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AUDIT REPORT

CITY OF COMMERCE BOARD OF EDUCATION

A COMPONENT UNIT OFTIIE

l

CITY OF COMMERCE, GEORGIA

YE__AR_END_E_D_J_UN_E 3_0_,1_9---,.99

.-/

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

5

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

7

ADDmONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

18

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

19

CAPITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

20

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

22

SCHEDULES

1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

24

2 SCHEDULE OF STATE REVENUE

26

3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

27

4 SCHEDULE OF EXPENDITURES

LOTTERY PROGRAMS

28

CITY OF COIyfMERCE BOARD OF EDUCATION - JACKSON COUNTY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

ADDmONAL FINANCIAL INFORMATION

SCHEDULES

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

5

OVERALL

29

6

BY PROGRAM

30

SECTIONll
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-l33

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

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

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 30, 2000

Honorable Roy E. Barnes, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe City ofCommerce Board ofEducation
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying general purpose financial statements of the City of Commerce Board of Education, a component unit ofthe City ofCommerce, Georgia, as ofand for the year ended June 30,1999, as listed in the table ofcontents. These general purpose financial statements are the responsibility ofthe City ofCommerce Board ofEducation's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perfonn the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in the notes to the general purpose financial statements, the Board's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:
* The general purpose financial statements of the Board did not contain a General Fixed Assets
Account Group to account for property and equipment owned by the Board which should be included to confonn to generally accepted accounting principles.
99ARL-13

* School activity accounts maintained at the individual schools are not included in the general purpose
financial statements. To confonn to generally accepted accounting principles, these accounts should be included in the general purpose financial statements.
* The Board did not recognize as expenditures, in the year ended June 30, 1999, a portion of salaries
and the corresponding employer's cost ofrelated benefits earned for contractual services completed prior to June 30, 1999. Also funds received, subsequent to June 30, 1999, from the Georgia Department ofEducation for the State's share ofthese unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1998, were improperly recorded in the year ended June 30, 1999. To confonn to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed.
The aggregate effects 'on the general purpose financial statements of these variances or omissions have not been detennined, but are believed to be material.
In our opinion, except for the effects on the general purpose financial statements of the matters referred to in the preceding paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe City ofCommerce Board ofEducation as ofJune 30, 1999, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles.
In accordance with Government Auditin~ Standards, we have also issued our report dated May 30, 2000, on 'our consideration ofthe City of Commerce Board ofEducation's internal control over financial reporting and our tests ofits compliance with certain provisions oflaws, regulations, contracts and grants.
Our audit was perfonned for the purpose offorming an opinion on the general purpose financial statements of the City of Commerce Board of Education taken as a whole. The accompanying combining statements (Exhibits E through H) and the financial schedules (Schedules 1 through 6), which includes the Schedule of Expenditures of Federal Awards as required byU. S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes ofadditional analysis and are not a required part ofthe general purpose financIal statements. Such infonnation has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and in our opinion, except for the effects ofthe matters referred to in the third paragraph, such infonnation is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole.
99ARL-13

A copy of this report has been filed as a pennanent 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,

RWH:gp 99ARL-13

sell W. Hinton State Auditor

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 1999

ASSETS
cash and Cash Equivalents
Investments
Accounts Receivable
Inventories Food Donated Commodities Purchased Food
Amount to be Provided in Future Years For Payment of capital Lease Agreements

GOVERNMENTAL FUND

SPECIAL

GENERAL

REVENUE

FUND

FUND

$

227,061,65 $

96,988.76

548,871.60

360,760.01

94,314,72

10,666.58 3,308.58

EXHIBIT "A"

TYPES CAPITAL
PROJECTS FUND
$ 1,725,588.11
651,483.47
201,621.00

ACCOUNT GROUP
GENERAL LONG-TERM
DEBT

TOTALS

(Memorandum Only)

JUNE 30,1999

JUNE 30,1998

$ 2,049,638.52 $ 3,201,223.90

1,200,355.07

825,639.74

656,695.73

541,564.76

_ _ _ _ _ _ $_---=1..:;08::;.1;!54=0.~78::...

10,666.58 3,308.58
108,540.78

8,701.81 3,213.46
135,673.36

108,540.78 $ 4,029,205.26 $ 4,716,017.03

$

91,n2.66 $

18,930.32

42,176.10

42,288.18

42,742.74

6,125.09

90,913.00

$

26,380.00

26.380.00

20,423.00

$

108,540.78

108,540.78

135,673.36

$

26,380.00 $

108,540.78 $

311,612.28 $

314.352.95

$ 1.646,053.27 803,141.71 103,117.60
0.00
$ 2,552.312.58

$

8,440.74 $

20,204.00

15,036.41

13,504.07

13,504.07

10.666.58 3,308.58 1,646.053.27 803,141.71 103,117.60

' Lo "

1.',

1.114,324.02

8,701.81 3;213.46 2.874,537.25 602,299.41 8,599.60
870,604.48

$ 3.717,592.98 $ 4,401 ,664.08

$ 2.578.692.58 $

108,540.78 $ 4,029,205.26 $ 4.716,017.03

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CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 3D. 1999

