GA', ;. ABOO , " " " ~. -; -, , ,"R I o' . '.' evs.: 1'3, ~t,l" O ",lOlQ ,, .."' .. .. :..- ~ '..' -, ,," ":;::'." ,, ". ,' J,' , ... ~. ; . ,, ' ., ,< "~ STATE OF GEOR'GIA .' '. ,. " ". " ,- , p '. " '. '.'. ' DE.P, ARTMENTOF AU'DllS'AND ," ACCOUNTS .' ., ., ", " v-, -r , .' " .,' ,. " " 0 ' ~';" J . " , ~, '.' , .'. .' .. .' .' .' ,- - ~' " :, " ' J j -, ., "'r ." , . "' , ,., , .' , , ,\ r 1- " -, r ..- ", . ., ,, " ' ' ,' ' '. ..... -. , "' . " ., " , .. -\ ,. " ". ) /,' I ~. ... ,, ~ , ' ,,' ", .. ,,,", 'I, -, 0-, -, ." . " , "' ;....' ,, ,\ , .' , " ,. '. ' .. ,I ,( .' .r, ,:'..t -, .":, l .'J,' ", ,- ., ' .' , " . , . , . " .~ " - " ,~ , .,', , " .' CITY OF PELHAM ,SOARD OF EDUCATION '" ,, , '. ,. " " : ... , MITCHELL COUNTY, .GEORGIA ,,' f. " f' ,J' . i " '. ,'" ,) ." , : .. : , ~.. "" " ~ I \," ." ,.~, REPORT' ON AUDIT .' :' ,,:' . ': OF THE FIN4t.JCIAL STATE~E~Ts " c ,,'" -, " ,. " ,i ." ' :" '"") , .- .. . , F.OR.'-T.. HE " - -r ," " FISCAL ", ,\ ", YEAR ENDED '.JUNE 30, 2002 ' ',' ' -" . " , .' ,, , ", -; , ' : I I, I ", , "' " .. ....~ ,.; I -, . :'. ' ~.~ r- .. -, " .' .;: , , " ''''I .., , " ", " " .. ," ,.... " .. .' '.. ,. , " -z.,'J~' ., .' ..' I ~ ,, " . I, , .'1 ' '" \ . ,""" ,, ,I ," " " " .- Russell W. Hinton ,. " ,.State Auditor . ' " " r ; .- ~. ,. ',' " . "... .. , . " , " , 'r , ~. ,'" " , ," , '. ". ,' r .. ,;, '. ", '. .,' e , \' e ,, ,,' " ., .',, I l~ ", ,. '. " " " ", .' , : " .' ,' .' ,) ." ,. , I cm" OF PELHAM BOARD OF EDUCATION MITCHELL COU1'.'TY -TABLE OF CONTENTS- SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATIONSCHEDULE OF EXPENDITURES OF FEDERAL AWARDS EXHIBITS GENERAL-PURPOSE FINANCIAL STATEMENTS COMBINED STATEMENTS - OVERVIEW A COMBINED BALANCE SHEET ALL FUND TYPES 2 B COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES 4 C COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS 7 D STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCES FIDUCIARY FUND TYPE - NONEXPENDABLE TRUST FUND 8 E STATEMENT OF CASH FLOWS FIDUCIARY FUND TYPE - NONEXPENDABLE TRUST FUND 9 F NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS 11 ADDmONAL FINANCIAL INFORMATION COMBINING AND INDIVIDUAL FUND STATEMENTS SPECIAL REVENUE FUND G COMBINING BALANCE SHEET 22 H COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 24 CAPITAL PROJECTS FUND I COMBINING BALANCE SHEET 26 J COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 28 FIDUCIARY FUND TYPES K COMBINING BALANCE SHEET 30 L STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND 31 cm" OF PELHAM BOARD OF EDUCATION - MITCHELL COUNTY - TABLE OF CONTENTS - SECTION I FINANCIAL ADDmONAL FINANCIAL INFORMATION SCHEDULES I SCHEDULE OF EXPENDfTIJRES OF FEDERAL AWARDS 32 2 SCHEDULE OF STATE REVENUE 34 3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 35 ALLOTMENTS AND EXPENDfTIJRES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) 4 BY PROGRAM 36 5 BY SITE 37 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDmNG STANDARPS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 SECTION ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTIONN FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL Rl/'i.~"ll W. HIr>-rOi'o STATE AUDITOR (404l~2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washrngton Street, S W Suuc 214 Atlant Gcorgra 30334-8400 February 7, 2003 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Supenntendent and Members of the City ofPelbam Board ofEducanon INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATIONSCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladles and Gentlemen. We have audited the accompanymg general-purpose financial statements of the City of Pelbam Board of Education, as of and for the year ended June 30, 2002, as hsted in the table of contents These general-purpose financial statements are the responsibility of the City of Pe1bam Board of Education's management. Our responsibility IS to express an opmion on these general-purpose financial statements based on our audit We conducted our audit m accordance With auditmg standards generally accepted m the United States ofAmenca and the standards apphcable to financial audits contained m 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 ofmatenal misstatement. An audit includes exammmg, on a test basis, evidence supporting the amounts and disclosures in the financial statements An audit also mcludes assessmg the accountmg pnnciples used and sigruficant estimates made by management, as well as evaluatmg the overall financial statement presentation. We beheve that our audit provides a reasonable basis for our opinion As descnbed m the notes to the general-purpose financial statements, the Board of Education's financial statements have been prepared using certain accounting practices and policies which, m our opuuon, vary m some respects from generally accepted accountmg pnnciples These vanances are descnbed as follows: 2002ARL-13 The general-purpose financial statements of the Board of Education did not contam a General Fixed Assets Account Group to account for property and equipment owned by the Board of Educallon which should be Included to conform to generally accepted accountmg pnncrples School activity accounts maintained at the individual schools are not Included In the general-purpose financial statements To conform to generally accepted accountmg pnnciples, these accounts should be Included In the general-purpose financial statements The Board of Education did not recogrnze as expenditures, In the year ended June 30, 2002, a portion of salanes and the corresponding employer's cost of related benefits earned for contractual services completed pnor to June 30, 2002 Also funds received, subsequent to June 30, 2002, from the Georgia Department of Education for the State's share of these unrecorded salanes and related benefits were not recorded as revenue in the year under review Conversely, the sirmlar expenditures and related revenues for contractual services completed pnor to June 30, 2001, were Improperly recorded in the year ended June 30, 2002 To conform to generally accepted accountmg pnnciples, revenues should be recorded when available and measurable and expenditures should be recorded when Incurred, rather than when funds are received or disbursed The aggregate effects on the general-purpose financial statements of these vanances or omissions have not been determmed, but are beheved to be matenal. In our OpInIOn, except for the effects on the general-purpose financial statements of the matters referred to In the preceding paragraph, the general-purpose financial statements referred to above present fairly, In all matenal respects, the financial position of the CIty of Pelham Board of Education as of June 30, 2002, and the results of Its operatIons and the cash flows of ItS nonexpendable trust fund for the year then ended, In conformity WIth accountIng prmciples generally accepted m the Uruted States of America, In accordance WIth Government AuditIng Standards, we have also ISSUed our report dated February 7, 2003, on our consideration of the CIty of Pelham Board of Education's mternal control over financial reportmg and our tests of Its comphance WIth certam provisions of laws, regulations, contracts and grants That report IS an mtegral part of an audit performed In accordance WIth Government AudIting Standards and should be read in conjunction WIth this report in considering the results of our audit. Our audit was performed for the purpose of forrmng an opimon on the general-purpose financial statements of the City of Pelham Board of Educanon taken as a whole The accompanymg combmmg and mdrvidual fund statements (Exhibits G through L) and the financial schedules (Schedules I through 5), which Includes the Schedule ofExpenditures ofFederal Awards as required by U S Office of Management and Budget Circular A-133, Audits ofStates. Local Governments. and Non-Profit Organtzanons, are presented for purposes of additional analysis and are not a required part ofthe general-purpose financial statements Such mformatIon has been subjected to the 2002ARL-13 auditmg procedures applied In the audit of the general-purpose financial statements and In our opiruon, except for the effects of the matters referred to In the third paragraph, such Information IS fairly stated, In all matenal respects, In relation to the general-purpose financial statements taken as a whole A copy oftins report has been filed as a permanent record In the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated Section 506-24 Respectfully submitted, ~~~~ Russell W. HInton State Auditor RWH:as 2002ARL-13 CTIY OF PELHAM BOARD OF EDUCATION - MITCHELL COUNTY CITY OF PELHAM BOARR OF epUCATION - MITCHELL COUNTy COMBINEQ BAlANCE SHEET ALL FUNQ TYPES JUNE 3Q 