management is responsiblefor designing and maintaining internal controls that provide reasonable assurance that journal entries are properly approved, documented, and processed.
Questioned Cost: N/A
Information: There was no evidence provided to document that journal entries were reviewed and approved by someone independent of the general ledger journal entry function.
Cause: The 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 controls over the journal entry process may result in errors in financial reportingand increases the risk of material misstatements, including misstatements due to fraud.
Recommendation: The School District should strengthen internal controls over the journal entry process to ensure journal entries are properly approved.

CITY OF BUFORD BOARD OF EDUCATION - GWINNEll COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-7641-10-05
Condition: This is a repeat finding (FS-7641-09-06 and FS-7641-08-05) from the fiscal years ended June 30, 2009, and June 30, 2008, respectively. The School District did not have adequate internal controls in place over the financial statement reporting process.
Criteria: Chapter 22A Annual Rnancial Reporting of the Financial Mana~ementfor Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles.
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control Integrated Framework states that an essential attribute to reliable financial reporting is the timely performance of procedures.
Questioned Cost: N/A
Information: The Governmental Accounting Standards Board (GASB) Statement 3 4 reporting model requires the preparation of both fund and entity-wide level statements in the School District's financial statements. The School District has not implemented an adequate level of internal control to ensure that financial data is processed and reported in a timely manner. Significant delays occurred in the preparation of required schedules necessary for the preparation of both fund level and entity-wide level statements, including note disclosures. In addition, several correcting entries were proposed by the auditor and accepted by the client to present the School District's fund level and entity-wide level financial statements, including note disclosures.
Cause: The School District did not implement an adequate system of internal control over the financial statement reporting process.
Effect: The School District does not have adequate internal controls in place to ensure that the financial statements are properly prepared in accordance with generally accepted accounting principles.
Recommendation: The School District should implement an adequate level of internal control to ensure that all required financial data is processed timely and accurately included in the financial statements presented for audit.

CITY OF BUFORD BOARD OF EDUCATION - GWINNElT COUNTY SCHEDULE OF FINDINGS AND QUESTIONEDCOSTS YEAR ENDED JUNE 30,2010
Ill FEDERALAWARD FINDINGS AND QUESTIONEDCOSTS
ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES Inadequate Internal Control Procedures Significant Deficiency U. S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.389) Finding Control Number: FA-7641-10-01
Condition: The School District did not implement an adequate system of internal controls to determine allowable costs for the Title I Program.
Criteria: Provisions of OMB Circular A-87 require that "governmental units assume responsibility for administering Federal funds in a manner consistent with underlying agreements, program objective, and the terms and conditions of the Federal award."
Questioned Cost: $10,015.36
Information: During our review of expenditures, two instances were noted where Title I funds were used to make purchases for a non-Title I school. Further review of Targeted Assistance program expenditures revealed a charge in which the School District purchased a schoolwide subscription for software and thus served all students - not just students eligible for the Targeted Assistance Program.
Cause: Management failed to monitor compliance with Federal guidelines to ensure that expenditures charged to Federal programs were allowable.
Effect: Failure to ensure that program expenditures are allowable can result in noncompliance with the requirements of the Federal grant.
Recommendation: The School District should implement procedures to ensure that all expenditures charged to the Federal program are allowable under OMB Circular A-87. In addition, the Georgia Department of Education should review this matter to determine if a reclaim of grant funds is appropriate.

CITY OF BUFORD BOARD OF EDUCATION - GWINNEll COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010
Ill FEDERALAWARD FINDINGS AND QUESTIONEDCOSTS
ALLOWABLE COSTS/COSTS PRINCIPLES Time and Attendance Records not Utilized Material Weakness U. S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027 and 84.391) Title I Grants to Local Educational Agencies (CFDA 84.010 and 84.389) Finding Control Number: FA-7641-10-02
Condition: Periodic certification or personnel activity reports were not completed in support of the Title I or Special Education Cluster salaries and wages as required by OMB Circular A-87.
Criteria: Provisions of the OM6 Circular A-87, Cost Princ@lesfor Sbte, Local and Indian Tribal Governments, require that "Where employees are expected to work solely on a single Federal award or cost
objective, charges for their salaries and wages will be supported by periodic certifications... Where
employees work on multiple activities or cost objectives, a distribution of their salaries or wages will
be supported by personnel activity reports or equivalent documentation..."
Questioned Cost: N/A
Information: A review of payroll records revealed that the entity did not complete any personnel activity reports for employees that worked on multiple activities or cost objectives. In addition, numerous instances were noted where the School District did not complete periodic certifications for employees that work solely on a single Federal award or cost objective.
Cause: Management failed to implement appropriate procedures to ensure compliance with Federal guidelines regarding charges for salaries and wages being supported by periodic certifications or personnel activity reports.
Effect: Noncompliance with provisions of OMB Circular A-87.
Recommendation: The School District should implement procedures to ensure that salaries and wages paid from Federal award programs are allowable and properly documented in accordance with OMB Circular A87.

