Audit report, City of Social Circle Board of Education, Walton County, Georgia, year ended June 30, 1998

c\
~ ~oo
~I
33
is
AUDIT REPORT CITY OF SOCIAL CIRCLE BOARD OF EDUCATION
WALTON COUNTY, GEORGIA YEARENDED JUNE30, 1998
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXlllBITS

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

3

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

(NON-GAAP BASIS)

GENERAL AND SPECIAL REVENUE FUNDS

5

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

6

ADDmONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

16

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

17

CAPITAL PROJECTS FUND

G

COMBINING BALANCE SHEET

18

H

COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

. 19

SCHEDULES

1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

20

2 SCHEDULE OF STATE REVENUE

22

3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

23

4 SCHEDULE OF EXPENDITURES

LOTTERY PROGRAMS

24

ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS

5

OVERALL

25

6

BY PROGRAM

26

CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY - TABLE OF CONTENTS -
SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
SECTION ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

CLAUDE L. VICKERS
STATE AUDI10R
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
March 23, 1999

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the City of Social Circle Board of Education

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

Ladies and Gentlemen:

We have audited the accompanying general purpose financial statements of the City of Social Circle Board

of Education, as of and for the year ended June 30, 1998, as listed in the table of contents. These general

purpose fmancial statements are the responsibility of the City of Social Circle Board of Education's

management. Our responsibility is to express an opinion on these general purpose financial statements based

on our audit.

.

We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As described in the notes to the general purpose financial statements, the Board's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:
* The general purpose financial statements of the Board did not contain a General Fixed Assets
Account Group to account for property and equipment owned by the Board which should be included to conform. to generally accepted accounting principles.

98ARL-13A

* Schoolactivity accounts maintained at theindividual schools are not included in the generalpurpose
financial statements. To conform to generally accepted accounting principles, these accounts should be included in the generalpurpose financial statements.
* The Board did not recognize as expenditures, in the year ended June 30, 1998,aportion of salaries
and the corresponding employer's cost of related benefits earnedfor contractual services completed prior to June 30, 1998. Also funds received, subsequent to June 30, 1998, from the Georgia Department ofEducation for the State's share of theseunrecorded salaries and related benefits were not recorded as revenue in the yearunderreview. Conversely, the similar expenditures and related revenues for contractual services completed priorto June 30, 1997, were improperly recorded in the yearendedJune 30, 1998. To conform to generally accepted accounting principles, revenues should be recorded when available and measurable and expenditures should be recorded when incurred, rather than when funds are received or disbursed.
* Governmental Accounting Standards BoardTechnical Bulletin 98-1, Disclosures About Year 2000
Issues, requires disclosure of certain matters regarding the year 2000 issue in order for financial statements to be prepared in conformity with generally accepted accounting principles. Such required disclosures include:
o Any significant amountof resources committed to make computersystems and other electronic
equipmentyear 2000 compliant;
o A general description of the year 2000 issue, including a description of the stages of work in processor completedas of the end of the reporting periodto make computersystemsand other electronicequipment critical to conducting operations year 2000 compliant.
o The additional stages of work necessary for makingthe computersystems and other electronic
equipment year 2000 compliant.
Cityof SocialCircleBoardofEducation has omitted suchdisclosures. We do not provide assurance that City of SocialCircleBoardof Education is or willbe year2000ready, that Cityof SocialCircle Board of Education's year 2000 remediation efforts will be successful in whole or in part, or that partieswith which Cityof SocialCircle Board of Education does businesswill be year 2000 ready.
The aggregate effects on the general purposefinancial statements of these variances or omissionshave not been determined, but are believedto be material.
In our opinion, except for the effects on the general purpose financial statements ofthe matters referredto in the preceding paragraph, the general purposefinancial statements referredto above present fairly, in all material respects, the financial position of the City of SocialCircleBoard ofEducationas of June 30, 1998, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated March 23, 1999, on our consideration of the Cityof Social Circle Boardof Education's internal control overfinancial reporting and our tests of its compliance with certainprovisions of laws, regulations, contractsand grants.
98ARL-13A

Ourauditwas performed for the purposeof forming an opinionon the general purpose financial statements of the Cityof SocialCircleBoardof Education taken as a whole. The accompanying combining statements (Exhibits E throughH) and the financial schedules (Schedules 1 through 6), which includesthe 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 requiredpart ofthe general purposefinancial statements. Such informationhas been subjected to the auditingprocedures applied in the audit ofthe general purposefinancial statements and in our opinion, exceptfor the effects of the matters referred to in the third paragraph, such information is fairly presentedin all material respectsin relationto the general purposefinancial 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 ofthe State, as provided for by Official Code of Georgia AnnotatedSection 50-6-24.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
CLV:jb 98ARL-13A

CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY

The notesto the generalpurpose financial statements are an integral partof this statement
-2-

The notes to the generalpurposefinancialstatements are an integralpartof this statement. -3-

