......... , .. ... ~ H, ~ ' ~:.;-, 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 . EXHffiITS GENERAL-PURPOSE FINANCIAL STATEMENTS COMBINED STATEMENTS - OVERVIEW A COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP B COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES C COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS D NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS ADDITIONAL FINANCIAL INFORMATION. COMBINING STATEMENTS SPECIAL REVENUE FUND E COMBINING BALANCE SHEET F COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES CAPITAL PROJECTS FUND G COMBINING BALANCE SHEET H COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES SCHEDULES 1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 2 SCHEDULE OF STATE REVENUE 3 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) 4 BY PROGRAM 5 BY SITE 2 4 6 7 18 20 . 22 24 : 26 28 29 30 31 CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY - TABLE OF CONTENTS - 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 AU,DITING STANDARDS 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 SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS ': ' SECTION I FINANCIAL .. {lJSSEll W. HINTON STATE AUDITOR (404) 6562174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 WashinglOn Slreel, S.w., Suile 214 Allanla, Georgia 30334-R400 , November 8, 2002 ' 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 Gircle Board of Education INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL-PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMAnON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying 'general-purpose financial statements ofthe City ofSocial Circle Board of Education, as of and for the year ended June 30, 2002, as listed in the table of contents. These general-purpose financial statements are the responsibility ofthe 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 auditing standards generally accepted in the United States ofAmerica and the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our OpInIOn. As described in 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, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows: 2002ARL-13 * The general-purpose financial statements of the Board ofEducation did not contain a General Fixed Assets Account Group to account for property and equipment owned by the Board of Education which should be included to conform to generally accepted accounting principles. * School activity accounts maintained at the individual schools are not included iIi the general-purpose financial statements. To conform to generally accepted accounting principles, these accounts should be included in the general-purpose financial statements. * The Board of Education did not recognize as expenditures, in the year ended June 30, 2002, a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior 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 salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2001, were improperly recorded in the year ended June 30, 2002. 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. The aggregate effects on the general-purpose financial statements of these variances or omissions have not been determined, but are believed to be material. In our opinion, except for the effects on the general-purpose financial statements of the matters referred to in the preceding paragraph, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Social Circle Board of Education as ofJune 30, 2002, and the results ofits operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated November 8, 2002, on our consideration of the City of Social Circle Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral 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 forming an opinion on the general-purpose financial statements of the City of Social Circle Board of Education taken as a whole. The accompanying combining statements (Exhibits E through H) and the financial schedules (Schedules 1 through 5), which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-B3, Audits of States, Local Governments. and Non-profit Organizations, are presented for purposes of additional analysis and are not a required part of the general-purPose financial statements. Such information has been subjected to the auditing 2002ARL-13 procedures applied in the audit ofthe general-purpose financial statements and in our opinion, except for the effects ofth.e matters referred to in the third paragraph, such information is fairly stated, in all material respects, in relation to the general-purpose financial statements taken as a whole. A copy ofthis 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, RWH:gp 2002ARL-13 Ru ell W. Hinton State Auditor CITY OF SOCIAL CIRCLE BOARD OF EDUCAnON - WALTON COUNTY CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 2002 ASSETS Cash and Cash Equivalents Investments Accounts Receivable Inventories Food Donated Commodities Purchased Food Amount Available in Debt Service Fund Amount to be Provided in Future Years For Payment of Bond Debt GENERAL FUND GOVERNMENTAL FUND TYPES SPECIAL CAPITAL REVENUE PROJECTS FUND FUND $ 2,912,903.87 $ 236,999.59 $ 818,217.09 3,696,230.07 29,250.13 25,776.44 534,082.96 6,061.31 2,992.66 Total Assets $ 2,942,154.00 $ 271,830.00 $ 5,048,530.12 LIABILITIES AND FUND EQUITY LIABILITIES Accounts Payable Salaries Payable Expired Grant Balances Payable Contracts Payable Retainages Payable Deferred Revenue General Obligation Bonds Payable Total Liabilities FUND EQUITY Fund Balances Reserved For Debt Service For Inventories Food Donated Commodities Purchased Food For