EXHIBIT"B"

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

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 1999

EXHIBIT"C"

REVENUES
State Funds Federal Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation Community Services Operations
Capital OuUay Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Other Sources Other Uses
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1. 1998
Adjustments Food Inventory - Net Change in Period
Donated Commodities Purchased Food

GENERAL FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

$ 4,793,985.19 $ 4,901,450.01

1,442,250,00 103,457.00

1,461,854,16 193,206.14

$ 6,339,692.19 $ 6,556,510.31

$ 4,131,526.32 $ 4,072,753.87

281,691.16 239,377.12 199,486.97 179,024.29 426,882.11
96,n9.74 559,486.00 106,738.33 106,833.50

296,617.71 249,321.06 197,822.53 205,525.74 429,1n.55
92,840.69 545,730.72
92,150.67 105,343.74

25,000.00

25,000.00 14,659.23

$ 6,352,825.54 $ 6,326,943.51

$ -13,133.35 $ 229,566.80

$ 25,086.00 -16,653.31
$ 8,432.69

$ -13,133.35 $ 237,999.49

688,101.53

819,203.69

-105,021.12

SPECIAL REVENUE FUND

ACTUAL

(BUDGET

BUDGET

BASIS)

$ 85,369.44 $ 112,187.12

609,822.25

619,126.23

156,790,00

152,091.30

$ 851,981.69 $ 883,404.65

$ 408,828.85 $ 382,552.57

32,333.00 4,500.00 23,240.00 11,739.00

35,501.22 23,848.42
10,401.93 40.00

6,681.00 20,750.00
7,000.00 374,163.00
2,000.00

6,509,10 11,354,45 7,000.00 404,496.79
1,246.06

$ 891,234.85 $ 882,950.54

. $ -39,253.16 $

454.11

$ 8,539.09

$ 8,539.09

$ -39,253.16 $ 78,040.75 22,185.84

8,993.20 97,024.13
1,964.n 95.12

FUND BALANCE JUNE 30, 1999

$ 569,947.06$ 1,057,203,18

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

-5-

$ 60,973,43 $ 108,On,22

CTIY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30.1999

EXHIBIT "D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The City of Commerce Board of Education (Board) 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 subj ect to approval by the City of Commerce, Georgia. Accordingly, the City of Commerce Board ofEducation is detennined to be a component unit of the City of Commerce, Georgia, which is the primary government.
FUND ACCOUNTING
The Board uses funds and an account group to report on its financial position and the results ofits operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
General Fixed Assets are recorded as expenditures in the various funds at the time ofpurchase. A General Fixed Assets Account Group is not presently maintained by the Board. To confonn to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances ofthese accounts are reflected in these financial statements. To confonn to generally accepted accounting principles, these accounts should be recorded in the general purpose financial statements.
The general purpose financial statements account for all State, Federal, Taxes and Other funds under control ofthe Board, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follow~:
GOVERNMENTAL FUND TYPES - are used to account for all or most ofa Board's educational activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources ofthe Board except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a board ofeducation.

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CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY NOTES TO TIIE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30.1999

EXHffiIT "D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SPECIAL REVENUE FUND - the fund used to account for the proceeds ofspecific revenue sources (other
than for major capital projects) that are legally restricted to expenditures for specified purposes. These funds are received primarily from the Georgia Department of Education and from the Federal government to accomplish specific educational objectives.
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the
acquisition or construction of major capital facilities.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for material capital lease obligations.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are property taxes, local option sales taxes, intergovernmental grants and investment income.
Expenditures are generally recognized when the related fund liability is incurred.
A departure from the above definitions is the accounting treatment afforded the final two paymentson General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 1999, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1998 and ending in early June 1999. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1998 and ending in August 1999. State

CITY OF C011MERCE BOARD OF EDUCATION - JACKSON COUNTY
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30.1999

EXHIBIT "D"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
grants to fund the State's share ofthese contracts were disbursed from the Georgia Department of Education to the Board in the same twelve months. As of June 30, 1999, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 1999, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30, 1999. Also, the State's portion ofthe compensation paid in July and August 1999 was received and recorded as revenue in the fiscal year subsequent to June 30, 1999. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1998, were recorded in the year ended June 30, 1999. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are , received or disbursed.
BUDGET
The City of Commerce Board ofEducation's budget is a complete financial plan for the Board's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure of the budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level ofbudget control was established by the Board at the aggregate level. The budget for governmental funds was prepared on a basis other than generally accepted accounting principles.
The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is advertised at least once in a newspaper ofgeneral circulation in the locality. At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department ofEducation. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
CAS~ ANI) CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financial institutions. Georgia Laws authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.
INVESTMENTS
COMPOSmON OF INVESTMENTS Investments made by the Board in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating
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CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1999

EXHIBIT "0"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Board to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State of Georgia, Office ofTreasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations ofother political subdivisions ofthe State of Georgia.
RECEIVABLES
Receivables consist ofgrant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The City of Commerce fixed the property tax levy for the 1998 tax year (calendar year) on October 12, 1998 (levy date). Taxes were due on January 16, 1999~ The lien date for property taxeslwas, January 1, 1998. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal year 1999. The City of Commerce City Clerk bills and collects the property taxesfor the Board ofEducation and remits taxes collected to the Board.