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

CITY OF SOCIAL CIRCLE BOARD OF EDUCAnON - WALTON COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The City of SocialCircleBoardof Education (Board) wasestablished underthe laws of the State of Georgia and operates under the guidance ofa school board electedby the voters and a Superintendent appointed by the Board. The Board is organized as a separate legalentityand has the powerto levytaxes and issue bonds. Its budgetis not subjectto approval by anyotherentity. Accordingly, the Boardis a primary government and consists of all the organizations that compose its legal entity.
FUND ACCOUNTING
The Boarduses funds to reporton its financial position and the results of its operations. Fund accountingis designed to demonstrate legalcompliance.and to aid financial management by segregating transactions related to certaingovernmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
General Fixed Assets are recordedas expenditures in the various funds at the time ofpurchase. A General Fixed Assets Account Group is not presently maintained by the Board. To conform to generally accepted accounting principles, a General FixedAssets Account Group shouldbe maintained for reporting the cost of assets acquired by governmental fund types.
Although "school activity accounts" are maintained at the individual schools, neitherthe assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances of these accounts are reflected in these financial statements. To conformto generally accepted accounting principles, these accounts should be recorded in the generalpurpose financial statements.
The general purposefinancial statements account for all State, Federal, Taxes and Other funds under control. ofthe Board,in compliance with generally accepted accounting principles applicable to governmental units, unless otherwisedisclosed in these notes. Funds presented in this report are as follows:
GOVERNMENTAL FUND TYPES - are usedto account for all or most of a Board's educational activities. Governmental Fund Types include:
GENERAL FUND- the fundusedto account for all financial resources ofthe Boardexceptthoserequired to be accounted for in another fund. These transactions relateto resources obtainedand used for services provided by a board of education.
SPECIAL REVENUE FUND- the fundusedto account fortheproceeds ofspecific revenue sources (other than for major capital projects)that are legallyrestricted to expenditures for specifiedpurposes. These funds are receivedprimarily from the Georgia Department of Education and fromthe Federal government to accomplish specific educational objectives.
-6-

CITY OF SOCIAL CIRCLE BOARD OF EDUCAnON - WALTON COUNTY EXHIBIT "0" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE30. 1998
Note 1: 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 facilities.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (i,e., when they become both measurable and available).
"Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are property taxes, local option sales taxes, intergovernmental grants and investment income.
Expenditures are generally recognized when the related fund liability is incurred.
A departure from the above definitions is the accounting treatment afforded the final two 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 1998, a substantial number of personnel ofthe Board were employed for a one hundred and ninety day period beginning in late August 1997 and ending in early June 1998. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 1997 and ending in August 1998. State grants to fund the State's share ofthese contracts were disbursed from the Georgia Department of Education to the Board in the same twelve months. As of June 30, 1998, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 1998, had not been made. Payments for these two months were made and recorded as expenditures by the Board subsequent to June 30, 1998. Also, the State's portion of the compensation paid in July and August 1998 was received and recorded as revenue in the fiscal year subsequent to June 30, 1998. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 1997, were recorded in the year ended June 30, 1998. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed.
-7-

CITY OF SOCIAL CIRCLE BOARD OF EDUCAnON - WALTON COUNTY EXITIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUDGET
The City of Social Circle Board ofEducation's budget is a complete financial plan for the Board's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe 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 accounting principles.
The budget process begins when the Board's administration prepares a tentative budget for the Board's approval. After approval of this 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 revisions as necessary and adopts a fmal school budget. This fmal budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167, to the Georgia Department ofEducation. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financial institutions. Georgia Laws authorize the Board to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, . or insured State chartered building and loan associations.
INVESTMENTS
COMPOSITION "OF INVESTMENTS
Investments made by the Board innonparticipating interest-earning contracts (such as certificates of deposit)
and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Board to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(l) 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,
-8-

CITY OF SOCIAL CIRCLE BOARD OF EDUCAnON - WALTON COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30.1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(4) Obligations of any corporation of the United States government,

(5) Prime banker's acceptances,

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

(7) Repurchase agreements, and

(8) Obligations of other political 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 recognition criteria has been met. Receivables recorded on the general purpose fmancial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

PROPERTY TAXES

The City ofSocial Circle fixed the property tax levy for the 1997 tax year (calendar year) on October 20, 1997 (levy date). Taxes were due on December 20, 1997. The lien date for property taxes was January 1, 1997.
Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in fiscal
year 1998. The Social Circle City Clerk bills and collects the property taxes for the Board of Education and remits the taxes collected to the Board.

The tax millage rate levied for the 1997 tax year (calendar year) for the City of Social Circle Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

.l.l.22 mills

SALES TAXES

Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes. Special Purpose Local Option Sales Tax collected by the State and remitted to the Board during the fiscal year amounted to $270,179.27 and was recorded.in the Capital Projects Fund. The State will terminate collection ofthis tax once an additional $4,729,820.73 has been collected or on December 31, 2002, whichever occurs first.

-9-

CITY OF SOCIAL CIRCLE BOARD OF EDUCAnON - WALTON COUNTY EXlllBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30.1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVENTORIES

FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Federally assigned value. Purchased foods inventories are reported on the Combined Balance Sheet at cost (first-in, first-out). Donated food commodities are recorded as revenues and expenditures at the time commodity items are received. Purchased foods inventories are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations offund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets.

COMPENSATED ABSENCES

Compensated absences represent obligations of the Board relating to employees' rights to receive

compensation for future absences based upon service already rendered. This obligation relates only to vesting

accumulating leave in which payment is probable and can be reasonably estimated. No liability has been

recorded in the individual funds for the current portion ofthis obligation as this amount is deemed immaterial

to the general purpose fmancial statements.