Purpose of Bond Issue For SPLOST Projects For State Capital Outlay Projects Unreserved Undesignated Total Fund Equity Total Liabilities and Fund Equity $ 159,762.43 $ 77,543.37 $ 206,646.33 7,834.01 67,870.78 4,403.88 113,198.28 790,524.00 $ 167,596.44 $ 149,818.03 $ 1,110,368.61 $ 6,061,31 2,992.66 $ 3,794,459.71 143,701.80 $ 2,774,557.56 $ 2,774,557.56 $ 112,958.00 122,011.97 $ 0.00 3,938,161.51 $ 2,942,154.00 $ 271,830.00 $ 5,048,530.12 The notes to the general-purpose financial statements are an integral part of this statement. -2- EXHIBIT"A" DEBT SERVICE FUND $ 167,975.32 ACCOUNT GROUP GENERAL LONG-TERM DEBT TOTALS (Memorandum Only) JUNE 30, 2002 JUNE 30, 2001 $ 3,968,120.55 $ 465,635.75 3,864,205.39 4,940,000.00 589,109.53 222,808.86 $ 167,975.32 3,832,024.68 6,061.31 2,992.66 167,975.32 3,832,024.68 4,024.43 2,213.79 $ 167,975.32 $ 4,000,000.00 $ 12,430,489.44 $ 5,634,682.83 $ 443,952.13 $ 75,704.79 $ 4,000,000.00 113,198.28 790,524.00 4,403.88 4,000,000.00 110,204.40 67,958.88 5.00 566,891.95 378,939.11 18,792.42 $ 4,000,000.00 $ 5,427,783.08 $ 1,142,791.76 $ 167,975.32 0.00 $ 167,975.32 $ 167,975.32 6,061.31 $ 2,992.66 3,794,459.71 143,701.80 4,024.43 2,213.73 126,165.06 2,097',714.05 2,887,515.56 2,261,773.80 $ 7,002,706.36 $ 4,491 ,891.07 $ 167,975.32 $ 4,000,000.00 $ 12,430,489.44 $ 5,634,682.83 -3~ CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY COMBINED STATEMENT OF REVENUES..EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 2002 FUND BALANCE JUNE 30 $ 2,774,557.56 $==1=2=2,0=,=1=1,=97= The notes to the general-purpose financial statements are an integral part of this statement. - 4- EXHIBIT"B" " CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTALS (Memorandum Only) YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 2,565,676.98 933,277.40 $ 140,718.31 $ 3,639,672.69 $ $ 0.00 10,077,668.43 $ 895,042.27 2,329,516.49 1,OOOi 144.88 9,215,121.47 658,097.73 2,191,415.92 1,176,525.87 . 0.00 $ 14,302,372.07 $ 13,241.160.99 $ 37,489.86 5,719,925.11 $ $ 5,757,414.97 $ $ -2,117,742.28 $ $ 6,695,963.82 $ 5,782,692.97 141,678.76 149,808.96 162,078.76 142,762.18 194,828.05 173,286.54 426,744.06 402,193.43 611,641.03 582,401.18 38,489.86 1,000.00 814,864.52 524,444.81 308,222.27 360,187.72 227.00 227.00 193,878.12 188,027.61 485,831.17 438,489.63 0.00 5,719,925.11 3,690,949.73 0.00 $ 15,794,372.53 $ 12,436,471.76 0.00 $ -1,492,000.46 $ 804,689.23 3,832,024.68 167,975.32 4,000,000.00 $. 1,714,282.40 $ 2,223,879.11 167,975.32 $ 0.00 2,507,999.54 $ 4,491,891.07 804,6"89.23 3,688,750.97 2,036.88 778.87 -1,976.66 427.53 $ 3,938,161.51 $ 167,975.32 $ 7,002,706.36 $ 4,491,891.07 - 5- CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - (NON-GAAP BASIS) GENERAL AND SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2002 EXHIBIT "C" GENERAL FUND BUDGET ACTUAL REVENUES State Funds Federal Funds Taxes Other Funds $ 7,031,108,00 $ 7,142,279.86 1,441,385.76 375,000.00 1,396,239.09 726,301.09 Total Revenues EXPENDITURES $ 8,847,493.76 $ 9,264,820.04 Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation $ 6,106,668.19 $ 5,946,156.86 131,098.83 88,458.54 197,937.57 424,480.12 607,752.58 113,630.80 74,009.98 194,828.05 419,216.05 607,932.12 842,158.69 348,225.00 1,511.00 169,690.00 36,367.56 813,975.65 298,081.38 158,546.72 36,125.19 Total Expenditures $ 8,954,348.08 $ 8,662,502.80 Excess of Revenues over (under) Expenditures $ -106,854.32 $ 602,317.24 FUND BALANCE JULY 1. 2001 2,151,589.17 2,172,240.32 Food Inventory - Net Change in Period Donated Commodities Purchased Food FUND BALANCE JUNE 30. 2002 $ 2,044,734.85 $ 2,774,557.56 SPECIAL REVENUE FUND BUDGET ACTUAL $ 78,924.00 $ 369,711.59 886,599.00 895,042.27 138,400.00 133,125.48 $ 1,103,923.00 $ 1,397,879.34 $ 492,889.00 $ 749,806.96 25,252.00 94,162.00 28,047.96 88,068.78 3,666.00 900.00 4,500.00 1,000.00 500.00 39,604.00 440,950.00 7,528.01 3,708.91 1,000.00 888.87 10,140.89 227.00 35,331.40 449,705.98 $ 1,103,423.00 $ 1,374,454.76 $ 500.00 $ 23,424.58 103,219.26 95,771.64 2,036.88 778.87 $ 103,719.26 $ 122,011.97 The notes to the general-purpose financial statements are an integral part of this statement. -6- CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE'30,2002 EXHffiIT "D" Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The City ofSocial Circle Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board, The School District is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity. FUND ACCOUNTING The School District uses funds and an account group to report on its financial position and the results ofits operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly ,affect exp~ndable available financial resources. General Fixed Assets are recorded as expenditures in the various funds at the time of purchase. A ,. General Fixed Assets Account Group is not presently maintained by the School District. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for .reporting the cost of assets acquired by governmental fund types. Although "school activity accounts" are maintained at the individual schools, neither the assets, liabilities and fund equity, nor the revenues, expenditures and changes in fund balances 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 allState, Federal, Taxes and Other funds under control of the School District, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows: GOVERNMENTAL FUND TYPES - are used to account for all or most of the School District's educational activities. Governmental Fund Types include: GENERAL FUND - the fund used to account for all financial resources of the School District 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. -7- CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY EXHffiIT "0" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS : JUNE 30, 2002 Note I: SUMMARY OF SIGNIFICANT ACCOUNTING'POLICIES SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes, These funds are received primarily 'from the Georgia Department of Education and from the Federal government to accomplish specific educational objectives. CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used forthe acquisition or construction of major capital facilities, DEBT SERVICE FUND - the fund used to account for the accumulation ofresources for, and the payment of, general long-term principal, interest and paying agent fees, ACCOUNT GROUP GENERAL LONG-TERM DEBT ACCOUNT GROUP - A financial reporting device used to account for general obligation debt outstanding. BASIS OF ACCOUNTI.NG 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 ofthese funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources. . Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds, Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group. Governmental funds are accounted for using the modified accrual basis of accounting under which: Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period, The School District considers receivables collected within sixty days after yearend to be available. Property taxes, sales taxes and intere~t are considered to be susceptible to accrual. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, local option sales taxes, intergovernmental grants and donations, Revenue for property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year the resources are received or susceptible to accrual. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Expenditures are generally recognized when the related fund liability is incurred. .. 8 - .J ... , CITY OF SOCIAL CIRCLE BOARD OF EDUCAnON - WALTON COUNTY EXHIBIT "0" NOTES TO THE GENERALPURPOSE FINANCIAL STATEMENTS : JUNE 30. 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 2002, a substantial number ofpersonnel ofthe School District were employed for a one hundred and ninety day period beginning in August 2001 and ending in earlyJune 2002. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 2001 and ending 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 District in the same twelve months. As of June 30, 2002, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 2002, had not been made. Payments for these two months were made and recorded as expenditures by the School District subsequent to June 30,2002. Also, the State's portion ofthe compensation paid in July and August 2002 was received and recorded as revenue in the fiscal year subsequent to June 30, 2001. Conversely, the similar expenditures and related revenues for contractual services completed prior to June 30, 2001, were recorded in the year ended June 30, 2002. Generally accepted accounting principles require that revenues be recorded when available and measurable and that expenditures be recorded when incurred, rather than when funds are received or disbursed. BUDGET The City of Social Circle Board of Education's budget is a complete financial plan for the SchooI District's fiscal year and is based upon estimates of expenditures together with probable f~nding 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 School District's administration prepares a tentative budget for the Board's approval. After approval ofthis tentative budget by the Board, such budget is' advertised at least once in a newspaper of general circulation in the locality. At the next regular meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final school budget. This final budget is then submitted, in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167(c), to the Georgia Department of Education. 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 ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations. -9- CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY NOTES TO THE GENERALPURPOSE FINANCIAL STATEMENTS JUNE 30. 2002 EXHffirr "D" "Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofqeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone 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 Officil:l1 Code ofGeorgia Annotated Section. 36-83-4 authorizes the School District to invest its funds and in selecting among option~ for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and' liquidity. Funds may be invested in the following: (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) "The Local Government Investment Pool administered by the State of Georgia, Office 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 infonnation available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general-purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The City of Social Circle fixed the property tax levy for the 2001 tax digest year (calendar year) on October 20,2001 (levy date). Taxes were due on December 20,2001 (lien date). Taxes collected - 10- CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY EXHIBIT tiD" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS .. JUNE 30, 2002 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES within 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 Social Circle City Clerk bills and collects the property taxes for the School District and remits the taxes collected to the School District. Property tax revenues during the fiscal year ended June 30, 2002 for maintenance and operations amounted to $1,396,239.09. The tax millage rate levied for the 2001 