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CITY OF COMMERCE BOARD OF EDUCATION - JACKSON CQUNfY NOTES TO TIffi GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30.1999

EXHIBIT liD"

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The tax millage rate levied for the 1998 tax year (calendar year) for the City ofCommerce Board ofEducation was as follows (a mill equals$1 per thousand dollars of assessed value):

School Operations

16.08 mills

SALES TAXES

Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes. Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $833,357.42 and was recorded
in the Capital Projects Fund. The State will tenninate collectionofthis tax once an additional $2,436,131.98
has been collected or on June 30, 2002, whichever occurs first.
INVENTORIES
FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.
INTERFUND TRANSACTIONS
The Board has the following types ofinterfund transactions:
Reimbursements of expenditures initially made from a fund that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.
Operating transfers are recorded for all interfund transactions other than reimbursements.
MEMORANDUM ONLY - TOTAL COLUMNS
-".
Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Certain reclassifications have been made to the comparative data to conform to the current year classifications.

- 11 -

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30.1999

EXHIBIT "D"

Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code ofGeorgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone ofor any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to, transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates ofindebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations ofthe counties or municipalities ofthe State of Georgia,
(5) Bonds ofany public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates ofindebtedness, or other obligations ofa subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 1999, the bank balances were $2,731,936.15. The amounts of the total bank balances are classified into three categories of credit risk:
Category 1 - Cash that is jnsured (e.g., Federal depository insurance) or collateralized with securities held by the Board or by the Board's agent in the Board's name.
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CITY OF COMMERCE BOARD OF EDUCAnON - JACKSON COUNTY
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS IDNE 30, 1999

EXHIBIT "D"

Note 2: DEPOSITS AND INVESTMENTS

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

The Board's deposits are classified by risk category at June 30, 1999, as follows:

Risk CategOIy
1 2 3

Bank Balance
$ 300,000.00 2,431,936.15 O.QO

Total

$ 2.731.936.15

CATEGORIZATION OF INVESTMENTS At June 30, 1999, the carrying value ofthe Board's total investments was $1,200,355.07, The investments are classified as follows:

T}!11e of Investment

Carrying Amount

Fair Value

Local Government Investment Pools
Money Market Mutual Funds

$ 548,871.60 $ 548,871.60

651.483.47

651.483.47

Total Investments

$ 1,200.355.07 $ 1,200.355,07

The carrying amounts shown above includes amounts maintained in an investment pool by the State of Georgia, Office of Treasury and Fiscal Services in which the Board owns no identifiable securities. The investment policy ofthe State ofGeorgia, Office ofTreasury and Fiscal Services for the Local Government Investment Pool (primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description of the Primary Liquidity Portfolio is as follows:

The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state
government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. However, Georgia Fund 1 operates in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to
as be a 2a-7 like pool. The pool is not registered with the SEC an investment company. The pool's primary
objectives are safety ofcapital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings

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CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30. 1999

EXHIBIT "D"

Note 2: DEPOSITS AND INVESTMENTS
(net of management fees) on a monthly basis and detennine& participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist offunds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.
Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any ofits agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity ofGeorgia Fund 1 may not exceed 60 days. Fund 6 maintains a duration of approximately one year. The weighted average maturity for Georgia Fund 1 on June 30, 1999 was 27 days. The average investment duration for Fund 6 on June 30, 1999 was 1.03 years.
Note 3: NON-MONETARY TRANSACTIONS
The Board receives food commodities from the United States Department ofAgriculture (USDA) for school breakfast and lunchprograms. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories
Note 4: RISK MANAGEMENT
The Board is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; natural disaster and unemployment compensation.
The Board has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and job related illness or injuries to employees. The Board has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any ofthe past three years.
The Board has elected to self-insure for all losses related to natural disaster. The Board has not experienced any losses related to this risk in the past three years.
The Board is self-insured with regard to unemployment compensation claims. The Board accounts for claims within the General Fund with expenditure and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated. The Board has not incurred any liabilities for unemployment compensation during the last two fiscal years.

-14-

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30.1999

EXHIBIT "D"

Note 4: RISK MANAGEMENT

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

Position Covered

Amount

Superintendent All Other Employees

$ 100,000.00 $ 10,000.00

Note 5: GENERAL LONG-TERM DEBT

CAPITAL LEASES The City of Commerce Board ofEducation has entered into various lease agreements as lessee for buses and bleachers. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception.

The changes in General Long-Term Debt during the fiscal year ended June 30, 1999, were as follows:

Capital Leases

Balance July 1, 1998

$ 145,601.10

Retroactive Restatement ofPrior Year Balances

-9,927.74

Balance July 1, 1998 Restated

$ 135,673.36

Additions Capital Leases

25,086.00

Deductions Payments
Balance June 30,1999

52,218.58 $ 108.540.78

At June 30, 1999, payments due by fiscal year which includes principal and interest for these items are as follows:

-15 -

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30. 1999

EXHIDIT "D"

Note 5: GENERAL LONG-TERM DEBT

Fiscal Year Ended June 30

Capital Leases

2000 2001 2002

$ 68,655.29 30,699.85 20.459.23

Total Principal and Interest

$ 119,814.37

Deduct: Imputed Interest

11.273.59

Net Present Value ofFuture Minimum Lease Payments

$ 108.540.78

Note 6: ON-BEHALF PAYMENTS

The Board has recognized revenues and expenditures in the amount of$93,515.65 for health insurance and retirement contributions paid on the Board's behalfby the following State Agencies.

