{"response":{"docs":[{"id":"dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2020-belec-p-btext","title":"Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended 2020 June 30 (including independent auditor's reports)","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2021-11-02"],"dcterms_description":["Annual financial report for the Talbot County Board of Education."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Georgia. Department of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Talbot County Board of Education (Ga.)--Appropriations and expenditures--Periodicals.","Education--Georgia--Talbot County--Auditing--Periodicals.","Education--Georgia--Talbot County--Finance--Statistics--Periodicals.","Georgia Government Documents--Serial"],"dcterms_title":["Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended 2020 June 30 (including independent auditor's reports)"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2020-belec-p-btext"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2020-belec-p-btext"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records","audits","financial records","financial statements"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"TALBOT COUNTY BOARD OF EDUCATION \r\nTALBOTTON, GEORGIA \r\nANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2020 \r\n(Including Independent Auditor's Reports) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nEXHIBITS \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nGOVERNMENT-WIDE FINANCIAL STATEMENTS \r\n \r\nA \r\n \r\nSTATEMENT OF NET POSITION \r\n \r\nB \r\n \r\nSTATEMENT OF ACTIVITIES \r\n \r\nFUND FINANCIAL STATEMENTS \r\n \r\nC \r\n \r\nBALANCE SHEET \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nD \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\n \r\nTO THE STATEMENT OF NET POSITION \r\n \r\nE \r\n \r\nSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES \r\n \r\nIN FUND BALANCES \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nF \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT \r\n \r\nOF REVENUES, EXPENDITURES AND CHANGES IN FUND \r\n \r\nBALANCES TO THE STATEMENT OF ACTIVITIES \r\n \r\nG \r\n \r\nSTATEMENT OF FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\nH \r\n \r\nSTATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\nI NOTES TO THE BASIC FINANCIAL STATEMENTS \r\n \r\nSCHEDULES \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\n2 SCHEDULE OF CONTRIBUTIONS  TEACHERS RETIREMENT SYSTEM OF GEORGIA 3 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY \r\nPUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA 4 SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY \r\nSCHOOL OPEB FUND 5 SCHEDULE OF CONTRIBUTIONS  SCHOOL OPEB FUND 6 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION 7 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES \r\nIN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND \r\n \r\nPage \r\n1 2 \r\n3 4 5 6 7 8 9 \r\n31 32 33 34 35 36 37 \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\nSECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 8 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 9 SCHEDULE OF STATE REVENUE 10 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS \r\n \r\nPage \r\n38 39 41 \r\n \r\nSECTION II \r\nCOMPLIANCE AND INTERNAL CONTROL REPORTS \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\nINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE \r\n \r\nSECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\nSECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\n \r\nSECTION V MANAGEMENT'S CORRECTIVE ACTION FOR CURRENT YEAR FINDINGS SCHEDULE OF MANAGEMENT'S CORRECTIVE ACTION \r\n \r\n SECTION I FINANCIAL \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400 \r\n \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nReport on the Financial Statements \r\nWe have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Talbot County Board of Education (School District), as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements as listed in the table of contents. \r\nManagement's Responsibility for the Financial Statements \r\nManagement is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. \r\nAuditor's Responsibility \r\nOur responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 from material misstatement. \r\nAn audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. \r\n \r\n We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. \r\nOpinions \r\nIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the School District as of June 30, 2020, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. \r\nOther Matters \r\nRequired Supplementary Information \r\nManagement has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinions on the basic financial statements are not affected by this missing information. \r\nAccounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and required supplementary information listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. \r\nOther Information \r\nOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District's basic financial statements. The accompanying supplementary information, as listed in the table of contents, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U. S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. \r\nThe accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional \r\n \r\n procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. \r\nOther Reporting Required by Government Auditing Standards \r\nIn accordance with Government Auditing Standards, we have also issued our report dated November 2, 2021 on our consideration of the School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control over financial reporting and compliance. \r\nA copy of this report has been filed as a permanent record and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. \r\nRespectfully submitted, \r\n \r\nNovember 2, 2021 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2020 \r\nASSETS \r\nCash and Cash Equivalents Investments Receivables, Net \r\nTaxes State Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation) \r\nTotal Assets \r\nDEFERRED OUTFLOWS OF RESOURCES \r\nRelated to Defined Benefit Pension Plan Related to OPEB Plan \r\nTotal Deferred Outflows of Resources \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Interest Payable Retainages Payable Net Pension Liability Net OPEB Liability Long-Term Liabilities \r\nDue Within One Year Due in More Than One Year \r\nTotal Liabilities \r\nDEFERRED INFLOWS OF RESOURCES \r\nRelated to Defined Benefit Pension Plan Related to OPEB Plan \r\nTotal Deferred Inflows of Resources \r\nNET POSITION \r\nNet Investment in Capital Assets Restricted for \r\nContinuation of Federal Programs Debt Service Capital Projects Unrestricted (Deficit) \r\nTotal Net Position \r\n \r\nEXHIBIT \"A\" \r\n \r\nGOVERNMENTAL ACTIVITIES \r\n \r\n$ \r\n \r\n2,515,898.58 \r\n \r\n65,000.00 \r\n \r\n611,107.79 274,221.00 \r\n2,299.69 23,922.01 5,103,464.11 12,589,209.34 \r\n \r\n21,185,122.52 \r\n \r\n1,804,679.55 1,286,804.00 \r\n3,091,483.55 \r\n \r\n89,090.42 600,237.14 \r\n65,799.63 32,316.67 136,253.13 6,308,463.00 5,584,072.00 \r\n417,474.63 3,244,403.73 \r\n16,478,110.35 \r\n \r\n203,939.00 1,394,667.00 \r\n1,598,606.00 \r\n \r\n14,312,965.62 \r\n438,004.46 79,010.01 \r\n449,354.68 (9,079,445.05) \r\n \r\n$ \r\n \r\n6,199,889.72 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 1 - \r\n \r\n GOVERNMENTAL ACTIVITIES \r\nInstruction Support Services \r\nPupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Long-Term Debt \r\nTotal Governmental Activities \r\nGeneral Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous \r\nTransfers \r\nTotal General Revenues and Transfers \r\nChange in Net Position \r\nNet Position - Beginning of Year \r\nNet Position - End of Year \r\n \r\nTALBOT COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES \r\nFOR THE YEAR ENDED JUNE 30, 2020 \r\n \r\nEXHIBIT \"B\" \r\n \r\nEXPENSES \r\n \r\nCHARGES FOR SERVICES \r\n \r\nPROGRAM REVENUES OPERATING GRANTS AND \r\nCONTRIBUTIONS \r\n \r\nCAPITAL GRANTS AND CONTRIBUTIONS \r\n \r\nNET (EXPENSES) REVENUES \r\nAND CHANGES IN NET POSITION \r\n \r\n$ \r\n \r\n4,445,037.58 $ \r\n \r\n101,204.66 $ \r\n \r\n3,010,438.27 $ \r\n \r\n416,637.80 358,680.77 115,186.20 517,156.05 571,951.20 \r\n89,573.87 878,545.54 506,489.48 \r\n36,292.00 \r\n \r\n- \r\n \r\n94,656.83 \r\n \r\n- \r\n \r\n162,107.28 \r\n \r\n- \r\n \r\n58,518.00 \r\n \r\n- \r\n \r\n419,859.64 \r\n \r\n- \r\n \r\n169,721.00 \r\n \r\n- \r\n \r\n1,921.91 \r\n \r\n- \r\n \r\n141,971.64 \r\n \r\n- \r\n \r\n246,877.36 \r\n \r\n- \r\n \r\n- \r\n \r\n123,115.01 525,210.54 \r\n77,032.36 \r\n \r\n30,670.93 \r\n- \r\n \r\n224,442.91 \r\n- \r\n \r\n$ \r\n \r\n8,660,908.40 $ \r\n \r\n131,875.59 $ \r\n \r\n4,530,514.84 $ \r\n \r\n- $ \r\n77,220.00 - \r\n- \r\n77,220.00 \r\n \r\n(1,333,394.65) \r\n(321,980.97) (196,573.49) \r\n(56,668.20) (97,296.41) (402,230.20) (87,651.96) (736,573.90) (182,392.12) (36,292.00) \r\n(123,115.01) (270,096.70) \r\n(77,032.36) \r\n(3,921,297.97) \r\n \r\n3,511,025.45 \r\n619,552.40 17,603.62 19,538.08 36,683.83 (13,056.89) \r\n4,191,346.49 \r\n270,048.52 \r\n5,929,841.20 \r\n \r\n$ \r\n \r\n6,199,889.72 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION BALANCE SHEET \r\nGOVERNMENTAL FUNDS JUNE 30, 2020 \r\n \r\nEXHIBIT \"C\" \r\n \r\nASSETS \r\nCash and Cash Equivalents Investments Receivables, Net \r\nTaxes State Government Other Inventories \r\n \r\nGENERAL FUND \r\n \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 2,016,265.09 $ 65,000.00 \r\n550,059.92 274,221.00 \r\n2,299.69 23,922.01 \r\n \r\n388,306.81 $ - \r\n61,047.87 - \r\n \r\n111,326.68 $ - \r\n- \r\n \r\n2,515,898.58 65,000.00 \r\n611,107.79 274,221.00 \r\n2,299.69 23,922.01 \r\n \r\nTotal Assets \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Retainages Payable \r\nTotal Liabilities \r\nDEFERRED INFLOWS OF RESOURCES \r\nUnavailable Revenue - Property Taxes \r\nFUND BALANCES \r\nNonspendable Restricted Assigned Unassigned \r\nTotal Fund Balances \r\n \r\n$ 2,931,767.71 $ 449,354.68 $ \r\n \r\n111,326.68 $ \r\n \r\n3,492,449.07 \r\n \r\n$ \r\n \r\n89,090.42 $ \r\n \r\n- $ \r\n \r\n600,237.14 \r\n \r\n- \r\n \r\n65,799.63 \r\n \r\n- \r\n \r\n- \r\n \r\n136,253.13 \r\n \r\n755,127.19 \r\n \r\n136,253.13 \r\n \r\n- $ - \r\n- \r\n \r\n89,090.42 600,237.14 \r\n65,799.63 136,253.13 \r\n891,380.32 \r\n \r\n212,380.84 \r\n \r\n- \r\n \r\n- \r\n \r\n212,380.84 \r\n \r\n23,922.01 414,082.45 \r\n526.76 1,525,728.46 \r\n1,964,259.68 \r\n \r\n313,101.55 \r\n- \r\n313,101.55 \r\n \r\n111,326.68 \r\n- \r\n111,326.68 \r\n \r\n23,922.01 838,510.68 \r\n526.76 1,525,728.46 \r\n2,388,687.91 \r\n \r\nTotal Liabilities, Deferred Inflows of Resources, and Fund Balances \r\n \r\n$ 2,931,767.71 $ 449,354.68 $ \r\n \r\n111,326.68 $ \r\n \r\n3,492,449.07 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\nTO THE STATEMENT OF NET POSITION JUNE 30, 2020 \r\n \r\nEXHIBIT \"D\" \r\n \r\nTotal fund balances - governmental funds (Exhibit \"C\") \r\nAmounts reported for governmental activities in the Statement of Net Position are different because: \r\nCapital assets used in governmental activities are not financial resources and therefore are not reported in the funds. \r\nLand Construction in progress Buildings and improvements Equipment Land improvements Accumulated depreciation \r\nSome liabilities are not due and payable in the current period and, therefore, are not reported in the funds. \r\nNet pension liability Net OPEB liability \r\nDeferred outflows and inflows of resources related to pensions/OPEB are applicable to future periods and, therefore, are not reported in the funds. \r\nRelated to pensions Related to OPEB \r\nTaxes that are not available to pay for current period expenditures are deferred in the funds. \r\nLong-term liabilities, and related accrued interest, are not due and payable in the current period and therefore are not reported in the funds. \r\nBonds payable Accrued interest payable Capital leases payable Unamortized bond premiums \r\n \r\n$ 2,388,687.91 \r\n \r\n$ \r\n \r\n379,857.93 \r\n \r\n4,723,606.18 \r\n \r\n14,060,918.30 \r\n \r\n2,423,172.01 \r\n \r\n1,411,233.02 \r\n \r\n(5,306,113.99) \r\n \r\n17,692,673.45 \r\n \r\n$ (6,308,463.00) (5,584,072.00) \r\n \r\n(11,892,535.00) \r\n \r\n$ 1,600,740.55 (107,863.00) \r\n \r\n1,492,877.55 212,380.84 \r\n \r\n$ (2,855,000.00) (32,316.67) \r\n(586,219.36) (220,659.00) \r\n \r\n(3,694,195.03) \r\n \r\nNet position of governmental activities (Exhibit \"A\") \r\n \r\n$ 6,199,889.72 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES \r\nGOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2020 \r\n \r\nEXHIBIT \"E\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent 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 Other Support Services Enterprise Operations Food Services Operation \r\nCapital Outlay Debt Service \r\nPrincipal Interest \r\nTotal Expenditures \r\nRevenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nCapital Leases Transfers In Transfers Out \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\n \r\nGENERAL FUND \r\n \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ \r\n \r\n3,522,872.11 $ \r\n \r\n17,603.62 \r\n \r\n3,326,171.94 \r\n \r\n1,269,277.90 \r\n \r\n131,875.59 \r\n \r\n2,136.70 \r\n \r\n36,683.83 \r\n \r\n8,306,621.69 \r\n \r\n- $ 619,552.40 \r\n17,394.56 - \r\n636,946.96 \r\n \r\n- $ 6.82 - \r\n6.82 \r\n \r\n3,522,872.11 637,156.02 \r\n3,326,171.94 1,269,277.90 \r\n131,875.59 19,538.08 36,683.83 \r\n8,943,575.47 \r\n \r\n3,913,830.12 \r\n396,931.81 344,896.77 110,041.27 493,505.93 537,445.73 \r\n82,456.87 818,351.55 518,104.55 \r\n36,292.00 123,115.01 499,977.71 \r\n- \r\n- \r\n7,874,949.32 \r\n431,672.37 \r\n \r\n- \r\n2,230.10 2,624,383.88 \r\n142,245.64 8,439.36 \r\n2,777,298.98 \r\n(2,140,352.02) \r\n \r\n(163,056.89) \r\n(163,056.89) \r\n268,615.48 \r\n1,695,644.20 \r\n \r\n728,465.00 150,000.00 (428,450.00) \r\n450,015.00 \r\n(1,690,337.02) \r\n2,003,438.57 \r\n \r\n- \r\n- \r\n325,000.00 103,450.00 \r\n428,450.00 \r\n(428,443.18) \r\n \r\n3,913,830.12 \r\n396,931.81 344,896.77 110,041.27 493,505.93 537,445.73 \r\n84,686.97 818,351.55 518,104.55 \r\n36,292.00 123,115.01 499,977.71 2,624,383.88 \r\n467,245.64 111,889.36 \r\n11,080,698.30 \r\n(2,137,122.83) \r\n \r\n428,450.00 \r\n- \r\n428,450.00 \r\n6.82 \r\n111,319.86 \r\n \r\n728,465.00 578,450.00 (591,506.89) \r\n715,408.11 \r\n(1,421,714.72) \r\n3,810,402.63 \r\n \r\nFund Balances - Ending \r\n \r\n$ \r\n \r\n1,964,259.68 $ \r\n \r\n313,101.55 $ \r\n \r\n111,326.68 $ \r\n \r\n2,388,687.91 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF \r\nREVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2020 \r\n \r\nEXHIBIT \"F\" \r\n \r\nNet change in fund balances total governmental funds (Exhibit \"E\") \r\n \r\nAmounts reported for governmental activities in the Statement of Activities are different because: \r\n \r\nGovernmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of capital assets is allocated over their estimated useful lives as depreciation expense. \r\n \r\nCapital outlay \r\n \r\n$ \r\n \r\nDepreciation expense \r\n \r\nTaxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. \r\n \r\nThe issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts and the difference between the carrying value of refunded debt and the acquisition cost of refunded debt when debt is first issued. These amounts are deferred and amortized in the Statement of Activities. \r\n \r\nCapital leases issued \r\n \r\n$ \r\n \r\nBond Principal Retirements \r\n \r\nBond Premium Amortization \r\n \r\nCapital lease payments \r\n \r\nDistrict pension contributions are reported as expenditures in the governmental funds when made. However, they are reported as deferred outflows of resources in the Statement of Net Position because the reported net pension/OPEB liability is measured a year before the District's report date. Pension/OPEB expense, which is the change in the net pension/OPEB liability adjusted for changes in deferred outflows and inflows of resources related to pensions/OPEB, is reported in the Statement of Activities. \r\n \r\nPension expense \r\n \r\n$ \r\n \r\nOPEB expense \r\n \r\nSome items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. \r\n \r\nAccrued interest on issuance of bonds \r\n \r\n$ \r\n2,716,537.88 (360,627.17) \r\n(728,465.00) 325,000.00 \r\n32,690.00 142,245.64 \r\n(252,118.45) (173,820.00) \r\n \r\n(1,421,714.72) 2,355,910.71 \r\n(11,846.66) \r\n(228,529.36) (425,938.45) \r\n2,167.00 \r\n \r\nChange in net position of governmental activities (Exhibit \"B\") \r\n \r\n$ \r\n \r\n270,048.52 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 6 - \r\n \r\n ASSETS Cash and Cash Equivalents Receivables, Net \r\nOther \r\nTotal Assets LIABILITIES Cash Overdraft Accounts Payable Funds Held for Others \r\nTotal Liabilities NET POSITION Held in Trust for Private Purposes \r\n \r\nTALBOT COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS JUNE 30, 2020 \r\n \r\nEXHIBIT \"G\" \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\nAGENCY FUNDS \r\n \r\n$ \r\n \r\n2,815.34 $ \r\n \r\n- \r\n \r\n- \r\n \r\n12,210.65 \r\n \r\n$ \r\n \r\n2,815.34 $ \r\n \r\n12,210.65 \r\n \r\n$ \r\n \r\n4,382.37 \r\n \r\n62.43 \r\n \r\n7,765.85 \r\n \r\n$ \r\n \r\n12,210.65 \r\n \r\n$ \r\n \r\n2,815.34 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS YEAR ENDED JUNE 30, 2020 \r\nADDITIONS Investment Earnings Interest \r\nDEDUCTIONS None reported Change in Net Position \r\nNet Position - Beginning \r\nNet Position - Ending \r\n \r\nEXHIBIT \"H\" \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\n$ \r\n \r\n1.02 \r\n \r\n1.02 2,814.32 \r\n \r\n$ \r\n \r\n2,815.34 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY \r\nREPORTING ENTITY \r\nThe Talbot County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a 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. \r\nNOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nThe accompanying financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the School District's accounting policies are described below. \r\nBASIS OF PRESENTATION \r\nThe School District's basic financial statements are collectively comprised of the government-wide financial statements, fund financial statements and notes to the basic financial statements. The government-wide statements focus on the School District as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information's usefulness. \r\nGOVERNMENT-WIDE STATEMENTS: \r\nThe Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. \r\nThe Statement of Net Position presents the School District's non-fiduciary assets, deferred outflows of resources, deferred inflows of resources and liabilities, with the difference reported as net position. Net position is reported in three categories as follows: \r\n1. Net investment in capital assets consists of the School District's total investment in capital assets, net of accumulated depreciation, and reduced by outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets. \r\n2. Restricted net position consists of resources for which the School District is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties or imposed by law through constitutional provisions or enabling legislation. \r\n3. Unrestricted net position consists of resources not meeting the definition of the two preceding categories. Unrestricted net position often has constraints on resources imposed by management which can be removed or modified. \r\nThe Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. \r\nDirect expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. \r\n \r\n- 9 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nProgram revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. \r\nFUND FINANCIAL STATEMENTS \r\nThe fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate financial statements are presented for governmental and fiduciary funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. \r\nThe School District reports the following major governmental funds: \r\n The general fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund. \r\n The capital projects fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) and bond proceeds that are restricted, committed or assigned for capital outlay expenditures, including the acquisition or construction of capital facilities and other capital assets. \r\n The debt service fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest. \r\nThe School District reports the following fiduciary fund types: \r\n Private purpose trust funds are used to report all trust arrangements, other than those properly reported elsewhere, in which principal and income benefit individuals, private organizations or other governments. \r\n Agency funds are used to report resources held by the School District in a purely custodial capacity (assets equal liabilities) and do not involve measurement of results of operations. \r\nBASIS OF ACCOUNTING \r\nThe basis of accounting determines when transactions are reported on the financial statements. The government-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied. \r\nThe School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. \r\nGovernmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are \r\n- 10 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nrecorded when the related fund liability is incurred, except for principal and interest on general longterm debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities are reported as other financing sources. \r\nThe School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net resources available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. \r\nNEW ACCOUNTING PRONOUNCEMENTS \r\nIn fiscal year 2020, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance. The primary objective of this statement is to provide temporary relief to governments and other stakeholders in light of the COVID-19 pandemic. That objective is accomplished by postponing the effective dates of certain provisions in statements and Implementation Guides that first became effective or are scheduled to become effective for period beginning after June 15, 2018, and later. \r\nCASH AND CASH EQUIVALENTS \r\nCash and cash equivalents consist of cash on hand, demand deposits, investments in the State of Georgia local government investment pool (Georgia Fund 1) and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated (O.C.G.A.) 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. \r\nINVESTMENTS \r\nThe School District can invest its funds as permitted by O.C.G.A. 36-83-4. 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. \r\nInvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. All other investments are reported at fair value. \r\nFor accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired. \r\nRECEIVABLES \r\nReceivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. \r\nINVENTORIES \r\nFood Inventories \r\nOn the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (calculated on the first-in, first-out basis). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue \r\n \r\n- 11 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nwhen received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. \r\nCAPITAL ASSETS \r\n \r\nOn the government-wide financial statements, capital assets are recorded at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at the acquisition value on the date donated. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. The School District does not capitalize book collections or works of art. \r\n \r\nCapital acquisition and construction are recorded as expenditures in the governmental fund financial statements at the time of purchase (including ancillary charges), and the related assets are reported as capital assets in the governmental activities column in the government-wide financial statements. \r\n \r\nDepreciation is computed using the straight-line for all assets, except land, and is used to allocate the actual or estimated historical cost of capital assets over estimated useful lives. \r\n \r\nCapitalization thresholds and estimated useful lives of capital assets reported in the government-wide statements are as follows: \r\n \r\nCapitalization Policy \r\n \r\nEstimated Useful Life \r\n \r\nLand Land Improvements Buildings and Improvements Equipment Intangible Assets \r\n \r\nALL $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 100,000.00 \r\n \r\nDEFERRED OUTFLOWS/INFLOWS OF RESOURCES \r\n \r\nN/A 20 to 70 years up to 70 years \r\n5 to 25 years 15 to 50 years \r\n \r\nIn addition to assets, the statement of financial position will report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. \r\n \r\nIn addition to liabilities, the statement of financial position will report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time. \r\nLONG-TERM LIABILITIES AND BOND DISCOUNTS/PREMIUMS \r\n \r\nIn the School District's government-wide financial statements, outstanding debt is reported as liabilities. Bond premiums and discounts and the difference between the reacquisition price and the net carrying value of refunded debt are deferred and amortized over the life of the bonds using the straight-line method. To conform to generally accepted accounting principles, bond premiums and discounts should be amortized using the effective interest method. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued. \r\n \r\nIn the governmental fund financial statements, the School District recognizes the proceeds of debt and premiums as other financing sources of the current period. Bond issuance costs are reported as debt service expenditures. \r\n \r\n- 12 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nPENSIONS \r\nFor purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. \r\nPOSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) \r\nFor purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Georgia School Employees Postemployment Benefit Fund (School OPEB Fund) and additions to/deductions from School OPEB Fund fiduciary net position have been determined on the same basis as they are reported by School OPEB Fund. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. \r\nFUND BALANCES \r\nFund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. \r\nThe School District's fund balances are classified as follows: \r\nNonspendable consists of resources that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact. \r\nRestricted consists of resources that can be used only for specific purposes pursuant constraints either (1) externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. \r\nCommitted consists of resources that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board. The Board is the School District's highest level of decisionmaking authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. \r\nAssigned consists of resources constrained by the School District's intent to be used for specific purposes but are neither restricted nor committed. The intent should be expressed by (1) the Board or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes. \r\nUnassigned consists of resources within the general fund not meeting the definition of any aforementioned category. The general fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance. \r\nUSE OF ESTIMATES \r\nThe preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. \r\n \r\n- 13 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nPROPERTY TAXES \r\n \r\nThe Talbot County Board of Commissioners adopted the property tax levy for the 2019 tax digest year (calendar year) on August 6, 2019 (levy date) based on property values as of January 1, 2019. Taxes were due on December 20, 2019 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2019 tax digest are reported as revenue in the governmental funds for fiscal year 2020. The Talbot County Tax Commissioner bills and collects the property taxes for the School District, withholds 1.25% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2020, for maintenance and operations amounted to $3,262,207.88. \r\n \r\nThe tax millage rate levied for the 2019 tax year (calendar year) for the School District was as follows (a mill equals $1 per thousand dollars of assessed value): \r\n \r\nSchool Operations \r\n \r\n14.05 mills \r\n \r\nAdditionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $260,664.23 during fiscal year ended June 30, 2020. \r\nSALES TAXES \r\nEducation Special Purpose Local Option Sales Tax (ESPLOST), at the fund reporting level, during the year amounted to $619,552.40 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. \r\nNOTE 3: BUDGETARY DATA \r\nThe budget is a complete financial plan for the School District's fiscal year and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general fund. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the general fund was prepared in accordance with accounting principles generally accepted in the United States of America. \r\nThe budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines, and a tentative budget is approved. 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, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of O.C.G.A. 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. \r\nThe Superintendent is authorized by the Board to approve adjustments of no more than five percent of the amount budgeted for expenditures in any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any budget function for any fund is anticipated to be more than five percent of the budgeted amount, the Superintendent shall request Board approval for the budget amendment. Under no circumstance is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board. \r\nSee the General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances  Budget to Actual in the Supplementary Information Section for a detail of any over/under expenditures during the fiscal year under review. \r\n \r\n- 14 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 4: DEPOSITS AND CASH EQUIVALENTS COLLATERALIZATION OF DEPOSITS \r\n \r\nO.C.G.A.  45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110% of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A.  45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110% of the daily pool balance. \r\nAcceptable security for deposits consists of any one of or any combination of the following: \r\n(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, \r\n(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, \r\n(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, \r\n(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, \r\n(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, \r\n(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and \r\n(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 or securities guaranteed 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. \r\nCATEGORIZATION OF DEPOSITS \r\n \r\nCustodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2020, the School District had deposits with a carrying amount of $2,291,788.13, and a bank balance of $2,898,444.06. The bank balances insured by Federal depository insurance were $534,022.69 and the bank balances collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name were $2,218,626.85. \r\nAt June 30, 2020, $145,794.52 of the School District's bank balance was exposed to custodial credit risk as follows: \r\n \r\nUninsured and Uncollateralized \r\n \r\n$ 145,794.52 \r\n \r\nUninsured with collateral held by the pledging \r\n \r\nfinancial institution \r\n \r\n- \r\n \r\nUninsured with collateral held by the pledging \r\n \r\nfinancial institution's trust department or \r\n \r\nagent but not in the School District's name \r\n \r\n- \r\n \r\nTotal \r\n \r\n$ 145,794.52 \r\n \r\n- 15 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nReconciliation of cash and cash equivalents balances to carrying value of deposits: \r\n \r\nCash and cash equivalents Statement of Net Position Statement of Fiduciary Net Position \r\n \r\n$ 2,515,898.58 (1,567.03) \r\n \r\nTotal cash and cash equivalents \r\n \r\n2,514,331.55 \r\n \r\nAdd: Deposits with original maturity of three months or more reported as investments \r\n \r\n65,000.00 \r\n \r\nLess: Investment pools reported as cash and cash equivalents \r\nGeorgia Fund 1 \r\n \r\n287,543.42 \r\n \r\nTotal carrying value of deposits - June 30, 2020 \r\n \r\n$ 2,291,788.13 \r\n \r\nCATEGORIZATION OF CASH EQUIVALENTS \r\n \r\nThe School District reported cash equivalents of $287,543.42 in Georgia Fund 1, a local government investment pool, which is included in the cash balances above. Georgia Fund 1 is not registered with the SEC as an investment company and does not operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share, which approximates fair value. The pool is an AAAf rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2020 was 38 days. \r\n \r\nGeorgia Fund 1, administered by the State of Georgia, Office of the State Treasurer, is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1, does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report, which is publicly available at https://www.sao.georgia.gov/comprehensive-annual-financial-reports. \r\n \r\n- 16 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 5: CAPITAL ASSETS \r\n \r\nThe following is a summary of changes in the capital assets for governmental activities during the fiscal year: \r\n \r\nBalances July 1, 2019 \r\n \r\nIncreases \r\n \r\nDecreases \r\n \r\nBalances June 30, 2020 \r\n \r\nGovernmental Activities Capital Assets, Not Being Depreciated: \r\nLand Construction in Progress \r\n \r\n$ 379,857.93 $ \r\n \r\n- $ \r\n \r\n2,827,687.30 1,895,918.88 \r\n \r\n- $ 379,857.93 \r\n \r\n- \r\n \r\n4,723,606.18 \r\n \r\nTotal Capital Assets Not Being Depreciated \r\n \r\n3,207,545.23 1,895,918.88 \r\n \r\n- \r\n \r\n5,103,464.11 \r\n \r\nCapital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements \r\nLess Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements \r\n \r\n14,060,918.30 2,331,018.01 682,768.02 \r\n2,601,349.40 1,838,528.70 \r\n505,608.72 \r\n \r\n92,154.00 728,465.00 \r\n215,576.61 98,598.50 46,452.06 \r\n \r\n- \r\n \r\n14,060,918.30 \r\n \r\n- \r\n \r\n2,423,172.01 \r\n \r\n- \r\n \r\n1,411,233.02 \r\n \r\n- \r\n \r\n2,816,926.01 \r\n \r\n- \r\n \r\n1,937,127.20 \r\n \r\n- \r\n \r\n552,060.78 \r\n \r\nTotal Capital Assets, Being Depreciated, Net \r\n \r\n12,129,217.51 \r\n \r\n459,991.83 \r\n \r\n- \r\n \r\n12,589,209.34 \r\n \r\nGovernmental Activities Capital Assets - Net $ 15,336,762.74 $ 2,355,910.71 $ \r\n \r\n- $ 17,692,673.45 \r\n \r\nCurrent year depreciation expense by function is as follows: \r\n \r\nInstruction \r\n \r\nSupport Services \r\n \r\nGeneral Administration \r\n \r\n$ \r\n \r\n347.79 \r\n \r\nMaintenance and Operation of Plant \r\n \r\n37,817.83 \r\n \r\nStudent Transportation Services \r\n \r\n62,639.52 \r\n \r\nFood Services \r\n \r\n$ 250,409.57 \r\n100,805.14 9,412.46 \r\n \r\n$ 360,627.17 \r\n \r\nNOTE 6: INTERFUND TRANSFERS INTERFUND TRANSFERS \r\n \r\nInterfund transfers for the year ended June 30, 2020, consisted of the following: \r\n \r\nTransfers to \r\n \r\nTransfers From \r\n \r\nGeneral \r\n \r\nCapital Projects \r\n \r\nFund \r\n \r\nFund \r\n \r\nCapital Projects Fund $ Debt Service Fund Agency Fund \r\n \r\n150,000.00 - \r\n13,056.89 \r\n \r\n$ \r\n \r\n- \r\n \r\n428,450.00 \r\n \r\n- \r\n \r\nTotal \r\n \r\n$ 163,056.89 \r\n \r\n$ 428,450.00 \r\n \r\n- 17 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nTransfers are used to move property tax revenues collected by the general fund to the capital projects fund as required match or supplemental funding source for capital construction projects and to move sales tax revenue collected by the capital projects fund to the debt service fund to pay debt service according to the approved SPLOST referendum. Lastly, transfers are used to move funds from the general fund to the agency fund to cover deficits from the Family Connection grant. \r\nNOTE 7: LONG-TERM LIABILITIES \r\nThe changes in long-term liabilities during the fiscal year for governmental activities were as follows: \r\n \r\nBalance July 1, 2019 \r\n \r\nGovernmental Activities \r\n \r\nBalance \r\n \r\nAdditions \r\n \r\nDeductions \r\n \r\nJune 30, 2020 \r\n \r\nDue Within One Year \r\n \r\nGeneral Obligation Bonds Unamortized Bond Premiums Capital Leases \r\n \r\n$ 3,180,000.00 $ \r\n \r\n- $ 325,000.00 $ 2,855,000.00 $ 330,000.00 \r\n \r\n253,349.00 \r\n \r\n- \r\n \r\n32,690.00 \r\n \r\n220,659.00 \r\n \r\n32,690.00 \r\n \r\n- \r\n \r\n728,465.00 142,245.64 \r\n \r\n586,219.36 \r\n \r\n54,784.63 \r\n \r\n$ 3,433,349.00 $ 728,465.00 $ 499,935.64 $ 3,661,878.36 $ 417,474.63 \r\n \r\nGENERAL OBLIGATION DEBT OUTSTANDING \r\n \r\nThe School District's bonded debt consists of general obligation bonds that are generally callable with interest payable semiannually. Bond proceeds primarily pay for acquiring or constructing capital facilities. The School District repays general obligation bonds from voter-approved property taxes. General obligation bonds are direct obligations and pledge the full faith and credit of the School District. \r\n \r\nThe School District had no unused line of credit or outstanding notes from direct borrowings and direct placements related to governmental activities as of June 30, 2020. In the event the entity is unable to make the principal and interest payments using proceeds from the Education Special Purpose Local Option Sales Tax (ESPLOST), the debt will be satisfied from a direct annual ad valorem tax levied upon all taxable property within the School District. Additional security is provided by the State of Georgia Intercept Program which allows for state appropriations entitled to the School District to be transferred to the Debt Service Custodian for the payment of debt. \r\n \r\nGeneral obligation bonds currently outstanding are as follows: \r\n \r\nDescription \r\n \r\nInterest Rates \r\n \r\nIssue Date \r\n \r\nMaturity Date Amount Issued \r\n \r\nAmount Outstanding \r\n \r\nGeneral Government - Series 2017 \r\n \r\n2.00% - 4.00% \r\n \r\n6/13/2017 \r\n \r\n3/1/2028 $ 3,500,000.00 $ 2,855,000.00 \r\n \r\n- 18 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe following schedule details debt service requirements to maturity for the School District's total general obligation bonds payable: \r\n \r\nFiscal Year Ended June 30: \r\n \r\nGeneral Obligation Debt \r\n \r\nPrincipal \r\n \r\nInterest \r\n \r\nUnamortized Bond Premium \r\n \r\n2021 2022 2023 2024 2025 2026 - 2028 \r\n \r\n$ \r\n \r\n330,000.00 $ \r\n \r\n340,000.00 \r\n \r\n345,000.00 \r\n \r\n350,000.00 \r\n \r\n360,000.00 \r\n \r\n1,130,000.00 \r\n \r\n96,950.00 \r\n \r\n$ \r\n \r\n87,050.00 \r\n \r\n76,850.00 \r\n \r\n66,500.00 \r\n \r\n56,000.00 \r\n \r\n91,000.00 \r\n \r\n32,690.00 32,690.00 32,690.00 32,690.00 32,690.00 57,209.00 \r\n \r\nTotal Principal and Interest \r\n \r\n$ \r\n \r\n2,855,000.00 $ \r\n \r\n474,350.00 \r\n \r\n$ \r\n \r\n220,659.00 \r\n \r\nCAPITAL LEASES \r\nThe School District has acquired stadium lighting under the provisions of a long-term lease agreement classified as a capital lease for accounting purposes because they provide for a bargain purchase option or a transfer of ownership by the end of the lease term. \r\nThe following assets were acquired through capital leases and are reflected in the capital asset note at fiscal year-end: \r\nGovernmental Activities \r\n \r\nLand Improvements \r\n \r\n$ \r\n \r\nLess: Accumulated Depreciation \r\n \r\n728,465.00 18,211.63 \r\n \r\n$ 710,253.37 \r\n \r\nDuring the current fiscal year, the School District entered into a lease agreement as lessee for financing the acquisition of stadium lighting at a cost of $728,465.00 with a down payment of $115,410.00. This lease qualifies as a capital lease for accounting purposes, and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of inception. \r\n \r\nCapital leases currently outstanding are as follows: \r\n \r\nPurpose \r\n \r\nInterest Rate \r\n \r\nIssue Date \r\n \r\nMaturity Date \r\n \r\nAmount Issued \r\n \r\nAmount Outstanding \r\n \r\nStadium Lighting \r\n \r\n2.75% \r\n \r\n10/15/2019 \r\n \r\n10/15/2029 $ \r\n \r\n728,465.00 $ \r\n \r\n586,219.36 \r\n \r\nThe following is a schedule of total capital lease payments: \r\n \r\nFiscal Year Ended June 30: \r\n \r\nPrincipal \r\n \r\n2021 2022 2023 2024 2025 2026 - 2030 \r\n \r\n$ \r\n \r\n54,784.63 $ \r\n \r\n56,303.35 \r\n \r\n57,864.18 \r\n \r\n59,468.26 \r\n \r\n61,116.83 \r\n \r\n296,682.11 \r\n \r\nTotal Principal and Interest \r\n \r\n$ \r\n \r\n586,219.36 $ \r\n \r\nInterest \r\n15,765.37 14,246.65 12,685.82 11,081.74 \r\n9,433.17 20,792.89 \r\n84,005.64 \r\n \r\n- 19 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 8: RISK MANAGEMENT INSURANCE Commercial Insurance \r\n \r\nThe 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; and natural disasters. The School District carries commercial insurance for these risks. Settled claims resulting from these insured risks have not exceed commercial insurance coverage in any of the past three fiscal years. \r\n \r\nThe School District has elected to self-insure for losses related to natural disasters. The School District has not experienced any losses related to this risk in the past three years. \r\nUNEMPLOYMENT COMPENSATION \r\n \r\nThe School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the general fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. \r\n \r\nChanges in the unemployment compensation claims liability during the last two fiscal years are as follows: \r\n \r\nBeginning of Year Liability \r\n \r\nClaims and Changes in Estimates \r\n \r\nClaims Paid \r\n \r\nEnd of Year Liability \r\n \r\n2019 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n4,551.00 $ \r\n \r\n4,551.00 \r\n \r\n$ \r\n \r\n- \r\n \r\n2020 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n1,082.00 $ \r\n \r\n1,082.00 \r\n \r\n$ \r\n \r\n- \r\n \r\nSURETY BOND \r\n \r\nThe School District purchased surety bonds to provide additional insurance coverage as follows: \r\n \r\nPosition Covered \r\n \r\nAmount \r\n \r\nSuperintendent \r\n \r\n$ \r\n \r\nFinance Director \r\n \r\n$ \r\n \r\nPayroll Clerk \r\n \r\n$ \r\n \r\nNOTE 9: FUND BALANCE CLASSIFICATION DETAILS \r\n \r\n30,000.00 10,000.00 10,000.00 \r\n \r\nThe School District's financial statements include the following amounts presented in the aggregate at June 30, 2020: \r\n \r\nNonspendable Inventories \r\nRestricted Continuation of Federal Programs Capital Projects Debt Service \r\nAssigned School Activity Accounts \r\nUnassigned \r\n \r\n$ \r\n \r\n23,922.01 \r\n \r\n$ 414,082.45 313,101.55 111,326.68 \r\n \r\n838,510.68 \r\n \r\n526.76 1,525,728.46 \r\n \r\nFund Balance, June 30, 2020 \r\n \r\n$ 2,388,687.91 \r\n \r\n- 20 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nWhen multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds. \r\nNOTE 10: SIGNIFICANT COMMITMENTS \r\nCOMMITMENTS UNDER CONSTRUCTION CONTRACTS \r\n \r\nThe following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2020. \r\n \r\nProject \r\n \r\nUnearned Executed Contracts (1) \r\n \r\nPayments through June 30, 2020 (2) \r\n \r\nAthletic Complex \r\n \r\n$ \r\n \r\n164,898.50 $ 4,680,026.50 \r\n \r\n(1) The amounts described are not reflected in the basic financial statements. (2) Payments include contracts and retainages payable at year end. \r\nNOTE 11: SIGNIFICANT CONTINGENT LIABILITIES \r\nFEDERAL GRANTS \r\nAmounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. Any disallowances resulting from the grantor audit may become a liability of the School District. However, the School District believes that such disallowances, if any, will be immaterial to its overall financial position. \r\nNOTE 12: OTHER POST-EMPLOYMENT BENEFITS (OPEB) \r\nGEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND \r\nPlan Description: Certified teachers and non-certified public school employees of the School District as defined in 20-2-875 of the Official Code of Georgia Annotated (O.C.G.A.) are provided OPEB through the School OPEB Fund - a cost-sharing multiple-employer defined benefit postemployment healthcare plan, reported as an employee trust fund and administered by a Board of Community Health (Board). Title 20 of the O.C.G.A. assigns the authority to establish and amend the benefit terms of the group health plan to the Board. \r\nBenefits Provided: The School OPEB Fund provides healthcare benefits for retirees and their dependents due under the group health plan for public school teachers, including librarians, other certified employees of public schools, regional educational service agencies and non-certified public school employees. Retiree medical eligibility is attained when an employee retires and is immediately eligible to draw a retirement annuity from Employees' Retirement System (ERS), Georgia Judicial Retirement System (JRS), Legislative Retirement System (LRS), Teachers Retirement System (TRS) or Public School Employees Retirement System (PSERS). If elected, dependent coverage starts on the same day as retiree coverage. Medicare-eligible retirees are offered Standard and Premium Medicare Advantage plan options. Non-Medicare eligible retiree plan options include Health Reimbursement Arrangement (HRA), Health Maintenance Organization (HMO) and a High Deductible Health Plan (HDHP). The School OPEB Fund also pays for administrative expenses of the fund. By law, no other use of the assets of the School OPEB Fund is permitted. \r\nContributions: As established by the Board, the School OPEB Fund is substantially funded on a pay-asyou-go basis; that is, annual cost of providing benefits will be financed in the same year as claims occur. Contributions to the School OPEB Fund from the School District were $158,001.00 for the year ended June 30, 2020. Active employees are not required to contribute to the School OPEB Fund. \r\n- 21 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nOPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB \r\n \r\nAt June 30, 2020, the School District reported a liability of $5,584,072.00 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2019. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2018. An expected total OPEB liability as of June 30, 2019 was determined using standard roll-forward techniques. The School District's proportion of the net OPEB liability was actuarially determined based on employer contributions during the fiscal year ended June 30, 2019. At June 30, 2019, the School District's proportion was 0.045502%, which was an increase of 0.002371% from its proportion measured as of June 30, 2018. \r\n \r\nFor the year ended June 30, 2020, the School District recognized OPEB expense of $331,821.00. At June 30, 2020, the School District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: \r\n \r\nDeferred Outflows of Resources \r\n \r\nOPEB \r\n \r\nDeferred Inflows of Resources \r\n \r\nDifferences between expected and actual \r\n \r\nexperience \r\n \r\n$ \r\n \r\n- $ 607,489.00 \r\n \r\nChanges of assumptions \r\n \r\n193,924.00 \r\n \r\n787,178.00 \r\n \r\nNet difference between projected and actual \r\n \r\nearnings on OPEB plan investments \r\n \r\n12,161.00 \r\n \r\n- \r\n \r\nChanges in proportion and differences \r\n \r\nbetween School District contributions and \r\n \r\nproportionate share of contributions \r\n \r\n922,718.00 \r\n \r\n- \r\n \r\nSchool District contributions subsequent to the measurement date \r\nTotal \r\n \r\n158,001.00 \r\n \r\n- \r\n \r\n$ 1,286,804.00 $ 1,394,667.00 \r\n \r\nSchool District contributions subsequent to the measurement date are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: \r\n \r\nYear Ended June 30: \r\n \r\nOPEB \r\n \r\n2021 2022 2023 2024 2025 2026 \r\n \r\n$ (67,746.00) \r\n \r\n$ (67,746.00) \r\n \r\n$ (68,215.00) \r\n \r\n$ (48,978.00) \r\n \r\n$ (12,952.00) \r\n \r\n$ \r\n \r\n(227.00) \r\n \r\n- 22 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nActuarial assumptions: The total OPEB liability as of June 30, 2019 was determined by an actuarial valuation as of June 30, 2018 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2019: \r\nOPEB: \r\n \r\nInflation \r\n \r\n2.50% \r\n \r\nSalary increases \r\n \r\n3.00% - 8.75%, including inflation \r\n \r\nLong-term expected rate of return \r\n \r\n7.30%, compounded annually, net of investment expense, and including inflation \r\n \r\nHealthcare cost trend rate \r\n \r\nPre-Medicare Eligible \r\n \r\n7.250% \r\n \r\nMedicare Eligible Ultimate trend rate \r\n \r\n5.375% \r\n \r\nPre-Medicare Eligible Medicare Eligible Year of Ultimate trend rate \r\n \r\n4.75% 4.75% \r\n \r\nPre-Medicare Eligible \r\n \r\n2028 \r\n \r\nMedicare Eligible \r\n \r\n2022 \r\n \r\nMortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB as follows: \r\n \r\n For TRS members: The RP-2000 White Collar Mortality Table projected to 2025 with projection \r\nscale BB (set forward 1 year for males) is used for death after service retirement and beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward two years for males and four years for females) is used for death after disability retirement. \r\n For PSERS members: The RP-2000 Blue-Collar Mortality Table projected to 2025 with \r\nprojection scale BB (set forward 3 years for males and 2 years for females) is used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 5 years for both males and females) is used for the period after disability retirement. \r\n \r\nThe actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the pension systems, which covered the five-year period ending June 30, 2014, and adopted by the pension Board on December 17, 2015. The next experience study for TRS will be for the period ending June 30, 2018. \r\nThe remaining actuarial assumptions (e.g., initial per capita costs, health care cost trends, rate of plan participation, rates of plan election, etc.) used in the June 30, 2018 valuation were based on a review of recent plan experience done concurrently with the June 30, 2018 valuation. \r\nProjection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation. \r\n \r\n- 23 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe long-term expected rate of return on OPEB plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected \r\nnominal returns, net of investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by \r\nweighting the expected future real rates of return by the target asset allocation percentage and by \r\nadding expected inflation. During fiscal year 2018, the School OPEB fund updated their investment \r\nstrategy to a more long-term approach. The target allocation and best estimates of arithmetic real \r\nrates of return for each major asset class are summarized in the following table: \r\n \r\nAsset class \r\n \r\nTarget allocation \r\n \r\nLong-Term Expected Real Rate of Return* \r\n \r\nFixed income Domestic Stocks -- Large Cap Domestic Stocks -- Small Cap Int'l Stocks - Developed Mkt Int'l Stocks - Emerging Mkt Alternatives \r\n \r\n30.00% 46.20% \r\n1.30% 12.40% \r\n5.10% 5.00% \r\n \r\n(0.10)% 8.90% \r\n13.20% 8.90% \r\n10.90% 12.00% \r\n \r\nTotal \r\n \r\n100.00% \r\n \r\n*Net of Inflation \r\n \r\nDiscount rate: The discount rate has changed since the prior measurement date from 3.87% to 3.58%. In order to measure the total OPEB liability for the School OPEB Fund, a single equivalent interest rate of 3.58% was used as the discount rate. This is comprised mainly of the yield or index rate for 20-year tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.50% per the Bond Buyers Index). The projection of cash flows used to determine the discount rate assumed that contributions from members and from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2119. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be available to make OPEB payments for inactive employees through year 2026. Therefore, the calculated discount rate of 3.58% was applied to all periods of projected benefit payments to determine the total OPEB liability. \r\nSensitivity of the School District's proportionate share of the net OPEB liability to changes in the discount rate: The following presents the School District's proportionate share of the net OPEB liability calculated using the discount rate of 3.58%, as well as what the School District's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.58%) or 1 percentage-point higher (4.58%) than the current discount rate: \r\n \r\n1% Decrease (2.58%) \r\n \r\nCurrent Discount Rate (3.58%) \r\n \r\n1% Increase (4.58%) \r\n \r\nSchool District's proportionate share of the Net OPEB Liability \r\n \r\n$ 6,490,535.00 $ \r\n \r\n5,584,072.00 $ 4,846,705.00 \r\n \r\n- 24 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nSensitivity of the School District's proportionate share of the net OPEB liability to changes in the healthcare cost trend rates: The following presents the School District's proportionate share of the net \r\nOPEB liability, as well as what the School District's proportionate share of the net OPEB liability would \r\nbe if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1- \r\npercentage-point higher than the current healthcare cost trend rates: \r\n \r\n1% Decrease \r\n \r\nCurrent Healthcare Cost Trend Rate \r\n \r\n1% Increase \r\n \r\nSchool District's proportionate share of the Net OPEB Liability \r\n \r\n$ 4,703,989.00 $ \r\n \r\n5,584,072.00 $ 6,701,843.00 \r\n \r\nOPEB plan fiduciary net position: Detailed information about the OPEB plan's fiduciary net position is available in the Comprehensive Annual Financial Report which is publicly available at https://sao.georgia.gov/comprehensive-annual-financial-reports. \r\nNOTE 13: RETIREMENT PLANS \r\n \r\nThe School District participates in various retirement plans administered by the State of Georgia, as further explained below. \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) \r\nPlan Description: All teachers of the School District as defined in O.C.G.A 47-3-60 and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers Retirement System of Georgia issues a publicly available separate financial report that can be obtained at www.trsga.com/publications. \r\nBenefits Provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death. \r\nContributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6.00% of their annual pay during fiscal year 2020. The School District's contractually required contribution rate for the year ended June 30, 2020 was 21.14% of annual School District payroll. For the current fiscal year, employer contributions to the pension plan were $772,422.55 from the School District. \r\nPUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS) \r\nPlan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/financials. \r\n \r\n- 25 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nBenefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service. \r\nUpon retirement, the member will receive a monthly benefit of $15.25, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits. \r\nContributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. \r\nIndividuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current fiscal year contribution was $15,676.00. \r\nPension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions \r\nAt June 30, 2020, the School District reported a liability of $6,308,463.00 for its proportionate share of the net pension liability for TRS. \r\nThe net pension liability for TRS was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2018. An expected total pension liability as of June 30, 2019 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2019. \r\nAt June 30, 2019, the School District's TRS proportion was 0.029338%, which was an increase of 0.000126% from its proportion measured as of June 30, 2018. \r\nAt June 30, 2020, the School District did not have a PSERS liability for a proportionate share of the net pension liability because of a Special Funding Situation with the State of Georgia, which is responsible for the net pension liability of the plan. The amount of the State's proportionate share of the net pension liability associated with the School District is $90,669.00. \r\nThe PSERS net pension liability was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2018. An expected total pension liability as of June 30, 2019 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2019. \r\nFor the year ended June 30, 2020, the School District recognized pension expense of $1,024,541.00 for TRS and $27,961.00 for PSERS and revenue of $27,961.00 for PSERS. The revenue is support provided by the State of Georgia. \r\n \r\n- 26 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nAt June 30, 2020, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: \r\n \r\nTRS \r\n \r\nDeferred \r\n \r\nDeferred \r\n \r\nOutflows of \r\n \r\nInflows of \r\n \r\nResources \r\n \r\nResources \r\n \r\nDifferences between expected and actual experience \r\n \r\n$ 355,577.00 $ \r\n \r\n1,870.00 \r\n \r\nChanges of assumptions \r\n \r\n605,379.00 \r\n \r\n- \r\n \r\nNet difference between projected and actual earnings on pension plan investments \r\n \r\n- \r\n \r\n150,224.00 \r\n \r\nChanges in proportion and differences between School District contributions and proportionate share of contributions \r\n \r\n71,301.00 \r\n \r\n51,845.00 \r\n \r\nSchool District contributions subsequent to the measurement date \r\n \r\n772,422.55 \r\n \r\n- \r\n \r\nTotal \r\n \r\n$ 1,804,679.55 $ 203,939.00 \r\n \r\nThe School District contributions subsequent to the measurement date are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: \r\n \r\nYear Ended June 30: \r\n \r\nTRS \r\n \r\n2021 \r\n \r\n$ 329,221.00 \r\n \r\n2022 \r\n \r\n$ 78,157.00 \r\n \r\n2023 \r\n \r\n$ 208,875.00 \r\n \r\n2024 \r\n \r\n$ 212,065.00 \r\n \r\nActuarial assumptions: The total pension liability as of June 30, 2019 was determined by an actuarial valuation as of June 30, 2018, using the following actuarial assumptions, applied to all periods included in the measurement: \r\n \r\nTeachers Retirement System: \r\n \r\nInflation \r\n \r\n2.50% \r\n \r\nSalary increases \r\n \r\n3.00%  8.75%, average, including inflation \r\n \r\nInvestment rate of return Post-retirement benefit increases \r\n \r\n7.25%, net of pension plan investment expense, including inflation \r\n1.50% semi-annually \r\n \r\nPost-retirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service requirements and dependent beneficiaries. The RP-2000 Disabled Mortality table with future mortality improvement projected to 2025 with Society of Actuaries' \r\n \r\n- 27 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nprojection scale BB (set forward two years for males and four years for females) was used for the death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. \r\n \r\nThe actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the period July 1, 2009  June 30, 2014, with the exception of the assumed investment rate of return. \r\nPublic School Employees Retirement System: \r\n \r\nInflation \r\n \r\n2.75% \r\n \r\nSalary increases \r\n \r\nN/A \r\n \r\nInvestment rate of return \r\n \r\n7.30%, net of pension plan investment expense, including inflation \r\n \r\nPost-retirement benefit increases 1.50% semi-annually \r\n \r\nPost-retirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected \r\nto 2025 with projection scale BB (set forward 3 years for males and 2 years for females) for the period after service retirements and for dependent beneficiaries. The RP-2000 Disabled Mortality projected \r\nto 2025 with projection scale BB (set forward 5 years for both males and females) was used for death \r\nafter disability retirement. There is a margin for future mortality improvement in the tables used by the \r\nSystem. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-11% less than the actual number of deaths that occurred during the study period for healthy retirees and 9-11% less than expected \r\nunder the selected table for disabled retirees. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. \r\n \r\nThe actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the period July 1, 2009  June 30, 2014, with the exception of the assumed investment rate of return. \r\n \r\nThe long-term expected rate of return on TRS and PSERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: \r\n \r\nAsset class \r\nFixed income Domestic large stocks Domestic small stocks International developed market stocks International emerging market stocks Alternative \r\nTotal \r\n* Rates shown are net of assumed rate of inflation. \r\n \r\nTRS Target allocation \r\n30.00% 51.00% \r\n1.50% 12.40% \r\n5.10% - \r\n100.00% \r\n \r\nPSERS Target allocation \r\n30.00% 46.20% \r\n1.30% 12.40% \r\n5.10% 5.00% \r\n100.00% \r\n \r\nLong-term expected real rate of return* \r\n(0.10)% 8.90% 13.20% 8.90% 10.90% 12.00% \r\n \r\n- 28 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2020 \r\n \r\nEXHIBIT \"I\" \r\n \r\nDiscount rate: The discount rate used to measure the total TRS pension liability was 7.25%. The discount rate used to measure the total PSERS pension liability was 7.30%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and PSERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. \r\nSensitivity of the School District's proportionate share of the net pension liability to changes in the discount rate: The following presents the School District's proportionate share of the net pension liability calculated using the discount rate of 7.25%, as well as what the School District's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.25%) or 1-percentage-point higher (8.25%) than the current rate: \r\n \r\nTeachers Retirement System: \r\n \r\n1% Decrease (6.25%) \r\n \r\nCurrent Discount Rate (7.25%) \r\n \r\n1% Increase (8.25%) \r\n \r\nSchool District's proportionate share of the net pension liability \r\n \r\n$ 10,240,482.00 $ \r\n \r\n6,308,463.00 $ 3,074,947.00 \r\n \r\nPension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS and PSERS financial report which is publicly available at www.trsga.com/publications and http://www.ers.ga.gov/formspubs/formspubs.html. \r\n \r\n- 29 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"1\" \r\n \r\nYear Ended \r\n \r\nSchool District's proportion of the \r\nnet pension liability \r\n \r\nSchool District's proportionate share of \r\nthe net pension liability \r\n \r\nState of Georgia's proportionate share of the \r\nnet pension liability associated with the School \r\nDistrict \r\n \r\nTotal \r\n \r\nSchool District's covered payroll \r\n \r\n2020 2019 2018 2017 2016 2015 \r\n \r\n0.029338% $ 0.029212% $ 0.029144% $ 0.028494% $ 0.029732% $ 0.030388% $ \r\n \r\n6,308,463.00 $ 5,422,373.00 $ 5,416,502.00 $ 5,878,630.00 $ 4,526,402.00 $ 3,839,123.00 $ \r\n \r\n- \r\n \r\n$ 6,308,463.00 $ 3,580,476.69 \r\n \r\n- \r\n \r\n$ 5,422,373.00 $ 3,484,577.21 \r\n \r\n- \r\n \r\n$ 5,416,502.00 $ 3,346,411.50 \r\n \r\n- \r\n \r\n$ 5,878,630.00 $ 3,125,519.13 \r\n \r\n- \r\n \r\n$ 4,526,402.00 $ 3,138,384.64 \r\n \r\n- \r\n \r\n$ 3,839,123.00 $ 3,100,171.01 \r\n \r\nSchool District's proportionate share of the net pension liability as a percentage of its covered \r\npayroll \r\n \r\nPlan fiduciary net position as a \r\npercentage of the total pension liability \r\n \r\n176.19% 155.61% 161.86% 188.08% 144.23% 123.84% \r\n \r\n78.56% 80.27% 79.33% 76.06% 81.44% 84.03% \r\n \r\nThis schedule is intended to show information for 10 years. Additional years will be displayed as they become available. \r\n \r\n- 31 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION \r\nSCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"2\" \r\n \r\nYear Ended \r\n2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 \r\n \r\nContractually required contribution \r\n \r\nContributions in relation to the contractually required \r\ncontribution \r\n \r\nContribution deficiency (excess) \r\n \r\n$ \r\n \r\n772,422.55 $ \r\n \r\n772,422.55 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n748,320.00 $ \r\n \r\n748,320.00 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n585,757.42 $ \r\n \r\n585,757.42 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n477,541.23 $ \r\n \r\n477,541.23 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n446,011.58 $ \r\n \r\n446,011.58 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n412,697.58 $ \r\n \r\n412,697.58 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n380,692.79 $ \r\n \r\n380,692.79 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n383,370.28 $ \r\n \r\n383,370.28 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n386,730.40 $ \r\n \r\n386,730.40 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n419,130.30 $ \r\n \r\n419,130.30 $ \r\n \r\n- \r\n \r\nSchool District's covered payroll \r\n \r\n$ \r\n \r\n3,653,843.74 \r\n \r\n$ \r\n \r\n3,580,476.69 \r\n \r\n$ \r\n \r\n3,484,577.21 \r\n \r\n$ 3,346,411.50 \r\n \r\n$ 3,125,519.13 \r\n \r\n$ 3,138,384.64 \r\n \r\n$ \r\n \r\n3,100,171.01 \r\n \r\n$ \r\n \r\n3,359,949.87 \r\n \r\n$ \r\n \r\n3,761,968.87 \r\n \r\n$ \r\n \r\n4,077,143.00 \r\n \r\nContribution as a percentage of covered \r\npayroll \r\n21.14% 20.90% 16.81% 14.27% 14.27% 13.15% 12.28% 11.41% 10.28% 10.28% \r\n \r\n- 32 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"3\" \r\n \r\nYear Ended \r\n2020 2019 2018 \r\n \r\nSchool District's proportion of the net pension liability \r\n \r\nSchool District's proportionate share of the net pension liability \r\n \r\nState of Georgia's proportionate share of the \r\nnet pension liability associated with the School \r\nDistrict \r\n \r\n0.00% $ 0.00% $ 0.00% $ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\n$ \r\n \r\n90,669.00 $ 85,902.00 $ 77,602.00 $ \r\n \r\nTotal \r\n90,669.00 85,902.00 77,602.00 \r\n \r\nSchool District's covered payroll \r\n \r\nSchool District's proportionate share of the net pension liability as a percentage of its \r\ncovered payroll \r\n \r\nPlan fiduciary net position as a \r\npercentage of the total pension liability \r\n \r\n$ \r\n \r\n248,819.98 \r\n \r\n$ \r\n \r\n214,025.43 \r\n \r\n$ \r\n \r\n227,137.34 \r\n \r\nN/A \r\n \r\n85.02% \r\n \r\nN/A \r\n \r\n85.26% \r\n \r\nN/A \r\n \r\n85.69% \r\n \r\nThis schedule is intended to show information for 10 years. Additional years will be displayed as they become available. \r\n \r\n- 33 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY \r\nSCHOOL OPEB FUND FOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"4\" \r\n \r\nYear Ended \r\n2020 2019 2018 \r\n \r\nSchool District's proportion of the net \r\nOPEB liability \r\n \r\nSchool District's proportionate share \r\nof the net OPEB liability \r\n \r\n0.045502% $ 0.043131% $ 0.038590% $ \r\n \r\n5,584,072.00 5,481,818.00 5,421,880.00 \r\n \r\nState of Georgia's proportionate share of the \r\nnet OPEB liability associated with the School \r\nDistrict \r\n \r\n$ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\nTotal \r\n$ 5,584,072.00 $ 5,481,818.00 $ 5,421,880.00 \r\n \r\nSchool District's covered-employee \r\npayroll \r\n \r\nSchool District's proportionate share of the net OPEB liability as a percentage of its covered- \r\nemployee payroll \r\n \r\n$ 3,402,237.58 $ 3,374,356.11 $ 3,174,208.92 \r\n \r\n164.13% 162.46% 170.81% \r\n \r\nPlan fiduciary net position as a \r\npercentage of the total OPEB liability \r\n4.63% 2.93% 1.61% \r\n \r\nThis schedule is intended to show information for 10 years. Additional years will be displayed as they become available. \r\n \r\n- 34 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION \r\nSCHEDULE OF CONTRIBUTIONS SCHOOL OPEB FUND \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"5\" \r\n \r\nYear Ended \r\n2020 2019 2018 \r\n \r\nContractually required contribution \r\n \r\nContributions in relation to the contractually required \r\ncontribution \r\n \r\nContribution deficiency (excess) \r\n \r\n$ \r\n \r\n158,001.00 $ \r\n \r\n158,001.00 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n245,062.00 $ \r\n \r\n245,062.00 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n223,544.00 $ \r\n \r\n223,544.00 $ \r\n \r\n- \r\n \r\nSchool District's covered-employee \r\npayroll \r\n \r\n$ \r\n \r\n3,484,362.83 \r\n \r\n$ \r\n \r\n3,402,237.58 \r\n \r\n$ \r\n \r\n3,374,356.11 \r\n \r\nContribution as a percentage of covered- \r\nemployee payroll \r\n4.53% 7.20% 6.62% \r\n \r\nThis schedule is intended to show information for 10 years. Additional years will be displayed as they become available. \r\n \r\n- 35 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION \r\nFOR THE YEAR ENDED JUNE 30, 2020 \r\n \r\nSCHEDULE \"6\" \r\n \r\nTeachers Retirement System \r\nChanges of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience. \r\nOn November 18, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. The expectation of retired life mortality was changed to RP2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males). \r\nOn May 15, 2019, the Board adopted recommended changes from the smoothed valuation interest rate methodology that has been in effect since June 30, 2009, to a constant interest rate method. In conjunction with the methodology, the long-term assumed rate of return in assets (discount rate) has been changed from 7.50% to 7.25%, and the assumed annual rate of inflation has been reduced from 2.75% to 2.50%. \r\nPublic School Employees Retirement System \r\nChanges of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. \r\nOn December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement and withdrawal. The expectation of retired life mortality was changed to the RP2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females). \r\nOn March 15, 2018, the Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for June 30, 2017 actuarial valuation. In addition, based on the Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. \r\nSchool OPEB Fund \r\nChanges of benefit terms: There have been no changes in benefit terms. \r\nChanges in assumptions: The June 30, 2017 actuarial valuation was revised, for various factors, including the methodology used to determine how employees and retirees were assigned to each of the OPEB Funds and anticipated participation percentages. Current and former employees of State organizations (including technical colleges, community service boards and public health departments) are now assigned to State OPEB fund based on their last employer payroll location; irrespective of retirement affiliation. \r\nThe discount rate was updated from 3.07% as of June 30, 2016 to 3.58% as of June 30, 2017 to 3.87% as of June 30, 2018, and back to 3.58% as of June 30, 2019. \r\n \r\n- 36 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND \r\nSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL \r\nYEAR ENDED JUNE 30, 2020 \r\n \r\nSCHEDULE \"7\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent 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 Other Support Services Enterprise Operations Food Services Operation \r\nTotal Expenditures \r\nExcess of Revenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nOther Sources Other Uses \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\nAdjustments \r\n \r\nNONAPPROPRIATED BUDGETS \r\n \r\nORIGINAL (1) \r\n \r\nFINAL (1) \r\n \r\nACTUAL AMOUNTS \r\n \r\nVARIANCE OVER/UNDER \r\n \r\n$ \r\n \r\n3,137,670.00 $ \r\n \r\n3,137,670.00 $ \r\n \r\n3,522,872.11 $ \r\n \r\n385,202.11 \r\n \r\n1,600.00 \r\n \r\n1,600.00 \r\n \r\n17,603.62 \r\n \r\n16,003.62 \r\n \r\n44,173.00 \r\n \r\n3,223,081.00 \r\n \r\n3,326,171.94 \r\n \r\n103,090.94 \r\n \r\n- \r\n \r\n1,224,121.00 \r\n \r\n1,269,277.90 \r\n \r\n45,156.90 \r\n \r\n- \r\n \r\n38,500.00 \r\n \r\n131,875.59 \r\n \r\n93,375.59 \r\n \r\n600.00 \r\n \r\n1,600.00 \r\n \r\n2,136.70 \r\n \r\n536.70 \r\n \r\n90,000.00 \r\n \r\n90,500.00 \r\n \r\n36,683.83 \r\n \r\n(53,816.17) \r\n \r\n3,274,043.00 \r\n \r\n7,717,072.00 \r\n \r\n8,306,621.69 \r\n \r\n589,549.69 \r\n \r\n4,020,967.92 \r\n476,889.89 274,037.75 125,987.00 467,425.16 467,233.00 103,025.35 770,550.72 401,386.00 \r\n35,250.00 - \r\n576,000.00 \r\n7,718,752.79 \r\n(4,444,709.79) \r\n \r\n4,602,447.15 \r\n516,199.89 441,002.80 125,987.00 499,093.16 467,233.00 103,025.35 770,550.72 491,639.00 \r\n35,250.00 - \r\n576,000.00 \r\n8,628,428.07 \r\n(911,356.07) \r\n \r\n3,913,830.12 \r\n396,931.81 344,896.77 110,041.27 493,505.93 537,445.73 \r\n82,456.87 818,351.55 518,104.55 \r\n36,292.00 123,115.01 499,977.71 \r\n7,874,949.32 \r\n431,672.37 \r\n \r\n688,617.03 \r\n119,268.08 96,106.03 15,945.73 5,587.23 (70,212.73) 20,568.48 (47,800.83) (26,465.55) (1,042.00) \r\n(123,115.01) 76,022.29 \r\n753,478.75 \r\n1,343,028.44 \r\n \r\n(4,444,709.79) 2,635,770.78 15,145.02 \r\n \r\n5,928.66 - \r\n5,928.66 (905,427.41) 2,635,770.78 (171,260.47) \r\n \r\n(163,056.89) (163,056.89) 268,615.48 1,695,644.20 \r\n- \r\n \r\n(5,928.66) (163,056.89) (168,985.55) 1,174,042.89 (940,126.58) 171,260.47 \r\n \r\nFund Balances - Ending \r\n \r\n$ \r\n \r\n(1,793,793.99) $ \r\n \r\n1,559,082.90 $ \r\n \r\n1,964,259.68 $ \r\n \r\n405,176.78 \r\n \r\nNotes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual \r\n(1) Original and Final Budget amounts do not include the budgeted revenues or expenditures of the various principal accounts. The actual revenues and expenditures of the various principal accounts are $114,959.66 and $130,037.76, respectively. \r\nThe accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 37 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\nYEAR ENDED JUNE 30, 2020 \r\n \r\nSCHEDULE \"8\" \r\n \r\nFUNDING AGENCY PROGRAM/GRANT \r\nAgriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program \r\nTotal Child Nutrition Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Food Services Fresh Fruit and Vegetable Program \r\nTotal U. S. Department of Agriculture \r\nEducation, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Grants to States Preschool Grants \r\nTotal Special Education Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Rural Education Rural Education Student Support and Academic Enrichment Program Student Support and Academic Enrichment Program Supporting Effective Instruction State Grants Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies \r\nTotal Other Programs \r\nTotal U. S. Department of Education \r\nDefense, U. S. Department of Direct Department of the Army R.O.T.C. Program \r\n \r\nCFDA NUMBER \r\n \r\nPASSTHROUGH \r\nENTITY ID \r\nNUMBER \r\n \r\nEXPENDITURES IN PERIOD \r\n \r\n10.553 10.555 \r\n \r\n205GA324N1099 $ 205GA324N1099 \r\n \r\n179,211.00 295,375.31 \r\n474,586.31 \r\n \r\n10.582 \r\n \r\n205GA324L1603 \r\n \r\n11,032.00 485,618.31 \r\n \r\n84.027 84.027 84.173 \r\n \r\nH027A180073 H027A190073 H173A190081 \r\n \r\n84.048 84.358 84.358 84.424A 84.424A 84.367 84.010 84.010 \r\n \r\nV048A190010 S365B180010 S358B190010 S424A180011 S424A190011 S367A180001 S010A180010 S010A190010 \r\n \r\n12.UNKNOWN \r\n \r\n3,204.00 91,191.54 18,502.00 \r\n112,897.54 \r\n4,652.33 556.00 \r\n8,250.07 7,126.00 6,603.21 6,887.27 105,374.33 300,380.55 \r\n439,829.76 \r\n552,727.30 \r\n61,301.68 \r\n \r\nTotal Expenditures of Federal Awards \r\n \r\n$ \r\n \r\n1,099,647.29 \r\n \r\nNotes to the Schedule of Expenditures of Federal Awards \r\nNote 1. Basis of Presentation \r\nThe accompanying schedule of expenditures of federal awards (the \"Schedule\") includes the federal award activity of the Talbot County Board of Education (the \"Board\") under programs of the federal government for the year ended June 30, 2020. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Board, it is not intended to and does not present the financial position or changes in net position of the Board. \r\nNote 2. Summary of Significant Accounting Policies \r\nExpenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. \r\nNote 3. Indirect Cost Rate \r\nThe Board has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 38 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2020 \r\nAGENCY/FUNDING \r\nGRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program \r\nEducation, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Principal Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Mid-term Adjustment Hold-Harmless Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Sparsity Other State Programs Food Services Hygiene Products in Georgia Schools Math and Science Supplements Pupil Transportation - State Bonds Vocational Education \r\nGovernor's Office of Student Achievement GRASP Counselor Grant \r\nOffice of the State Treasurer Public School Employees Retirement \r\n \r\nSCHEDULE \"9\" \r\n \r\nGOVERNMENTAL FUND TYPE GENERAL FUND \r\n \r\n$ \r\n \r\n92,898.45 \r\n \r\n123,461.00 (2,863.00) \r\n323,690.00 33,704.00 \r\n182,926.00 35,423.00 \r\n318,834.00 336,732.00 \r\n50,964.00 422,426.00 \r\n20,526.00 21,859.00 49,517.00 16,479.00 \r\n7,559.00 240.00 \r\n306,211.00 130,481.00 \r\n94,499.00 32,356.00 (38,508.00) \r\n230,911.00 45,000.00 \r\n317,203.00 \r\n11,484.00 51.00 \r\n2,101.19 77,220.00 18,854.00 \r\n48,257.30 \r\n15,676.00 \r\n$ 3,326,171.94 \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 39 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS \r\nYEAR ENDED JUNE 30, 2020 \r\n \r\nSCHEDULE \"10\" \r\n \r\nPROJECT \r\n \r\nORIGINAL ESTIMATED \r\nCOST (1) \r\n \r\nCURRENT ESTIMATED COSTS (2) \r\n \r\nAMOUNT EXPENDED IN CURRENT \r\nYEAR (3) \r\n \r\nAMOUNT EXPENDED IN PRIOR YEARS (3) \r\n \r\nTOTAL COMPLETION \r\nCOST \r\n \r\nEXCESS PROCEEDS NOT \r\nEXPENDED \r\n \r\n(1) Adding to, constructing, renovating, \r\n \r\nfurnishing, and/or equipping an athletic \r\n \r\ncomplex and related facilities, including a \r\n \r\nstadium, a track, softball field and any related \r\n \r\nlighting; (2) acquiring equipment for physical \r\n \r\neducation and the athletic departments; (3) \r\n \r\nacquiring safety, security and/or fire protection \r\n \r\nequipment; (4) acquiring buses, vehicles, \r\n \r\nand/or transportation equipment; and/or (5) \r\n \r\nacquiring property. \r\n \r\n$ 2,800,000.00 $ 5,704,015.01 $ 2,046,603.88 $ 2,928,946.13 $ \r\n \r\n- $ \r\n \r\n- \r\n \r\nESTIMATED COMPLETION \r\nDATE \r\n6/30/2022 \r\n \r\n(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. \r\n(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion. \r\n(3) The voters of Talbot County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 41 - \r\n \r\n SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400 \r\n \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON \r\nCOMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\n \r\nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nWe have audited, in accordance with the 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, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Talbot County Board of Education (School District), as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements, and have issued our report thereon dated November 2, 2021. \r\nInternal Control Over Financial Reporting \r\nIn planning and performing our audit of the financial statements, we considered the School District's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control. \r\nOur consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we did identify certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies. \r\nA deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs as item FS 2020-004 to be a material weakness. \r\n \r\n A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS 2020-001, FS 2020-002 and FS 2020-003, to be significant deficiencies. \r\nCompliance and Other Matters \r\nAs part of obtaining reasonable assurance about whether the School District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. \r\nSchool District's Response to Findings \r\nThe School District's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. \r\nPurpose of this Report \r\nThe purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nNovember 2, 2021 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400 \r\n \r\nINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE \r\n \r\nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nReport on Compliance for Each Major Federal Program \r\nWe have audited the Talbot County Board of Education's (School District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2020. The School District's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. \r\nManagement's Responsibility \r\nManagement is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. \r\nAuditor's Responsibility \r\nOur responsibility is to express an opinion on compliance for each of the School District's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. \r\nWe believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the School District's compliance. \r\n \r\n Basis for Qualified Opinion on Title I Grants Local Educational Agencies (CFDA 84.010) \r\nAs described in the accompanying Schedule of Findings and Questioned Costs, the School District did not comply with requirements regarding Title I Grants to Local Educational Agencies (CFDA 84.010) as described in item FA 2020-001 for Cash Management. Compliance with such requirements is necessary, in our opinion, for the School District to comply with requirements applicable to that program. \r\nQualified Opinion on Title I Grants Local Educational Agencies (CFDA 84.010) \r\nIn our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the School District complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on Title I Grants to Local Educational Agencies (CFDA 84.010) for the year ended June 30, 2020. \r\nUnmodified Opinion on the Other Major Federal Program \r\nIn our opinion, the School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its other major federal program identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs for the year ended June 30, 2020. \r\nOther Matters \r\nThe School District's response to the noncompliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. \r\nReport on Internal Control over Compliance \r\nManagement of the School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control over compliance. \r\nA deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. \r\n \r\n Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. We did identify a certain deficiency in internal control over compliance, described in the accompanying Schedule of Findings and Questioned Costs as item FA 2020-001, that we consider to be a material weakness. \r\nThe School District's response to the internal control over compliance finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. \r\nThe purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nNovember 2, 2021 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2020 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 7301-13-01 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2014-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2015-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2016-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Control Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2017-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Control Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2018-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Control Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2020 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2019-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Control Procedures Cash and Cash Equivalents Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nThe finance director will meet with all parties involved to discuss the findings, examine our current procedure, and seek ways to diminish all the risks. We will make adjustments to procedures as needed. We will meet periodically to share ideas, discuss adjustments to procedures and provide additional training. \r\n \r\nFS 7301-13-02 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2014-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2015-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2020 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2016-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2017-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2018-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Agency Fund Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2019-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Agency Fund Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nThe finance/business director will review the current accounting procedures and ensure that internal controls are in place. In addition, the School District has received quotes in reference to purchasing a new software that will be implemented for school accounts that has features to eliminate issues with school level purchases. The business/finance director will meet periodically to share ideas, discuss adjustments to procedures (if any), and provide additional training, if needed. \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2020 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 7301-13-06 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nFailure to Adequately Maintain Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFS 2014-005 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nFailure to Adequately Maintain Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFS 2015-005 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nFailure to Adequately Maintain Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFS 2016-004 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFS 2017-004 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFS 2018-004 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Capital Assets Capital Assets Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2020 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2019-003 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Capital Assets Capital Assets Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFS 2016-005 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls at the Central Office Accounting Controls (Overall) Expenditures/Liabilities/Disbursements Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2017-005 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls at the Central Office Accounting Controls (Overall) Expenditures/Liabilities/Disbursements Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2018-005 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls at the Central Office Accounting Controls (Overall) Expenditures/Liabilities/Disbursements General Ledger Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2019-004 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls at the Central Office Accounting Controls (Overall) General Ledger Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nThe finance officer will review the accounting procedures and ensure that internal controls are in place. In addition, the School District will review the current accounting procedures and controls and will implement procedures to help strengthen the internal controls. \r\n \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2020 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2016-006 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Financial Reporting Financial Reporting Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2017-006 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Financial Reporting Financial Reporting Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2018-006 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Financial Reporting Financial Reporting Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS-2019-005 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Financial Reporting Financial Reporting Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe finance officer will review the accounting procedures and ensure that internal controls are in place. In addition, the School District will review the current accounting procedures and controls and will implement procedures to help strengthen the internal controls. \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2014-003 \r\n \r\nInadequate Control Over the Cash Management Process \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\n- 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2020 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2015-002 \r\n \r\nControls Over the Cash Management Process \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFA 2016-001 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nImprove Controls Over the Cash Management Process Cash Management Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFA 2017-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nImprove Controls Over the Cash Management Process Cash Management Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFA 2018-001 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: \r\n \r\nImprove Controls Over Cash Management Cash Management Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies S010A160010, S010A170010 \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2020 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2019-001 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: \r\n \r\nImprove Controls Over Cash Management Cash Management Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies S010A170010, S010A180010 \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nManagement has implemented procedures to monitor the cash monthly balances for all programs when requesting reimbursement for federal and state programs. \r\n \r\nFA 2017-005 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nImprove Controls over the Schoolwide Program Special Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nFurther Action not Warranted \r\n \r\nFA 2019-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: \r\n \r\nStrengthen Controls over Financial Reporting Reporting Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Educational Agencies S010A170010, S010A180010 \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe financial officer will oversee the accounting procedures. The financial officer will monitor monthly/yearly expenditures to ensure that completion reports are both in agreement at the end of each grant period. \r\n \r\n- 8 - \r\n \r\n SECTION IV FINDINGS AND QUESTIONED COSTS \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2020 \r\n \r\nI SUMMARY OF AUDITOR'S RESULTS \r\n \r\nFinancial Statements \r\n \r\nType of auditor's report issued: Governmental Activities; All Major Funds; Aggregate Remaining Fund Information \r\n \r\nUnmodified \r\n \r\nInternal control over financial reporting: \r\n \r\n Material weakness identified? \r\n \r\nYes \r\n \r\n Significant deficiencies identified? \r\n \r\nYes \r\n \r\nNoncompliance material to financial statements noted: \r\n \r\nNo \r\n \r\nFederal Awards \r\n \r\nInternal Control over major programs:  Material weakness identified?  Significant deficiency identified? \r\n \r\nYes None Reported \r\n \r\nType of auditor's report issued on compliance for major programs: Unmodified for all major programs except for Title I Grants to Local Educational Agencies, which was qualified. \r\n \r\nAny audit findings disclosed that are required to be reported in \r\n \r\naccordance with 2 CFR 200.516(a)? \r\n \r\nYes \r\n \r\nIdentification of major programs: \r\n \r\nCFDA Numbers \r\n \r\nName of Federal Program or Cluster \r\n \r\n10.553, 10.555 84.010 \r\n \r\nChild Nutrition Cluster Title I Grants to Local Educational Agencies \r\n \r\nDollar threshold used to distinguish between Type A and Type B programs: \r\n \r\n$750,000.00 \r\n \r\nAuditee qualified as low-risk auditee? \r\n \r\nNo \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2020 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2020-001 \r\n \r\nInternal Control Procedures \r\n \r\nControl Category: \r\n \r\nCash and Cash Equivalents \r\n \r\nInternal Control Impact: \r\n \r\nSignificant Deficiency \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: \r\n \r\nFS 2019-001, FS 2018-001, FS 2017-001, FS 2016-001, \r\n \r\nFS 2015-001, FS 2014-001, FS 7301-13-01 \r\n \r\nDescription: \r\n \r\nThe accounting procedures of the School District continue to be insufficient to provide adequate \r\n \r\ninternal controls over the Cash and Cash Equivalents functions. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls over Cash and Cash Equivalents. Further, management is responsible for implementing reported corrective action to findings from previous engagements. \r\n \r\nCondition: The following Cash and Cash Equivalents related deficiencies were noted: \r\n Bank reconciliations were not performed by someone independent of the general ledger function. \r\n Misstatements were noted on Note Disclosure 4 for the carrying amount, the bank balance amount, the amount insured by Federal depository insurance, the amount collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name, and the amount uninsured and uncollateralized. \r\n One reconciliation lacked the approvers signature. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the cause was a direct result of the lack of time and resources to fully separate duties to ensure that internal controls were sufficient. \r\n \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over cash activity increases the risk significant misstatements could occur in the financial statements due to error or fraud. Failure to implement corrective actions from findings in previous years raises concerns about the School District's management of local, state, and federal monies. Given the increased level of risk of misstatement or fraud, auditors must consider increasing audit procedures. \r\n \r\nRecommendation: Management should take appropriate steps to ensure the time and resources are made available to implement controls over cash to ensure monthly bank reconciliations are preformed accurately by someone independent of the general ledger function. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2020 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2020-002 Control Category: \r\nInternal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over Agency Fund Accounts Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) Significant Deficiency None FS 2019-002, FS 2018-002, FS 2017-002, FS 2016-002, FS 2015-002, FS 2014-002, FS 7301-13-02 \r\n \r\nDescription: The accounting procedures of the School District continue to be not followed resulting in internal control weaknesses over Agency Fund accounts. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and provide reasonable assurance transactions are processed according to established procedures. Further, management is responsible for implementing reported corrective action to findings from previous engagements. \r\n \r\nCondition: The following deficiencies were noted with the School District's Agency Fund accounts: \r\n \r\nRevenues/Receivables/Receipts  The deposit preparation function was not separated from the bank reconciliation and general ledger functions for school activity accounts.  No supporting receipt documentation was provided for the three school activity receipts selected for review. \r\n \r\nExpenditures/Liabilities/Disbursements  None of the three school activity account expenditures reviewed had evidence of review or approval.  One of the three school activity account expenditures reviewed was not paid according to the invoice.  Two of the three school activity account expenditures did not have evidence of receipt of purchase. \r\n \r\nAccounting Controls (Overall)  For school activity accounts, the School District did not have a formal process for documenting agency fund sponsors, purpose of accounts, allowable activities of accounts, source of funds, and final disposition of funds related to individual agency fund accounts. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the internal control deficiencies related to school activity accounts occurred due to a shortage of personnel at the school and a failure of those personnel to follow the established policies and procedures due to lack of understanding. That resulted in necessary information not being recorded and located. \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2020 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nEffect or Potential Effect: The lack of adequate controls increases the risk of theft, fraud, or misuse of School District resources that may result in errors and/or irregularities not being detected in a timely manner. Failure to implement corrective actions from findings in previous years raises concerns about the School District's management of local monies. Given the increased level of risk of misstatement or fraud, auditors must consider increasing audit procedures. \r\n \r\nRecommendation: Management should take appropriate steps to ensure: \r\n The time and resources are made available to ensure proper separation of duties is established, \r\n proper approval process for disbursements is followed,  safe keeping of receipt documentation is implemented,  accounting processes are adequately monitored,  standard procedures are implemented over the depositing of funds,  and agency fund accounts are properly documented. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFS 2020-003 Control Category: \r\nInternal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls at the Central Office Accounting Controls (Overall) General Ledger Significant Deficiency None FS 2019-004, FS 2018-005, FS 2017-005, FS 2016-005 \r\n \r\nDescription: The accounting procedures of the School District continue to not provide adequate internal controls at the Central Office. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed appropriately. Further, management is responsible for implementing reported corrective action to findings from previous engagements. \r\n \r\nCondition: Accounting Controls (Overall) \r\n The School District does not have adequate logical access controls in place to ensure only appropriate users have access to significant financial applications and supporting infrastructure. We noted several users with access rights that exceeded their need to complete their assigned job functions. Further, the access granted did not adequately separate the functions of initiating, authorizing, and recording transactions, reconciliations, and maintaining the custody of assets. \r\n Inadequate physical access controls are in place over the server rooms. It was noted that the server room is unlocked during working hours. \r\n Proper anti-virus protection was not in place at the workstation level. For efficiency, IT personnel performs a full memory wipe and restore for any workstation that becomes compromised. This exposes the entity to unnecessary risk from cyber threats. \r\n \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2020 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\n There are no established written organizational standards or procedures over IT functions and key processes. Considering the School District has only one full time IT personnel, formal written procedures such as back-up policies, job scheduling, and IT risk assessment is crucial. \r\n Backup and recovery procedures for the student information system and school food service point of sale system are not adequate. \r\n There is no formal policy for managing user access to the financial application, student information system, and school food service point of sale system. \r\n The School District did not have adequate password policies over the network, student information system, and school food service point of sale system. \r\n \r\nGeneral Ledger Our examination of seven journal entries revealed the following deficiencies: \r\n All of the journal entries lacked evidence of supervisory review and approval. \r\n \r\nCause: In discussing these deficiencies with School District, they stated that these issues were a result of management's failure to ensure that internal controls were established, implemented, and functioning. \r\n \r\nEffect or Potential Effect: Without satisfactory accounting controls and procedures in place, the School District could place itself in a position where potential misappropriation of assets could occur. In addition, the lack of proper controls impacts its reporting and financial position and results of operations. Failure to implement corrective actions from findings in previous years raises concerns about the School District's management of local, state, and federal monies. Given the increased level of risk of misstatement or fraud, auditors must consider increasing audit procedures. \r\n \r\nRecommendation: The School District should implement procedures to ensure that key accounting functions are appropriately separated and/or utilize management oversight for these incompatible activities. In addition, the School District should ensure server rooms are properly safeguarded and monitored, and adequate protection from cyber threats exists on all workstations. The School District should review accounting procedures in place and design and implement procedures relative to expenditures and journal entries to strengthen the internal controls over the accounting function. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFS 2020-004 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over Financial Reporting Financial Reporting Material Weakness None FS 2019-005, FS 2018-006, FS 2017-006, FS 2016-006 \r\n \r\nDescription: The School District continues to not have adequate controls in place over the financial statement reporting process to ensure all required activity was correctly included in the financial statement information presented for audit. The original financial statements, as presented for audit, contained numerous material and significant errors and omissions. \r\n \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2020 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCriteria: Management is responsible for having adequate controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). The School District's internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills, and experience to prepare GAAP based financial statements and include all disclosures as required by the Governmental Accounting Standards Board (GASB). \r\nGASB Statement No. 34, Basic Financial Statements  Management's Discussion and Analysis  for State and Local Governments (Statement), requires governments to present government-wide and fund financial statements as well as summary reconciliation of the (a) total governmental funds balances to the net position of governmental activities in the Statement of Net Position, and (b) total changes in governmental fund balances to the change in the net position of governmental activities in the Statement of Activities. In addition, the statement requires information about the government's major and nonmajor funds in the aggregate, to be provided in the fund financial statements. \r\nChapter II2, Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles. \r\nFurther, management is responsible for implementing reported corrective action to findings from previous enagements. \r\nCondition: The following errors and omissions were noted in the School District's financial statement presented for audit: \r\n Agency fund cash was overstated by $12,148.22, agency fund accounts receivable was understated by $12,210.65, and accounts payable was understated by $62.43 due to the Family Connections grant being incorrectly recorded in the general fund. Adjustments to the financial statements were proposed by the auditors and accepted by the School District. These misstatements were material to the agency fund. \r\n A review of federal grant fund balances revealed that several grants were not properly closed out at year-end. Federal programs should be reviewed each year to determine if funds should be refunded to the grantor or if a transfer or receivable is necessary to cover a deficit balance. \r\n Several other audit adjustments and reclassifications were proposed by auditors and accepted by the School District to properly present the financial statement and note disclosures. \r\nCause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of review of the financial statements and note disclosures as prepared by their consultant. \r\nEffect or Potential Effect: Material and significant misstatements and misclassifications were included in the financial statements presented for audit. Numerous adjustments were necessary for the School District's financial statements to be in conformity with GAAP. The lack of controls and monitoring could impact the reporting of the School District's financial position and results of operations. Failure to implement corrective actions from findings in previous years raises concerns about the School District's management of local, state, and federal monies. Given the increased level of risk of misstatement or fraud, auditors must consider increasing audit procedures. \r\n- 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2020 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nRecommendation: The School District should strengthen their internal controls and preparation and review procedures over financial reporting to ensure that the financial statements, including disclosures, presented for audit are complete and accurate. These procedures should be performed by a properly trained individual(s) possessing a thorough understanding of the applicable GAAP, GASB pronouncements and knowledge of the School District's activities and operations. The School District should also consider implementing the use of a review checklist to assist in the review process over the financial statements. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2020-001 \r\n \r\nImprove Controls over Cash Management \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: \r\n \r\nMaterial Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: \r\n \r\n84.010 Title I Grants to Local Education Agencies \r\n \r\nFederal Award Numbers: S010A180010, S010A190010 \r\n \r\nQuestioned Costs: \r\n \r\nNone Identified \r\n \r\nRepeat of Prior Year Findings: FA 2019-001, FA 2018-001, FA 2017-002, FA 2016-001, \r\n \r\nFA 2015-002, FA 2014-003 \r\n \r\nDescription: The School District continued to make cash drawdowns in excess of immediate cash needs for the Title I program. \r\n \r\nCriteria: 2 CFR 200.305(b) states, \"For non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the pass-through entity and the disbursement by the non-Federal entity.\" In addition, 2 CFR 200.302(b)(6) requires that the entity develop written cash management procedures. \r\n \r\nFurthermore, 2 CFR 200.303(a) states in part that the \"non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award... (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. \r\n \r\nFurther, management is responsible for implementing reported corrective action to findings from previous engagements. \r\n \r\nCondition: Upon review of cash drawdowns and disbursements related to the Title I program, cash balances in excess of Title I program materiality were observed for the entire fiscal year. Additionally, it was noted that the School District did not have appropriate controls in place over the cash drawdown process. \r\n \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2020 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Cause: In discussing the issues with management, they indicated that the lack of review of federal grants resulted in excess cash drawdown requests. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. In addition, the School District could potentially accrue a Federal interest liability that would be owed to the Federal government. Failure to implement corrective actions from findings in previous years raises concerns about the School District's management of federal monies. Given the increased level of risk of misstatement or fraud, auditors must consider increasing audit procedures. Recommendation: The School District should develop and implement procedures to accurately forecast the cash needs of the Title I program and minimize the time elapsing between the transfer of funds from the Georgia Department of Education and the disbursement of such funds by the School District. These procedures should be documented in accordance with 2 CFR 200.302(b)(6). In addition, management should develop and implement a monitoring process to ensure that these procedures are followed. Views of Responsible Officials: We concur with this finding. \r\n- 8 - \r\n \r\n SECTION V MANAGEMENT'S CORRECTIVE ACTION \r\n \r\n Cynthia Epps Assistant Superintendent \u0026 Director of Curriculum \r\n \r\nTalbot County Board of Education \r\nDr. James Catrett, Superintendent \r\n \r\nBoard Members Anton Turner, District 1 \r\nJames Steverson, Vice Chairperson, District 2 Sharleta Hall, Chairman District 3 Carlton Mahone, District 4 Mildred Biggs, District 5 \r\n \r\nCORRECTIVE ACTION PLAN: FINANCIAL AND FEDERAL AUDIT FINDINGS \r\n \r\nFinding: FS 2020-001 \r\n \r\nInternal Control Procedures \r\n \r\nControl Category: \r\n \r\nCash and Cash Equivalents \r\n \r\nInternal Control Impact: Significant Deficiency \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: FS 2019-01, FS 2018-001, FS 2017-001, FS 2016-001, FS 2015-001, \r\n \r\nFS 2014-001, FS-7301-13-01 \r\n \r\nResponse: The Finance Director will meet with all parties involved to discuss the findings, examine our current procedure sand seek ways to diminish the risks. We will make adjustments to procedures as needed. We will meet periodically to share ideas, discuss adjustments to procedures and provide additional training. \r\n \r\nFS 2020-002 \r\n \r\nInternal Controls over Agency Fund Accounts \r\n \r\nControl Category: \r\n \r\nRevenues/Receivables/Receipts \r\n \r\nExpenditures/Liabilities/Disbursements \r\n \r\nAccounting Controls (Overall) \r\n \r\nInternal Control Impact: Significant Deficiency \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: FS 2019-002, FS 2018-002, FS 2017-002, FS 2016-002, FS 2015-002, \r\n \r\nFS 2014-002, FS-7301-13-02 \r\n \r\nResponse: The school district has hired a new Finance/Business Director that will review the current accounting procedures and ensure that internal controls are in place. In addition, the school district has received quotes in reference to purchasing a new software that will be implemented for school accounting that has features to eliminate issues with school level purchases. The Business/Finance Director will meet periodically to share ideas, discuss adjustments to procedures (if any), and provide additional training, if needed. \r\n \r\nFS 2020-003 \r\n \r\nInternal Controls at the Central Office \r\n \r\nControl Category: \r\n \r\nAccounting Controls (Overall) \r\n \r\nGeneral Ledger \r\n \r\nInternal Control Impact: Significant Deficiency \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: FS 2019-004, FS 2018-005, FS 2017-005, FS 2016-005 \r\n \r\n945 N. Washington Avenue \r\n \r\nP. O. Box 515 Determined to Achieve; Dedicated to Succeed \r\n \r\nTalbotton, GA 31827 \r\n \r\n  "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2019-belec-p-btext","title":"Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended 2019 June 30 (including independent auditor's reports)","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2021-09-02"],"dcterms_description":["Annual financial report for the Talbot County Board of Education."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Georgia. Department of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Talbot County Board of Education (Ga.)--Appropriations and expenditures--Periodicals.","Education--Georgia--Talbot County--Auditing--Periodicals.","Education--Georgia--Talbot County--Finance--Statistics--Periodicals.","Georgia Government Documents--Serial"],"dcterms_title":["Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended 2019 June 30 (including independent auditor's reports)"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2019-belec-p-btext"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2019-belec-p-btext"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records","audits","financial records","financial statements"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"TALBOT COUNTY BOARD OF EDUCATION \r\nTALBOTTON, GEORGIA \r\nANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2019 \r\n(Including Independent Auditor's Reports) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nEXHIBITS \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nGOVERNMENT-WIDE FINANCIAL STATEMENTS \r\n \r\nA \r\n \r\nSTATEMENT OF NET POSITION \r\n \r\nB \r\n \r\nSTATEMENT OF ACTIVITIES \r\n \r\nFUND FINANCIAL STATEMENTS \r\n \r\nC \r\n \r\nBALANCE SHEET \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nD \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\n \r\nTO THE STATEMENT OF NET POSITION \r\n \r\nE \r\n \r\nSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES \r\n \r\nIN FUND BALANCES \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nF \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT \r\n \r\nOF REVENUES, EXPENDITURES AND CHANGES IN FUND \r\n \r\nBALANCES TO THE STATEMENT OF ACTIVITIES \r\n \r\nG \r\n \r\nSTATEMENT OF FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\nH \r\n \r\nSTATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\nI NOTES TO THE BASIC FINANCIAL STATEMENTS \r\n \r\nSCHEDULES \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\n2 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA \r\n3 SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY SCHOOL OPEB FUND \r\n4 SCHEDULE OF CONTRIBUTIONS  TEACHERS RETIREMENT SYSTEM OF GEORGIA 5 SCHEDULE OF CONTRIBUTIONS  SCHOOL OPEB FUND 6 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION 7 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES \r\nIN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND \r\n \r\nPage \r\n1 2 \r\n3 4 5 6 7 8 10 \r\n31 32 33 34 35 36 37 \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\nFINANCIAL \r\nSCHEDULES \r\nSUPPLEMENTARY INFORMATION \r\n8 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 9 SCHEDULE OF STATE REVENUE 10 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS \r\n \r\nPage \r\n38 39 41 \r\n \r\nSECTION II \r\nCOMPLIANCE AND INTERNAL CONTROL REPORTS \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\nINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE \r\n \r\nSECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\nSECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\n \r\nSECTION V MANAGEMENT'S CORRECTIVE ACTION FOR CURRENT YEAR FINDINGS SCHEDULE OF MANAGEMENT'S CORRECTIVE ACTION \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION I FINANCIAL \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400 \r\n \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nReport on the Financial Statements \r\nWe have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Talbot County Board of Education (School District), as of and for the year ended June 30, 2019, and the related notes to the financial statements. We were unable to opine on the aggregate remaining fund information due to the matters discussed in the Basis for Disclaimer of Opinion paragraph. These financial statements collectively comprise the School District's basic financial statements as listed in the table of contents. \r\nManagement's Responsibility for the Financial Statements \r\nManagement is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. \r\nAuditor's Responsibility \r\nOur responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 from material misstatement. Because of the matter described in the \"Basis for Disclaimer of Opinion on the Aggregate Remaining Fund Information paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the aggregate remaining fund information. \r\nAn audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also \r\n \r\n (This page left intentionally blank) \r\n \r\n includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. \r\n \r\nExcept for the matter described in the \"Basis for Disclaimer of Opinion on the Aggregate Remaining Fund Information\" paragraph, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. \r\nSummary of Opinions \r\n \r\nOpinion Unit Governmental Activities General Fund Capital Projects Fund Debt Service Fund Aggregate Remaining Fund Information \r\n \r\nType of Opinion Unmodified Unmodified Unmodified Unmodified Disclaimer \r\n \r\nBasis for Disclaimer of Opinion on the Aggregate Remaining Fund Information \r\n \r\nDue to lack of adequate documentation supporting the school activity (Principal and Agency) accounts maintained at the schools and recorded in the fiduciary fund and failure to record any current year activity, we were not able to obtain sufficient appropriate audit evidence to substantiate the balances recorded in the financial statements. As a result of these matters, we were unable to determine whether the fiduciary fund was materially correct. \r\nDisclaimer of Opinion \r\n \r\nBecause of the significance of the matter described in the \"Basis for Disclaimer of Opinion on the Aggregate Remaining Fund Information\" paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements of the aggregate remaining fund information of the School District. Accordingly, we do not express an opinion on these financial statements. \r\nUnmodified Opinions \r\n \r\nIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the School District as of June 30, 2019, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. \r\nOther Matters \r\nRequired Supplementary Information \r\n \r\nManagement has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinions on the basic financial statements are not affected by this missing information. \r\n \r\nAccounting principles generally accepted in the United States of America require that the required supplementary information listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is \r\n \r\n (This page left intentionally blank) \r\n \r\n required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. \r\nOther Information \r\nOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District's basic financial statements. The accompanying supplementary information, as listed in the table of contents, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U. S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. \r\nThe accompanying supplemental information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying account and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, except for the impact of the matter described in the \"Basis for Disclaimer of Opinion on the Aggregate Remaining Fund Information\" paragraph, the accompanying supplemental information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. \r\nOther Reporting Required by Government Auditing Standards \r\nIn accordance with Government Auditing Standards, we have also issued our report dated September 2, 2021 on our consideration of the School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control over financial reporting and compliance. \r\n \r\n (This page left intentionally blank) \r\n \r\n A copy of this report has been filed as a permanent record and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. \r\nRespectfully submitted, \r\n \r\nSeptember 2, 2021 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2019 \r\nASSETS \r\nCash and Cash Equivalents Investments Receivables, Net \r\nTaxes State Government Federal Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation) \r\nTotal Assets \r\nDEFERRED OUTFLOWS OF RESOURCES \r\nRelated to Defined Benefit Pension Plan Related to OPEB Plan \r\nTotal Deferred Outflows of Resources \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Interest Payable Contracts Payable Retainages Payable Net Pension Liability Net OPEB Liability Long-Term Liabilities \r\nDue Within One Year Due in More Than One Year \r\nTotal Liabilities \r\nDEFERRED INFLOWS OF RESOURCES \r\nRelated to Defined Benefit Pension Plan Related to OPEB Plan \r\nTotal Deferred Inflows of Resources \r\nNET POSITION \r\nNet Investment in Capital Assets Restricted for \r\nContinuation of Federal Programs Debt Service Capital Projects Unrestricted (Deficit) \r\nTotal Net Position \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\nEXHIBIT \"A\" \r\n \r\nGOVERNMENTAL ACTIVITIES \r\n \r\n$ \r\n \r\n4,115,133.92 \r\n \r\n65,000.00 \r\n \r\n619,897.04 326,444.59 304,425.69 \r\n40.20 7,137.84 3,207,545.23 12,129,217.51 \r\n \r\n20,774,842.02 \r\n \r\n1,267,054.00 1,017,040.00 \r\n2,284,094.00 \r\n \r\n105,627.69 776,321.59 \r\n67,664.80 34,483.67 356,829.07 97,006.00 5,422,373.00 5,481,818.00 \r\n357,690.00 3,075,659.00 \r\n15,775,472.82 \r\n \r\n300,285.00 1,053,337.00 \r\n1,353,622.00 \r\n \r\n12,641,775.48 \r\n245,377.63 76,836.19 \r\n1,515,544.13 (8,549,692.23) \r\n \r\n$ \r\n \r\n5,929,841.20 \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES \r\nFOR THE YEAR ENDED JUNE 30, 2019 \r\n \r\nEXHIBIT \"B\" \r\n \r\nEXPENSES \r\n \r\nPROGRAM REVENUES \r\n \r\nOPERATING \r\n \r\nCHARGES FOR \r\n \r\nGRANTS AND \r\n \r\nSERVICES \r\n \r\nCONTRIBUTIONS \r\n \r\nNET (EXPENSES) REVENUES \r\nAND CHANGES IN NET POSITION \r\n \r\nInstruction Support Services \r\nPupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Operations of Non-Instructional Services Food Services Interest on Short-Term and Long-Term Debt \r\nTotal Governmental Activities \r\nGeneral Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous \r\nTransfers \r\nTotal General Revenues and Transfers \r\nChange in Net Position \r\nNet Position - Beginning of Year \r\n \r\n$ \r\n \r\n4,461,226.41 $ \r\n \r\n411,383.75 288,239.98 \r\n99,779.71 463,178.52 523,456.96 254,151.71 752,920.16 450,324.01 \r\n31,278.00 \r\n \r\n447,204.82 76,325.00 \r\n \r\n$ \r\n \r\n8,259,469.03 $ \r\n \r\n- $ \r\n- \r\n37,765.94 - \r\n37,765.94 $ \r\n \r\n2,640,398.47 $ \r\n107,546.92 251,904.26 \r\n67,254.00 383,869.91 171,170.00 \r\n2,541.16 137,965.44 252,655.35 \r\n- \r\n516,813.74 - \r\n4,532,119.25 \r\n \r\n(1,820,827.94) \r\n(303,836.83) (36,335.72) (32,525.71) (79,308.61) \r\n(352,286.96) (251,610.55) (614,954.72) (197,668.66) \r\n(31,278.00) \r\n107,374.86 (76,325.00) \r\n(3,689,583.84) \r\n \r\n3,043,710.15 \r\n574,555.08 13,394.12 70,137.20 \r\n101,585.31 (3.15) \r\n3,803,378.71 \r\n113,794.87 \r\n5,816,046.33 \r\n \r\nNet Position - End of Year \r\n \r\n$ \r\n \r\n5,929,841.20 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION BALANCE SHEET \r\nGOVERNMENTAL FUNDS JUNE 30, 2019 \r\n \r\nEXHIBIT \"C\" \r\n \r\nASSETS \r\nCash and Cash Equivalents Investments Receivables, Net \r\nTaxes State Government Federal Government Other Inventories \r\n \r\nGENERAL FUND \r\n \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 1,594,186.88 $ 65,000.00 \r\n572,250.58 326,444.59 304,425.69 \r\n40.20 7,137.84 \r\n \r\n2,409,627.18 $ - \r\n47,646.46 - \r\n \r\n111,319.86 $ - \r\n- \r\n \r\n4,115,133.92 65,000.00 \r\n619,897.04 326,444.59 304,425.69 \r\n40.20 7,137.84 \r\n \r\nTotal Assets \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Contracts Payable Retainages Payable \r\nTotal Liabilities \r\nDEFERRED INFLOWS OF RESOURCES \r\nUnavailable Revenue - Property Taxes \r\nFUND BALANCES \r\nNonspendable Restricted Assigned Unassigned \r\nTotal Fund Balances \r\n \r\n$ 2,869,485.78 $ \r\n \r\n2,457,273.64 $ \r\n \r\n111,319.86 $ 5,438,079.28 \r\n \r\n$ \r\n \r\n105,627.69 $ \r\n \r\n776,321.59 \r\n \r\n67,664.80 \r\n \r\n- \r\n \r\n- \r\n \r\n949,614.08 \r\n \r\n- $ 356,829.07 97,006.00 \r\n453,835.07 \r\n \r\n- $ - \r\n \r\n105,627.69 776,321.59 \r\n67,664.80 356,829.07 \r\n97,006.00 \r\n \r\n- \r\n \r\n1,403,449.15 \r\n \r\n224,227.50 \r\n \r\n- \r\n \r\n- \r\n \r\n224,227.50 \r\n \r\n7,137.84 238,239.79 \r\n15,654.36 1,434,612.21 \r\n1,695,644.20 \r\n \r\n2,003,438.57 \r\n- \r\n2,003,438.57 \r\n \r\n111,319.86 \r\n- \r\n111,319.86 \r\n \r\n7,137.84 2,352,998.22 \r\n15,654.36 1,434,612.21 \r\n3,810,402.63 \r\n \r\nTotal Liabilities, Deferred Inflows of Resources, \r\n \r\nand Fund Balances \r\n \r\n$ 2,869,485.78 $ \r\n \r\n2,457,273.64 $ \r\n \r\n111,319.86 $ 5,438,079.28 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\nTO THE STATEMENT OF NET POSITION JUNE 30, 2019 \r\n \r\nEXHIBIT \"D\" \r\n \r\nTotal fund balances - governmental funds (Exhibit \"C\") \r\nAmounts reported for governmental activities in the Statement of Net Position are different because: \r\nCapital assets used in governmental activities are not financial resources and therefore are not reported in the funds. \r\nLand Construction in progress Buildings and improvements Equipment Land improvements Accumulated depreciation \r\nSome liabilities are not due and payable in the current period and, therefore, are not reported in the funds. \r\nNet pension liability Net OPEB liability \r\nDeferred outflows and inflows of resources related to pensions/OPEB are applicable to future periods and, therefore, are not reported in the funds. \r\nRelated to pensions Related to OPEB \r\nTaxes that are not available to pay for current period expenditures are deferred in the funds. \r\nLong-term liabilities, and related accrued interest, are not due and payable in the current period and therefore are not reported in the funds. \r\nBonds payable Accrued interest payable Unamortized bond premiums \r\n \r\n$ 3,810,402.63 \r\n \r\n$ \r\n \r\n379,857.93 \r\n \r\n2,827,687.30 \r\n \r\n14,060,918.30 \r\n \r\n2,331,018.01 \r\n \r\n682,768.02 \r\n \r\n(4,945,486.82) \r\n \r\n15,336,762.74 \r\n \r\n$ (5,422,373.00) (5,481,818.00) \r\n \r\n(10,904,191.00) \r\n \r\n$ \r\n \r\n966,769.00 \r\n \r\n(36,297.00) \r\n \r\n930,472.00 224,227.50 \r\n \r\n$ (3,180,000.00) (34,483.67) \r\n(253,349.00) \r\n \r\n(3,467,832.67) \r\n \r\nNet position of governmental activities (Exhibit \"A\") \r\n \r\n$ 5,929,841.20 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES \r\nGOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2019 \r\n \r\nEXHIBIT \"E\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent 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 Other Support Services Food Services Operation \r\nCapital Outlay Debt Services \r\nPrincipal Interest \r\nTotal Expenditures \r\nRevenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nTransfers In Transfers Out \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\n \r\nGENERAL FUND \r\n \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ \r\n \r\n3,390,995.83 $ \r\n \r\n13,394.12 \r\n \r\n3,169,074.92 \r\n \r\n1,357,919.33 \r\n \r\n37,765.94 \r\n \r\n1,173.14 \r\n \r\n101,585.31 \r\n \r\n8,071,908.59 \r\n \r\n- $ 574,555.08 \r\n68,865.31 - \r\n643,420.39 \r\n \r\n- $ 98.75 - \r\n98.75 \r\n \r\n3,390,995.83 587,949.20 \r\n3,169,074.92 1,357,919.33 \r\n37,765.94 70,137.20 101,585.31 \r\n8,715,427.73 \r\n \r\n4,284,550.88 \r\n422,356.82 297,096.03 101,224.55 476,819.04 538,866.67 256,938.36 723,060.68 448,894.95 \r\n31,278.00 430,969.51 \r\n- \r\n- \r\n8,012,055.49 \r\n59,853.10 \r\n \r\n- \r\n246.70 2,495,750.62 \r\n- \r\n2,495,997.32 \r\n(1,852,576.93) \r\n \r\n(3.15) \r\n(3.15) \r\n59,849.95 \r\n1,635,794.25 \r\n \r\n(429,850.00) \r\n(429,850.00) \r\n(2,282,426.93) \r\n4,285,865.50 \r\n \r\n- \r\n- \r\n730,000.00 117,640.00 \r\n847,640.00 \r\n(847,541.25) \r\n \r\n4,284,550.88 \r\n422,356.82 297,096.03 101,224.55 476,819.04 538,866.67 257,185.06 723,060.68 448,894.95 \r\n31,278.00 430,969.51 2,495,750.62 \r\n730,000.00 117,640.00 \r\n11,355,692.81 \r\n(2,640,265.08) \r\n \r\n429,850.00 - \r\n429,850.00 \r\n(417,691.25) \r\n529,011.11 \r\n \r\n429,850.00 (429,853.15) \r\n(3.15) \r\n(2,640,268.23) \r\n6,450,670.86 \r\n \r\nFund Balances - Ending \r\n \r\n$ \r\n \r\n1,695,644.20 $ \r\n \r\n2,003,438.57 $ \r\n \r\n111,319.86 $ \r\n \r\n3,810,402.63 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF \r\nREVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2019 \r\n \r\nEXHIBIT \"F\" \r\n \r\nNet change in fund balances total governmental funds (Exhibit \"E\") \r\nAmounts reported for governmental activities in the Statement of Activities are different because: \r\nGovernmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of capital assets is allocated over their estimated useful lives as depreciation expense. \r\nCapital outlay Depreciation expense \r\nTaxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. \r\nThe issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts and the difference between the carrying value of refunded debt and the acquisition cost of refunded debt when debt is first issued. These amounts are deferred and amortized in the Statement of Activities. \r\nBond principal retirements Amortization of bond premiums \r\nDistrict pension contributions are reported as expenditures in the governmental funds when made. However, they are reported as deferred outflows of resources in the Statement of Net Position because the reported net pension/OPEB liability is measured a year before the District's report date. Pension/OPEB expense, which is the change in the net pension/OPEB liability adjusted for changes in deferred outflows and inflows of resources related to pensions/OPEB, is reported in the Statement of Activities. \r\nPension expense OPEB expense \r\nSome items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. \r\nAccrued interest on issuance of bonds \r\n \r\n$ \r\n \r\n(2,640,268.23) \r\n \r\n$ \r\n \r\n2,509,741.79 \r\n \r\n(340,648.59) \r\n \r\n2,169,093.20 (347,285.68) \r\n \r\n$ \r\n \r\n730,000.00 \r\n \r\n32,690.00 \r\n \r\n762,690.00 \r\n \r\n$ \r\n \r\n292,905.58 \r\n \r\n(131,965.00) \r\n \r\n160,940.58 \r\n \r\n8,625.00 \r\n \r\nChange in net position of governmental activities (Exhibit \"B\") \r\n \r\n$ \r\n \r\n113,794.87 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS JUNE 30, 2019 \r\n \r\nEXHIBIT \"G\" \r\n \r\nASSETS Cash and Cash Equivalents Receivables, Net \r\nOther \r\nTotal Assets LIABILITIES Cash Overdraft Funds Held for Others \r\nTotal Liabilities NET POSITION Held in Trust for Private Purposes \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\nAGENCY FUNDS \r\n \r\n$ \r\n \r\n2,814.32 $ \r\n \r\n- \r\n \r\n- \r\n \r\n10,976.47 \r\n \r\n$ \r\n \r\n2,814.32 $ 10,976.47 \r\n \r\n$ \r\n \r\n836.14 \r\n \r\n10,140.33 \r\n \r\n$ 10,976.47 \r\n \r\n$ \r\n \r\n2,814.32 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS YEAR ENDED JUNE 30, 2019 \r\nADDITIONS Investment Earnings Interest \r\nDEDUCTIONS None reported Change in Net Position \r\nNet Position - Beginning \r\nNet Position - Ending \r\n \r\nEXHIBIT \"H\" \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\n$ \r\n \r\n5.06 \r\n \r\n5.06 2,809.26 \r\n \r\n$ \r\n \r\n2,814.32 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 8 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY \r\nREPORTING ENTITY \r\nThe Talbot County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a 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. \r\nNOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nThe accompanying financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the School District's accounting policies are described below. \r\nBASIS OF PRESENTATION \r\nThe School District's basic financial statements are collectively comprised of the government-wide financial statements, fund financial statements and notes to the basic financial statements. The government-wide statements focus on the School District as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information's usefulness. \r\nGOVERNMENT-WIDE STATEMENTS: \r\nThe Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. \r\nThe Statement of Net Position presents the School District's non-fiduciary assets and liabilities, with the difference reported as net position. Net position is reported in three categories as follows: \r\n1. Net investment in capital assets consists of the School District's total investment in capital assets, net of accumulated depreciation, and reduced by outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets. \r\n2. Restricted net position consists of resources for which the School District is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties or imposed by law through constitutional provisions or enabling legislation. \r\n3. Unrestricted net position consists of resources not meeting the definition of the two preceding categories. Unrestricted net position often has constraints on resources imposed by management which can be removed or modified. \r\nThe Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. \r\nDirect expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. \r\n \r\n- 10 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nProgram revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. \r\nFUND FINANCIAL STATEMENTS \r\nThe fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate financial statements are presented for governmental and fiduciary funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. \r\nThe School District reports the following major governmental funds: \r\n The general fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund. \r\n The capital projects fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) and bond proceeds that are restricted, committed or assigned for capital outlay expenditures, including the acquisition or construction of capital facilities and other capital assets. \r\n The debt service fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest. \r\nThe School District reports the following fiduciary fund types: \r\n Private purpose trust funds are used to report all trust arrangements, other than those properly reported elsewhere, in which principal and income benefit individuals, private organizations or other governments. \r\n Agency funds are used to report resources held by the School District in a purely custodial capacity (assets equal liabilities) and do not involve measurement of results of operations. \r\nBASIS OF ACCOUNTING \r\nThe basis of accounting determines when transactions are reported on the financial statements. The government-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied. \r\nThe School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. \r\nGovernmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within 60 days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are \r\n- 11 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nrecorded when the related fund liability is incurred, except for principal and interest on general longterm debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. \r\nThe School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net resources available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. \r\nNEW ACCOUNTING PRONOUNCEMENTS \r\nIn fiscal year 2019, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 83, Certain Asset Retirement Obligations. This statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this statement. The adoption of this statement did not have an impact on the School District's financial statement. \r\nIn fiscal year 2019, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. The primary objective of this statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. The School District included additional information in the Long-term Liabilities note disclosure. \r\nCASH AND CASH EQUIVALENTS \r\nCash and cash equivalents consist of cash on hand, demand deposits, investments in the State of Georgia local government investment pool (Georgia Fund 1) and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated (O.C.G.A.) 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. \r\nINVESTMENTS \r\nThe School District can invest its funds as permitted by O.C.G.A. 36-83-4. 