CITY OF BUFORD BOARD OF EDUCATION - GWINNETT COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010
Ill FEDERALAWARD FINDINGS AND QUESTIONEDCOSTS
ELIGIBILITY Failure to Document Eligibility Determinations Significant Deficiency U. S. Department of Education Through Georgia Department of Education Title I Grants to Local EducationalAgencies (CFDA 84.010 and 84.389) Finding Control Number: FA-7641-10-03
Condition: The School District failed to provide adequate documentation of eligibility determinations for its Title 1 Targeted Assistance Program. The policies and procedures of the School District were insufficient to provide adequate internal controls over correctly identifying students for participation in the targeted assistance program.
Criteria: As provided in Section 1115(a) of Title I of the ElementarySecondary Education Act (ESEA), a school selected to operate as a Targeted Assistance Program may use funds only for programs that provide services to eligible children identified as having the greatest need for special assistance. In addition, Section 1115(b)(l)(B) provides that eligible children are identified by the school as failing, or most at-risk of failing, to meet the Georgia Department of Education challenging student academic achievement standards on the basis of multiple, educationally related, objective criteria established by the Local EducationAgency and supplemented by the school.
Questioned Cost: $560.00
Information: The School District failed to provide adequate documentation of eligibility determinations for its Targeted Assistance Title I School. The School District provided a spreadsheet with the title "Identifying Students Eligible for TA Services." A review of the spreadsheet revealed selection criteria used for determining eligibility that was not in compliance with Section 1115(b)(l)(B)of the Elementary Secondary Education Act (ESEA). Auditor testing noted one student who was ineligible for services and one student who was determined eligible during eligibility determinations but was not sewed.
Cause: Management failed to implement adequate internal controls for maintaining adequate documentation of eligibility determinations for its Targeted Assistance Title 1 school. There was a lack of internal controls over eligibility determinations.
Effect: The School District may have sewed students with less need over those who have more need.

CITY OF BUFORD BOARD OF EDUCATION - GWINNET COUNTY SCHEDULE OF FINDINGS AND QUESTIONEDCOSTS YEAR ENDED JUNE 30,2010
Ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ELIGIBILITY Failure to Document Eligibility Determinations Significant Deficiency U. S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010 and 84.389) Finding Control Number: FA-7641-10-03
Recommendation: The School District should ensure that proper procedures are implemented and followed in determining student eligibility for Targeted Assistance Schools. Documentation of these determinations should be maintained on file and made available for audit. The Georgia Department of Education should review this matter to determine if a reclaim of grant funds is appropriate.
SPECIAL TESTS AND PROVISIONS Inadequate Schoolwide Program Plans Significant Deficiency U. S. Department of Education Through Georgia Department of Education Title I Grants to Local EducationalAgencies (CFDA 84.010 and 84.389) Finding Control Number: FA-7641-10-04
Condition: The School District provided schoolwide plans for schools operating schoolwide programs that did not adequately address all ten schoolwide plan components as required by Section 1114(b) of the Elementaryand Secondary Education Act (ESEA).
Criteria: Under section 1114(b) of the Elementary and Secondary Education Act, "any eligible school that
... desires to operate a schoolwide program shall first develop a comprehensive plan...that describes
how the school will implement the components described."
Questioned Cost: N/A
Information: Neither the Buford Elementary Schoolwide Plan nor the Buford Academy Schoolwide Plan adequately addressed the following four indicators at the school level: Instruction by highly qualified professional staff; High quality and ongoing professional development for teachers, principals, and paraprofessionals and, if appropriate, pupil services personnel, parents, and other staff; Strategies to increase parental involvement; and Measures to include teachers in the decisions regarding the use of academic assessments. An additional required component not adequately addressed in the Buford Elementary Schoolwide Plan included the activities to ensure that students who experience difficulty mastering the proficient or advanced levels of academic achievement standards are provided with effective, timely assistance.