Georgia Department ofEducation Paid to the State Merit System ofPersonnel Administration For Health Insurance ofNon-Certified Personnel In the amount of$65,723.71

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $9,675.94

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$18,116.00

Note 7: CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grant terms. The Board believes that such disallowances, if any, will be immaterial to its overall financial position.

- 16-

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30. 1999

EXHIBIT "D"

Note 7: CONTINGENT LIABILITIES

The Board is a defendant in various legal proceedings pertaining to matters incidental to the perfonnance of routine Board operations. The ultimate disposition of these proceedings is not presently detenninable, but is not believed to be material to the general purpose financial statements.

Note 8: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers~ administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Board who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.95% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

1999 1998 1997

100% 100% 100%

$ 488,735.57 $ 445,316.54 .$ 409,951.62

- 17-

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30,1999

EXHIBIT"E"

ASSETS Cash and Cash Equivalents Accounts Receivable Inventories
Food Donated Commodities Purchased Food
Total Assets

SCHOOL FOOD
SERVICES FUND

LOTTERY

FEDERAL

TOTALS

PROGRAMS PROGRAMS JUNE 30,1999 JUNE 30,1998

$ 90,496.16

$ 15,339.20 $ 105,835.36 $ 105,414.91

1,357.68 $ 23,376.00

69,581.04

94,314.72

62,988.63

10,666.58 3,308.58

10,666.58 3,308.58

8,701.81 3,213.46

$ 105,829.00 $ 23,376.00 $ 84,920.24 $ 214,125.24 $ 180,318.81

see notes to the general purpose financial statements.

-18-

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 1999

EXHIBIT "F"

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

FEDERAL PROGRAMS

TOTALS YEAR ENDED JUNE 30, 1999 JUNE 30, 1998

REVENUES

State Funds Federal Funds Other Funds

$ 30,594,00 $ 215,768,28 152,091,30

81,593,12

$

$ 403,357.95

112,187,12 $ 619,126,23 152,091.30

158,311,82 454,051,76 172,740,29

Total Revenues

$ 398,453,58 $ 81,593.12 $ 403,357,95 $ 883,404,65 $ 785,103,87

EXPENDITURES

Current Instruction Support Services Pupil Services Improvement of Instructional Services General Administration School Administration Student Transportation Services Central Support Services Other Support Services Food Services Operation Community Services Operations

$ 88,877.49 $ 293,675,08 $

$ 404,496.79

40.00 420.00

35,501.22 23,848,42 10,401.93
6,089.10 11,354.45 7,000.00
1,246,06

382,552.57 $
35,501.22 23,848.42 10,401.93
40,00 6,509,10 11,354.45 7,000.00 404,496.79 1,246,06

310,059.40
17,247.93 19,927.25 9,070.37
4,836.52 10,705.56 7,000.00 382,394.90
468.88

Total Expenditures Excess of Revenues over (under) Expenditures

$ 404,496.79 $ 89,337.49 $ 389,116.26 $ $ -6,043.21 $ -7,744,37 $ 14,241.69 $

882,950.54 $ 454,11 $

761,710.81 23,393.06

OTHER FINANCING SOURCES

Operating Transfers In

7,744.37

794.72

8,539.09

16,990.59

Excess of Revenues and Other Financing Sources over (under) Expenditures
FUND BALANCE JULY 1

$ -6,043.21 $ 83,721.70

0.00 $ 15,036.41 $

6,711.20

6,591.23

8,993.20 $ 97,024.13

40,383.65 54,270.16

Food Inventory - Net Change in Period Donated Commodities Purchased Food

1,964.n 95.12

1,964.n 95.12

2,298.31 72.01

FUND BALANCE JUNE 30

$ 79,738,38 $ 6,711.20 $ 21,627.64 $ 108,077.22 $ 97,024,13

See notes to the general purpose financial statements.

19

""

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30, 1999

ASSETS Cash and Cash Equivalents Investments Accounts Receivable

BOND PROCEEDS

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$ 1,661,053,27 $

103,117.60

Total Assets

$ 1.661,053.27 $ ......= .1..0::;;3010;,1=17;.;,.6=.0..

Total Liabilities and Fund Equity

$ 1.661,053.27 $

10::;;3.,1;,,;1.7..;;;,;6.0...

See notes to the general purpose financial statements.