2002 Cash and cash EqUivalents Investments Accounts ReceIVable Prepaid Items Inventories Food Donated Commodities Pun:hased Food Total Aa88ts GENERAL FUND GOVERNMENTAL FUND TYPES SPECIAL CAPITAL REVENUE PROJECTS FUND FUND S 884.93248 S 1286497Q S 1.744.58906 1.227.000 00 112.19379 255.93777 125.74749 32.536 22 12.286 14 2.783 34 $ 2.256:662<49 $ 399,655 95 S 1,870,336 55 LIAILmES AND FUND EQUITY LIABILITIES Accounts Payable SaIanee Payable Contraeta Payable Ratalnagoa Payable Deferred Revenue Funds Hold for Others TotalLJabilltlas FUNQEQUITY Fund Balances Reaarved For Bus Beplacement Funds For Endowment Corpus For Inventories Food Pro_ Donated Commodities Purchased Food For SPLOST lhYeIerved Dealgnatad fer 5a~~nsurance Undealgnalad Total Fund Equity Total Llabllrtlas and FU1d Equity S 2.31517 S 53.77866 3.905 91 12Q.932 Q1 S 134.884 40 25.571 50 S 8.221 08 S 174.71Q 87 S 180.22590 S 8.81400 S 184.58844 2.087,258 97 S 2.250.44141 S 12,286 14 2.783 34 S 919.40242 209.8788Q 224._28 S 790.708 23 1.71Q.11Q 85 $ 2,256,662 <49 $ 399.858 95 S 1,870:336 55 The notesto the genen!ll-purpoae ftnBnclaI statements are an rrtegral part of thla atatl!!lment -2- EXHIBIT "A" DEBT SERVICE FUND FIDUCIARY FUND TYPES TRUST AND AGENCY FUNDS TOTAlS (Memorandum amy> JUNE 30, 2002 JUNE 30, 2001 $ 000 $ 711378 $ 2,765,28502 $ 2.159.304609 20.000 00 1.247,000 00 1.817.000 00 1,783 01 495.68206 81084428 32.538.22 35.811 00 12.288 14 2,783 304 12455 70 2,760 03 $ 000 $ 28,898 79 $ 4.555:55278 $ $ 58.09383 $ 45.31383 124.83792 120.37608 1304.654 40 381,44340 25.571 50 65.533 20 3184 $ 1304 78 1304 78 11978 $ 1304 78 $ 3041,292 43 $ 812,817 93 $ 6.61400 $ 20,000 00 20.00000 $ 20,000 00 12.28814 2783304 919.402 42 12,45570 2,760 03 1.098.381 97 154.!588 44 140.427 15 $ 000 8.762 01 3,0ll6.606 01 2,753.174 32 $ 000 $ 28,76201 $ 4,214,260 35 $ 4,025,199 17 $ 000 $ 28,896 79 $ 4,555,!5S2 78 $ 4,638[017 10 -3- CITY Of pELHAM BOARD Of EDUCATION - MITCHELL COUNTY COMBINEO STATEMENT OF REVENUES EXPEND'TURES ANO CHANGES IN FUNO BAlANCES ALL GO\IERNMENTAL FUND TYpES YEAR ENDED JUNE 30 2002 REVENUES State Funds Federal Funds Taxe. Other Fund. Total Revenues EXpENDITURES Gunent InstructIOn Support serveee PupU 5e1VlC8S Improvement of Instructlonal SeNtC89 Educabonal Mecha 8eMcea General Admmlslnltlon Sd100IAdminIStration BusIness Ad~n Ma,ntenance and QperatJon of Plant StUdent Transportabon 5ervloos Conlnll Support Servlces Other Support 5eN":'" Food 5erv1C88 QpeTllllon Community 5eMCllll OpeT1lbonS Copltol Outlay Debt 5eIVlCB Prtndpal Interest Paying Agent Fees Total EJcpenddu..... Excess of Revenues over (undert EJcpendrtures OTHER FINANCING SOURCES (USES) 0p0TlItmg Trans",", In 0pera1mg Transfers OUt Total Other Rnanang Sources (Use.) Excess of Revenues and Other Flnanang Sources over (under) ExpendItures and other Financing Uoea fUND BALANCE JULY 1 eomm_ Food IlMlIltOl'( - Net ChangoIn Period Doneled _Food FUND BALANCE JUNE 3Q GENERAL FUND SPECIAL REVENUE FUND $ 8,870,54342 $ 368,29819 844849 1 390,186 60 602,62538 107,42915 110,13573 $ 9,589,046 44 $ , ,868,620 52 $ 6354,120 54 $ 237,24593 209,232 03 215,88934 154,06735 637,47559 182,87038 671,11422 33,28161 53,02960 14,27000 930,28134 43,11012 85,92512 82,530 78 15,26169 2745086 653,094 72 $ 8,762,596 59 $ 1,837,654 63 $ 826,44985 $ 30,96589 $ $ -813,28113 $ -813,281 13 $ 67578 67578 $ 13,166 72 $ 2,237.27269 31,64167 193,4!50 86 -16956 23 31 $ 2,250,441 41 $ _....:~.:;::~:. Tho note. to !he goneral-ptnpose finencIaJ stetsments 8T1I en Inlegrol part of this sletement -4- EXHIBIT 'B" CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTALS (Memorandum Ontyl YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 168 832 51 $ 9,407.67412 $ 8,57885675 1,398,63509 1,380,780 64 569,103 91 $ 147,19340 1,318,92269 1.314,34854 26,870n 244,43565 345,35797 $ 764,80719 $ 147,19340 $ 12,369,66755 $ 11,619,34390 $ 1,435,91369 $ $ 1,435,91389 $ S -671,108 50 S $ 7,284.401 88 $ 6,924,03532 280,356 05 295,15715 215,88934 236,59813 637,47559 182,87038 686,37591 33,28161 53,02960 41,720 86 n 653,094 1,435.91369 233,28867 232,01685 195 502 48 243591 76 586 019 00 131,880 32 561,39326 84,37298 53,30660 33,31584 669,11866 17,87551 797,45140 100,000 00 48,44250 75090 100,00000 48,44250 750 90 95.000 00 50.385 00 75090 147,19340 S 12,183,358 31 S 10,929,284 55 000 S 186,309 24 S 690,05935 S 812,605 35 S 812,60535 S 141,498 85 S 1.568,611 80 $ 813,28113 S 683,04727 -813,28113 -683,04727 $ 000 S 000 000 $ 000 186,309 24 S 3,999,335 35 690,08935 3,300,517 79 -18956 2331 8,59770 18051 s 1,710,11065 S ....;O~OO::.. S 4,185,49834 S 3,999,33535 -5- CITY OF PELHAM BOARD OF EDUCATION MITCHELL COUNTY COMBINER STATEMENT OF RElIENUES EXPENDITURES AND CHANGES IN FUNR BALANCES BUDGET AND ACTUAL (NDNGAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30 2002 EXHIBIT "C. GENERAL FUND BUDGET ACTUAL REVENUES State Funds Federal Funds Taxes Other Funds $ 8,86532400 $ 8870,54342 8,404349 484 000 00 802,62538 14,00000 107,42915 Total Revenues $ 9,383,32400 $ 9,589,046 44 EXPENDITlJRES Current InstruClJOn Support SeMCM Pupil SeMC8& Improvement of InstnJdional SaMoaS Educational Mecha Servlces GeneralAdrmmstratlcn School Admltustratfon Business Administration Maintenance and Operation of Plant Student Transportation serwcee Central Support services Other Support Services Food SaNa! Operabon Community Services Operatkms $ 7,311,82300 $ 6,354,120 54 270,230 00 299,98700 217,33000 190,82000 721,57800 228205 00 8298noo 4853500 71,540 00 12,30000 237,24593 209,232 03 215,88934 154,06735 837,47559 182,87038 871,11422 33,28161 53,02980 14,27000 21,000 00 Total ExpenclLtures $ 10,323,02500 $ 8,762,598 59 Excess of Revenues over (under) Expenditures $ -959,701 00 $ 828,44985 OTHER FINANCING SOURCES (USES) Other Sources Other Uses $ -813,281 13 Total Other FinanCing Sources (Ules) $ -813281 13 Excess of Revenues and Other FInancing Sources over (under) Expenditures and Other Financing uses $ -959,701 00 $ 13,186 72 FUNp BALANCE JULY 1 2001 2,038,064 28 2,237,272 89 Adjustments Food Inventory - Net Change In PerIod Donated Commod_ Purchesed Food 002 fUND BAlANCE JUNE 30 2002 S '.078:363 28 S 2,250, .... ' 4' SPECIAL REVENUE FUND BUDGET ACT!JAL 5 313,38700 $ 388,298 19 1 355,27600 1,390,18680 111,44500 110,13573 $ 1,780,108 00 $ 1,868,820 52 $ 828,05900 $ 930,281 34 50,303 00 98,9nOO 43,11012 85,92512 5834200 82 530 78 9,75000 15,28169 28,84100 70583600 27,450 86 853,094 72 $ 1,780,108 00 $ 1,837,654 63 $ 000 $ 30,985 89 $ 87578 $ 67578 $ 000 $ 31,84187 193 482 44 193,450 86 -1,483 70 -18958 2331 S 192.01874 S 224,904628 The notesto the general-purpose ftnanc:lal statements are an Integral pari of this statemenl -7- CITY OF PELHAM BOARD OF EDUCATION - MITCHELL COUNTY STATEMENT OF REVENUES EXPENSES AND CHANGES IN FUND BALANCES FIDUCIARY FUND TYPE - NONEXPENDABLE TRUST FUND YEAR ENDED JUNE 30, 2002 EXHIBIT "D" OPERATING REVENUES Donations Other Funds Total Operabng Revenues OPERATING EXPENSES Current Support SeMces Other Support SeMC8s Operating Income NONOPERATING REVENUES Interest Earned Net Income FUND BALANCE JULY 1 FUND BALANCE JUNE 30 C M AND BERNICE C STRIPLING PELHAM FFA SCHOLARSHIP TRUST FUND TOTALS (Memorandum Only) YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 1,000 00 $ 1,00753 S 2,00753 $ 1,00000 $ 1,00753 2,00753 $ 1,000 00 1,000 00 $ 000 $ 000 $ 2,44500 $ 2,00753 $ 2,00753 $ -1,44500 89066 89066 1,251 97 $ 2,898 19 $ 2,898 19 $ -19303 25,86382 25,88382 26,056 85 $ 28?6201 $ 28?62 01 $ _.....2~ 5,8~ 638~ 2 The notes to the genera~purpose finanoal statements are an Integral part of thiS statement -8- CITY OF PELHAM BOARD OF EDUCATION - MITCHELL COUNTY STATEMENT OF CASH FLOWS FIDUCIARY FUND TYPE - NONEXPENDABLE TRUST FUND YEAR ENDED JUNE 30, 2002 EXHIBIT "E" Cash Flows from Opera1mg Aenvmes Cash Received from Donations Cash Paid for Scholarships Net Cash Provided (Used) by Opera1tng ActMlJes Cash Flows from Invesbng ActJVrt,es Interes1 Received on Investments Net Cash Provided (Used) by Invesbng AclJvitJes Net Increase (Decrease) In Cash Cash and Cash EqUivalents - July 1 Cash and Cash EquNalems - June 30 C M AND BERNICEC STRIPLING PELHAM FFA SCHOLARSHIP TRUST FUND TOTALS (Memorandum Only) YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 1,00000 S 1,000 00 $ 1,00000 -2,44500 S 1,000 00 $ 1,000 00 $ -1,44500 $ 1,27400 $ 1,27400 $ 1,00274 S 1,27400 $ 1,27400 $ 1,00274 S 2,27400 S 2,27400 S -44226 4,705 00 4,70500 5,14726 s 6 ,979 00 S _ _..4;,:7.~0.5:0::0:. ReconCIliation of Operetlng Income to Net Cash Provtded (Used) by Opera1tng ActNrtles Operabng Income (loss) Increase m Accounts Receivable s 2,00753 S 2,00753 $ 1,44500 -1,00753 1 ,00753 Net Cash Provided (Used) by Opera1ing ActlVJbes s 1,000 00 S 1,000 00 $ _ _..;.:.