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 13.49 mills SALES TAXES Special Purpose Local Option Sales Tax is to be used for capital outlay for educational purposes. Special Purpose Local Option Sales Tax revenue during the fiscal year amounted to $933,277.40 ($910,619.47 from Walton County and $22,657.93 from Newton County) and was recorded in the Capital Projects Fund. The State will terminate collection ofthe tax within Walton County once an additional $1,462,264.55 has been collected or on December 31,2002, whichever occurs first. The State will terminate collection of the tax within Newton County once an additional $4,949,202.95 has been collected or on December 31, 2004, whichever occurs first. INVENTORIES FOOD INVENTORIES Inventories of donated food commodities used in the preparation of meals are reported on the Combined Balance Sheet at their Fed;;:rally 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 ofpurchase. The inventories reported on the balance sheet for donated food commodities and for purchased foods are equally offset by reservations of fund balance which indicates that these amounts do not constitute "available spendable resources" even though they are a component of net current assets. COMPENSATED ABSENCES Compensated absences represent obligations oftheSchool District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion of this obligation as this amount is deemed immaterial to .the general-purpose financial 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 ofthese financial statements. - 11 - CITY OF SOCIAL CIRCLE BOARD OF EDUCAnON - WALTON COUNTY NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2002 EXHffiIT "0" Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GENERAL OBLIGATION BONDS . The School District issues general obligation bonds to provide funds for the acquisition and construction ofmajor capital facilities. Bond premiums and discounts, as well as issuance costs, are recognized in the financial statements during the year bonds are issued. General obligation bonds are direcfobligations and pledge the full faith and credit ofthe government. The outstanding amount ofthese bonds is recorded in the General Long-Term Debt Account Group. INTERFUND TRANSACTIONS The School District has the following type 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. 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 ofoperations 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. Note 2: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum 'of money which has not been secured by surety bond, by gUarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts. Acceptable security for deposits consists of anyone of or any combination of the following: (1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, - 12 - CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY EXHmIT "D" . NOTES TO THE GENERAL-PURPOSE FINANCIALSTATEMENTS JUNE 30. 2002 Note 2: DEPOSITS AND INVESTMENTS (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, (4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, .(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose, (6) Industrial revenue bonds and bonds of development authorities created by the laws ofthe . State of Georgia, and (7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by 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 $4,491,538.86. The amounts ofthe total bank balances are classified into three categories of credit risk: Category 1 - . Cash that is insured (e.g., Federal depository insurance) or collateralized with se~urities held by the School District or by the School District's agent in the School District's name. Category2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name. Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.) The School District's deposits are classified by risk category at June 30, 2002, as follows: Risk Category Bank Balance 1 $ 200,000.00 2 4,291,538.86 3 0.00 Total $ 4.491.538.86 - 13- CITY OF SOCIAL CIRCLE BOARD'OF EDUCATION - WALTON COUNTY NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2002 EXHffiIT "D" Note 2: DEPOSITS AND INVESTMENTS CATEGORIZATION OF INVESTMENTS At June 30, 2002, the carrying value of the School District's total investments was $3,864,205.39 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State ofGeorgia, Office ofTreasury and Fiscal Services which are not required to be categorized since the School District did not own any .specific identifiable secunties in the pool. The investment policy ofthe State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows: The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAArn rated money market funds. The pool is not registered with the SEC as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to be a Rule 2a- 7 like pool. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and v~lues participant's shares sold and redeemed based on: $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value ofthe shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund. ' Investments in Georgia Fund 1 are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2002, was 0.12 years. Note 3: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories Note 4: RISK MANAGEMENT The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation. - 14- ~. ,~~., /' VI CITY OF SOCIAL CIRCLE BOARD OF EDUCAnON - ALTON COUNTY NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" Note 4: RISK MANAGEMENT The School District has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions, job related illness or injuries to employees and Acts ofGod. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years. The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenditure and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss canbe reasonably estimated. The School District has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount Superintendent Each Principal $ 5,000.00 $ 5,000.00 Note 5: GENERAL LONG-TERM DEBT GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: Purpose Interest Rate Amount General Government - Series 2002 3.74% $ 4,000,000.00 The changes in General Long-Term Debt during the fiscal year ended June 30, 2002, were as follows: General Obligation Bonds Balance July 1,2001 $ 0.00 Additions G.O. Bonds 4,000,000.00 Balance June 30, 2002 $ 4,000,000.00 At June 30, 2002, payments due by fiscal year which includes principal and interest for these items are as follows: - 15 - CITY OF SOCIAL CIRCLE BOARD OF EDUCAnON - WALTON COUNTY EXHIDIT "D" .. NOTES TO TIlE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 30. 2002 Note 5: GENERAL LONG-TERM DEBT Fiscal Year Ended June 30 2003 2004 2005 2006 2007 2008 - 2012 General Obligation Bonds $ 171,624.44 874,600.00 897,485.00 898,500.00 893,393.00 897,351.00 Total Principal and Interest Note 6: ON-BEHALF PAYMENTS $ 4.632.953.44 The School District has recognized revenues and expenditures in the amount of $87,346.77 for health insurance and retirement contributions paid on the School District's behalfby the following State Agencies. Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of$77,383.77 Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $9,963.00 Note 7: SIGNIFICANT COMMITMENTS The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2002, together with funding available: Project Unearned Executed Contracts Funding Available From State GSFIC 99-786-093 $ 296.120.88 $ 171.809.71 The amounts described in this note are not reflected in the general-purpose financial st;;ttements. - 16 - CITY OF SOCIAL CIRCLE BOARD OF EDUCAnON - WALTON COUNTY EXHffiIT "D" NOTES TO THE GENERAL-PURPOSE FINANCIAL STATEMENTS JUNE 3D. 2002 Note 8: 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 School District believes that such ,disallowances, if any, will be immaterial to its overall financial position. Note 9: ACCUMULATED EMPLOYEES' LEAVE Twelve month employees earn vacation leave at the rate of twelve (12) days per year. Vacation leave may be accumulated from year to year, to a maximum of twenty-four (24) days. Employees will be paid at their most recent rate of pay, for vacation leave 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 Note 10: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) TRS PLAN DESCRIPTION Substantially all teachers, administrative and Clerical personnel employed by local school districts 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 separat~ stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 2002 2001 2000 100% 100% 100% $ 517,029.88 $ 574,349.44 $ 524,113.13 - 17 - CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY . COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 3D, 2002 ASSETS Cash and Cash Equivalents Accounts Receivable Inventories Food Donated Commodities Purchased Food SCHOOL FOOD SERVICES FUND , LOTTERY PROGRAMS $ 130,057.92 $ 55,244.28 r 6,061.31 2,992.66 Total Assets LIABILITIES AND FUND EQUITY LIABILITIES Accounts Payable Salaries Payable Expired Grant Balances Payable Deferred Revenue Total Liabilities FUND EQUITY Fund Balances Reserved For Inventories Food Donated Commodities Purchased Food Unreserved Undesignated Total Fund Equity Total Liabilities and Fund Equity $ 139,111.89 $ ===5=5=,2=44';';';;;,;28== $ 1,653.17 $ 35,161.15 15,446.75 16,812.72 3,270.41 $ 17,099.92 $ 55,244.28 $ 6,061.31 2,992.66 112,958.00 $ 0.00 $ 122,011.97 $ 0.00 $ 139,111.89 $===5=5=:,2=44....2;;;,;8= See notes to the general-purpose "financial statements. - 18 - EXHIBIT"E" FEDERAL PROGRAMS TOTALS JUNE 30, 2002 JUNE 30, 2001 $ 51,697.39 $ 236,999.59 $ 154,245.74 25,776.44 25,776.44 42,357.47 6,061.31 2,992.66 4,024.43 2,213.79 $ 77,473.83 $ 271,830.00 $ ==-=2;,;;0=2;,;;,8=41,;,;,.4";,;3;;,,, $ 40,729.05 $ 77,543.37 $ 27,811.09 35,611.31 67,870.78 60,461.28 5.00 1,133.47 4,403.88 18,792.42 $ 77,473.83 $ 149,818.03 $ 107,069.79 $ 6,061.31 $ 4,024.43 2,992.66 2,213.73 $ ---:0::.:;.0::.::0:.,. 112,958.00 $ 0.00 $ 122,011.97 $ _ _...::9=5.1..:.,7..;,.71.:...;,.=..64,,- $ 77,473.83 $ 271,830.00 $==-=2;,;;0=2;,;;,8=41,;,;,.4";,;3;;,,, - 19- ~-----------~----~~~~------------------------------------~_.~~~---~--~- CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON 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 Instruction Support Services . Pupil Services Improvement of Instructional Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation Total Expenditures Excess of Revenues over (under) Expenditures FUND. BALANCE JULY 1 Food Inventory - Net Change in Period Donated Commodities Purchased Food FUND BALANCE JUNE 30 SCHOOL FOOD SERVICES FUND LOTTERY PROGRAMS $ . 36,266.00 $ 333,445.59 300,606.79 133,125.48 $ 469,998.27 $ 333,445.59 $ 320,261.13 4,009.40 470.58 2,851.72 1,000.00 888.87 $ 446,573.69 831.60 3,132.29 $ 446,573.69 $ 333,445.59 $ 23,424.58 $ 0.00 95,771.64 0.00 2,036.88 778.87 $ 122,011.97 $====0='=00== See notes to the general-purpose financial statements. - 20- EXHIBIT"F" .. FEDERAL PROGRAMS TOTALS YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 369,711.59 $ 227,819.09 $ 594,435.48 895,042.27 658,097.73 133,125.48 '145,362.79 $ 594,435.48 $_....:..L1:,:3.:9.:7...,r8.;7=9:.:3..4:... $ 1,031,279.61 $ 429,545.83 $ 749,806.96 $ 468,742.18 .24,038.56 87,598.20 4,676.29 3,708.91 10,140.89 227.00 34,499.80 28,047.96 88,068.78 7,528.01 3,708.91 1,000.00 888.87 10,140.89 227.00 35,331.40 449,705.98 17,885.72 59,882.69 6,279.66 1,000.00 1,407.81 26.40 227.00 35,331.29 421,053.23 $ 594,435.48 $ 1,374,454.76 $ 1,011,835.98 $ 0.00 $ 23,424.58 $ . 