-20 -

EXHIBIT"G"

SPECIAL PURPOSE LOCAL OPTION SALES TAX

$

651,483.47

153.745.00 $

LOTIERY PROJECT

TOTALS

JUNE 30,1999

JUNE 30,1998

$ 1,764,170.87 $ 3,053,010.77

651,483.47

418,212.73

47,876.00

201.621.00

125.548.76

$

805,228.47 $

47,876.00 $ 2,617,275.34 $ 3,596,772.26

$

2,086.76 $

36,496.00 $

38,582.76

$

90,913.00

11,380.00

26,380.00

20.423.00

$

2,086.76 $

47,876.00 $

64,962.76 $

111,336.00

$

803,141.71

0.00 $

$

803,141.71 $

$
0.00 0.00 $

1,646,053.27 $ 803,141.71 103,117.60
0.00
2.552.312.58 $

2,874,537.25 602,299.41 8,599.60
0.00
3.485.436.26

$

805,228.47 $

47.876.00 $ 2,617.275.34 $ 3.596,772.26

- 21 -

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUND YEAR ENDED JUNE 30. 1999

REVENUES
State Funds Taxes Other Funds
Total Revenues
EXPENDITURES
Current Support Services Business Administration
Capital Outlay Building and Building Improvements Equipment
Debt Service Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Capital Leases Operating Transfers In Operating Transfers Out
Total Other Financing Sources (Uses)
Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1
FUND BALANCE JUNE 30

BOND PROCEEDS

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

$

0.00

$

148,944.87

$

148,944.87 $

0.00

$

447,347.53 $

30,453.19

$

477,800.72 $

$ -328,855.85 $

38,662.78
40,253.01 6,493.05
85,408.84 -85,408.84

$

8,114.22 $

-907,742.35

$ -899,628.13 $

$ -1,228,483.98 $ 2,874,537.25

179,926.84 179,926.84
94,518.00 8,599.60

$ 1,646,053.27 $

1;,;;;0_3.,.1...17.;.,;;.6;;,;;0_

See notes to the general purpose financial statements.

-22 -

EXHIBIT"H"

SPECIAL PURPOSE LOCAL OPTION SALES TAX

LOTIERY PROJECT

TOTALS

YEAR ENDED

JUNE 30, 1999

JUNE 30,1998

$

$

833,357.42

13,050.39

$

846,407.81 $

47,876.00 $ 47,876.00 $

47,876.00 833,357.42 $ 161,995.26
1,043,228.68 $

638,010.60 129,396.38
767,406.98

$

65,475.48

$

0.00 $

775,691.51 $ 1,261,701.82

228,471.68

30,453.19

177,309.23

40,253.01 6,493.05

147,002.60 6,133.49

$

0.00 $

775,691.51 $ 1,338,901.07 $

624,392.48

$

846,407.81 $ -727,815.51 $ -295,672.39 $

143,014.50

$ $ -645,565.51
$ -645,565.51 $

727,815.51 $

$ 915,856.57 -1.553,307.86

727,815.51 $ -637,451.29 $

177,309.23 3,209,980.64
-53,467.71
3,333,822.16

$

200,842.30 $

602,299.41

0.00 $ 0.00

-933,123.68 $ 3,485,436.26

3,476,836.66 .8,599.60

$

803,141.71 $

...0..0..0.. $ 2,552,312.58 $ 3,485,436.26

-23 -

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30. 1999

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program 1999 Grant National School Lunch Program 1999 Grant
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Educa~on Food and Nutrition Program Food Distribution Program (1) Pass-Through From Office of School Readiness Food and Nutrition Program Child and Adult Care Food Program 1999 Contract
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B Special Education Flow Through 1999 Grant Preschool 1999 Grant
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Elementary and Secondary Education Act TiUe I
Grants to Local Educational Agencies
1999 Grant TiUe II
Eisenhower Professional Development 1999 Grant
TiUe III Technology Uteracy Challenge Grant 1999 Grant
TiUe VI Innovative Education Program Strategies 1999 Grant

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

. 10.553
10.555

NlA $ NlA
$

40,044.49 148.407.92 $ 188,452.41 $

(2) 381,043.53 (3) 381,043.53

10.550

NlA

23,453.26

23,453.26

10.558

NlA $

3,862.61 215,768.28 $

(2) 404.496.79

* 84.027 * 84.173

NlA $ NlA
$

89,646.29 $ 13.913.88 103,560.17 $

89.646.29 13,913.88 103,560.17

84.010

NlA

84.281

NlA

84.318

NlA

84.298

NlA

103,297.00 18.500.00 74,784.00 5,514.00

103.759.32 (3) 18,516.04 (3) 61,419.92 5,751.26 (3)

-24-

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30.1999

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT
Education, U. S. Department of Other Programs Pass-Through From Georgia Department of Education Goals 2000 State and Local Education Systemic Improvement Grants 1999 Grant Safe and Drug-Free Schools 1999 Grant
Vocational Education - Basic Grants to States
High School Program Basic Grant 1999 Grant
Pass-Through From Georgia Department of Human Resources Substance Abuse Block Grant 1999 Grant
Total U. S. Department of Education

CFDA NUMBER

PASS THROUGH
ENTITY 10
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

84.276 84.186

N/A $ N/A

75,000.00 $ 5,621.00

73,327.67 5,680.62 (3)

84.048

NlA

907.78

907.78

84.186

NlA $

16,174.00 403,357.95 $

16,193.48 (3) 389,116.26

Total Federal Financial Assistance
= NlA Not Available

$

619,126.23 $

Notes to the Schedule of Exoenditures of Federal Awards

(1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.
(2) Expenditures for the Child and Adult Care Food Program and the School Breakfast Program were not maintained separately and are induded in the 1999 National School Lunch Program.
(3) Expenditures for this program indude State, .and/or Other Funds. Expenditures are not maintained by fund source.
r> Major Programs are identified by an asterisk in front of the CFDA number.

