City of Dublin Board of Education, Laurens County, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2006

CITY OF DUBLIN BOARD OF EDUCATION LAURENS COUNTY, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS 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

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

9

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

10

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERALFUND

25

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

26

3 SCHEDULE OF STATE REVENUE

27

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

28

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

29

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

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

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

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY - TABLE OF CONTENTS -
SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
July 13, 2007

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the City of Dublin Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the City of Dublin Board of Education, as of and for the year ended June 30, 2006, 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 Dublin Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 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 opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information ofthe City of Dublin Board of Education, as of June 30, 2006, 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.
2006ARL-11

The City of Dublin Board of Education has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not to be part of, the basic financial statements.
In accordance with Government Auditing Standards, we have also issued our report dated July 13, 2007, on our consideration ofthe City ofDublin Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing ofinternal control over financial reporting and compliance and the results ofthat testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 25, is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Dublin Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
~-~
Rus ell W. Hinton, CPA, CGFM Sta e Auditor
RWH:gp 2006ARL-11

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY STATEMENT OF NET ASSETS JUNE 30, 2006

EXHIBIT"A"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Construction in Progress Improvements Other than Buildings Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries Payable Contracts Payable Retainages Payable Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets
The notes to the basic financial statements are an integral part of this statement. - 1-

GOVERNMENTAL ACTIVITIES

$

565,507

9,934,117

962,183 1,744,770
546,630 50,048 31,950

1,121,060 1,344,2e6 1,057,660 24,123,380 1,075,234 -9,306,806

$ ===3=3=,2=4=9'=9=99=

$

808,289

2,382,683

718,883

33,905

1,394,355 1,704,364

$

7 042 479

$

19,414,794

395,067 26,149
6,073,390 298,120

$

26,207,520

$ ===3..,3_,2..,4,..9,..,99=9===

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2006

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year

EXPENSES

CHARGES FOR SERVICES

$

19,493,057 $

1,375,831 1,122,582
400,106 555,652 1,744,905 289,824 2,060,706 927,828
86,421 114,354

349,562 1,449,210
94 953

$ ======3=0=,0=6=4=,=99=1== $

227,327
353,800 149,937 731 064

Net Assets - End of Year

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

EXHIBIT"B"

PROGRAM REVENUES

OPERATING .

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

13,281,729

393,804 526,323 270,435 518,629 657,979

725,477 216,726 $ 111,605
92,644

1,229,060

$

18,024,411 $

$ 25,438 25438 $

-5,984,001
-982,027 -596,259 -129,671
-37,023 -1,086,926
-289,824 -1,335,229
-685,664 25,184 -21,710
4,238 -70,213 -94 953
-11,284,078

$

7,153,717

2,742,150 73,706 33,610
1,401,140 493,589 299,346

$

12,197,258

$

913,180

25,294,340

$ =====26=,2=0=7=,52=0=

-3-

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2006

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$

65,898 $

499,374 $

1,181,119

8,727,084

206,241 1,744,770
546,630 50,048 31,950

502,617

235 $

565,507

25,914

9,934,117

708,858 1,744,770
546,630 50,048 31,950

Total Assets

$ 3,826,656 $ 9,729,075 $

26,149 $ 13,581,880

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries Payable Contracts Payable Retainages Payable
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Debt Service Inventories Capital Projects
Unreserved Undesignated Reported in: General Fund Capital Projects
Total Fund Balances

$

808,289

2,382,683

$

$ 3,190,972 $

718,883 33,905
752,788

$

363,117

$

31,950

$ 8,911,820

240,617

64467

$

635,684 $ 8,976,287 $

$

808,289

2,382,683

718,883

33,905

$ 3,943,760

$ 26,149

363,117 26,149 31,950 8,911,820

240,617 64467
26149 $ 9,638,120

Total Liabilities and Fund Balances

$ 3,826,656 $ 9,729,075 $

26 149 $ 13,581,880

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

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2006

EXHIBIT"D"

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

$

9,638,120

$

1,121,060

1,344,266

1,057,660

24,123,380

1,075,234

-9,306,806

19,414,794

253,325

$ -2,520,000 -578 719

-3,098,719

Net Assets of Governmental Activities (Exhibit "A")

$ 26,207,520

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

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2006

EXHIBIT"E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES}
Capital Leases Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 7,150,013

107,316 $ 2,742,150

14,663,436

4,787,553

731,064

77,973

379,775 $

331,542

$ 27,848,897 $ 3,121,925 $

$
35,841 35 841 $

7,150,013 2,849,466 14,663,436 4,787,553
731,064 493,589 331,542
31,006,663

$ 18,102,485

$

1,375,831

1,122,582

400,106

527,041

1,744,905

289,768 $

41 $

15

2,056,718

839,813

86,421

114,354

349,562

1,356,404

84,576

2,341,002

225,610

44,570 18186

1,195,000 76 767

$ 28,676,176 $ 2,403,799 $ 1,271,782 $

$ -827,279 $ 718,126 $ -1,235,941 $

18,102,485
1,375,831 1,122,582
400,106 527,041 1,744,905 289,824 2,056,718 839,813 86,421 114,354 349,562 1,356,404 2,425,578
1,465,180 94 953
32,351,757
-1,345,094