.

Additionally, the dollar value of accumulated compensated absences at June 30, which will be payable from future resources has not been recorded in the General Long-Term. Debt Account Group as this liability is also deemed to be immaterial to the fair presentation of these financial statements.

INTERFUND TRANSACTIONS

The Board has the' following types of interfund transactions:

Reimbursements ofexpenditures initially made from a fund that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.

Operating transfers are recorded for all interfund transactions other than reimbursements.

MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do'not present financial position or results of operations in conformity with generally accepted accounting principles.. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Certain reclassifications have been made to the comparative data to conform to the current year classifications.

- 10-

CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY EXIllBIT "0" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998
Note 2: DEPOSITS
COLLATERALIZAnON OF DEPOSITS Official Codeof GeorgiaAnnotated(OCGA) Section45-8-12 providesthat there shall not be on deposit at any time in any depositoryfor a time longerthan ten days a sum of moneywhich has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond andthe marketvalueofsecurities pledged shall-be equalto not lessthan 110 percentofthe publicfundsbeing secured afterthe deduction ofthe amountof depositinsurance. OCGA Section45-8-11 provides an officer holding publicfunds may,in his discretion, waivethe requirement for security in the case of operatingfunds placed in demand deposit checkingaccounts.
Acceptable securityfor deposits consistsof anyone of or any combination of the following:
(l) Suretybond signed by a suretycompany du1y qualifiedand authorized to transact business within the State of Georgia,
(2) Insuranceon accountsprovided by the Federal DepositInsurance Corporation,
(3) Bonds,bills, notes, certificates ofindebtedness or otherdirectobligations of the United States or of the State of Georgia,
(4) Bonds,bills, notes, certificates ofindebtedness or otherobligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any publicauthority created by the lawsof the Stateof Georgia, providingthat the statute that created the authorityauthorized the use of the bonds for this purpose,
(6) Industrialrevenue bonds and bonds of development authorities createdby the laws of the State of Georgia, and
(7) Bonds,bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporationof the United Statesgovernment, whichare fully guaranteed by the United States government both as to principal and interest and debt obligations issuedby 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 FederalNational Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 1998, the bank balances were $1,410,329.21. The amounts of the total bank balances are classifiedinto three categories of credit risk:
Category 1 - Cashthat is insured (e.g., Federal depository insurance) or collateralized with securities held by the Board or by the Board's agent in the Board'sname.
- 11 -

CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998

Note 2: DEPOSITS

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

The Board's deposits are classified by risk category at June 30, 1998, as follows:

Risk Category

Bank Balance

1

$ 100,000.00

2

1,310,329.21

3

0.00

Total

$ 1.410.329.21

Note 3: NON-MONETARY TRANSACTIONS

The Boardreceives food commodities fromthe United States Department of Agriculture (USDA)for school breakfast and lunchprograms. These commodities arerecorded at their Federally assignedvalue. See Note 1 - Inventories

Note 4: RISK MANAGEMENT

The Boardis exposedto variousrisks of loss relatedto torts; theft of, damageto, and destruction of assets; errors or omissions; job related illness or injuries to employees; natural disaster and unemployment compensation.

TheBoardhas obtained commercial insurance forrisk ofloss associated withtorts,assets, errorsor omissions and job related illness or injuriesto employees. The Board has neither significantly reduced coverage for theserisksnor incurred losses (settlements) whichexceeded the Board's insurance coverage in any of the past three years.'

The Boardhas elected to self-insure for all losses related to natural disaster. The Board has not experienced any losses related to this risk in the past three years.

The Boardis self-insured withregard to unemployment compensation claims. 'the Boardaccounts for claims within the General Fund 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 claimsliability duringthe last two fiscal years are as follows:

- 12-

CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY EXHIBIT "0" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE30. 1998

Note 4: RISK MANAGEMENT
Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

Endof Year Liability

1997 1998

$

0.00 $

887.00 $

887.00 $

0.00

$

0.00 $

918.00 $

918.00 $

0.00

The Board has purchased suretybonds to provide additional insurancecoverageas follows:

Position Covered

Amount

Superintendent Assistant Superintendent Each Principal

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

Note 5: ON-BEHALF PAYMENTS

The Board has recognized revenues and expenditures in the amount of$83,165.l0 for health insurance and retirement contributionspaid on the Board'sbehalf by the following State Agencies,

Georgia Department of Education Paid to the State Merit SystemofPersonnel Administration For Health Insurance ofNon-Certified Personnel In the amoun{of$64,016.26

Paid to the Teachers RetirementSystemof Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $4,608.84

Office of Treasuryand Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $14,540.00

Note 6: SIGNIFICANT COMMITMENTS

Governmental Accounting Standards BoardTechnical Bulletin 98-1 requires certaindisclosures in the Notes to the General Purpose Financial Statements concerning an entity's computerrelated year 2000 readiness. . These disclosures, which are necessary to complyWith generally acceptedaccounting principles, have not been made by the Board.

- 13-

CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY EXIllBIT "0" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998

Note 6: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the Board as of June 30, 1998, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

GSFIC 99-786-093

$ 360.000.00 $ 5.478.556.00 .

The amounts described in this note are not reflected in the general purpose financial statements.