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. \r\nInvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. All other investments are reported at fair value. \r\nFor accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired. \r\nRECEIVABLES \r\nReceivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. \r\n \r\n- 12 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nINVENTORIES \r\n \r\nFood Inventories \r\n \r\nOn the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (calculated on the first-in, first-out basis). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. \r\n \r\nCAPITAL ASSETS \r\n \r\nOn the government-wide financial statements, capital assets are recorded at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at acquisition value on the date donated. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. The School District does not capitalize book collections or works of art. \r\n \r\nCapital acquisition and construction are recorded as expenditures in the governmental fund financial statements at the time of purchase (including ancillary charges), and the related assets are reported as capital assets in the governmental activities column in the government-wide financial statements. \r\n \r\nDepreciation is computed using the straight-line for all assets, except land, and is used to allocate the actual or estimated historical cost of capital assets over estimated useful lives. \r\n \r\nCapitalization thresholds and estimated useful lives of capital assets reported in the government-wide statements are as follows: \r\n \r\nCapitalization Policy \r\n \r\nEstimated Useful Life \r\n \r\nLand Land Improvements Buildings and Improvements Equipment Intangible Assets \r\n \r\nALL $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 100,000.00 \r\n \r\nN/A 20 to 70 years up to 70 years \r\n5 to 25 years 15 to 50 years \r\n \r\nDEFERRED OUTFLOWS/INFLOWS OF RESOURCES \r\nIn addition to assets, the statement of financial position will report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. \r\n \r\nIn addition to liabilities, the statement of financial position will report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time. \r\n \r\n- 13 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nLONG-TERM LIABILITIES AND BOND DISCOUNTS/PREMIUMS \r\nIn the School District's government-wide financial statements, outstanding debt is reported as liabilities. Bond premiums and discounts and the difference between the reacquisition price and the net carrying value of refunded debt are deferred and amortized over the life of the bonds using the straight-line method. To conform to generally accepted accounting principles, bond premiums and discounts should be amortized using the effective interest method. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued. \r\nIn the governmental fund financial statements, the School District recognizes the proceeds of debt and premiums as other financing sources of the current period. Bond issuance costs are reported as debt service expenditures. \r\nPENSIONS \r\nFor purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. \r\nPOSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) \r\nFor purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Georgia School Employees Postemployment Benefit Fund (School OPEB Fund) and additions to/deductions from School OPEB Fund fiduciary net position have been determined on the same basis as they are reported by School OPEB Fund. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. \r\nFUND BALANCES \r\nFund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. \r\nThe School District's fund balances are classified as follows: \r\nNonspendable consists of resources that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact. \r\nRestricted consists of resources that can be used only for specific purposes pursuant constraints either (1) externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. \r\nCommitted consists of resources that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board. The Board is the School District's highest level of decisionmaking authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. \r\nAssigned consists of resources constrained by the School District's intent to be used for specific purposes but are neither restricted nor committed. The intent should be expressed by (1) the Board or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes. \r\n \r\n- 14 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nUnassigned consists of resources within the general fund not meeting the definition of any aforementioned category. The general fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance. \r\nUSE OF ESTIMATES \r\nThe preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. \r\nPROPERTY TAXES \r\nThe Talbot County Board of Commissioners adopted the property tax levy for the 2018 tax digest year (calendar year) on August 14, 2018 (levy date) based on property values as of January 1, 2018. Taxes were due on December 20, 2018 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2018 tax digest are reported as revenue in the governmental funds for fiscal year 2019. The Talbot County Tax Commissioner bills and collects the property taxes for the School District, withholds 1.25% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2019, for maintenance and operations amounted to $3,202,121.17. \r\nThe tax millage rate levied for the 2018 tax year (calendar year) for the School District was as follows (a mill equals $1 per thousand dollars of assessed value): \r\n \r\nSchool Operations \r\n \r\n14.05 mills \r\n \r\nAdditionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $188,874.66 during fiscal year ended June 30, 2019. \r\nSALES TAXES \r\nEducation Special Purpose Local Option Sales Tax (ESPLOST), at the fund reporting level, during the year amounted to $574,555.08 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. \r\nNOTE 3: BUDGETARY DATA \r\nThe budget is a complete financial plan for the School District's fiscal year and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general fund. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the general fund was prepared in accordance with accounting principles generally accepted in the United States of America. \r\nThe budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines, and a tentative budget is approved. 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, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of O.C.G.A. 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. \r\n \r\n- 15 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe Superintendent is authorized by the Board to approve adjustments of no more than five percent of the amount budgeted for expenditures in any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any budget function for any fund is anticipated to be more than five percent of the budgeted amount, the Superintendent shall request Board approval for the budget amendment. Under no circumstance is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board. \r\nSee the General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances  Budget to Actual in the Supplementary Information Section for a detail of any over/under expenditures during the fiscal year under review. \r\nNOTE 4: DEPOSITS AND CASH EQUIVALENTS \r\nCOLLATERALIZATION OF DEPOSITS \r\nO.C.G.A.  45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110% of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A.  45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110% of the daily pool balance. \r\nAcceptable security for deposits consists of any one of or any combination of the following: \r\n(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, \r\n(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, \r\n(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, \r\n(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, \r\n(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, \r\n(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and \r\n(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 or securities guaranteed 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. \r\n \r\n- 16 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nCATEGORIZATION OF DEPOSITS \r\n \r\nCustodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2019, the School District had deposits with a carrying amount of $1,990,650.48, and a bank balance of $2,167,275.71. The bank balances insured by Federal depository insurance were $557,327.65 and the bank balances collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name were $1,609,948.06. \r\n \r\nReconciliation of cash and cash equivalents balances to carrying value of deposits: \r\n \r\nCash and cash equivalents Statement of Net Position Statement of Fiduciary Net Position \r\n \r\n$ 4,115,133.92 1,978.18 \r\n \r\nTotal cash and cash equivalents \r\n \r\n4,117,112.10 \r\n \r\nAdd: Deposits with original maturity of three months or more reported as investments \r\n \r\n65,000.00 \r\n \r\nLess: Investment pools reported as cash and cash equivalents \r\nGeorgia Fund 1 \r\nTotal carrying value of deposits - June 30, 2019 \r\n \r\n2,191,461.62 $ 1,990,650.48 \r\n \r\nCATEGORIZATION OF CASH EQUIVALENTS \r\nThe School District reported cash equivalents of $2,191,461.62 in Georgia Fund 1, a local government investment pool, which is included in the cash balances above. Georgia Fund 1 is not registered with the SEC as an investment company and does not operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share, which approximates fair value. The pool is an AAAf rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2019 was 39 days. \r\nGeorgia Fund 1, administered by the State of Georgia, Office of the State Treasurer, is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1, does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report, which is publicly available at https://www.sao.georgia.gov/comprehensive-annual-financial-reports. \r\n \r\n- 17 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 5: CAPITAL ASSETS \r\n \r\nThe following is a summary of changes in the capital assets for governmental activities during the fiscal year: \r\n \r\nBalances July 1, 2018 \r\n \r\nIncreases \r\n \r\nDecreases \r\n \r\nBalances June 30, 2019 \r\n \r\nGovernmental Activities Capital Assets, Not Being Depreciated: \r\nLand Construction in Progress \r\n \r\n$ 379,857.93 $ \r\n \r\n- $ \r\n \r\n385,475.51 2,442,211.79 \r\n \r\n- $ 379,857.93 \r\n \r\n- \r\n \r\n2,827,687.30 \r\n \r\nTotal Capital Assets Not Being Depreciated \r\n \r\n765,333.44 2,442,211.79 \r\n \r\n- \r\n \r\n3,207,545.23 \r\n \r\nCapital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements \r\nLess Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements \r\n \r\n14,060,918.30 2,263,488.01 682,768.02 \r\n2,385,044.15 1,742,425.80 \r\n477,368.28 \r\n \r\n67,530.00 \r\n- \r\n216,305.25 96,102.90 28,240.44 \r\n \r\n- \r\n \r\n14,060,918.30 \r\n \r\n- \r\n \r\n2,331,018.01 \r\n \r\n- \r\n \r\n682,768.02 \r\n \r\n- \r\n \r\n2,601,349.40 \r\n \r\n- \r\n \r\n1,838,528.70 \r\n \r\n- \r\n \r\n505,608.72 \r\n \r\nTotal Capital Assets, Being Depreciated, Net \r\n \r\n12,402,336.10 \r\n \r\n(273,118.59) \r\n \r\n- \r\n \r\n12,129,217.51 \r\n \r\nGovernmental Activities Capital Assets - Net \r\n \r\n$ 13,167,669.54 $ 2,169,093.20 $ \r\n \r\n- $ 15,336,762.74 \r\n \r\nCurrent year depreciation expense by function is as follows: \r\n \r\nInstruction \r\n \r\nSupport Services \r\n \r\nGeneral Administration \r\n \r\n$ \r\n \r\n347.79 \r\n \r\nMaintenance and Operation of Plant \r\n \r\n21,341.64 \r\n \r\nStudent Transportation Services \r\n \r\n51,681.02 \r\n \r\nFood Services \r\n \r\n$ 260,352.57 \r\n73,370.45 6,925.57 \r\n \r\n$ 340,648.59 \r\n \r\nNOTE 6: INTERFUND TRANSFERS INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2019, consisted of the following: \r\n \r\nTransfers to \r\n \r\nTransfers From \r\n \r\nGeneral \r\n \r\nCapital Projects \r\n \r\nFund \r\n \r\nFund \r\n \r\nDebt Service Fund $ Agency Fund \r\n \r\n- $ 3.15 \r\n \r\n429,850.00 - \r\n \r\nTotal \r\n \r\n$ \r\n \r\n3.15 $ 429,850.00 \r\n \r\nTransfers are used to move sales tax revenue collected by the capital projects fund to the debt service fund to pay debt service according to the approved SPLOST referendum. Also, transfers are used to move funds from the general fund to the agency fund to cover deficits for the Family Connection grant. \r\n- 18 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 7: LONG-TERM LIABILITIES The changes in long-term liabilities during the fiscal year for governmental activities were as follows: \r\n \r\nGeneral Obligation Bonds Unamortized Bond Premiums \r\n \r\nBalance July 1, 2018 \r\n \r\nAdditions \r\n \r\nGovernmental Activities \r\n \r\nBalance \r\n \r\nDeductions \r\n \r\nJune 30, 2019 \r\n \r\nDue Within One Year \r\n \r\n$ 3,910,000.00 $ 286,039.00 \r\n \r\n- $ 730,000.00 $ 3,180,000.00 $ 325,000.00 \r\n \r\n- \r\n \r\n32,690.00 \r\n \r\n253,349.00 \r\n \r\n32,690.00 \r\n \r\n$ 4,196,039.00 $ \r\n \r\n- $ 762,690.00 $ 3,433,349.00 $ 357,690.00 \r\n \r\nGENERAL OBLIGATION DEBT OUTSTANDING \r\n \r\nThe School District's bonded debt consists of general obligation bonds that are generally callable with interest payable semiannually. Bond proceeds primarily pay for acquiring or constructing capital facilities. The School District repays general obligation bonds from voter-approved property taxes. General obligation bonds are direct obligations and pledge the full faith and credit of the School District. \r\n \r\nThe School District had no unused line of credit or outstanding notes from direct borrowings and direct placements related to governmental activities as of June 30, 2019. In the event the entity is unable to make the principal and interest payments using proceeds from the Education Special Purpose Local Option Sales Tax (ESPLOST), the debt will be satisfied from a direct annual ad valorem tax levied upon all taxable property within the School District. Additional security is provided by the State of Georgia Intercept Program which allows for state appropriations entitled to the School District to be transferred to the Debt Service Account Custodian for the payment of debt. \r\n \r\nGeneral obligation bonds currently outstanding are as follows: \r\n \r\nDescription \r\n \r\nInterest Rates \r\n \r\nIssue Date \r\n \r\nMaturity Date \r\n \r\nAmount Issued \r\n \r\nAmount Outstanding \r\n \r\nGeneral Government - Series 2017 \r\n \r\n2.00% - 4.00% \r\n \r\n6/13/2017 \r\n \r\n3/1/2028 $ 3,500,000.00 $ 3,180,000.00 \r\n \r\nThe following schedule details debt service requirements to maturity for the School District's total general obligation bonds payable: \r\n \r\nFiscal Year Ended June 30: \r\n \r\nGeneral Obligation Debt \r\n \r\nPrincipal \r\n \r\nInterest \r\n \r\nUnamortized Bond Premium \r\n \r\n2020 2021 2022 2023 2024 2025 - 2028 \r\n \r\n$ \r\n \r\n325,000.00 $ \r\n \r\n103,450.00 \r\n \r\n$ \r\n \r\n330,000.00 \r\n \r\n96,950.00 \r\n \r\n340,000.00 \r\n \r\n87,050.00 \r\n \r\n345,000.00 \r\n \r\n76,850.00 \r\n \r\n350,000.00 \r\n \r\n66,500.00 \r\n \r\n1,490,000.00 \r\n \r\n147,000.00 \r\n \r\n32,690.00 32,690.00 32,690.00 32,690.00 32,690.00 89,899.00 \r\n \r\nTotal Principal and Interest \r\n \r\n$ \r\n \r\n3,180,000.00 $ \r\n \r\n577,800.00 \r\n \r\n$ \r\n \r\n253,349.00 \r\n \r\n- 19 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 8: RISK MANAGEMENT \r\n \r\nINSURANCE \r\n \r\nCommercial Insurance \r\n \r\nThe 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; and natural disasters. The School District carries commercial insurance for these risks. Settled claims resulting from these insured risks have not exceed commercial insurance coverage in any of the past three fiscal years. \r\n \r\nThe School District has elected to self-insure for losses related to natural disasters. The School District has not experienced any losses related to this risk in the past three years. \r\n \r\nUNEMPLOYMENT COMPENSATION \r\n \r\nThe School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the general fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. \r\n \r\nChanges in the unemployment compensation claims liability during the last two fiscal years are as follows: \r\n \r\nBeginning of Year Liability \r\n \r\nClaims and Changes in Estimates \r\n \r\nClaims Paid \r\n \r\nEnd of Year Liability \r\n \r\n2018 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n3,300.00 \r\n \r\n$ \r\n \r\n3,300.00 \r\n \r\n$ \r\n \r\n- \r\n \r\n2019 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n4,551.00 \r\n \r\n$ \r\n \r\n4,551.00 \r\n \r\n$ \r\n \r\n- \r\n \r\nSURETY BOND The School District purchased surety bonds to provide additional insurance coverage as follows: \r\n \r\nPosition Covered \r\n \r\nAmount \r\n \r\nSuperintendent Finance Director Payroll Clerk \r\n \r\n$ \r\n \r\n30,000.00 \r\n \r\n$ \r\n \r\n10,000.00 \r\n \r\n$ \r\n \r\n10,000.00 \r\n \r\nNOTE 9: FUND BALANCE CLASSIFICATION DETAILS \r\nThe School District's financial statements include the following amounts presented in the aggregate at June 30, 2019: \r\n \r\nNonspendable Inventories \r\nRestricted Continuation of Federal Programs Capital Projects Debt Service \r\nAssigned School Activity Accounts \r\nUnassigned \r\n \r\n$ \r\n \r\n7,137.84 \r\n \r\n$ \r\n \r\n238,239.79 \r\n \r\n2,003,438.57 \r\n \r\n111,319.86 \r\n \r\n2,352,998.22 \r\n \r\n15,654.36 1,434,612.21 \r\n \r\nFund Balance, June 30, 2019 \r\n \r\n$ 3,810,402.63 \r\n \r\n- 20 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nWhen multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds. \r\n \r\nNOTE 10: SIGNIFICANT COMMITMENTS \r\n \r\nCOMMITMENTS UNDER CONSTRUCTION CONTRACTS \r\n \r\nThe following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2019. \r\n \r\nProject \r\n \r\nUnearned Executed Contracts (1) \r\n \r\nPayments through June 30, 2019 (2) \r\n \r\nAthletic Complex \r\n \r\n$ 2,021,667.18 $ 2,774,582.82 \r\n \r\n(1) The amounts described are not reflected in the basic financial statements. (2) Payments include contracts and retainages payable at year end. \r\nNOTE 11: SIGNIFICANT CONTINGENT LIABILITIES \r\nFEDERAL GRANTS \r\nAmounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. Any disallowances resulting from the grantor audit may become a liability of the School District. However, the School District believes that such disallowances, if any, will be immaterial to its overall financial position. \r\nNOTE 12: OTHER POST-EMPLOYMENT BENEFITS (OPEB) \r\nGEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND \r\nPlan Description: Certified teachers and non-certified public school employees of the School District as defined in 20-2-875 of the Official Code of Georgia Annotated (O.C.G.A.) are provided OPEB through the School OPEB Fund - a cost-sharing multiple-employer defined benefit postemployment healthcare plan, reported as an employee trust fund and administered by a Board of Community Health (Board). Title 20 of the O.C.G.A. assigns the authority to establish and amend the benefit terms of the group health plan to the Board. \r\nBenefits Provided: The School OPEB Fund provides healthcare benefits for retirees and their dependents due under the group health plan for public school teachers, including librarians, other certified employees of public schools, regional educational service agencies and non-certified public school employees. Retiree medical eligibility is attained when an employee retires and is immediately eligible to draw a retirement annuity from Employees' Retirement System (ERS), Georgia Judicial Retirement System (JRS), Legislative Retirement System (LRS), Teachers Retirement System (TRS) or Public School Employees Retirement System (PSERS). If elected, dependent coverage starts on the same day as retiree coverage. Medicare-eligible retirees are offered Standard and Premium Medicare Advantage plan options. Non-Medicare eligible retiree plan options include Health Reimbursement Arrangement (HRA), Health Maintenance Organization (HMO) and a High Deductible Health Plan (HDHP). The School OPEB Fund also pays for administrative expenses of the fund. By law, no other use of the assets of the School OPEB Fund is permitted. \r\nContributions: As established by the Board, the School OPEB Fund is substantially funded on a payas-you-go basis; that is, annual cost of providing benefits will be financed in the same year as claims occur. Contributions to the School OPEB Fund from the School District were $245,062.00 for the year ended June 30, 2019. Active employees are not required to contribute to the School OPEB Fund. \r\n- 21 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nOPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB \r\n \r\nAt June 30, 2019, the School District reported a liability of $5,481,818.00 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2018. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2017. An expected total OPEB liability as of June 30, 2018 was determined using standard roll-forward techniques. The School District's proportion of the net OPEB liability was actuarially determined based on employer contributions during the fiscal year ended June 30, 2018. At June 30, 2018, the School District's proportion was 0.043131%, which was an increase of 0.004541% from its proportion measured as of June 30, 2017. \r\n \r\nFor the year ended June 30, 2019, the School District recognized OPEB expense of $377,027.00. At June 30, 2019, the School District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: \r\n \r\nDeferred Outflows of Resources \r\n \r\nOPEB \r\n \r\nDeferred Inflows of Resources \r\n \r\nDifferences between expected and actual \r\n \r\nexperience \r\n \r\n$ \r\n \r\n- $ 124,690.00 \r\n \r\nChanges of assumptions \r\n \r\n- \r\n \r\n928,647.00 \r\n \r\nNet difference between projected and actual \r\n \r\nearnings on OPEB plan investments \r\n \r\n7,417.00 \r\n \r\n- \r\n \r\nChanges in proportion and differences \r\n \r\nbetween School District contributions and \r\n \r\nproportionate share of contributions \r\n \r\n764,561.00 \r\n \r\n- \r\n \r\nSchool District contributions subsequent to \r\n \r\nthe measurement date \r\n \r\n245,062.00 \r\n \r\n- \r\n \r\nTotal \r\n \r\n$ 1,017,040.00 $ 1,053,337.00 \r\n \r\nSchool District contributions subsequent to the measurement date are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: \r\n \r\nYear Ended June 30: \r\n \r\nOPEB \r\n \r\n2020 2021 2022 2023 2024 2025 \r\n \r\n$ (57,763.00) $ (57,763.00) $ (57,763.00) $ (58,205.00) $ (40,893.00) $ (8,972.00) \r\n \r\n- 22 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nActuarial assumptions: The total OPEB liability as of June 30, 2018 was determined by an actuarial valuation as of June 30, 2017 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2018: \r\n \r\nOPEB: \r\n \r\nInflation \r\n \r\n2.75% \r\n \r\nSalary increases \r\n \r\n3.25% - 9.00%, including inflation \r\n \r\nLong-term expected rate of return \r\n \r\n7.30%, compounded annually, net of investment expense, and including inflation \r\n \r\nHealthcare cost trend rate \r\n \r\nPre-Medicare Eligible \r\n \r\n7.50% \r\n \r\nMedicare Eligible \r\n \r\n5.50% \r\n \r\nUltimate trend rate \r\n \r\nPre-Medicare Eligible \r\n \r\n4.75% \r\n \r\nMedicare Eligible \r\n \r\n4.75% \r\n \r\nYear of Ultimate trend rate \r\n \r\nPre-Medicare Eligible \r\n \r\n2028 \r\n \r\nMedicare Eligible \r\n \r\n2022 \r\n \r\nMortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB as follows: \r\n \r\n For TRS members: The RP-2000 White Collar Mortality Table projected to 2025 with projection \r\nscale BB (set forward 1 year for males) is used for death after service retirement and beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward two years for males and four years for females) is used for death after disability retirement. \r\n For PSERS members: The RP-2000 Blue-Collar Mortality Table projected to 2025 with \r\nprojection scale BB (set forward 3 years for males and 2 years for females) is used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 5 years for both males and females) is used for the period after disability retirement. \r\n \r\nThe actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the pension systems, which covered the five-year period ending June 30, 2014. \r\nThe remaining actuarial assumptions (e.g., initial per capita costs, health care cost trends, rate of plan participation, rates of plan election, etc.) used in the June 30, 2017 valuation were based on a review of recent plan experience done concurrently with the June 30, 2017 valuation. \r\n \r\nProjection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation. \r\n \r\n- 23 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe long-term expected rate of return on OPEB plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. During fiscal year 2018, the School OPEB fund updated their investment strategy to a more long-term approach. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: \r\n \r\nAsset class \r\n \r\nTarget allocation \r\n \r\nLong-Term Expected Real Rate of Return* \r\n \r\nFixed income Domestic Stocks -- Large Cap Domestic Stocks -- Mid Cap Domestic Stocks -- Small Cap Int'l Stocks - Developed Mkt Int'l Stocks - Emerging Mkt Alternatives \r\nTotal \r\n \r\n30.00% 37.20% \r\n3.40% 1.40% 17.80% 5.20% 5.00% \r\n100.00% \r\n \r\n(0.50)% 9.00% \r\n12.00% 13.50% \r\n8.00% 12.00% 10.50% \r\n \r\n*Net of Inflation \r\n \r\nDiscount rate: The discount rate has changed since the prior measurement date from 3.58% to 3.87%. In order to measure the total OPEB liability for the School OPEB Fund, a single equivalent interest rate of 3.87% was used as the discount rate. This is comprised mainly of the yield or index rate for 20-year tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.87% per the Bond Buyers Index). The projection of cash flows used to determine the discount rate assumed that contributions from members and from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2118. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be available to make OPEB payments for inactive employees through year 2018. Therefore, the calculated discount rate of 3.87% was applied to all periods of projected benefit payments to determine the total OPEB liability. \r\nSensitivity of the School District's proportionate share of the net OPEB liability to changes in the discount rate: The following presents the School District's proportionate share of the net OPEB liability calculated using the discount rate of 3.87%, as well as what the School District's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.87%) or 1 percentage-point higher (4.87%) than the current discount rate: \r\n \r\n1% Decrease (2.87%) \r\n \r\nCurrent Discount Rate (3.87%) \r\n \r\n1% Increase (4.87%) \r\n \r\nSchool District's proportionate share of the Net OPEB Liability \r\n \r\n$ 6,401,044.00 $ \r\n \r\n5,481,818.00 $ 4,740,558.00 \r\n \r\n- 24 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nSensitivity of the School District's proportionate share of the net OPEB liability to changes in the healthcare cost trend rates: The following presents the School District's proportionate share of the net OPEB liability, as well as what the School District's proportionate share of the net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1percentage-point higher than the current healthcare cost trend rates: \r\n \r\n1% Decrease \r\n \r\nCurrent Healthcare Cost Trend Rate \r\n \r\n1% Increase \r\n \r\nSchool District's proportionate share of the Net OPEB Liability \r\n \r\n$ 4,608,608.00 $ \r\n \r\n5,481,818.00 $ 6,597,747.00 \r\n \r\nOPEB plan fiduciary net position: Detailed information about the OPEB plan's fiduciary net position is available in the Comprehensive Annual Financial Report which is publicly available at https://sao.georgia.gov/comprehensive-annual-financial-reports. \r\nNOTE 13: RETIREMENT PLANS \r\nThe School District participates in various retirement plans administered by the State of Georgia, as further explained below. \r\n \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) \r\nPlan Description: All teachers of the School District as defined in O.C.G.A 47-3-60 and certain other support personnel as defined by O.C.G.A 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers Retirement System of Georgia issues a publicly available separate financial report that can be obtained at www.trsga.com/publications. \r\nBenefits Provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death. \r\nContributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2019. The School District's contractually required contribution rate for the year ended June 30, 2019 was 20.90% of annual School District payroll. For the current fiscal year, employer contributions to the pension plan were $748,320.00 from the School District. \r\n \r\nPUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS) \r\nPlan Description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers \r\n \r\n- 25 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nPSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs. \r\nBenefits Provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service. \r\nUpon retirement, the member will receive a monthly benefit of $15.00, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits. \r\nContributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. \r\nIndividuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current fiscal year contribution was $14,764.00. \r\nPension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions \r\nAt June 30, 2019, the School District reported a liability of $5,422,373.00 for its proportionate share of the net pension liability for TRS. \r\nThe net pension liability for TRS was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2017. An expected total pension liability as of June 30, 2018 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2018. \r\nAt June 30, 2018, the School District's TRS proportion was 0.029212%, which was an increase of 0.000068% from its proportion measured as of June 30, 2017. \r\nAt June 30, 2019, the School District did not have a PSERS liability for a proportionate share of the net pension liability because of a Special Funding Situation with the State of Georgia, which is responsible for the net pension liability of the plan. The amount of the State's proportionate share of the net pension liability associated with the School District is $85,902.00. \r\nThe PSERS net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2017. An expected total pension liability as of June 30, 2018 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2018. \r\nFor the year ended June 30, 2019, the School District recognized pension expense of $454,530.00 for TRS and $19,889.00 for PSERS and revenue of $19,889.00 for PSERS. The revenue is support provided by the State of Georgia. \r\n \r\n- 26 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nAt June 30, 2019, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: \r\n \r\nTRS Deferred Outflows of Resources \r\n \r\nDeferred Inflows of Resources \r\n \r\nDifferences between expected and actual experience \r\n \r\n$ 358,969.00 $ 11,176.00 \r\n \r\nChanges of assumptions \r\n \r\n81,822.00 \r\n \r\n- \r\n \r\nNet difference between projected and actual earnings on pension plan investments \r\n \r\n- \r\n \r\n148,258.00 \r\n \r\nChanges in proportion and differences between School District contributions and proportionate share of contributions \r\n \r\n77,943.00 \r\n \r\n140,851.00 \r\n \r\nSchool District contributions subsequent to the measurement date \r\n \r\n748,320.00 \r\n \r\n- \r\n \r\nTotal \r\n \r\n$ 1,267,054.00 $ 300,285.00 \r\n \r\nThe School District contributions subsequent to the measurement date are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: \r\n \r\nYear Ended June 30: \r\n \r\nTRS \r\n \r\n2020 2021 2022 2023 2024 \r\n \r\n$ 216,851.00 $ 121,931.00 $ (127,900.00) $ 2,205.00 $ 5,362.00 \r\n \r\nActuarial assum ptions: The total pension liability as of June 30, 2018 was determined by an actuarial valuation as of June 30, 2017, using the following actuarial assumptions, applied to all periods included in the measurement: \r\n \r\nTeachers Retirement System: \r\nInflation Salary increases Investment rate of return \r\n \r\n2.75% \r\n3.25%  9.00%, average, including inflation \r\n7.50%, net of pension plan investment expense, including inflation \r\n \r\n- 27 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nPost-retirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service requirements and dependent beneficiaries. The RP-2000 Disabled Mortality table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and four years for females) was used for the death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. \r\nThe actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009  June 30, 2014. \r\n \r\nPublic School Employees Retirement System: \r\n \r\nInflation \r\n \r\n2.75% \r\n \r\nSalary increases \r\n \r\nN/A \r\n \r\nInvestment rate of return \r\n \r\n7.30%, net of pension plan investment expense, including inflation \r\n \r\nPost-retirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) for the period after service retirements and for dependent beneficiaries. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward 5 years for both males and females) was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-11% less than the actual number of deaths that occurred during the study period for healthy retirees and 9-11% less than expected under the selected table for disabled retirees. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. \r\nThe actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009  June 30, 2014. \r\nThe long-term expected rate of return on TRS and PSERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: \r\n \r\nAsset class \r\nFixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks Alternative \r\nTotal \r\n* Rates shown are net of the 2.75% assumed rate of inflation \r\n \r\nTRS Target allocation \r\n30.00% 39.80% \r\n3.70% 1.50% 19.40% 5.60% \r\n- \r\n100.00% \r\n \r\nPSERS Target allocation \r\n30.00% 37.20% \r\n3.40% 1.40% 17.80% 5.20% 5.00% \r\n100.00% \r\n \r\nLong-term expected real rate of return* \r\n(0.50)% 9.00% 12.00% 13.50% 8.00% 12.00% 10.50% \r\n \r\n- 28 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2019 \r\n \r\nEXHIBIT \"I\" \r\n \r\nDiscount rate: The discount rate used to measure the total TRS pension liability was 7.50%. The discount rate used to measure the total PSERS pension liability was 7.30%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and PSERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. \r\nSensitivity of the School District's proportionate share of the net pension liability to changes in the discount rate: The following presents the School District's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the School District's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate: \r\n \r\nTeachers Retirement System: \r\n \r\n1% Decrease (6.50%) \r\n \r\nCurrent Discount Rate (7.50%) \r\n \r\n1% Increase (8.50%) \r\n \r\nSchool District's proportionate share of the net pension liability \r\n \r\n$ 9,051,493.00 $ \r\n \r\n5,422,373.00 $ 2,431,793.00 \r\n \r\nPension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS and PSERS financial report which is publicly available \r\nat www.trsga.com/publications and https://www.ers.ga.gov/formspubs/formspub.html. \r\n \r\n- 29 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"1\" \r\n \r\nYear Ended \r\n \r\nSchool District's proportion of the net \r\npension liability \r\n \r\nSchool District's proportionate share of the net pension liability \r\n \r\n2019 2018 2017 2016 2015 \r\n \r\n0.029212% $ 0.029144% $ 0.028494% $ 0.029732% $ 0.030388% $ \r\n \r\n5,422,373.00 5,416,502.00 5,878,630.00 4,526,402.00 3,839,123.00 \r\n \r\nState of Georgia's proportionate share of the \r\nnet pension liability associated with the School \r\nDistrict \r\n \r\n$ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\nTotal \r\n$ 5,422,373.00 $ 5,416,502.00 $ 5,878,630.00 $ 4,526,402.00 $ 3,839,123.00 \r\n \r\nSchool District's covered payroll \r\n$ 3,484,577.21 $ 3,346,411.50 $ 3,125,519.13 $ 3,138,384.64 $ 3,100,171.01 \r\n \r\nSchool District's proportionate share of the net pension liability as a percentage of its \r\ncovered payroll \r\n \r\nPlan fiduciary net position as a \r\npercentage of the total pension liability \r\n \r\n155.61% 161.86% 188.08% 144.23% 123.84% \r\n \r\n80.27% 79.33% 76.06% 81.44% 84.03% \r\n \r\nThis schedule is intended to show information for 10 years. Additional years will be displayed as they become available. \r\n \r\n- 31 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"2\" \r\n \r\nYear Ended \r\n2019 2018 \r\n \r\nSchool District's proportion of the net \r\npension liability \r\n \r\nSchool District's proportionate share of the net pension liability \r\n \r\nState of Georgia's proportionate share of the \r\nnet pension liability associated with the School \r\nDistrict \r\n \r\n0.00% $ 0.00% $ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\n$ \r\n \r\n85,902.00 $ 77,602.00 $ \r\n \r\nTotal \r\n85,902.00 77,602.00 \r\n \r\nSchool District's covered payroll \r\n \r\nSchool District's proportionate share of the net pension liability as a percentage of its \r\ncovered payroll \r\n \r\nPlan fiduciary net position as a \r\npercentage of the total pension liability \r\n \r\n$ \r\n \r\n214,025.43 \r\n \r\n$ \r\n \r\n227,137.34 \r\n \r\nN/A \r\n \r\n85.26% \r\n \r\nN/A \r\n \r\n85.69% \r\n \r\nThis schedule is intended to show information for 10 years. Additional years will be displayed as they become available. \r\n \r\n- 32 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY \r\nSCHOOL OPEB FUND FOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"3\" \r\n \r\nYear Ended \r\n2019 2018 \r\n \r\nSchool District's proportion of the net OPEB liability \r\n \r\nSchool District's proportionate share \r\nof the net OPEB liability \r\n \r\nState of Georgia's proportionate share of the \r\nnet OPEB liability associated with the School \r\nDistrict \r\n \r\nTotal \r\n \r\nSchool District's covered-employee \r\npayroll \r\n \r\nSchool District's proportionate share of the \r\nnet OPEB liability as a percentage of its covered- \r\nemployee payroll \r\n \r\nPlan fiduciary net position as a \r\npercentage of the total OPEB liability \r\n \r\n0.043131% $ 5,481,818.00 $ 0.038590% $ 5,421,880.00 $ \r\n \r\n- \r\n \r\n$ 5,481,818.00 $ 3,374,356.11 \r\n \r\n- \r\n \r\n$ 5,421,880.00 $ 3,174,208.92 \r\n \r\n162.46% 170.81% \r\n \r\n2.93% 1.61% \r\n \r\nThis schedule is intended to show information for 10 years. Additional years will be displayed as they become available. \r\n \r\n- 33 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION \r\nSCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"4\" \r\n \r\nYear Ended \r\n2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 \r\n \r\nContractually required contribution \r\n \r\nContributions in relation to the contractually required \r\ncontribution \r\n \r\nContribution deficiency (excess) \r\n \r\n$ \r\n \r\n748,320.00 $ \r\n \r\n748,320.00 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n585,757.42 $ \r\n \r\n585,757.42 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n477,541.23 $ \r\n \r\n477,541.23 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n446,011.58 $ \r\n \r\n446,011.58 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n412,697.58 $ \r\n \r\n412,697.58 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n380,692.79 $ \r\n \r\n380,692.79 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n383,370.28 $ \r\n \r\n383,370.28 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n386,730.40 $ \r\n \r\n386,730.40 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n419,130.30 $ \r\n \r\n419,130.30 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n444,832.43 $ \r\n \r\n444,832.43 $ \r\n \r\n- \r\n \r\nSchool District's covered payroll \r\n \r\n$ \r\n \r\n3,580,476.69 \r\n \r\n$ \r\n \r\n3,484,577.21 \r\n \r\n$ \r\n \r\n3,346,411.50 \r\n \r\n$ \r\n \r\n3,125,519.13 \r\n \r\n$ \r\n \r\n3,138,384.64 \r\n \r\n$ \r\n \r\n3,100,171.01 \r\n \r\n$ \r\n \r\n3,359,949.87 \r\n \r\n$ \r\n \r\n3,761,968.87 \r\n \r\n$ \r\n \r\n4,077,143.00 \r\n \r\n$ \r\n \r\n4,567,068.07 \r\n \r\nContribution as a percentage of covered \r\npayroll \r\n20.90% 16.81% 14.27% 14.27% 13.15% 12.28% 11.41% 10.28% 10.28% \r\n9.74% \r\n \r\n- 34 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION \r\nSCHEDULE OF CONTRIBUTIONS SCHOOL OPEB FUND \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"5\" \r\n \r\nYear Ended \r\n2019 2018 \r\n \r\nContractually required contribution \r\n \r\nContributions in relation to the contractually required \r\ncontribution \r\n \r\nContribution deficiency (excess) \r\n \r\n$ \r\n \r\n245,062.00 $ \r\n \r\n245,062.00 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n223,544.00 $ \r\n \r\n223,544.00 $ \r\n \r\n- \r\n \r\nSchool District's covered-employee \r\npayroll \r\n \r\n$ \r\n \r\n3,402,237.58 \r\n \r\n$ \r\n \r\n3,374,356.11 \r\n \r\nContribution as a percentage of covered- \r\nemployee payroll \r\n7.20% 6.62% \r\n \r\nThis schedule is intended to show information for 10 years. Additional years will be displayed as they become available. \r\n \r\n- 35 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION \r\nFOR THE YEAR ENDED JUNE 30, 2019 \r\n \r\nSCHEDULE \"6\" \r\n \r\nTeachers Retirement System \r\n \r\nChanges of assumptions: On November 18, 2015, th-e Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. The \r\n \r\nexpectation of retired life mortality was changed to RP 2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the \r\n \r\nSociety of Actuaries' projection scale BB (set forward one year for males). \r\n \r\n- \r\n \r\nIn 2010 and later, the expectation of retired life mortality was changed to the RP 2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience. \r\n \r\nPublic School Employees Retirement System \r\nChanges of assumptions: On March 15, 2018, the Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for June 30, 2017 actuarial valuation. In addition, based on the Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. \r\n \r\nOn-December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement and withdrawal. The expectation of retired life mortality was changed to the RP 2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (-set forward 3 years for males and 2 years for females). \r\nIn 2010 and later, the expectation of retired life mortality was changed to the RP 2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual H[SHULHQFH \r\nSchool OPEB Fund \r\n \r\nChanges of benefit terms: There have been no changes in benefit terms. \r\n \r\nChanges of assumptions: The June 30, 2017 actuarial valuation was revised, for various factors, including the methodology used to determine how employees and retirees were assigned to each of the OPEB Funds and anticipated participation percentages. Current and former employees of State organizations (including technical colleges, community service boards and public health departments) are now assigned to the State OPEB fund based on their last employer payroll location: irrespective of retirement affiliation. \r\n \r\nThe discount rate was updated from 3.58% as of June 30, 2017 to 3.87% as of June 30, 2018. \r\n \r\n- 36 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND \r\nSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL \r\nYEAR ENDED JUNE 30, 2019 \r\n \r\nSCHEDULE \"7\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent 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 Other Support Services Food Services Operation \r\nTotal Expenditures \r\nExcess of Revenues over (under) Expenditures \r\nOTHER FINANCING USES \r\nOther Uses \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\nAdjustments \r\n \r\nNONAPPROPRIATED BUDGETS \r\n \r\nORIGINAL \r\n \r\nFINAL \r\n \r\nACTUAL AMOUNTS \r\n \r\nVARIANCE OVER/UNDER \r\n \r\n$ \r\n \r\n3,158,942.00 $ \r\n \r\n3,317,322.54 $ \r\n \r\n3,390,995.83 $ \r\n \r\n73,673.29 \r\n \r\n- \r\n \r\n20,642.30 \r\n \r\n13,394.12 \r\n \r\n(7,248.18) \r\n \r\n3,238,378.00 \r\n \r\n3,360,389.00 \r\n \r\n3,169,074.92 \r\n \r\n(191,314.08) \r\n \r\n562,053.00 \r\n \r\n1,207,238.00 \r\n \r\n1,357,919.33 \r\n \r\n150,681.33 \r\n \r\n51,500.00 \r\n \r\n51,500.00 \r\n \r\n37,765.94 \r\n \r\n(13,734.06) \r\n \r\n1,000.00 \r\n \r\n1,000.00 \r\n \r\n1,173.14 \r\n \r\n173.14 \r\n \r\n125,193.00 \r\n \r\n128,193.00 \r\n \r\n101,585.31 \r\n \r\n(26,607.69) \r\n \r\n7,137,066.00 \r\n \r\n8,086,284.84 \r\n \r\n8,071,908.59 \r\n \r\n(14,376.25) \r\n \r\n4,460,784.69 \r\n495,562.00 318,192.00 \r\n95,188.00 422,341.00 442,994.00 373,135.00 723,993.00 494,502.00 \r\n27,000.00 554,000.00 \r\n8,407,691.69 \r\n(1,270,625.69) \r\n- \r\n(1,270,625.69) \r\n- \r\n- \r\n \r\n4,559,045.00 \r\n501,263.00 375,102.00 \r\n95,188.00 425,841.00 442,994.00 375,021.35 742,932.72 507,836.84 \r\n27,000.00 556,974.09 \r\n8,609,198.00 \r\n(522,913.16) \r\n \r\n4,284,550.88 \r\n422,356.82 297,096.03 101,224.55 476,819.04 538,866.67 256,938.36 723,060.68 448,894.95 \r\n31,278.00 430,969.51 \r\n8,012,055.49 \r\n59,853.10 \r\n \r\n(522,913.16) 2,261,496.72 \r\n22,558.57 \r\n \r\n(3.15) 59,849.95 1,635,794.25 \r\n- \r\n \r\n274,494.12 \r\n78,906.18 78,005.97 (6,036.55) (50,978.04) (95,872.67) 118,082.99 19,872.04 58,941.89 (4,278.00) 126,004.58 \r\n597,142.51 \r\n582,766.26 \r\n(3.15) \r\n582,763.11 \r\n(625,702.47) \r\n(22,558.57) \r\n \r\nFund Balances - Ending \r\n \r\n$ \r\n \r\n(1,270,625.69) $ \r\n \r\n1,761,142.13 $ \r\n \r\n1,695,644.20 $ \r\n \r\n(65,497.93) \r\n \r\nNotes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual \r\nThe accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 37 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\nYEAR ENDED JUNE 30, 2019 \r\n \r\nSCHEDULE \"8\" \r\n \r\nFUNDING AGENCY PROGRAM/GRANT \r\nAgriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program \r\nTotal Child Nutrition Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Food Services Fresh Fruit and Vegetable Program \r\nTotal U. S. Department of Agriculture \r\nEducation, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Grants to States Preschool Grants \r\nTotal Special Education Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Rural Education Student Support and Academic Enrichment Program Student Support and Academic Enrichment Program Supporting Effective Instruction State Grants Supporting Effective Instruction State Grants Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies \r\nTotal Other Programs \r\nTotal U. S. Department of Education \r\nDefense, U. S. Department of Direct Department of the Army R.O.T.C. Program \r\n \r\nCFDA NUMBER \r\n \r\nPASSTHROUGH \r\nENTITY ID \r\nNUMBER \r\n \r\nEXPENDITURES IN PERIOD \r\n \r\n10.553 10.555 \r\n \r\n195GA324N1099 $ 195GA324N1099 \r\n \r\n130,480.08 274,206.04 \r\n404,686.12 \r\n \r\n10.582 \r\n \r\n195GA324L1603 \r\n \r\n12,057.30 416,743.42 \r\n \r\n84.027 84.027 84.173 \r\n \r\nH027A170073 H027A180073 H173A180081 \r\n \r\n84.048 84.358 84.424A 84.424A 84.367 84.367 84.010 84.010 \r\n \r\nV048A180010 S365B170010 S424A170011 S424A180011 S367A170001 S367A180001 S010A170010 S010A180010 \r\n \r\n12.UNKNOWN \r\n \r\n46,783.79 107,052.62 \r\n18,391.00 \r\n172,227.41 \r\n10,956.62 4,568.14 2,949.02 1,814.61 4,908.17 \r\n35,413.67 64,337.03 354,585.04 \r\n479,532.30 \r\n651,759.71 \r\n58,370.75 \r\n \r\nTotal Expenditures of Federal Awards \r\n \r\n$ \r\n \r\n1,126,873.88 \r\n \r\nNote 1. Basis of Presentation \r\n \r\nNotes to the Schedule of Expenditures of Federal Awards \r\n \r\nThe accompanying schedule of expenditures of federal awards (the \"Schedule\") includes the federal award activity of the Talbot County Board of Education (the \"Board\") under programs of the federal government for the year ended June 30, 2019. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Board, it is not intended to and does not present the financial position or changes in net position of the Board. \r\nNote 2. Summary of Significant Accounting Policies \r\nExpenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. \r\nNote 3. Indirect Cost Rate \r\nThe Board has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 38 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2019 \r\nAGENCY/FUNDING \r\nGRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program \r\nEducation, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Principal Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Mid-term Adjustment Hold-Harmless Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Sparsity Food Services Math and Science Supplements Vocational Education \r\nGovernor's Office of Student Achievement GRASP Counselor Grant \r\nOffice of the State Treasurer Public School Employees Retirement \r\n \r\nSCHEDULE \"9\" \r\n \r\nGOVERNMENTAL FUND TYPE GENERAL FUND \r\n \r\n$ \r\n \r\n79,811.10 \r\n \r\n79,428.00 21,215.00 356,811.00 53,865.00 184,019.00 38,896.00 288,745.00 267,139.00 62,486.00 441,310.00 26,264.00 20,920.00 48,760.00 15,636.00 \r\n7,232.00 222.00 \r\n277,237.00 123,970.00 \r\n94,691.00 78,720.00 (39,690.00) \r\n225,481.00 45,000.00 \r\n284,698.00 11,252.00 2,097.08 27,438.02 \r\n30,657.72 \r\n14,764.00 \r\n \r\n$ \r\n \r\n3,169,074.92 \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 39 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS \r\nYEAR ENDED JUNE 30, 2019 \r\n \r\nSCHEDULE \"10\" \r\n \r\nPROJECT \r\n \r\nORIGINAL ESTIMATED \r\nCOST (1) \r\n \r\nCURRENT ESTIMATED COSTS (2) \r\n \r\nAMOUNT EXPENDED IN CURRENT \r\nYEAR (3) \r\n \r\nAMOUNT EXPENDED IN PRIOR YEARS (3) \r\n \r\nTOTAL COMPLETION \r\nCOST \r\n \r\nEXCESS PROCEEDS NOT \r\nEXPENDED \r\n \r\n(1) Adding to, constructing, renovating, \r\n \r\nfurnishing, and/or equipping an athletic \r\n \r\ncomplex and related facilities, including a \r\n \r\nstadium, a track, softball field and any related \r\n \r\nlighting; (2) acquiring equipment for physical \r\n \r\neducation and the athletic departments; (3) \r\n \r\nacquiring safety, security and/or fire \r\n \r\nprotection equipment; (4) acquiring buses, \r\n \r\nvehicles, and/or transportation equipment; \r\n \r\nand/or (5) acquiring property. \r\n \r\n$ 2,800,000.00 $ 3,500,000.00 $ 2,495,750.62 $ 433,195.51 $ \r\n \r\n- $ \r\n \r\n- \r\n \r\nESTIMATED COMPLETION \r\nDATE \r\n6/30/2022 \r\n \r\n(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. \r\n(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion. \r\n(3) The voters of Talbot County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 41 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400 \r\n \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON \r\nCOMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\n \r\nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nWe have audited, in accordance with the 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, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Talbot County Board of Education (School District), as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements, and have issued our report thereon dated September 2, 2021. We were unable to obtain sufficient appropriate audit evidence to substantiate the balances for the aggregate remaining fund information and, therefore, we did not express an opinion on this information. \r\nInternal Control Over Financial Reporting \r\nIn planning and performing our audit the financial statements, we considered the School District's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control. \r\nOur consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we did identify certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies. \r\nA deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS 2019-002 and FS 2019-005 to be material weaknesses. \r\n \r\n (This page left intentionally blank) \r\n \r\n A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS 2019-001, FS 2019-003 and FS 2019-004 to be significant deficiencies. \r\nCompliance and Other Matters \r\nAs part of obtaining reasonable assurance about whether the School District's financial statements are free from material misstatements, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our engagement, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. \r\nSchool District's Response to Findings \r\nThe School District's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the engagement to audit of the financial statements and, accordingly, we express no opinion on it. \r\nPurpose of this Report \r\nThe purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control or on compliance. This report is an integral part of an engagement to perform an audit performed in accordance with Government Auditing Standards in considering the School District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nSeptember 2, 2021 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400 \r\n \r\nINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE \r\nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nReport on Compliance for Each Major Federal Program \r\nWe have audited the Talbot County Board of Education's (School District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2019. The School District's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. \r\nManagement's Responsibility \r\nManagement is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. \r\nAuditor's Responsibility \r\nOur responsibility is to express an opinion on compliance for each of the School District's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. \r\nWe believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the School District's compliance. \r\n \r\n (This page left intentionally blank) \r\n \r\n Basis for Qualified Opinion on Title I Grants Local Educational Agencies (CFDA 84.010) \r\nAs described in the accompanying Schedule of Findings and Questioned Costs, the School District did not comply with requirements regarding Title I Grants to Local Educational Agencies (CFDA 84.010) as described in item FA 2019-001 for Cash Management and FA 2019-002 for Financial Reporting. Compliance with such requirements is necessary, in our opinion, for the School District to comply with requirements applicable to that program. \r\nQualified Opinion on Title I Grants Local Educational Agencies (CFDA 84.010) \r\nIn our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the School District complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on Title I Grants to Local Educational Agencies (CFDA 84.010) for the year ended June 30, 2019. \r\nUnmodified Opinion on the Other Major Federal Program \r\nIn our opinion, the School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its other major federal program identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs for the year ended June 30, 2019. \r\nOther Matters \r\nThe School District's response to the noncompliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. \r\nReport on Internal Control over Compliance \r\nManagement of the School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control over compliance. \r\nA deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. \r\n \r\n (This page left intentionally blank) \r\n \r\n Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. We did identify certain deficiencies in internal control over compliance, described in the accompanying Schedule of Findings and Questioned Costs as items FA 2019-001 and FA 2019-002, that we consider to be material weaknesses. \r\nThe School District's response to the internal control over compliance finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. \r\nThe purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nSeptember 2, 2021 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2019 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS-7301-13-01 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2014-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2015-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2016-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Control Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2017-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Control Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2018-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Control Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe Finance Director will meet with all parties involved to discuss the findings, examine our current procedure, and seek ways to diminish all the risks. We will make adjustments to procedures as needed. We will meet periodically to share ideas, discuss adjustments to procedures and provide additional training. \r\n \r\n-1- \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2019 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS-7301-13-02 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2014-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2015-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2016-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\n-2- \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2019 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2017-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2018-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Agency Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe School District has hired a new Finance/Business Director that will review the current accounting procedures and ensure that internal controls are in place. In addition, the School District has received quotes in reference to purchasing a new software that will be implemented for school account that has features to eliminate issues with school level purchases. The Business/Finance Director will meet periodically to share ideas, discuss adjustments to procedures (if any), and provide additional training, if needed. \r\n \r\nFS-7301-13-05 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls over Employee Compensation Employee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFS 2014-004 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls over Employee Compensation Employee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\n-3- \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2019 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2015-004 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls over Employee Compensation Employee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFS 2016-003 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Employee Compensation Employee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFS 2017-003 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Employee Compensation Employee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFS 2018-003 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Employee Compensation Employee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFS-7301-13-06 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nFailure to Adequately Maintain Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2014-005 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nFailure to Adequately Maintain Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\n-4- \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2019 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2015-005 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nFailure to Adequately Maintain Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2016-004 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2017-004 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2018-004 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Capital Assets Capital Assets Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nAdditional resources will be committed as well as controls designed and implemented to the capital asset inventory management process to ensure records are properly maintained. Further, the School District is in the process of implementing a better control system to assist with the capital asset activity. \r\n \r\nFS 2016-005 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls at the Central Office Accounting Controls (Overall) Expenditures/Liabilities/Disbursements Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2017-005 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls at the Central Office Accounting Controls (Overall) Expenditures/Liabilities/Disbursements Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\n-5- \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2019 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2018-005 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls at the Central Office Accounting Controls (Overall) Expenditures/Liabilities/Disbursements General Ledger Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nThe School District has hired a new Chief Financial Officer to oversee the accounting procedures and ensure that internal controls are in place. In addition, the School District will review the current accounting procedures and controls and will implement procedures to help strengthen the internal controls. \r\n \r\nFS 2016-006 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Financial Reporting Financial Reporting Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2017-006 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Financial Reporting Financial Reporting Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2018-006 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Financial Reporting Financial Reporting Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nThe School District has hired a new Chief Financial Officer to oversee the accounting procedures and ensure that internal controls are in place. In addition, the School District will review the current accounting procedures and controls and will implement procedures to help strengthen the internal controls. \r\n \r\n-6- \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2019 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2014-003 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nInadequate Control Over the Cash Management Process Cash Management Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFA 2015-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nControls Over the Cash Management Process Cash Management Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFA 2016-001 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nImprove Controls Over the Cash Management Process Cash Management Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFA 2017-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nImprove Controls Over the Cash Management Process Cash Management Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\n-7- \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2019 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2018-001 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: \r\n \r\nImprove Controls Over the Cash Management Cash Management Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies S010A160010, S010A170010 \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nManagement has implemented procedures to monitor the cash monthly balances for all programs when requesting reimbursement for federal and state programs. \r\n \r\nFA 2016-003 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nImprove Controls over Equipment Equipment and Real Property Management Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education 10.553 and 10.555 Child Nutrition Cluster \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFA 2017-003 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nImprove Controls over Equipment Equipment and Real Property Management Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education 10.553 and 10.555 Child Nutrition Cluster \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFA 2018-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: \r\n \r\nImprove Controls over Equipment Equipment and Real Property Management Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education 10.553 and 10.555 Child Nutrition Cluster 181856A324N1099  School Breakfast Program 181856A324N1100  National School Lunch Program \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\n-8- \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2019 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2018-003 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: \r\n \r\nStrengthen Controls over Maintenance of Effort Requirements Matching, Level of Effort, Earmarking Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies S010A160010, S010A170010 \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFA 2017-005 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nImprove Controls over the Schoolwide Program Special Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe School District will evaluate and implement their internal control processes regarding operation of a schoolwide program and formation of the schoolwide plan. The School District will then modify or develop procedures to ensure that an annual evaluation of results achieved by the schoolwide program is performed and the schoolwide plan is revised appropriately based upon these results. Management will develop and implement a monitoring process to ensure that these procedures are properly implemented. \r\n \r\nFA 2017-006 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nStrengthen Controls over Consultation with Private School Officials Special Tests and Provisions Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFA 2018-004 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: \r\n \r\nStrengthen Controls over Consultation with Private School Officials Special Tests and Provisions Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies S010A160010, S010A170010 \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\n-9- \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION IV FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2019 \r\n \r\nI SUMMARY OF AUDITOR'S RESULTS \r\n \r\nFinancial Statements \r\n \r\nType of auditor's report issued: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund Aggregate Remaining Fund Information \r\n \r\nUnmodified Disclaimed \r\n \r\nInternal control over financial reporting: \r\n \r\n Material weaknesses identified? \r\n \r\nYes \r\n \r\n Significant deficiencies identified? \r\n \r\nYes \r\n \r\nNoncompliance material to financial statements noted: \r\n \r\nNo \r\n \r\nFederal Awards \r\n \r\nInternal Control over major programs:  Material weaknesses identified?  Significant deficiency identified? \r\n \r\nYes None Reported \r\n \r\nType of auditor's report issued on compliance for major programs: Unmodified for all major programs except for Title I Grants to Local Educational Agencies, which was qualified. \r\n \r\nAny audit findings disclosed that are required to be reported in \r\n \r\naccordance with 2 CFR 200.516(a)? \r\n \r\nYes \r\n \r\nIdentification of major programs: \r\n \r\nCFDA Numbers \r\n \r\nName of Federal Program or Cluster \r\n \r\n10.553, 10.555 84.010 \r\n \r\nChild Nutrition Cluster Title I Grants to Local Educational Agencies \r\n \r\nDollar threshold used to distinguish between Type A and Type B programs: \r\n \r\n$750,000.00 \r\n \r\nAuditee qualified as low-risk auditee? \r\n \r\nNo \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2019 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2019-001 \r\n \r\nInternal Control Procedures \r\n \r\nControl Category: \r\n \r\nCash and Cash Equivalents \r\n \r\nInternal Control Impact: \r\n \r\nSignificant Deficiency \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: \r\n \r\nFS 2018-001, FS 2017-001, FS 2016-001, FS 2015-001, \r\n \r\nFS 2014-001, FS 7301-13-01 \r\n \r\nDescription: \r\n \r\nThe accounting procedures of the School District were insufficient to provide adequate internal \r\n \r\ncontrols over the Cash and Cash Equivalents functions. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls over Cash and Cash Equivalents. \r\n \r\nCondition: The following Cash and Cash Equivalents related deficiencies were noted: \r\n Bank reconciliations were not performed by someone independent of the general ledger function. \r\n Misstatements were noted on Note Disclosure 4 for the carrying amount, the bank balance amount, the amount insured by Federal depository insurance, and the amount collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name. \r\n One bank account was not properly reconciled to the June 30, 2019 general ledger balance in the amount of $12,937.14. \r\n One reconciliation lacked the preparers and approvers signature. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the cause was a direct result of the lack of time and resources to fully separate duties to ensure that internal controls were sufficient. \r\n \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over cash activity increases the risk significant misstatements could occur in the financial statements due to error or fraud. \r\n \r\nRecommendation: Management should take appropriate steps to ensure the time and resources are made available to implement controls over cash to ensure monthly bank reconciliations are performed accurately and in a timely manner by someone independent of the general ledger function. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2019 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2019-002 Control Category: \r\nInternal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over Agency Fund Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None FS 2018-002, FS 2017-002, FS 2016-002, FS 2015-002, FS 2014-002, FS 7301-13-02, \r\n \r\nDescription: The accounting procedures of the School District were not followed resulting in internal control weaknesses over Agency Fund accounts. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and provide reasonable assurance transactions are processed according to established procedures. \r\n \r\nCondition: The following deficiencies were noted with the School District's Agency Fund accounts: \r\n \r\nCash and Cash Equivalents  The CSS Internal School Funds account was not reconciled to the general ledger nor to the school activity ledger reports at June 30, 2019. \r\n \r\nRevenues/Receivables/Receipts  The deposit preparation function was not separated from the bank reconciliation and general ledger functions for school activity accounts.  No supporting receipt documentation was provided for the three school activity receipts selected for review. \r\n \r\nExpenditures/Liabilities/Disbursements  None of the three school activity account expenditures reviewed had evidence of review or approval.  One of the three school activity account expenditures reviewed was not supported by an invoice.  None of the three school activity account expenditures had evidence of receipt of purchase.  No supporting expenditure documentation was provided for the twelve Family Connection grant expenditures selected for review. \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2019 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nAccounting Controls (Overall)  For school activity accounts, the School District did not have a formal process for documenting agency fund sponsors, purpose of accounts, allowable activities of accounts, source of funds, and final disposition of funds related to individual agency fund accounts. \r\nGeneral Ledger  The School District did not record any fiscal year 2019 school activity account transactions on the general ledger or the financial statements. Supporting documentation provided by the School District to record school activity accounts was unreliable and inaccurate; therefore, it was not possible to determine if the balances at June 30, 2019 were materially correct. \r\nCause: In discussing these deficiencies with the School District, they stated that the internal control deficiencies related to school activity accounts occurred due to a shortage of personnel at the school and a failure of those personnel to follow the established policies and procedures due to lack of understanding. That resulted in necessary information not being recorded and located. \r\nEffect or Potential Effect: The lack of adequate controls increases the risk of theft, fraud, or misuse of School District resources that may result in errors and/or irregularities not being detected in a timely manner. Also, agency funds could be materially misstated. \r\nRecommendation: Management should take appropriate steps to ensure: \r\n The time and resources are made available to ensure proper separation of duties is established, \r\n proper approval process for disbursements is followed,  safe keeping of receipt documentation is implemented,  accounting processes are adequately monitored,  school activity accounts are properly classified,  financial statement amounts are reconciled to the schools' general ledger balances and bank \r\nstatement balance,  standard procedures are implemented over the depositing of funds,  amounts reported in consolidation spreadsheet for school activity accounts is accurate,  and agency fund accounts are properly documented. \r\nIn addition, the School District should ensure that balances are properly reflected in the general ledger and financial statements. \r\nViews of Responsible Officials: We concur with this finding. \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2019 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2019-003 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over Capital Assets Capital Assets Significant Deficiency None FS 2018-004, FS 2017-004, FS 2016-004, FS 2015-005, FS 2014-005, FS 7301-13-06 \r\n \r\nDescription: The School District did not adequately maintain the capital assets records. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that capital assets inventory reports are properly maintained. Chapter IV-7 Implementing a Capital Assets Management System of the Financial Management for Georgia Local Units of Administration provides that School Districts must establish capital asset policies, define system requirements, implement a capital asset system and maintain capital asset inventory reports. \r\n \r\nCondition: The School District's capital asset records revealed the following exceptions: \r\n A physical inventory of capital assets has not been performed since fiscal year 2015.  An entry was proposed by auditors and accepted by the School District to record expenditures \r\nrelated to construction in progress totaling $428,426.24. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the cause was a direct result of the lack of time and resources to fully monitor and implement procedures over capital assets which follow Board policy. \r\n \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over capital assets can lead to inaccurate internal and external reporting, as well as, noncompliance with generally accepted accounting principles. \r\n \r\nRecommendation: Management should take appropriate steps to ensure the time and resources are made available to implement controls over capital assets to ensure records are accurate and conform to the School District's approved capital asset policy. In addition, management should ensure that expenditures that meet the capitalization threshold are properly capitalized and included in capital assets. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2019 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2019-004 Control Category: \r\nInternal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls at the Central Office Accounting Controls (Overall) General Ledger Significant Deficiency None FS 2018-005, FS 2017-005, FS 2016-005 \r\n \r\nDescription: The accounting procedures of the School District did not provide adequate internal controls at the Central Office. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed appropriately. \r\n \r\nCondition: Accounting Controls (Overall) \r\n The School District does not have adequate logical access controls in place to ensure only appropriate users have access to significant financial applications and supporting infrastructure. We noted several users with access rights that exceeded their need to complete their assigned job functions. Further, the access granted did not adequately separate the functions of initiating, authorizing, and recording transactions, reconciliations, and maintaining the custody of assets. \r\n Inadequate physical access controls are in place over the server rooms. It was noted that the server room is unlocked during working hours. \r\n Proper anti-virus protection was not in place at the workstation level. For efficiency, IT personnel performs a full memory wipe and restore for any workstation that becomes compromised. This exposes the entity to unnecessary risk from cyber threats. \r\n There are no established written organizational standards or procedures over IT functions and key processes. Considering the School District has only one full time IT personnel, formal written procedures such as back-up policies, job scheduling, and IT risk assessment is crucial. \r\n Backup and recovery procedures for the student information system and school food service point of sale system are not adequate. \r\n There is no formal policy for managing user access to the financial application, student information system, and school food service point of sale system. \r\n The School District did not have adequate password policies over the network, student information system, and school food service point of sale system. \r\n \r\nGeneral Ledger Our examination of seven journal entries revealed the following deficiencies: \r\n Supporting documentation for six journal entries selected for review could not be provided by the School District. \r\n All of the journal entries lacked evidence of supervisory review and approval. \r\n \r\nCause: In discussing these deficiencies with School District, they stated that these issues were a result of management's failure to ensure that internal controls were established, implemented, and functioning. \r\n \r\n- 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2019 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nEffect or Potential Effect: Without satisfactory accounting controls and procedures in place, the School District could place itself in a position where potential misappropriation of assets could occur. In addition, the lack of proper controls impacts its reporting and financial position and results of operations. \r\n \r\nRecommendation: The School District should implement procedures to ensure that key accounting functions are appropriately separated and/or utilize management oversight for these incompatible activities. In addition, the School District should ensure server rooms are properly safeguarded and monitored, and adequate protection from cyber threats exists on all workstations. The School District should review accounting procedures in place and design and implement procedures relative to expenditures and journal entries to strengthen the internal controls over the accounting function. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFS 2019-005 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over Financial Reporting Financial Reporting Material Weakness None FS 2018-006, FS 2017-006, FS 2016-006 \r\n \r\nDescription: The School District did not have adequate controls in place over the financial statement reporting process to ensure all required activity was correctly included in the financial statement information presented for audit. The original financial statements, as presented for audit, contained numerous material and significant errors and omissions. \r\n \r\nCriteria: Management is responsible for having adequate controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). The School District's internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills, and experience to prepare GAAP based financial statements and include all disclosures as required by the Governmental Accounting Standards Board (GASB). \r\n \r\nGASB Statement No. 34, Basic Financial Statements  Management's Discussion and Analysis  for State and Local Governments (Statement), requires governments to present government-wide and fund financial statements as well as summary reconciliation of the (a) total governmental funds balances to the net position of governmental activities in the Statement of Net Position, and (b) total changes in governmental fund balances to the change in the net position of governmental activities in the Statement of Activities. In addition, the statement requires information about the government's major and nonmajor funds in the aggregate, to be provided in the fund financial statements. \r\n \r\nChapter II2, Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles. \r\n \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2019 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCondition: The following errors and omissions were noted in the School District's financial statement presented for audit: \r\nAgency fund cash and funds held for others was overstated and accounts receivable was understated by $10,976.47 due to the Family Connections grant being incorrectly recorded in the general fund. Adjustments to the financial statements were proposed by the auditors and accepted by the School District. These misstatements were material to the agency fund.  A review of federal grant fund balances revealed that several grants were not properly closed out at year-end. Federal programs should be reviewed each year to determine if funds should be refunded to the grantor or if a transfer or receivable is necessary to cover a deficit balance.  Several other audit adjustments and reclassifications were proposed by auditors and accepted by the School District to properly present the financial statement and note disclosures. Cause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of review of the financial statements and note disclosures as prepared by their consultant. \r\nEffect or Potential Effect: Material and significant misstatements and misclassifications were included in the financial statements presented for audit. Numerous adjustments were necessary for the School District's financial statements to be in conformity with GAAP. The lack of controls and monitoring could impact the reporting of the School District's financial position and results of operations. \r\nRecommendation: The School District should strengthen their internal controls and preparation and review procedures over financial reporting to ensure that the financial statements, including disclosures, presented for audit are complete and accurate. These procedures should be performed by a properly trained individual(s) possessing a thorough understanding of the applicable GAAP, GASB pronouncements and knowledge of the School District's activities and operations. The School District should also consider implementing the use of a review checklist to assist in the review process over the financial statements. \r\nViews of Responsible Officials: We concur with this finding. \r\n- 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2019 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2019-001 \r\n \r\nImprove Controls over Cash Management \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: \r\n \r\nMaterial Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: \r\n \r\n84.010 Title I Grants to Local Education Agencies \r\n \r\nFederal Award Numbers: S010A170010, S010A180010 \r\n \r\nQuestioned Costs: \r\n \r\nNone Identified \r\n \r\nRepeat of Prior Year Findings: FA 2018-001; FA 2017-002, FA 2016-001, FA 2015-002, \r\n \r\nFA 2014-003 \r\n \r\nDescription: The School District made cash drawdowns in excess of immediate cash needs for the Title I program. \r\n \r\nCriteria: 2 CFR 200.305(b) states, \"For non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the pass-through entity and the disbursement by the non-Federal entity.\" In addition, 2 CFR 200.302(b)(6) requires that the entity develop written cash management procedures. \r\n \r\nFurthermore, 2 CFR 200.303(a) states in part that the \"non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award... (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. \r\n \r\nCondition: Upon review of cash drawdowns and disbursements related to the Title I program, cash balances in excess of Title I program materiality were observed for the entire fiscal year. Additionally, it was noted that the School District did not have appropriate controls in place over the cash drawdown process. \r\n \r\nCause: In discussing the issues with management, they indicated that the lack of review of federal grants resulted in excess cash drawdown requests. \r\n \r\nEffect or Potential Effect: The School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. In addition, the School District could potentially accrue a Federal interest liability that would be owed to the Federal government. \r\n \r\nRecommendation: The School District should develop and implement procedures to accurately forecast the cash needs of the Title I program and minimize the time elapsing between the transfer of funds from the Georgia Department of Education and the disbursement of such funds by the School District. These procedures should be documented in accordance with 2 CFR 200.302(b)(6). In addition, management should develop and implement a monitoring process to ensure that these procedures are followed. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\n- 9 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2019 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2019-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Questioned Costs: \r\n \r\nStrengthen Controls over Financial Reporting Reporting Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Educational Agencies S010A170010, S010A180010 $59,268.45 \r\n \r\nDescription: The School District did not file accurate completion reports for the Title I Grants to Local Educational Agencies program. \r\n \r\nCriteria: 2 CFR 200.302(a) states in part that \"the non-Federal entity's financial management systems must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.\" In addition, 2 CFR 200.302(b)(2) states in part that the non-Federal entity's financial management systems must provide for \"accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.\" \r\n \r\nFurthermore, 2 CFR 200.303(a) states in part that the \"non-Federal must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award... (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards.\" \r\n \r\nCondition: A review of the School District's accounting records and the program completion reports revealed the following: \r\n \r\n1. The Title I-A, Improving Academic Achievement completion report for the period ending June 30, 2019 was over reported by $55,268.45. \r\n2. The Title I-A, School Improvement completion report for the period ending June 30, 2019 was over reported by $4,000.00. \r\n \r\nQuestioned Costs: Questioned costs of $59,268.45 were identified for cash drawdowns in excess of reimbursable expenditures. \r\n \r\nCause: In discussing this deficiency with the School District, they stated these issues were a result of turnover within the Central Office. \r\n \r\nEffect or Potential Effect: The School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. Failure to accurately report Federal award expenditures through the completion report process lead to the filing of reimbursement requests that do not agree to actual expenditures. Therefore, the School District obtained more Federal funding than they were eligible to receive. Additionally, this funding must be returned to the Georgia Department of Education. \r\n \r\n- 10 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2019 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Recommendation: The School District should revise and implement internal control procedures to ensure that completion reports submitted to the Georgia Department of Education are supported by the accounting records and reimbursement requests are prepared based upon actual expenditures incurred. In addition, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding. \r\n- 11 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION V MANAGEMENT'S CORRECTIVE ACTION \r\n \r\n (This page left intentionally blank) \r\n \r\n    "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2018-belec-p-btext","title":"Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended 2018 June 30 (including independent auditor's reports)","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2021-07-27"],"dcterms_description":["Annual financial report for the Talbot County Board of Education."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Georgia. Department of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Talbot County Board of Education (Ga.)--Appropriations and expenditures--Periodicals.","Education--Georgia--Talbot County--Auditing--Periodicals.","Education--Georgia--Talbot County--Finance--Statistics--Periodicals.","Georgia Government Documents--Serial"],"dcterms_title":["Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended 2018 June 30 (including independent auditor's reports)"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2018-belec-p-btext"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2018-belec-p-btext"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records","audits","financial records","financial statements"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"TALBOT COUNTY BOARD OF EDUCATION \r\nTALBOTTON, GEORGIA \r\nANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2018 \r\n(Including Independent Auditor's Reports) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nEXHIBITS \r\n \r\nGOVERNMENT-WIDE FINANCIAL STATEMENTS \r\n \r\nA \r\n \r\nSTATEMENT OF NET POSITION \r\n \r\nB \r\n \r\nSTATEMENT OF ACTIVITIES \r\n \r\nFUND FINANCIAL STATEMENTS \r\n \r\nC \r\n \r\nBALANCE SHEET \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nD \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\n \r\nTO THE STATEMENT OF NET POSITION \r\n \r\nE \r\n \r\nSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES \r\n \r\nIN FUND BALANCES \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nF \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT \r\n \r\nOF REVENUES, EXPENDITURES AND CHANGES IN FUND \r\n \r\nBALANCES TO THE STATEMENT OF ACTIVITIES \r\n \r\nG \r\n \r\nSTATEMENT OF FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\nH \r\n \r\nSTATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\nI NOTES TO THE BASIC FINANCIAL STATEMENTS \r\n \r\nSCHEDULES \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\n2 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA \r\n3 SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY SCHOOL OPEB FUND \r\n4 SCHEDULE OF CONTRIBUTIONS  TEACHERS RETIREMENT SYSTEM OF GEORGIA 5 SCHEDULE OF CONTRIBUTIONS  SCHOOL OPEB FUND 6 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION \r\n \r\nPage \r\n1 2 \r\n3 4 5 6 7 8 9 \r\n31 32 33 34 35 36 \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\n \r\nSECTION I FINANCIAL \r\nSCHEDULES \r\nREQUIRED SUPPLEMENTARY INFORMATION 7 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES \r\nIN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND \r\nSUPPLEMENTARY INFORMATION \r\n8 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 9 SCHEDULE OF STATE REVENUE 10 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS \r\nSECTION II \r\nCOMPLIANCE AND INTERNAL CONTROL REPORTS \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\nINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE \r\nSECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\nSECTION IV FINDINGS AND QUESTIONED COSTS \r\nSCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nSECTION V \r\nMANAGEMENT'S CORRECTIVE ACTION FOR CURRENT YEAR FINDINGS SCHEDULE OF MANAGEMENT'S CORRECTIVE ACTION \r\n \r\nPage \r\n37 38 39 41 \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION I FINANCIAL \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400 \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nReport on the Financial Statements \r\nWe have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Talbot County Board of Education (School District), as of and for the year ended June 30, 2018, and the related notes to the financial statements. We were unable to opine on the aggregate remaining fund information due to the matters discussed in the Basis for Disclaimer of Opinion paragraph. These financial statements collectively comprise the School District's basic financial statements as listed in the table of contents. \r\nManagement's Responsibility for the Financial Statements \r\nManagement is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. \r\nAuditor's Responsibility \r\nOur responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 from material misstatement. Because of the matter described in the \"Basis for Disclaimer of Opinion on the Aggregate Remaining Fund Information\" paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the aggregate remaining fund information. \r\nAn audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also \r\n \r\n (This page left intentionally blank) \r\n \r\n includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. \r\n \r\nExcept for the matter described in the \"Basis for Disclaimer of Opinion on the Aggregate Remaining Fund Information\" paragraph, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. \r\nSummary of Opinions \r\n \r\nOpinion Unit Governmental Activities General Fund Capital Projects Fund Debt Service Fund Aggregate Remaining Fund Information \r\n \r\nType of Opinion Unmodified Unmodified Unmodified Unmodified Disclaimer \r\n \r\nBasis for Disclaimer of Opinion on the Aggregate Remaining Fund Information \r\n \r\nDue to lack of adequate documentation supporting the school activity (Principal and Agency) accounts maintained at the schools and recorded in the fiduciary fund and failure to record any current year activity, we were not able to obtain sufficient appropriate audit evidence to substantiate the balances recorded in the financial statements. As a result of these matters, we were unable to determine whether the fiduciary fund was materially correct. \r\nDisclaimer of Opinion \r\n \r\nBecause of the significance of the matter described in the \"Basis for Disclaimer of Opinion on the Aggregate Remaining Fund Information\" paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements of the aggregate remaining fund information of the School District. Accordingly, we do not express an opinion on these financial statements. \r\nUnmodified Opinions \r\n \r\nIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the School District as of June 30, 2018, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. \r\nEmphasis of Matter \r\n \r\nAs described in Note 2 to the financial statements, in 2018, the School District adopted new \r\naccounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, as amended by GASB Statement No. 85, Omnibus 2017. The School District restated beginning net position for \r\nthe effect of GASB Statement No. 75. Our opinions are not modified with respect to this matter. \r\n \r\n (This page left intentionally blank) \r\n \r\n Other Matters \r\nRequired Supplementary Information \r\nManagement has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinions on the basic financial statements are not affected by this missing information. \r\nAccounting principles generally accepted in the United States of America require that the required supplementary information listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. \r\nOther Information \r\nOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District's basic financial statements. The accompanying supplementary information, as listed in the table of contents, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U. S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. \r\nThe accompanying supplemental information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, except for the impact of the matter described in the \"Basis for Disclaimer of Opinion on the Aggregate Remaining Fund Information\" paragraph, the accompanying supplemental information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. \r\nOther Reporting Required by Government Auditing Standards \r\nIn accordance with Government Auditing Standards, we have also issued our report dated July 27, 2021 on our consideration of the School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to \r\n \r\n (This page left intentionally blank) \r\n \r\n provide an opinion on the effectiveness of the School District's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control over financial reporting and compliance. \r\nA copy of this report has been filed as a permanent record and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. \r\nRespectfully submitted, \r\n \r\nJuly 27, 2021 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2018 \r\nASSETS \r\nCash and Cash Equivalents Investments Receivables, Net \r\nTaxes State Government Federal Government Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation) \r\nTotal Assets \r\nDEFERRED OUTFLOWS OF RESOURCES \r\nRelated to Defined Benefit Pension Plan Related to OPEB Plan \r\nTotal Deferred Outflows of Resources \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Interest Payable Contracts Payable Retainages Payable Net Pension Liability Net OPEB Liability Long-Term Liabilities \r\nDue Within One Year Due in More Than One Year \r\nTotal Liabilities \r\nDEFERRED INFLOWS OF RESOURCES \r\nRelated to Defined Benefit Pension Plan Related to OPEB Plan \r\nTotal Deferred Inflows of Resources \r\nNET POSITION \r\nNet Investment in Capital Assets Restricted for \r\nContinuation of Federal Programs Debt Service Capital Projects Unrestricted (Deficit) \r\nTotal Net Position \r\n \r\nEXHIBIT \"A\" \r\n \r\nGOVERNMENTAL ACTIVITIES \r\n \r\n$ \r\n \r\n6,796,419.91 \r\n \r\n65,000.00 \r\n \r\n682,814.95 314,142.93 \r\n18,273.75 6,595.06 \r\n765,333.44 12,402,336.10 \r\n \r\n21,050,916.14 \r\n \r\n997,406.42 448,593.00 \r\n1,445,999.42 \r\n \r\n113,740.98 523,119.84 \r\n58,313.69 43,108.67 135,077.55 30,810.50 5,416,502.00 5,421,880.00 \r\n762,690.00 3,433,349.00 \r\n15,938,592.23 \r\n \r\n329,414.00 412,863.00 \r\n742,277.00 \r\n \r\n12,327,117.68 \r\n249,439.42 485,902.44 1,127,306.83 (8,373,720.04) \r\n \r\n$ \r\n \r\n5,816,046.33 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES \r\nFOR THE YEAR ENDED JUNE 30, 2018 \r\n \r\nEXHIBIT \"B\" \r\n \r\nGOVERNMENTAL ACTIVITIES \r\nInstruction Support Services \r\nPupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Operations of Non-Instructional Services Food Services Interest on Short-Term and Long-Term Debt \r\nTotal Governmental Activities \r\nGeneral Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous \r\nTransfers \r\nTotal General Revenues and Transfers \r\nChange in Net Position \r\nNet Position - Beginning of Year - Restated \r\n \r\nEXPENSES \r\n \r\nCHARGES FOR SERVICES \r\n \r\nPROGRAM REVENUES OPERATING GRANTS AND \r\nCONTRIBUTIONS \r\n \r\nCAPITAL GRANTS AND CONTRIBUTIONS \r\n \r\nNET (EXPENSES) REVENUES \r\nAND CHANGES IN NET POSITION \r\n \r\n$ 3,993,578.77 $ \r\n398,897.36 277,675.57 \r\n89,034.79 446,023.65 424,604.72 103,927.90 715,425.19 453,747.48 \r\n37,211.00 \r\n512,080.69 99,467.51 \r\n$ 7,551,674.63 $ \r\n \r\n- $ 2,353,622.88 $ \r\n \r\n- \r\n \r\n61,646.97 \r\n \r\n- \r\n \r\n91,671.24 \r\n \r\n- \r\n \r\n74,716.00 \r\n \r\n- \r\n \r\n371,264.00 \r\n \r\n- \r\n \r\n168,357.00 \r\n \r\n- \r\n \r\n2.69 \r\n \r\n- \r\n \r\n153,898.74 \r\n \r\n- \r\n \r\n162,117.46 \r\n \r\n- \r\n \r\n- \r\n \r\n38,745.58 - \r\n \r\n495,954.56 - \r\n \r\n38,745.58 $ 3,933,251.54 $ \r\n \r\n- $ \r\n77,220.00 - \r\n- \r\n77,220.00 \r\n \r\n(1,639,955.89) \r\n(337,250.39) (186,004.33) \r\n(14,318.79) (74,759.65) (256,247.72) (103,925.21) (561,526.45) (214,410.02) (37,211.00) \r\n22,619.45 (99,467.51) \r\n(3,502,457.51) \r\n \r\n3,474,082.01 \r\n529,890.50 20,156.52 47,985.48 10,685.13 (1,398.67) \r\n4,081,400.97 \r\n578,943.46 \r\n5,237,102.87 \r\n \r\nNet Position - End of Year \r\n \r\n$ \r\n \r\n5,816,046.33 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION BALANCE SHEET \r\nGOVERNMENTAL FUNDS JUNE 30, 2018 \r\n \r\nEXHIBIT \"C\" \r\n \r\nASSETS \r\nCash and Cash Equivalents Investments Receivables, Net \r\nTaxes State Government Federal Government Inventories \r\n \r\nGENERAL FUND \r\n \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 1,878,195.03 $ 4,389,213.77 $ \r\n \r\n65,000.00 \r\n \r\n- \r\n \r\n620,275.17 314,142.93 \r\n18,273.75 6,595.06 \r\n \r\n62,539.78 - \r\n \r\n529,011.11 $ 6,796,419.91 \r\n \r\n- \r\n \r\n65,000.00 \r\n \r\n- \r\n \r\n682,814.95 \r\n \r\n- \r\n \r\n314,142.93 \r\n \r\n- \r\n \r\n18,273.75 \r\n \r\n- \r\n \r\n6,595.06 \r\n \r\nTotal Assets \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Contracts Payable Retainages Payable \r\nTotal Liabilities \r\nDEFERRED INFLOWS OF RESOURCES \r\nUnavailable Revenue - Property Taxes \r\nFUND BALANCES \r\nNonspendable Restricted Assigned Unassigned \r\nTotal Fund Balances \r\nTotal Liabilities, Deferred Inflows of Resources, and Fund Balances \r\n \r\n$ 2,902,481.94 $ 4,451,753.55 $ \r\n \r\n529,011.11 $ 7,883,246.60 \r\n \r\n$ \r\n \r\n113,740.98 $ \r\n \r\n- $ \r\n \r\n523,119.84 \r\n \r\n- \r\n \r\n58,313.69 \r\n \r\n- \r\n \r\n- \r\n \r\n135,077.55 \r\n \r\n- \r\n \r\n30,810.50 \r\n \r\n695,174.51 \r\n \r\n165,888.05 \r\n \r\n- $ - \r\n- \r\n \r\n113,740.98 523,119.84 \r\n58,313.69 135,077.55 \r\n30,810.50 \r\n861,062.56 \r\n \r\n571,513.18 \r\n \r\n- \r\n \r\n- \r\n \r\n571,513.18 \r\n \r\n6,595.06 242,844.36 \r\n15,654.36 1,370,700.47 \r\n1,635,794.25 \r\n \r\n4,285,865.50 \r\n- \r\n4,285,865.50 \r\n \r\n529,011.11 \r\n- \r\n529,011.11 \r\n \r\n6,595.06 5,057,720.97 \r\n15,654.36 1,370,700.47 \r\n6,450,670.86 \r\n \r\n$ 2,902,481.94 $ 4,451,753.55 $ \r\n \r\n529,011.11 $ 7,883,246.60 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\nTO THE STATEMENT OF NET POSITION JUNE 30, 2018 \r\n \r\nEXHIBIT \"D\" \r\n \r\nTotal fund balances - governmental funds (Exhibit \"C\") \r\nAmounts reported for governmental activities in the Statement of Net Position are different because: \r\nCapital assets used in governmental activities are not financial resources and therefore are not reported in the funds. \r\nLand Construction in progress Buildings and improvements Equipment Land improvements Accumulated depreciation \r\nSome liabilities are not due and payable in the current period and, therefore, are not reported in the funds. \r\nNet pension liability Net OPEB liability \r\nDeferred outflows and inflows of resources related to pensions/OPEB are applicable to future periods and, therefore, are not reported in the funds. \r\nRelated to pensions Related to OPEB \r\nTaxes that are not available to pay for current period expenditures are deferred in the funds. \r\nLong-term liabilities, and related accrued interest, are not due and payable in the current period and therefore are not reported in the funds. \r\nBonds payable Accrued interest payable Unamortized bond premiums \r\n \r\n$ \r\n \r\n6,450,670.86 \r\n \r\n$ \r\n \r\n379,857.93 \r\n \r\n385,475.51 \r\n \r\n14,060,918.30 \r\n \r\n2,263,488.01 \r\n \r\n682,768.02 \r\n \r\n(4,604,838.23) \r\n \r\n13,167,669.54 \r\n \r\n$ \r\n \r\n(5,416,502.00) \r\n \r\n(5,421,880.00) \r\n \r\n(10,838,382.00) \r\n \r\n$ \r\n \r\n667,992.42 \r\n \r\n35,730.00 \r\n \r\n703,722.42 571,513.18 \r\n \r\n$ \r\n \r\n(3,910,000.00) \r\n \r\n(43,108.67) \r\n \r\n(286,039.00) \r\n \r\n(4,239,147.67) \r\n \r\nNet position of governmental activities (Exhibit \"A\") \r\n \r\n$ \r\n \r\n5,816,046.33 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES \r\nGOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2018 \r\n \r\nEXHIBIT \"E\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent 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 Other Support Services Food Services Operation \r\nCapital Outlay Debt Services \r\nPrincipal Interest \r\nTotal Expenditures \r\nRevenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nTransfers In Transfers Out \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\n \r\nGENERAL FUND \r\n \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 3,043,774.09 $ 20,156.52 \r\n2,961,546.95 1,048,903.59 \r\n38,745.58 2,016.39 \r\n16,195.94 \r\n7,131,339.06 \r\n \r\n- $ 529,890.50 \r\n45,861.85 - \r\n575,752.35 \r\n \r\n- $ 107.24 - \r\n107.24 \r\n \r\n3,043,774.09 550,047.02 \r\n2,961,546.95 1,048,903.59 \r\n38,745.58 47,985.48 16,195.94 \r\n7,707,198.65 \r\n \r\n3,876,865.61 \r\n399,935.00 278,490.45 \r\n88,433.47 446,608.86 424,285.00 103,955.93 686,444.89 650,330.58 \r\n37,211.00 524,499.04 \r\n- \r\n- \r\n7,517,059.83 \r\n(385,720.77) \r\n \r\n- \r\n433,195.51 \r\n- \r\n433,195.51 \r\n142,556.84 \r\n \r\n- \r\n- \r\n390,000.00 101,715.84 \r\n491,715.84 \r\n(491,608.60) \r\n \r\n3,876,865.61 \r\n399,935.00 278,490.45 \r\n88,433.47 446,608.86 424,285.00 103,955.93 686,444.89 650,330.58 \r\n37,211.00 524,499.04 433,195.51 \r\n390,000.00 101,715.84 \r\n8,441,971.18 \r\n(734,772.53) \r\n \r\n(643,077.32) \r\n(643,077.32) \r\n(1,028,798.09) \r\n2,664,592.34 \r\n \r\n(290,590.59) \r\n(290,590.59) \r\n(148,033.75) \r\n4,433,899.25 \r\n \r\n932,269.24 - \r\n932,269.24 \r\n440,660.64 \r\n88,350.47 \r\n \r\n932,269.24 (933,667.91) \r\n(1,398.67) \r\n(736,171.20) \r\n7,186,842.06 \r\n \r\nFund Balances - Ending \r\n \r\n$ 1,635,794.25 $ 4,285,865.50 $ \r\n \r\n529,011.11 $ 6,450,670.86 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF \r\nREVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2018 \r\n \r\nEXHIBIT \"F\" \r\n \r\nNet change in fund balances total governmental funds (Exhibit \"E\") \r\nAmounts reported for governmental activities in the Statement of Activities are different because: \r\nGovernmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of capital assets is allocated over their estimated useful lives as depreciation expense. \r\nCapital outlay Depreciation expense \r\nThe net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, donations, and disposals) is to increase net position. \r\nTaxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. \r\nThe issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts and the difference between the carrying value of refunded debt and the acquisition cost of refunded debt when debt is first issued. These amounts are deferred and amortized in the Statement of Activities. \r\nBond principal retirements Amortization of bond premiums \r\nDistrict pension contributions are reported as expenditures in the governmental funds when made. However, they are reported as deferred outflows of resources in the Statement of Net Position because the reported net pension/OPEB liability is measured a year before the District's report date. Pension/OPEB expense, which is the change in the net pension/OPEB liability adjusted for changes in deferred outflows and inflows of resources related to pensions/OPEB, is reported in the Statement of Activities. \r\nPension expense OPEB expense \r\nSome items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. \r\nAccrued interest on issuance of bonds \r\n \r\n$ \r\n \r\n(736,171.20) \r\n \r\n$ \r\n \r\n691,068.26 \r\n \r\n(327,434.57) \r\n \r\n363,633.69 160,208.53 430,307.92 \r\n \r\n$ \r\n \r\n390,000.00 \r\n \r\n32,690.00 \r\n \r\n422,690.00 \r\n \r\n$ \r\n \r\n100,581.19 \r\n \r\n(131,865.00) \r\n \r\n(31,283.81) \r\n \r\n(30,441.67) \r\n \r\nChange in net position of governmental activities (Exhibit \"B\") \r\n \r\n$ \r\n \r\n578,943.46 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 6 - \r\n \r\n ASSETS Cash and Cash Equivalents Receivables, Net \r\nOther \r\nTotal Assets LIABILITIES Cash Overdraft Funds Held for Others \r\nTotal Liabilities NET POSITION Held in Trust for Private Purposes \r\n \r\nTALBOT COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS JUNE 30, 2018 \r\n \r\nEXHIBIT \"G\" \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\nAGENCY FUNDS \r\n \r\n$ \r\n \r\n2,809.26 $ \r\n \r\n- \r\n \r\n- \r\n \r\n11,989.82 \r\n \r\n$ \r\n \r\n2,809.26 $ \r\n \r\n11,989.82 \r\n \r\n$ \r\n \r\n1,849.49 \r\n \r\n10,140.33 \r\n \r\n$ \r\n \r\n11,989.82 \r\n \r\n$ \r\n \r\n2,809.26 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS YEAR ENDED JUNE 30, 2018 \r\nADDITIONS Investment Earnings Interest \r\nDEDUCTIONS None Reported Change in Net Position \r\nNet Position - Beginning \r\nNet Position - Ending \r\n \r\nEXHIBIT \"H\" \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\n$ \r\n \r\n13.10 \r\n \r\n13.10 2,796.16 \r\n \r\n$ \r\n \r\n2,809.26 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY \r\nREPORTING ENTITY \r\nThe Talbot County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a 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. \r\nNOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nThe accompanying financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the School District's accounting policies are described below. \r\nBASIS OF PRESENTATION \r\nThe School District's basic financial statements are collectively comprised of the government-wide financial statements, fund financial statements and notes to the basic financial statements. The government-wide statements focus on the School District as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information's usefulness. \r\nGOVERNMENT-WIDE STATEMENTS: \r\nThe Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. \r\nThe Statement of Net Position presents the School District's non-fiduciary assets and liabilities, with the difference reported as net position. Net position is reported in three categories as follows: \r\n1. Net investment in capital assets consists of the School District's total investment in capital assets, net of accumulated depreciation, and reduced by outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets. \r\n2. Restricted net position consists of resources for which the School District is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties or imposed by law through constitutional provisions or enabling legislation. \r\n3. Unrestricted net position consists of resources not meeting the definition of the two preceding categories. Unrestricted net position often has constraints on resources imposed by management which can be removed or modified. \r\nThe Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. \r\nDirect expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. \r\n \r\n- 9 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nProgram revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. \r\nFUND FINANCIAL STATEMENTS \r\nThe fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate financial statements are presented for governmental and fiduciary funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. \r\nThe School District reports the following major governmental funds: \r\n The general fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund. \r\n The capital projects fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) and bond proceeds that are restricted, committed or assigned for capital outlay expenditures, including the acquisition or construction of capital facilities and other capital assets. \r\n The debt service fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest. \r\nThe School District reports the following fiduciary fund types: \r\n Private purpose trust funds are used to report all trust arrangements, other than those properly reported elsewhere, in which principal and income benefit individuals, private organizations or other governments. \r\n Agency funds are used to report resources held by the School District in a purely custodial capacity (assets equal liabilities) and do not involve measurement of results of operations. \r\nBASIS OF ACCOUNTING \r\nThe basis of accounting determines when transactions are reported on the financial statements. The government-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied. \r\nThe School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. \r\nGovernmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are \r\n- 10 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nrecorded when the related fund liability is incurred, except for principal and interest on general longterm debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. \r\nThe School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net resources available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. \r\nNEW ACCOUNTING PRONOUNCEMENTS \r\nIn fiscal year 2018, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. This statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed. The adoption of this statement has a significant impact on the School District's financial statements. As noted in the Restatement of Net Position note disclosure, the School District restated beginning net position for the cumulative effect of this accounting change. \r\nIn fiscal year 2018, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 81, Irrevocable Split-Interest Agreements. This statement requires that a government that receives resources pursuant to an irrevocable split-interest agreement recognize assets, liabilities, and deferred inflows of resources at the inception of the agreement. Furthermore, this statement requires that a government recognize assets representing its beneficial interests in irrevocable split-interest agreements that are administered by a third party, if the government controls the present service capacity of the beneficial interests. This statement requires that a government recognize revenue when the resources become applicable to the reporting period. The adoption of this statement did not have an impact on the School District's financial statements. \r\nIn fiscal year 2018, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 85, Omnibus 2017. The objective of this statement is to address practice issues that have been identified during implementation and application of certain GASB Statements. This statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits [OPEB]). The adoption of this statement did not have an impact on the School District's financial statements. \r\nIn fiscal year 2018, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 86, Certain Debt Extinguishment Issues. The primary objective of this statement is to improve consistency in accounting and financial reporting for in-substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources--resources other than the proceeds of refunding debt--are placed in an irrevocable trust for the sole purpose of extinguishing debt. This statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. The adoption of this statement did not have an impact on the School District's financial statements. \r\nCASH AND CASH EQUIVALENTS \r\nCash and cash equivalents consist of cash on hand, demand deposits, investments in the State of Georgia local government investment pool (Georgia Fund 1) and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. \r\n- 11 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nOfficial Code of Georgia Annotated (O.C.G.A.) 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. \r\nINVESTMENTS \r\nThe School District can invest its funds as permitted by O.C.G.A. 36-83-4. 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. \r\nInvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. All other investments are reported at fair value. \r\nFor accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired. \r\nRECEIVABLES \r\nReceivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. \r\nINVENTORIES \r\nFood Inventories \r\nOn the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (calculated on the first-in, first-out basis). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. \r\nCAPITAL ASSETS \r\nOn the government-wide financial statements, capital assets are recorded at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at acquisition value on the date donated. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. The School District does not capitalize book collections or works of art. \r\nCapital acquisition and construction are recorded as expenditures in the governmental fund financial statements at the time of purchase (including ancillary charges), and the related assets are reported as capital assets in the governmental activities column in the government-wide financial statements. \r\nDepreciation is computed using the straight-line for all assets, except land, and is used to allocate the actual or estimated historical cost of capital assets over estimated useful lives. \r\n \r\n- 12 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nCapitalization thresholds and estimated useful lives of capital assets reported in the government-wide statements are as follows: \r\n \r\nCapitalization Policy \r\n \r\nEstimated Useful Life \r\n \r\nLand \r\n \r\nLand Improvements \r\n \r\n$ \r\n \r\nBuildings and Improvements $ \r\n \r\nEquipment \r\n \r\n$ \r\n \r\nIntangible Assets \r\n \r\n$ \r\n \r\nAll 10,000.00 10,000.00 10,000.00 100,000.00 \r\n \r\nN/A 20 to 70 years up to 70 years \r\n5 to 25 years 15 to 50 years \r\n \r\nDEFERRED OUTFLOWS/INFLOWS OF RESOURCES \r\n \r\nIn addition to assets, the statement of financial position will report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. \r\n \r\nIn addition to liabilities, the statement of financial position will report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time. \r\nLONG-TERM LIABILITIES AND BOND DISCOUNTS/PREMIUMS \r\n \r\nIn the School District's government-wide financial statements, outstanding debt is reported as liabilities. Bond premiums and discounts and the difference between the reacquisition price and the net carrying value of refunded debt are deferred and amortized over the life of the bonds using the straight-line method. To conform to generally accepted accounting principles, bond premiums and discounts should be amortized using the effective interest method. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued. \r\n \r\nIn the governmental fund financial statements, the School District recognizes the proceeds of debt and premiums as other financing sources of the current period. Bond issuance costs are reported as debt service expenditures. \r\nPENSIONS \r\n \r\nFor purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. \r\nPOSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) \r\n \r\nFor purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Georgia School Employees Postemployment Benefit Fund (School OPEB Fund) and additions to/deductions from School OPEB Fund fiduciary net position have been determined on the same basis as they are reported by School OPEB Fund. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. \r\n \r\n- 13 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nFUND BALANCES \r\n \r\nFund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. \r\n \r\nThe School District's fund balances are classified as follows: \r\n \r\nNonspendable consists of resources that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact. \r\n \r\nRestricted consists of resources that can be used only for specific purposes pursuant constraints either (1) externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. \r\n \r\nCommitted consists of resources that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board. The Board is the School District's highest level of decisionmaking authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. \r\n \r\nAssigned consists of resources constrained by the School District's intent to be used for specific purposes but are neither restricted nor committed. The intent should be expressed by (1) the Board or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes. \r\n \r\nUnassigned consists of resources within the general fund not meeting the definition of any aforementioned category. The general fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance. \r\nUSE OF ESTIMATES \r\n \r\nThe preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. \r\nPROPERTY TAXES \r\n \r\nThe Talbot County Board of Commissioners adopted the property tax levy for the 2017 tax digest year (calendar year) on August 16, 2017 (levy date) based on property values as of January 1, 2017. Taxes were due on December 20, 2017 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2017 tax digest are reported as revenue in the governmental funds for fiscal year 2018. The Talbot County Tax Commissioner bills and collects the property taxes for the School District, withholds 1.25% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2018, for maintenance and operations amounted to $2,869,990.36. \r\n \r\nThe tax millage rate levied for the 2017 tax year (calendar year) for the School District was as follows (a mill equals $1 per thousand dollars of assessed value): \r\n \r\nSchool Operations \r\n \r\n14.05 mills \r\n \r\nAdditionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $173,783.73 during fiscal year ended June 30, 2018. \r\n \r\n- 14 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nSALES TAXES \r\nEducation Special Purpose Local Option Sales Tax (ESPLOST), at the fund reporting level, during the year amounted to $529,890.50 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. \r\nNOTE 3: BUDGETARY DATA \r\nThe budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general fund. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the general fund was prepared in accordance with accounting principles generally accepted in the United States of America. \r\nThe budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines, and a tentative budget is approved. 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, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of O.C.G.A. 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. \r\nThe Superintendent is authorized by the Board to approve adjustments of no more than five percent of the amount budgeted for expenditures in any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any budget function for any fund is anticipated to be more than five percent of the budgeted amount, the Superintendent shall request Board approval for the budget amendment. Under no circumstance is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board. \r\nSee the General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances  Budget to Actual in the Supplementary Information Section for a detail of any over/under expenditures during the fiscal year under review. \r\nNOTE 4: DEPOSITS AND CASH EQUIVALENTS \r\nCOLLATERALIZATION OF DEPOSITS \r\nO.C.G.A.  45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110% of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A.  45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110% of the daily pool balance. \r\nAcceptable security for deposits consists of any one of or any combination of the following: \r\n(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, \r\n(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, \r\n(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, \r\n- 15 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\n(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, \r\n \r\n(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, \r\n \r\n(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and \r\n \r\n(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 or securities guaranteed 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. \r\nCATEGORIZATION OF DEPOSITS \r\n \r\nCustodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2018, the School District had deposits with a carrying amount of $2,998,833.79, which includes $65,000.00 in Certificates of Deposits that are reported as investments, and a bank balance of $3,412,171.70. The bank balances insured by Federal depository insurance were $559,056.04 and the bank balances collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name were $2,853,115.66. \r\n \r\nReconciliation of cash and cash equivalents balances to carrying value of deposits: \r\n \r\nCash and cash equivalents Statement of Net Position Statement of Fiduciary Net Position \r\n \r\n$ 6,796,419.91 959.77 \r\n \r\nTotal cash and cash equivalents \r\n \r\n6,797,379.68 \r\n \r\nAdd: Deposits with original maturity of three months or more reported as investments \r\n \r\n65,000.00 \r\n \r\nLess: Investment pools reported as cash and cash equivalents \r\nGeorgia Fund 1 \r\n \r\n3,863,545.89 \r\n \r\nTotal carrying value of deposits - June 30, 2018 \r\n \r\n$ 2,998,833.79 \r\n \r\nCATEGORIZATION OF CASH EQUIVALENTS \r\nThe School District reported cash equivalents of $3,863,545.89 in Georgia Fund 1, a local government investment pool, which is included in the cash balances above. Georgia Fund 1 is not registered with the SEC as an investment company and does not operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share, which approximates fair value. The pool is an AAAf rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2018 was 10 days. \r\nGeorgia Fund 1, administered by the State of Georgia, Office of the State Treasurer, is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1, does \r\n \r\n- 16 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nnot provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report, which is publicly available at https://www.sao.georgia.gov/comprehensive-annual-financial-reports. \r\nNOTE 5: CAPITAL ASSETS \r\n \r\nThe following is a summary of changes in the capital assets for governmental activities during the fiscal year: \r\n \r\nBalances July 1, 2017 \r\n \r\nIncreases \r\n \r\nDecreases \r\n \r\nAdjustments \r\n \r\nBalances June 30, 2018 \r\n \r\nGovernmental Activities Capital Assets, Not Being Depreciated: \r\nLand Construction in Progress \r\n \r\n$ 354,857.93 $ 25,000.00 $ \r\n \r\n- \r\n \r\n385,475.51 \r\n \r\n- $ - \r\n \r\n- $ 379,857.93 \r\n \r\n- \r\n \r\n385,475.51 \r\n \r\nTotal Capital Assets Not Being Depreciated \r\n \r\n354,857.93 410,475.51 \r\n \r\n- \r\n \r\n- \r\n \r\n765,333.44 \r\n \r\nCapital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements \r\nLess Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements \r\n \r\n14,348,890.98 1,982,896.06 713,295.15 \r\n \r\n280,592.75 \r\n- \r\n \r\n287,972.17 - \r\n30,527.13 \r\n \r\n(0.51) (0.80) \r\n- \r\n \r\n14,060,918.30 2,263,488.01 682,768.02 \r\n \r\n2,651,027.34 1,631,825.31 \r\n473,260.15 \r\n \r\n216,114.41 83,079.72 28,240.44 \r\n \r\n282,461.36 - \r\n30,527.13 \r\n \r\n(199,636.24) 27,520.77 6,394.82 \r\n \r\n2,385,044.15 1,742,425.80 \r\n477,368.28 \r\n \r\nTotal Capital Assets, Being Depreciated, Net \r\n \r\n12,288,969.39 \r\n \r\n(46,841.82) \r\n \r\n5,510.81 165,719.34 12,402,336.10 \r\n \r\nGovernmental Activities Capital Assets - Net $ 12,643,827.32 $ 363,633.69 $ 5,510.81 $ 165,719.34 $ 13,167,669.54 \r\n \r\nCurrent year depreciation expense by function is as follows: \r\n \r\nInstruction Support Services \r\nGeneral Administration Maintenance and Operation of Plant Student Transportation Services Food Services \r\n \r\n$ 347.79 21,341.64 43,508.94 \r\n \r\n$ 253,835.96 \r\n65,198.37 8,400.24 \r\n \r\n$ 327,434.57 \r\n \r\nNOTE 6: INTERFUND TRANSFERS INTERFUND TRANFERS \r\n \r\nInterfund transfers for the year ended June 30, 2018, consisted of the following: \r\n \r\nTransfers to \r\n \r\nTransfers From \r\n \r\nGeneral Fund \r\n \r\nCapital Projects Fund \r\n \r\nDebt Service Fund \r\n \r\n$ \r\n \r\n641,678.65 $ \r\n \r\n290,590.59 \r\n \r\nAgency Fund \r\n \r\n1,398.67 \r\n \r\n- \r\n \r\n$ \r\n \r\n643,077.32 $ \r\n \r\n290,590.59 \r\n \r\n- 17 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nTransfers are used to move property tax revenues collected by the general fund and sales tax revenue collected by the capital projects fund to the debt service fund to pay debt service according to the approved SPLOST referendum. Also, transfers are used to move funds from student accounts in the general fund to student accounts in the agency fund. \r\nNOTE 7: LONG-TERM LIABILITIES \r\nThe changes in long-term liabilities during the fiscal year for governmental activities, were as follows: \r\n \r\nBalance July 1, 2017 \r\n \r\nGovernmental Activities \r\n \r\nBalance \r\n \r\nAdditions \r\n \r\nDeductions \r\n \r\nJune 30, 2018 \r\n \r\nDue Within One Year \r\n \r\nGeneral Obligation Bonds Unamortized Bond Premiums \r\n \r\n$ 4,300,000.00 $ 318,729.00 \r\n \r\n- $ 390,000.00 $ 3,910,000.00 $ 730,000.00 \r\n \r\n- \r\n \r\n32,690.00 \r\n \r\n286,039.00 \r\n \r\n32,690.00 \r\n \r\n$ 4,618,729.00 $ \r\n \r\n- $ 422,690.00 $ 4,196,039.00 $ 762,690.00 \r\n \r\nGENERAL OBLIGATION DEBT OUTSTANDING \r\n \r\nThe School District's bonded debt consists of various issues of general obligation bonds that are generally callable with interest payable semiannually. Bond proceeds primarily pay for acquiring or constructing capital facilities. The School District repays general obligation bonds from voter-approved sales taxes. General obligation bonds are direct obligations and pledge the full faith and credit of the School District. \r\n \r\nGeneral obligation bonds currently outstanding are as follows: \r\n \r\nDescription \r\n \r\nInterest Rates \r\n \r\nIssue Date \r\n \r\nMaturity Date \r\n \r\nAmount Issued \r\n \r\nAmount Outstanding \r\n \r\nGeneral Government - Series 2003 General Government - Series 2017 \r\n \r\n3.80% 2.00% - 4.00% \r\n \r\n1/14/2003 6/13/2017 \r\n \r\n8/1/2018 $ 3/1/2028 \r\n \r\n4,500,000.00 $ 3,500,000.00 \r\n \r\n410,000.00 3,500,000.00 \r\n \r\n$ 8,000,000.00 $ 3,910,000.00 \r\n \r\nThe following schedule details debt service requirements to maturity for the School District's total general obligation bonds payable: \r\n \r\nFiscal Year Ended June 30: \r\n \r\nGeneral Obligation Debt \r\n \r\nPrincipal \r\n \r\nInterest \r\n \r\nUnamortized Bond Premium \r\n \r\n2019 2020 2021 2022 2023 2024 - 2028 \r\n \r\n$ \r\n \r\n730,000.00 $ 117,640.00 $ \r\n \r\n325,000.00 \r\n \r\n103,450.00 \r\n \r\n330,000.00 \r\n \r\n96,950.00 \r\n \r\n340,000.00 \r\n \r\n87,050.00 \r\n \r\n345,000.00 \r\n \r\n76,850.00 \r\n \r\n1,840,000.00 \r\n \r\n213,500.00 \r\n \r\n32,690.00 32,690.00 32,690.00 32,690.00 32,690.00 122,589.00 \r\n \r\nTotal Principal and Interest \r\n \r\n$ 3,910,000.00 $ 695,440.00 $ \r\n \r\n286,039.00 \r\n \r\n- 18 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 8: RISK MANAGEMENT INSURANCE Commercial Insurance \r\n \r\nThe 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; and natural disasters. Except as described below, the School District carries commercial insurance for these risks. Settled claims resulting from these insured risks have not exceed commercial insurance coverage in any of the past three fiscal years. \r\n \r\nThe School District has elected to self-insure for losses related to natural disasters. The School District has not experienced any losses related to this risk in the past three years. WORKERS' COMPENSATION Georgia Education Workers' Compensation Trust \r\n \r\nThe School District participates in the Georgia Education Workers' Compensation Trust (the Trust), a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general workers' compensation insurance coverage. Specific excess of loss insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1.0 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2.0 million. The Trust covers the first $1.0 million of each Employers Liability claim with Safety National providing additional Employers Liability limits up to a $2.0 million per occurrence maximum. Safety National Casualty Company also provides $2.0 million in aggregate coverage to the Trust, attaching at 110% of the loss fund and based on the Fund's annual normal premium. \r\nUNEMPLOYMENT COMPENSATION \r\n \r\nThe School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the general fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. \r\n \r\nChanges in the unemployment compensation claims liability during the last two fiscal years are as follows: \r\n \r\nBeginning of Year Liability \r\n \r\nClaims and Changes in Estimates \r\n \r\nClaims Paid \r\n \r\nEnd of Year Liability \r\n \r\n2017 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\n2018 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n3,300.00 \r\n \r\n$ \r\n \r\n3,300.00 \r\n \r\n$ \r\n \r\n- \r\n \r\nSURETY BOND \r\n \r\nThe School District purchased surety bonds to provide additional insurance coverage as follows: \r\n \r\nPosition Covered \r\n \r\nAmount \r\n \r\nSuperintendent Finance Director Payroll Clerk \r\n \r\n$ \r\n \r\n30,000.00 \r\n \r\n$ \r\n \r\n10,000.00 \r\n \r\n$ \r\n \r\n10,000.00 \r\n \r\n- 19 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 9: FUND BALANCE CLASSIFICATION DETAILS \r\n \r\nThe School District's financial statements include the following amounts presented in the aggregate at June 30, 2018: \r\n \r\nNonspendable Inventories \r\nRestricted Continuation of Federal Programs Capital Projects Debt Service \r\nAssigned School Activity Accounts \r\nUnassigned \r\n \r\n$ \r\n \r\n6,595.06 \r\n \r\n$ 242,844.36 4,285,865.50 529,011.11 \r\n \r\n5,057,720.97 \r\n \r\n15,654.36 1,370,700.47 \r\n \r\nFund Balance, June 30, 2018 \r\n \r\n$ 6,450,670.86 \r\n \r\nWhen multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds. \r\nNOTE 10: SIGNIFICANT COMMITMENTS \r\nCOMMITMENTS UNDER CONSTRUCTION CONTRACTS \r\n \r\nThe following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2018: \r\n \r\nProject \r\n \r\nUnearned Executed Contracts (1) \r\n \r\nPayments through June 30, 2018 (2) \r\n \r\nAthletic Complex \r\n \r\n$ \r\n \r\n3,686,371.25 $ \r\n \r\n385,475.51 \r\n \r\n(1) The amounts described are not reflected in the basic financial statements. (2) Payments include contracts and retainages payable at year end. \r\nOPERATING LEASES \r\nThe School District leases copiers and a postage meter under the provisions of one or more long-term lease agreements classified as operating leases for accounting purposes. Rental expenditures under the terms of the operating leases totaled $8,162.79 for governmental activities for the year ended June 30, 2018. There were no operating lease payments due as of June 30, 2018. NOTE 11: SIGNIFICANT CONTINGENT LIABILITIES FEDERAL GRANTS \r\nAmounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. Any disallowances resulting from the grantor audit may become a liability of the School District. However, the School District believes that such disallowances, if any, will be immaterial to its overall financial position. \r\n \r\n- 20 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nLITIGATION \r\nThe School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable but is not believed to have a material adverse effect on the financial condition of the School District. \r\nNOTE 12: OTHER POST-EMPLOYMENT BENEFITS (OPEB) \r\nGEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND \r\nPlan Description: Certified teachers and non-certified public school employees of the School District as defined in 20-2-875 of the Official Code of Georgia Annotated (O.C.G.A.) are provided OPEB through the School OPEB Fund - a cost-sharing multiple-employer defined benefit postemployment healthcare plan, reported as an employee trust fund and administered by a Board of Community Health (Board). Title 20 of the O.C.G.A. assigns the authority to establish and amend the benefit terms of the group health plan to the Board. \r\nBenefits Provided: The School OPEB Fund provides healthcare benefits for retirees and their dependents due under the group health plan for public school teachers, including librarians, other certified employees of public schools, regional educational service agencies and non-certified public school employees. Retiree medical eligibility is attained when an employee retires and is immediately eligible to draw a retirement annuity from Employees' Retirement System (ERS), Georgia Judicial Retirement System (JRS), Legislative Retirement System (LRS), Teachers Retirement System (TRS) or Public School Employees Retirement System (PSERS). If elected, dependent coverage starts on the same day as retiree coverage. Medicare-eligible retirees are offered Standard and Premium Medicare Advantage plan options. Non-Medicare eligible retiree plan options include Health Reimbursement Arrangement (HRA), Health Maintenance Organization (HMO) and a High Deductible Health Plan (HDHP). The School OPEB Fund also pays for administrative expenses of the fund. By law, no other use of the assets of the School OPEB Fund is permitted. \r\nContributions: As established by the Board, the School OPEB Fund is substantially funded on a payas-you-go basis; that is, annual cost of providing benefits will be financed in the same year as claims occur. Contributions to the School OPEB Fund from the School District were $223,544.00 for the year ended June 30, 2018. Active employees are not required to contribute to the School OPEB Fund. \r\nOPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB \r\nAt June 30, 2018, the School District reported a liability of $5,421,880.00 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2017. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2016. An expected total OPEB liability as of June 30, 2017 was determined using standard roll-forward techniques. The School District's proportion of the net OPEB liability was actuarially determined based on employer contributions during the fiscal year ended June 30, 2017. At June 30, 2017, the School District's proportion was 0.038590%, which was an increase of 0.001779% from its proportion measured as of June 30, 2016. \r\n \r\n- 21 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nFor the year ended June 30, 2018, the School District recognized OPEB expense of $355,409.00. At June 30, 2018, the School District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: \r\n \r\nOPEB \r\n \r\nDeferred \r\n \r\nDeferred \r\n \r\nOutflows of \r\n \r\nInflows of \r\n \r\nResources \r\n \r\nResources \r\n \r\nDifferences between expected and actual \r\n \r\nexperience \r\n \r\n$ \r\n \r\n- $ \r\n \r\n- \r\n \r\nChanges of assumptions \r\n \r\n- \r\n \r\n412,863.00 \r\n \r\nNet difference between projected and actual \r\n \r\nearnings on OPEB plan investments \r\n \r\n1,586.00 \r\n \r\n- \r\n \r\nChanges in proportion and differences \r\n \r\nbetween School District contributions and \r\n \r\nproportionate share of contributions \r\n \r\n223,463.00 \r\n \r\n- \r\n \r\nSchool District contributions subsequent to \r\n \r\nthe measurement date \r\n \r\n223,544.00 \r\n \r\n- \r\n \r\nTotal \r\n \r\n$ 448,593.00 $ 412,863.00 \r\n \r\nSchool District contributions subsequent to the measurement date are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: \r\n \r\nYear Ended June 30: \r\n \r\nOPEB \r\n \r\n2019 2020 2021 2022 2023 2024 \r\n \r\n$ (33,668.00) $ (33,668.00) $ (33,668.00) $ (33,668.00) $ (34,065.00) $ (19,077.00) \r\n \r\n- 22 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nActuarial assumptions: The total OPEB liability as of June 30, 2017 was determined by an actuarial valuation as of June 30, 2016 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2017: \r\nOPEB: \r\n \r\nInflation \r\n \r\n2.75% \r\n \r\nSalary increases \r\n \r\nERS \r\n \r\n3.25% - 7.00%, including inflation \r\n \r\nJRS \r\n \r\n4.50%, including inflation \r\n \r\nLRS \r\n \r\nNone \r\n \r\nTRS \r\n \r\n3.25 -- 9.00%, including inflation \r\n \r\nPSERS \r\n \r\nN/A \r\n \r\nLong-term expected rate of return \r\n \r\n3.88%, compounded annually, net of investment expense, and including inflation \r\n \r\nHealthcare cost trend rate \r\n \r\nPre-Medicare Eligible \r\n \r\n7.75% \r\n \r\nMedicare Eligible \r\n \r\n5.75% \r\n \r\nUltimate trend rate \r\n \r\nPre-Medicare Eligible Medicare Eligible \r\n \r\n5.00% 5.00% \r\n \r\nYear of Ultimate trend rate \r\n \r\n2022 \r\n \r\nMortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB as follows: \r\n \r\n For ERS, JRS and LRS members: The RP-2000 Combined Mortality Table projected to 2025 \r\nwith projection scale BB and set forward 2 years or both males and females is used for the period after service retirement and for dependent beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB and set back 7 years for males and set forward 3 years for females is used for the period after disability retirement. \r\n For TRS members: The RP-2000 White Collar Mortality Table projected to 2025 with projection \r\nscale BB (set forward 1 year for males) is used for death after service retirement and beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward two years for males and four years for females) is used for death after disability retirement. \r\n For PSERS members: The RP-2000 Blue-Collar Mortality Table projected to 2025 with \r\nprojection scale BB (set forward 3 years for males and 2 years for females) is used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 5 years for both males and females) is used for the period after disability retirement. \r\n \r\nThe actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the pension systems, which covered the five-year period ending June 30, 2014. \r\nProjection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan \r\n- 23 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nmembers to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation. \r\n \r\nAdditionally, there was a change that affected measurement of the total OPEB liability since the prior measurement date. The methodology used to determine employee and retiree participation in the School OPEB Fund is based on their current or last employer payroll location. Current and former employees of public school districts, libraries, regional educational service agencies and community colleges are allocated to the School OPEB Fund irrespective of retirement system affiliation. In addition, the discount rate increased from 3.07% to 3.58%. \r\nThe long-term expected rate of return on OPEB plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: \r\n \r\nAsset Class \r\n \r\nTarget Allocation \r\n \r\nLong-Term Expected Real Rate of Return * \r\n \r\nLocal Government Investment Pool \r\n \r\n100.00% \r\n \r\n1.13% \r\n \r\n* Rate shown is net of the 2.75% assumed rate of inflation. \r\nDiscount Rate: In order to measure the total OPEB liability for the School OPEB Fund, a single equivalent interest rate of 3.58% was used as the discount rate. This is comprised mainly of the yield or index rate for 20 year tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.56% per the Bond Buyers Index). The projection of cash flows used to determine the discount rate assumed that contributions from members and from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2115. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be available to make OPEB payments for inactive employees through year 2029. Therefore, the calculated discount rate of 3.58% was applied to all periods of projected benefit payments to determine the total OPEB liability. \r\nSensitivity of the School District's proportionate share of the net OPEB liability to changes in the discount rate: The following presents the School District's proportionate share of the net OPEB liability calculated using the discount rate of 3.58%, as well as what the District's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.58%) or 1 percentage-point higher (4.58%) than the current discount rate: \r\n \r\nSchool District's proportionate share of the Net OPEB Liability \r\n \r\n1% Decrease (2.58%) \r\n \r\nCurrent Discount Rate (3.58%) \r\n \r\n1% Increase (4.58%) \r\n \r\n$ 6,437,511.00 $ \r\n \r\n5,421,880.00 $ 4,620,341.00 \r\n \r\n- 24 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nSensitivity of the School District's proportionate share of the net OPEB liability to changes in the healthcare cost trend rates: The following presents the School District's proportionate share of the net \r\nOPEB liability, as well as what the District's proportionate share of the net OPEB liability would be if it \r\nwere calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage- \r\npoint higher than the current healthcare cost trend rates: \r\n \r\nSchool District's proportionate share of the Net OPEB Liability \r\n \r\n1% Decrease \r\n \r\nCurrent Healthcare Cost Trend Rate \r\n \r\n1% Increase \r\n \r\n$ 4,494,120.00 $ \r\n \r\n5,421,880.00 $ 6,629,821.00 \r\n \r\nOPEB plan fiduciary net position: Detailed information about the OPEB plan's fiduciary net position is available in the Comprehensive Annual Financial Report which is publicly available at https://sao.georgia.gov/comprehensive-annual-financial-reports. \r\nNOTE 13: RETIREMENT PLANS \r\n \r\nThe School District participates in various retirement plans administered by the State of Georgia, as further explained below. \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) \r\nPlan Description: All teachers of the School District as defined in O.C.G.A 47-3-60 and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers Retirement System of Georgia issues a publicly available separate financial report that can be obtained at www.trsga.com/publications. \r\nBenefits Provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death. \r\nContributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2018. The School District's contractually required contribution rate for the year ended June 30, 2018 was 16.81% of annual School District payroll. For the current fiscal year, employer contributions to the pension plan were $585,757.42 from the School District. \r\nPUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS) \r\nPlan Description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs. \r\n- 25 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nBenefits Provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service. \r\nUpon retirement, the member will receive a monthly benefit of $14.75, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits. \r\nContributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. \r\nIndividuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current fiscal year contribution was $15,619.00. \r\nPension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions \r\nAt June 30, 2018, the School District reported a liability of $5,416,502.00 for its proportionate share of the net pension liability for TRS. \r\nThe net pension liability for TRS was measured as of June 30, 2017. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2016. An expected total pension liability as of June 30, 2017 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2017. \r\nAt June 30, 2017, the School District's TRS proportion was 0.029144%, which was an increase of 0.000650% from its proportion measured as of June 30, 2016. \r\nAt June 30, 2018, the School District did not have a PSERS liability for a proportionate share of the net pension liability because of a Special Funding Situation with the State of Georgia, which is responsible for the net pension liability of the plan. The amount of the State's proportionate share of the net pension liability associated with the School District is $77,602.00. \r\nThe PSERS net pension liability was measured as of June 30, 2017. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2016. An expected total pension liability as of June 30, 2017 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2017. \r\nFor the year ended June 30, 2018, the School District recognized pension expense of $485,166.00 for TRS and $15,640.00 for PSERS and revenue of $15,640.00 for PSERS. The revenue is support provided by the State of Georgia. \r\n \r\n- 26 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nAt June 30, 2018, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: \r\n \r\nTRS Deferred Outflows of Resources \r\n \r\nDeferred Inflows of Resources \r\n \r\nDifferences between expected and actual experience \r\n \r\n$ 202,611.00 $ \r\n \r\n20,441.00 \r\n \r\nChanges of assumptions \r\n \r\n118,736.00 \r\n \r\n- \r\n \r\nNet difference between projected and actual earnings on pension plan investments \r\n \r\n- \r\n \r\n37,275.00 \r\n \r\nChanges in proportion and differences between School District contributions and proportionate share of contributions \r\n \r\n90,302.00 \r\n \r\n271,698.00 \r\n \r\nSchool District contributions subsequent to the \r\n \r\nmeasurement date \r\n \r\n585,757.42 \r\n \r\n- \r\n \r\nTotal \r\n \r\n$ 997,406.42 $ 329,414.00 \r\n \r\nThe School District contributions subsequent to the measurement date are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: \r\n \r\nYear Ended June 30: \r\n \r\nTRS \r\n \r\n2019 2020 \r\n \r\n$ (143,280.00) $ 219,463.00 \r\n \r\n2021 \r\n \r\n$ 124,870.00 \r\n \r\n2022 2023 \r\n \r\n$ (124,297.00) $ 5,479.00 \r\n \r\nActuarial assumptions: The total pension liability as of June 30, 2017 was determined by an actuarial valuation as of June 30, 2016, using the following actuarial assumptions, applied to all periods included in the measurement: \r\n \r\nTeachers Retirement System: \r\n \r\nInflation \r\n \r\n2.75% \r\n \r\nSalary increases \r\n \r\n3.25%  9.00%, average, including inflation \r\n \r\nInvestment rate of return \r\n \r\n7.50%, net of pension plan investment expense, including inflation \r\n \r\nPost-retirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service requirements and dependent beneficiaries. The RP-2000 Disabled Mortality table with future mortality improvement projected to 2025 with Society of Actuaries' \r\n \r\n- 27 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\nprojection scale BB (set forward two years for males and four years for females) was used for the death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. \r\n \r\nThe actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009  June 30, 2014. \r\nPublic School Employees Retirement System: \r\n \r\nInflation \r\n \r\n2.75% \r\n \r\nSalary increases \r\n \r\nN/A \r\n \r\nInvestment rate of return \r\n \r\n7.50%, net of pension plan investment expense, including inflation \r\n \r\nPost-retirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected \r\nto 2025 with projection scale BB (set forward 3 years for males and 2 years for females) for the period after service retirements and for dependent beneficiaries. The RP-2000 Disabled Mortality projected \r\nto 2025 with projection scale BB (set forward 5 years for both males and females) was used for death \r\nafter disability retirement. There is a margin for future mortality improvement in the tables used by the \r\nSystem. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-11% less than the actual number of deaths that occurred during the study period for healthy retirees and 9-11% less than expected \r\nunder the selected table for disabled retirees. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. \r\n \r\nThe actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009  June 30, 2014. \r\n \r\nThe long-term expected rate of return on TRS and PSERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: \r\n \r\nAsset class \r\n \r\nTRS Target allocation \r\n \r\nPSERS Target allocation \r\n \r\nLong-term expected real rate of return* \r\n \r\nFixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks Alternative \r\n \r\n30.00% 39.80% \r\n3.70% 1.50% 19.40% 5.60% \r\n- \r\n \r\n30.00% 37.20% \r\n3.40% 1.40% 17.80% 5.20% 5.00% \r\n \r\n(0.50)% 9.00% 12.00% 13.50% 8.00% 12.00% 10.50% \r\n \r\nTotal \r\n \r\n100.00% \r\n \r\n100.00% \r\n \r\n* Rates shown are net of the 2.75% assumed rate of inflation \r\nDiscount Rate: The discount rate used to measure the total TRS and PSERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and PSERS pension plan's fiduciary net position was projected to be available to make all projected future benefit \r\n \r\n- 28 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2018 \r\n \r\nEXHIBIT \"I\" \r\n \r\npayments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. \r\nSensitivity of the School District's proportionate share of the net pension liability to changes in the discount rate: The following presents the School District's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the School District's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate: \r\n \r\nTeachers Retirement System: \r\nSchool District's proportionate share of the net pension liability \r\n \r\n1% Decrease (6.50%) \r\n \r\nCurrent Discount Rate \r\n(7.50%) \r\n \r\n1% Decrease (8.50%) \r\n \r\n$ 8,889,116.00 $ 5,416,502.00 $ 2,555,849.00 \r\n \r\nPension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS and PSERS financial report which is publicly available at www.trsga.com/publications and http://www.ers.ga.gov/formspubs/formspubs.html. \r\n \r\nNOTE 14: RESTATEMENT OF PRIOR YEAR NET POSITION \r\n \r\nFor fiscal year 2018, the School District made prior period adjustments due to the adoption of GASB Statement No. 75, as described in \"New Accounting Pronouncements\", which require the restatement of the June 30, 2017, net position in Governmental Activities. The result is a decrease in net position at July 1, 2017 of $5,254,285.00 This change is in accordance with generally accepted accounting procedures. \r\n \r\nNet Position, July 1, 2017 as previously reported \r\n \r\n$ 10,491,387.87 \r\n \r\nPrior Period Adjustment - Implementation of GASB No. 75: Net OPEB Liability (measurement date) \r\n \r\n(5,455,495.00) \r\n \r\nDeferred Outflows - School District's Contributions made during fiscal year 2017 \r\n \r\n201,210.00 \r\n \r\nNet Position, July 1, 2017, as restated \r\n \r\n$ \r\n \r\n5,237,102.87 \r\n \r\nNOTE 15: SUBSEQUENT EVENTS \r\nIn December 2019, a strain of coronavirus (COVID-19) began to spread worldwide, resulting in a severe impact on the United States economy in March 2020. The spread of COVID-19 has had a negative impact on virtually all businesses and individuals which comprise the tax base of all levels of government. \r\n \r\n- 29 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"1\" \r\n \r\nYear Ended \r\n \r\nSchool District's proportion of the net pension liability \r\n \r\nSchool District's proportionate share of the net pension liability \r\n \r\nState of Georgia's proportionate share of the net pension liability \r\nassociated with the School District \r\n \r\nTotal \r\n \r\nSchool District's covered payroll \r\n \r\nSchool District's proportionate share of the net pension liability as a percentage of its \r\ncovered payroll \r\n \r\nPlan fiduciary net position as a \r\npercentage of the total pension liability \r\n \r\n2018 2017 2016 2015 \r\n \r\n0.029144% $ 0.028494% $ 0.029732% $ 0.030388% $ \r\n \r\n5,416,502.00 $ 5,878,630.00 $ 4,526,402.00 $ 3,839,123.00 $ \r\n \r\n- \r\n \r\n$ 5,416,502.00 $ 3,346,411.50 \r\n \r\n- \r\n \r\n$ 5,878,630.00 $ 3,125,519.13 \r\n \r\n- \r\n \r\n$ 4,526,402.00 $ 3,138,384.64 \r\n \r\n- \r\n \r\n$ 3,839,123.00 $ 3,100,171.01 \r\n \r\n161.86% 188.08% 144.23% 123.84% \r\n \r\n79.33% 76.06% 81.44% 84.03% \r\n \r\nThis schedule is intended to show information for 10 years. Additional years will be displayed as they become available. \r\n \r\n- 31 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"2\" \r\n \r\nYear Ended \r\n \r\nSchool District's proportion of the net pension liability \r\n \r\nSchool District's proportionate share of the net pension liability \r\n \r\nState of Georgia's proportionate share of the net pension liability \r\nassociated with the School District \r\n \r\n2018 \r\n \r\n0.00% $ \r\n \r\n- \r\n \r\n$ \r\n \r\n77,602.00 $ \r\n \r\nTotal \r\n \r\nSchool District's covered payroll \r\n \r\nSchool District's proportionate share of the net pension liability as a percentage of its \r\ncovered payroll \r\n \r\nPlan fiduciary net position as a \r\npercentage of the total pension liability \r\n \r\n77,602.00 $ \r\n \r\n227,137.34 \r\n \r\nN/A \r\n \r\n85.69% \r\n \r\nThis schedule is intended to show information for 10 years. Additional years will be displayed as they become available. \r\n \r\n- 32 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY \r\nSCHOOL OPEB FUND FOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"3\" \r\n \r\nYear Ended \r\n \r\nSchool District's proportion of the net OPEB liability \r\n \r\nSchool District's proportionate share of the net OPEB liability \r\n(asset) \r\n \r\nState of Georgia's proportionate share of the net OPEB liability \r\nassociated with the School District \r\n \r\n2018 \r\n \r\n0.038590% $ \r\n \r\n5,421,880.00 $ \r\n \r\n- \r\n \r\nTotal \r\n \r\nSchool District's covered-employee \r\npayroll \r\n \r\nSchool District's proportionate share of the \r\nnet OPEB liability as a percentage of its covered- \r\nemployee payroll \r\n \r\nPlan fiduciary net position as a \r\npercentage of the total OPEB liability \r\n \r\n$ 5,421,880.00 $ \r\n \r\n3,174,208.92 \r\n \r\n170.81% \r\n \r\n1.61% \r\n \r\nThis schedule is intended to show information for 10 years. Additional years will be displayed as they become available. \r\n \r\n- 33 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION \r\nSCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"4\" \r\n \r\nYear Ended \r\n \r\nContractually required contribution \r\n \r\nContributions in relation to the contractually required contribution \r\n \r\nContribution deficiency (excess) \r\n \r\n2018 \r\n \r\n$ \r\n \r\n585,757.42 $ \r\n \r\n585,757.42 $ \r\n \r\n- \r\n \r\n2017 \r\n \r\n$ \r\n \r\n477,541.23 $ \r\n \r\n477,541.23 $ \r\n \r\n- \r\n \r\n2016 \r\n \r\n$ \r\n \r\n446,011.58 $ \r\n \r\n446,011.58 $ \r\n \r\n- \r\n \r\n2015 \r\n \r\n$ \r\n \r\n412,697.58 $ \r\n \r\n412,697.58 $ \r\n \r\n- \r\n \r\n2014 \r\n \r\n$ \r\n \r\n380,692.79 $ \r\n \r\n380,692.79 $ \r\n \r\n- \r\n \r\n2013 \r\n \r\n$ \r\n \r\n383,370.28 $ \r\n \r\n383,370.28 $ \r\n \r\n- \r\n \r\n2012 \r\n \r\n$ \r\n \r\n386,730.40 $ \r\n \r\n386,730.40 $ \r\n \r\n- \r\n \r\n2011 \r\n \r\n$ \r\n \r\n419,130.30 $ \r\n \r\n419,130.30 $ \r\n \r\n- \r\n \r\n2010 \r\n \r\n$ \r\n \r\n444,832.43 $ \r\n \r\n444,832.43 $ \r\n \r\n- \r\n \r\n2009 \r\n \r\n$ \r\n \r\n419,136.12 $ \r\n \r\n419,136.12 $ \r\n \r\n- \r\n \r\nSchool District's covered payroll \r\n$ 3,484,577.21 $ 3,346,411.50 $ 3,125,519.13 $ 3,138,384.64 $ 3,100,171.01 $ 3,359,949.87 $ 3,761,968.87 $ 4,077,143.00 $ 4,567,068.07 $ 4,516,553.02 \r\n \r\nContribution as a percentage of covered \r\npayroll \r\n16.81% 14.27% 14.27% 13.15% 12.28% 11.41% 10.28% 10.28% \r\n9.74% 9.28% \r\n \r\n- 34 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION \r\nSCHEDULE OF CONTRIBUTIONS SCHOOL OPEB FUND \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"5\" \r\n \r\nYear Ended \r\n \r\nContractually required contribution \r\n \r\nContributions in relation to the contractually required contribution \r\n \r\nContribution deficiency (excess) \r\n \r\n2018 \r\n \r\n$ \r\n \r\n223,544.00 $ \r\n \r\n223,544.00 $ \r\n \r\n- \r\n \r\nSchool District's covered-employee \r\npayroll \r\n$ 3,374,356.11 \r\n \r\nContribution as a percentage of covered- \r\nemployee payroll \r\n6.62% \r\n \r\nThis schedule is intended to show information for 10 years. Additional years will be displayed as they are available. \r\n \r\n- 35 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION \r\nFOR THE YEAR ENDED JUNE 30, 2018 \r\n \r\nSCHEDULE \"6\" \r\n \r\nTeachers Retirement System \r\nChanges of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP 2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience. \r\nOn November 18, 2-015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. The expectation of retired life mortality was changed to RP 2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males). \r\nPublic School Employees Retirement System \r\nChanges of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP 2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more FORVHO\\UHIOHFWDFWXDOH[SHULHQFH \r\nOn-December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement and withdrawal. The expectation of retired life mortality was changed to the RP 2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females). \r\nSchool OPEB Fund \r\nChanges of benefit terms: In June 30, 2010 actuarial valuation, there was a change of benefit terms to require Medicare-eligible recipients to enroll in a Medicare Advantage plan to receive the State subsidy. \r\nChanges in assumptions: In the revised June 30, 2017 actuarial valuation, there was a change relating to employee allocation. Employees were previously allocated based on their Retirement System membership, and currently employees are allocated based on their current employer payroll location. \r\nIn the June 30, 2015 actuarial valuation, decremental and underlying inflation assumptions were changed to reflect the Retirement Systems' experience studies. \r\nIn the June 30, 2012 actuarial valuation, a data audit was performed and data collection procedures and assumptions were changed. \r\n \r\n- 36 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND \r\nSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL \r\nYEAR ENDED JUNE 30, 2018 \r\n \r\nSCHEDULE \"7\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent 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 \r\nTotal Expenditures \r\nExcess of Revenues (under) Expenditures \r\nOTHER FINANCING USES \r\nOther Uses \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\nAdjustments \r\nFund Balances - Ending \r\n \r\nNONAPPROPRIATED BUDGETS \r\n \r\nORIGINAL (1) \r\n \r\nFINAL (1) \r\n \r\nACTUAL AMOUNTS \r\n \r\nVARIANCE OVER/UNDER \r\n \r\n$ 3,458,163.33 $ 3,458,163.33 $ \r\n \r\n2,825.00 \r\n \r\n2,825.00 \r\n \r\n2,868,873.86 \r\n \r\n2,946,093.86 \r\n \r\n1,390,203.00 \r\n \r\n1,372,204.00 \r\n \r\n31,500.00 \r\n \r\n31,500.00 \r\n \r\n715.60 \r\n \r\n715.60 \r\n \r\n80,456.00 \r\n \r\n80,456.00 \r\n \r\n7,832,736.79 \r\n \r\n7,891,957.79 \r\n \r\n3,043,774.09 $ 20,156.52 \r\n2,961,546.95 1,048,903.59 \r\n38,745.58 2,016.39 \r\n16,195.94 \r\n7,131,339.06 \r\n \r\n(414,389.24) 17,331.52 15,453.09 \r\n(323,300.41) 7,245.58 1,300.79 \r\n(64,260.06) \r\n(760,618.73) \r\n \r\n4,456,274.46 \r\n419,528.20 324,027.00 103,974.00 384,547.13 403,309.00 \r\n94,790.00 599,233.00 430,770.00 \r\n13,280.00 27,000.00 576,004.00 \r\n7,832,736.79 \r\n- \r\n \r\n4,417,597.37 \r\n461,012.20 372,178.00 103,974.00 384,166.78 403,309.00 \r\n94,790.00 599,233.00 682,594.00 \r\n27,000.00 551,004.00 \r\n8,096,858.35 \r\n(204,900.56) \r\n \r\n3,876,865.61 \r\n399,935.00 278,490.45 \r\n88,433.47 446,608.86 424,285.00 103,955.93 686,444.89 650,330.58 \r\n37,211.00 524,499.04 \r\n7,517,059.83 \r\n(385,720.77) \r\n \r\n540,731.76 \r\n61,077.20 93,687.55 15,540.53 (62,442.08) (20,976.00) (9,165.93) (87,211.89) 32,263.42 \r\n(10,211.00) 26,504.96 \r\n579,798.52 \r\n(180,820.21) \r\n \r\n- \r\n \r\n- \r\n \r\n(643,077.32) \r\n \r\n(643,077.32) \r\n \r\n- \r\n \r\n(204,900.56) \r\n \r\n(1,028,798.09) \r\n \r\n(823,897.53) \r\n \r\n- \r\n \r\n3,018,165.63 \r\n \r\n2,664,592.34 \r\n \r\n(353,573.29) \r\n \r\n- \r\n \r\n(549.45) \r\n \r\n- \r\n \r\n549.45 \r\n \r\n$ \r\n \r\n- $ 2,812,715.62 $ \r\n \r\n1,635,794.25 $ (1,176,921.37) \r\n \r\nNotes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual \r\n(1) Original and final budget amounts do not include the budgeted revenues or expenditures of the various principal accounts. \r\nThe accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 37 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\nYEAR ENDED JUNE 30, 2018 \r\n \r\nSCHEDULE \"8\" \r\n \r\nFUNDING AGENCY PROGRAM/GRANT \r\nAgriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program \r\nTotal Child Nutrition Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Food Services Fresh Fruit and Vegetable Program \r\nTotal U. S. Department of Agriculture \r\nEducation, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Grants to States \r\nTotal Special Education Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Supporting Effective Instruction State Grants Supporting Effective Instruction State Grants Rural Education Student Support and Academic Enrichment Program Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies \r\nTotal Other Programs \r\nTotal U. S. Department of Education \r\nDefense, U. S. Department of Direct Department of the Army R.O.T.C. Program \r\n \r\nCFDA NUMBER \r\n \r\nPASSTHROUGH \r\nENTITY ID \r\nNUMBER \r\n \r\nEXPENDITURES IN PERIOD \r\n \r\n10.553 10.555 \r\n \r\n18185GA324N1099 $ 18185GA324N1100 \r\n \r\n152,971.28 343,349.89 \r\n496,321.17 \r\n \r\n10.582 \r\n \r\n185GA324L1603 \r\n \r\n11,967.20 508,288.37 \r\n \r\n84.027 84.027 \r\n \r\nH027A160073 H027A170073 \r\n \r\n84.048 84.367 84.367 84.358 84.424A 84.010 84.010 \r\n \r\nV048A170010 S367A160001 S367A170001 S365B170010 S424A170011 S010A160010 S010A170010 \r\n \r\n12.UNKNOWN \r\n \r\n31,475.79 82,684.06 114,159.85 \r\n1,860.19 10,966.85 \r\n6,251.91 841.28 \r\n3,283.39 111,397.77 252,202.61 386,804.00 500,963.85 \r\n72,125.88 \r\n \r\nTotal Expenditures of Federal Awards \r\n \r\n$ \r\n \r\n1,081,378.10 \r\n \r\nNotes to the Schedule of Expenditures of Federal Awards \r\nNote 1. Basis of Presentation \r\nThe accompanying schedule of expenditures of federal awards (the \"Schedule\") includes the federal award activity of the Talbot County Board of Education (the \"Board\") under programs of the federal government for the year ended June 30, 2018. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Board, it is not intended to and does not present the financial position or changes in net position of the Board, it is not intended to and does not present the financial position or changes in net position of the School District. \r\nNote 2. Summary of Significant Accounting Policies \r\nExpenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. \r\nNote 3: Indirect Cost Rate \r\nThe Board has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 38 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2018 \r\nAGENCY/FUNDING \r\nGRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program \r\nEducation, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Principal Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Mid-term Adjustment Hold-Harmless Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Sparsity Other State Programs Food Services Math and Science Supplements Pupil Transportation - State Bonds Vocational Education \r\nOffice of the State Treasurer Public School Employees Retirement \r\n \r\nSCHEDULE \"9\" \r\n \r\nGOVERNMENTAL FUND TYPE GENERAL FUND \r\n \r\n$ \r\n \r\n78,287.67 \r\n \r\n146,446.00 329,721.00 \r\n35,282.00 149,856.00 \r\n48,984.00 259,897.00 233,381.00 \r\n68,194.00 420,843.00 \r\n(612.00) 49,478.00 18,031.00 46,426.00 14,700.00 \r\n7,448.00 215.00 \r\n253,890.00 112,429.00 \r\n97,337.00 2,678.00 \r\n(37,699.00) \r\n149,288.00 45,000.00 \r\n294,178.00 \r\n12,533.00 3,502.86 \r\n77,220.00 28,993.42 \r\n15,619.00 \r\n \r\n$ \r\n \r\n2,961,546.95 \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 39 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS \r\nYEAR ENDED JUNE 30, 2018 \r\n \r\nSCHEDULE \"10\" \r\n \r\nPROJECT \r\n \r\nORIGINAL ESTIMATED \r\nCOST (1) \r\n \r\n(1) Adding to, constructing, renovating, \r\n \r\nfurnishing, and/or equipping an athletic \r\n \r\ncomplex and related facilities, including \r\n \r\na stadium, a track, softball field and \r\n \r\nany related lighting; (2) acquiring \r\n \r\nequipment for physical education and \r\n \r\nthe athletic departments; (3) acquiring \r\n \r\nsafety, security and/or fire protection \r\n \r\nequipment; (4) acquiring buses, vehicles, \r\n \r\nand/or transportation equipment: and/or; \r\n \r\n(5) acquiring property. \r\n \r\n$ 2,800,000.00 $ \r\n \r\nCURRENT ESTIMATED COSTS (2) \r\n \r\nAMOUNT EXPENDED IN CURRENT \r\nYEAR (3) \r\n \r\n3,500,000.00 $ \r\n \r\n433,195.51 $ \r\n \r\nAMOUNT EXPENDED IN PRIOR YEARS (3) \r\n- $ \r\n \r\nTOTAL COMPLETION \r\nCOST \r\n \r\nEXCESS PROCEEDS NOT \r\nEXPENDED \r\n \r\n- $ \r\n \r\n- \r\n \r\nESTIMATED COMPLETION \r\nDATE \r\n3/1/2028 \r\n \r\n(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. \r\n(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion. \r\n(3) The voters of Talbot County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 41 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400 \r\n \r\nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED \r\nIN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\nWe have audited, in accordance with the 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, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Talbot County Board of Education (School District), as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements, and have issued our report thereon dated July 27, 2021. We were unable to obtain sufficient appropriate audit evidence to substantiate the balances for the aggregate remaining fund information and, therefore, we did not express an opinion on this information. \r\nInternal Control Over Financial Reporting \r\nIn planning and performing our audit of the financial statements, we considered the School District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control. \r\nOur consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we did identify certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies. \r\nA deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS 2018-001, FS 2018-002, and FS 2018-006 to be material weaknesses. \r\n \r\n (This page left intentionally blank) \r\n \r\n A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS 2018-003, FS 2018-004, and FS 2018-005 to be significant deficiencies. \r\nCompliance and Other Matters \r\nAs part of obtaining reasonable assurance about whether the School District's financial statements are free from material misstatements, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our engagement, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. \r\nSchool District's Response to Findings \r\nThe School District's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the engagement to audit of the financial statements and, accordingly, we express no opinion on it. \r\nPurpose of this Report \r\nThe purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control or on compliance. This report is an integral part of an engagement to perform an audit performed in accordance with Government Auditing Standards in considering the School District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nJuly 27, 2021 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400 \r\n \r\nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE \r\nReport on Compliance for Each Major Federal Program \r\nWe have audited the Talbot County Board of Education's (School District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2018. The School District's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. \r\nManagement's Responsibility \r\nManagement is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. \r\nAuditor's Responsibility \r\nOur responsibility is to express an opinion on compliance for each of the School District's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. \r\nWe believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the School District's compliance. \r\n \r\n (This page left intentionally blank) \r\n \r\n Basis for Qualified Opinion on Title I Grants Local Educational Agencies (CFDA 84.010) \r\nAs described in the accompanying Schedule of Findings and Questioned Costs, the School District did not comply with requirements regarding Title I Grants to Local Educational Agencies (CFDA 84.010) as described in items FA 2018-001 for Cash Management and FA 2018-004 for Special Tests and Provisions. Compliance with such requirements is necessary, in our opinion, for the School District to comply with requirements applicable to that program. \r\nQualified Opinion on Title I Grants Local Educational Agencies (CFDA 84.010) \r\nIn our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the School District complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on Title I Grants to Local Educational Agencies (CFDA 84.010) for the year ended June 30, 2018. \r\nUnmodified Opinion on the Other Major Program \r\nIn our opinion, the School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its other major federal program identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs for the year ended June 30, 2018. \r\nOther Matters \r\nThe School District's response to the noncompliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. \r\nReport on Internal Control over Compliance \r\nManagement of the School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control over compliance. \r\nOur consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses and significant deficiencies. \r\nA deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such \r\n \r\n (This page left intentionally blank) \r\n \r\n that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as items as FA 2018-001 and FA 2018-004 to be material weaknesses. \r\nA significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as items FA 2018-002 and FA 2018-003 to be significant deficiencies. \r\nThe School District's response to the internal control over compliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. \r\nThe purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nJuly 27, 2021 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 7301-13-01 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2014-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2015-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2016-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Control Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2017-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Control Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe Finance Director will meet with all parties involved to discuss the findings, examine our current procedure, and seek ways to diminish all the risks. We will make adjustments to procedures as needed. We will meet periodically to share ideas, discuss adjustments to procedures and provide additional training. \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 7301-13-02 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2014-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2015-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2016-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2017-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe School District has hired a new Finance/Business Director that will review the current accounting procedures and ensure that internal controls are in place. In addition, the School District has received quotes in reference to purchasing a new software that will be implemented for school accounting that has features to eliminate issues with school level purchases. The Business/Finance Director will meet periodically to share ideas, discuss adjustments to procedures (if any), and provide additional training, if needed. \r\n \r\nFS 7301-13-05 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls over Employee Compensation Employee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2014-004 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls over Employee Compensation Employee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2015-004 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInadequate Internal Controls over Employee Compensation Employee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2016-003 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Employee Compensation Employee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2017-003 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Employee Compensation Employee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe Board will ensure that internal controls are established, implemented, and functioning at the system level to adequately address controls over employee compensation procedures and ensure that all said employee compensation is properly calculated. \r\n \r\nFS 7301-13-06 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nFailure to Adequately Maintain Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2014-005 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nFailure to Adequately Maintain Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2015-005 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nFailure to Adequately Maintain Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2016-004 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nFS 2017-004 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPartially Resolved \r\n \r\nAdditional resources will be committed as well as controls designed and implemented to the capital asset inventory management process to ensure records are properly maintained. Further, the School District is in the process of implementing a better control system to assist with the capital asset activity. \r\n \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2016-005 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls at the Central Office Accounting Controls (Overall) Expenditures/Liabilities/Disbursements Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2017-005 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls at the Central Office Accounting Controls (Overall) Expenditures/Liabilities/Disbursements Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe School District has hired a new Chief Financial Officer to oversee the accounting procedures and ensure that internal controls are in place. In addition, the School District will review the current accounting procedures and controls and will implement procedures to help strengthen the internal controls. \r\n \r\nFS 2016-006 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Financial Reporting Financial Reporting Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2017-006 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Financial Reporting Financial Reporting Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe School District has hired a new Chief Financial Officer to oversee the accounting procedures and ensure that internal controls are in place. In addition, the School District will review the current accounting procedures and controls and will implement procedures to help strengthen the internal controls. \r\n \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2014-003 \r\n \r\nInadequate Control Over the Cash Management Process \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFA 2015-002 \r\n \r\nControls Over the Cash Management Process \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFA 2016-001 \r\n \r\nImprove Controls Over the Cash Management Process \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFA 2017-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nImprove Controls Over the Cash Management Process Cash Management Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nManagement has implemented procedures to monitor the cash monthly balances for all programs when requesting reimbursement for federal and state programs. \r\n \r\n- 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2016-002 Compliance Requirement: \r\nInternal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nControls Over Expenditures Activities Allowed or Unallowed Allowable Costs/Cost Principles Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies 10.553 and 10.555 Child Nutrition Cluster \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFA 2017-001 Compliance Requirement: \r\nInternal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nImprove Controls Over Expenditures Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies 10.553 and 10.555 Child Nutrition Cluster \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFA 2016-003 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nImprove Controls over Equipment Equipment and Real Property Management Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education 10.553 and 10.555 Child Nutrition Cluster \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2017-003 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nImprove Controls over Equipment Equipment and Real Property Management Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education 10.553 and 10.555 Child Nutrition Cluster \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nControls will be designed and implemented to ensure complete and accurate tracking of equipment to include physical inventory audits in accordance with federal regulations, 2 CFR 200.313. In addition, the School District will review the current procedure and control to ensure this control is properly maintained and communicate the difficulties (if any) that exist between the responsible parties of purchasing equipment, labeling equipment, performance of annual inventory, and recording equipment items on listings. \r\n \r\nFA 2017-004 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nStrengthen Controls over Financial Reporting Reporting Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFA 2017-005 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nImprove Controls over the Schoolwide Program Special Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe School District will evaluate and implement their internal control processes regarding operation of a schoolwide program and formation of the schoolwide plan. The School District will then modify or develop procedures to ensure that an annual evaluation of results achieved by the schoolwide program is performed and the schoolwide plan is revised appropriately based upon these results. Management will develop and implement a monitoring process to ensure that these procedures are properly implemented. \r\n \r\n- 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2017-006 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nStrengthen Controls over Consultation with Private School Officials Special Tests and Provisions Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Education Agencies \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe School District will review current internal control procedures related to consultation with private school officials. The School District will develop and/or modify its policies and procedures to ensure that timely and meaningful consultation occurs with private school officials and that services are provided to eligible private school children. Management will develop and implement a monitoring process to ensure that controls are operating appropriately. \r\n \r\n- 9 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION IV FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2018 \r\n \r\nI SUMMARY OF AUDITOR'S RESULTS \r\n \r\nFinancial Statements \r\n \r\nType of auditor's report issued: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund Aggregate Remaining Fund Information \r\n \r\nUnmodified Disclaimed \r\n \r\nInternal control over financial reporting: \r\n \r\n Material weaknesses identified? \r\n \r\nYes \r\n \r\n Significant deficiencies identified? \r\n \r\nYes \r\n \r\nNoncompliance material to financial statements noted: \r\n \r\nNo \r\n \r\nFederal Awards \r\n \r\nInternal Control over major programs: \r\n \r\n Material weaknesses identified? \r\n \r\nYes \r\n \r\n Significant deficiencies identified? \r\n \r\nYes \r\n \r\nType of auditor's report issued on compliance for major programs: Unmodified for all major programs except for Title I Grants to Local Educational Agencies, which was qualified. \r\n \r\nAny audit findings disclosed that are required to be reported in \r\n \r\naccordance with 2 CFR 200.516(a)? \r\n \r\nYes \r\n \r\nIdentification of major programs: \r\n \r\nCFDA Numbers \r\n \r\nName of Federal Program or Cluster \r\n \r\n10.553, 10.555 84.010 \r\n \r\nChild Nutrition Cluster Title I Grants to Local Educational Agencies \r\n \r\nDollar threshold used to distinguish between Type A and Type B programs: \r\n \r\n$750,000.00 \r\n \r\nAuditee qualified as low-risk auditee? \r\n \r\nNo \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2018 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2018-001 \r\n \r\nInternal Control Procedures \r\n \r\nControl Category: \r\n \r\nCash and Cash Equivalents \r\n \r\nInternal Control Impact: \r\n \r\nMaterial Weakness \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: \r\n \r\nFS 2017-001, FS 2016-001, FS 2015-001, FS 2014-001, \r\n \r\nFS 7301-13-01 \r\n \r\nDescription: \r\n \r\nThe accounting procedures of the School District were insufficient to provide adequate internal \r\n \r\ncontrols over the Cash and Cash Equivalents functions. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls over Cash and Cash Equivalents. \r\n \r\nCondition: The following Cash and Cash Equivalents related deficiencies were noted: \r\n Bank reconciliations were not performed by someone independent of the general ledger function. \r\n Misstatements were noted on Note Disclosure 4 for the carrying amount, the bank balance amount, the amount insured by Federal depository insurance, and the amount collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name. \r\n Two bank accounts were not properly reconciled to the June 30, 2018 general ledger balance.  Thirteen reconciliations lacked evidence of timely completion through completion dates for \r\nboth the preparer and approver.  One reconciliation lacked the preparers and approvers signature. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the cause was a direct result of the lack of time and resources to fully separate duties to ensure that internal controls were sufficient. \r\n \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over cash activity increases the risk significant misstatements could occur in the financial statements due to error or fraud. \r\n \r\nRecommendation: Management should take appropriate steps to ensure the time and resources are made available to implement controls over cash to ensure monthly bank reconciliations are performed accurately and in a timely manner by someone independent of the general ledger function. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2018 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2018-002 Control Category: \r\nInternal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over Agency Fund Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None FS 2017-002, FS 2016-002, FS 2015-002, FS 2014-002, FS 7301-13-02 \r\n \r\nDescription: The accounting procedures of the School District were not followed resulting in internal control weaknesses over Agency Fund accounts. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and provide reasonable assurance transactions are processed according to established procedures. \r\n \r\nCondition: The following deficiencies were noted with the School District's Agency Fund accounts: \r\n \r\nCash and Cash Equivalents  The CSS Internal School Funds account was not reconciled to the general ledger nor to the school activity ledger reports at June 30, 2018. \r\n \r\nRevenues/Receivables/Receipts  The deposit preparation function was not separated from the bank reconciliation and general ledger functions for school activity accounts.  No supporting receipt documentation was provided for the ten school activity receipts selected for review.  No supporting receipt documentation was provided for the three Family Connection grant receipts selected for review. \r\n \r\nExpenditures/Liabilities/Disbursements  Nine of the ten school activity account expenditures reviewed did not have evidence of review or approval.  Four of the ten school activity account expenditures reviewed were not supported by an invoice and/or the invoice did not equal the amount paid.  None of the ten school activity account expenditures had evidence of receipt of purchase.  No supporting expenditure documentation was provided for the thirteen Family Connection grant expenditures selected for review. \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2018 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nAccounting Controls (Overall)  For school activity accounts, the School District did not have a formal process for documenting agency fund sponsors, purpose of accounts, allowable activities of accounts, source of funds, and final disposition of funds related to individual agency fund accounts. \r\nGeneral Ledger  The School District did not record any fiscal year 2018 school activity account transactions on the general ledger or the financial statements. Supporting documentation provided by the School District to record school activity accounts was unreliable and inaccurate; therefore, it was not possible to determine if the balances at June 30, 2018 were materially correct. \r\nCause: In discussing these deficiencies with the School District, they stated that the internal control deficiencies related to school activity accounts occurred due to a shortage of personnel at the school and a failure of those personnel to follow the established policies and procedures due to lack of understanding. That resulted in necessary information not being recorded and located. \r\nEffect or Potential Effect: The lack of adequate controls increases the risk of theft, fraud, or misuse of School District resources that may result in errors and/or irregularities not being detected in a timely manner. Also, agency funds could be materially misstated. \r\nRecommendation: Management should take appropriate steps to ensure: \r\n The time and resources are made available to ensure proper separation of duties is established, \r\n proper approval process for disbursements is followed,  safe keeping of receipt documentation is implemented,  accounting processes are adequately monitored,  school activity accounts are properly classified,  financial statement amounts are reconciled to the schools' general ledger balances and bank \r\nstatement balance,  standard procedures are implemented over the depositing of funds,  amounts reported in consolidation spreadsheet for school activity accounts is accurate,  and agency fund accounts are properly documented. \r\nIn addition, the School District should ensure that balances are properly reflected in the general ledger and financial statements. \r\nViews of Responsible Officials: We concur with this finding. \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2018 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2018-003 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over Employee Compensation Employee Compensation Significant Deficiency None FS 2017-003, FS 2016-003, FS 2015-004, FS 2014-004, FS 7301-13-05 \r\n \r\nDescription: The accounting procedures of the School District did not provide adequate internal controls over employee compensation. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance employees are paid according to approved salary schedules and documentation is maintained to support the salary payments. \r\n \r\nCondition: Based on a review of employees' payroll records, the following deficiencies were noted: \r\n A review of employee compensation revealed instances where salaries and/or hourly payments were not properly supported by Board approved salary schedules. \r\n A review of employee compensation revealed that two employees were overpaid a total of $13,655.42 in comparison to their proper pay rates per Board approved salary scales and/or approved contacts. \r\n Extra pay documentation totaling $7,306.10 for two employees could not be located by School District personnel. \r\n \r\nCause: In discussing these deficiencies with the School District, they indicated that appropriate procedures to ensure salary amounts are supported by adequate documentation had not been implemented. \r\n \r\nEffect or Potential Effect: The failure to maintain adequate internal controls over employee compensation increases the risk that misstatements could occur in the financial statements due to error or fraud. \r\n \r\nRecommendation: The School District should implement policies and procedures to ensure normal business procedures are followed for all salaries, which includes ensuring salaries are paid according to approved salary schedules and adequate documentation is maintained to support the salary payments. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2018 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2018-004 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over Capital Assets Capital Assets Significant Deficiency None FS 2017-004, FS 2016-004, FS 2015-005, FS 2014-005, FS 7301-13-06 \r\n \r\nDescription: The School District did not adequately maintain the capital assets records. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that capital assets inventory reports are properly maintained. Chapter IV-7 Implementing a Capital Assets Management System of the Financial Management for Georgia Local Units of Administration provides that School Districts must establish capital asset policies, define system requirements, implement a capital asset system and maintain capital asset inventory reports. \r\n \r\nCondition: The School District's capital asset records revealed the following exceptions: \r\n Documentation of a physical inventory of capital assets was not provided.  Two items were listed that were below the capitalization threshold requirements in the School \r\nDistrict's policy.  A current year demolished building and improvements was not removed from the capital \r\nassets listing. The cost of the building improvements was $318,499.30 and the related accumulated depreciation totaled $312,988.49. An entry was proposed by auditors and accepted by the School District to remove the building and improvements. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the cause was a direct result of the lack of time and resources to fully monitor and implement procedures over capital assets which follow Board policy. \r\n \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over capital assets can lead to inaccurate internal and external reporting, as well as, noncompliance with generally accepted accounting principles. \r\n \r\nRecommendation: Management should take appropriate steps to ensure the time and resources are made available to implement controls over capital assets to ensure records are accurate and conform to the School District's approved capital asset policy. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\n- 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2018 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2018-005 Control Category: \r\nInternal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls at the Central Office Accounting Controls (Overall) Expenditures/Liabilities/Disbursements General Ledger Significant Deficiency None FS 2017-005, FS 2016-005 \r\n \r\nDescription: The accounting procedures of the School District did not provide adequate internal controls at the Central Office. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed appropriately. \r\n \r\nCondition: Accounting Controls (Overall) \r\n The School District does not have adequate logical access controls in place to ensure only appropriate users have access to significant financial applications and supporting infrastructure. We noted several users with access rights that exceeded their need to complete their assigned job functions. Further, the access granted did not adequately separate the functions of initiating, authorizing, and recording transactions, reconciliations, and maintaining the custody of assets. \r\n Inadequate physical access controls are in place over the server rooms. It was noted that the server room is unlocked during working hours. \r\n Proper anti-virus protection was not in place at the workstation level. For efficiency, IT personnel performs a full memory wipe and restore for any workstation that becomes compromised. This exposes the entity to unnecessary risk from cyber threats. \r\n There are no established written organizational standards or procedures over IT functions and key processes. Considering the School District has only one full time IT personnel, formal written procedures such as back-up policies, job scheduling, and IT risk assessment is crucial. \r\n Backup and recovery procedures for the student information system and school food service point of sale system are not adequate. \r\n There is no formal policy for managing user access to the financial application, student information system, and school food service point of sale system. \r\n The School District did not have adequate password policies over the network, student information system, and school food service point of sale system. \r\n \r\nExpenditures/Liabilities/Disbursements Our examination of twenty-five expenditures revealed the following deficiencies: \r\n Supporting documentation for six expenditure transactions selected for review could not be provided by the School District. \r\n \r\nGeneral Ledger Our examination of nineteen journal entries revealed the following deficiencies: \r\n Supporting documentation for three journal entries selected for review could not be provided by the School District. \r\n Seven journal entries lacked evidence of supervisory review and approval. \r\n \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2018 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCause: In discussing these deficiencies with School District, they stated that these issues were a result of management's failure to ensure that internal controls were established, implemented, and functioning. \r\n \r\nEffect or Potential Effect: Without satisfactory accounting controls and procedures in place, the School District could place itself in a position where potential misappropriation of assets could occur. In addition, the lack of proper controls impacts its reporting and financial position and results of operations. \r\n \r\nRecommendation: The School District should implement procedures to ensure that key accounting functions are appropriately separated and/or utilize management oversight for these incompatible activities. In addition, the School District should ensure server rooms are properly safeguarded and monitored, and adequate protection from cyber threats exists on all workstations. The School District should review accounting procedures in place and design and implement procedures relative to expenditures and journal entries to strengthen the internal controls over the accounting function. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFS 2018-006 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over Financial Reporting Financial Reporting Material Weakness None FS 2017-006, FS 2016-006 \r\n \r\nDescription: The School District did not have adequate controls in place over the financial statement reporting process to ensure all required activity was correctly included in the financial statement information presented for audit. The original financial statements, as presented for audit, contained numerous material and significant errors and omissions. \r\n \r\nCriteria: Management is responsible for having adequate controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). The School District's internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills, and experience to prepare GAAP based financial statements and include all disclosures as required by the Governmental Accounting Standards Board (GASB). \r\nGASB Statement No. 34, Basic Financial Statements  Management's Discussion and Analysis  for State and Local Governments (Statement), requires governments to present government-wide and fund financial statements as well as summary reconciliation of the (a) total governmental funds balances to the net position of governmental activities in the Statement of Net Position, and (b) total changes in governmental fund balances to the change in the net position of governmental activities in the Statement of Activities. In addition, the statement requires information about the government's major and nonmajor funds in the aggregate, to be provided in the fund financial statements. \r\n \r\n- 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2018 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nChapter II2, Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles. \r\nCondition: The following errors and omissions were noted in the School District's financial statement presented for audit: \r\n Capital projects fund expenditures, contracts payable, and retainages payable were understated by $148,323.30, $124,678.80, and $23,644.50, respectively. These misstatements were material to the capital projects fund. Adjustments to the financial statements were proposed by auditors and accepted by the School District. \r\n Capital projects fund SPLOST revenue, accounts receivables, and cash were overstated by $99,848.39, $37,308.61, and $62,539.78, respectively, due to posting errors. These misstatements were material to the capital projects fund. Adjustments to the financial statements were proposed by auditors and accepted by the School District. \r\n Agency fund cash and funds held for others were overstated by $11,989.82 due to the Family Connections grant being incorrectly recorded in the general fund. Adjustments to the financial statements were proposed by the auditors and accepted by the School District. These misstatements were material to the agency fund. \r\n Agency fund accounts receivables and funds held for others were understated by $11,989.82 due to an accounts receivable not being recorded. Adjustments to the financial statements were proposed by the auditors and accepted by the School District. These misstatements were material to the agency fund. \r\n A review of federal grant fund balances revealed that several grants were not properly closed out at year-end. Federal programs should be reviewed each year to determine if funds should be refunded to the grantor or if a transfer or receivable is necessary to cover a deficit balance. \r\n Several other audit adjustments and reclassifications were proposed by auditors and accepted by the School District to properly present the financial statement and note disclosures. \r\nCause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of review of the financial statements and note disclosures as prepared by their consultant. \r\nEffect or Potential Effect: Material and significant misstatements and misclassifications were included in the financial statements presented for audit. Numerous adjustments were necessary for the School District's financial statements to be in conformity with GAAP. The lack of controls and monitoring could impact the reporting of the School District's financial position and results of operations. \r\nRecommendation: The School District should strengthen their internal controls and preparation and review procedures over financial reporting to ensure that the financial statements, including disclosures, presented for audit are complete and accurate. These procedures should be performed by a properly trained individual(s) possessing a thorough understanding of the applicable GAAP, GASB pronouncements and knowledge of the School District's activities and operations. The School District should also consider implementing the use of a review checklist to assist in the review process over the financial statements. \r\nViews of Responsible Officials: We concur with this finding. \r\n- 9 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2018 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2018-001 \r\n \r\nImprove Controls over Cash Management \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: \r\n \r\nMaterial Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: \r\n \r\n84.010 Title I Grants to Local Education Agencies \r\n \r\nFederal Award Numbers: \r\n \r\nS010A160010, S010A170010 \r\n \r\nQuestioned Costs: \r\n \r\nNone Identified \r\n \r\nRepeat of Prior Year Findings: FA 2017-002, FA 2016-001, FA 2015-002, FA 2014-003 \r\n \r\nDescription: The School District made cash drawdowns in excess of immediate cash needs for the Title I program. \r\n \r\nCriteria: 2 CFR 200.305(b) states, \"For non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the pass-through entity and the disbursement by the non-Federal entity.