$ 485,899

$

485,899

$ 1,262,090

1,262,090

$ -1,262,090

-1,262,090

$ 485,899 $ -1,262,090 $ 1,262,090 $

485,899

$ -341,380 $ -543,964 $

26,149 $

-859,195

977 064

9,520,251

0

10,497,315

$

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

CITY OF DUBLIN BOARD OF EDUCATION- LAURENS COUNTY RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2006

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (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
Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.
In the Statement of Activities, only the loss on the sale of the buildings and equipment is reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the buildings and equipment sold.
Some of the Capital Assets acquired this year were financed with capital leases. In Governmental Funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Assets, the lease obligation is reported as a Long-Term Liability.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Bond Principal Retirements Capital Lease Payments
Total Long-Term Debt Repayments

$
$ 1,357,577 -535,991
$ 1,195,000 270,180

-859,195
821,586 3,704
-32, 196 -485,899 1,465,180

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

$===9=13..,.1=8=0

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

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2006

EXHIBIT"G"

ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

AGENCY FUNDS
$ =====5=5=,6=37=
$ ===55='=63=7=

The notes to the basic financial statements are an integral part of this statement. -9 -

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006
Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The City ofDublin Board ofEducation (School District) was established under the laws ofthe 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 organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements ofthe City of Dublin Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
- 10 -

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) and Bond Proceeds to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (sales) legally restricted for the payment ofgeneral longterm principal, interest and paying agent's fees.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless ofwhen the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized
- 11 -

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) 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 interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District 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,
- 12 -

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,

(7) Repurchase agreements, and

(8) Obligations of other political subdivisions of the State of Georgia.

The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration ofcredit risks, interest rate risks or foreign currency risks.

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 ofDublin Board ofCommissioners fixed the property tax levy for the 2005 tax digest year (calendar year) on November 10, 2005 (levy date). Taxes were due on January 20, 2006 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2005 tax digest are reported as revenue in the governmental funds for fiscal year 2006. The City of Dublin City Clerk bills and collects the property taxes for the School District, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance oftaxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2006, for maintenance and operations amounted to $7,150,013.

The tax millage rate levied for the 2005 tax year (calendar year) for the City of Dublin Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

16.277 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $2,742,150 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.

- 13 -

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVENTORIES

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

CAPITAL ASSETS

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

During 1994, the School District became a separate legal entity and the City of Dublin deeded all land and buildings in use by the School District to the School District. A stipulation in the agreement was made that ifthe property was no longer needed for educational purposes, the property would revert to the City of Dublin. Currently, all property transferred to the School District's possession at that time is being used for educational purposes, therefore these capital assets are considered to be the property of the City of Dublin Board of Education and will be reported on the School District's basic financial statements.

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

Capitalization Policy

Estimated Useful Life

Land Improvements Other than Buildings Buildings and Improvements Equipment

All

NIA

$

5,000

20 years

$

5,000

50 years

$

5,000 5 to 25 years

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

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement ofNet Assets.
Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value ofsuch surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. At June 30, $13,832 ofdeposits were not secured by surety bond, insurance or collateral as specified above. The School District is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the School District's deposits.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(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
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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006

Note 3: DEPOSITS AND INVESTMENTS

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

CATEGORIZATION OF DEPOSITS At June 30, 2006, the bank balances were $2,343,832. The amounts of the total bank balances are classified into four categories of custodial credit risk:

Category 1 - Cash that is insured (e.g., Federal Deposit Insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name.
Category 3 - Cash collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.
Category 4 - Uncollateralized.

The School District's deposits are classified by custodial credit risk category at June 30, 2006, as follows:

Custodial Credit Risk Category

Bank Balance

1

$ 327,689

2

2,002,311

3

0

4

13,832

Total

$ 2,343.832

CATEGORIZATION OF INVESTMENTS At June 30, 2006, the carrying value ofthe School District's total investments was $9,934,117 which is materially the same as fair value. This investment consisted entirely offunds invested in the Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. 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:

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006
Note 3: DEPOSITS AND INVESTMENTS The Primary Liquidity Portfolio consists ofGeorgia Fund 1, which is a combination local and state government investment pool. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the SEC as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 of the Investment Company Act of 1940. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated daily and reported to the rating agency weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed at the pool's share price, $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost. 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 of funds 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 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 of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2006, was 28 days. 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:
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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006

Note 5: CAPITAL ASSETS

Balances July l, 2005

Increases

Balances Decreases June 30, 2006

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

$ 1,121,060

$

0 $ 1,344,266

0 $ 1,121,060 1,344,266

Total Capital Assets Not Being Depreciated $ 1,121,060 $ 1,344,266 $

0 $ 2,465,326

Capital Assets Being Depreciated Buildings and Improvements Equipment Improvements Other than Buildings

$ 24,200,442 1,104,040 $ 1,057,660

$ 13,311

77,062 $ 24,123,380

42,117

1,075,234

1,057,660

Less Accumulated Depreciation for: Buildings and Improvements Equipment Improvements Other than Buildings

7,331,130 689,032 837,636

Total Capital Assets, Being Depreciated, Net $ 17,504,344 $

Governmental Activity Capital Assets - Net $ 18,625,404 $

454,057 65,659 16,275
-522,680 $
821,586 $

44,866 42,117

7,740,321 712,574 853,911

32,196 $ 16,949,468

32,126 $ 12,414,12~

Current year depreciation expense by function is as follows:

Instruction Support Services
General Administration Maintenance and Operation of Plant Student Transportation Services Food Services

$ 460,850

$

9,482

5,733

29.169

44,384 30,757

Note 6: RESTRICTED ASSETS

$==a!:5a!!f:!35-,9~9~1

Special Purpose Local Option Sales Tax (SPLOST) and general obligation bond proceeds are reported as restricted assets in the Statement ofNet Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2006, were as follows:

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006

Note 6: RESTRICTED ASSETS

District-wide Capital Projects

Bond

SPLOST

Proceeds

Debt Service Funds

Restricted Cash and Cash Equivalents: Debt Services Capital Acquisitions
Restricted Investments: Debt Services Capital Acquisitions

$
$ 1,161,918
$
$ 3,983,811 $ 4,743,273

235 25,914

Note 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2006, consisted of the following:

Transfer to

Transfers From District-wide
Capital Projects

Debt Service Fund

$ 1,262.090

Transfers are used to move Special Purpose Local Option Sales Tax revenue from the District-wide Capital Projects Fund to the Debt Service Fund to service bond debt.

Note 8: RISK MANAGEMENT

The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.

The School District has obtained commercial insurance for risk ofloss associated with automobiles. The School District has neither significantly reduced coverage for this risk nor incurred losses (settlements) which exceeded the School District's insurance coverage in any ofthe past three years.

The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups ofself-insurance funds, including the processing and defense ofclaims brought against members of the system. The School District pays an annual premium to the system for its general insurance

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006

Note 8: RISK MANAGEMENT

coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions and crime. Payment of excess insurance for the system varies by line of coverage.
The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the same fund that the employee's salary and benefits were paid. Claims are accounted for with expenditure and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

2005 2006

$

0 $

7 908 $

7 908 $

0

$

0 $

1 550 $

1 550 $

0

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Midwest Employers Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $500,000 loss per occurrence, up to $2,000,000.

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

Position Covered

Amount

Superintendent All Employees

$

20,000

$ 300,000

Note 9: SHORT-TERM DEBT

The School District obtains temporary loans in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution ofthe State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred.

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006

Note 9: SHORT-TERM DEBT

Short-term debt activity for the fiscal year is as follows:

Beginning Balance

Issued

Redeemed

Ending Balance

Temporary Loans

$=======0 $ 1,550.000 $ 1,550.000 $====0

Note 10: LONG-TERM DEBT

CAPITAL LEASES The City of Dublin Board of Education has entered into various lease agreements as lessee for equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value ofthe future minimum lease payments as ofthe date oftheir inception.

GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rate

Amount

General Government - Series 2004

2.07%

$ 2,520,000

Voters have authorized $10,100,000 in general obligation debt for various construction projects which was not issued as of June 30, 2006.

The changes in Long-Term Debt during the fiscal year ended June 30, 2006, were as follows:

Governmental Funds

General

Capital

Obligation

Leases

Bonds

Total

Balance July 1, 2005

$ 363,000 $ 3,715,000 $ 4,078,000

Additions Capital Leases

485,899

485,899

Deductions Debt Retired

270,180

1,195,000

1,465,180

Balance June 30, 2006

$ 578,719 $ 2,520,000 $ 3,098,719

Portion of Long-Term Debt Due within One Year

$ 159,355 $ 1,235.000 $ 1,394,355

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006

Note 10: LONG-TERM DEBT

At June 30, 2006, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

Capital Leases

Principal

Interest

2007 2008 2009 2010 2011 2012

$ 159,355 $ 169,838 78,657 54,196 56,911 59,762

34,990 24,509 13,269
8,561 5,845 2,994

Total Principal and Interest

$ 578,719 $

90,168

Fiscal Year Ended June 30

General Obligation

Debt

Principal

Interest

2007 2008

$ 1,235,000 $ 1,285,000

52,164 26,600

Total Principal and Interest

$ 2,520,000 $

78,764

Note 11: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2006:

Project

Unearned Executed Contracts

Dublin High School Football Stadium Renovations

$ 1,309,457

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

-22 -

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY EXHIBIT "H" NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006

Note 12: 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 ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.

Note 13: 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 School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2006 2005 2004

100% 100% 100%

$ 1,457,355 $ 1,374,281 $ 1,365,207

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CITY OF DUBLIN BOARD OF EDUCATION- LAURENS COUNTY GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006

SCHEDULE "1"

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

NONAPPROPRIATED BUDGETS

ORIGINAL {1}

FINAL {1}

ACTUAL AMOUNTS

$

7,150,013

$

7,202,982 $

7,202,982

107,316

14,511,234

14,505,454

14,663,436

4,505,608

4,909,044

4,787,553

151,275

164,294

731,064

32,500

32,500

77,973

252,750

252,455

331,542

$

26,656,349 $

27,066,729 $

27,848,897

$

17,213,769 $

17,650,062 $

18,102,485

1,129,341 1,188,685
366,164 523,238 1,715,779 326,099 1,943,500 813,536 133,100
92,316
1,559,523 30,000

1,087,244 1,311,335
366,164 520,033 1,718,398 326,099 1,940,410 817,818 133,100 113,860
1,533,431 30,000

1,375,831 1,122,582
400,106 527,041 1,744,905 289,768 2,056,718 839,813
86,421 114,354 349,562 1,356,404
84,576 225,610