~;:.:;:::.. The notes to the genera~purpose finanClel statemems are an ,megral part of this statement -9- CITY OF PELHAM BOARD OF EDUCAnON - MITCHELL COUNn' EXHffiIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2002 Note I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The CIty ofPelham Board of Education (School DIStnCt) was estabhshed under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Supenntendent appointed by the Board The School DIStnCt IS orgaruzed as a separate legal entity and has the power to levy taxes Its budget IS not subject to approval by any other entity Accordingly, the School Distnct IS a pnmary government and consists of all the orgaruzations that compose Its legal entity. FUND ACCOUNTING The School Distnct uses funds to report on ItS financial posmon and the results of Its operations Fund accounting IS designed to demonstrate legal comphance and to aid financial management by segregatmg transactions related to certain governmental functions or acnvines A fund IS a separate accounting entity With a self-balancing set of accounts. General FIXed Assets are recorded as expenditures In the vanous funds at the time of purchase A General FIXed Assets Account Group IS not presently mamtamed by the School DIStnCt To conform to generally accepted accounting principles, a General FIXedAssets Account Group should be mamtamed for reportmg the cost of assets acquired by governmental fund types Although "school activrty accounts" are mamtamed at the individual schools, neither the assets, habrhnes and fund equrty, nor the revenues, expenditures and changes In fund balances of these accounts are reflected In these financial statements. To conform to generally accepted accounting principles, these accounts should be recorded In the general-purpose financial statements. The general-purpose financial statements account for all State, Federal, Taxes and Other funds under control of the School Distnct, In compliance With generally accepted accounting principles apphcable to governmental units, unless otherwise disclosed In these notes. Funds presented In this report are as follows GOVERNMENTAL FUND TYPES - are used to account for all or most of the School DIStnCt'S educational activtties Governmental Fund Types include- GENERAL FUND - the fund used to account for all financial resources of the School DIStnCt except those required to be accounted for in another fund These transactions relate to resources obtained and used for services provided by a board of educatIon. SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restncted to expenditures for specified purposes These funds are received pnmanly from the Georgia Department of Education and from the Federal government to accomphsh specific educational objectives - 11 - CITY OF PELHAM BOARD OF EDUCAnON - MITCHELL COUNTY EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facihties DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term pnncipal, interest and paying agent fees, for the City of Pelham, Georgia, General Obhgation School Bonds, Senes 1993 FIDUCIARY FUND TYPES - the funds used to account for assets held by a government unit m a trustee capacity or as an agent for individuals, pnvate orgamzanons, other government umts and/or other funds. These funds include NONEXPENDABLE TRUST FUND C, M. and Bernice C. Stripling Pelham FFA Scholarship Trust Fund - the fund used to account for an endowment of which the corpus IS to be invested and preserved intact WIth the resultant income to be used to provide a scholarship to the most outstanding graduating student in the Agncultural Education (Future Farmers of Amenca) Program at Pelham High School AGENCY FUND - the funds used to account for assets held in a fiduciary capacity for other funds, governments, or mdividuals BASIS OF ACCOUNTING The accountmg and financial reportIng treatment applied to a fund IS detennmed by Its measurement focus AJI governmental funds are accounted for usmg a current financial resources measurement focus WIth tlus measurement focus, only current assets and current hahilines generally are mcluded on the balance sheet Operating statements of these funds present increases (i.e., revenues and other financmg sources) and decreases (i.e., expenditures and other financing uses) in net current assets Their reported fund balance IS considered a measure of available spendable resources Lrabihties which are expected to be financed from available spendable resources are reported as habrhties in the governmental funds. All nonexpendable trust funds are accounted for on a flow of econormc resources measurement focus WIth this measurement focus, all assets and habilrties associated WIth the operation ofthese funds are included on the balance sheet. Operatmg statements present increases (e.g, revenues) and decreases (e g , expenses) in net totaJ assets Agency funds are purely custodial in nature and do not mvolve measurement ofresults ofoperations Governmental funds are accounted for using the modified accrual basis ofaccountmg under which: - 12 - CITY OF PELHAM BOARDOF EDUCATION - MITCHELL CQUNTY EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reveuues are recognizedw hen susceptible to accrual (I e., whenthey become both measurableand available) "Measurable" means the amount of the transaction can be determmed and "available" means collectible withm the current penod or soon enoughthereafterto be used to pay habilmes of the current period The SchoolDismct considers receivables collectedwnhm SIXty days after yearend to be available Property taxes, sales taxes and Interest are considered to be susceptible to accrual Nonexchange transactions, In which the School Distnct gives (or receives) value WIthout directly receiving (or grvmgj equal value In exchange, Include property taxes, local option sales taxes, intergovernmental grants and donations Revenue forpropertytaxesIS recogruzed Inthe fiscal year for which the taxes are levied Revenue from sales taxes IS recogmzed in the fiscal year the resourcesare receivedor susceptibleto accrual Revenue from grants anddonations IS recogruzed In the fiscal year in which all elrgibthty requirements have been satisfied. Expenditures are generallyrecognized when the related fund habihty IS incurred. A departure from the above defimtrons IS the accounting treatmentaffordedthe final two payments on General Fund teachers' and bus drivers'contracts,and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 2002, a substantial number ofpersonnelofthe SchoolDistnct were employed for a one hundredand rnnety day penod begmrung In August 2001 and ending In early June 2002 Personnelcontracts for this employmentpenod specifythat compensation be paid m twelveequalmonthlypayments begmrung in September 2001 and endmg In August 2002. State grants to fund the State's share of these contracts were disbursed from the Georgia Department of Education to the School Distnct in the same twelve months As of June 30, 2002, compensation under these employment contracts had been earned, but two of the twelve monthlypayments, due for July and August2002, had not been made. Payments for these two months were made and recorded as expenditures by the School Distnct subsequentto June 30,2002 Also,the State'sportionof the compensationpaid m July and August 2002 was received and recorded as revenue In the fiscal year subsequent to June 30, 2002. Conversely, the Similar expenditures and related revenues forcontractual services completed prior to June 30, 2001, were recorded m the year ended June 30, 2002 Generally accepted accounting pnncrples requirethat revenuesbe recordedwhenavailable andmeasurable and thatexpenditures be recorded when incurred. rather than when funds are received or disbursed The accrual basis ofaccounting, as required by generally accepted accounting principles,IS utihzed by nonexpendabletrust funds. Under the accrual basis of accounting, revenuesare recorded when earned and expenses are recorded at the time habihnes are incurred. Agency funds are accounted for usingthe modified accrual basts ofaccounnng m recogmzmg assets and liabihtres - 13 - I I I I I I I I I I I I I I I I I I I I I I I I I I I I CITY OF PELHAM BOARD OF EDUCAnON - MITCHELL COUNTY EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2002 Note I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUDGET The City ofPelham Board ofEducauon's budget IS a complete financial plan for the School District's fiscal year and IS based upon esl1mates of expenditures together WIth probable funding sources There IS no stalutory prohibinon regarding overexpenditure of the budget at any level The budget for all governmental funds IS prepared by fund, function and object The legal level of budget control was established by the Board