\" In addition, 2 CFR 200.302(b)(6) requires that the entity develop written cash management procedures. \r\n \r\nFurthermore, 2 CFR 200.303(a) states in part that the \"non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award... (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. \r\n \r\nCondition: Upon review of cash drawdowns and disbursements related to the Title I program, cash balances in excess of Title I program materiality were observed for the entire fiscal year. Additionally, it was noted that the School District did not have appropriate controls in place over the cash drawdown process. \r\n \r\nCause: In discussing the issues with management, they indicated that the lack of review of federal grants resulted in excess cash drawdown requests. \r\n \r\nEffect or Potential Effect: The School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. In addition, the School District could potentially accrue a Federal interest liability that would be owed to the Federal government. \r\n \r\nRecommendation: The School District should develop and implement procedures to accurately forecast the cash needs of the Title I program and minimize the time elapsing between the transfer of funds from the Georgia Department of Education and the disbursement of such funds by the School District. These procedures should be documented in accordance with 2 CFR 200.302(b)(6). In addition, management should develop and implement a monitoring process to ensure that these procedures are followed. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\n- 10 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2018 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2018-002 \r\n \r\nImprove Controls over Equipment \r\n \r\nCompliance Requirement: Equipment and Real Property Management \r\n \r\nInternal Control Impact: \r\n \r\nSignificant Deficiency \r\n \r\nCompliance Impact: \r\n \r\nNonmaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Numbers and Title: \r\n \r\n10.553 and 10.555 Child Nutrition Cluster \r\n \r\nFederal Award Numbers: \r\n \r\n18185GA324N1099  School Breakfast Program \r\n \r\n18185GA324N1100  National School Lunch Program \r\n \r\nQuestioned Costs: \r\n \r\nNone Identified \r\n \r\nRepeat of Prior Year Findings: FA 2017-003, FA 2016-003 \r\n \r\nDescription: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Child Nutrition Cluster. \r\n \r\nCriteria: 2 CFR 200.313(d)(1) states, \"Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.\" In addition, 2 CFR 200.313(d)(2) states, \"A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years.\" \r\n \r\nCondition: The following deficiencies were noted when reviewing the Child Nutrition Cluster equipment listing: \r\n \r\n Property records did not include the following required components for all/most items: (1) Percentage of Federal participation in the project costs for the Federal award under which the property was acquired, (2) who holds the title, and (3) condition of property. \r\n The equipment listing appeared to be incomplete because equipment that is currently in storage was not included. \r\n There was no evidence that a physical inventory has been performed in either the current year or the previous year. \r\n \r\nCause: The internal control process by which equipment items get aggregated and reported does not appear fully effective. In discussing the deficiency with management, they state that communication difficulties exist between the responsible parties of purchasing equipment, labeling equipment, performance of the annual inventory, and recording equipment items on the listings. \r\n \r\nEffect or Potential Effect: Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or Federal funds. Additionally, the School District is not in compliance with the Uniform Guidance and Georgia Department of Education Guidance. \r\n \r\n- 11 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2018 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nRecommendation: The School District should strengthen controls over Child Nutrition Cluster equipment to ensure that the equipment records are complete and accurate. Management should update the equipment listing to reflect all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. Management should perform a physical inventory of equipment at least once every two years and reconcile the results of the physical inventory to the Child Nutrition Cluster equipment listing. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFA 2018-003 Compliance Requirements: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Questioned Costs: \r\n \r\nStrengthen Controls over Maintenance of Effort Requirements Matching, Level of Effort, Earmarking Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Educational Agencies S010A160010, S010A170010 None Identified \r\n \r\nDescription: The School District did not meet maintenance of effort requirements associated with the Title I Grants to Local Educational Agencies program. \r\n \r\nCriteria: 34 CFR 299.5(a) states in part that \"an LEA receiving funds under an applicable program... may receive its full allocation of funds only if the SEA finds that either the combined fiscal effort per student or the aggregate expenditures of State and local funds with respect to the provision of free public education in the LEA for the preceding fiscal year was not less than 90 percent of the combined fiscal effort per student or the aggregate expenditures for the second preceding fiscal year.\" \r\n \r\nIn addition, 2 CFR 200.303(a) states in part that the \"non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award... (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards.\" \r\n \r\n- 12 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2018 \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nCondition: Our review of the maintenance of effort calculation performed by the Georgia Department of Education revealed that the School District did not meet maintenance of effort requirements associated with the Title I Grants to Local Educational Agencies program. The School District was required to meet either the aggregate expenditure maintenance of effort requirement or the average per pupil expenditure maintenance of effort requirement. Neither of these requirements were met, and the following deficiencies were noted: \r\n State and local expenditures totaled $5,422,540.00 in fiscal year 2015. The School District was required to spend at least 90% of this total using State and local funds in fiscal year 2016. However, the School District only expended $4,446,565.00 using State and local funds, which was $433,721.00 less than the required spending level of $4,880,286.00. \r\n Based upon a 2015 Full-Time Equivalent (FTE) enrollment total of 504, the School District should have expended $9,683.11 per student using State and local funds in fiscal year 2016. However, the School District only expended $8,964.85 per student using State and local funds, which was $718.26 less per student than the required spending level based upon a 2016 FTE enrollment total of 496. \r\nCause: In discussing this deficiency with the School District, they stated that these issues were a result of management's failure to ensure that internal controls were established, implemented, and functioning over maintenance of effort requirements. \r\nEffect or Potential Effect: Due to the amendments made to the Elementary and Secondary Education Act of 1965 by the, Every Student Succeeds Act, no reduction in the allocation of Federal funds is required for the fiscal year under review. However, failure to ensure that maintenance of effort requirements are met going forward may lead to a reduction in funding for the Title I Grants to Local Educational Agencies program in future years and could result in unnecessary financial strains and shortages within the Title I program fund. Additionally, the School District is not in compliance with Federal regulations specific to the Title I program. \r\nRecommendation: The School District should strengthen procedures to ensure that the proper amount of State and local funds is expended each year to meet maintenance of effort requirements associated with the Title I Grants to Local Educational Agencies program. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. \r\nViews of Responsible Officials: We concur with this finding. \r\n- 13 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2018 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2018-004 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Questioned Costs: Repeat of Prior Year Finding: \r\n \r\nStrengthen Controls over Consultation with Private School Officials Special Tests and Provisions Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Educational Agencies S010A160010, S010A170010 None Identified FA 2017-006 \r\n \r\nDescription: The policies and procedures of the School District were insufficient to provide adequate internal controls over consulting private school officials regarding the participation of private school children in the Title I Grants to Local Educational Agencies program. \r\n \r\nCriteria: 34 CFR 200.55(a) states in part that \"After timely and meaningful consultation with appropriate officials of private schools, an LEA must (1) ... provide special educational services or other benefits... on an equitable basis and in a timely manner, to eligible children who are enrolled in private elementary and secondary schools.\" \r\n \r\nIn addition, 34 CFR 200.56(a) states in part that \"in order to have timely and meaningful consultation, an LEA must consult with the appropriate officials of private schools during the design and development of the LEA's program for eligible private school children.\" More specifically, 34 CFR 200.56(c)(1) states in part that \"consultation by the LEA must (i) include meetings of the LEA and appropriate officials of the private schools; and (ii) occur before the LEA makes any decision that affects the opportunity of eligible private school children to participate in Title I programs.\" \r\n \r\nCondition: The School District did not conduct timely and meaningful consultation with private school officials regarding private school children's participation in the Title I Grants to Local Educational Agencies program. The School District was unable to locate any evidence that private school officials were contacted about involvement in the Title I Grants to Local Educational Agencies program for the fiscal year under review. Therefore, Title I program services were not offered to eligible private school children appropriately. \r\n \r\nCause: In discussing deficiency with the School District, they stated that the cause was direct result of lack of time and resources to fully monitor and implement procedures to ensure letters were sent out. \r\n \r\nEffect or Potential Effect: Failure to conduct appropriate consultations with private school officials regarding participation in the Title I program could lead to the School District's failure to set aside appropriate Title I funding to provide services to eligible private school children. Additionally, the School District is not in compliance with U.S. Department of Education and Georgia Department of Education guidance. \r\n \r\n- 14 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2018 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Recommendation: The School District should review current internal control procedures related to consultation with private school officials. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that timely and meaningful consultation occurs with private school officials and that services are provided to eligible private school children, as necessary. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding. \r\n- 15 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION V MANAGEMENT'S CORRECTIVE ACTION \r\n \r\n (This page left intentionally blank) \r\n \r\n Cynthia Epps Assistant Superintendent \u0026 Director of Curriculum \r\n \r\nTalbot County Board of Education \r\nDr. James Catrett, Superintendent \r\n \r\nBoard Members Anton Turner, District 1 \r\nJames Steverson, Vice Chairperson, District 2 Sharleta Hall, Chairman District 3 Carlton Mahone, District 4 Mildred Biggs, District 5 \r\n \r\nCORRECTIVE ACTION PLAN: FINANCIAL AND FEDERAL AUDIT FINDINGS \r\n \r\nFinding: FS 2018-001 \r\n \r\nInternal Control Procedures \r\n \r\nControl Category: \r\n \r\nCash and Cash Equivalents \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: FS 2017-001, FS 2016-001, FS 2015-001, FS 2014-001, FS-7301-13-01 \r\n \r\nResponse: The Finance Director will meet with all parties involved to discuss the findings, examine our current procedure and seek ways to diminish the risks. We will make adjustments to procedures as needed. We will meet periodically to share ideas, discuss adjustments to procedures and provide additional training. \r\n \r\nFS 2018-002 \r\n \r\nInternal Controls over Agency Accounts \r\n \r\nControl Category: \r\n \r\nCash and Cash Equivalents \r\n \r\nRevenues/Receivables/Receipts \r\n \r\nExpenditures/Liabilities/Disbursements \r\n \r\nAccounting Controls (Overall) \r\n \r\nGeneral Ledger \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: FS 2017-002, FS 2016-002, FS 2015-002, FS 2014-002, FS-7301-13-02 \r\n \r\nResponse: The school district has hired a new Finance/Business Director that will review the current accounting procedure and ensure that internal controls are in place. In addition, the school district has received quotes in reference to purchasing a new software that will be implemented for school accounting that has features to eliminate issues with school level purchases. The Business/Finance Director will meeting periodically to share ideas, discuss adjustments to procedures (if any), and provide additional training, if needed. \r\n \r\nFS 2018-003 \r\n \r\nInternal Controls over Employee Compensation \r\n \r\nControl Category: \r\n \r\nEmployee Compensation \r\n \r\nInternal Control Impact: Significant Deficiency \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: FS 2017-003, FS 2016-003, FS 2015-004, FS 2014-004, FS-7301-13-05 \r\n \r\n945 N. Washington Avenue \r\n \r\nP. O. Box 515 Determined to Achieve; Dedicated to Succeed \r\n \r\nTalbotton, GA 31827 \r\n \r\n Response: The Board will ensure that internal controls are establish, implemented and functioning at the system level to adequately address controls over employee compensation procedures and ensure that all said employee compensation is properly calculated. \r\n \r\nFS 2018-004 \r\n \r\nInternal Controls over Capital Assets \r\n \r\nControl Category: \r\n \r\nCapital Assets \r\n \r\nInternal Control Impact: Significant Deficiency \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: FS 2017-004, FS 2016-004, FS 2015-005, FS 2014-005, FS-7301-13-06 \r\n \r\nResponse: Management concurs with this finding; Additional resources will be committed as well as controls designed and implemented to the capital asset inventory management process to ensure records are properly maintained. Further, the school district is in the process of implementing a better control system to assist with the capital asset activity. \r\n \r\nFS 2018-005 \r\n \r\nInternal Controls at the Central Office \r\n \r\nControl Category: \r\n \r\nAccounting Controls (Overall) \r\n \r\nExpenditures/Liabilities/Disbursements \r\n \r\nGeneral Ledger \r\n \r\nInternal Control Impact: Significant Deficiency \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: FS 2017-005, FS 2016-005 \r\n \r\nResponse: The school district has hired a new Chief Financial Officer to oversee the accounting procedures and ensure that internal controls are in place. In addition, the school district will review the current accounting procedures and controls and will implement procedures to help strengthen the internal controls. \r\n \r\nFS 2018-006 \r\n \r\nInternal Controls over Financial Reporting \r\n \r\nControl Category: \r\n \r\nFinancial Reporting \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: FS 2017-006, FS 2016-006 \r\n \r\nResponse: The school district has hired a new Chief Financial Officer to oversee the accounting procedures and ensure that internal controls are in place. In addition, the school district will review the current accounting procedures and controls and will implement procedures to help strengthen the internal controls. \r\n \r\nFA 2018-001 \r\n \r\nImprove Controls over Cash Management \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: 84.010 Title I Grants to Local Education Agencies \r\n \r\nFederal Award Numbers: S010A160010, S010A170010 \r\n \r\nQuestioned Costs: \r\n \r\nNone Identified \r\n \r\nRepeat of Prior Year Finding: FA 2017-002, FA 2016-001, FA 2015-002, FA 2014-003 \r\n \r\n945 N. Washington Avenue \r\n \r\nP. O. Box 515 Determined to Achieve; Dedicated to Succeed \r\n \r\nTalbotton, GA 31827 \r\n \r\n Response: Management has implemented procedures to monitor the cash monthly balances for all programs when requesting reimbursement for federal and state programs. \r\n \r\nFA 2018-002 \r\n \r\nImprove Controls over Equipment \r\n \r\nCompliance Requirement: Equipment and Real Property Management \r\n \r\nInternal Control Impact: Significant Deficiency \r\n \r\nCompliance Impact: \r\n \r\nNonmaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: 10.553 \u0026 10.555 Child Nutrition Cluster \r\n \r\nFederal Award Number: 18185GA324N1099-School Breakfast Program \r\n \r\n18185GA324N1100-National School Lunch Program \r\n \r\nQuestioned Costs: \r\n \r\nNone Identified \r\n \r\nRepeat of Prior Year Finding: FA 2017-003, FA 2016-003 \r\n \r\nResponse: Controls will be designed and implemented to ensure complete and accurate tracking of equipment to include physical inventory audits in accordance with federal regulations, 2 CFR 200.313. In addition, the school district will review the current procedure and control to ensure this control is properly maintained and communicate the difficulties (if any) that exists between the responsible parties of purchasing equipment, labeling equipment, performance of annual inventory, and recording equipment items on listings. \r\n \r\nFA 2018-003 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Questioned Costs: \r\n \r\nStrengthen Controls over Maintenance of Effort Requirements Matching, Level of Effort, Earmarking Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Educational Agencies S010A160010, S010A170010 None Identified \r\n \r\nResponse: The school district and Finance Director will review the current procedures related to strengthening the controls over the Maintenance of Efforts requirement. We will develop policies and procedures to ensure we are in compliance with the requirements of earmarking, matching, and expending according to Federal Grants measures. \r\n \r\nFA 2018-004 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: \r\n \r\nStrengthen Controls over Consultation with Private School Officials Special Tests and Provisions Material Weakness Material Noncompliance U. S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Educational Agencies S010A160010, S010A170010 \r\n \r\n945 N. Washington Avenue \r\n \r\nP. O. Box 515 Determined to Achieve; Dedicated to Succeed \r\n \r\nTalbotton, GA 31827 \r\n \r\n  "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2016-belec-p-btext","title":"Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended 2016 June 30 (including independent auditor's reports)","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2020-09-14"],"dcterms_description":["Annual financial report for the Talbot County Board of Education."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Georgia. Department of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Talbot County Board of Education (Ga.)--Appropriations and expenditures--Periodicals.","Education--Georgia--Talbot County--Auditing--Periodicals.","Education--Georgia--Talbot County--Finance--Statistics--Periodicals.","Georgia Government Documents--Serial"],"dcterms_title":["Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended 2016 June 30 (including independent auditor's reports)"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2016-belec-p-btext"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2016-belec-p-btext"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records","audits","financial records","financial statements"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"TALBOT COUNTY BOARD OF EDUCATION \r\nTALBOTTON, GEORGIA \r\nANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2016 \r\n(Including Independent Auditor's Reports) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nEXHIBITS \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nGOVERNMENT-WIDE FINANCIAL STATEMENTS \r\n \r\nA \r\n \r\nSTATEMENT OF NET POSITION \r\n \r\nB \r\n \r\nSTATEMENT OF ACTIVITIES \r\n \r\nFUND FINANCIAL STATEMENTS \r\n \r\nC \r\n \r\nBALANCE SHEET \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nD \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\n \r\nTO THE STATEMENT OF NET POSITION \r\n \r\nE \r\n \r\nSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES \r\n \r\nIN FUND BALANCES \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nF \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT \r\n \r\nOF REVENUES, EXPENDITURES AND CHANGES IN FUND \r\n \r\nBALANCES TO THE STATEMENT OF ACTIVITIES \r\n \r\nG \r\n \r\nSTATEMENT OF FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\nH \r\n \r\nSTATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\nI NOTES TO THE BASIC FINANCIAL STATEMENTS \r\n \r\nSCHEDULES \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\n2 SCHEDULE OF CONTRIBUTIONS  TEACHERS RETIREMENT SYSTEM OF GEORGIA 3 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION 4 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES \r\nIN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND \r\n \r\nSUPPLEMENTARY INFORMATION \r\n \r\n5 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 6 SCHEDULE OF STATE REVENUE 7 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS \r\n \r\nPage \r\n1 2 \r\n4 5 6 7 8 9 10 \r\n29 30 31 32 \r\n33 34 35 \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\nSECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE \r\nSECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\nSECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nSECTION V MANAGEMENT'S CORRECTIVE ACTION FOR CURRENT YEAR FINDINGS SCHEDULE OF MANAGEMENT'S CORRECTIVE ACTION \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION I FINANCIAL \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nHonorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nLadies and Gentlemen: \r\nReport on the Financial Statements \r\nWe have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Talbot County Board of Education (School District), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements as listed in the table of contents. \r\nManagement's Responsibility for the Financial Statements \r\nManagement is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. \r\nAuditor's Responsibility \r\nOur responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 from material misstatement. \r\nAn audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. \r\n \r\n (This page left intentionally blank) \r\n \r\n We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. \r\n \r\nSummary of Opinions \r\n \r\nOpinion Unit Governmental Activities General Fund Capital Projects Fund Debt Service Fund Aggregate Remaining Fund Information \r\n \r\nType of Opinion Unmodified Unmodified Unmodified Unmodified Qualified \r\n \r\nBasis for Qualified Opinion on Aggregate Remaining Fund Information \r\n \r\nManagement has not recorded school activity (principal's) accounts maintained at the individual schools in the governmental activities, general fund or fiduciary fund (which comprise a material portion of the aggregate remaining fund information) as appropriate. Accounting principles generally accepted in the United States of America require that the assets, liabilities, revenues, expense or expenditures, as appropriate, and the respective changes in financial position of these accounts be reflected in these financial statements. The aggregate effect on the financial statements of this variance or omission has not been determined, but is believed to be material. \r\nQualified Opinion \r\n \r\nIn our opinion, except for the effects of the matter described in the \"Basis for Qualified Opinion on the Aggregate Remaining Fund information\" paragraph, the financial statements referred to above present fairly, in all material respects, the respective financial position of the aggregate remaining fund information of the School District, as of June 30, 2016, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. \r\nUnmodified Opinions \r\n \r\nIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the general fund, the capital projects fund, and the debt service fund of the School District, as of June 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. \r\nEmphasis of Matter \r\n \r\nAs described in Note 2 to the financial statements, in 2016, the School District adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application, GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and No. 68, and GASB Statement No. 79, Certain External Investment Pools and Pool Participants. Our opinions are not modified with \r\nrespect to this matter. \r\n \r\n (This page left intentionally blank) \r\n \r\n Other Matters \r\nRequired Supplementary Information \r\nManagement has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinions on the basic financial statements are not affected by this missing information. \r\nAccounting principles generally accepted in the United States of America require that the Schedules of Proportionate Share of the Net Pension Liability, Schedule of Contributions to Retirement Systems, the Notes to the Required Supplementary Information and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual as presented on pages 29 through 32 respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. \r\nOther Information \r\nOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District's basic financial statements. The accompanying supplementary information, consisting of Schedules 5 through 8, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U. S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. \r\nThe accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole. \r\nOther Reporting Required by Government Auditing Standards \r\nIn accordance with Government Auditing Standards, we have also issued our report dated September 14, 2020, on our consideration of the School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing \r\n \r\n (This page left intentionally blank) \r\n \r\n of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control over financial reporting and compliance. \r\nA copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. \r\nRespectfully submitted, \r\n \r\nSeptember 14, 2020 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2016 \r\nASSETS \r\nCash and Cash Equivalents Investments Receivables, Net \r\nTaxes State Government Federal Government Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation) \r\nTotal Assets \r\nDEFERRED OUTFLOWS OF RESOURCES \r\nRelated to Defined Benefit Pension Plans \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Interest Payable Net Pension Liability Long-Term Liabilities \r\nDue Within One Year Due in More Than One Year \r\nTotal Liabilities \r\nDEFERRED INFLOWS OF RESOURCES \r\nRelated to Defined Benefit Pension Plans \r\nNET POSITION \r\nNet Investment in Capital Assets Restricted for \r\nContinuation of Federal Programs Debt Service Capital Projects Bus Replacement Unrestricted (Deficit) \r\nTotal Net Position \r\n \r\nEXHIBIT \"A\" \r\n \r\nGOVERNMENTAL ACTIVITIES \r\n \r\n$ \r\n \r\n3,143,868.69 \r\n \r\n65,000.00 \r\n \r\n240,115.24 242,303.52 111,710.50 \r\n4,938.88 354,857.93 12,644,169.22 \r\n \r\n16,806,963.98 \r\n \r\n446,011.58 \r\n \r\n99,351.77 608,222.95 \r\n14,820.00 4,526,402.00 \r\n370,000.00 800,000.00 \r\n6,418,796.72 \r\n \r\n748,982.00 \r\n \r\n11,829,027.15 \r\n338,967.61 377,410.00 247,723.60 \r\n39,451.00 (2,747,382.52) \r\n \r\n$ \r\n \r\n10,085,196.84 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES \r\nFOR THE YEAR ENDED JUNE 30, 2016 \r\n \r\nGOVERNMENTAL ACTIVITIES \r\nInstruction Support Services \r\nPupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt \r\nTotal Governmental Activities \r\nGeneral Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous \r\nTotal General Revenues \r\nChange in Net Position \r\nNet Position - Beginning of Year \r\nNet Position - End of Year \r\n \r\nEXPENSES \r\n \r\nCHARGES FOR SERVICES \r\n \r\n$ \r\n \r\n3,737,114.47 $ \r\n \r\n321,858.98 232,528.34 115,879.16 328,380.75 331,026.19 \r\n76,136.88 604,733.31 430,054.01 \r\n26,740.00 \r\n \r\n14,819.37 473,083.51 \r\n41,879.17 \r\n \r\n$ \r\n \r\n6,734,234.14 $ \r\n \r\n- \r\n71,917.35 \r\n29,641.17 \r\n- \r\n101,558.52 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 2 - \r\n \r\n EXHIBIT \"B\" \r\n \r\nPROGRAM REVENUES OPERATING GRANTS AND \r\nCONTRIBUTIONS \r\n \r\nCAPITAL GRANTS AND CONTRIBUTIONS \r\n \r\nNET (EXPENSES) REVENUES \r\nAND CHANGES IN NET POSITION \r\n \r\n$ \r\n \r\n2,063,728.59 $ \r\n \r\n190,229.97 138,654.65 \r\n68,611.95 194,023.70 197,955.31 \r\n45,377.46 345,635.37 245,288.19 \r\n15,215.59 \r\n \r\n8,432.51 267,935.63 \r\n- \r\n \r\n$ \r\n \r\n3,781,088.92 $ \r\n \r\n531,475.83 $ \r\n452.97 1,889.91 - \r\n16,655.20 \r\n- \r\n550,473.91 \r\n \r\n(1,141,910.05) \r\n(131,629.01) (93,873.69) (47,267.21) \r\n(133,904.08) (133,070.88) \r\n(30,759.42) (257,208.03) (184,765.82) \r\n60,392.94 \r\n(6,386.86) (158,851.51) \r\n(41,879.17) \r\n(2,301,112.79) \r\n \r\n3,045,079.43 \r\n448,249.88 1,771.72 2,221.96 \r\n72,952.44 \r\n3,570,275.43 \r\n1,269,162.64 \r\n8,816,034.20 \r\n \r\n$ \r\n \r\n10,085,196.84 \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION BALANCE SHEET \r\nGOVERNMENTAL FUNDS JUNE 30, 2016 \r\n \r\nEXHIBIT \"C\" \r\n \r\nASSETS \r\nCash and Cash Equivalents Investments Receivables, Net \r\nTaxes State Government Federal Government Inventories \r\n \r\nGENERAL FUND \r\n \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 2,452,405.36 $ 65,000.00 \r\n173,492.76 242,303.52 111,710.50 \r\n4,938.88 \r\n \r\n603,112.86 $ - \r\n66,622.48 - \r\n \r\n88,350.47 $ - \r\n- \r\n \r\n3,143,868.69 65,000.00 \r\n240,115.24 242,303.52 111,710.50 \r\n4,938.88 \r\n \r\nTotal Assets \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable \r\nTotal Liabilities \r\nDEFERRED INFLOWS OF RESOURCES \r\nUnavailable Revenue - Property Taxes \r\nFUND BALANCES \r\nNonspendable Restricted Assigned Unassigned \r\nTotal Fund Balances \r\n \r\n$ 3,049,851.02 $ \r\n \r\n669,735.34 $ \r\n \r\n88,350.47 $ \r\n \r\n3,807,936.83 \r\n \r\n$ \r\n \r\n56,499.92 $ \r\n \r\n608,222.95 \r\n \r\n664,722.87 \r\n \r\n42,851.85 $ - \r\n42,851.85 \r\n \r\n- $ - \r\n- \r\n \r\n99,351.77 608,222.95 \r\n707,574.72 \r\n \r\n117,003.80 \r\n \r\n- \r\n \r\n- \r\n \r\n117,003.80 \r\n \r\n4,938.88 373,479.73 \r\n9,448.54 1,880,257.20 \r\n2,268,124.35 \r\n \r\n551,603.13 \r\n75,280.36 - \r\n626,883.49 \r\n \r\n88,350.47 \r\n- \r\n88,350.47 \r\n \r\n4,938.88 1,013,433.33 \r\n84,728.90 1,880,257.20 \r\n2,983,358.31 \r\n \r\nTotal Liabilities, Deferred Inflows of Resources, and Fund Balances \r\n \r\n$ 3,049,851.02 $ \r\n \r\n669,735.34 $ \r\n \r\n88,350.47 $ 3,807,936.83 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\nTO THE STATEMENT OF NET POSITION JUNE 30, 2016 \r\n \r\nEXHIBIT \"D\" \r\n \r\nTotal fund balances - governmental funds (Exhibit \"C\") \r\nAmounts reported for governmental activities in the Statement of Net Position are different because: \r\nCapital assets used in governmental activities are not financial resources and therefore are not reported in the funds. \r\nLand Buildings and improvements Equipment Land improvements Accumulated depreciation \r\nSome liabilities are not due and payable in the current period and, therefore, are not reported in the funds. \r\nNet pension liability \r\nDeferred outflows and inflows of resources related to pensions are applicable to future periods and, therefore, are not reported in the funds. \r\nTaxes that are not available to pay for current period expenditures are deferred in the funds. \r\nLong-term liabilities, and related accrued interest, are not due and payable in the current period and therefore are not reported in the funds. \r\nBonds payable Accrued interest payable \r\n \r\n$ 2,983,358.31 \r\n \r\n$ \r\n \r\n354,857.93 \r\n \r\n14,348,890.98 \r\n \r\n1,940,044.21 \r\n \r\n713,295.15 \r\n \r\n(4,358,061.12) \r\n \r\n12,999,027.15 \r\n \r\n(4,526,402.00) (302,970.42) 117,003.80 \r\n \r\n$ (1,170,000.00) (14,820.00) \r\n \r\n(1,184,820.00) \r\n \r\nNet position of governmental activities (Exhibit \"A\") \r\n \r\n$ 10,085,196.84 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES \r\nGOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2016 \r\n \r\nEXHIBIT \"E\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent 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 Other Support Services Enterprise Operations Food Services Operation \r\nCapital Outlay Debt Services \r\nPrincipal Interest \r\nTotal Expenditures \r\nRevenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nTransfers In Transfers Out \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\n \r\nGENERAL FUND \r\n \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 3,180,433.20 $ 1,771.72 \r\n2,607,464.03 1,169,488.89 \r\n101,558.52 1,705.56 \r\n72,952.44 \r\n7,135,374.36 \r\n \r\n- $ 448,249.88 550,473.91 \r\n513.70 - \r\n999,237.49 \r\n \r\n- $ 2.70 - \r\n \r\n3,180,433.20 450,021.60 \r\n3,157,937.94 1,169,488.89 \r\n101,558.52 2,221.96 \r\n72,952.44 \r\n \r\n2.70 \r\n \r\n8,134,614.55 \r\n \r\n3,492,983.73 \r\n334,311.76 243,672.85 120,579.23 340,631.10 347,888.33 \r\n79,746.74 605,971.47 366,032.59 \r\n26,740.00 14,819.37 462,670.02 \r\n- \r\n- \r\n6,436,047.19 \r\n699,327.17 \r\n \r\n- \r\n331,286.13 \r\n- \r\n331,286.13 \r\n667,951.36 \r\n \r\n- \r\n- \r\n355,000.00 51,205.00 \r\n406,205.00 \r\n(406,202.30) \r\n \r\n3,492,983.73 \r\n334,311.76 243,672.85 120,579.23 340,631.10 347,888.33 \r\n79,746.74 605,971.47 366,032.59 \r\n26,740.00 14,819.37 462,670.02 331,286.13 \r\n355,000.00 51,205.00 \r\n7,173,538.32 \r\n961,076.23 \r\n \r\n- \r\n- \r\n699,327.17 \r\n1,568,797.18 \r\n \r\n(406,202.30) \r\n(406,202.30) \r\n261,749.06 \r\n365,134.43 \r\n \r\n406,202.30 - \r\n406,202.30 \r\n- \r\n88,350.47 \r\n \r\n406,202.30 (406,202.30) \r\n- \r\n961,076.23 \r\n2,022,282.08 \r\n \r\nFund Balances - Ending \r\n \r\n$ 2,268,124.35 $ 626,883.49 $ \r\n \r\n88,350.47 $ 2,983,358.31 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF \r\nREVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nNet change in fund balances total governmental funds (Exhibit \"E\") \r\nAmounts reported for governmental activities in the Statement of Activities are different because: \r\nGovernmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of capital assets is allocated over their estimated useful lives as depreciation expense. \r\nCapital outlay Depreciation expense \r\nTaxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. \r\nRepayment of long-term debt is reported as an expenditure in governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. In the current year, these amounts consist of: \r\nBond principal retirements \r\nDistrict pension contributions are reported as expenditures in the governmental funds when made. However, they are reported as deferred outflows of resources in the Statement of Net Position because the reported net pension liability is measured a year before the District's report date. Pension expense, which is the change in the net pension liability adjusted for changes in deferred outflows and inflows of resources related to pensions, is reported in the Statement of Activities. \r\nPension expense \r\nSome items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. \r\nAccrued interest on issuance of bonds \r\nChange in net position of governmental activities (Exhibit \"B\") \r\n \r\n$ \r\n \r\n961,076.23 \r\n \r\n$ \r\n \r\n259,492.59 \r\n \r\n(422,650.24) \r\n \r\n(163,157.65) (135,353.77) \r\n \r\n355,000.00 \r\n \r\n242,272.00 9,325.83 \r\n$ 1,269,162.64 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 7 - \r\n \r\n ASSETS Cash and Cash Equivalents \r\nLIABILITIES Funds Held for Others \r\nNET POSITION Held in Trust for Private Purposes \r\n \r\nTALBOT COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS JUNE 30, 2016 \r\n \r\nEXHIBIT \"G\" \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\nAGENCY FUNDS \r\n \r\n$ \r\n \r\n2,792.15 $ \r\n \r\n7,001.28 \r\n \r\n$ \r\n \r\n7,001.28 \r\n \r\n$ \r\n \r\n2,792.15 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS YEAR ENDED JUNE 30, 2016 \r\nADDITIONS Investment Earnings Interest \r\nDEDUCTIONS None Reported Change in Net Position \r\nNet Position - Beginning \r\nNet Position - Ending \r\n \r\nEXHIBIT \"H\" \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\n$ \r\n \r\n4.01 \r\n \r\n4.01 2,788.14 \r\n \r\n$ \r\n \r\n2,792.15 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 9 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY \r\nREPORTING ENTITY \r\nThe Talbot County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a 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. \r\nNOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nThe accompanying financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the School District's accounting policies are described below. \r\nBASIS OF PRESENTATION \r\nThe School District's basic financial statements are collectively comprised of the government-wide financial statements, fund financial statements and notes to the basic financial statements. The government-wide statements focus on the School District as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information's usefulness. \r\nGOVERNMENT-WIDE STATEMENTS: \r\nThe Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. \r\nThe Statement of Net Position presents the School District's non-fiduciary assets and liabilities, with the difference reported as net position. Net position is reported in three categories as follows: \r\n1. Net investment in capital assets consists of the School District's total investment in capital assets, net of accumulated depreciation, and reduced by outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets. \r\n2. Restricted net position consists of resources for which the School District is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties or imposed by law through constitutional provisions or enabling legislation. \r\n3. Unrestricted net position consists of resources not meeting the definition of the two preceding categories. Unrestricted net positon often has constraints on resources imposed by management which can be removed or modified. \r\nThe Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. \r\nDirect expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. \r\n \r\n- 10 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nProgram revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. \r\nFUND FINANCIAL STATEMENTS: \r\nThe fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate financial statements are presented for governmental and fiduciary funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. \r\nThe School District reports the following major governmental funds: \r\n The general fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund. \r\n The capital projects fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission that are restricted, committed or assigned for capital outlay expenditures, including the acquisition or construction of capital facilities and other capital assets. \r\n The debt service fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest. \r\nThe School District reports the following fiduciary fund types: \r\n Private purpose trust funds are used to report all trust arrangements, other than those properly reported elsewhere, in which principal and income benefit individuals, private organizations or other governments. \r\n Agency funds are used to report resources held by the School District in a purely custodial capacity (assets equal liabilities) and do not involve measurement of results of operations. \r\nBASIS OF ACCOUNTING \r\nThe basis of accounting determines when transactions are reported on the financial statements. The government-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied. \r\nThe School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. \r\nGovernmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end. \r\n- 11 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nProperty taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general longterm debt, and claims which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources. \r\nThe School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. \r\nNEW ACCOUNTING PRONOUNCEMENTS \r\nIn fiscal year 2016, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application. The provisions of this statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This statement provides guidance for determining a fair value measurement for financial reporting purposes. This statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The School District did not have any items that required a reassessment of value for reporting purposes as a result of adoption of this statement. \r\nIn fiscal year 2016, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and No. 68. This statement establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68, Accounting and Financial Reporting for Pensions, as well as for the assets accumulated for purposes of providing those pensions. In addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement No. 68. It also amends certain provisions of Statement No. 67, Financial Reporting for Pension Plans, and Statement No. 68 for pension plans and pensions that are within their respective scopes. The adoption of this statement does not have a significant impact on the School District's financial statements. \r\nIn fiscal year 2016, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 79, Certain External Investment Pools and Pool Participants. This statement addresses accounting and financial reporting for certain external investment pools and pool participants. If an external investment pool meets the criteria in this statement and measures all of its investments at amortized cost, the pool's participants also should measure their investments in that external investment pool at amortized cost for financial reporting purposes. The adoption of this statement does not have an impact on the School District's financial statements. \r\nCASH AND CASH EQUIVALENTS \r\nCash and cash equivalents consist of cash on hand, demand deposits, investments in the State of Georgia local government investment pool (Georgia Fund 1) and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated (O.C.G.A.) 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. \r\n \r\n- 12 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nINVESTMENTS \r\nThe School District can invest its funds as permitted by O.C.G.A. 36-83-4. 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. \r\nInvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. All other investments are reported at fair value. \r\nFor accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired. \r\nRECEIVABLES \r\nReceivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. \r\nINVENTORIES \r\nFood Inventories \r\nOn the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (calculated on the first-in, first-out basis). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. \r\nCAPITAL ASSETS \r\nOn the government-wide financial statements, capital assets are recorded at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at acquisition value on the date donated. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. The School District does not capitalize book collections or works of art. \r\nCapital acquisition and construction are recorded as expenditures in the governmental fund financial statements at the time of purchase (including ancillary charges), and the related assets are reported as capital assets in the governmental activities column in the government-wide financial statements. \r\nDepreciation is computed using the straight-line for all assets, except land, and is used to allocate the actual or estimated historical cost of capital assets over estimated useful lives. \r\n \r\n- 13 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nCapitalization thresholds and estimated useful lives of capital assets reported in the government-wide statements are as follows: \r\n \r\nCapitalization Policy \r\n \r\nEstimated Useful Life \r\n \r\nLand \r\n \r\nLand Improvements \r\n \r\n$ \r\n \r\nBuildings and Improvements $ \r\n \r\nEquipment \r\n \r\n$ \r\n \r\nIntangible Assets \r\n \r\n$ \r\n \r\nALL 10,000.00 10,000.00 \r\n5,000.00 100,000.00 \r\n \r\nDEFERRED OUTFLOWS/INFLOWS OF RESOURCES \r\n \r\nN/A 20 to 70 years up to 70 years \r\n5 to 25 years 15 to 50 years \r\n \r\nIn addition to assets, the statement of financial position will report a separate section for deferred outflows of resources. This separate financial statement element, represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. \r\n \r\nIn addition to liabilities, the statement of financial position will report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time. \r\nLONG-TERM LIABILITIES AND BOND DISCOUNTS/PREMIUMS \r\n \r\nIn the School District's government-wide financial statements, outstanding debt is reported as liabilities. Bond premiums and discounts and the difference between the reacquisition price and the net carrying value of refunded debt are deferred and amortized over the life of the bonds using the straight-line method. To conform to generally accepted accounting principles, bond premiums and discounts should be amortized using the effective interest method. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued. \r\n \r\nIn the governmental fund financial statements, the School District recognizes the proceeds of debt and premiums as other financing sources of the current period. Bond issuance costs are reported as debt service expenditures. \r\nPENSIONS \r\n \r\nFor purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. \r\n \r\n- 14 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nFUND BALANCES \r\nFund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. \r\nThe School District's fund balances are classified as follows: \r\nNonspendable consists of resources that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact. \r\nRestricted consists of resources that can be used only for specific purposes pursuant constraints either (1) externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. \r\nAssigned consists of resources constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes. \r\nUnassigned consists of resources within the general fund not meeting the definition of any aforementioned category. The general fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance. \r\nUSE OF ESTIMATES \r\nThe preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. \r\nPROPERTY TAXES \r\nThe Talbot County Board of Commissioners adopted the property tax levy for the 2015 tax digest year (calendar year) on August 13, 2015 (levy date) based on property values as of January 1, 2015. Taxes were due on December 20, 2015 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2015 tax digest are reported as revenue in the governmental funds for fiscal year 2016. The Talbot County Tax Commissioner bills and collects the property taxes for the School District, withholds 1.25% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2016, for maintenance and operations amounted to $3,029,243.63. \r\nThe tax millage rate levied for the 2015 tax year (calendar year) for the School District was as follows (a mill equals $1 per thousand dollars of assessed value): \r\n \r\nSchool Operations \r\n \r\n14.109 mills \r\n \r\nAdditionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $151,189.57 during fiscal year ended June 30, 2016. \r\nSALES TAXES \r\nEducation Special Purpose Local Option Sales Tax (ESPLOST), at the fund reporting level, during the year amounted to $448,249.88 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. \r\n \r\n- 15 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 3: BUDGETARY DATA \r\nThe budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate fund level. The budget for the general fund was prepared in accordance with accounting principles generally accepted in the United States of America. \r\nThe budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines, and a tentative budget is approved. 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, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of O.C.G.A. 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. \r\nThe Superintendent is authorized by the Board to approve adjustments of no more than five percent of the amount budgeted for expenditures in any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any budget function for any fund is anticipated to be more than five percent of the budgeted amount, the Superintendent shall request Board approval for the budget amendment. Under no circumstance is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board. \r\nSee the General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances  Budget to Actual in the Supplementary Information Section for a detail of any over/under expenditures during the fiscal year under review. \r\nNOTE 4: DEPOSITS \r\nCOLLATERALIZATION OF DEPOSITS \r\nO.C.G.A.  45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110% of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A.  45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110% of the daily pool balance. \r\n \r\n- 16 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nAcceptable security for deposits consists of any one of or any combination of the following: \r\n(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, \r\n \r\n(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, \r\n \r\n(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, \r\n(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, \r\n \r\n(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, \r\n \r\n(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and \r\n \r\n(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 or securities guaranteed 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. \r\nCATEGORIZATION OF DEPOSITS \r\n \r\nCustodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2016, the School District had deposits with a carrying amount of $3,218,662.12, which includes $65,000.00 in Certificates of Deposit that are reported as investments, and a bank balance of $3,529,288.57. The bank balances insured by Federal depository insurance were $595,451.04 and the bank balances collateralized with securities held by the pledging financial institution trust department or agent in the School District's name were $2,933,837.53. \r\n \r\nStatement of Net Position Cash and cash equivalents \r\nStatement of Fiduciary Net Position Private Purpose Trust Funds Agency Funds \r\n \r\n$ 3,143,868.69 \r\n2,792.15 7,001.28 \r\n \r\nTotal cash and cash equivalents \r\n \r\n3,153,662.12 \r\n \r\nAdd: Deposits with original maturity of three months or more reported as investments \r\n \r\n65,000.00 \r\n \r\nTotal carrying value of deposits - June 30, 2016 \r\n \r\n$ 3,218,662.12 \r\n \r\n- 17 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 5: CAPITAL ASSETS \r\n \r\nThe following is a summary of changes in the capital assets for governmental activities during the fiscal year: \r\n \r\nBalances July 1, 2015 \r\n \r\nIncreases \r\n \r\nDecreases \r\n \r\nBalances June 30, 2016 \r\n \r\nGovernmental Activities Capital Assets, Not Being Depreciated: \r\nLand \r\n \r\n$ 354,857.93 $ \r\n \r\n- $ \r\n \r\n- $ 354,857.93 \r\n \r\nCapital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements \r\n \r\n14,285,080.32 1,887,436.20 570,221.23 \r\n \r\n63,810.66 52,608.01 143,073.92 \r\n \r\nLess Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements \r\n \r\n2,019,875.67 1,482,822.86 \r\n432,712.35 \r\n \r\n322,165.85 80,206.83 20,277.56 \r\n \r\nTotal Capital Assets, Being Depreciated, Net 12,807,326.87 (163,157.65) \r\n \r\nGovernmental Activity Capital Assets - Net $ 13,162,184.80 $ (163,157.65) $ \r\n \r\n- \r\n \r\n14,348,890.98 \r\n \r\n- \r\n \r\n1,940,044.21 \r\n \r\n- \r\n \r\n713,295.15 \r\n \r\n- \r\n \r\n2,342,041.52 \r\n \r\n- \r\n \r\n1,563,029.69 \r\n \r\n- \r\n \r\n452,989.91 \r\n \r\n- \r\n \r\n12,644,169.22 \r\n \r\n- $ 12,999,027.15 \r\n \r\nCurrent year depreciation expense by function is as follows: \r\n \r\nInstruction Support Services \r\nGeneral Administration Maintenance and Operation of Plant Student Transportation Services Food Services \r\n \r\n$ \r\n \r\n347.79 \r\n \r\n1,451.06 \r\n \r\n65,038.96 \r\n \r\n$ 343,024.68 \r\n66,837.81 12,787.75 \r\n \r\n$ 422,650.24 \r\n \r\nNOTE 6: INTERFUND TRANSFERS INTERFUND TRANSFERS \r\n \r\nInterfund transfers for the year ended June 30, 2016, consisted of the following: \r\n \r\nTransfers to \r\n \r\nTransfers From Capital Projects \r\nFund \r\n \r\nDebt Service Fund \r\n \r\n$ 406,202.30 \r\n \r\n- 18 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nTransfers are used to move sales tax revenue collected by the capital projects fund to the debt service fund to pay debt service according to the approved Special Purpose Location Option Sales Tax (SPLOST) referendum. \r\n \r\nNOTE 7: LONG-TERM LIABILITIES \r\n \r\nThe changes in long-term liabilities during the fiscal year for governmental activities, were as follows: \r\n \r\nBalance July 1, 2015 \r\n \r\nGovernmental Activities \r\n \r\nAdditions \r\n \r\nDeductions \r\n \r\nBalance June 30, 2016 \r\n \r\nDue Within One Year \r\n \r\nGeneral Obligation Bonds $ 1,525,000.00 $ \r\n \r\n- $ 355,000.00 $ 1,170,000.00 $ 370,000.00 \r\n \r\nGENERAL OBLIGATION DEBT OUTSTANDING \r\n \r\nThe School District's bonded debt consists of general obligation bonds that are generally noncallable with interest payable semiannually. Bonds proceeds primarily pay for acquiring or constructing capital facilities. The School District repays general obligation bonds from voter-approved property taxes. General obligation bonds are direct obligations and pledge the full faith and credit of the School District. \r\n \r\nGeneral obligation bonds currently outstanding are as follows: \r\n \r\nDescription \r\n \r\nInterest Rate Issue Date \r\n \r\nMaturity Date \r\n \r\nAmount Issued \r\n \r\nAmount Outstanding \r\n \r\nGeneral Government - Series 2003 3.80% 1/14/2003 8/1/2018 $ 4,500,000.00 $ 1,170,000.00 \r\n \r\nThe following schedule details debt service requirements to maturity for the School District's total general obligation bonds payable: \r\n \r\nFiscal Year Ended June 30: \r\n \r\nGeneral Obligation Debt \r\n \r\nPrincipal \r\n \r\nInterest \r\n \r\n2017 2018 2019 \r\n \r\n$ 370,000.00 $ 37,430.00 \r\n \r\n390,000.00 22,990.00 \r\n \r\n410,000.00 \r\n \r\n7,790.00 \r\n \r\nTotal Principal and Interest \r\n \r\n$ 1,170,000.00 $ 68,210.00 \r\n \r\nNOTE 8: RISK MANAGEMENT INSURANCE Commercial Insurance \r\nThe 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; and natural disasters. Except as described below, the School District carries commercial insurance for these risks. Settled claims resulting from these insured risks have not exceeded commercial insurance coverage in any of the past three fiscal years. \r\nThe School District has elected to self-insure for losses related to natural disasters. The School District has not experienced any losses related to this risk in the past three years. \r\n- 19 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nWORKERS' COMPENSATION Georgia Education Workers' Compensation Trust \r\n \r\nThe School District participates in the Georgia Education Workers' Compensation Trust (the Trust), a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general workers' compensation insurance coverage. Specific excess of loss insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2 million. The Trust covers the first $1 million of each Employers Liability claim with Safety National providing additional Employers Liability limits up to a $2 million per occurrence maximum. Safety National Casualty Company also provides $2 million in aggregate coverage to the Trust, attaching at 110% of the loss fund and based on the Fund's annual normal premium. \r\nUNEMPLOYMENT COMPENSATION \r\n \r\nThe School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the general fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. \r\n \r\nChanges in the unemployment compensation claims liability during the last two fiscal years are as follows: \r\n \r\nBeginning of Year Liability \r\n \r\nClaims and Changes in Estimates \r\n \r\nClaims Paid \r\n \r\nEnd of Year Liability \r\n \r\n2015 \r\n \r\n$ \r\n \r\n- \r\n \r\n$ 7,458.00 $ 7,458.00 $ \r\n \r\n- \r\n \r\n2016 \r\n \r\n$ \r\n \r\n- \r\n \r\n$ 6,680.00 $ 6,680.00 $ \r\n \r\n- \r\n \r\nSURETY BOND \r\n \r\nThe School District purchased surety bonds to provide additional insurance coverage as follows: \r\n \r\nPosition Covered \r\n \r\nAmount \r\n \r\nSuperintendent Finance Director Payroll Clerk \r\n \r\n$ \r\n \r\n30,000.00 \r\n \r\n$ \r\n \r\n10,000.00 \r\n \r\n$ \r\n \r\n10,000.00 \r\n \r\n- 20 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 9: FUND BALANCE CLASSIFICATION DETAILS \r\n \r\nThe School District's financial statements include the following amounts presented in the aggregate at June 30, 2016: \r\n \r\nNonspendable \r\n \r\nInventories \r\n \r\nRestricted \r\n \r\nBus Replacement \r\n \r\n$ \r\n \r\nContinuation of Federal Programs \r\n \r\nCapital Projects \r\n \r\nDebt Service \r\n \r\nAssigned \r\n \r\nLocal Capital Outlay Projects \r\n \r\n$ \r\n \r\nSchool Activity Accounts \r\n \r\nUnassigned \r\n \r\n$ \r\n \r\n4,938.88 \r\n \r\n39,451.00 334,028.73 247,723.60 392,230.00 \r\n \r\n1,013,433.33 \r\n \r\n75,280.36 9,448.54 \r\n \r\n84,728.90 1,880,257.20 \r\n \r\nFund Balance, June 30, 2016 \r\n \r\n$ 2,983,358.31 \r\n \r\nWhen multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds. \r\nNote 10: SIGNIFICANT CONTINGENT LIABILITIES \r\nFEDERAL GRANTS \r\nAmounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. Any disallowances resulting from the grantor audit may become a liability of the School District. However, the School District believes that such disallowances, if any, will be immaterial to its overall financial position. \r\nLITIGATION \r\nThe School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to have a material adverse effect on the financial condition of the School District. \r\nNOTE 11: POST-EMPLOYMENT BENEFITS \r\nGEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND \r\nPlan Description. The Georgia School Personnel Post-Employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). Additional information about the School OPEB Fund is disclosed in the State of Georgia Comprehensive Annual Financial Report. This report can be obtained from the Georgia Department of Audits and Accounts at www.audits.ga.gov/SGD/CAFR.html. \r\n \r\n- 21 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nFunding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012 pay approximately 25% of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy. \r\n \r\nParticipating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected \"payas-you-go\" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. \r\n \r\nThe combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2016: \r\n \r\nFor certificated teachers, librarians and regional educational service agencies and certain other eligible participants: \r\n \r\nJuly 1, 2015  June 30, 2016 \r\n \r\n$945.00 per member per month \r\n \r\nFor non-certificated school personnel: \r\n \r\nJuly 1, 2015  December 31, 2015 $596.20 per member per month \r\n \r\nJanuary 1, 2016  June 30, 2016 $746.20 per member per month \r\n \r\nNo additional contribution was required by the Board for fiscal year 2016 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation. \r\n \r\nThe School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage Contributed \r\n \r\nRequired Contribution \r\n \r\n2016 2015 2014 \r\n \r\n100% 100% 100% \r\n \r\n$ 579,499.33 $ 619,598.88 $ 672,167.60 \r\n \r\n- 22 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 12: RETIREMENT PLANS \r\nThe School District participates in various retirement plans administered by the State of Georgia, as further explained below. \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) \r\nPlan Description: All teachers of the School District as defined in O.C.G.A 47-3-60 and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers Retirement System of Georgia issues a publicly available separate financial audit report that can be obtained at www.trsga.com/publications. \r\nBenefits Provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death. \r\nContributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2016. The School District's contractually required contribution rate for the year ended June 30, 2016 was 14.27% of annual School District payroll. For the current fiscal year, employer contributions to the pension plan were $446,011.58 from the School District. \r\nPUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS) \r\nPlan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs. \r\nBenefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service. \r\nUpon retirement, the member will receive a monthly benefit of $14.75, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits. \r\nContributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined \r\n- 23 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nand paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. \r\nIndividuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current fiscal year contribution was $16,829.00. \r\nPension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions \r\nAt June 30, 2016, the School District reported a liability of $4,526,402.00 for its proportionate share of the net pension liability for TRS. \r\nThe net pension liability for TRS was measured as of June 30, 2015. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2014. An expected total pension liability as of June 30, 2015 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2015. \r\nAt June 30, 2015, the School District's TRS proportion was 0.029732%, which was an decrease of 0.000656% from its proportion measured as of June 30, 2014. \r\nAt June 30, 2016, the School District did not have a PSERS liability for a proportionate share of the net pension liability because of a Special Funding Situation with the State of Georgia, which is responsible for the net pension liability of the plan. The amount of the State's proportionate share of the net pension liability associated with the School District is $69,353.00. \r\nThe PSERS net pension liability was measured as of June 30, 2015. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2014. An expected total pension liability as of June 30, 2015 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2015. \r\nFor the year ended June 30, 2016, the School District recognized pension expense of $203,740.00 for TRS and $4,136.00 for PSERS and revenue of $4,136.00 for PSERS. The revenue is support provided by the State of Georgia. \r\n \r\n- 24 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nAt June 30, 2016, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: \r\n \r\nTRS \r\n \r\nDeferred \r\n \r\nDeferred \r\n \r\nOutflows of \r\n \r\nInflows of \r\n \r\nResources \r\n \r\nResources \r\n \r\nDifferences between expected and actual \r\n \r\nexperience \r\n \r\n$ \r\n \r\n- $ 39,812.00 \r\n \r\nNet difference between projected and actual earnings on pension plan investments \r\n \r\n- \r\n \r\n381,807.00 \r\n \r\nChanges in proportion and differences between School District contributions and proportionate share of contributions \r\n \r\n- \r\n \r\n327,363.00 \r\n \r\nSchool District contributions subsequent to the \r\n \r\nmeasurement date \r\n \r\n446,011.58 \r\n \r\n- \r\n \r\nTotal \r\n \r\n$ 446,011.58 $ 748,982.00 \r\n \r\nThe School District contributions subsequent to the measurement date of $446,011.58 for TRS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: \r\n \r\nYear Ended June 30: \r\n \r\nTRS \r\n \r\n2017 \r\n \r\n$ (278,001.00) \r\n \r\n2018 \r\n \r\n$ (278,001.00) \r\n \r\n2019 \r\n \r\n$ (278,001.00) \r\n \r\n2020 \r\n \r\n$ \r\n \r\n91,217.00 \r\n \r\n2021 \r\n \r\n$ \r\n \r\n(6,196.00) \r\n \r\nActuarial assumptions: The total pension liability as of June 30, 2015 was determined by an actuarial valuation as of June 30, 2014, using the following actuarial assumptions, applied to all periods included in the measurement: \r\n \r\nTeachers Retirement System: \r\n \r\nInflation \r\n \r\n3.00% \r\n \r\nSalary increases \r\n \r\n3.75%  7.00%, average, including inflation \r\n \r\nInvestment rate of return \r\n \r\n7.50%, net of pension plan investment expense, including inflation \r\n \r\n- 25 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nMortality rates were based on the RP-2000 Combined Mortality Table for Males or Females set back two years for males and set back three years for females. \r\n \r\nThe actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004  June 30, 2009. \r\nPublic School Employees Retirement System: \r\n \r\nInflation \r\n \r\n3.00% \r\n \r\nSalary increases \r\n \r\nN/A \r\n \r\nInvestment rate of return \r\n \r\n7.50%, net of pension plan investment expense, including inflation \r\n \r\nMortality rates were based on the RP-2000 Combined Mortality Table set forward one year for males for the period after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back two years for males and set forward one year for females for the period after disability retirement. \r\nThe actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004  June 30, 2009. \r\nThe long-term expected rate of return on TRS and PSERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: \r\n \r\nAsset class \r\n \r\nTarget allocation \r\n \r\nLong-term expected real rate of return* \r\n \r\nFixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks \r\nTotal \r\n \r\n30.00% 39.70% \r\n3.70% 1.60% 18.90% 6.10% \r\n100.00% \r\n \r\n3.00% 6.50% 10.00% 13.00% 6.50% 11.00% \r\n \r\n* Rates shown are net of the 3.00% assumed rate of inflation \r\n \r\nDiscount rate: The discount rate used to measure the total TRS and PSERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and PSERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. \r\n \r\n- 26 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"I\" \r\n \r\nSensitivity of the School District's proportionate share of the net pension liability to changes in the discount rate: The following presents the School District's proportionate share of the net \r\npension liability calculated using the discount rate of 7.50%, as well as what the School District's \r\nproportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate: \r\n \r\nTeachers Retirement System: \r\n \r\n1% Decrease (6.50%) \r\n \r\nCurrent Discount Rate (7.50%) \r\n \r\n1% Increase (8.50%) \r\n \r\nSchool District's proportionate share of the \r\n \r\nnet pension liability \r\n \r\n$ 7,778,279.00 $ \r\n \r\n4,526,402.00 $ 1,846,081.00 \r\n \r\nPension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS and PSERS financial report which is publically available at www.trsga.com/publications and http://www.ers.ga.gov/formspubs/formspubs.html. \r\n \r\nNOTE 13: SUBSEQUENT EVENTS \r\nOn June 13, 2017, voters authorized the School District to issue general obligation bonds in the amount of $3,500,000.00. The proceeds from these bonds will be used for future construction projects. \r\n \r\n- 27 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"1\" \r\n \r\nYear Ended \r\n \r\nSchool District's proportion of the net pension liability \r\n \r\nSchool District's proportionate share of the net pension liability \r\n \r\nSchool District's covered payroll \r\n \r\nSchool District's proportionate share of the net pension liability as a percentage of its covered \r\npayroll \r\n \r\nPlan fiduciary net position as a \r\npercentage of the total pension liability \r\n \r\n2016 2015 \r\n \r\n0.029732% $ 0.030388% $ \r\n \r\n4,526,402.00 $ 3,839,123.00 $ \r\n \r\n3,138,384.64 3,100,171.01 \r\n \r\n144.23% 123.84% \r\n \r\n81.44% 84.03% \r\n \r\nThis schedule is intended to show information for 10 years. Additional years will be displayed as they become available. \r\n \r\n- 29 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION \r\nSCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"2\" \r\n \r\nYear Ended \r\n \r\nContractually required contribution \r\n \r\nContributions in relation to the contractually required \r\ncontribution \r\n \r\nContribution deficiency (excess) \r\n \r\n2016 \r\n \r\n$ \r\n \r\n446,011.58 $ \r\n \r\n446,011.58 $ \r\n \r\n- \r\n \r\n2015 \r\n \r\n$ \r\n \r\n412,697.58 $ \r\n \r\n412,697.58 $ \r\n \r\n- \r\n \r\n2014 \r\n \r\n$ \r\n \r\n380,692.79 $ \r\n \r\n380,692.79 $ \r\n \r\n- \r\n \r\n2013 \r\n \r\n$ \r\n \r\n383,370.28 $ \r\n \r\n383,370.28 $ \r\n \r\n- \r\n \r\n2012 \r\n \r\n$ \r\n \r\n386,730.40 $ \r\n \r\n386,730.40 $ \r\n \r\n- \r\n \r\n2011 \r\n \r\n$ \r\n \r\n419,130.30 $ \r\n \r\n419,130.30 $ \r\n \r\n- \r\n \r\n2010 \r\n \r\n$ \r\n \r\n444,832.43 $ \r\n \r\n444,832.43 $ \r\n \r\n- \r\n \r\n2009 \r\n \r\n$ \r\n \r\n419,136.12 $ \r\n \r\n419,136.12 $ \r\n \r\n- \r\n \r\n2008 \r\n \r\n$ \r\n \r\n442,548.18 $ \r\n \r\n442,548.18 $ \r\n \r\n- \r\n \r\n2007 \r\n \r\n$ \r\n \r\n406,039.06 $ \r\n \r\n406,039.06 $ \r\n \r\n- \r\n \r\nSchool District's covered payroll \r\n$ 3,125,519.13 $ 3,138,384.64 $ 3,100,171.01 $ 3,359,949.87 $ 3,761,968.87 $ 4,077,143.00 $ 4,567,068.07 $ 4,516,553.02 $ 4,768,838.15 $ 4,375,420.91 \r\n \r\nContribution as a percentage of covered \r\npayroll \r\n14.27% 13.15% 12.28% 11.41% 10.28% 10.28% \r\n9.74% 9.28% 9.28% 9.28% \r\n \r\n- 30 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION \r\nFOR THE YEAR ENDED JUNE 30, 2016 \r\n \r\nSCHEDULE \"3\" \r\n \r\nTeachers Retirement System \r\n \r\nChanges of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience. \r\n \r\nMethod and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2016 reported in that schedule: \r\n \r\nValuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation rate Salary increases Investment rate of return \r\n \r\nJune 30, 2013 Entry age Level percentage of payroll, closed 30 years Five-year smoothed market 3.00% 3.75  7.00%, including inflation 7.50%, net of pension plan investment \r\nexpense, including inflation \r\n \r\n- 31 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND \r\nSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL \r\nYEAR ENDED JUNE 30, 2016 \r\n \r\nSCHEDULE \"4\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent 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 Other Support Services Enterprise Operations Food Services Operation \r\nTotal Expenditures \r\nExcess of Revenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nOther Sources Other Uses \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\nAdjustments \r\nFund Balances - Ending \r\n \r\nNONAPPROPRIATED BUDGETS \r\n \r\nORIGINAL (1) \r\n \r\nFINAL (1) \r\n \r\nACTUAL AMOUNTS \r\n \r\nVARIANCE OVER/UNDER \r\n \r\n$ \r\n \r\n2,971,805.40 $ \r\n \r\n10,140.00 \r\n \r\n2,709,088.99 \r\n \r\n1,120,924.00 \r\n \r\n60,000.00 \r\n \r\n1,700.00 \r\n \r\n95,500.00 \r\n \r\n6,969,158.39 \r\n \r\n2,971,805.40 $ 10,140.00 \r\n2,709,088.99 1,301,845.00 \r\n60,000.00 1,700.00 \r\n95,500.00 \r\n7,150,079.39 \r\n \r\n3,180,433.20 $ 1,771.72 \r\n2,607,464.03 1,169,488.89 \r\n101,558.52 1,705.56 \r\n72,952.44 \r\n7,135,374.36 \r\n \r\n208,627.80 (8,368.28) \r\n(101,624.96) (132,356.11) \r\n41,558.52 5.56 \r\n(22,547.56) \r\n(14,705.03) \r\n \r\n3,969,045.99 \r\n353,293.00 236,850.00 124,221.75 352,671.07 389,592.94 \r\n84,942.00 522,059.64 393,482.00 \r\n30,000.00 - \r\n513,000.00 \r\n6,969,158.39 \r\n- \r\n \r\n4,102,051.75 \r\n363,293.00 302,505.88 127,182.00 352,575.00 399,113.00 \r\n84,942.00 544,559.64 393,082.00 \r\n30,000.00 - \r\n510,589.00 \r\n7,209,893.27 \r\n(59,813.88) \r\n \r\n3,492,983.73 \r\n334,311.76 243,672.85 120,579.23 340,631.10 347,888.33 \r\n79,746.74 605,971.47 366,032.59 \r\n26,740.00 14,819.37 462,670.02 \r\n6,436,047.19 \r\n699,327.17 \r\n \r\n609,068.02 \r\n28,981.24 58,833.03 \r\n6,602.77 11,943.90 51,224.67 \r\n5,195.26 (61,411.83) 27,049.41 \r\n3,260.00 (14,819.37) 47,918.98 \r\n773,846.08 \r\n759,141.05 \r\n \r\n106,056.00 (106,056.00) \r\n- \r\n \r\n106,056.00 (106,056.00) \r\n(59,813.88) 1,318,840.56 \r\n(4,585.43) \r\n \r\n72,746.49 (72,746.49) \r\n699,327.17 1,568,797.18 \r\n- \r\n \r\n(33,309.51) 33,309.51 \r\n759,141.05 249,956.62 \r\n4,585.43 \r\n \r\n$ \r\n \r\n- $ \r\n \r\n1,254,441.25 $ \r\n \r\n2,268,124.35 $ \r\n \r\n1,013,683.10 \r\n \r\nNotes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual \r\n(1) Original and Final Budget amounts do not include the budgeted revenues and expenditures of the various principal accounts. The actual revenues and expenditures of the various principal accounts are $97,155.32 and $85,825.75, respectively. \r\nThe accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 32 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\nYEAR ENDED JUNE 30, 2016 \r\n \r\nSCHEDULE \"5\" \r\n \r\nFUNDING AGENCY PROGRAM/GRANT \r\nAgriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program \r\nTotal Child Nutrition Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Food Services Child Nutrition Discretionary Grants Limited Availability Fresh Fruit and Vegetable Program \r\nTotal Other Programs \r\nTotal U. S. Department of Agriculture \r\nEducation, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants \r\nTotal Special Education Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Improving Teacher Quality State Grants Title I Grants to Local Educational Agencies \r\nTotal Other Programs \r\nTotal U. S. Department of Education \r\nDefense, U. S. Department of Direct Department of the Army R.O.T.C. Program \r\n \r\nCFDA NUMBER \r\n \r\nPASSTHROUGH \r\nENTITY ID \r\nNUMBER \r\n \r\nEXPENDITURES IN PERIOD \r\n \r\n10.553 10.555 \r\n \r\n16165GA324N1099 $ 16165GA324N1099 \r\n \r\n137,075.18 282,172.77 \r\n419,247.95 \r\n \r\n10.579 10.582 \r\n \r\n15155GA350N8103 16145GA324L1603 \r\n \r\n1,103.02 12,897.70 \r\n14,000.72 \r\n433,248.67 \r\n \r\n84.027 84.173 \r\n \r\nH027A150073 H173A150081 \r\n \r\n84.048 84.367 84.010 \r\n \r\nV048A150010 S367A150001 S010A150010 \r\n \r\n137,606.27 18,162.00 \r\n155,768.27 \r\n11,001.07 84,606.26 448,722.62 544,329.95 700,098.22 \r\n66,898.45 \r\n \r\nTotal Expenditures of Federal Awards \r\n \r\n$ \r\n \r\n1,200,245.34 \r\n \r\nNotes to the Schedule of Expenditures of Federal Awards \r\nNote 1. Basis of Presentation \r\nThe accompanying schedule of expenditures of federal awards (the \"Schedule\") includes the federal award activity of the Talbot County Board of Education (the \"Board\") under programs of the federal government for the year ended June 30, 2016. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Board, it is not intended to and does not present the financial position or changes in net position of the Board. \r\nNote 2. Summary of Significant Accounting Policies \r\nExpenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The Board has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 33 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2016 \r\n \r\nSCHEDULE \"6\" \r\n \r\nAGENCY/FUNDING \r\nGRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program \r\nEducation, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Principal Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Mid-term Adjustment Hold-Harmless Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Sparsity Other State Programs Food Services Math and Science Supplements Preschool Disability Services Vocational Education \r\nGeorgia State Financing and Investment Commission Reimbursement on Construction Projects \r\nOffice of the State Treasurer Public School Employees Retirement \r\n \r\nGOVERNMENTAL FUND TYPES \r\n \r\nCAPITAL \r\n \r\nGENERAL \r\n \r\nPROJECTS \r\n \r\nFUND \r\n \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ \r\n \r\n65,003.10 $ \r\n \r\n- $ \r\n \r\n65,003.10 \r\n \r\n127,948.00 (4,632.00) \r\n399,918.00 22,675.00 \r\n123,745.00 10,883.00 \r\n269,275.00 281,021.00 \r\n95,665.00 267,946.00 \r\n(6,081.00) 19,901.00 45,398.00 15,104.00 \r\n6,969.00 202.00 \r\n218,469.00 109,011.00 \r\n99,508.00 70,308.00 (145,850.00) \r\n143,821.00 45,000.00 \r\n268,253.00 \r\n10,590.00 5,807.99 2,404.00 \r\n22,372.94 \r\n- \r\n16,829.00 \r\n \r\n- \r\n- \r\n- \r\n- \r\n550,473.91 \r\n- \r\n \r\n127,948.00 (4,632.00) \r\n399,918.00 22,675.00 \r\n123,745.00 10,883.00 \r\n269,275.00 281,021.00 \r\n95,665.00 267,946.00 \r\n(6,081.00) 19,901.00 45,398.00 15,104.00 \r\n6,969.00 202.00 \r\n218,469.00 109,011.00 \r\n99,508.00 70,308.00 (145,850.00) \r\n143,821.00 45,000.00 \r\n268,253.00 \r\n10,590.00 5,807.99 2,404.00 \r\n22,372.94 \r\n550,473.91 \r\n16,829.00 \r\n \r\n$ \r\n \r\n2,607,464.03 $ \r\n \r\n550,473.91 $ \r\n \r\n3,157,937.94 \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 34 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS \r\nYEAR ENDED JUNE 30, 2016 \r\n \r\nSCHEDULE \"7\" \r\n \r\nPROJECT \r\n \r\nORIGINAL ESTIMATED \r\nCOST (1) \r\n \r\nCURRENT ESTIMATED COSTS (2) \r\n \r\nAMOUNT EXPENDED IN CURRENT YEAR (3) \r\n \r\nAMOUNT EXPENDED IN PRIOR YEARS (3) \r\n \r\nTOTAL COMPLETION \r\nCOST \r\n \r\nEXCESS PROCEEDS NOT \r\nEXPENDED \r\n \r\nAcquiring, constructing and \r\n \r\nequipping one new elementary \r\n \r\nschool, adding to, renovating, \r\n \r\nrepairing, improving and equipping \r\n \r\nexisting school building and other \r\n \r\nbuildings and facilities useful or \r\n \r\ndesireable in connection therewith \r\n \r\npayment of capitalized interest to \r\n \r\nthe bonds through and including \r\n \r\nAugust 1, 2003; and the costs of \r\n \r\nissuing the bonds. \r\n \r\n$ 2,500,000.00 $ 14,801,615.10 $ 382,491.13 $ 14,084,458.27 $ \r\n \r\n- $ \r\n \r\n- \r\n \r\nESTIMATED COMPLETION \r\nDATE \r\n \r\n(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. \r\n(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion. \r\n(3) The voters of Talbot County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 35 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\n \r\nREPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE \r\n \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nHonorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nLadies and Gentlemen: \r\nReport on Compliance for Each Major Federal Program \r\nWe have audited Talbot County Board of Education's (School District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2016. The School District's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. \r\nManagement's Responsibility \r\nManagement is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. \r\nAuditor's Responsibility \r\nOur responsibility is to express an opinion on compliance for each of the School District's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. \r\n \r\n (This page left intentionally blank) \r\n \r\n We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the School District's compliance. \r\nBasis for Qualified Opinion on Chrld Nutrition Cluster (CFDA 10.553 \u0026 10.555) and Title I Grants to Local Education Agencies (CFDA 84.010) \r\nAs described in the accompanying Schedule of Findings and Questioned Costs, the School District did not comply with requirements regarding Child Nutrition Cluster (CFDA 10.553 \u0026 10.555) and Title I Grants to Local Education Agencies (CFDA 84.010) as described in item FA 2016-001 for Cash Management and FA 2016-002 for Activities Allowed or Unallowed and Allowable Cost/Cost Principles. Compliance with such requirements is necessary, in our opinion, for the School District to comply with requirements applicable to those programs. \r\nQualified Opinion on Chrld Nutrition Cluster (CFDA 10.553 \u0026 10.555) and Title I Grants to Local Education Agencies (CFDA 84.010) \r\nIn our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on Child Nutrition Cluster (CFDA 10.533 \u0026 10.555) and Title I Grants to Local Education Agencies (CFDA 84.010) for the year ended June 30, 2016. \r\nOther Matters \r\nThe School District's response to the noncompliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. \r\nReport on Internal Control over Compliance \r\nManagement of the School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control over compliance. \r\nOur consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses and a significant deficiency. \r\n \r\n (This page left intentionally blank) \r\n \r\n A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as items FA 2016-001 and FA 2016-002, to be material weaknesses. \r\nA significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiency in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as item FA 2016-003 to be a significant deficiency. \r\nThe School District's response to the internal control over compliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. \r\nThe purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nSeptember 14, 2020 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\n \r\nREPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER \r\nMATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\n \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nHonorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nLadies and Gentlemen: \r\nWe have audited, 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, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Talbot County Board of Education (School District) as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements and have issued our report thereon dated September 14, 2020. \r\nInternal Control Over Financial Reporting \r\nIn planning and performing our audit of the financial statements, we considered the School District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control. \r\nOur consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies. \r\nA deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and \r\n \r\n (This page left intentionally blank) \r\n \r\n corrected on a timely basis. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS 2016-001, FS 2016-002, FS 2016-004, and FS 2016-006, to be material weaknesses. \r\nA significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS 2016-003 and FS 2016-005, to be significant deficiencies. \r\nCompliance and Other Matters \r\nAs part of obtaining reasonable assurance about whether the School District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. \r\nSchool District's Response to Findings \r\nThe School District's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. \r\nPurpose of this Report \r\nThe purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nSeptember 14, 2020 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS-7301-13-01 \r\n \r\nInadequate Internal Controls Procedures \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nCash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2014-001 \r\n \r\nInadequate Internal Controls Procedures \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nCash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2015-001 \r\n \r\nInadequate Internal Controls Procedures \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nCash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe Board will implement controls over cash to ensure that cash is properly reconciled to general ledger and cash activity. \r\n \r\nFS-7301-13-02 \r\n \r\nInadequate Internal Controls over School Activity Accounts \r\n \r\nControl Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nCash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2014-002 \r\n \r\nInadequate Internal Controls over School Activity Accounts \r\n \r\nControl Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nCash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2015-002 \r\n \r\nInadequate Internal Controls over School Activity Accounts \r\n \r\nControl Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nCash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nManagement will ensure that transactions are processed according to procedures and accurately monitored and reconciled to the general ledger. \r\n \r\nFS-7301-13-04 \r\n \r\nInadequate Controls over Financial Reporting \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nFinancial Reporting Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPrevious Corrective Action Plan Implemented \r\n \r\nFS 2014-003 \r\n \r\nInadequate Controls over Financial Reporting \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nFinancial Reporting Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPrevious Corrective Action Plan Implemented \r\n \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2015-003 \r\n \r\nInadequate Controls over Financial Reporting \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nFinancial Reporting Material Weakness None \r\n \r\nFinding Status: \r\n \r\nPrevious Corrective Action Plan Implemented \r\n \r\nFS-7301-13-05 \r\n \r\nInadequate Internal Controls over Employee Compensation \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nEmployee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2014-004 \r\n \r\nInadequate Internal Controls over Employee Compensation \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nEmployee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2015-004 \r\n \r\nInadequate Internal Controls over Employee Compensation \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nEmployee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe Board will implement policies and procedures to ensure that business procedures are followed for all salaries, ensuring that salaries are paid according to approved salary schedules and adequate documentation will be maintained to support the salary payments. \r\n \r\nFS-7301-13-06 \r\n \r\nFailure to Adequately Maintain Capital Assets \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nCapital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2014-005 \r\n \r\nFailure to Adequately Maintain Capital Assets \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nCapital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2015-005 \r\n \r\nFailure to Adequately Maintain Capital Assets \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nCapital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe Board will implement procedures to ensure capital asset records conform to the approved capital assets policy. \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2014-002 \r\n \r\nFailure to Refund Unexpended Grants \r\n \r\nCompliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nReporting Material Weakness Material Noncompliance U.S. Department of Education None Early Reading First (CFDA 84.359) U.S. Department of Health and Human Services None Child Care and development Block Grant (CFDA 93.575) U.S. Department of Justice Children and Youth Coordinating Council Juvenile Justice and Delinquency Prevention (CFDA 16.540) U.S. Department of Education Georgia Department of Education Title I Grants to Local Education Agencies (CFDA 84.010) Improving Teacher Quality State Grants (CFDA 84.367) \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nManagement is working to determine what happened with these grants. We are trying to determine what caused these errors and correct them appropriately. \r\n \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2015-001 \r\n \r\nRefund Unexpended Grants \r\n \r\nCompliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nReporting Material Weakness Material Noncompliance U.S. Department of Education None Early Reading First (CFDA 84.359) U.S. Department of Health and Human Services Children and Youth Coordinating Council Child Care and development Block Grant (CFDA 93.575) U.S. Department of Justice Children and Youth Coordinating Council Juvenile Justice and Delinquency Prevention (CFDA 16.540) U.S. Department of Education Georgia Department of Education Title I Grants to Local Education Agencies (CFDA 84.010) \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThis is a long ongoing finding that we wish to work with the Georgia Department of Education's federal program division for conclusion for these long standing findings. \r\n \r\nFA 2014-003 \r\n \r\nInadequate Control Over the Cash Management Process \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: Title I Grants to Local Education Agencies (CFDA 84.010) \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nManagement is working on procedures to control cash management. \r\n \r\nFA 2015-002 \r\n \r\nControls Over the Cash Management Process \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: Title I Grants to Local Education Agencies (CFDA 84.010) \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nManagement has implemented procedures to monitor the cash monthly balances for all programs when requesting reimbursement for federal and state programs. \r\n \r\n- 5 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION IV FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2016 \r\n \r\nI SUMMARY OF AUDITOR'S RESULTS \r\n \r\nFinancial Statements \r\n \r\nType of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund Aggregate Remaining Fund Information \r\n \r\nUnmodified Qualified \r\n \r\nInternal control over financial reporting: \r\n \r\n Material weaknesses identified? \r\n \r\nYes \r\n \r\n Significant deficiencies identified? \r\n \r\nYes \r\n \r\nNoncompliance material to financial statements noted: \r\n \r\nNo \r\n \r\nFederal Awards \r\n \r\nInternal Control over major programs: \r\n \r\n Material weaknesses identified? \r\n \r\nYes \r\n \r\n Significant deficiency identified? \r\n \r\nYes \r\n \r\nType of auditor's report issued on compliance for major programs: Unmodified for all major programs except for Child Nutrition Cluster and Title I Grants to Local Educational Agencies, which was qualified. \r\n \r\nAny audit findings disclosed that are required to be reported in \r\n \r\naccordance with 2 CFR 200.516(a)? \r\n \r\nYes \r\n \r\nIdentification of major programs: \r\n \r\nCFDA Numbers \r\n \r\nName of Federal Program or Cluster \r\n \r\n10.553, 10.555 84.010 \r\n \r\nChild Nutrition Cluster Title I Grants to Local Educational Agencies \r\n \r\nDollar threshold used to distinguish between Type A and Type B programs: \r\n \r\n$750,000.00 \r\n \r\nAuditee qualified as low-risk auditee? \r\n \r\nNo \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2016 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2016-001 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Control Procedures Cash and Cash Equivalents Material Weakness None FS 2015-001, FS 2014-001, FS-7301-13-01, FS-7301-12-02 \r\n \r\nDescription: The accounting procedures of the School District were insufficient to provide adequate internal controls over the Cash and Cash Equivalents functions. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls over Cash and Cash Equivalents. \r\n \r\nCondition: The following Cash and Cash Equivalents related deficiencies were noted: \r\n Bank reconciliations were not performed by someone independent of the general ledger function. \r\n Misstatements were noted on Note Disclosure 4 for the carrying amount and the bank balance amount. \r\n Five bank accounts were not properly reconciled to the June 30, 2016 general ledger balance.  Reconciliations, including bank statements and supporting documentation, were not provided \r\nfor two accounts.  Ten reconciliations lacked evidence of timely completion through completion dates for both \r\nthe preparer and approver.  One reconciliation lacked the preparers signature. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the cause was a direct result of the lack of time and resources to fully separate duties to ensure that internal controls were effective. \r\n \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over cash activity increases the risk significant misstatements could occur in the financial statements due to error or fraud. \r\n \r\nRecommendation: Management should take appropriate steps to ensure the time and resources are made available to implement controls over cash to ensure monthly bank reconciliations are preformed accurately by someone independent of the general ledger. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2016 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2016-002 Control Category: \r\nInternal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None FS 2015-002, FS 2014-002, FS-7301-13-02, FS-7301-12-03 \r\n \r\nDescription: The accounting procedures of the School District were insufficient to provide adequate internal controls over the school activity accounts. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and provide reasonable assurance transactions are processed according to established procedures. \r\n \r\nCondition: The following errors were noted with the School District's school activity accounts: Cash and Cash Equivalents \r\n Reconciliation including bank statement and supporting documentation was not provided for the CSS Internal School Funds account. \r\n \r\nRevenues/Receivables/Receipts  The deposit preparation function was not separated from the bank reconciliations and general ledger functions.  The depositing of funds in the bank was not a standard process for all school activity accounts.  No receipt documentation was provided for one receipt selected for review. \r\n \r\nExpenditures/Liabilities/Disbursements A review of eight vouchers revealed the following deficiencies: \r\n None of the vouchers had evidence of review or approval;  Four expenditures were not supported by an invoice or any other applicable documentation;  Two expenditures lacked evidence of receipt of the purchase. \r\n \r\nAccounting Controls (Overall)  An administrative review of the bank reconciliation process, cash receipt process, and cash disbursement process to determine if established procedures were being followed was not performed.  The School District did not have a formal process for documenting agency fund sponsors, purpose of accounts, allowable activities of accounts, source of funds, and final disposition of funds related to individual agency fund accounts. \r\n \r\nGeneral Ledger  The year-end General Ledger balance did not agree to the school activity ledger reports. Additionally, per the school activity ledger reports, five accounts were misclassified between governmental and agency, four accounts had beginning balances that did not agree to prior year ending balances, and four accounts had deficit balances. \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2016 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the internal control deficiencies related to school activity accounts occurred due to a shortage of personnel at the school and a failure of those personnel to follow the established policies and procedures. \r\n \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over school activity accounts increases the risk that misstatements could occur in the financial statements due to error or fraud. \r\n \r\nRecommendation: Management should take appropriate steps to ensure the time and resources are made available to ensure proper separation of duties is established, proper approval process for disbursements is followed, safe keeping of receipt documentation is implemented, accounting processes are adequately monitored, school activity accounts are properly classified, financial statement amounts are reconciled to the schools' general ledger balances and bank statement balance, standard procedures are implemented over the depositing of funds, amounts reported in consolidation spreadsheet for school activity accounts is accurate, and agency fund accounts are properly documented. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFS 2016-003 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over Employee Compensation Employee Compensation Significant Deficiency None FS 2015-004,FS 2014-004, FS-7301-13-05, FS-7301-12-04 \r\n \r\nDescription: The accounting procedures of the School District were insufficient to provide adequate internal controls over employee compensation. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance employees are paid according to approved salary schedules and documentation is maintained to support the salary payments. \r\n \r\nCondition: Based on a review of employees' payroll records, the following deficiencies were noted: \r\n A review of employee compensation revealed instances where salaries and/or hourly payments were not properly supported by signed contracts and/or Board approved salary schedules. \r\n One employee selected for review was overpaid $4,500.00 due to receiving a supplement twice. \r\n \r\nCause: In discussing these deficiencies with the School District, they indicated that appropriate procedures to ensure salary amounts are supported by adequate documentation had not been implemented. \r\n \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2016 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nEffect or Potential Effect: The failure to maintain adequate internal controls over employee compensation increases the risk that misstatements could occur in the financial statements due to error or fraud. \r\n \r\nRecommendation: The School District should implement policies and procedures to ensure normal business procedures are followed for all salaries, which includes ensuring salaries are paid according to approved salary schedules and adequate documentation is maintained to support the salary payments. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFS 2016-004 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over Capital Assets Capital Assets Material Weakness None FS 2015-005, FS 2014-005, FS-7301-13-06, FS-7301-12-05 \r\n \r\nDescription: The School District did not adequately maintain the capital assets records. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that capital assets inventory reports are properly maintained. Chapter 37 Implementing a Capital Assets Management System of the Financial Management for Georgia Local Units of Administration provides that School Districts must establish capital asset policies, define system requirements, implement a capital asset system and maintain capital asset inventory reports. \r\n \r\nCondition: The following School District's capital asset records revealed the following exceptions: \r\n The entity was unable to provide a capital asset listing that was accurate or complete. The listing did not contain all items reported on the prior year listing nor had it been updated to include items noted by auditors in the previous audit. \r\n Documentation of a physical inventory of capital assets was not provided.  A fiscal year 2016 equipment expenditure totaling $42,851.85 was incorrectly recorded in the \r\nsubsequent period. The School District did not record current year activity; therefore a material adjustment was noted.  The capital asset note disclosure reports depreciation expense that does not agree to the capital asset listing. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the cause was a direct result of the lack of time and resources to fully monitor and implement procedures over Capital Assets which follow Board policy. \r\n \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over capital assets can lead to inaccurate internal and external reporting, as well as, noncompliance with generally accepted accounting principles. \r\n \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2016 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nRecommendation: Management should take appropriate steps to ensure the time and resources are made available to implement controls over capital assets to ensure records are accurate and conform to the School District's approved capital asset policy. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFS 2016-005 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls at the Central Office Accounting Controls (Overall) Expenditures/Liabilities/Disbursements Significant Deficiency None \r\n \r\nDescription: The accounting procedures of the School District were insufficient to provide adequate internal controls at the Central Office. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures. \r\n \r\nCondition: Accounting Controls (Overall) \r\n The School District does not have adequate logical access controls in place to ensure only appropriate users have access to significant financial applications and supporting infrastructure. We noted several users with access rights that exceeded their need to complete their assigned job functions. Further, the access granted did not adequately separate the functions of initiating, authorizing, and recording transactions, reconciliations, and maintaining the custody of assets. \r\n Inadequate physical access controls are in place over the server rooms. It was noted that both the main server room and supplementary server room were unlocked and in high traffic areas. \r\n Proper anti-virus protection was not in place at the workstation level. For efficiency, IT personnel performs a full memory wipe and restore for any workstation that becomes compromised. This exposes the entity to unnecessary risk from cyber threats. \r\n There are no established written organizational standards or procedures over IT functions and key processes. Considering the School District has only one full time IT personnel, formal written procedures such as back-up policies, job scheduling, and IT risk assessment is crucial. \r\n Back-ups over the point of sale system are not properly documented or maintained in a separate location from the main sever. \r\n \r\nExpenditures/Liabilities/Disbursements Our examination of twenty-six expenditures revealed the following deficiencies: \r\n Supporting documentation for six expenditure transactions selected for review could not be provided by the School District. \r\n One expenditure selected for review lacked evidence of proper review and approval. \r\n \r\n- 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2016 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCause: In discussing this deficiency with School District, they stated that these issues were a result of management's failure to ensure that internal controls were established, implemented, and functioning. \r\n \r\nEffect or Potential Effect: Without satisfactory accounting controls and procedures in place, the School District could place itself in a position where potential misappropriation of assets could occur. In addition, the lack of proper controls impacts its reporting and financial position and results of operations. \r\n \r\nRecommendation: The School District should implement procedures to ensure that key accounting functions are appropriately separated and/or utilize management oversight for these incompatible activities. In addition, the School District should ensure server rooms are properly safeguarded and monitored, and adequate protection from cyber threats exists on all workstations. The School District should review accounting procedures in place and design and implement procedures relative to expenditures to strengthen the internal controls over the accounting function. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFS 2016-006 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Financial Reporting Financial Reporting Material Weakness None \r\n \r\nDescription: The School District did not have adequate controls in place over the financial statement reporting process to ensure all required activity was correctly included in the financial statement information presented for audit. The original financial statements, as presented for audit, contained numerous material and significant errors and omissions. \r\n \r\nCriteria: Management is responsible for having adequate controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). The School District's internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills, and experience to prepare GAAP based financial statements and include all disclosures as required by the Governmental Accounting Standards Board (GASB). \r\nGASB Statement No. 34, Basic Financial Statements  Management's Discussion and Analysis  for State and Local Governments (Statement), requires governments to present government-wide and fund financial statements as well as summary reconciliation of the (a) total governmental funds balances to the net position of governmental activities in the Statement of Net Position, and (b) total changes in governmental fund balances to the change in the net position of governmental activities in the Statement of Activities. In addition, the statement requires information about the government's major and nonmajor funds in the aggregate, to be provided in the fund financial statements. \r\n \r\nChapter 112, Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles. \r\n \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2016 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCondition: The following errors and omissions were noted in the School District's financial statement presented for audit: \r\n A material audit reclassification was proposed and accepted by the School District to correctly report restricted for continuation of federal programs net position and unrestricted net position. Restricted for continuation of federal programs was understated by $187,882.77 and unrestricted was overstated by $169,661.90. \r\n A material audit adjustment of $42,851.85 was proposed and accepted by the School District to correctly report Capital Projects Fund expenditures in the proper period. \r\n Material errors were noted for the SPLOST schedule due to expenditures already reported in the prior year being included in the current year expenditure total. Audit adjustments were proposed by the auditor and accepted by the School District to properly report the SPLOST schedule. \r\n A review of federal grant fund balances revealed that several grants were not properly closed out at year-end. Federal programs should be reviewed each year to determine if funds should be refunded to the grantor or if a transfer or receivable is necessary to cover a deficit balance. \r\n Several other audit adjustments and reclassifications were proposed by auditors and accepted by the School District to properly present the financial statement and note disclosures. \r\nCause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of review of the financial statements and note disclosures as prepared by their consultant. \r\nEffect or Potential Effect: Material and significant misstatements and misclassifications were included in the financial statements presented for audit. Numerous adjustments were necessary for the School District's financial statements to be in conformity with GAAP. The lack of controls and monitoring could impact the reporting of the School District's financial position and results of operations. \r\nRecommendation: The School District should strengthen their internal controls and preparation and review procedures over financial reporting to ensure that the financial statements, including disclosures, presented for audit are complete and accurate. These procedures should be performed by a properly trained individual(s) possessing a thorough understanding of the applicable GAAP, GASB pronouncements and knowledge of the School District's activities and operations. The School District should also consider implementing the use of a review checklist to assist in the review process over the financial statements. \r\nViews of Responsible Officials: We concur with this finding. \r\n- 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2016 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2016-001 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Repeat of Prior Year Finding: \r\n \r\nImprove Controls Over the Cash Management Process Cash Management Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education Title I Grants to Local Education Agencies (CFDA 84.010) S010A150010 FA 2015-002, FA 2014-003 \r\n \r\nDescription: The School District made cash drawdowns in excess of immediate cash needs for the Title I program. \r\n \r\nCriteria: 2 CFR 200.305(b) states, \"For non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from...the pass-through entity and the disbursement by the non-Federal entity.\" In addition, 2 CFR 200.302(b)(6) requires that the entity develop written cash management procedures. \r\n \r\nCondition: Upon review of cash drawdowns and disbursements related to the Title I program, cash balances in excess of Title I program materiality were observed for a quarter of the fiscal year. Additionally, it was noted that the School District did not have appropriate controls in place over the cash drawdown process. \r\n \r\nQuestioned Cost: N/A \r\n \r\nCause: In discussing the issues with management, they indicated that the failure to reverse the prior year salary accruals until the end of the fiscal year resulted in excess cash drawdown requests. \r\n \r\nEffect or Potential Effect: The School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. In addition, the School District could potentially accrue a Federal interest liability that would be owed to the Federal government. \r\n \r\nRecommendation: The School District should develop and implement procedures to accurately forecast the cash needs of the Title I program and minimize the time elapsing between the transfer of funds from the Georgia Department of Education and the disbursement of such funds by the School District. These procedures should be documented in accordance with 2 CFR 200.302(b)(6). In addition, management should develop and implement a monitoring process to ensure that these procedures are followed. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\n- 9 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2016 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2016-002 Compliance Requirement: \r\nInternal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\nFederal Award Numbers: \r\nQuestioned Costs: \r\n \r\nControls Over Expenditures Activities Allowed or Unallowed Allowable Costs/Cost Principles Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education Title I Grants to Local Education Agencies (CFDA 84.010) Child Nutrition Cluster (CFDA 10.553 \u0026 10.555) S010A150010 16165GA324N1099 $104,652.88 \r\n \r\nDescription: A review of expenditures charged to the Special Education Cluster (CFDA 84.173 and 84.027) program and Child Nutrition Cluster (CFDA 10.553 and 10.555) revealed that the School District's internal control procedures were not operating appropriately to ensure that expenditures were properly approved. \r\n \r\nCriteria: 2 CFR 200.403 states in part that \"costs must meet the following general criteria in order to be allowable under federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles... (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity...\" (g) Be adequately documented...\" \r\n \r\n2 CFR 200.430(h)(8)(i)(1) states in part that \"charges to federal awards must be based on records that accurately reflect the work performed... (i) Be supported by a system of internal control which provides reasonable assurance that charges are accurate, allowable, and properly allocated.\" \r\n \r\n2 CFR 200.303(a) states that the non-Federal entity must \"establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award.\" \r\n \r\nCondition: Our review of expenditures paid from the Child Nutrition Cluster program revealed the following: \r\n One out of seventeen expenditure transactions lacked supporting documentation.  Timesheets for the three employees lacked evidence of review and approval. Our review of expenditures paid from the Title I program revealed the following:  Six out of thirteen expenditure transactions lacked supporting documentation. \r\n \r\nQuestioned Cost: $90,994.93 in Title I Grants to Local Education Agencies $13,657.95 in Child Nutrition Cluster \r\n \r\nCause: In discussing this deficiency with the School District, they stated these issues were a result of poor record retention of previous central office employees. \r\n \r\n- 10 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2016 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nEffect or Potential Effect: Failure to ensure that supporting documentation of expenditures is properly maintained and that evidence of proper review and approval is noted resulted in noncompliance with the requirements of the federal grant awards. \r\n \r\nRecommendation: The School District should implement procedures to ensure that all supporting documentation is maintained and that proper review and approval is well documented. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFA 2016-003 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Costs: \r\n \r\nImprove Controls over Equipment Equipment and Real Property Management Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 \u0026 10.555) 16165GA324N1099 None Identified \r\n \r\nDescription: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Child Nutrition Cluster. \r\n \r\nCriteria: 2 CFR 200.313(d)(1) states, \"Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.\" In addition, 2 CFR 200.313(d)(2) states, \"A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years.\" \r\n \r\nCondition: The following deficiencies were noted when reviewing the Child Nutrition Cluster equipment listing: \r\n \r\n Property records did not include the following required components: (1) Percentage of Federal participation in the project costs for the Federal award under which the property was acquired (2) who holds the title and (3) condition of property. \r\n There was no evidence that a physical inventory has been performed in either the current year or the previous year. \r\n \r\nCause: The internal control process by which equipment items get aggregated and reported does not appear fully effective. In discussing the deficiency with management, they state that communication difficulties exist between the responsible parties of purchasing equipment, labeling equipment, performance of the annual inventory, and recording equipment items on the listings. \r\n- 11 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2016 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Effect or Potential Effect: Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or Federal funds. Additionally, the School District is not in compliance with the Uniform Guidance. Recommendation: The School District should strengthen controls over Child Nutrition Cluster equipment to ensure that the equipment records are complete and accurate. Management should update the equipment listing to reflect all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. Management should perform a physical inventory of equipment at least once every two years and reconcile the results of the physical inventory to the Head Start equipment listing. Views of Responsible Officials: We concur with this finding. \r\n- 12 - \r\n \r\n SECTION V MANAGEMENT'S CORRECTIVE ACTION \r\n \r\n (This page left intentionally blank) \r\n \r\n    "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2017-belec-p-btext","title":"Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended 2017 June 30 (including independent auditor's reports)","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2020-09-14"],"dcterms_description":["Annual financial report for the Talbot County Board of Education."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Georgia. Department of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Talbot County Board of Education (Ga.)--Appropriations and expenditures--Periodicals.","Education--Georgia--Talbot County--Auditing--Periodicals.","Education--Georgia--Talbot County--Finance--Statistics--Periodicals.","Georgia Government Documents--Serial"],"dcterms_title":["Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended 2017 June 30 (including independent auditor's reports)"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2017-belec-p-btext"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2017-belec-p-btext"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records","audits","financial records","financial statements"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"TALBOT COUNTY BOARD OF EDUCATION \r\nTALBOTTON, GEORGIA \r\nANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2017 \r\n(Including Independent Auditor's Reports) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nEXHIBITS \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nGOVERNMENT-WIDE FINANCIAL STATEMENTS \r\n \r\nA \r\n \r\nSTATEMENT OF NET POSITION \r\n \r\nB \r\n \r\nSTATEMENT OF ACTIVITIES \r\n \r\nFUND FINANCIAL STATEMENTS \r\n \r\nC \r\n \r\nBALANCE SHEET \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nD \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\n \r\nTO THE STATEMENT OF NET POSITION \r\n \r\nE \r\n \r\nSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES \r\n \r\nIN FUND BALANCES \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nF \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT \r\n \r\nOF REVENUES, EXPENDITURES AND CHANGES IN FUND \r\n \r\nBALANCES TO THE STATEMENT OF ACTIVITIES \r\n \r\nG \r\n \r\nSTATEMENT OF FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\nH \r\n \r\nSTATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\nI NOTES TO THE BASIC FINANCIAL STATEMENTS \r\n \r\nSCHEDULES \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\n2 SCHEDULE OF CONTRIBUTIONS  TEACHERS RETIREMENT SYSTEM OF GEORGIA 3 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION 4 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES \r\nIN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND \r\n \r\nSUPPLEMENTARY INFORMATION \r\n \r\n5 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 6 SCHEDULE OF STATE REVENUE 7 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS \r\n \r\nPage \r\n1 2 \r\n3 4 5 6 7 8 10 \r\n29 30 31 32 \r\n33 34 35 \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS  \r\nSECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE \r\nSECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\nSECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nSECTION V MANAGEMENT'S CORRECTIVE ACTION FOR CURRENT YEAR FINDINGS SCHEDULE OF MANAGEMENT'S CORRECTIVE ACTION \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION I FINANCIAL \r\n \r\n (This page left intentionally blank) \r\n \r\n GREG S. GRIFFIN \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nReport on the Financial Statements \r\nWe have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Talbot County Board of Education (School District), as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements as listed in the table of contents. \r\nManagement's Responsibility for the Financial Statements \r\nManagement is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. \r\nAuditor's Responsibility \r\nOur responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 from material misstatement. \r\nAn audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. \r\n \r\n (This page left intentionally blank) \r\n \r\n We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. \r\n \r\nSummary of Opinions \r\n \r\nOpinion Unit Governmental Activities General Fund Capital Projects Fund Debt Service Fund Aggregate Remaining Fund Information \r\n \r\nType of Opinion Unmodified Unmodified Unmodified Unmodified Qualified \r\n \r\nBasis for Qualified Opinion on Aggregate Remaining Fund Information \r\n \r\nManagement has not recorded school activity (principal's) accounts maintained at the individual schools in the governmental activities, general fund or fiduciary fund (which comprise a material portion of the aggregate remaining fund information) as appropriate. Accounting principles generally accepted in the United States of America require that the assets, liabilities, revenues, expense or expenditures, as appropriate, and the respective changes in financial position of these accounts be reflected in these financial statements. The aggregate effect on the financial statements of this variance or omission has not been determined, but is believed to be material. \r\nQualified Opinion \r\n \r\nIn our opinion, except for the effects of the matter described in the \"Basis for Qualified Opinion on the Aggregate Remaining Fund information\" paragraph, the financial statements referred to above present fairly, in all material respects, the respective financial position of the aggregate remaining fund information of the School District, as of June 30, 2017, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. \r\nUnmodified Opinions \r\n \r\nIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the general fund, the capital projects fund, and the debt service fund of the School District, as of June 30, 2017, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. \r\nEmphasis of Matter \r\n \r\nAs described in Note 2 to the financial statements, in 2017, the School District adopted new accounting guidance, Governmental Accounting Standards Board (GASB) GASB Statement No. 77, Tax Abatement Disclosures, GASB Statement No. 80, Blending Requirements for Certain Component Units, and GASB Statement No. 82, Pension Issues. Our opinions are not modified with respect to \r\nthese matters. \r\n \r\n (This page left intentionally blank) \r\n \r\n Other Matters \r\nRequired Supplementary Information \r\nManagement has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. \r\nAccounting principles generally accepted in the United States of America require that the required supplementary information listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. \r\nOther Information \r\nOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District's basic financial statements. The accompanying supplementary information, as listed in the table of contents, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U. S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. \r\nThe accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. \r\nOther Reporting Required by Government Auditing Standards \r\nIn accordance with Government Auditing Standards, we have also issued our report dated September 14, 2020 on our consideration of the School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control over financial \r\n \r\n (This page left intentionally blank) \r\n \r\n reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control over financial reporting and compliance. \r\nA copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. \r\nRespectfully submitted, \r\n \r\nSeptember 14, 2020 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2017 \r\nASSETS \r\nCash and Cash Equivalents Investments Receivables, Net \r\nTaxes State Government Federal Government Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation) \r\nTotal Assets \r\nDEFERRED OUTFLOWS OF RESOURCES \r\nRelated to Defined Benefit Pension Plan \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Interest Payable Net Pension Liability Long-Term Liabilities \r\nDue Within One Year Due in More Than One Year \r\nTotal Liabilities \r\nDEFERRED INFLOWS OF RESOURCES \r\nRelated to Defined Benefit Pension Plan \r\nNET POSITION \r\nNet Investment in Capital Assets Restricted for \r\nContinuation of Federal Programs Debt Service Capital Projects Bus Replacement Unrestricted (Deficit) \r\nTotal Net Position \r\n \r\nEXHIBIT \"A\" \r\n \r\nGOVERNMENTAL ACTIVITIES \r\n \r\n$ \r\n \r\n6,977,766.94 \r\n \r\n65,000.00 \r\n \r\n513,731.81 442,583.70 \r\n85,139.58 7,144.51 \r\n354,857.93 12,288,969.39 \r\n \r\n20,735,193.86 \r\n \r\n1,461,154.23 \r\n \r\n88,333.83 674,985.39 \r\n12,667.00 5,878,630.00 \r\n422,690.00 4,196,039.00 \r\n11,273,345.22 \r\n \r\n431,615.00 \r\n \r\n11,843,827.32 \r\n204,307.83 392,533.00 541,769.36 \r\n39,451.00 (2,530,500.64) \r\n \r\n$ 10,491,387.87 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES \r\nFOR THE YEAR ENDED JUNE 30, 2017 \r\n \r\nEXHIBIT \"B\" \r\n \r\nGOVERNMENTAL ACTIVITIES \r\nInstruction Support Services \r\nPupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt \r\nTotal Governmental Activities \r\nGeneral Revenues Taxes Property Taxes For Maintenance and Operations Other Taxes Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous \r\nTotal General Revenues \r\nChange in Net Position \r\nNet Position - Beginning of Year \r\n \r\nEXPENSES \r\n \r\nPROGRAM REVENUES \r\n \r\nOPERATING \r\n \r\nCHARGES FOR \r\n \r\nGRANTS AND \r\n \r\nSERVICES \r\n \r\nCONTRIBUTIONS \r\n \r\nNET (EXPENSES) REVENUES \r\nAND CHANGES IN NET POSITION \r\n \r\n$ 3,992,109.81 $ \r\n364,128.04 322,915.02 \r\n90,811.46 381,008.46 449,621.83 \r\n82,469.59 629,048.68 424,342.62 \r\n8,100.00 28,061.00 \r\n90,548.83 466,174.41 152,280.17 \r\n$ 7,481,619.92 $ \r\n \r\n- $ \r\n62,435.02 \r\n34,189.74 \r\n- \r\n96,624.76 $ \r\n \r\n2,116,910.34 $ \r\n190,599.71 169,144.31 \r\n47,599.19 199,750.71 235,594.12 \r\n43,683.52 329,163.68 222,162.11 \r\n4,223.62 14,631.96 \r\n47,215.24 244,001.57 \r\n- \r\n3,864,680.08 \r\n \r\n(1,875,199.47) \r\n(173,528.33) (153,770.71) \r\n(43,212.27) (181,257.75) (214,027.71) \r\n(38,786.07) (299,885.00) (202,180.51) \r\n(3,876.38) 49,005.98 \r\n(43,333.59) (187,983.10) (152,280.17) \r\n(3,520,315.08) \r\n \r\n3,304,061.53 28,172.18 \r\n505,956.27 2,865.16 3,163.49 \r\n82,287.48 \r\n3,926,506.11 \r\n406,191.03 \r\n10,085,196.84 \r\n \r\nNet Position - End of Year \r\n \r\n$ \r\n \r\n10,491,387.87 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION BALANCE SHEET \r\nGOVERNMENTAL FUNDS JUNE 30, 2017 \r\n \r\nEXHIBIT \"C\" \r\n \r\nASSETS \r\nCash and Cash Equivalents Investments Receivables, Net \r\nTaxes State Government Federal Government Inventories \r\n \r\nGENERAL FUND \r\n \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 2,492,825.83 $ 4,396,590.64 $ \r\n \r\n65,000.00 \r\n \r\n- \r\n \r\n476,423.20 442,583.70 \r\n85,139.58 7,144.51 \r\n \r\n37,308.61 - \r\n \r\n88,350.47 $ - \r\n- \r\n \r\n6,977,766.94 65,000.00 \r\n513,731.81 442,583.70 \r\n85,139.58 7,144.51 \r\n \r\nTotal Assets \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable \r\nTotal Liabilities \r\nDEFERRED INFLOWS OF RESOURCES \r\nUnavailable Revenue - Property Taxes \r\nFUND BALANCES \r\nNonspendable Restricted Assigned Unassigned \r\nTotal Fund Balances \r\n \r\n$ 3,569,116.82 $ 4,433,899.25 $ \r\n \r\n88,350.47 $ 8,091,366.54 \r\n \r\n$ \r\n \r\n88,333.83 $ \r\n \r\n674,985.39 \r\n \r\n763,319.22 \r\n \r\n- $ - \r\n- \r\n \r\n- $ - \r\n- \r\n \r\n88,333.83 674,985.39 \r\n763,319.22 \r\n \r\n141,205.26 \r\n \r\n- \r\n \r\n- \r\n \r\n141,205.26 \r\n \r\n7,144.51 236,614.32 \r\n5,517.52 2,415,315.99 \r\n2,664,592.34 \r\n \r\n4,358,618.89 \r\n75,280.36 - \r\n4,433,899.25 \r\n \r\n88,350.47 \r\n- \r\n88,350.47 \r\n \r\n7,144.51 4,683,583.68 \r\n80,797.88 2,415,315.99 \r\n7,186,842.06 \r\n \r\nTotal Liabilities, Deferred Inflows of Resources, and Fund Balances \r\n \r\n$ 3,569,116.82 $ 4,433,899.25 $ \r\n \r\n88,350.47 $ 8,091,366.54 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\nTO THE STATEMENT OF NET POSITION JUNE 30, 2017 \r\n \r\nEXHIBIT \"D\" \r\n \r\nTotal fund balances - governmental funds (Exhibit \"C\") \r\nAmounts reported for governmental activities in the Statement of Net Position are different because: \r\nCapital assets used in governmental activities are not financial resources and therefore are not reported in the funds. \r\nLand Buildings and improvements Equipment Land improvements Accumulated depreciation \r\nSome liabilities are not due and payable in the current period and, therefore, are not reported in the funds. \r\nNet pension liability \r\nDeferred outflows and inflows of resources related to pensions are applicable to future periods and, therefore, are not reported in the funds. \r\nTaxes that are not available to pay for current period expenditures are deferred in the funds. \r\nLong-term liabilities, and related accrued interest, are not due and payable in the current period and therefore are not reported in the funds. \r\nBonds payable Unamortized bond premiums Accrued interest payable \r\n \r\n$ \r\n \r\n7,186,842.06 \r\n \r\n$ \r\n \r\n354,857.93 \r\n \r\n14,348,890.98 \r\n \r\n1,982,896.06 \r\n \r\n713,295.15 \r\n \r\n(4,756,112.80) \r\n \r\n12,643,827.32 \r\n \r\n(5,878,630.00) 1,029,539.23 \r\n141,205.26 \r\n \r\n$ (4,300,000.00) (318,729.00) (12,667.00) \r\n \r\n(4,631,396.00) \r\n \r\nNet position of governmental activities (Exhibit \"A\") \r\n \r\n$ 10,491,387.87 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE \r\nGOVERNEMENTAL FUNDS JUNE 30, 2017 \r\n \r\nEXHIBIT \"E\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation \r\nDebt Services Principal Dues and Fees Interest \r\nTotal Expenditures \r\nRevenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nProceeds of Bonds Premiums on Bonds Sold Transfers In Transfers Out \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\n \r\nGENERAL FUND \r\n \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 3,308,032.25 $ 2,865.16 \r\n2,629,651.28 1,232,019.80 \r\n96,624.76 2,530.36 \r\n82,287.48 \r\n7,354,011.09 \r\n \r\n- $ 505,956.27 \r\n630.65 - \r\n506,586.92 \r\n \r\n- $ 2.48 - \r\n \r\n3,308,032.25 508,821.43 \r\n2,629,651.28 1,232,019.80 \r\n96,624.76 3,163.49 \r\n82,287.48 \r\n \r\n2.48 \r\n \r\n7,860,600.49 \r\n \r\n3,697,218.30 \r\n363,124.37 321,864.04 \r\n90,472.31 379,177.85 448,048.30 \r\n81,680.83 625,351.49 368,239.58 \r\n8,100.00 28,061.00 90,548.83 455,656.20 \r\n- \r\n6,957,543.10 \r\n396,467.99 \r\n \r\n- \r\n- \r\n110,872.64 \r\n- \r\n110,872.64 \r\n395,714.28 \r\n \r\n- \r\n- \r\n370,000.00 - \r\n37,430.00 \r\n407,430.00 \r\n(407,427.52) \r\n \r\n3,697,218.30 \r\n363,124.37 321,864.04 \r\n90,472.31 379,177.85 448,048.30 \r\n81,680.83 625,351.49 368,239.58 \r\n8,100.00 28,061.00 90,548.83 455,656.20 \r\n370,000.00 110,872.64 \r\n37,430.00 \r\n7,475,845.74 \r\n384,754.75 \r\n \r\n- \r\n- \r\n396,467.99 \r\n2,268,124.35 \r\n \r\n3,500,000.00 318,729.00 (407,427.52) \r\n3,411,301.48 \r\n3,807,015.76 \r\n626,883.49 \r\n \r\n407,427.52 - \r\n407,427.52 \r\n- \r\n88,350.47 \r\n \r\n3,500,000.00 318,729.00 407,427.52 (407,427.52) \r\n3,818,729.00 \r\n4,203,483.75 \r\n2,983,358.31 \r\n \r\nFund Balances - Ending \r\n \r\n$ 2,664,592.34 $ 4,433,899.25 $ \r\n \r\n88,350.47 $ 7,186,842.06 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF \r\nREVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2017 \r\n \r\nEXHIBIT \"F\" \r\n \r\nNet change in fund balances total governmental funds (Exhibit \"E\") \r\nAmounts reported for governmental activities in the Statement of Activities are different because: \r\nGovernmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of capital assets is allocated over their estimated useful lives as depreciation expense. \r\nCapital outlay Depreciation expense \r\nTaxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. \r\nRepayment of long-term debt is reported as an expenditure in governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. In the current year, these amounts consist of: \r\nBond principal retirements \r\nThe issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts and the difference between the carrying value of refunded debt and the acquisition cost of refunded debt when debt is first issued. These amounts are deferred and amortized in the Statement of Activities. \r\nGeneral obligation bonds issued, including a premium of $3,818,729.00 \r\nDistrict pension contributions are reported as expenditures in the governmental funds when made. However, they are reported as deferred outflows of resources in the Statement of Net Position because the reported net pension liability is measured a year before the District's report date. Pension expense, which is the change in the net pension liability adjusted for changes in deferred outflows and inflows of resources related to pensions, is reported in the Statement of Activities. \r\nPension expense \r\nSome items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. \r\nAccrued interest on issuance of bonds \r\n \r\n$ 4,203,483.75 \r\n \r\n$ \r\n \r\n42,851.85 \r\n \r\n(398,051.68) \r\n \r\n(355,199.83) 24,201.46 \r\n \r\n370,000.00 \r\n \r\n(3,818,729.00) (19,718.35) 2,153.00 \r\n \r\nChange in net position of governmental activities (Exhibit \"B\") \r\n \r\n$ \r\n \r\n406,191.03 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 6 - \r\n \r\n ASSETS Cash and Cash Equivalents \r\nLIABILITIES Funds Held for Others \r\nNET POSITION Held in Trust for Private Purposes \r\n \r\nTALBOT COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS JUNE 30, 2017 \r\n \r\nEXHIBIT \"G\" \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\nAGENCY FUNDS \r\n \r\n$ \r\n \r\n2,796.16 $ \r\n \r\n10,140.33 \r\n \r\n$ \r\n \r\n10,140.33 \r\n \r\n$ \r\n \r\n2,796.16 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS YEAR ENDED JUNE 30, 2017 \r\nADDITIONS Investment Earnings Interest \r\nDEDUCTIONS None Reported Change in Net Position \r\nNet Position - Beginning \r\nNet Position - Ending \r\n \r\nEXHIBIT \"H\" \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\n$ \r\n \r\n4.01 \r\n \r\n4.01 2,792.15 \r\n \r\n$ \r\n \r\n2,796.16 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. \r\n \r\n- 8 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY \r\nREPORTING ENTITY \r\nThe Talbot County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a 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. \r\nNOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nThe accompanying financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the School District's accounting policies are described below. \r\nBASIS OF PRESENTATION \r\nThe School District's basic financial statements are collectively comprised of the government-wide financial statements, fund financial statements and notes to the basic financial statements. The government-wide statements focus on the School District as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information's usefulness. \r\nGOVERNMENT-WIDE STATEMENTS: \r\nThe Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. \r\nThe Statement of Net Position presents the School District's non-fiduciary assets and liabilities, with the difference reported as net position. Net position is reported in three categories as follows: \r\n1. Net investment in capital assets consists of the School District's total investment in capital assets, net of accumulated depreciation, and reduced by outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets. \r\n2. Restricted net position consists of resources for which the School District is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties or imposed by law through constitutional provisions or enabling legislation. \r\n3. Unrestricted net position consists of resources not meeting the definition of the two preceding categories. Unrestricted net position often has constraints on resources imposed by management which can be removed or modified. \r\nThe Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. \r\nDirect expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. \r\n \r\n- 10 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nProgram revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. \r\nFUND FINANCIAL STATEMENTS \r\nThe fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate financial statements are presented for governmental and fiduciary funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. \r\nThe School District reports the following major governmental funds: \r\n The general fund is the School District's primary operating fund. It accounts for and reports all \r\nfinancial resources not accounted for and reported in another fund. \r\n The capital projects fund accounts for and reports financial resources including Education \r\nSpecial Purpose Local Option Sales Tax (ESPLOST) and bond proceeds that are restricted, committed or assigned for capital outlay expenditures, including the acquisition and construction of capital facilities and other capital assets. \r\n The debt service fund accounts for and reports financial resources that are restricted, \r\ncommitted, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest. \r\nThe School District reports the following fiduciary fund types: \r\n Private purpose trust funds are used to report all trust arrangements, other than those properly reported elsewhere, in which principal income benefits individuals, private organizations or other governments. \r\n Agency funds are used to report resources held by the School District in a purely custodial capacity (assets equal liabilities) and do not involve measurement of results of operations. \r\nBASIS OF ACCOUNTING \r\nThe basis of accounting determines when transactions are reported on the financial statements. The government-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied. \r\nThe School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. \r\nGovernmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are \r\n- 11 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nrecorded when the related fund liability is incurred, except for principal and interest on general longterm debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. \r\nThe School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted resources available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. \r\nNEW ACCOUNTING PRONOUNCEMENTS \r\nIn fiscal year 2017, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 77, Tax Abatement Disclosures. This statement requires governments that enter into tax abatement agreements to disclose the following information; (1) brief descriptive information, such as the tax being abated, the authority under which tax abatements are provided, eligibility criteria, the mechanism by which taxes are abated, provisions for recapturing abated taxes, and the types of commitments made by tax abatement recipients; (2) the gross dollar amount of taxes abated during the period; and (3) commitments made by a government, other than to abate taxes, as part of a tax abatement agreement. The adoption of this statement did not have an impact on the School District's financial statements. \r\nIn fiscal year 2017, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 80, Blending Requirements for Certain Component Units  an amendment of GASB Statement No. 14. This statement amends the blending requirements for the financial statement presentation of component units of all state and local governments. The additional criterion requires blending of a component unit incorporated as a not-for-profit corporation in which the primary government is the sole corporate member. The additional criterion does apply to component units included in the financial reporting entity pursuant to the provisions of Statement No. 39, Determining Whether Certain Organization Are Component Units. The adoption of this statement did not have an impact on the School District's financial statements. \r\nIn fiscal year 2017, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 82, Pension Issues  an amendment of GASB Statements No. 67, No. 68 and No. 73. This statement addresses certain issues that have been raised with respect to Statements No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial Reporting for Pensions, and No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and No. 68. Specifically, this statement addresses issues regarding (1) the presentation of payroll-related measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements. The adoption of this statement did not have an impact on the School District's financial statements. \r\nCASH AND CASH EQUIVALENTS \r\nCash and cash equivalents consist of cash on hand, demand deposits, investments in the State of Georgia local government investment pool (Georgia Fund 1) and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated (O.C.G.A.) 