$

27,035,050 $

27,547,954 $

28,676,176

$

-378 701 $

-481,225 $

-827,279

$

160,557 $

164,099 $

485,899

-160,557

-160,557

$

0 $

3 542 $

485,899

$

-378,701 $

-477,683 $

-341,380

906,563

906,563

977 064

Fund Balances - Ending

$

527,862 $

428,880 $

635,684

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

-25-

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2006

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U.S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Donation (1)
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Comprehensive School Reform Demonstration Education for Homeless Children and Youth Enhancing Education Through Technology Program Even Start Improving Teacher Quality Stale Grants Rural Education State Grants for Innovative Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States
Total U.S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555
10.550

N/A

(2)

NIA $ _ __..:..,1=-21.:..;:3.7""-7-=-8

$

1,213,778

N/A

33 887

$ _ __..:..,1c=-24..:..:7-"6=6=-5

* 84.027 * 84.173
84.332 84.196 * 84.318 84.213 * 84.367 84.358 84.298 84.010 84.048

N/A

$

N/A

$

596,417 20 723
617,140

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

90,831 60,025 440,029 212,267 310,908 103,583 15,030 1,747,880 42 624
3 640 317

Total Federal Financial Assistance
N/A = Not Available

$=====4,=88=7=,9=8=2

Notes to the Schedule of Expenditures of Federal Awards

(1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($328,475) were not maintained separately and are included in the 2006 National School Lunch Program.

Major Programs are identified by an asterisk {*) in front of the CFDA r_iumber.

The School District did not provide Federal Assistance to any Subrecipient.

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the City of Dublin 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.

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2006

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Bright from the Start: Georgia.Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Sparsity Nursing Services Principal Supplements Mid-term Adjustment Hold-Harmless Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs K-8 Statewide Reading and Mathematics Program National Teacher Certification Preschool Handicapped Program

GOVERNMENTAL FUND TYPE GENERAL FUND

$

782,969

850,423 223,954 1,902,228 101,901 859,973
40,014 1,624,863 1,441,334
554,434 2,065,469
322,399 70,203
132,881 8,673
270,435 86,362 53,031
449,786 631,701 722,333
163,574 25,438 20,000 67,394 9,808
131,662 1,526,170
81,824 92,525 -766, 116
48,414 5,829
61 548

$ ===1=4=,6=6=3,=4=36=

See notes to the basic financial statements.

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2006

SCHEDULE "4"

PROJECT
Acquiring, constructing and equipping renovations and improvements to the Dublin Junior High School Auditorium, including partial demolition of Dublin Junior High School, renovations and additions at Dublin High School, the purchase of school buses, the installation of computer cabling on a system-wide basis and technology upgrades, the acquisition of certain property and equipment, including any heating and air conditioning equipment, which may be subject to lease by the Dublin School District and additions, renovations and improvements to Central Elementary School, Susie Dasher Elementary School, Saxon Heights Elementary School, Hillcrest Elementary School, Moore Street Elementary School and Dublin Middle School.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

PROJECT STATUS

$ 14,850,000 $ 14,850,000 $ 2,480,525 $ 887,848 Ongoing

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

See notes to the basic financial statements.

- 28 -

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2006

SCHEDULE "5"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES OPERATIONS

TOTAL

$

965,882 $ 1,343,591 $

7,755 $

1,351,346

254,981

149,479

149,479

2,172,799

2,139,272

30,186

2,169,458

122,865

268,746

3,512

272,258

1,000,690

1,213,857

10,619

1,224,476

52,517 1,902,236 1,667,663
633,322 2,389,433
368,074 81,483
154,490 8 620

-6 2,058,622 2,255,189
555,670
217,568 1,736,865
163,383 311,294 304,160
72,121 94,023
4 837

37,076 186,865
44,574
2,724 5,713 18,024 4,959 2,325 4,801
502 1,231

-6 2,095,698 2,442,054
600,244
2,724 223,281 1,754,889 168,342 313,619 308,961
72,623 95,254
4 837

$

11,775,055 $ 12,888,671 $

360,866 $

13,249,537

312,402 61 609

374,775 9496

25,333 38 040

400,108 47 536

TOTAL QBE FORMULA FUNDS

$

12,149,066 $ 13,272,942 $

424 239 $ ==1=3,..,69=7=,1=8=1

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State budget austerity reduction.

See notes to the basic financial statements.

- 29 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
July 13, 2007

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the City of Dublin Board of Education
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of City of Dublin Board of Education as of and for the year ended June 30, 2006, which collectively comprise City of Dublin Board of Education's basic financial statements and have issued our report thereon dated July 13, 2007. 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 Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered City of Dublin Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to provide an opinion on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. 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 judgment, could adversely affect City ofDublin Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions ofmanagement in the financial statements. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FS-7741-06-02, FS-7741-06-03, FS-7741-06-04 and FS-7741-06-06.
2006YB-30

A material weakness is a reportable condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud 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, we believe none of the reportable conditions described above are material weaknesses.
Compliance and Otlier Matters
As part of obtaining reasonable assurance about whether City of Dublin Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of the management and members of the City ofDublin Board ofEducation and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~ w.~~
sell W. Hinton, CPA, CGFM State Auditor
RWH:gp 2006YB-30