CITY OF BUFORD BOARD OF EDUCATION - GWINNEll COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30.2010
Ill FEDERALAWARD FINDINGS AND QUESTIONEDCOSTS
SPECIAL TESTS AND PROVISIONS Inadequate Schoolwide Program Plans Significant Deficiency U. S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010 and 84.389) Finding Control Number: FA-7641-10-04
Cause: The School District failed to implement internal controls over the creation of Schoolwide Plans. The School District failed to include all specified requirements of the Schoolwide Plans.
Effect: Failure to adequately include all required components of the Schoolwide Plans could result in noncompliance with the Elementary and Secondary Education Act (ESEA) and schools could lose their eligibility for Schoolwide programs.
Recommendation: To correctly comply with Schoolwide Program provisions, we recommend the School District implement procedures to strengthen its Schoolwide planning process.

SECTION V MANAGEMENT'S RESPONSES

CITY OF BUFORD BOARD OF EDUCATION - GWlNNEll COUNTY SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDED JUNE 30,2010
Finding Control Number: FS-7641-10-01
We concur with this finding. The Board will begin the process of including an administrative staff member to assure that there is separation of those who perform monthly bank reconciliations. The Board has implemented controls so that an error due to fraud or misstatement is reduced.
Finding Control Number: FS-7641-10-02
We concur with this finding. The School District is implementing controls to reduce the risk of misstatements to the financial statements. New software is being implemented in Fiscal Year 2011. Principals open the bank statement and sign prior to the bookkeeper reconciling. All cash funds collected are receipted. All cash funds collected are collected by someone other than the school bookkeeper. Each school has someone independent of the bookkeeper making the deposits.
Finding Control Number: FS-7641-10-03
We concur with this finding. The school district is in the process of drafting a new capital assets policy and procedures to ensure that capital assets are properly classified, booked and depreciated.
Finding Control Number: FS-7641-10-04
We concur with this finding. The school district is implementing procedures in FYI2 to ensure that there are adequate segregation of duties as it relates to journal entries. All journal entries will be proposed and made by the Operations Manager or the Central Office Bookkeeper. The Finance Director will review all journal entries for classification, documentation, and accuracy.
Finding Control Number: FS-7641-10-05
We concur with this finding. The School District will insure that all financial statements are prepared before November 1 s t follows the close of each fiscal year. This will allow questions and concerns to be addressed and corrected before the audit is complete. The Financial Director will work closely with the Financial Review section of GDOE and the Georgia Department of Audits to ensure that the financial statements are completed in a timely fashion.
Finding Control Number: FA-7641-10-01
We concur with this finding. The School District is implementing procedures to assure that adequate controls exist for the expenditures of federal funds. The school district has implemented new monitoring procedures and will review all federal expenditures every month to insure that all expenditures are properly classified and categorized.
Finding Control Number: FA-7641-10-02
We concur with this finding. The School District is implementing procedures to assure that time and attendance records are correctly utilized for employees that are paid with federal funds. The school district has implemented new time/attendance record procedures and will review all federal timesheets every month to insure that all employees paid with federal funds have the correct documentation of his/her time and effort.

CITY OF BUFORD BOARD OF EDUCATION - GWINNElT COUNTY SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDEDJUNE 30,2010

Finding Control Number: FA-7641-10-03

We concur with this finding. The School District is implementing procedures to assure that all students are properly identified as whether they are Title I students. Teachers and staff will document the eligibility determination. The school district is utilizing existing trained personnel as an independent source to review eligibility documentation.

Finding Control Number: FA-7641-10-04

We concur with this finding. The School District is implementing procedures to assure that all four indicators are adequately addressed at the school level. The school district is utilizing existing trained personnel as an independent source to review eligibility documentation.

Contact Person: Telephone: Fax: E-mail:

Angela Adams, Director of Finance (770) 945-5035 (770) 945-4629 angela.adams@bufordcityschools.org