19,443.63 0.00 95,771.64 77,877.14 2,036.88 778.87 -1,976.66 427.53 $ 0.00 $ 122,011.97 $===9=:5=,7.7..1=.6..4= - 21 - CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY COMBINING BALANCE SHEET CAPITAL PROJECTS FUND JUNE 30. 2002 ASSETS Cash and Cash Equivalents Investments Accounts Receivable BOND PROCEEDS GEORGIA STATE FINANCING AND INVESTMENT COMMISSION $ 101,012.97 $ 723,601.25 3,696,230.07 383,984.03 Total Assets $ 3,797,243.04 $ ======1,=10=7=,5=85=:,2=:8= Total Liabilities and Fund Equity $ 3,797,243.04 $===1=,1=0=7,=58=:5=.2=:8= See notes to the general-purpose financial statements, - 22- EXHIBIT"G" SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS JUNE 30, 2002 JUNE 30, 2001 $ 824,614.22 $ 203,545.11 3.696,230.07 2,840,000.00 $ 150,098.93 534,082.96 145,445.05 $ 150,098.93 $ 5,054,927.25 $ 3,188,990;16 $ 6,397.13 $ 6,397.13 $ 19,279.99 206,646.33 113,198.28 566,891.95 790,524.00 378,939.11 $ 6,397.13 $ 1,116,765.74 $ 965,111.05 $ 3,794,459.71 $ 143,701:80 143,701.80 $ 126,165.06 2,097,714.05 0.00 0.00 0.00 $ 143,701.80 $ 3,938,161.51 $ 2,223,879.11 $ 150,098.93 $ 5,054,927.25 $ 3,188,990.16 - 23- .-------------------------------------~---~-- - CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 2002 FUND BALANCE JUNE 30 .$ 3,794,459.71 $ ====~O;;,;;.O;;;;O;", See notes to the general-purpose financial statements. - 24- EXHIBIT"H" SPECIAL PURPOSE LOCAL OPTION SALES TAX TOTALS YEAR ENDED JUNE 30, 2002 JUNE 30, 2001 $ 2,565,676.98 $ 2,486,899.31 $ 933,277.40 933,277.40 877,827.03 140,718.31. 122,006.37 $ 933,277.40 $ 3,639,672.69 $ 3,486,732.71 $ 37,489.86 $ 9,653.88 5,689,387.11 $ 3,685,587.73 30,538.00 $ 9,653.88 $ 5,757,414.97 $ 3,685,587.73 $ 923,623.52 $ -2,117,742.28 $ -198,855.02 $ 3,832,024.68 . 906,086.78 $ 1,161,158.00 $ -906,086.78 -906,086.78 -1,161,158.00 $ -906,086.78 $ 3,832,024.68 $ 0.00 $ 17,536.74 $ 1,714,282.40 $ -198,855.02 126,165.06 2,223,879.11 2A22,734.13 $ 143,701.80 $ 3,938,161.51 $ 2,223,879.11 - 25- CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2002 SCHEDULE "1" FUNDING AGENCY . PROGRAM/GRANT Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program National School Lunch Program Total Child Nutrition Cluster Other Programs Pass-Through From Georgia Department of Education Food and Nutrition Program Food Distribution Program (1) Pass-Through From Office of School Readiness Food and Nutrition Program Child and Adult Care Food Program Total U. S. Department of Agriculture Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Flow Through Preschool Capacity Building Improvement Total Special Education Cluster Other Programs Pass-Through From Georgia Department of Education Charter Schools Elementary and Secondary Education Act Tille I Accountability Grants Grants to Local Educational Agencies Tille II Eisenhower Professional Development Tille III Technology Literacy Challenge Fund Grants Tille VI Innovative Education Program Strategies Class Size Reduction Safe and Drug-Free Schools and Communities Vocational Education - Basic Grants to States High School Program Basic Grant Total U. S. Department of Education CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER FEDERAL REVENUE IN PERIOD EXPENDITURES IN PERIOD . 10.553 10.555 NlA $ 60,961.79 N/A 198,407.59 $ $ 259,369.38 $ (2) 405,336.28 (3) 405,336.28 10.550 10.558 N/A 24,235.21 24,235.21 NlA 17,002.20 $ 300,606.79 $ 17,002.20 446.573.69 84.027 84.173 84.027 N/A $ 131,586.17 $ N/A 4,411.45 N/A 3,482.00 $ 139,479.62 $ 131,586.17 4,411.45 3,482.00 139,479.62 84.282 84.348 84.010 84.281 84.318 84.298 84.340 84.186 84.048 N/A 9,431.13 9,431.13 N/A 62,637.00 N/A 179,023.91 N/A 20,441.58 N/A 128,462.24 N/A 8,011.00 N/A 22,046.00 N/A 5,757.00 62,637.00 179,023.91 20,441.58 128,462.24 8.011.00 22,046.00 5,757.00 N/A 19,146.00 $ 594,435.48 $ 19,146.00 594,435.48 Total Federal Financial Assistance N/A = Not Available - 26 $ 895,042.27 $=~1,;;;,0;.;4,,;,1;;;,0~0;;;:9',,;,17,;,. ( ' -'0 CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2002 SCHEDULE "1" Notes to the Schedule of Expenditures of Federal Awards (1) The amounts shown for the Food Distribution Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year. (2) . Expenditures for the School Breakfast Program were not maintained separately and are included in the 2002 National School Lunch Program. (3). Expenditures for this program include State, and lor Other Funds, Expenditures are not maintained by fund source. Major Programs are identified by an asterisk (*) in front of the CFDA number. The School District did not provide Federal Assistance to any Subrecipient. The accompanying schedule of expenditures of-Federal awards includes the Federal grant activity of the City of Social Circle Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the general-purpose financial statements, See notes to the general-purpose financial statements. 27 - CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY SCHEDULE OF STATE REVENUE SCHEDULE "2" . YEAR ENDER JUNE 30 2002 AGENCY/FUNDING GRANTS Education, Georgia Department of Quality Basic Education Direct Instructional Cost. Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades (4-5) Early Intervention Middle School (6-8) Program High School General Education (9-12) Program Vocational laboratory (9-12) Program Students with Disabilities Category I Gifted Student - Category VI Remedial Education Program Altemative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Facility M&O School Administration Categorical Grants Pupil Transportation Regular Bus Replacement Mid-ierm Adjustment Hold-Hannless Nursing Services Principal Supplements Sparsity Vocational Supervisors Education Equalization Funding Grant Food Services Other State Programs AgriCUlture Construction Related Equipment State Bonds FY 2001 Extended Day - Technology / Career FHA- FCCLA Project Health Insurance K-3 Statewide Reading Program Mentor Teachers Post Secondary Option - Spring Pre-School Handicapped Program 4-8 Statewide After School Program Technology / Career High Schools That Work Vocational Construction Related Equipment State Bonds FY 2001 Lottery Programs Assistive Technology Computers in the Classroom Vocational Technology Program Georgia State Financing and Investment Commission Reimbursement on Construction Projects Office of School Readiness Pre-Kindergarten Program Office of Treasury and Fiscal Services Public School Employees Retirement GOVERNMENTAL FUND TYPES SPECIAL CAPITAL GENERAL REVENUE PROJECTS FUND FUND FUND TOTAL $ 274,082.00 135,231.00 722,983.00 231,181.00 381,481.00 121,729.00 756,081.00 539,857.00 374,080.00 784,114.00 63,918.00 17,050.00 61,977.00 132,367.00 40,344.00 26,392.00 334,197.00 388,052.00 313,338.00 129,456.00 39,978.00 68,266.00 45,336.00 5,975.00 20,000.00 14,151.00 662,427.00 $ 36,266.00 3,000.00 20,001.00 114,000.00 77,383.77 16,487.09 2,142.00 1,287.00 37,307.00 12.666.00 4,000.00 160,000.00 7,126.35 61,696.24 100,000.00 $ 274,082.00 135,231.00 722,983.00 231,181.00 381,481.00 121,729.00 756,081.00 539,857.00 374,080.00 784,114.00 63,918.00 17,050.00 61,977.00 132,367.00 40,344.00 26,392.00 334.197.00 388,052.00 313.338.00 129,456.00 39,978.00 68,266.00 45,336.00 5,975.00 20,000.00 14.151.00 662,427.00 36,266.00 3,000.00 20,001.00 114,000.00 77,383.77 16,487.09 2,142.00 1,287.00 37,307.00 12,666.00 4,000.00 160,000.00 7,126.35 61,696.24 100,000.00 $ 2,565.676.96 164.623.00 9,963.00 2.565.676.98 164,623.00 9.963.00 See notes to the general-purpose financial statements. $ 7,142,279.66 $ 369,711.59 $ 2,565,676.96 $ 10,077,666.43 - 28- CITY OF SOCIAL CIRCLE BOARP OF EDUCATION - WALtON COUNTY SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2002 SCHEDULE "3" PROJECT ORIGINAL ESTIMATED COST (1) CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR (3) AMOUNT EXPENDED. IN PRIOR YEARS (3) PROJECT STATUS Adding to, renovating, repairing. improving and equipping the existing educational buildings, properties and facilities of the City of Social Circle School District. inclUding, but notlimiled to. the acquisition. construction and equipping of a new school to accommodate grades 6-12. The acquisition, construction and equipping of a new cafeteria at the building which will become the new Social Circle Elementary School and the re-roofing and renovation of all existing school buildings and facilities in the City of Social Circle School District to comply with all regulations and pay expenses incident thereto. $ 5,000,000.00 $ 10,748,500.00 $ 5,687,669.29 $ 4,476,355.05 Ongoing Adding to, renovating, repairing, improving, furnishing and equipping existing educational buildings. properties and facilities of the City of Social Circle School District, including, but not limited to, the completing the construction and equipping of a new school built to accommodate grades 6-12 and,to the extent there are sufficient monies available and enrollment demand requires it, the acquisition, construction and equipping of a new elementary/ primary school, including the acquisition of any necessary land and paying expenses incident thereto. 5,000,000.00 5,000,000.00 32.255.82 ongoing $ 10,000.000.00 $ 15,748,500.00 $ 5,719,925.11 $ 4,476.355.05 (1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. The School District has two Local Optio~ Sales Tax and all of the above projects were authorized by each referendum. (2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion. (3) The voters of Walton and Newton County approved the imposition of a 1% sales tax to fund the above projects. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. See notes to the general-purpose financial statements. - 29- CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY GENERAL FUND aUALITY BASIC EDUCATION PROGRAM (aBEl SCHEDULE "4" .. ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2002 TOTAL aBE FORMULA FUNDS $ 4,963,766.00 $ 4,910,652.33 $ 288,917.35 $ 5,199.569.68 (1) Comprised of State Funds plus Local Five Mill Share, See notes to the general-purpose financial statements. - 30 CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30, 2002 SCHEDULE "5" Social Circle Middle School Social Circle High School Social Circle Elementary School Central Office (Alternative Education Program) TOTAL (1) Compri~ed of State Funds plus Local Five Mill Share. ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) ELIGIBLE QBE PROGRAM COSTS $ 1,066,032.00 $ 1,001,116.61 1,286,142.00 1,384,122.48 2,374,560.00 2,567,702.39 66,552.00 23,072.58 $ 4,793,286.00 $ 4,976,014.06 See notes to the general-purpose financial statements. . - 31 - .' SECTIONll COMPLIANCE AND INTERNAL CONTROL REPORTS /' " .,~ .. {USSELL W. HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400 November 8, 2002 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 Cityof Social Circle Board of Education as of and for the year ended June 30,2002, and have issued our report thereon dated November 8, 2002. 