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
July 13, 2007

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members of the State Board of Education
and Superintendent and Members ofthe City of Dublin Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-133
Ladies and Gentlemen:
Compliance
We have audited the compliance ofCity ofDublin Board ofEducation with the types ofcompliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2006. City of Dublin Board of Education's major Federal programs are identified in the Summary ofAuditor's Results Section ofthe accompanying Schedule ofFindings 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 Dublin Board of Education's management. Our responsibility is to express an opinion on City of Dublin 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 ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the City ofDublin Board ofEducation's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on City of Dublin Board of Education's compliance with those requirements.
2006SA-40

In our opinion, the City of Dublin Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2006. The results of our auditing procedures disclosed an instance ofnonmaterial noncompliance with those requirements which is described in the accompanying Schedule of Findings and Questioned Costs as item FA-7741-06-01.
Internal Control Over Compliance
The management of City of Dublin Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered City ofDublin 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 0MB Circular A-133.
We noted certain matters involving the internal control over compliance and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over compliance that, in our judgment, could adversely affect the City of Dublin Board of Education's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FA-7741-06-02 and FA-7741-06-03.
A material weakness is a reportable condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level ofrisk that noncompliance with the applicable requirements oflaws, regulations, contracts and grants caused by error or fraud 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 ofthe 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 none of the reportable conditions described above are material weaknesses.
This report is intended solely for the information and use ofthe management, members ofthe City of Dublin 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,
c:S:tit~~j~ State Auditor
RWH:gp 2006SA-40

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

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7741-04-01 FS-7741-05-01 FS-7741-05-02 FS-7741-05-03

Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action Responses Previously Reported Corrective Action Implemented

CORRE<;TIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS INVESTMENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Control Procedures Finding Control Number: FS-7741-05-01

Cash and Cash Eguivalents - After conversion from Genesis to CSI, there was a discrepancy in the amounts showing on the School District's general ledger and statements. The software contractor, bookkeeper, nor the state auditor could locate the sources. The School District will make sure that all bank statements are reconciled to the ledger with supporting documentation. This was rectified in fiscal year 2007.

Investments - The School District will make sure that investment statements are reconciled to the general ledger with supporting documentation.

Expenditures/Liabilities/Disbursements - The School District will make sure that all disbursements are accompanied by proper supporting documentation for all principal accounts.

CASH AND CASH EQUIVALENTS Uncollateralized Deposits Finding Control Number: FS-7741-05-02

It was discovered that the high school account was not being collateralized and that the account exceeded the $100,000 threshold. However, the auditors found this a year after the fiscal year being audited. The School District called the bank and informed them that the funds should be collateralized. The problem is that the year following the year being audited had also passed while the funds were uncollateralized. Therefore, this finding will not be resolved until the audit for the year ending June 30, 2007.

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
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SECTION IV FINDINGS AND QUESTIONED COSTS

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

I SUMMARY OF AUDITOR'S RESULTS

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

2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the City of Dublin Board of Education disclosed financial statement reportable conditions related to the following control categories.

Cash and Cash Equivalents Revenues/ReceivabIes/Receipts

Expenditures/Liabilities/Disbursements Accounting Controls (Overall)

None ofthe reportable conditions described above are considered to be material weaknesses.

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

4. Reportable Conditions in Internal Control Over Major Programs The audit report for the City ofDublin Board ofEducation disclosed reportable conditions in internal control over major programs for the following compliance requirements.

Program Income

Special Tests and Provisions

None ofthe reportable conditions described above are considered to be material weaknesses.

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

6. Audit Findings Required to be Reported by Section .51 0{a) of 0MB Circular A-133 The City of Dublin Board of Education's audit disclosed audit findings required to be reported by section .510(a) ofOMB Circular A-133. These audit findings are included in section IV of this report. We also noted a certain instance of nonmaterial noncompliance which is included in section IV ofthis report.

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

I SUMMARY OF AUDITOR'S RESULTS

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 84.027 Special Education - Grants to States 84.173 Special Education - Preschool Grants 84.318 Enhancing Education Through Technology Program 84.367 Improving Teacher Quality State Grants

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

9. Low Risk Auditee The City of Dublin Board of Education did not qualify as a low risk auditee as defined by Section .530 ofOMB Circular A-133.

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS Failure to Meet State Collateralization Requirements Nonmaterial Noncompliance Finding Control Number: FS-7741-06-01

Condition:

This is a repeat finding (FS-7741-05-02) from the fiscal year ended June 30, 2005. The School District failed to meet State collateralization requirements.

Criteria:

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 ofthe face value ofsuch surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction of the amount of deposit insurance.

Questioned Cost: NIA

Information:

At June 30, 2006, deposits in the amount of $13,832 were not secured by surety bond, insurance, or collateral.

Cause:

Management failed to monitor the amount ofcollateral pledged to the School District's accounts.

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS Failure to Meet State Collateralization Requirements Nonmaterial Noncompliance Finding Control Number: FS-7741-06-01

Effect:

Noncompliance with respect to O.C.G.A. 45-8-12.

Recommendation:

The School District should work with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the School District's deposits.

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Reportable Condition Finding Control Number: FS-7741-06-02

Condition:

This is a repeat finding (FS-7741-05-01 and FS-7741-04-01) from the years ended June 30, 2005, and June 30, 2004, respectively. The accounting procedures of the School District were insufficient to provide for adequate internal controls over the school activity accounts.