Note 7: CONTINGENT LIABILITIES

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

Note 8: ACCUMULATED EMPLOYEES' LEAVE

Twelve month employees earn vacation at the rate of twelve (12) days per year. Vacation days may be accumulated from year to year, to a maximum oftwenty-four (24) days. Employees will be paid at their most recent rate of pay, for vacation days earned but not taken at the time of resignation, retirement, or other termination of employment, up to a maximum of twelve (12) days. See Note 1 - Compensated Absences

Nore9: RETmEMENTPLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Board who are covered by TRS are required by Stare stature to contribute 5% oftheir gross earnings to TRS. The Board makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with Stare statute and as advised by their independent actuary. The required employer contribution rare is 11.81% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

- 14-

CITY OF SOCIAL CIRCLE BOARD OF EDUCAnON - WALTON COUNTY EXlllBIT "D" NOTES TO TIlE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998

Note 9: RETIREMENT PLANS
Fiscal Year
1998 1997 1996

Percentage Contributed
100% 100% 100%

Required Contribution
$ 489,294.94 $ 438,718.24 $ 409,755.86

- 15 -

CITY OF SOCIALCIRCLE BOARD OF EDUCATION - WALTON COUNTY COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 3 0 , 1 9 9 8

EXHIBIT"E"

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

SCHOOL FOOD
SERVICES FUND

LOTTERY PROGRAMS

FEDERAL PROGRAMS

TOTALS JUNE 30,1998 JUNE 30, 1997

$

32,340,75 $

27,224,79 $

10,246,97 $

69,812.51 $

72,869,03

28,766,19

21,630,00

50,396.19

25,669,05

4,912,32 1,927.86

4,912,32 1,927.86

3,734.30 1,834,63

$

67,947,12 $

27,224,79 $

31,876.97 $ 127,048,88 $ 104,107,01

LIABILITIES AND FUNDEQUITY

LIABILITIES

Cash Overdraft

Accounts Payable

$

Salaries Payable

ExpiredGrant Balances Payable

Total Liabilities

$

FUND EqUITY

Fund Balances

Reserved

For Continuation of FederalPrograms

For Inventories

Food

DonatedCommodities

$

Purchased Food

Unreserved

Undesignated

Total Fund EqUity

$

917,24 $ 13,999,08 14,916,32 $
4,912,32 1,927.86 46,190,62 $ 53,030,80 $

13,933,93 $ 13,164,86
126,00 27,224,79 $
$
0,00 0.00 $

7,228,99 $ 21,859.28
1,854,46 30,942,73 $
934,24 $
0,00 934,24 $

$ 22,080,16 49,023.22
1,980,46 73,083,84 $
934,24 $
4,912.32 1,927.86 46,190.62 53,965,04 $

19,700.38 9,206.46 17,543,58 13,749,52 60,199,94
687,86
3,734,30 1,834.63 37,650,28
4~,907,07

Total Liabilities and Fund Equity $

67,947.12 $

27,224,79 $

31,876,97 $ 127,048.88 $ 104,107.01

See notes to the generalpurposefinancialstatements,

-16 -

Seenotesto the general purpose financial statements.

-17 -

See notesto the generalpurpose financial statements.

-18 -

CITYOF SOCIALCIRCLEBOARDOF EDUCATION - WALTONCOUNTY COMBINING STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUNDBALANCES
CAPITAL PROJECTS FUND YEAR ENDEDJUNE 3 0 , 1 9 9 8

EXHIBIT"H"

REGULAR

GEORGIA STATE FINANCING AND
INVESTMENT
COMMISSION

SPECIAL PURPOSE LOCALOPTION SALESTAX

TOTALS

YEAR ENDED

JUNE 30,1998

JUNE 30,1997

REVENUES

Taxes Other Funds

$ 25.606,66 $

$ 0.00

270.179.27 $ 139.43

270.179.27 25.746.09 $

12,891.72

Total Revenues

$ 25.606.66 $

0.00 $

270.318.70 $

295,925,36 $

12.891.72

EXPENDITURES

CapitalOutlay Buildingand BuildingImprovements Landand Land Improvements .

$

0.00 $

3.118,40 $

35J66,98

0.00 $

3.118.40 $ 35.166.98

7.250.00

Total Expenditures

$

0.00 $

38.285.38 $

0.00 $

38.285.38 $

7,250.00

Excessof Revenuesover (under) Expenditures

$ 25.606.66 $

-38.285.38 $

270.318.70 $

257,639.98 $

5.641.72

OTHERFINANCING SOURCES (USES)

OperatingTransfers In OperatingTransfers Out

$ 250.000.00 $ -441.584.59

608.730.00 $

$ -167.145.41

858.730.00 $ -608.730.00

453.550.00

Total Other FinancingSources(Uses)

$ -191.564.59 $

608.730.00 $

-167,145.41 $

250,000.00 $

453.550.00

Excessof Revenuesand Other Financing Sources over (under)Expenditures and Other Financing Uses $ -165.9n.93 $

570.444.62 $

103.173.29 $

507.639.98 $

459,191.72

FUND BALANCE JULY 1

460.458.90

0.00

0.00

460.458,90

1,267.18

FUND BALANCE JUNE 30

$ 294,480.97 $

570.444.62 $

103.173.29 $

968p98.88 $

460.458,90

See notesto the general purposefinancialstatements.