The Board did not provide Federal Assistance to any Subrecipient

The accompanying schedule of expenditures of Federal awards includes the Federal'grant activity of the City of Commerce Board of Education and is presented on the modified acaual basis of accounting which is the basis of accounting used in the presentation of the general purpose financial statements.

7;,;,;9.3,,;;,61;,;;3;;0:.0;,;;.5

See notes to the general purpose financial statements.

-25-

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 1999

SCHEDULE "2"

AGENCY/FUNDING
GRANTS Education, Georgia Department of Quality Basic Education General and Career Education Programs Special Education Programs Remedial Education Program Media Center Programs Staff Development Programs Indirect Cost Pupil Transportation Regular Bus Replacement Middle School Incentive Program Special Instructional Assistance In-School Suspension Counselors Grades 4 and 5 Technology Specialist Local Five Mill Share Educational Equalization Funding Grant Food Services Vocational Education Other State Programs At-Risk Summer School Program Environmental Science Program Health Insurance Mentor Teacher Program Preschool Handicapped Program Remedial Summer School Program Student Record Teachers' Retirement Lottery Programs Assistive Technology Computers in the Classroom Exceptional Growth-CSpital OuUay
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Public School Employees Retirement

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

TOTAL

$ 2,615,745.00 848,109.00 61,034.00 113,853.00 33,274.00 741,825.00
69,783.00 20,165.00 90,066.00 59,547.00 90,409.00
9,444.00 28,842.00 -398,563.00 358,669.00
$ 33,700.31
5,800.80 1,000.00 65,723.71 2,106.00 18,079.00 4,165.75
880.50 9,675.94
18,116.00

30,594.00
5,079.64 23,376.00
$ 53,137.48

$ 47,876.00

2,615,745.00 848,109.00 61,034.00 113,853.00 33,274.00 741,825.00
69,783.00 2Q,,165.00 90,066.00 59,547.00 90,409.00
9,444.00 28,842.00 -398,563.00 358,669.00 30,594.00 33,700.31
5,800.80 1,000.00 65,723.71 2,106.00 18,079.00 4,165.75
880.50 9,675.94
5,079.64 23,376.00 47,876.00

53,137.48

18,116.00

$ 4,901.450.01 $

112,187.12 $

47,876.00 $ 5,061 ;513.13

see notes to the general purpose financial statements.

-26-

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30,1999

SCHEDULE "3"

$ 4,928,400.00 $ 4,957,043.22 $ 1,338,901.07 $ 545,707.n

(1) The Board's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.

(2) The Board's current estimate of total cost for the projects. Includes all cost from project inception to completion.

(3) The voters of the City of Commerce - Jackson County approved the imposition of a 1% sales tax to fund the above projects and associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

(4) In addition to the expenditures shown above, the Board has incurred interest expense to provide advance funding

for the above projects as follows:

.

Prior Years

$

53,467.71

Current Year

118,478.75

Total

$ 171,946.46

See notes to the general purpose financial statements.

-27 -

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS YEAR ENDED JUNE 30, 1999

SCHEDULE "4"

EXPENDITURES
Current Instruction Support Services School Administration Student Transportation Services

ASSISTIVE TECHNOLOGY

COMPUTERS IN THE
CLASSROOM

PRE-KINDERGARTEN PROGRAM

TOTAL

$

7,930.00 $ 23,435.08 $

57,512.41 $ 88,877.49

40.00 420.00

40.00 420.00

Total Expenditures

$

7,930.00 $

23,435.08 $

5;,;7.,9_.7._2.4.1. $ 89,337.49

RECAP: Salaries and Benefits Pre-Kindergarten Program Other Expenditures Assistive Technology Computers in the Classroom Pre-Kindergarten Program

$

47,019.29

7,930.00 23,435.08 10,953.12

$

89,337.49

See notes to the general purpose financial statements.

-28-

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30.1999

SCHEDULE "5"

Minimum Expenditure Requirements (Total Allotment) Expenditures on Combined Program Basis
Salaries Operations
Less: Expenditures for Media Center Programs in Excess of Total Media Allotment
Expenditures per Audit
Amount of Underexpenditure for Total Allotment

FOURTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS

100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS

$

3,638,741.00 $ _ _.....;1;.;;.03=,=02;;.;;.0.;.;;..0..-0

$

3,755,171.00

212,240.91 $ _ _...;1:.:.89;.:.,4..:.,;:5;.:,4,;.;;.6.-0

$

3,967,411.91

-80,943.70 $ _ _...:;.3=,8=86;;.:.,4..;..;;6;.;;.8.=2.-1

$

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

See notes to the general purpose financial statements. - 29 -

CITY OF COMMERCE BOARD OF EDUCATION JACKSON COUNTY ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS BY PROGRAM
GENERAL FUND QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30. 1999

STAFF DEVELOPMENT PROGRAMS Cost of Instruction Professional Development
Total Staff Development Programs
r> Identifies Fourteen Weighted Programs.
See notes to the general purpose financial statements.