Criteria:

The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: NIA

Information:

Cash and Cash Equivalents The bank reconciliation function was not separated from the check writing function. The bank reconciliations did not include evidence ofapproval by an administrator not directly connected with cash operations. Two savings accounts were not recorded on the general ledger. An audit entry was proposed and made to record the two savings accounts on the general ledger. Two bank accounts were not reconciled to the cash amounts on the general ledger as presented for audit.

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over School Activity Accounts Reportable Condition Finding Control Number: FS-7741-06-02

Revenues/Receivables/Receipts The cash receipts function was not separated from the record keeping function. Based on a review oftwenty receipts, the following deficiencies were noted: o Ten receipts lacked supporting documentation. o One receipt was not deposited in a timely manner.

Expenditures/Liabilities/Disbursements The record keeping function was not separated from the check writing function. Based on a review of twenty vouchers, the following deficiencies were noted: o Three vouchers lacked supporting documentation. o Two vouchers did not contain purchase orders. o Three vouchers contained purchase orders completed after the purchase date. o One voucher did not contain an original invoice.

Cause:

These deficiencies were a result of management's decision to limit the number ofadministrative staffmade responsible for accounting functions and management's failure to ensure that internal controls were established, implemented and functioning at the school level.

Effect:

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

Recommendation:

The School District should implement procedures to ensure that the key accounting functions of custody, record keeping and authorization are separated and/or utilize oversight for these incompatible activities. In addition, management should monitor controls to provide reasonable assurance that transactions are processed according to established policies and implement those procedures deemed necessary to strengthen internal controls over the accounting functions.

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls at the Central Office Reportable Condition Finding Control Number: FS-7741-06-03

Condition:

This is a repeat finding (FS-7741-05-01) from fiscal year June 30, 2005. The accounting procedures ofthe School District were insufficient to provide for adequate internal controls at the central office.

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. In addition, management is responsible for ensuring that travel expenditures comply with the travel regulations as set forth in the Financial Management for Georgia Local Units of Administration.

Questioned Cost: NIA

Information:

Cash and Cash Equivalents The General Fund (Operating) bank account, Payroll bank account and School Food Services bank account were not reconciled to the cash amounts listed on the general ledger at June 30, 2006. The School District's general ledger reflected an overall balance in the Interfund Cash account of $46,346. This account should always carry an overall balance of zero.

Expenditures/Liabilities/Disbursements Based on a review of twenty vouchers, two vouchers were for unallowable meals and one voucher was for excessive mileage reimbursement.

Cause:

These deficiencies were the result of management's failure to ensure that adequate internal controls were established, implemented and functioning for Cash and Cash Equivalents and Expenditures/Liabilities/Disbursements at the Central Office.

Effect:

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

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls at the Central Office Reportable Condition Finding Control Number: FS-7741-06-03

Recommendation:

The School District should establish, revise and/or monitor procedures to ensure that bank accounts are properly reconciled to the general ledger and that the Interfund Cash account is accurate. In addition, management should review current policies regarding travel expenditures and implement controls to ensure that expenditures are in compliance with travel regulations as set forth in the Financial Management for Georgia Local Units of Administration.

ACCOUNTING CONTROLS (OVERALL) Inadequate Access Controls Reportable Condition Finding Control Number: FS-7741-06-04

Condition:

The accounting procedures of the School District did not maintain adequate separation of duties in the Financial Accounting System.

Criteria:

Separation of duties involving key accounting functions, both manual and automated, is the basis for achieving an adequate system of internal control.

Information:

Inadequate access controls in the Financial Accounting System do not prevent users from accessing accounting functions that are outside of their area of responsibility.

Cause:

The School District's management is responsible for designing and maintaining internal controls that restrict access to programs or data. Management has not limited the access rights of users of the Financial Accounting System.

Effect:

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

Recommendation:

Management should ensure that the access controls in the accounting information system should complement the system of internal control by limiting an employee's access to only the accounting functions necessary for the performance of the employee's duties.

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Use ofSPLOST Proceeds Nonmaterial Noncompliance Finding Control Number: FS-7741-06-05

Condition:

The School District spent Special Purpose Local Option Sales Tax (SPLOST) proceeds on stadium renovations which were not specifically identified in the SPLOST project referendum and do not appear to meet the definition of "capital outlay projects for educational purposes" in State laws regarding imposition and use of sales taxes for educational purposes.

Criteria:

According to Paragraph IV, Section VI, Article VIII of the Constitution of the State ofGeorgia, "the purpose or purposes for which the proceeds ofthe tax are to be used and may be expended include: (1) Capital outlay projects for educational purposes; (2) the retirement of previously incurred general obligation debt with respect only to capital outlay projects of the school system... " 0.C.G.A. 48-8-121 states, "The proceeds received from the tax authorized by this part shall be used .. . exclusively for the purpose or purposes specified in the resolution or ordinance calling for imposition ofthe tax".

The Attorney General's Official Opinion 97-7 for O.C.G.A. 20-2-260 (b)(5) states, "The definition of educational facilities specifically excludes swimming pools, tracks, stadiums, and other facilities or portions offacilities used primarily for athletic competition".

Questioned Cost: NIA

Information:

During the year under review, the School District spent $2,259,359 for the equipping and renovating of the Dublin High School stadium.