-19 -

CITY OF SOCIALCIRCLEBOARD OF EDUCATION - WALTONCOUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDEDJUNE 30, 1998

SCHEDULE "1"

FUNDING AGENCY PROGRAM/GRANT

PASS-

. THROUGH

ENTITY

CFDA

10

NUMBER NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

Agriculture, U. S. Department of Pass-Through from GeorgiaDepartment of Education Food and NutritionProgram Food Services School BreakfastProgram 1998 Grant NationalSchool Lunch Program 1998 Grant Food Distribution Program (1) Nutrition Education and Training Program Pass-Through from Office of School Readiness Food and Nutrition Program Child and Adult Care Food Program 1998 Contract

* 10.553 * 10.555
10,550 10.564
10,558

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

55,565,10
172,943.58 $ 25,135.95 5,000.00

(2)
387,622.00 (3) 25,135,95 (2)

N/A

4,798.79

(2)

Total U. S. Department of Agriculture

$

263,443.42 $

412,757,95

Education, U. S. Department of Pass-Through from GeorgiaDepartment of Education Safe and Drug-Free Schools 1998 Grant Elementary and Secondary Education Act Title I Grantsto Local Educational Agencies 1998 Grant Title II Eisenhower Professional Development 1997 Grant 1998 Grant Title VI Innovative Education Program Strategies 1998 Grant Individualswith Disabilities Education Act Part B - Special Education Flow Through 1998 Grant Preschool 1998 Grant Vocational Education - Basic Grantsto States Tech-Prep Education 1998 Grant

84.186
84.010 84.281 84,281 84.298
84.027 84.173 84.243

N/A $

51,909.51 $

51,909.51

N/A

132,825.56

133,999.10 (3)

N/A

687.86

N/A

19,353,64

18,419.40

N/A

5,767.25

5,767.25

N/A

40,425.62

40,425.62

N/A

6,049.16

6,049.16

N/A

30,000,00

30,000.00

Total U. S. Department of Education

$

286,330.74 $

287,257.90

OTHER FEDERAL ASSISTANCE

Defense, U. S. Department of Direct Troopsto Teachers

$

7,500.00

(4)

Total FederalFinancial Assistance N/A=NotAvailable

$

557,274,16 $

700,015.85

-20-

CITY OF SOCIALCIRCLE BOARD OF EDUCATION - WALTON COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDEDJUNE 30. 1998

SCHEDULE "1"

Notesto the Schedule of Expenditures of Federal Awards
(1~ The amountsshownfor the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donatedcommodities received and/orconsumed by the system duringthe currentfiscal year.
(2) Expenditures for the School BreakfastProgram, Nutrition Education and TrainingProgram and the Child and Adult Care Food Program were not maintained separately and are included in the 1998 National School Lunch Program.
(3) Expenditures for this program includeState,and/orOther Funds. Expenditures are not maintained by fund source.
(4) Expenditures on this program were not maintained by fund source.
Major Programs are identified by an asterisk(*) in front of the CFDA number.
The Boarddid not provide Federal Assistance to any Subrecipienl
The accompanying scheduleof expenditures of Federal awards includes the Federal grantactivityof the City of Social Circle Boardof Education and is presented on the modified accrual basis of accounting which is the same basis of accounting used in the presentation of the generalpurpose financial statements.

See notesto the generalpurposefinancial statements.

- 21 -

CITY OF SOCIALCIRCLE BOARD OF EDUCATION - WALTON COUNTY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE30,1998

SCHEDULE "2"

AGENCYIFUNDING
GRANTS Education, Georgia Department of QualityBasic Education Generaland Career Education Programs SpecialEducation Programs Remedial Education Program Media CenterPrograms Staff Development Programs IndirectCost Pupil Transportation Regular Bus Replacement MiddleSchool Incentive Program Special Instructional Assistance In-School Suspension Mid-term Adjustment Counselors Grades4 and 5 Technology Training Local Fair Share Educational Equalization Funding Grant Food Services Other State Programs Ad Valorem Tax Adjustment A1temative Program At-Risk Summer School Program Health Insurance Innovative Programs Mentoring Program Preschool Handicapped Program Remedial Summer School Program Teachers'Retirement . Lottery Programs Alternative SchoolProgram Instructional Technology Assistive Technology Classroom Technology
Office of School Readiness Pre-Kindergarten Program
Office of Treasuryand Fiscal Services Public School Employees Retirement

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$ 2,628,033.00 331,849.00 110,331.00 109,103.00 33,898.00 764,692.00
118,095.00 36,631.00 98,079.00 153,321.00 79,633.00 109,194.00 12,061.00 28,842.00 -244,084.00 410,725.00
$
10,338.00 48,757.00
4,389.75 64,016.26
13.31 8,000.00 16,211.00 2,440.78 4,608.84
14,540.00

$
31,536,00
4,132.00 3,976.00 53,000.00

2,628,033.00 331,849.00 110,331.00 109,103.00 33,898.00 764,692.00
118,095.00 36,631.00 98,079.00 153,321.00 79,633.00 109,194.00 12,061.00 28,842.00 -244,084.00 410,725.00 31,536.00
10,338.00 48,757.00
4,389.75 64,016.26
13.31 8,000.00 . 16,211.00 2,440.78 4,608.84
4,132.00
3,976.00 53,000,00

122,217.32

122,217.32

14,540.00

$ 4,953,717.94 $

214,861.32 $ 5,168,579.26

See notesto the general purpose financial statements.