at the aggregate level The budget for governmental funds was prepared on a basis other than generally accepted accountmg pnnciples The budget process begms when the School District's admuustranon prepares a tentative budget for the Board's approval After approval oftJus tentative budget by the Board, such budget IS advertised at least once In a newspaper of general circulation In the locality At the next regular meeting ofthe Board after advertisement, the Board receives comments on the tentative budget, makes revrsions as necessary and adopts a final school budget TIus final budget IS then submitted, In accordance WIth provisions of the Quality Basic Education Act, OCGA Section 20-2-167(c), to the Georgia Department of Education. The Board may Increase or decrease the budget at any tune dunng the year AU unexpended budget authonty lapses at fiscal year-end CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term Investments WIth ongmal maturities of three months or less from the date of acquisinon In authonzed financial mstrtuuons, Georgia Laws OCGA 45-8-14 authonze the School Distnct to deposit ItSfunds In one or more solvent banks or msured Federal savings and loan associanons. INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the School Distnct In nonparncipanng mterest-earnmg contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost Parncipatmg mterest-earrung contracts and money market Investments With a matunty at purchase ofone year or less are reported at amortized cost Both participating mterest-eammg contracts and money market Investments WIth a matunty at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authonzes the School Distnct to Invest Its funds and In selecl1ng among options for investment or among msl1lutional bids for deposits, the lughest rate ofreturn shall bethe objectrve, given equivalent conditions of safety and hquidity Funds may be Invested In the followmg: (I) Obhgations ISSUed by the State of Georgia or by other states, (2) Obligations Issued by the Umted States government, - 14- CITY OF PELHAM BOARD OF EDUCATION - MITCHELL COUNTY EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2002 Note I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (3) Obhgations fully Insured or guaranteed by the United States government or a United States government agency, (4) Obhgations of any corporation of the United States government, (5) Pnme banker's acceptances, (6) The Local Government Investment Pool adrmmstered by the State of Georgia, Office of Treasury and FIscal Services, (7) Repurchase agreements, and (8) Obligations of other pohtical subdivisions of the State of Georgia RECEIVABLES Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognrtion cntena has been met Receivables recorded on the general-purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables PROPERTY TAXES The CIty of Pelham fixed the property tax levy for the 2001 tax digest year (calendar year) on October IS, 2001 (levy date) Taxes were due on December 20,2001 (lien date). Taxes collected withm the current fiscal year or WIthin 60 days after year-end on the 2001 tax digest are reported as revenue In fiscal year 2002 The CIty of Pelham City Clerk bills and collects the property taxes for the School Distnct. Property tax revenues dunng the fiscal year ended June 30, 2002 for maintenance and operations amounted to $255,088 52. The tax nullage rate levied for the 2001 tax year (calendar year) for the CIty of Pelham Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value): School Operations ~mil1s SALES TAXES Local Option Sales Tax revenue dunng the fiscal year amounted to $347,536 86 and was recorded In the General Fund Local Opuon Sales Tax IS to be used for the maintenance and operation of the School District - IS - CITY OF PELHAM BOARD OF EDUCAnON - MITCHELL COUNTY EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 3D. 2002 Note I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Special Purpose Local Option Sales Tax revenue dunng the fiscal year amounted to $716,297 31 and IS to be used for capital outlay for educational purposes and debt service. This sales tax was authonzed by local referendum and the sales tax must be reauthonzed at least every five years INVENTORIES FOOD INVENTORIES Inventones of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods mventones are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the nme commodity Items are received. Purchased foods mventones are recorded as expenditures at the time ofpurchase The mventones reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which mdicates that these amounts do not constItute "available spendable resources" even though they are a component of net current assets PREPAID ITEMS Payments made to vendors for services that Will benefit penods subsequent to June 30, 2002, are recorded as prepaid Items LONG-TERM DEBT AGREEMENT The City ofPelham, Georgia (City Government) ISSUed General Obligation Bonds to provide funds for the acquisition and construction of major capital facihties. The general obligation bonds are direct obhgations and pledge the full faith and credit of the City Government. In accordance with the bond vahdatIon (Civil Action File No. 93-V-743) "".the City of Pelham shall provide for the assessment and collection ofan annual tax sufficient m amount to pay the pnncrpal ofand mterest on said debt by the levy of an annual tax upon all property subject to taxation for school bond purposes within the corporate limits of the City... ", Although not required by formal agreement to do so, during fiscal year 2002, the School Distnct paid $147,193.40 for debt service on the City Government's general obhgatron bonds. However, as discussed above, the debt associated With those general obhgation bonds IS the liabihty of the City Government, therefore that debt IS not recorded on the financial statements of the CIty of Pelham Board of Education. INTERFUND TRANSACflONS The School Distnct has the following types ofmterfund transactions' - 16 - cm' OF PELHAM BOARD OF EDUCAnON - MITCHELL COUNTY EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2002 Note I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reimbursements of expenditures/expenses minally made from a fund that are properly applicable to another fund are recorded as expenditures/expenses m the reimbursmg fund and as reducuons of expenditures/expenses m the fund that IS reimbursed Operating transfers are recorded for all mterfund transactions other than reimbursements MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the general-purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data m these columns do not present financial positron, results ofoperations or cash flows in confonruty WIthgenerally accepted accountmg pnncrples Neither are such data comparable to a consohdanon Interfund ehrmnanons have not been made in the aggregation oftlus data Note 2: DEPOSITS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time m any depository for a time longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee of Insurance, or by collateral The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe pubhc funds bemg secured after the deduction ofthe amount ofdeposit Insurance. If a depository elects the pooled method (OCGA 45-8-13. I) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe dailypool balance OCGA Section 45-8-11 (b) provides an officer holdmg public funds may, m Ius discretion, waive the requirement for security m the case ofoperatmg funds placed in demand deposit checkmg accounts. Acceptable secunty for deposits consists of anyone of or any combmanon of the followmg (I) Surety bond SIgned by a surety company duly qualified and authonzed to transact business withm the State of Georgia, (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (3) Bonds, bills, notes, certificates of mdebtedness 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 mumcipahnes of the State of Georgia, (5) Bonds of any public authonty created by the laws of the State of Georgia, providing that the statute that created the authonty authorized the use of the bonds for this purpose, - 17 - CITY OF PELHAM BOARD OF EDUCATION - MITCHELL COUNTY EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 2 DEPOSITS (6) Industnal revenue bonds and bonds of development authonnes created by the laws of the State of Georgia, and (7) Bonds, bills, notes, certificates of Indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the Uruted States government both as to pnncipal and Interest or debt obhgations 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, 2002, the bank balances were $4,508,479.26. The amounts ofthe total bank balances are classified Into three categones of credit nsk' Category I - Cash that IS insured (e g , Federal depository Insurance) or collateralized With secunues held by the School Distnct or by the School Distncr's agent In the School District's name. Category 2 - Cash collateralized With secunties held by the pledging financial msurution's trust department or agent In the School Distnct's name. Category 3 - Uncollaterahzed deposits (TIus Includes any bank balance that IS collaterahzed WIth secunnes held by the pledging financial msntution, or by Its trust department or agent but not In the School Distnct's name.) The School Distnct's deposits are classified by nsk category at June 30, 2002, as follows RIsk Category Bank Balance I $ 308,43601 2 160,420.96 3 4,039,622 29 Total $ 4,508.479.26 Note 3 NON-MONETARY TRANSACTIONS The School District receives food commodrties from the United States Department of Agnculture (USDA) for school breakfast and lunch programs. These commodines are recorded at their Federally assigned value. See Note 1 - Inventories - 18 - CITY OF PELHAM BOARD OF EDUCATION - MITCHELL COUNTY EXHIBIT "Fo NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 4 RISK MANAGEMENT The School Distnct IS exposed to VariOUS nsks of loss related to torts, theft of, damage to, and destruction of assets, errors or omissions, Job related Illness or mjunes to employees, acts of God and unemployment compensation The School Distnct has obtamed commercial msurance for nsk of loss associated WIth torts and assets The School Distnct has neither sigruficantly reduced coverage for these nsks nor mcurred losses (settlements) which exceeded the School Distnct's msurance coverage many ofthe past three years The School District has elected to self-Insure for all losses related to acts of God In addition, the School District has elected to self-Insure for errors or ormssions, which mcludes, among other nsks, nsks for sexual harassment and discnmmation The School District has not expenenced any losses related to these nsks in the past three years The School District IS self-msured Withregard to unemployment compensation chums A premium IS charged when needed by the General Fund to each user fund on the basis ofthe percentage ofthat fund's payroll to total payroll m order to cover estimated claims budgeted by management based on known claims and prior expenence The School District accounts for claims WIth expenditure and liability being reported when It IS probable that a loss has occurred, and the amount of that loss can be reasonably estimated. The School DIstrict has not mcurred any habihtres for unemployment compensation dunng the past two fiscal years. The School Distnct participates in the Georgia Education Workers' Compensation Trust, a pubhc entity nsk pool organized on December I, 1991, to develop, Implement and adrmruster a program of workers' compensation self-Insurance for Its member orgamzanons, The School Distnct pays an annual premium to the Trust for ItS general msurance coverage, Addinonal Insurance coverage IS provided through an agreement by the Trust WIth the United States Fidehty and Guaranty Company to provide coverage for potential losses sustamed by the Trust in excess of $350,000,00 loss per occurrence, up to $2,000,000 00, The School District has purchased surety bonds to provide addmonal msurance coverage as follows: - 19 - CITY OF PELHAM BOARD OF EDUCAnON - MITCHELL COUNTY EXHffiIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2002 Note 4 RISK MANAGEMENT PosItIon Covered Amount Supermtendent Each Principal Office ManagerlBookkeeper Each PersonnellPayroll Clerk Accounts Payable Clerk SecretarylBookkeeper All School Nutrition Managers $ 100,000.00 $ 5,00000 $ 5,000.00 $ 5,000.00 s 5,00000 s 5,00000 s 10,00000 Note 5 ON-BEHALF PAYMENTS The School Distnct has recognized revenues and expenditures in the amount of $105,080 55 for health insurance and retirement contnbutions paid on the School Distnct's behalfby the following State Agencies Georgia Department of EducatIon Paid to the Georgia Department of Comrnuruty Health For Health Insurance of Non-Certified Personnel 1nthe amount of$95,117.55 Office of Treasury and Fiscal Services Paid to the Pubhc School Employees Retirement System For Pubhc School Employees Retirement (PSERS) Employer's Cost 1nthe amount of $9,963.00 Note 6' SIGNIFICANT COMMITMENTS The following IS an analysis of sigrnficant outstanding constructIon or renovation contracts executed by the School Distnct as of June 30, 2002' ProJect Pelham High School Reroofing Pelham Elementary School Kindergarten Renovation Unearned Executed Contracts s 8,14974 15.326.54 $ 23,476,28 The amounts described In this note are not reflected in the general-purpose financial statements - 20- CITY OF PELHAM BOARD OF EDUCAnON - MITCHELL COUNTY EXHIBIT "F" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 Note 7 CONTINGENT LIABILITIES Amounts received or receivable pnncipally from the Federal government are subject to audit and review by grantor agencies This could result In requests for reimbursement to the grantor agency for any expenditures wluch are disallowed under grant terms. The School Distnct believes that such disallowances, If any, will be immatenal to Its overall financral position Note 8 RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) TRS PLAN DESCRIPTION Substantially all teachers, admuustrative and clencal personnel employed by local school districts are covered by the Teachers Retirement System of Georgia (TRS), which IS a cost-shanng multiple employer defined benefit pension plan TRS provides service retirement, disabilrty 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 Distnct who are covered by TRS are required by State statute to contnbute 5% of their gross earnings to TRS The School District makes monthly employer contribuuons 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 contnbution rate IS 9 24% and employer contributions for the current fiscal year and the precechng two fiscal years are as follows: Fiscal Year Percentage Contnbuted Required Contribution 2002 2001 2000 100% 100% 100% $ 595,822 18 $ 707,659.74 $ 628,682.34 - 21 - CITY OF PELHAM BOARD OF EDUCATION - MITCHELL COUNTY COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 2002 ASSETS Cash and Cash EqUIvalents Accounts Receivable Inventones Food Donated Commodtties Purchased Food Total Assets SCHOOL FOOD SERVICES FUND LOTIERY PROGRAMS $ 227,64142 $ 8.06128 25,63734 49,686 82 12.28614 2.78334 $ 268,348 24 $ _ _~5~7.,.7:4.8:1:0.. LIABILITIES ANP FUNp EQUITY LIABILITIES Cash Overdraft Accounts Payable Salaries Payabla Daferred Revenue Total b1abllrties FUND EQUITY Fund Balances Reserved For Inventorias Food Donated ccmrnecmes Purchased Food Unreserved Undeslgnated Total Fund Equity Total b1ab,lrtJas and Fund Equrty $ 6,534 28 $ 31,44992 36,86768 26,29818 $ 43.40196 $ 57,748 10 $ 12,286 14 2,78334 209,87680 $ 000 $ 224.946 28 $ 000 $ 268,348 24 $ _ _.::.:...:.;:;;:..:,::., See notes to the general-purpose finanoal statements -22- EXHIBIT"G" FEDERAL PROGRAMS TOTALS JUNE 30, 2002 JUNE 30, 2001 $ 235,70270 $ 244,51961 $ 180,61361 255,937n 195,098 52 12,286 14 2,78334 12,45570 2,76003 $ 180,61361 $ 506,709 95 $_..4.5;4,:83=3~86~ $ 107,053 00 $ 107,05300 $ 123,59738 15,794 46 53,n866 24,768 54 57,766 15 120,932 01 112,985 24 3184 $ 180,61361 $ 281,76367 $ 261,383 00 $ $ ----"-"'0''0-0- $ 000 $ 12,286 14 $ 2,78334 12,455 70 2,760 03 209,87680 178,23513 224,946 28 $_---1'9=3,=45:0=86.. $ 180,61361 $ 506,709 95 $_.....4=5=4,:8:3.3:::8:6.. - 23- CITY OF PELHAM BOARD OF EDUCATION MITCHELL COUNTY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES SPECIAL REVENUE FUND YEAR ENDED JUNE 30, 2002 REVENUES State Funds Federal Funds Other Funds Total Revenues EXPENDITURES Current Instrucbon Support Services Pupil Services Improvement of Instructional SeMces Educabonal MedIa SeMceS General AdmInistration Maintenance and Operation of Plant Othar Support SaMces Food SeMces Operabon Total Expenditures Excess of Ravenuas ovar (undar) Expenditures OTHER FINANCING SOURCES Operating Transfers In Excess of Revenues and Other FinanCln9 Sources over (under) Expenditures FUND BALANCE JULY 1 Food Inventory - Net Change In Pened Donated CommodrtJes Purchased Food FUND BALANCE JUNE 30 SCHOOL FOOD SERVICES FUND LOTIERY PROGRAMS $ 52,204 00 $ 316,094 19 521,85936 110,13573 $ 684,19909 $ 316,094 19 $ 259,622 44 28,553 78 12,501 00 15,261 69 $ 652,55742 53730 $ 652,55742 $ 316,47621 $ 31,64167 $ -38202 $ 31,64167 $ 193,450 86 169 56 2331 38202 000 000 $ 224,946 28 $ .....:;0:,0.::0::,. See notes to the genera~purpose financral statements 24 EXHIBIT"H" FEDERAL PROGRAMS TOTALS YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 368,298 19 $ 306,45562 $ 868,32724 1,390,18660 1,380,380 96 110,13573 110,62737 $ 