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 auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether City ofSocial Circle Board ofEducation's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, 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 ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered City of 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 2002YB-41 o' control over financial reporting. However, we noted a certain matter 'involving the internal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect City ofSocial Circle Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions ofmanagement in the financial statements. The reportable condition is described in the accompanying Schedule ofFindings and Questioned Costs as item FS-7861-0201. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, . would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we consider item FS-7861-02-01 to be a material weakness. This report is intended solely for the information and use ofthe management, members ofthe City of SoCial Circle Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~uJ.~..k RWH:gp. 2002YB-41 {tJSSELL W. HINTON STATE AUDITOR (404) 6562174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street. S.w.. Suite 214 Atlanta. Georgia 30334-8400 . November 8, 2002 Honorable RoyE. Barnes, Governor Members of the General Assembly , I Members of the 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 ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Ladies and Gentlemen: Compliance We have audited the compliance of City of Social Circle Board of Education with the types of compliance requirements described in the Us. Office ofManagement and Budget (OMB) Circular A-I33 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30,.2002. City of Social Circle Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance withthe requirements oflaws, 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 auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan 'and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance 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 ofSocial Circle Board ofEducation's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. 2002SA-IO " We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal detennination on City of Social Circle Board of. Education's compliance with those requirements. In our opinion, the City of Social Circle Board ofEducation complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2002. Internal Control Over Compliance The management of City of Social Circle Board of Education is responsible for establishing and maintaining. effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and perfonning our audit, we considered City of Social Circle Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to detennine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-B3. Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level of risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the nonnal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. This report is intended solely for the infonnation and use ofthe management, members ofthe City of Social Circle Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~W~ Russ 11 W. Hinton Stat Auditor RWH:gp 2002SA-IO SECTION ill AUDITEE'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 YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-7861-00-01 FS-7861-01-01 Further Action Not Warranted Unresolved - No Corrective Action Implemented CORRECTIVE ACTIONIRESPONSES GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: FS-7861-01-0 I The City ofSocial Circle Board ofEducation does not presently maintain a General Fixed Assets Account Group but is in the implementation stage and anticipates full implementation by June 30, 2003. .. ,', SECTION IV FINDINGS AND QUESTIONED COSTS {.... CITY OF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the City ofSocial Circle Board ofEducation'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 of the City of Social Circle Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements. 4. Reportable Conditions in Internal Control Over Major Programs ' The audit report for the City 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 ofSocial Circle Board ofEducation's report on compliance with requirements applicable to major programs was unqualified. 6. Audit Findings Required to be Reported by Section .51 OCa) of OMB Circular A-B3 The City ofSocial Circle Board ofEducation's audit did not disclose audit findings required to be reported by section .51O(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 ofEducation did qualify as a low risk auditee as defined by Section .530 ofOMBprcular A-B3. - 1- CITYOF SOCIAL CIRCLE BOARD OF EDUCATION - WALTON 'COUNTY .' SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 2002 IT FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Reportable Condition - Material Weakness Repeated From Prior Year ' Finding Control Number: FS-7861-02-01 The City ofSocial Circle Board ofEducation failed to maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general-purpose financial statements ofthe School District being incomplete and not in accordance with generallyaccepted accounting principles. Appropriate action should be taken by the School District to establish accounting controls and procedures to provide for maintenance ofa General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings and equipment owned by the School District and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained ofall additions and deletions to the General Fixed Assets Account Group. ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. - 2-