-22 -

CITY OF SOCIALCIRCLE BOARD OF EDUCATION - WALTONCOUNTY SCHEDULE OF APPROVED LOCALOPTION SALESTAX PROJECTS YEARENDED JUNE 30, 1998

SCHEDULE "3"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED
COST (2)

Addingto, renovating, repairing, improving

and equipping the existingeducational

buildings, properties and facilitiesof the

City of Social Circle SchoolDistrict, inciuding,

but not limitedto, the acquisition, construction

and equippingof a new schoolto accommodate

grades6-12.

$

2,441,500,00 $

9,091,500,00 $

The acquisition, construction and equipping of a new cafeteriaat the bUilding which will becomethe new Social CircieElementary School.

660,000.00

660,000.00

The re-roofing and renovation of all existing school buildings and facilitiesin the City of SocialCircie School Districtto complywith all governmentregulations.

997,000.00

997,000.00

Paymentof expensesincidentto the above matters.

901,500.00

901,500.00

AMOUNT EXPENDED IN CURRENT
YEAR (3)
38,285.38 $
0,00
0,00 0.00

AMOUNT EXPENDED IN PRIOR
YEARS
0.00
0.00
0.00 0.00

$

5,000,000.00 $ 11,650,000.00 $

(1) The Board'soriginalcost estimateas specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The Board'scurrentestimateof total cost for each project. Inciudes all cost from project inceptionto completion.
(3) The voters of Walton Countyapproved the imposition of a 1% salestax to fund the aboveprojects. Amountsexpended for these projectsmay inciudesalestax proceeds, state,local property taxes and/or other funds over the life of the project,

38,285.38 $

..0...0..0..

See notesto the generalpurposefinancialstatements.

- 23-

CITYOF SOCIALCIRCLE BOARD OF EDUCATION - WALTON COUNTY SCHEDULE OF EXPENDITURES LOTTERY PROGRAMS YEAR ENDED JUNE30,1998

SCHEDULE "4"

EXPENDITURES

ALTERNATIVE SCHOOL PROGRAM

INSTRUCTIONAL TECHNOLOGY

ASSISTIVE

CLASSROOM

TECHNOLOGY TECHNOLOGY

PRE-KINDERGARTEN PROGRAM

Current

Instruction

$

SupportServices

Pupil Services

Maintenance and Operation of Plant

Other Supportservices

Food ServicesOperation

4,132,00 $

3,976,00 $

53,000,00 $

107,131,30 $
9,993,75 3,209.32 1,024,20
858,75

TOTAL
168,239,30
9,993.75 3,209.32 1,024,20
858,75

Total Expenditures

$

4,132,00 $

3,976,00 $

53,000.00 $

1~ 22,~ 217~ .32 $

183,325,32

RECAP: Salaries and Benefits Pre-Kindergarten Program Other Expenditures Alternative SchoolProgram Instructional Technology AssistiveTechnology Classroom Technology Pre-Kindergarten Program

$

105,835,30

4,132,00

3,976,00 53,000,00 16,382,02

$

183,325,32

See notesto the generalpurpose financial statements,

- 24-

CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - OVERALL
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS YEAR ENDED JUNE 30, 1998

SCHEDULE "5"

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

FOURTEEN WEIGHTED AND MEDIA CENTER
PROGRAMS

100% TEST FOR OPERATIONS PORTION OF FOURTEEN WEIGHTED PROGRAMS

$ 3,288,510,00 $ _ _---:9=6.,z9.2::5=.0=0_

$ 3,338,627,36 178,177,90 $ _ _...1.5..8:.,:6:=7:.7.:,.9.:6.:~
$ 3,516,805.26

-25,599,07 $ 3,491,206,19

$

0,00 $=======0=.0=0

See notes to the general purpose financial statements. - 25 -

CITYOF SOCIAl CIRCLE BOARD OF EDUCATION WALTON COUNTY ANALYSIS OF MINIMUM EXPENDITURE REQUIREMENTS - BY PROGRAM
GENERAL FUND- QUALITY BASIC EDUCATION PROGRAMS YEARENDED JUNE30, 1998

GENERAL AND CAREER EDUCATION PROGRAMS Kindergarten (*) Grades1 - 3 (*) Sub-Total- K-3 Grades4 - 5 (*) Grades6 8 (*) Grades9 -12 (*) High School Laboratories (*) Vocational Education Laboratories (*) Total General and CareerEducation Programs
SPECIAL EDUCATION PROGRAMS Regular, Programs CategoryII (*) Category III (*) Category IV (*) Category V (*) Sub-Total- Regular Category VI (Gifted)(*) Total SpecialEducation Programs
REMEDIAL EDUCATION PROGRAM " Total Fourteen Weighted Programs
MEDIACENTER PROGRAMS Salaries Operations Total MediaCenterPrograms