$

10,475.00

S

10,475.00 $

0.00

22,799.00

22,799.00

0.00

$

33,274.00 100 $

33,274.00 $ ......_ _=0...0.0=

30 -

SCHEDULE "6"

EDUCATION TOTAL
REQUIRED

ACTUAL EXPENDITURES

SALARIES

OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$

348,446.70 $

321,670.12 $

30,513.00 $

352.183.12

671.645.70

659,270.02

23,905.96

683,175.98

$ 1.020,092.40 $

980.940.14 $

54,418.96 $ 1,035,359.10 $

0.00

253,341.00

367,176.52

5,064.37

372,240.89

0.00

491.674.50

635.701.11

13.551.82

649.252.93

0.00

287.322.30

298,418.48

11,193.09

309,611.57

0.00

185.705.10

345,027.02

9.368.72

354,395.74

0.00

116.035.20

162.446.95

14.689.11

1n,136.06

0.00

$ 2.354.170.50 $ 2.789,710.22 $

108.286.07 $ 2,897,996.29

$

728.651.70

$

62.630.52 $ 260,240.36 383.668.89

895.08 $ 3.556.49 67.495.08 1.144.03

63,525.60 263,796.85 451,163.97
1.144.03

$

728,651.70 $

706.539.n $

73.090.68 $

n9.630.45

0.00

34,646.40

38.853.87

473.09

39.326.96

0.00

$

763.298.10 $

745,393.64 $

73.563.n $

818,957.41

$

54.930.60 $

48,056.75 $

7.604.76 $

55.661.51

0.00

$ 3,172,399.20 $ 3,583.160.61 $

189,454.60 $ 3,n2,615.21

$

82,044.00 $

172.010.39

$

172.010.39

0.00

22.693.00

$

22.786.31

22,786.31

0.00

$

104.737.00 $

172.010.39 $

22,786.31 $

194.796.70

$ 3,2n.136.20 $ 3.755,171.00 $

212.240.91 $ 3.967,411.91 $

0.00

$

10,475.00

22.799.00

$ _ _,;,33.,.2.7,.;4;,;;..00.

$

27.884.72 $

27.884.72

6.761.65

6,761.65

$

34,646.37 $

34,646.37 $

00..0.

31 -

SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 30, 2000

Honorable.Roy E. Barnes, Governor Members of the General Assembly Members ofthe State Board ofEducation
and Superintendent and Members ofthe City of Commerce Board ofEducation
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of City of Commerce Board of Education as of and for the year ended June 30, 1999, and have issued our report thereon dated May 30, 2000. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether City of Commerce Board of Education's financial statements are free of material misstatement, we perfonned tests ofits compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the detennination 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 that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered City of Commerce Board ofEducation's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial
a reporting. However, we noted certain matter involving the internal control over financial reporting and its
99YB-40

operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgement, could adversely affect City of Commerce Board of Education's ability to record, process, summarize and report financial data consistent with assertions ofmanagement in the financial statements. The reportable condition is described in the accompanying Schedule ofFindings and Questioned Costs as item FS-7711-99-01.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, the reportable condition described above is considered to be a material weakness.
This report is intended solely for the information and use ofmanagement, members ofthe City ofCommerce Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used.by anyone other than these specified parties.
Respectfully submitted,
~.tl).~.~ Russell W. Hinton State Auditor
RWH:gp 99YB-40

RUSSELL W. HINTON
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 30,2000

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members of the State Board ofEducation
and Superintendent and Members ofthe City of Commerce Board ofEducation
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MNOR PROGRAM AND INTERNAL CONTROL OVER COMPLJANCEIN ACCQRDANCE WITH OMB CIRCULAR A-I 33
Ladies and Gentlemen:
Compliance
We have audited the compliance of City of Commerce Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (OMB) Circular A-i33 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1999. City of Commerce Board ofEducation's major Federal programs are identified in the accompanying Schedule of Findings and Questioned Costs.. Compliance with the requirements oflaws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of City of Commerce Board of Education's management. Our responsibility is to express an opinion on City of Commerce Board of Education's compliance based on our audit. .
We conducted our audit of compliance in accordance with generally accepted auditing standards; the standards applicable to financial audits contained in GoYernment Auditin~ Standards, issued by the Comptroller General of the United States; and OMB Circular A-I33, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-I33 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 Commerce 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 Commerce Board of Education's compliance with those requirements.