868,32724 $_--,1-,,8,6=8=,6,2,0-=52,- $ 1,797,463 95 $ 670,65890 $ 930,28134 $ 878,663 03 14,556 34 85,92512 70,02978 27,45088 43,11012 85,92512 82,53078 15,26169 27,45088 653,094 72 41,14250 53,91184 3,50545 95,43998 13,694 12 24,565 84 689,11866 $ 868,62100 $ 1,837,654 63 $ 1,780,04142 $ -29376 $ 30,96589 $ 17,422 53 29376 67578 2,70127 $ 000 $ 31,84167 $ 20,123 80 000 193,45088 164,568 85 -16956 2331 8,59770 160 51 $ 000 $ 193,450 86 - 25- CITY OF pELHAM BOARD OF EDUCATION - MITCHELL COUNTY COMBINING BALANCE SHEET CAPITAL pROJECTS FUND JUNE 30 2002 ASSETS Cash and Cash Equivalents Investments Accounts ReceIVable Totel Assets REGULAR GEORGIA STATE FINANCING AND INVESTMENT COMMISSION s s 950,934 13 000 $ 950 ,934 13 s ~_ _~ 00~ 0 L1ABILmES AND FUNp EQUITY L1ABILmES Contracts Payable Retelnages Peyable Totel Llablhtles FUND EQUITY Fund Balances ReseNed For SPLOST Projects unreserved UndeSlgnated Totel Fund Eqully Totel LlBb,hbes and Fund Eqully S 134,654 40 25,571 50 $ 160,22590 s 790,708 23 $ 000 S 790,708 23 S 000 s 950 ,934 13 $ ~_ _...:0:.,0:;0:::. See notes to the general-pUrpose finanCIal stetements 26 EXHIBIT "I" SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS JUNE 30, 2002 JUNE 30, 2001 $ 793,654 93 $ 1,744,58906 $ 669,62579 620,000 00 125,74749 125,74749 305,76261 $ 919,40242 $ $ 134,654 40 $ 381,44340 25,57150 65,53320 $ 160,225 90 $ _--""",4-,4,-6,,-9,=7,6-6,,0,,- $ 919.40242 S 000 790,70823 472,22983 $ 919,40242 $ 1,710,11065 S 1,568,611 80 $ 919,40242 S 2,015,58640 - 27- CITY OF PELHAM BOARD OF EDUCATION - MITCHELL COUNTY COMBINING STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES CAPITAL PROJECTS FUND YEAR ENDED JUNE 30 2002 REVENUES State Funds Taxes Other Funds Total Revenues EXPENDITURES Capital OuUay Building end BUilding Improvements Excess of Revenues over (under) Expendllures OTHER FINANCING SOURCES IUSES) Operellng Transfers in Operating Transfers Out Total O1her F,nanang Sources (Uses) Excess pf Revenues and Other FinanCing Sources over (under) Expendrtures and O1her Financing Uses FUND BALANCE JULY 1 FUNP BALANCE JUNE 30 REGULAR GEORGIA STATE FiNANCING AND INVESTMENT COMMISSION $ 20,00000 $ 148,832 51 10,294 23 $ 30,294 23 $ 148,83251 $ 419,74747 $ 1,016,16622 $ -389,453 24 $ -867,333 71 $ 707,93164 $ 667,33371 $ 707,93164 $ 667,33371 $ 318,47840 $ 000 472,22983 000 $ 790,708 23 $_=~.....:0~0:0. See notas to the general-purpose finanCIal statemen1s - 28- EXHIBIT "J" SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 168.83251 $ 270,39749 $ 569,10391 569.103 91 589,84816 16,57654 26.87077 83,66278 $ 585,68045 $ 764,80719 $_--,=92=3,"90-8,,4,3,- $ 000 $ 1.435.91369 $_--7,97~,1~4~ 6 2"1- $ 585,68045 $ -e71.106 50 $ _ _1'-2"'6<,07=6.2.2..2,,- $ 1.575.265 35 $ 953,409 20 $ -762,660 00 -762.660 00 273,063 20 $ -762,660 00 $ 812.60535 $ 680,346 00 $ -176,97955 $ 141,498 65 $ 1,096,381 97 1,568,611 80 807,108.22 761,50358 $ 919.40242 $ 1:710,11065 $ 1,568,611 80 29 CITY OF PELHAM BOARD OF EDUCATION - MITCHELL COUNTY COMBINING BALANCE SHEET FIDUCIARY FUND TYPES JUNE 30 2002 EXHIBIT"K" ASSETS Cash and Cash EqUIValents Investments Held by Trustee Accounts ReceIVable NONEXPENDABLE TRUST FUND ENDOWMENT FUND C M AND BERNICEC STRIPLING PELHAMFFA SCHOLARSHIP TRUST FUND AGENCY FUND TOTALS JUNE 30, 2002 JUNE 30, 2001 s 6,97900 S 134 78 S 7,11378 S 482478 20,00000 20,00000 20,00000 1,78301 1,783 01 1,15882 Total Assets S 28:76201 S 134 78 S LIABILmES AND FUND EQUITY LlABlLmES Funds Heldfor Others FUNp EQUITY Fund Balances RoaoMld For Endowment Corpus S Unreserved Undoslgnaled Total Fund Equity S Total LIBblhlles and Fund Equity S S 134 78 S 134 78 S 11978 20,000 00 8,762 01 S 28,76201 S 28,762 01 S S 000 000 S 20,000 00 S 8,76201 28,76201 S 20,00000 5,86382 25,86382 _-=-==::.. 134 78 S 28,896 79 S 25,98360 see notes to the goneral-purpose linandalstatemonts - 30- CITY OF PELHAM BOARDOF EDUCATION - MITCHELLCOUNTY STATEMENTOF CHANGES IN ASSETS AND L1ABILmES FIDUCIARY FUNDTYPE - AGENCY FUND YEAR ENDED JUNE 30 2002 EXHIBIT "L" REMEMBRANCE GIFT FUND ASSETS Cash and Cash EqUivalents LIABILITIES Funds Held lor Othern BALANCE JULY 1, 2001 ADDmONS DEDUCTIONS BALANCE JUNE 30, 2002 $ 11978 S 75 00 $ 6000 $ 134 78 s 11978 S 75 00 $ 6000 $ 1~ 34 ~ 78 See no1es to the general-purposeflnanClal statemen1s - 31 - Cm OF pELHAM BOARD OF EDUCATION. MITCHELL COUNTY SCHEDULE OF EXPENDIDJRES OF fEDERAL AWARDS YEAR ENDED JUNE 30 2002 SCHEDULE "'" FUNDING AGENCY pROGRAMIGRANT Agncuttura U S Department 01 Child Nutnnon Cluster Paae-Through From GeorgIa Departmllllt of Education food 8nd NutrItion Program food ServiceS School Breakfast Program NabonBl School Lunch Program Totsl Child NutntJon Cluster Other Programs PsssThrough From GeOfgl8 Department of Edueatlon food 8nd NutntJon Progrllm Food Dlstrlbutton Program (1) T018I U S Department of Agriculture Educabon. U S Department of SpeCIal EdUC8tlon Cluster P8SS-Through From Georgia Department of EdUCBtJon -IndlVldUBIs with DlS8b1~beS EducabOn Ad Pert B Speasl Educatton Flow Through Pert C - Speclal Education S~I Edl..le-bon Cl!lpaaty Bullchng tmproveml!lnt Total SpeclaJ EdUCl!ltlonCluster Other Programs Dned Impact AId P8uThrough From GeorgI8 Department of EducabOn Elementary and Secondary EducabOn N::t nth!! I Accountability Grant Grants to Local Educational Agenaea Trtle II Elaenhower Pro1eIIIOI\BI Development Trtlelll Technology Lrteracy Challenge Fund Grants Tlue VI IMOVlIlIYe Educabon prog... m su.teg1n Class SIZe Reduction GOBls 2000 State and Local Educ:atlon SyaterTllC Improwment Orenta VocatIOnsI educatIOn Basic GllIInta to SWta High School Program B8SlC Grant Pall-ThrOugh From MltcheD County BOlird 01Edueatkln Elementary end Secondary EducabOn Ad Title I Grants to Locel EducabOnBl AgertCIH Total U S Department of Education CFDA NUMBER PASSTHROUGH ENTITY 10 NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD 10553 10555 NlA S 108 221 51 NIA 372 409 68 S S 480631 19 S (2) 61132925 (3) 61132Q25 10550 NlA 41,22817 S 521,e5936 S 41,22817 652,55742 Bot 027 Bot 173 84 173 NlA S 16945833 S NlA 17 714 72 NlA 425200 S 191,42505 S 16945833 17,71472 4,25200 191,42505 84 041 844849 (4) 84 348 N/A 84 010 N/A 84 2e1 N/A 84 3t8 NlA 84 29" NlA 84 340 NlA 84 276 NlA 84 049 NlA 64 969 00 186 ee1 87 664875 12500000 e e01 00 37,009 00 1,558 57 36 687 00 85084 82 (3) 186 88187 664875 12501984 (3) 8908 98 (3) 37009 00 1 588 21 (3) 35 729 49 (3) 84010 N/A 209,34700 S 87677573 S 209,34700 se8,62100 TotBl Feeleral Flnenclal Asslstance N1A II Not Available - 32 S 1,398,63509 S 1,521 17842 CITY OF PELHAM BOARD OF eDuCATION. MITCHELL COUNTY SCHEDULE OF EXPENPI!URES OF FEDERAL AWARDS YEAR ENDED JUNE 30 2002 SCHEDULE "1" Not'" 10 !h0 Schftdule of Exoendrtura, of Fedoral Awards (1) Tho amounts shown torthe Food Dlstnbubon Program represents the Federally IlSllgned value of nonmonetary eesetence tor donated commodrttes recelV8d BOdJorconsumed by the system dunng the current fiscal year (2) Expenditures for the School Breakfast Progl'8m were not malntBlt'l8d eepetately and are Induded r.n the 2002 Natlonal School Lunch Program (3) ExpendItures for thiS progl'8m Include State, end/or Other Funds Expenditures are not maintained by fund source (4) Funds earned on ttus program do not require reportlng of expendItures MeJOr Programs are ldenbfied by an aatensk (e) In front of the CFDA number The School D1stnd did not provlde Fedel'8l Aur:atanc:e to any Subrecplent The accompanYIng schedule of expenchtures of Federal Awards Includes the Federal Grant AdJY1tyof the City of Pelham Board of Educatlon and IS presented on the modified acaual baSIS of accounting whICh IS the baSIS of accounlJng uaecl In the presentation of the general-purpoae flnanaal statements See notes to the general-purpose finanaal statements " 33- CITy OF PELHAM POMp OF EDUCATlON _MITCHELL COUNTY SCHEPULE OF STATE REVENUE YEAR ENDED JUNE 30 2002 SCHEDULE 7 ' AGENCY/FUNDING GOVERNMENTAL FUND TYPES SPECIAl CAPITAl GENERAL REVENUE PROJECTS FUND FUND FUND TOTAL GRANTS Educabon Georg18 Department of Quality BalK: Education Drreet In&tructlonal Cost Klfldergarten Program S 400 249 00 Kindergarten Program - Earty b1terventlon Program 123 82g 00 Pnmary Grades (1-3) Program 97005700 Primary Grades - ElirtyInterventIOn (1-3) Program 18775200 Upper Elementary Grtldes (4-5) Program 597 ()olJ8 00 Upper Elementary Grades (4-5) ~ tntervenbOf'l Proglllllm 41754 00 Middle School (6-6) Program g35,84700 H'Oh School General Education (9-12) Proglllllm 8n11300 VocatlOnal18bollllltory (9-12) Program 340,36500 Students with D....bliltle. GalegO<'j II GalegO<'j m 303,92900 481920 00 Gifted Student - CategO<'j VI 137,004 00 Remed18.1 Educalton Program 87,mOO Altemabve Educalton prog.ram 72,05700 EnglJlh Speakers of Other Languagea (ESOL) 13,70700 Media center Progrtlm 16640800 Stan and PrcfeuJonlll Development 30857 00 Indnct Cost 1,18753900 Twenty Days AddrbOnallnatruc:bOn 5O,41g 00 Cateooneal GllIIInta Pup'1 TfW\SllOf1OlIon Regular 3274200 Bu. Replacement 881400 Sparsrty 20,000 00 Nnng SeMce. 