ALLOTMENTS FROMDEPARTMENT OF EDUCATION

REQUIRED

ORIGINAL ~

ORIGINAL

MID-TERM

$

246,532.00

$

221,878.80 $

697,936.00

628,142.40

$

944,468.00 90 $

850,021,20 $

359,918.00 90

323,926.20

577,545.00 90

519,790.50

320,177.00 90

288,159.30

232,850.00 90

209,565.00

193,075.00 90

173,767.50

$ 2,628,033.00

$ 2.365.229.70 $

0.00 0.00 109,194.00
109,194.00

$

301,303.00

$

271,172.70 $

0,00

$

301,303,00 90 $

271,172.70 $

30,546.00 90

27,491.40

$

331,849.00

$

298,664.10 $

$

110,331.00 90 $

99,297.90 $

$ 3,070,213.00

$ 2.763,191.70 $

0.00
0.00 0.00 109,194.00

$

88.020.00 90 $

79,218.00 $

0.00

21,083.00 90

18,974.70

$

109,103.00

$

98,192,70 $

0.00

Total Fourteen Weighted and MediaCenterPrograms

$ 3.179,316.00

$ 2,861,384.40 $ . 109.194.00

STAFFDEVELOPMENT PROGRAMS Cost of Instruction Professional Development
Total Staff Development Programs r) Identifies Fourteen Weighted Programs. See notesto the generalpurpose financial statements.

$

9,843.00

,$

9,843.00 $

0.00

24,055,00

24,055.00

0.00

$

33,898.00 100 $

==== 33,898.00 $ -==............. 0.00

26 -

SCHEDULE "6"

TOTAL REQUIRED

ACTUAL EXPENDITURES

SALARIES

OPERATIONS

TOTAL

AMOUNT OF UNDEREXPENDITURE
FOR REQUIRED ALLOTMENT

$

221,878.80 $

247,242.63 $

4,620.27 $

251,862.90

628,142.40

621,117.37

23,622.17

644,739.54

$

850,021.20 $

868,360.00 $

28,242.44 $

896,602.44 $

0.00

323,926.20

343,544.23

12,938.14

356,482.37

0.00

628,984.50

681,196.41

33,826.74

715,023.15

0.00

288,159.30

348,113.67

27,212.29

375,325.96

0.00

209,565.00

216,179.57

12,682.14

228,861.71

0.00

173,767.50

257,538.28

29,020.78

286,559.06

0.00

$ 2,474,423.70 $ 2,714,932.16 $

143,922.53 $ 2,858,854.69

$

271,172.70

$

250,957.31 $ 57,403.75 26,781.95 9,963.04

706.41 $ 4,679.89

251,663.72 62,083.64 26,781.95 9,963.04

$

271,172.70 $

345,106.05 $

5,386.30 $

350,492.35

0.00

27,491.40

62,516.72

1,834.13

64,350.85

0.00

$

298,664.10 $

407,622.77 $

7,220.43 $

414,843.20

$

99,297.90 $

100,870.30 $

7,535.00 $

108,405.30

0.00

$ 2,872,385.70 $ 3,223,425.23 $

158,677.96 $ 3,382,103.19

$

79,218.00 $

115,202.13

$

115,202.13

0.00

18,974.70

$

19,499.94

19,499.94

0.00

$

98,192.70 $

115,202.13 $

19,499.94 $

134,702.07

$ 2,970,578.40 $ 3,338,627.36 $

178,177.90 $ 3,516,805.26 $

0.00

$

9,843.00

24,055.00

33,898.00

$

16,657.03 $

16,657.03

17,279.24

17,279.24

$

33,936.27 $

33,936.27 $ ....

==-= ....... 0.00

- 27 -

SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
March 23, 1999

Honorable Roy E. Barnes, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the City of Social Circle 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
Ladies and Gentlemen:
We have audited the financial statements of City of Social Circle Board of Education as of and for the year ended June 30, 1998, and have issued our report thereon dated March 23, 1999. This report was qualified for various departures from generally accepted accounting principles, as identified in the auditor's report on the general purpose financial statements. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether City of Social Circle Board ofEducation's financial statements are free ofmaterial misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, 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 that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reportin~
In planning and performing our audit, we considered City of Social Circle Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its
98YB-40

operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attentionrelatingto significant deficiencies in the designor operation of the internalcontrol over financial reporting that, in ourjudgement, couldadversely affect Cityof SocialCircleBoard ofEducation's abilityto record, process, summarize andreportfinancial dataconsistent withassertions of management in the financial statements. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FS-7861-98-02.
A material weakness is a condition in which the designor operation of one or more ofthe internal control componentsdoes not reduce to a relatively low level the risk that misstatements in amountsthat would be material in relationto the financial statements being auditedmay occur and not be detected within a timely periodby employees in the normal courseof performing their assigned functions. Our consideration of the internal control overfinancial reporting wouldnot necessarily disclose all mattersin the internalcontrolthat mightbe reportable conditions and accordingly, wouldnot necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, the reportable conditiondescribed above is also considered to be a material weakness.
This reportis intended for the information of management, the Federal cognizant agency, Federal awarding agencies andpassthrough entities. Thisrestriction is not intended to limitthe distribution of this reportwhich is a matter of public record.
Respectfully submitted,
~~
ClaudeL. Vickers State Auditor
CLV:jb 98YB-40

CLAUDE L. VICKERS
STATE AlJDI10R
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
March 23, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board of Education
and Superintendent and Members of the City of Social Circle Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULARA-l33
Ladies and Gentlemen:
Compliance
We have audited the compliance of City of Social Circle Board of Education with the types of compliance
u.s. requirements described in the Office ofManagement and Budget (OME) Circular A-133 Compliance
Supplement that are applicable to each of its major Federal programs for the year ended June 30, 1998. City of Social Circle Board of Education's major Federal programs are identified in the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of City of Social Circle Board of Education's management. Our responsibility is to express an opinion on City of Social Circle Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-l33, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-l33 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the City of Social Circle Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on City of Social Circle Board of Education's compliance with those requirements.