99SA-30

In our opinion, the City of Commerce Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 1999.
Internal Control Over Compliance
The management of City of Commerce Board ofEducation is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered City of Commerce Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133.
We noted a certain matter involving the internal control over compliance and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over compliance that, in our judgement, could adversely affect the City of Commerce Board ofEducation's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. The reportable condition is described in the accompanying Schedule ofFindings and Questioned Costs as item FA-7711-99-01.
A material weakness is a condition in which the design or operation of one or more ofthe internal control components does not reduce to a relatively low level ofrisk that noncompliance with applicable requirements oflaws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe the reportable condition described above is not a material weakness.
This report is intended solely for the information and use ofmanagement, members ofthe City of Commerce Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
LO.4~
R sell W. Hinton State Auditor
RWH:gp 99SA-30

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

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY
AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7711-97-01 FS-7711-98-01 FS-77ll-98-02 FS-771l-98-03 FS-771l-98-04 FS-7711-98-05 FS-771l-98-06

Further Action Not Warranted Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Unresolved - See Corrective ActionlResponses Unresolved - See Corrective ActionlResponses Previously Reported Corrective Action Implemented Unresolved - See Corrective ActionlResponses

CORRECTIVE ACTIONIRESPONSES

EXPENDITURESILIABILlTIESIDISBURSEMENTS .Failure to Meet Expenditure Requirements Financial Statements Amount: $201.64 Finding Control Number: FS-7711-98-03

This finding will be resolved by Georgia Department ofEducation through a future increase in the Board's local share portion of QBE Allotments.

GENERAL LEDGER Failure to File Accurate Completion Reports Financial Statements Amount: $13,302.43 Finding Control Number: FS-771l-98-04

The Board will be sending corrected completion reports and unearned funds for Lottery Pre-K, Title VI, B - Flow Through and Title VI, B - Preschool to the Georgia Department ofEducation during FY2000.

GENERAL FIXED ASSETS Failure to Maintain General Fixed As'sets Account Group Finding Control Number: FS-77ll-98-06

Due to staffing limitations and budgetary considerations prohibiting the hiring of additional administrative staff, the Board has decided not to pursue the recording of general fixed assets on the financial statements.

SECTION IV FINDINGS AND QUESTIONED COSTS

CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
I SUMMARY OF AUDITOR'S RESULTS
1. T~e of Report Issued on the Financial Statements The auditor's opinion on the City of Commerce Board of Education's financial statements was qualified for various departures from generally accepted accounting principles.
2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the City of Commerce Board of Education disclosed a financial statement reportable condition related to the following control category.
General Fixed Assets
The reportable condition described above is considered to be a material weakness.
3. Noncompliance Material to the Financial Statements The audit ofthe City of Commerce Board ofEducation disclosed no instances ofnoncompliance that were deemed to be material to the financial statements.
4. Reportable Conditions in Internal Control Over Major Pr0iUarnS The audit report for the City of Commerce Board ofEducation disclosed a reportable condition in internal control over major programs for the following compliance requirement.
Cash Management
The reportable condition described above is not considered to be a material weakness.
5. me ofR.e.port Issued on Compliance for Major Programs
The auditor's opinion on' the City of Commerce Board of Education's report on compliance with requirements applicable to major programs was unqUalified.
6. Audit Findings Required to be Re.ported by Section .510(a) ofOMB Circular A-133 The City ofCommerce Board ofEducation's audit disclosed an audit finding required to be reported by section .510(a) ofOMB Circular A-133. The audit finding is included in section IV ofthis report.
7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program 84.027 Individuals with Disabilities Education Act - Part B - Special Education - Flow Through 84.173 Individuals with Disabilities Education Act - Part B - Special Education - Preschool
8. T}!pe "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
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CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
I SUMMARY OF AUDITOR'S RESULTS
9. Low Risk Auditee The City ofCommerce Board ofEducation did not qualify as a low risk auditee as defined by Section .530 ofOMB Circular A-133.
IT FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year Finding Control Number: FS-771l-99-0l
The City of Commerce Board of Education did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general purpose financial statements of the Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Board to establish accounting controls and procedures to provide for maintenance ofa General Fixed Assets Account Group. These subsidiary records should include an inventory ofland, buildings and equipment owned by the Board and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group.
Management's Response:
We concur with this recommendation. Due to current staffing limitations and budgetary considerations prohibiting the hiring ofadditional administrative staffthe Board has decided not to pursue the recording of general fixed assets on the financial statements.
ill FEDERAL AWARD FINDINGS AND QlJESTIONED COSTS
CASH MANAGEMENT Excessive Cash Balances Reportable Condition U. S. Department ofEducation Through Georgia Department of Education Finding Control Number: FA-7711-99-01
A review of cash management procedures and internal controls for the Special Education Cluster (CFDA 84.027 and 84.173) disclosed that cash draws utilizing DE form 0147, "Quarterly Report ofExpenditures and Estimated Requirement for Grant Funds", were made in advance ofimmediate cash needs, resulting in the accumulation of excessive ending monthly cash balances in four months.
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CITY OF COMMERCE BOARD OF EDUCATION - JACKSON COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
CASH MANAGEMENT .Excessive Cash Balances Reportable Condition U. S. Department of Education Through Georgia Department ofEducation Finding Control Number: FA-7711-99-01 Management should become familiar with the Federal regulations for the Special Education program in order to develop adequate control procedures designed to provide for the achievement of compliance objectives. Management's Response: We concur with this recommendation. Future quarterly reports ofexpenditures and estimated requirements for grant funds will be accurately based upon immediate cash needs.
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