Cause:

The School District believed this project was covered by references of "renovations and additions at Dublin High School" and "acquisition of certain property and equipment" in its referendum.

Effect:

Expenditures of SPLOST funds for stadium renovations appear to be in conflict with State laws regarding imposition and use ofSPLOST funds after considering that Paragraph IV, Section VI, Article VIII ofthe Constitution of the State ofGeorgia indicates SPLOST proceeds should be spent on "capital outlay projects for educational purposes" and the Attorney General has ruled that facilities used primarily for athletic competition do not meet the definition of educational facilities.

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Use ofSPLOST Proceeds Nonmaterial Noncompliance Finding Control Number: FS-7741-06-05

Recommendation:

The School District should research this issue, consult with legal counsel and verify if expenditures ofthis nature are an appropriate use of SPLOST funds in accordance with State law and the SPLOST referendum as approved by the voters of Laurens County.

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over Procurement Card Expenditures Reportable Condition Finding Control Number: FS-7741-06-06

Condition:

School District personnel did not ensure that purchases made with the Board's procurement cards were properly authorized and documented.

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.

Questioned Cost: NIA

Information:

Weaknesses in internal controls related to procurement card usage were noted as follows:
The School District did not have a written policy regarding the use of the procurement cards.
There were no procedures in place to ensure that charges were allowable prior to the use of the procurement cards.
A review of twelve procurement card transactions revealed that six transactions did not have supporting documentation.
The School District's management was unaware of a procurement card being utilized by School Food Services.

Cause:

These deficiencies were a result of management's failure to ensure that internal controls were established, implemented and functioning with regard to the procurement cards.

Effect:

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

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Controls over Procurement Card Expenditures Reportable Condition Finding Control Number: FS-7741-06-06

Recommendation: The School District should establish written policies and procedures to ensure that procurement card expenditures are authorized and documented.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

CASH MANAGEMENT Excessive Cash Balances Failure to Refund Interest Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027 and 84.173) Finding Control Number: FA-7741-06-01

Condition:

A review of cash management procedures for the Special Education Cluster programs disclosed that cash draws were made in advance ofimmediate cash needs, resulting in the accumulation of excessive cash balances.

Criteria:

In accordance with 34 CFR 80.21 when funds are advanced, Local Education Agencies must follow procedures to minimize the time lapsing between the transfer of funds from the Georgia Department of Education and disbursement. In addition, interest earned on advances by local government grantees is required to be submitted promptly to the Federal grantor agency. Up to $100 per year may be kept for administrative expenses.

Questioned Cost: $1,288

Information:

The Special Education Cluster programs had an average cash balance of $27,189 with excessive ending monthly cash balances in seven months.

Cause:

The School District failed to accurately forecast the cash needs of the program.

Effect:

Excessive cash balances maintained for more than four months resulting in noncompliance with grant requirements.

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

CASH MANAGEMENT Excessive Cash Balances Failure to Refund Interest Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027 and 84.173) Finding Control Number: FA-7741-06-01

Recommendation:

The School District should implement procedures to accurately forecast the cash needs ofthe program. In addition, procedures should be implemented to minimize the time elapsing between the transfer of funds from the Georgia Department of Education and disbursement of such funds by the School District. The Georgia Department ofEducation should review this matter to determine if a refund of funds is necessary for the excess interest proceeds.

PROGRAM INCOME Inadequate Controls over Collection and Deposit Procedures Reportable Condition U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-7741-06-02

Condition:

A review of the School District's internal control policies and procedures noted deficiencies related to the collection and deposit procedures for sales for the Child Nutrition Cluster (CNC) (CFDA 10.553 and 10.555) programs.

Criteria:

In accordance with 7 CPR 3015.61, the Board is responsible for maintaining a financial system that includes effective control over CNC program funds. This includes designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures.

Questioned Cost: NIA

Information:

Based on a review of thirty cash register reports, the following deficiencies were noted: Nine cash register reports indicated a deposit amount which was different
from the amount actually deposited. One cash register report indicated an $85.40 shortage which was not
investigated or explained by the School District.

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

PROGRAM INCOME Inadequate Controls over Collection and Deposit Procedures Reportable Condition U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-7741-06-02

Cause:

The School District failed to establish adequate internal control policies and procedures for the documentation of deposits from sales of the CNC programs.

Effect:

Failure to establish appropriate procedures for collection and deposit ofmeal sales revenues could result in errors in financial reporting and increase the risk of material misstatement to the financial statements including misstatements due to fraud.

Recommendation:

Collection and deposit procedures should be implemented and/or enhanced to ensure that all sales are properly accounted for and deposits are accurate and properly supported by sales records.

SPECIAL TESTS AND PROVISIONS Federal Reimbursement Transfers Not Timely Reportable Condition U.S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-7741-06-03

Condition:

A review of the School District's process for the transfer of Federal reimbursement payments for the Child Nutrition Cluster (CFDA 10.553 and 10.555) programs disclosed that Federal reimbursement payments have not been credited to the food service account in a timely manner in accordance with USDA Policy 210.14-06.

Criteria:

USDA Policy 210.14-06 states that USDA funds should be entered into the school food service account as soon as possible on receipt. If program reimbursement funds are held in a different account before placing it into the school food service account, any interest on this USDA revenue must also be credited to the school food service account.