98SA-IO

In our opinion, the City of Social Circle Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programsfor the year ended June 30, 1998.
Internal Control Over Compliance
The management of City of SocialCircle BoardofEducation is responsible for establishing and maintaining . effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planningand performing our audit, we consideredCity of Social Circle BoardofEducation's internal control overcompliance with requirements that couldhave a directand material effecton a major Federal program in orderto determine our auditing procedures for the purposeofexpressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133.
Our considerationofthe internal control over compliance would not necessarily disclose all matters in the internal controlthat mightbe material weaknesses. A material weakness is a conditionin which the design or operation ofone or more ofthe internal control components doesnot reduce to a relatively low levelofrisk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relationto a major Federal program beingauditedmay occur and not be detectedwithin a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internalcontrol over compliance and its operation that we considerto be material weaknesses.
This report is intended for the information of management, the Federal cognizant agency, Federal awarding agencies and pass throughentities. Thisrestriction is not intended to limitthe distribution ofthis reportwhich is a matter of public record.
Respectfully submitted,
~~
ClaudeL. Vickers State Auditor
CLV:jb 98SA-10

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

CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEARFINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

7861-93-02 7861-95-01 FS-7861-97-01 FS-7861-97-02

FurtherActionNot Warranted Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETS Failure to Maintain General Fixed AssetsAccountGroup Finding ControlNumber: FS-7861-97-01

SocialCircle City Schools at this time doesnot implement a General FixedAssets Account Group.

EXPENDITURESILIABILITIESIDISBURSEMENTS Failure to Meet Expenditure Requirements Amount: $3,594.85 Finding ControlNumber: FS-7861-97-02

Social Circle City Schools Local Fair Share will be increased by the Georgia Department of Education in a subsequent year.

SECTION IV FINDINGS AND QUESTIONED COSTS

CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30, 1998
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the City of Social Circle Board of Education's financial statements was qualified for various departures from generally accepted accounting principles.
2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements . The audit report for the City of Social Circle Board of Education disclosed a financial statement reportable condition related to the following control category.
General Fixed Assets
The reportable condition described above is considered to be a material weakness.
3. Noncompliance Material to the Financial Statements The audit ofthe City of Social Circle Board of Education disclosed no instances of noncompliance that were deemed to be material to the fmancial statements.
4. Reportable Conditions in Internal Control Over Major Programs The audit report for the City of Social Circle Board of Education did not disclose any reportable conditions in internal control over major programs.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the City of Social Circle Board of Education's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .sIOCa) ofOMB Circular A-I33 The City of Social Circle Board of Education's audit did not disclose audit findings required to be reported by section .5IO(a) ofOMB Circular A-B3.
7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services - National School Lunch Program
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00.
9. Low Risk Auditee The City of Social Circle Board of Education was audited as a low risk auditee based on a waiver granted by the U. S. Department of Education.
- 1-

CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDEDJUNE 30, 1998
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Failure to Transfer Local MatchingFunds NonmaterialNoncompliance Finding Control Number: FS-7861-98-01
The CityofSocialCircleBoardofEducation failed to transfer localmatching funds fromthe CapitalProjects Fund - Regularand the Capital Projects Fund- SPLOST to the Capital Projects Fund - GSFIC as required for the approved State Capital Outlay Projectfor the 1998 fiscal year. Boththe instructions in Chapter 41 of the Financial Management for Georgia Local Units ofAdministration and the agreement signed by the Board to receivethe funding throughthe Georgia StateFinancing and Investment Commission require that the Board transferlocalmatching fundsby year-end and designate thosefunds by projectname and number. Correcting audit adjustments were necessary to transfer $441,584.59 from the Capital Projects Fund - Regular and $167,145.41 fromthe Capital Projects Fund- SPLOST to the GSFIC Projectnumber99-786-093 as required.
GENERAL FIXED ASSETS Failure to Maintain GeneralFixed Assets AccountGroup Reportable Condition - MaterialWeakness Repeated from Prior Year Finding Control Number: FS-7861-98-02
The City of SocialCircleBoardof Education did not maintain a system-wide GeneralFixed Assets Account Group within the formal accounting records as requiredby generally acceptedaccountingprinciples. This condition results in the general purpose financial statements of the Board being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Board to establish accounting controls andprocedures to provide formaintenance ofa General FixedAssetsAccount Group. These subsidiary records shouldinclude an inventory ofland, buildings and equipment owned by the Boardand shouldinclude, but may not be limitedto, date acquired, acquisition cost, estimated replacement cost, location and description. Detailedrecords should be maintained of all additions and deletions to the General Fixed Assets Account Group.
ill FEDERALAWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.
-2-