49,18500 P"napa! Supplements 6,85500 VOC8bOf\III SupervllCW'S 1246600 EducatIOn Equllllzabon Funding Grant 1781,39200 Food 5ef'VIOl!s S VocabOnal Educabon 9,029 19 Other State Programs Hellth Insurance ....a Statewide After School Progrtlm 95117155 18128 00 K-3 Sta~ Reading Proglllllm Preschool Hl!lndicapped Program 2223088 :ze 70e 00 Lottery Programs Alltstlve Technology Computers In the CIIi room 52204 00 5,nSOO 73,500 00 S 40024900 123 82g 00 g70 057 00 16775200 597,04800 41,754 00 g35 647 00 87711300 34036500 30392900 481 92000 137004 00 87,86500 72,05700 13,70700 166 408 00 30,65700 1,187,53900 SO,41g 00 32,74200 861400 2000000 4918500 8 8S5 00 12 4e8 00 1,781,392 00 52,204 00 9,02919 9511715S 18,12800 22 230 86 26,708 00 snsoo 73,50000 Georg18 State Fmanong end Investment CommosslOn RelnY.MJraement on Construction Protedl S 148,83251 1"8,83251 On-teeof SChOOl Reldlness Pre-Kw1l18fgar1lln Program 238 81g 19 238 819 19 On-teeof Trusury and FISCal Services PublIC SChool Employees Retirement 9,983 00 gge300 OTHER Community Arran, Georgia Department of Local Aa.latlincll Gnlnts 1500000 2000000 35,00000 S 8:870.54342 S 388 129819 S 186 163251 S 9140787412 see notes sothe general-purpose mandalltatementl - 34- CITY OF pELHAM BOARp OF EPUCATlON - MITCHEll COUNTY SCHEPUlE OF APPROVED lOCAL OPTION SAlES TAX PROJECTS YEAR ENDED JUNE 30 2002 SCHEDULE 0" PROJECTS ORIGiNAl ESTIMATED COST (1) CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR (3) AMOUNT EXPENDED IN PRIOR YEARS (3) PROJECT STATUS The repayment of principal and Interest on outstanding Cityof Pelham General ObhgabonBonds, Senes 1993. coming due on February 1, 1998, and semiannually thereafter 8S set forth m Exh,brt"8" attached hereto and, by thiS reference thereto, Incorporated herein, the maximum amount of debt to be rebrad not to exceed $1,612,300 00 $ 1,612,300 00 $ 1,612,300 00 $ 147,1934Q $ 566,24964 OngDUlg The 3~ulSmon, construction and equ,pp,ng of caprtBl outlay projects for the Pelham SChool System constsUng of 8 new p~ergarten bullchng on the campus of the Pelham EJemen1ary School and addrbons, expanSions, improvements. renovations modIfications and eqUipping of exlsbng school faalrbes of the Pelham School System, m an amount nolto exceed $2,121,27300 2,121,27300 2,121,273 00 1,016,16622 1,581,036 03 Ongo,ng $ 3:733,573 00 $ 3,733,573 00 $ 1,163,35962 $ 2,167,285 87 (1) The School DlSlncl's ong,nel costesbmate .. apeclfled m the resolution calhngfor the imposition of the local Opbon Sales Tax (2) The School D,stnel's current estlmata of total cost for the projects Indud.. all costfrom prated ,noeptlonto compIebon (3) The vote.. of Crty of Pelham appn:ryed the Irnpoolbon of a 1% sales tax to fund the _ projOClS Amounts e_nded for these Prateds may ,ndude sales tax proceeds, slats, local property taxes and/or other lunds D1Ier the hfe of the Protects See notasto the general-purpose IlnanCl3I statements - 35- CITY Of PELHAM BOARD OF EDUCATION - MITCHELL COUNTY GENERAL FUND - OUALITY BASIC EDUCATION PROGRAM rOBEl ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 39 2002 SCHEDULE "4" DESCRIPTION ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (11 ELIGIBLE aBE PROGRAM COSTS SALARIES OPERATIONS TOTAL Dlf8d InstrudJonal Programs Kmdergarten Program $ Klrldl!!lrgarten Program-Early Intervention Program Pnmary GradeS (1-3) Program Pnmary GradaS-Early InteJV8l1bOn (1-3) Program Upper Elementary Grades (4-5) Program Upper E1.mentary Gradas-Early Intervention (4-5) Program M,ddl. School (~) Program High School Goneral Educabon (9-12) Program Vocational boboratory (9-12) Program Students wtth otaabliities Category II Category III GIItod Student - Cata90ry VI Remedial Edueabon Program Alternative Educ:atJon Program English Speakera of Othar bonguoga. (ESOL) 407.565 00 $ 313733 &I $ 125.88900 149909 58 987.788 00 1,039.18756 179.81800 152 388 87 697.911 00 579.993 87 42.565 00 952.74900 689.48900 346.586 00 800.21300 13950809 89.471 09 73.37409 13.958 00 45.61623 1.118.74248 908,44772 350.m23 512,52066 263.97764 48,25146 45.85392 94,13959 8.81272 993771 $ 391 19 43.265 62 2.&1947 25.703 45 1.000 00 36.12883 roo.rra se 54.64295 5.83371 8.17026 3.51496 1.&10 97 1017 21568 322,771 55 141,300 68 1.973,45318 15533834 _.79712 46.61623 1.154.87111 1.909.221 69 405,41428 518 J504 37 272.14799 4976642 47.7&189 94.14976 8,82840 TOTAL DIRECT INSTRUCTIONAL PROGRAMS $ 5.447.884 00 $ 5.611.248 17 $ 293.57766 $ 5_.82583 Media center Program Staff and ProfeS51onal Devetopment 169.44900 31.421 00 185.12312 3.82448 48.51531 39,41119 21383843 43.23565 TOTALOBEFQRMULAFUNDS $ 5.648,754 00 S 5,78O,1957!5 S 381.504 16 $ 6.161.699 91 (1) COmprised of Stat. Funds plus Local Five Mil Share See notes to the general-purpose flnBndal statements - 36- CITY OF PELHAM BOARD OF EDUCATION - MITCHELL COUNTY GENERAL FUND - aUALITY BASIC EDUCATION PROGRAM (aBEl ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30, 2002 SCHEDULE "5" Pelham HI9h School Pelham City Middle School Pelham Elementary School Central Office (Altemative Educa1lon Pro9ram) Psychoeducallonal Program TOTAL (1) Compnsed of State Funds plus Local Frve MIll Shara ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) ELIGIBLE aBE PROGRAM COSTS $ 1,333,867 00 $ 1,685,285 77 1,295,676 00 1,361,33844 2,744,96700 2,749,98258 73,37400 93,65735 14,58169 $ 5,447 ,884 00 $_...5:,9;0=4=,8~2;5;83. See notes to the general-purpose finanCIal statements - 37- SECIlONII COMPLIANCE AND INTERNAL CONTROL REPORTS RL".,III W. HIN roN STATF AUDITOI-l (4~1 6"0 .:'17.. DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washmgton Street, S W SUIlC 214 Atlanta Georgia 303 >4-l\4(KJ February 7, 2003 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Supenntendent and Members of the City of Pelham Board of EducatIon REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladles and Gentlemen We have audited the financial statements ofCity ofPelham Board ofEducatIon as ofand for the year ended June 30, 2002, and have ISSUed our report thereon dated February 7, 2003 This report was quahfied for vanous departures from generally accepted accountmg principles, as Identified m the auditor's report on the general-purpose financial statements. We conducted our audit m accordance WIth auditmg standards generally accepted m the Uruted States of Amenca and the standards applicable to financial audits contamed m Government Audltmg Standards, ISSUed by the Comptroller General of the Uruted States. Comphance As part of obtammg reasonable assurance about whether CIty of Pelham Board of Education's financial statements are free ofmatenal misstatement, we performed tests of Its comphance WIth certam provisions oflaws, regulations, contracts and grants, noncomphance WIth wluch could have a direct and matenal effect on the determmation offinancial statement amounts However, providing an opmion on comphance WIth those provisrons was not an objective of our audit, and accordmgly, we do not express such an opmion The results ofour tests disclosed no mstances ofnoncomphance that are required to be reported under Government Auditing Standards Internal Control Over Fmanclal Reportmg In planrung and perfomnng our audit, we considered City of Pelham Board of Education's mternal control over financial reporting in order to determme our audrtmg procedures for the purpose of expressmg our opiruon on the financial statements and not to provide assurance on the mternal 2002YB-40 control over financial reportmg. However, we noted a certam matter mvolvmg the mternal control over financial reportmg and Its operation that we consider to be a reportable condition Reportable conditions mvolve matters commg to our attention relatmg to sigruficant deficiencies m the design or operation of the mternal control over financial reportmg that, ill our Judgment, could adversely affect City of Pelham Board of Education's ability to record, process, summanze and report financial data consistent With assertions of management in the financial statements The reportable condition IS descnbed in the accompanymg Schedule ofFmdmgs and Questioned Costs as Item FS- 7841-02-0 I. A matenal weakness IS a condition in which the design or operation of one or more of the mternal control components does not reduce to a relatively low level the nsk that misstatements in amounts that would be matenal m relation to the financial statements being audited may occur and not be detected withm a timely penod by employees in the normal course of performmg their assigned functions Our