Questioned Cost: NIA

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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

SPECIAL TESTS AND PROVISIONS Federal Reimbursement Transfers Not Timely Reportable Condition U. S. Department of Agriculture Through Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) Finding Control Number: FA-7741-06-03

Information:

Based on a review of ten Federal reimbursements received by the School District, nine were not transferred to the food service account in a timely manner. These transfers were made within 6 days and up to 69 days.

Cause:

The School District failed to implement appropriate internal controls to ensure that Federal reimbursement payments for the CNC programs are transferred to the food service account in a timely manner.

Effect:

Failure to promptly credit Federal reimbursements received to the food service account results in noncompliance with requirements of the Federal grant.

Recommendation:

The School District should implement policies and procedures to ensure that Federal reimbursement payments are properly transferred to the CNC food service account in a timely manner.

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SECTIONV MANAGEMENT'S RESPONSES

CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-7741-06-01
We concur with this finding. This finding occurred in fiscal year 2005, but was not discovered until a year later, when we were audited. This finding should be resolved in the audit for the year ending June 30, 2007.
Contact Person: Cecil E. Pollock, Director of Finance Phone: (478) 277-4019 Fax Number: (478) 272-1249 E-mail Address: pollockc@dublinirish.org
Finding Control Number: FS-7741-06-02
We concur with this finding. However, the Dublin City Board of Education does not have the financial resources to hire enough personnel at the administrative level at each school to fully implement the recommendations for separation of duties. This process will be reviewed, and controls put in place to involve the principal in more oversight of each procedure in the accounting process ofthe school activity accounts, especially the reconciliation ofthe bank accounts. All bank accounts will be included for reconciliation at the High School.
Contact Person: Cecil E. Pollock, Director of Finance Phone: (478) 277-4019 Fax Number: (478) 272-1249 E-mail Address: pollockc@dublinirish.org
Finding Control Number: FS-7741-06-03
We concur with this finding in fact. However, we do not feel that it is a matter of Inadequate Internal Controls at the Central Office. The matter of the bank statements not reconciling to the Interfund Cash account was the result ofa problem when the school system changed from Genesis to the CSI+ accounting software. Items were hitting Interfund Cash that should not have been. Working with the support staff at CSI+, the cause of this problem has been discovered, and parameters within the software have been changed. However, this was done well into the fiscal year 2007 year. Therefore, this problem will persist into the audit for the year ending June 30, 2007. Travel vouchers will also be reviewed carefully to ensure the proper disbursement of funds.
Contact Person: Cecil E. Pollock, Director of Finance Phone: (478) 277-4019 Fax Number: (478) 272-1249 E-mail Address: pollockc@dublinirish.org
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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-7741-06-04
We concur with this finding. The school system will require that passwords be changed periodically for security purposes. However, no person involved in the accounting process has access to functions that are outside of his/her area of responsibility.
Contact Person: Cecil E. Pollock, Director of Finance Phone: (478) 277-4019 Fax Number: (478) 272-1249 E-mail Address: pollockc@dublinirish.org
Finding Control Number: FS-7741-06-05
We concur with this finding. The Board feels that it was complying with the wishes of the citizens ofDublin, who specifically approved the stadium additions and renovations in the SPLOST starting January 1, 2008. In having to postpone the project for the new High School because of inflated costs, it was decided to proceed with the stadium project. Before proceeding with future projects, the Board of Education will secure the legal opinion of its attorney before proceeding with each project.
Contact Person: Cecil E. Pollock, Director of Finance Phone: (478) 277-4019 Fax Number: (478) 272-1249 E-mail Address: pollockc@dublinirish.org
Finding Control Number: FS-7741-06-06
We concur with this finding. Written procedures will be put in place to ensure that proper authorization and documentation are in place for each expenditure secured with a procurement card.
Contact Person: Cecil E. Pollock, Director of Finance Phone: (478) 277-4019 Fax Number: (478) 272-1249 E-mail Address: pollockc@dublinirish.org
Finding Control Number: FA-7741-06-01
We concur with this finding. The school system will review monthly the cash needs ofthe Federally funded programs.
Contact Person: Cecil E. Pollock, Director of Finance Phone: (478) 277-4019 Fax Number: (478) 272-1249 E-mail Address: pollockc@dublinirish.org
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CITY OF DUBLIN BOARD OF EDUCATION - LAURENS COUNTY SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDED JUNE 30, 2006
Finding Control Number: FA-7741-06-02 We concur with this finding. A written procedure policy will be put in place. Each cashier shall review and sign the cashier report indicating the amount of the deposit. A full explanation of any discrepancy shall be listed on the cashier report. The daily cashier report shall be attached to the deposit record and submitted to the central office each Tuesday. In the future, if there is a change from the previous day, and this is known before lunch, the end-of-the-day processing will be run for the previous day to clear up the previous transactions. Contact Person: Ann Coogle, School Nutrition Director Phone: (478) 277-4024 Fax Number: (478) 272-1249 E-mail Address: cooglea@dublinirish.org Finding Control Number: FA-7741-06-03 We concur with this finding. The school system will implement procedures to ensure compliance with Federal requirements over the process for the transfer of Federal reimbursements. Contact Person: Cecil E. Pollock, Director of Finance Phone: (478) 277-4019 Fax Number: (478) 272-1249 E-mail Address: pollockc@dublinirish.org
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