consideranon of the mternal control over financial reportmg would not necessanly disclose all matters m the mternal control that might be reportable conditions and, accordmgly, would not necessarily disclose all reportable condinons that are also considered to be matenal weaknesses However, the reportable condition descnbed above IS considered to be a matenal weakness This report IS mtended solely for the mformanon and use of management, members of the City of Pelham Board ofEducation, Federal awardmg agencies and pass-through ennties and IS not mtended to be and should not be used by anyone other than these specified parties. -- ~~.:-k Respectfully subrmtted, .... R sell W Hmton State Auditor RWH:as 2002YB-40 RU"'~I:L1 W. HI'TO' STA"'[ AlJrJITQR 14041656-217 .. DEPARTMENT OF AUDITS AND ACCOUNTS 254 Waxhmgton Street S W Suite 214 Atlanta, Georgld 3U33-H<4lKJ February 7,2003 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Supenntendent and Members of the City of Pelham Board of Education REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Ladles and Gentlemen: ComplIance We have audited the compliance ofCity ofPelham Board ofEducation WIth the types ofcompliance requirements descnbed in the US Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of Its major Federal programs for the year ended June 30, 2002 City of Pelham Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanymg Schedule of Fmdmgs and Questioned Costs Compliance WIth the requirements of laws, regulations, contracts and grants applicable to each of Its major Federal programs IS the responsibihty of City of Pelham Board of Education's management Our responsibrhty IS to express an opiruon on City of'Pelham Board of Education's compliance based on our audit We conducted our audit of compliance in accordance WIth auditing standards generally accepted in the Umted States of Amenca; the standards applicable to financial audits contamed m Government AuditIng Standards, ISSUed by the Comptroller General ofthe Umted States; and OMB Circular A133, Audits of States, Local Governments, and Non-Profit Orgamzations Those standards and OMB Circular A-I33 require that we plan and perform the audIt to obtam reasonable assurance about whether noncompliance WIth the types ofcompliance requirements referred to above that could have a direct and matenal effect on a major Federal program occurred An audrt mcludes exarmrung, on a test basis, evidence about the City of Pelham Board of Education's compliance WIth those requirements and performing such other procedures as we considered necessary m the circumstances. We believe that our audit provides a reasonable basis for our opimon Our audit does not provide a legal determmanon on City of Pelham Board of Educanon's compliance With those requirements 2002SA-IO In our opmion, the City of Pelham Board of Education comphed, m all matenal respects, with the requirements referred to above that are apphcable to each of Its major Federal programs for the year ended June 30, 2002 Internal Control Over Comphance The management of CIty of Pelham Board of EducatIon IS responsible for estabhslnng and mamtammg effective Internal control over comphance WIth requirements of laws, regulations, contracts and grants apphcable to Federal programs In plannmg and perforrnmg our audit, we considered CIty ofPelham Board of Education's mternal control over comphance WIthrequirements that could have a direct and matenal effect on a major Federal program in order to deterrmne our audmng procedures for the purpose of expressmg our opinion on comphance and to test and report on mternal control over comphance in accordance WIth OMB Circular A-133. Our consideration ofthe Internal control over comphance would not necessanly disclose all matters m the Internal control that might be matenal weaknesses A matenal weakness IS a condinon m winch the design or operation ofone or more ofthe Internal control components does not reduce to a relatively low level of nsk that noncomphance WIth apphcable requirements of laws, regulations, contracts and grants that would be matenal m relalIon to a major Federal program bemg audited may occur and not be detected WIthin a tunely penod by employees m the normal course of performmg their assigned functions. We noted no matters mvolvmg the mternal control over comphance and Its operatIon that we consider to be matenal weaknesses. TIns report is mtended solely for the Information and use of management, members of the CIty of Pelham Board of Education, Federal awarding agencies and pass-through entities and is not Intended to be and should not be used by anyone other thanthese specified parties. - - ~.~~ Respectfully subnutted, Rus ell W. Hinton Sta e Auditor RWHas 2002SA-IO SECTION ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS CITY OF PELHAM BOARD OF EDUCATION - MITCHELL COUNTY AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 2002 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-7841-00-02 FS-7841-01-0l Further Action Not Warranted Unresolved - See Corrective Action/Responses CORRECTIVE ACfIONIRESPONSES GENERAL FIXED ASSETS Failure to Mamtam General Fixed Assets Account Group Finding Control Number. FS-7841-01-0l We concur WIththis recommendatIon The School Distnct IS in the process ofpreparmg to record general fixed assets on the financial statements in unplementmg GASB Statement 34 SECTIONN FINDINGS AND QUESTIONED COSTS CITY OF PELHAM BOARD OF EDUCATION - MITCHELL COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 I SUMMARY OF AUDITOR'S RESULTS Type of Report Issued on the Financial Statements The auditor's opimon on the CIty of Pelham Board of Education's financial statements was qualified for vanous departures from generally accepted accountmg principles 2. Reportable Condluons In Internal Control Disclosed by the Audit of the Fmanclal Statements The audit report for the CIty of Pelham Board of'Educanon disclosed a financial statement reportable condition related to the following control category General Fixed Assets The reportable condrtion descnbed above IS considered to be a matenal weakness 3 Noncompliance Matenal to the Fmanclal Statements The audit ofthe CIty ofPelham Board of'Educanon disclosed no instances ofnoncompliance that were deemed to be matenal to the financial statements 4 Reportable Condluons m Internal Control Over MaJor Programs The audit report for the City of Pelham Board of'Educauon did not disclose any reportable conditions in mternal control over major programs, 5 Type of Report Issued on Comphance for Malor Programs The auditor's opimon on the City ofPelham Board of'Educanon's report on compliance With reqwrements applicable to major programs was unqualified. 6 Audit Flndmgs ReqUired to be Reported by SectIon .51Oea) of OMB Circular A-133 The City ofPelham Board ofEducation's audit did not disclose audit findings required to be reported by section ,51O(a) ofOMB Circular A-133. 7 MalOr Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10,555 Food and Nutntion Program - Food Services - National School Lunch Program 8 Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00 9 Low RIsk Audltee The City ofPelham Board of Education qualified as a low nsk auditee as defined by Section .530 ofOMB Circular A-133. -I - CITY OF PELHAM BOARD OF EDUCAnON - MITCHELL COUNTY SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30. 2002 II FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS GENERAL FIXED ASSETS Failure to Maintam General Fixed Assets Account Group Reportable Condition - Matenal Weakness Repeated From Pnor Year Fmdmg Control Number. FS-7841-02-01 The City of Pelham Board of Education did not mamtam a system-wide General Fixed Assets Account Group withm the formal accountmg records as required by generally accepted accountmg prmciples. This condition results in the general-purpose financial statements ofthe School District bemg mcomplete and not In accordance With generally accepted accountmg pnnciples Appropnate action should be taken by the School District to establish accountmg controls and procedures to provide for maintenance ofa General Fixed Assets Account Group These subsidiary records should mclude an mventory of land, buildings and equipment owned by the School DIStnCt and should mclude but may not be hrmted to date acquired, acqursition cost, estimated replacement cost, location and descnption Detailed records should bemamtamed ofall addmons and deletions to the General Fixed Assets Account Group Management's Response: We concur WIth this recommendation. The Board IS in the process ofprepanng to record general fixed assets on the financial statements in implementing GASB Statement 34 ill FEDERAL AWARD FINDINGS AND OUESTIONED COSTS No matters were reported. -2-