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. \r\n \r\n- 12 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nINVESTMENTS \r\nThe School District can invest its funds as permitted by O.C.G.A. 36-83-4. 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. \r\nInvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. All other investments are reported at fair value. \r\nFor accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired. \r\nRECEIVABLES \r\nReceivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. \r\nINVENTORIES \r\nFood Inventories \r\nOn the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (calculated on the first in, first out basis). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. \r\nCAPITAL ASSETS \r\nOn the government-wide financial statements, capital assets are recorded at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at acquisition value on the date donated. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. The School District does not capitalize book collections or works of art. \r\nCapital acquisition and construction are recorded as expenditures in the governmental fund financial statements at the time of purchase (including ancillary charges), and the related assets are reported as capital assets in the governmental activities column in the government-wide financial statements. \r\nDepreciation is computed using the straight-line for all assets, except land, and is used to allocate the actual or estimated historical cost of capital assets over estimated useful lives. \r\n \r\n- 13 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nCapitalization thresholds and estimated useful lives of capital assets reported in the government-wide statements are as follows: \r\n \r\nCapitalization Policy \r\n \r\nEstimated Useful Life \r\n \r\nLand Land Improvements Buildings and Improvements Equipment Intangible Assets \r\n \r\nALL $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 100,000.00 \r\n \r\nN/A 20 to 70 years up to 70 years \r\n5 to 25 years 15 to 50 years \r\n \r\nDEFERRED OUTFLOWS/INFLOWS OF RESOURCES \r\nIn addition to assets, the statement of financial position will report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. \r\nIn addition to liabilities, the statement of financial position will report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time. \r\nLONG-TERM LIABILITIES AND BOND DISCOUNTS/PREMIUMS \r\nIn the School District's government-wide financial statements, outstanding debt is reported as liabilities. Bond premiums and discounts and the difference between the reacquisition price and the net carrying value of refunded debt are deferred and amortized over the life of the bonds using the straight-line method. To conform to generally accepted accounting principles, bond premiums and discounts should be amortized using the effective interest method. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued. \r\nIn the governmental fund financial statements, the School District recognizes the proceeds of debt and premiums as other financing sources of the current period. Bond issuance costs are reported as debt service expenditures. \r\nPENSIONS \r\nFor purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. \r\n \r\n- 14 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nFUND BALANCES \r\nFund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. \r\nThe School District's fund balances are classified as follows: \r\nNonspendable consists of resources that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact. \r\nRestricted consists of resources that can be used only for specific purposes pursuant constraints either (1) externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. \r\nCommitted consists of resources that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board. The Board is the School District's highest level of decisionmaking authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. \r\nAssigned consists of resources constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes. \r\nUnassigned consists of resources within the general fund not meeting the definition of any aforementioned category. The general fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance. \r\nUSE OF ESTIMATES \r\nThe preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. \r\nPROPERTY TAXES \r\nThe Talbot County Board of Commissioners adopted the property tax levy for the 2016 tax digest year (calendar year) on September 12, 2016 (levy date) based on property values as of January 1, 2016. Taxes were due on December 20, 2016 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2016 tax digest are reported as revenue in the governmental funds for fiscal year 2017. The Talbot County Tax Commissioner bills and collects the property taxes for the School District, withholds 1.25% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2017, for maintenance and operations amounted to $3,106,123.61. \r\nThe tax millage rate levied for the 2016 tax year (calendar year) for the School District was as follows (a mill equals $1 per thousand dollars of assessed value): \r\n \r\nSchool Operations \r\n \r\n14.109 mills \r\n \r\nAdditionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $173,736.46 during fiscal year ended June 30, 2017. \r\n \r\n- 15 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nSALES TAXES \r\nEducation Special Purpose Local Option Sales Tax (ESPLOST), at the fund reporting level, during the year amounted to $505,956.27 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. \r\nNOTE 3: BUDGETARY DATA \r\nThe budget is a complete financial plan for the School District's fiscal year and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general fund. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the general fund was prepared in accordance with accounting principles generally accepted in the United States of America. \r\nThe budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines, and a tentative budget is approved. 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, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of O.C.G.A. 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. \r\nThe Superintendent is authorized by the Board to approve adjustments of no more than five percent of the amount budgeted for expenditures ins any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditures of funds in any budget function for any fund is anticipated to be more than five percent of the budgeted amount, the Superintendent shall request Board approval for the budget amendment. Under no circumstances is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board. \r\nSee the General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances  Budget to Actual in the Supplementary Information Section for a detail of any over/under expenditures during the fiscal year under review. \r\nNOTE 4: DEPOSITS AND CASH EQUIVALENTS \r\nCOLLATERALIZATION OF DEPOSITS \r\nO.C.G.A.  45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110% of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A.  45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110% of the daily pool balance. \r\nAcceptable security for deposits consists of any one of or any combination of the following: \r\n(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, \r\n(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, \r\n(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, \r\n- 16 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\n(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, \r\n \r\n(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, \r\n \r\n(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and \r\n \r\n(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 or securities guaranteed 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. \r\nCATEGORIZATION OF DEPOSITS \r\n \r\nCustodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2017, the School District had deposits with a carrying amount of $3,350,347.07, which includes $65,000.00 in Certificate of Deposit that are reported as investments, and a bank balance of $3,720,966.92. The bank balances insured by Federal depository insurance were $595,467.81 and the bank balances collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name were $3,125,499.11. \r\n \r\nReconciliation of cash and cash equivalents balances to carrying value of deposits: \r\n \r\nStatement of Net Position Cash and cash equivalents \r\nStatement of Fiduciary Net Position Cash and cash equivalents \r\n \r\n$ 6,977,766.94 12,936.49 \r\n \r\nTotal cash and cash equivalents \r\n \r\n6,990,703.43 \r\n \r\nAdd: Deposits with original maturity of three months or more reported as investments \r\n \r\n65,000.00 \r\n \r\nLess: Investment pools reported as cash and cash equivalents \r\nGeorgia Fund 1 \r\n \r\n3,705,356.36 \r\n \r\nTotal carrying value of deposits - June 30, 2017 \r\n \r\n$ 3,350,347.07 \r\n \r\nCATEGORIZATION OF CASH EQUIVALENTS \r\nThe School District reported cash equivalents of $3,705,356.36 in Georgia Fund 1, a local government investment pool, which is included in the cash balances above. Georgia Fund 1 is not registered with the SEC as an investment company and does not operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share, which approximates fair value. The pool is an AAAf rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2017, was 56 days. \r\n \r\n- 17 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nGeorgia Fund 1, administered by the State of Georgia, Office of the State Treasurer, is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1, does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at www.audits.ga.gov/SGD/CAFR.html. \r\nNOTE 5: CAPITAL ASSETS \r\n \r\nThe following is a summary of changes in the capital assets for governmental activities during the fiscal year: \r\n \r\nGovernmental Activities Capital Assets, Not Being Depreciated: \r\nLand \r\n \r\nBalances July 1, 2016 \r\n \r\nIncreases \r\n \r\nDecreases \r\n \r\nBalances June 30, 2017 \r\n \r\n$ 354,857.93 $ \r\n \r\n- $ \r\n \r\n- $ \r\n \r\n354,857.93 \r\n \r\nCapital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements \r\n \r\n14,348,890.98 1,940,044.21 713,295.15 \r\n \r\n42,851.85 \r\n- \r\n \r\n- \r\n \r\n14,348,890.98 \r\n \r\n- \r\n \r\n1,982,896.06 \r\n \r\n- \r\n \r\n713,295.15 \r\n \r\nLess Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements \r\n \r\n2,342,041.52 1,563,029.69 \r\n452,989.91 \r\n \r\n308,985.82 68,795.62 20,270.24 \r\n \r\n- \r\n \r\n2,651,027.34 \r\n \r\n- \r\n \r\n1,631,825.31 \r\n \r\n- \r\n \r\n473,260.15 \r\n \r\nTotal Capital Assets, Being Depreciated, Net \r\n \r\n12,644,169.22 \r\n \r\n(355,199.83) \r\n \r\n- \r\n \r\n12,288,969.39 \r\n \r\nGovernmental Activity Capital Assets - Net $ 12,999,027.15 $ (355,199.83) $ \r\nCurrent year depreciation expense by function is as follows: \r\n \r\n- \r\n \r\n$ 12,643,827.32 \r\n \r\nInstruction \r\n \r\nSupport Services \r\n \r\nGeneral Administration \r\n \r\n$ \r\n \r\nMaintenance and Operation of Plant \r\n \r\nStudent Transportation Services \r\n \r\nFood Services \r\n \r\n$ \r\n347.79 2,494.25 55,187.24 \r\n \r\n330,493.01 \r\n58,029.28 9,529.39 \r\n \r\n$ \r\n \r\n398,051.68 \r\n \r\nNOTE 6: INTERFUND TRANSFERS INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2017, consisted of the following: \r\n \r\nTransfers to \r\n \r\nTransfers From Capital Projects \r\nFund \r\n \r\nDebt Service Fund \r\n \r\n$ 407,427.52 \r\n \r\n- 18 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nTransfers are used to move sales tax revenues collected by the capital projects fund to the debt service fund to pay principal and interest for the general obligation bonds as required in the bond resolution. \r\nNOTE 7: LONG-TERM LIABILITIES The changes in long-term liabilities during the fiscal year for governmental activities, were as follows: \r\n \r\nBalance July 1, 2016 \r\n \r\nAdditions \r\n \r\nGovernmental Activities \r\n \r\nBalance \r\n \r\nDeductions \r\n \r\nJune 30, 2017 \r\n \r\nDue Within One Year \r\n \r\nGeneral Obligation Bonds \r\n \r\n$ 1,170,000.00 $ 3,500,000.00 $ 370,000.00 $ 4,300,000.00 $ 390,000.00 \r\n \r\nUnamortized Bond Premiums \r\n \r\n- \r\n \r\n318,729.00 \r\n \r\n- \r\n \r\n318,729.00 \r\n \r\n32,690.00 \r\n \r\n$ 1,170,000.00 $ 3,818,729.00 $ 370,000.00 $ 4,618,729.00 $ 422,690.00 \r\n \r\nGENERAL OBLIGATION DEBT OUTSTANDING \r\n \r\nThe School District's bonded debt consists of various issues of general obligation bonds that are generally noncallable with interest payable semiannually. Bond proceeds primarily pay for acquiring or constructing capital facilities. The School District repays general obligation bonds from voter-approved sales taxes. General obligation bonds are direct obligations and pledge the full faith and credit of the School District. \r\n \r\nDuring the current year, the School District issued general obligation bonds totaling $3,500,000.00 to acquire or construct capital facilities. \r\n \r\nGeneral obligation bonds currently outstanding are as follows: \r\n \r\nDescription \r\n \r\nInterest Rates \r\n \r\nIssue Date \r\n \r\nMaturity Date \r\n \r\nAmount Issued \r\n \r\nAmount Outstanding \r\n \r\nGeneral Government - Series 2003 General Government - Series 2017 \r\n \r\n3.80% 2.00% - 4.00% \r\n \r\n1/14/2003 6/13/2017 \r\n \r\n8/1/2018 $ 4,500,000.00 $ 800,000.00 \r\n \r\n3/1/2028 \r\n \r\n3,500,000.00 \r\n \r\n3,500,000.00 \r\n \r\n$ 8,000,000.00 $ 4,300,000.00 \r\n \r\nThe following schedule details debt service requirements to maturity for the School District's total general obligation bonds payable: \r\n \r\nFiscal Year Ended June 30: \r\n \r\nGeneral Obligation Debt \r\n \r\nPrincipal \r\n \r\nInterest \r\n \r\nUnamortized Bond Premium \r\n \r\n2018 2019 2020 2021 2022 2023 - 2027 2028 \r\n \r\n$ 390,000.00 $ 730,000.00 325,000.00 330,000.00 340,000.00 \r\n1,800,000.00 385,000.00 \r\n \r\n101,715.83 $ 117,640.00 103,450.00 \r\n96,950.00 87,050.00 274,950.00 15,400.00 \r\n \r\n32,690.00 32,690.00 32,690.00 32,690.00 32,690.00 155,279.00 \r\n- \r\n \r\nTotal Principal and Interest \r\n \r\n$ 4,300,000.00 $ 797,155.83 $ \r\n \r\n318,729.00 \r\n \r\n- 19 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 8: RISK MANAGEMENT INSURANCE Commercial Insurance \r\n \r\nThe 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; and natural disasters. Except as described below, the School District carries commercial insurance for these risks. Settled claims resulting from these insured risks have not exceeded commercial insurance coverage in any of the past three fiscal years. \r\n \r\nThe School District has elected to self-insure for losses related to natural disasters. The School District has not experienced any losses related to this risk in the past three years. WORKERS' COMPENSATION Georgia Education Workers' Compensation Trust \r\n \r\nThe School District participates in the Georgia Education Workers' Compensation Trust (the Trust), a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general workers' compensation insurance coverage. Specific excess of loss insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2 million. The Trust covers the first $1 million of each Employers Liability claim with Safety National providing additional Employers Liability limits up to a $2 million per occurrence maximum. Safety National Casualty Company also provides $2 million in aggregate coverage to the Trust, attaching at 110% of the loss fund and based on the Fund's annual normal premium. \r\nUNEMPLOYMENT COMPENSATION \r\n \r\nThe School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the general fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. \r\n \r\nChanges in the unemployment compensation claims liability during the last two fiscal years are as follows: \r\n \r\nBeginning of Year Liability \r\n \r\nClaims and Changes in Estimates \r\n \r\nClaims Paid \r\n \r\nEnd of Year Liability \r\n \r\n2016 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n6,680.00 \r\n \r\n$ 6,680.00 \r\n \r\n$ \r\n \r\n- \r\n \r\n2017 $ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\nSURETY BOND \r\n \r\nThe School District purchased surety bonds to provide additional insurance coverage as follows: \r\n \r\nPosition Covered \r\n \r\nAmount \r\n \r\nSuperintendent Finance Director Payroll Clerk \r\n \r\n$ 30,000.00 $ 10,000.00 $ 10,000.00 \r\n \r\n- 20 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 9: FUND BALANCE CLASSIFICATION DETAILS \r\n \r\nThe School District's financial statements include the following amounts presented in the aggregate at June 30, 2017: \r\n \r\nNonspendable Inventories \r\nRestricted Bus Replacement Continuation of Federal Programs Capital Projects Debt Service \r\nAssigned Local Capital Outlay Projects School Activity Accounts \r\nUnassigned \r\n \r\n$ \r\n \r\n7,144.51 \r\n \r\n$ 39,451.00 197,163.32 \r\n4,041,769.36 405,200.00 \r\n \r\n4,683,583.68 \r\n \r\n$ 75,280.36 \r\n \r\n5,517.52 \r\n \r\n80,797.88 \r\n \r\n2,415,315.99 \r\n \r\nFund Balance, June 30, 2017 \r\n \r\n$ 7,186,842.06 \r\n \r\nWhen multiples categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds. \r\nNOTE 10: SIGNIFICANT CONTINGENT LIABILITIES \r\nFEDERAL GRANTS \r\nAmounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. Any disallowances resulting from the grantor audit may become a liability of the School District. However, the School District believes that such disallowances, if any, will be immaterial to its overall financial position. \r\nLITIGATION \r\nThe School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable but is not believed to have a material adverse effect on the financial condition of the School District. \r\nNOTE 11: POST-EMPLOYMENT BENEFITS \r\nGEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND \r\nPlan Description. The Georgia School Personnel Post-Employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). Additional information about the School OPEB Fund is disclosed in the State of Georgia Comprehensive Annual Financial Report. This report can be obtained from the Georgia Department of Audits and Accounts at www.audits.ga.gov/SGD/CAFR.html. \r\nFunding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan \r\n- 21 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nelection, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012 pay approximately 25% of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy. \r\n \r\nParticipating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected \"payas-you-go\" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. \r\n \r\nThe combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2017: \r\n \r\nFor certificated teachers, librarians and regional educational service agencies and certain other eligible participants: \r\n \r\nJuly 1, 2016  June 30, 2017 \r\n \r\n$945.00 per member per month \r\n \r\nFor non-certificated school personnel: \r\n \r\nJuly 1, 2016  December 31, 2016 $746.20 per member per month \r\n \r\nJanuary 1, 2017  June 30, 2017 $846.20 per member per month \r\n \r\nNo additional contribution was required by the Board for fiscal year 2017 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation. \r\n \r\nThe School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage Contributed \r\n \r\nRequired Contribution \r\n \r\n2017 2016 2015 \r\n \r\n100% 100% 100% \r\n \r\n$ \r\n \r\n729,023.00 \r\n \r\n$ \r\n \r\n579,499.33 \r\n \r\n$ \r\n \r\n619,598.88 \r\n \r\n- 22 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 12: RETIREMENT PLANS \r\nThe School District participates in various retirement plans administered by the State of Georgia, as further explained below. \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) \r\nPlan Description: All teachers of the School District as defined in O.C.G.A 47-3-60 and certain other support personnel as defined by O.C.G.A 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers Retirement System of Georgia issues a publicly available separate financial audit report that can be obtained at www.trsga.com/publications. \r\nBenefits Provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death. \r\nContributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2017. The School District's contractually required contribution rate for the year ended June 30, 2017 was 14.27% of annual School District payroll. For the current fiscal year, employer contributions to the pension plan were $477,541.23 from the School District. \r\nPUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS) \r\nPlan Description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs. \r\nBenefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service. \r\nUpon retirement, the member will receive a monthly benefit of $14.75, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits. \r\n \r\n- 23 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nContributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. \r\nIndividuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current fiscal year contribution was $13,832.00. \r\nPension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions \r\nAt June 30, 2017, the School District reported a liability of $5,878,630.00 for its proportionate share of the net pension liability for TRS. \r\nThe net pension liability for TRS was measured as of June 30, 2016. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2015. An expected total pension liability as of June 30, 2016 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS and ERS during the fiscal year ended June 30, 2016. \r\nAt June 30, 2016, the School District's TRS proportion was 0.028494%, which was a decrease of 0.001238% from its proportion measured as of June 30, 2015. \r\nAt June 30, 2017, the School District did not have a PSERS liability for a proportionate share of the net pension liability because of a Special Funding Situation with the State of Georgia, which is responsible for the net pension liability of the plan. The amount of the State's proportionate share of the net pension liability associated with the School District is $102,730.00. \r\nThe PSERS net pension liability was measured as of June 30, 2016. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2015. An expected total pension liability as of June 30, 2016 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2016. \r\nFor the year ended June 30, 2017, the School District recognized pension expense of $497,260.00 for TRS and $16,841.00 for PSERS and revenue of $16,841.00 for PSERS. The revenue is support provided by the State of Georgia. \r\n \r\n- 24 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nAt June 30, 2017, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: \r\n \r\nTRS \r\n \r\nDeferred \r\n \r\nDeferred \r\n \r\nOutflows of \r\n \r\nInflows of \r\n \r\nResources \r\n \r\nResources \r\n \r\nDifferences between expected and actual experience Change of assumptions \r\n \r\n$ 87,576.00 $ 152,366.00 \r\n \r\n29,070.00 - \r\n \r\nNet difference between projected and actual earnings on \r\n \r\npension plan investments \r\n \r\n743,671.00 \r\n \r\n- \r\n \r\nChanges in proportion and differences between School District contributions and proportionate share of contributions \r\n \r\n- \r\n \r\n402,545.00 \r\n \r\nSchool District contributions subsequent to the measurement date \r\n \r\n477,541.23 \r\n \r\n- \r\n \r\nTotal \r\n \r\n$ 1,461,154.23 $ 431,615.00 \r\n \r\nThe School District contributions subsequent to the measurement date of $477,541.23 for TRS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: \r\n \r\nYear Ended June 30: \r\n \r\nTRS \r\n \r\n2018 2019 2020 2021 2022 \r\n \r\n$ \r\n \r\n(17,799.00) \r\n \r\n$ \r\n \r\n(17,800.00) \r\n \r\n$ \r\n \r\n337,787.00 \r\n \r\n$ \r\n \r\n246,308.00 \r\n \r\n$ \r\n \r\n3,502.00 \r\n \r\nActuarial assumptions: The total pension liability as of June 30, 2016 was determined by an actuarial valuation as of June 30, 2015, using the following actuarial assumptions, applied to all periods included in the measurement: \r\n \r\nTeachers Retirement System: \r\n \r\nInflation \r\n \r\n2.75% \r\n \r\nSalary increases \r\n \r\n3.25%  9.00%, average, including inflation \r\n \r\nInvestment rate of return \r\n \r\n7.50%, net of pension plan investment expense, including inflation \r\n \r\nPost-retirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service requirements and dependent beneficiaries. The RP-2000 Disabled Mortality table with future mortality improvement projected to 2025 with Society of Actuaries' \r\n \r\n- 25 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nprojection scale BB (set forward two years for males and four years for females) was used for the death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. \r\n \r\nThe actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2009  June 30, 2014. \r\nPublic School Employees Retirement System: \r\n \r\nInflation \r\n \r\n2.75% \r\n \r\nSalary increases \r\n \r\nN/A \r\n \r\nInvestment rate of return \r\n \r\n7.50%, net of pension plan investment expense, including inflation \r\n \r\nPost-retirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) for the period after service retirements and for dependent beneficiaries. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward 5 years for both males and females) was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-11% less than the actual number of deaths that occurred during the study period for healthy retirees and 9-11% less than expected under the selected table for disabled retirees. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. \r\nThe actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2009  June 30, 2014. \r\nThe long-term expected rate of return on TRS and PSERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: \r\n \r\nAsset class \r\n \r\nTRS Target allocation \r\n \r\nPSERS Target allocation \r\n \r\nLong-term expected real rate of return* \r\n \r\nFixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks international emerging market stocks Alternative \r\n \r\n30.00% 39.80% \r\n3.70% 1.50% 19.40% 5.60% \r\n- \r\n \r\n30.00% 37.20% \r\n3.40% 1.40% 17.80% 5.20% 5.00% \r\n \r\n(0.50)% 9.00% \r\n12.00% 13.50% \r\n8.00% 12.00% 10.50% \r\n \r\nTotal \r\n \r\n100.00% \r\n \r\n100.00% \r\n \r\n* Rates shown are net of the 2.75% assumed rate of inflation \r\n \r\n- 26 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2017 \r\n \r\nEXHIBIT \"I\" \r\n \r\nDiscount rate: The discount rate used to measure the total TRS and PSERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and PSERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. \r\nSensitivity of the School District's proportionate share of the net pension liability to changes in the discount rate: The following presents the School District's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the School District's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate: \r\n \r\nTeachers Retirement System: \r\nSchool District's proportionate share of the net pension liability \r\n \r\n1% Decrease (6.50%) \r\n \r\nCurrent Discount Rate (7.50%) \r\n \r\n1% Increase (8.50%) \r\n \r\n$ 9,150,160.00 $ \r\n \r\n5,878,630.00 $ 3,185,064.00 \r\n \r\nPension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS and PSERS financial report which is publicly available at www.trsga.com/publications and http://www.ers.ga.gov/formspubs/formspubs.html. \r\n \r\n- 27 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"1\" \r\n \r\nYear Ended \r\n \r\nSchool District's proportion of the net \r\npension liability \r\n \r\nSchool District's proportionate share of the net pension liability \r\n \r\n2017 2016 2015 \r\n \r\n0.028494% $ 0.029732% $ 0.030388% $ \r\n \r\n5,878,630.00 4,526,402.00 3,839,123.00 \r\n \r\nState of Georgia's proportionate share of the net pension liability \r\nassociated with the School District \r\n \r\n$ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\n$ \r\n \r\n- \r\n \r\nTotal \r\n \r\nSchool District's covered payroll \r\n \r\n$ 5,878,630.00 $ $ 4,526,402.00 $ $ 3,839,123.00 $ \r\n \r\n3,125,519.13 3,138,384.64 3,100,171.01 \r\n \r\nSchool District's proportionate share of the net pension liability as a percentage of its \r\ncovered payroll \r\n \r\nPlan fiduciary net position as a \r\npercentage of the total pension liability \r\n \r\n188.08% 144.23% 123.84% \r\n \r\n76.06% 81.44% 84.03% \r\n \r\nThis schedule is intended to show information for 10 years. Additional years will be displayed as they become available. \r\n \r\n- 29 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION \r\nSCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nSCHEDULE \"2\" \r\n \r\nYear Ended \r\n \r\nContractually required contribution \r\n \r\nContributions in relation to the contractually required contribution \r\n \r\nContribution deficiency (excess) \r\n \r\n2017 \r\n \r\n$ \r\n \r\n477,541.23 $ \r\n \r\n477,541.23 $ \r\n \r\n- \r\n \r\n2016 \r\n \r\n$ \r\n \r\n446,011.58 $ \r\n \r\n446,011.58 $ \r\n \r\n- \r\n \r\n2015 \r\n \r\n$ \r\n \r\n412,697.58 $ \r\n \r\n412,697.58 $ \r\n \r\n- \r\n \r\n2014 \r\n \r\n$ \r\n \r\n380,692.79 $ \r\n \r\n380,692.79 $ \r\n \r\n- \r\n \r\n2013 \r\n \r\n$ \r\n \r\n383,370.28 $ \r\n \r\n383,370.28 $ \r\n \r\n- \r\n \r\n2012 \r\n \r\n$ \r\n \r\n386,730.40 $ \r\n \r\n386,730.40 $ \r\n \r\n- \r\n \r\n2011 \r\n \r\n$ \r\n \r\n419,130.30 $ \r\n \r\n419,130.30 $ \r\n \r\n- \r\n \r\n2010 \r\n \r\n$ \r\n \r\n444,832.43 $ \r\n \r\n444,832.43 $ \r\n \r\n- \r\n \r\n2009 \r\n \r\n$ \r\n \r\n419,136.12 $ \r\n \r\n419,136.12 $ \r\n \r\n- \r\n \r\n2008 \r\n \r\n$ \r\n \r\n442,548.18 $ \r\n \r\n442,548.18 $ \r\n \r\n- \r\n \r\nSchool District's covered payroll \r\n$ 3,346,411.50 $ 3,125,519.13 $ 3,138,384.64 $ 3,100,171.01 $ 3,359,949.87 $ 3,761,968.87 $ 4,077,143.00 $ 4,567,068.07 $ 4,516,553.02 $ 4,768,838.15 \r\n \r\nContribution as a percentage of covered payroll \r\n14.27% 14.27% 13.15% 12.28% 11.41% 10.28% 10.28% \r\n9.74% 9.28% 9.28% \r\n \r\n- 30 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION \r\nFOR THE YEAR ENDED JUNE 30, 2017 \r\n \r\nSCHEDULE \"3\" \r\n \r\nTeachers Retirement System \r\nChanges of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience. \r\nOn November 18, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal, and salary increases. The expectation of retired life mortality was changed to RP 2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males). \r\n \r\n- 31 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND \r\nSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nSCHEDULE \"4\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation \r\nTotal Expenditures \r\nExcess of Revenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nOther Sources Other Uses \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\nAdjustments \r\n \r\nNONAPPROPRIATED BUDGETS \r\n \r\nORIGINAL (1) \r\n \r\nFINAL (1) \r\n \r\nACTUAL AMOUNTS \r\n \r\nVARIANCE OVER/UNDER \r\n \r\n$ \r\n \r\n2,973,421.00 $ \r\n \r\n3,259,146.00 $ \r\n \r\n3,308,032.25 $ \r\n \r\n2,500.00 \r\n \r\n2,500.00 \r\n \r\n2,865.16 \r\n \r\n2,618,102.15 \r\n \r\n2,631,363.15 \r\n \r\n2,629,651.28 \r\n \r\n1,266,056.26 \r\n \r\n1,244,737.26 \r\n \r\n1,232,019.80 \r\n \r\n31,000.00 \r\n \r\n31,000.00 \r\n \r\n96,624.76 \r\n \r\n1,900.00 \r\n \r\n1,900.00 \r\n \r\n2,530.36 \r\n \r\n99,977.40 \r\n \r\n63,456.45 \r\n \r\n82,287.48 \r\n \r\n6,992,956.81 \r\n \r\n7,234,102.86 \r\n \r\n7,354,011.09 \r\n \r\n48,886.25 365.16 \r\n(1,711.87) (12,717.46) 65,624.76 \r\n630.36 18,831.03 \r\n119,908.23 \r\n \r\n3,969,727.62 \r\n334,307.20 270,550.00 \r\n64,729.00 362,011.00 387,682.00 \r\n88,584.00 579,924.00 406,441.99 \r\n27,000.00 \r\n502,000.00 \r\n6,992,956.81 \r\n- \r\n \r\n4,025,924.70 \r\n356,411.20 349,041.00 \r\n90,129.00 368,011.00 423,025.00 \r\n88,584.00 579,924.00 404,860.00 \r\n13,280.00 27,000.00 \r\n508,000.00 \r\n7,234,189.90 \r\n(87.04) \r\n \r\n3,697,218.30 \r\n363,124.37 321,864.04 \r\n90,472.31 379,177.85 448,048.30 \r\n81,680.83 625,351.49 368,239.58 \r\n8,100.00 28,061.00 90,548.83 455,656.20 \r\n6,957,543.10 \r\n396,467.99 \r\n \r\n328,706.40 \r\n(6,713.17) 27,176.96 \r\n(343.31) (11,166.85) (25,023.30) \r\n6,903.17 (45,427.49) 36,620.42 \r\n5,180.00 (1,061.00) (90,548.83) 52,343.80 \r\n276,646.80 \r\n396,555.03 \r\n \r\n100,000.00 (100,000.00) \r\n- \r\n \r\n100,000.00 (100,000.00) \r\n(87.04) 2,554,362.06 2,205.63 \r\n \r\n396,467.99 2,268,124.35 - \r\n \r\n(100,000.00) 100,000.00 \r\n396,555.03 (286,237.71) \r\n(2,205.63) \r\n \r\nFund Balances - Ending \r\n \r\n$ \r\n \r\n- $ \r\n \r\n2,556,480.65 $ \r\n \r\n2,664,592.34 $ \r\n \r\n108,111.69 \r\n \r\nNotes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual \r\n(1) Original and Final Budget amounts do not include the budgeted revenues and expenditures of the various principal accounts. The actual revenues and expenditures of the various principal accounts are $87,175.72 and $109,053.19, respectively. \r\nThe accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 32 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nSCHEDULE \"5\" \r\n \r\nFUNDING AGENCY PROGRAM/GRANT \r\nAgriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program \r\nTotal Child Nutrition Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Food Services Child Nutrition Discretionary Grants Limited Availability Fresh Fruit and Vegetable Program \r\nTotal Other Programs \r\nTotal U. S. Department of Agriculture \r\nEducation, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Grants to States Preschool Grants Preschool Grants \r\nTotal Special Education Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Improving Teacher Quality State Grants Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies \r\nTotal Other Programs \r\nTotal U. S. Department of Education \r\nDefense, U. S. Department of Direct Department of the Army R.O.T.C. Program \r\n \r\nCFDA NUMBER \r\n \r\nPASSTHROUGH \r\nENTITY ID \r\nNUMBER \r\n \r\nEXPENDITURES IN PERIOD \r\n \r\n10.553 10.555 \r\n \r\n17175GA324N1099 $ 17175GA324N1100 \r\n \r\n142,100.28 272,774.92 \r\n414,875.20 \r\n \r\n10.579 10.582 \r\n \r\n16165GA350N8103 175GA324L1903 \r\n \r\n2,161.18 13,973.00 \r\n16,134.18 \r\n431,009.38 \r\n \r\n84.027 84.027 84.173 84.173 \r\n \r\nH027A150073 H027A160073 H173A150081 H173A160081 \r\n \r\n84.048 84.367 84.010 84.010 \r\n \r\nV048A160010 S367A160001 S010A150010 S010A160010 \r\n \r\n56,906.25 98,810.14 \r\n126.00 18,360.00 174,202.39 \r\n11,121.00 38,427.78 90,969.33 362,114.26 502,632.37 676,834.76 \r\n69,208.29 \r\n \r\nTotal Expenditures of Federal Awards \r\n \r\n$ \r\n \r\n1,177,052.43 \r\n \r\nNotes to the Schedule of Expenditures of Federal Awards \r\nNote 1. Basis of Presentation \r\nThe accompanying schedule of expenditures of federal awards (the \"Schedule\") includes the federal award activity of the Talbot County Board of Education (School District) under programs of the federal government for the year ended June 30, 2017. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Board, it is not intended to and does not present the financial position or changes in net position of the School District. \r\nNote 2. Summary of Significant Accounting Policies \r\nExpenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The Board has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 33 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2017 \r\nAGENCY/FUNDING \r\nGRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program \r\nEducation, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Students - Category VI Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Principal Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Mid-term Adjustment Hold-Harmless Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Sparsity Other State Programs Food Services Math and Science Supplements Vocational Education \r\nOffice of the State Treasurer Public School Employees Retirement \r\n \r\nSCHEDULE \"6\" \r\n \r\nGOVERNMENTAL FUND TYPE GENERAL FUND \r\n \r\n$ \r\n \r\n81,860.37 \r\n \r\n154,190.00 313,899.00 \r\n41,291.00 118,422.00 \r\n25,950.00 246,094.00 227,688.00 \r\n64,075.00 357,335.00 \r\n5,355.00 7,468.00 19,792.00 41,625.00 13,167.00 6,986.00 \r\n203.00 \r\n226,414.00 103,275.00 \r\n95,099.00 2,790.00 \r\n(42,667.00) \r\n151,215.00 45,000.00 \r\n268,253.00 \r\n10,664.00 4,612.60 \r\n25,763.31 \r\n13,832.00 \r\n \r\n$ \r\n \r\n2,629,651.28 \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 34 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nSCHEDULE \"7\" \r\n \r\nPROJECT \r\n \r\nORIGINAL ESTIMATED \r\nCOST (1) \r\n \r\nCURRENT ESTIMATED COSTS (2) \r\n \r\nAMOUNT EXPENDED IN CURRENT \r\nYEAR (3) \r\n \r\nAMOUNT EXPENDED IN PRIOR YEARS (3) \r\n \r\nTOTAL COMPLETION \r\nCOST \r\n \r\nEXCESS PROCEEDS NOT \r\nEXPENDED \r\n \r\nESTIMATED COMPLETION \r\nDATE \r\n \r\nAcquiring, constructing and equipping one new elementary school, adding to, renovating, repairing, improving and equipping existing school building and other buildings and facilities useful or desirable in connection therewith payment of capitalized interest to the bonds through and including August 1, 2003; and the costs of issuing the bonds. \r\n \r\n$ 2,500,000.00 $ 14,801,615.10 $ \r\n \r\n- $ 14,466,949.40 $ \r\n \r\n- $ \r\n \r\n- \r\n \r\nCompleted \r\n \r\n(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. \r\n(2) The School District's current estimate of total cost for the project. Includes all cost from project inception to completion. \r\n(3) The voters of Talbot County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for this project may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 35 - \r\n \r\n SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\n \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON \r\nCOMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\n \r\nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education \r\nand Superintendent and Members of the Talbot Country Board of Education \r\nWe have audited, in accordance with the 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, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Talbot County Board of Education (School District), as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements, and have issued our report thereon dated September 14, 2020. \r\nInternal Control Over Financial Reporting \r\nIn planning and performing our audit of the financial statements, we considered the School District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control. \r\nOur consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies. \r\nA deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS 2017-001, FS 2017-002 and FS 2017-004, to be material weaknesses. \r\n \r\n (This page left intentionally blank) \r\n \r\n A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS 2017-003, FS 2017-005, and FS 2017-006 to be significant deficiencies. \r\nCompliance and Other Matters \r\nAs part of obtaining reasonable assurance about whether the School District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. \r\nSchool District's Response to Findings \r\nThe School District's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. \r\nPurpose of this Report \r\nThe purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nSeptember 14, 2020 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\n \r\nINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE \r\n \r\nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nReport on Compliance for Each Major Federal Program \r\nWe have audited the Talbot County Board of Education (School District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2017. The School District's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. \r\nManagement's Responsibility \r\nManagement is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. \r\nAuditor's Responsibility \r\nOur responsibility is to express an opinion on compliance for each of the School District's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. \r\nWe believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the School District's compliance. \r\n \r\n (This page left intentionally blank) \r\n \r\n Basis for Qualified Opinion on Child Nutrition Cluster (CFDA 10.553 \u0026 10.555) and Title I Grants to Local Educational Agencies (CFDA 84.010) \r\nAs described in the accompanying Schedule of Findings and Questioned Costs, the School District did not comply with requirements regarding Child Nutrition Cluster (CFDA 10.553 \u0026 10.555) and Title I Grants to Local Educational Agencies (CFDA 84.010) as described in items FA 2017-001 for Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, FA 2017-002 for Cash Management, FA 2017-004 for Reporting and FA 2017-005 for Special Tests and Provisions. Compliance with such requirements is necessary, in our opinion, for the School District to comply with requirements applicable to that program. \r\nQualified Opinion on Child Nutrition Cluster (CFDA 10.553 \u0026 10.555) and Title I Grants to Local Educational Agencies (CFDA 84.010) \r\nIn our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the School District complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on Child Nutrition Cluster (CFDA 10.553 \u0026 10.555) and Title I Grants to Local Educational Agencies (CFDA 84.010) for the year ended June 30, 2017. \r\nOther Matters \r\nThe School District's response to the noncompliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. \r\nReport on Internal Control over Compliance \r\nManagement of the School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control over compliance. \r\nOur consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses and significant deficiencies. \r\nA deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. \r\n \r\n (This page left intentionally blank) \r\n \r\n We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as items FA 2017-001, FA 2017-002, FA 2017-004, and FA 2017-006 to be material weaknesses. \r\nA significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as items FA 2017-003 and FA 2017-005, to be significant deficiencies. \r\nThe School District's response to the internal control over compliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. \r\nThe purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nSeptember 14, 2020 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2017 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS-7301-13-01 \r\n \r\nInadequate Internal Controls Procedures \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nCash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2014-001 \r\n \r\nInadequate Internal Controls Procedures \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nCash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2015-001 \r\n \r\nInadequate Internal Controls Procedures \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nCash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2016-001 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Control Procedures Cash and Cash Equivalents Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe Finance Director will meet with all parties involved to discuss the findings, examine our current procedures and seek ways to diminish all the risks. We will make adjustments to procedures as needed. We will meet periodically to share ideas, discuss adjustments to procedures and provide additional training. \r\n \r\nFS-7301-13-02 \r\n \r\nInadequate Internal Controls over School Activity Accounts \r\n \r\nControl Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nCash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\n-1- \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2017 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2014-002 \r\n \r\nInadequate Internal Controls over School Activity Accounts \r\n \r\nControl Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nCash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2015-002 \r\n \r\nInadequate Internal Controls over School Activity Accounts \r\n \r\nControl Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nCash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2016-002 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe School District has hired a new Chief Financial Officer that will review the current accounting procedure and ensure that internal controls are in place. In addition, the School District has received quotes in reference to purchasing a new software that will be implemented for school activity accounts that has features to eliminate issues with school level purchases. The Business/Finance Director will meet periodically to share ideas, discuss adjustments to procedures (if any), and provide additional training, if needed. \r\n \r\n-2- \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2017 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS-7301-13-05 \r\n \r\nInadequate Internal Controls over Employee Compensation \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nEmployee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2014-004 \r\n \r\nInadequate Internal Controls over Employee Compensation \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nEmployee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2015-004 \r\n \r\nInadequate Internal Controls over Employee Compensation \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nEmployee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2016-003 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Employee Compensation Employee Compensation Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe Board will ensure that internal controls are established, implemented, and functioning at the system level to adequately address controls over employee compensation procedures and ensure that all said employee compensation is properly calculated. \r\n \r\nFS-7301-13-06 \r\n \r\nFailure to Adequately Maintain Capital Assets \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nCapital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2014-005 \r\n \r\nFailure to Adequately Maintain Capital Assets \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nCapital Assets Material Weakness None \r\n \r\n-3- \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2017 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2015-005 \r\n \r\nFailure to Adequately Maintain Capital Assets \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: \r\n \r\nCapital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFS 2016-004 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Capital Assets Capital Assets Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nAdditional resources will be committed as well as controls designed and implemented to the capital asset inventory management process to ensure records are properly maintained. Further, the School District is in the process of implementing a better control system to assist with the capital asset activity. \r\n \r\nFS 2016-005 Control Category: \r\nInternal Control Impact: Compliance Impact: \r\n \r\nInternal Controls at the Central Office Accounting Controls (Overall) Expenditures/Liabilities/Disbursements Significant Deficiency None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe School District has hired a new Chief Financial Officer to oversee the accounting procedures and ensure that internal controls are in place. In addition, the School District will review the current accounting procedures and controls and will implement procedures to help strengthen the internal controls. \r\n \r\nFS 2016-006 Control Category: Internal Control Impact: Compliance Impact: \r\n \r\nInternal Controls over Financial Reporting Financial Reporting Material Weakness None \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nThe School District has hired a new Chief Financial Officer to oversee the accounting procedures and ensure that internal controls are in place. In addition, the School District will review the current accounting procedures and controls and will implement procedures to help strengthen the internal controls. \r\n \r\n-4- \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2017 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2014-002 \r\n \r\nFailure to Refund Unexpended Grants \r\n \r\nCompliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nReporting Material Weakness Material Noncompliance U.S. Department of Education None Early Reading First (CFDA 84.359) U.S. Department of Health and Human Services None Child Care and development Block Grant (CFDA 93.575) U.S. Department of Justice Children and Youth Coordinating Council Juvenile Justice and Delinquency Prevention (CFDA 16.540) U.S. Department of Education Georgia Department of Education Title I Grants to Local Education Agencies (CFDA 84.010) Improving Teacher Quality State Grants (CFDA 84.367) \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\nFA 2015-001 \r\n \r\nRefund Unexpended Grants \r\n \r\nCompliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nReporting Material Weakness Material Noncompliance U.S. Department of Education None Early Reading First (CFDA 84.359) U.S. Department of Health and Human Services Children and Youth Coordinating Council Child Care and development Block Grant (CFDA 93.575) U.S. Department of Justice Children and Youth Coordinating Council Juvenile Justice and Delinquency Prevention (CFDA 16.540) U.S. Department of Education Georgia Department of Education Title I Grants to Local Education Agencies (CFDA 84.010) \r\n \r\nFinding Status: \r\n \r\nPreviously Reported Corrective Action Implemented \r\n \r\n-5- \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2017 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2014-003 \r\n \r\nInadequate Control Over the Cash Management Process \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: Title I Grants to Local Education Agencies (CFDA 84.010) \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFA 2015-002 \r\n \r\nControls Over the Cash Management Process \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: Title I Grants to Local Education Agencies (CFDA 84.010) \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFA 2016-001 \r\n \r\nImprove Controls Over the Cash Management Process \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: Title I Grants to Local Education Agencies (CFDA 84.010) \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nManagement has implemented procedures to monitor the cash monthly balances for all programs when requesting reimbursement for federal and state programs. \r\n \r\n-6- \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2017 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2016-002 Compliance Requirement: \r\nInternal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nControls Over Expenditures Activities Allowed or Unallowed Allowable Costs/Cost Principles Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education Title I Grants to Local Education Agencies (CFDA 84.010) Child Nutrition Cluster (CFDA 10.553 \u0026 10.555) \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nFA 2016-003 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nImprove Controls over Equipment Equipment and Real Property Management Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 \u0026 10.555) \r\n \r\nFinding Status: \r\n \r\nUnresolved \r\n \r\nControls will be designed and implemented to ensure complete and accurate tracking of equipment to include physical inventory audits in accordance with federal regulations, 2 CFR 200.313. In addition, the School District will review the current procedure and control to ensure this control is properly maintained and communicate the difficulties (if any) that exist between the responsible parties of purchasing equipment, labeling equipment, performance of annual inventory, and recording equipment items on listings. \r\n \r\n-7- \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION IV FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nI SUMMARY OF AUDITOR'S RESULTS \r\n \r\nFinancial Statements \r\n \r\nType of auditor's report issued: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund Aggregate Remaining Fund Information \r\n \r\nUnmodified Qualified \r\n \r\nInternal control over financial reporting: \r\n \r\n Material weaknesses identified? \r\n \r\nYes \r\n \r\n Significant deficiencies identified? \r\n \r\nYes \r\n \r\nNoncompliance material to financial statements noted: \r\n \r\nNo \r\n \r\nFederal Awards \r\n \r\nInternal Control over major programs: \r\n \r\n Material weaknesses identified? \r\n \r\nYes \r\n \r\n Significant deficiency identified? \r\n \r\nYes \r\n \r\nType of auditor's report issued on compliance for major programs: Unmodified for all major programs except for Child Nutrition Cluster and Title I Grants to Local Educational Agencies, which was qualified. \r\n \r\nAny audit findings disclosed that are required to be reported in \r\n \r\naccordance with 2 CFR 200.516(a)? \r\n \r\nYes \r\n \r\nIdentification of major programs: \r\n \r\nCFDA Numbers \r\n \r\nName of Federal Program or Cluster \r\n \r\n10.553, 10.555 84.010 \r\n \r\nChild Nutrition Cluster Title I Grants to Local Educational Agencies \r\n \r\nDollar threshold used to distinguish between Type A and Type B programs: \r\n \r\n$750,000.00 \r\n \r\nAuditee qualified as low-risk auditee? \r\n \r\nNo \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2017-001 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Control Procedures Cash and Cash Equivalents Material Weakness None FS 2016-001, FS 2015-001, FS 2014-001, FS-7301-13-01, FS-7301-12-02 \r\n \r\nDescription: The accounting procedures of the School District were insufficient to provide adequate internal controls over the Cash and Cash Equivalents functions. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls over Cash and Cash Equivalents. \r\n \r\nCondition: The following Cash and Cash Equivalents related deficiencies were noted: \r\n Bank reconciliations were not performed by someone independent of the general ledger function. \r\n Misstatements were noted on Note Disclosure 4 for the carrying amount and the bank balance amount. \r\n Four bank accounts were not properly reconciled to the June 30, 2017 general ledger balance.  Reconciliations, including bank statements and supporting documentation, were not provided \r\nfor two accounts.  Seven reconciliations lacked evidence of timely completion through completion dates for both \r\nthe preparer and approver.  Six reconciliations lacked the preparers signature. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the cause was a direct result of the lack of time and resources to fully separate duties to ensure that internal controls were effective. \r\n \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over cash activity increases the risk significant misstatements could occur in the financial statements due to error or fraud. \r\n \r\nRecommendation: Management should take appropriate steps to ensure the time and resources are made available to implement controls over cash to ensure monthly bank reconciliations are preformed accurately by someone independent of the general ledger. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2017-002 Control Category: \r\nInternal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None FS 2016-002, FS 2015-002, FS 2014-002, FS-7301-13-02, FS-7301-12-03 \r\n \r\nDescription: The accounting procedures of the School District were insufficient to provide adequate internal controls over the school activity accounts. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and provide reasonable assurance transactions are processed according to established procedures. \r\n \r\nCondition: The following errors were noted with the School District's school activity accounts: Cash and Cash Equivalents \r\n Reconciliation including bank statement and supporting documentation was not provided for the CSS Internal School Funds account. \r\n \r\nRevenues/Receivables/Receipts  The deposit preparation function was not separated from the bank reconciliations and general ledger functions.  The depositing of funds in the bank was not a standard process for all school activity accounts.  No receipt documentation was provided for the ten selected for review. \r\n \r\nExpenditures/Liabilities/Disbursements  No expenditure documentation was provided for the ten selected for review. \r\n \r\nAccounting Controls (Overall)  An administrative review of the bank reconciliation process, cash receipt process, and cash disbursement process to determine if established procedures were being followed was not performed.  The School District did not have a formal process for documenting agency fund sponsors, purpose of accounts, allowable activities of accounts, source of funds, and final disposition of funds related to individual agency fund accounts. \r\n \r\nGeneral Ledger  The year-end General Ledger balance did not agree to the school activity ledger reports. Additionally, per the school activity ledger reports, five accounts were misclassified between governmental and agency, four accounts had beginning balances that did not agree to prior year ending balances, and four accounts had deficit balances. \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the internal control deficiencies related to school activity accounts occurred due to a shortage of personnel at the school and a failure of those personnel to follow the established policies and procedures. \r\n \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over school activity accounts increases the risk that misstatements could occur in the financial statements due to error or fraud. \r\n \r\nRecommendation: Management should take appropriate steps to ensure the time and resources are made available to ensure proper separation of duties is established, proper approval process for disbursements is followed, safe keeping of receipt documentation is implemented, accounting processes are adequately monitored, school activity accounts are properly classified, financial statement amounts are reconciled to the schools' general ledger balances and bank statement balance, standard procedures are implemented over the depositing of funds, amounts reported in consolidation spreadsheet for school activity accounts is accurate, and agency fund accounts are properly documented. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFS 2017-003 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over Employee Compensation Employee Compensation Significant Deficiency None FS 2016-003, FS 2015-004, FS 2014-004, FS-7301-13-05, FS-7301-12-04 \r\n \r\nDescription: The accounting procedures of the School District were insufficient to provide adequate internal controls over employee compensation. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance employees are paid according to approved salary schedules and documentation is maintained to support the salary payments. \r\n \r\nCondition: Based on a review of employees' payroll records, the following deficiencies were noted: \r\n A review of employee compensation revealed instances where salaries and/or hourly payments were not properly supported by signed contracts and/or Board approved salary schedules. \r\n A review of employee compensation revealed that two employees were underpaid a total of $5,319.07 in comparison to their proper pay rates per Board approved salary scales and/or approved contacts. \r\n A review of employee compensation revealed that six employees were overpaid a total of $26,615.33 in comparison to their proper pay rates per Board approved salary scales and/or approved contacts. \r\n \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCause: In discussing these deficiencies with the School District, they indicated that appropriate procedures to ensure salary amounts are supported by adequate documentation had not been implemented. \r\n \r\nEffect or Potential Effect: The failure to maintain adequate internal controls over employee compensation increases the risk that misstatements could occur in the financial statements due to error or fraud. \r\n \r\nRecommendation: The School District should implement policies and procedures to ensure normal business procedures are followed for all salaries, which includes ensuring salaries are paid according to approved salary schedules and adequate documentation is maintained to support the salary payments. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFS 2017-004 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over Capital Assets Capital Assets Material Weakness None FS 2016-005, FS 2015-005, FS 2014-005, FS-7301-13-06, FS-7301-12-05 \r\n \r\nDescription: The School District did not adequately maintain the capital assets records. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that capital assets inventory reports are properly maintained. Chapter IV-7 Implementing a Capital Assets Management System of the Financial Management for Georgia Local Units of Administration provides that School Districts must establish capital asset policies, define system requirements, implement a capital asset system and maintain capital asset inventory reports. \r\n \r\nCondition: The following School District's capital asset records revealed the following exceptions: \r\n The entity was unable to provide a capital asset listing that was accurate or complete. The listing did not contain all items reported on the prior year listing nor had it been updated to include items noted by auditors in the previous audit. \r\n Documentation of a physical inventory of capital assets was not provided.  The capital asset note disclosure reports depreciation expense that does not agree to the \r\ncapital asset listing. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the cause was a direct result of the lack of time and resources to fully monitor and implement procedures over capital assets which follow Board policy. \r\n \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over capital assets can lead to inaccurate internal and external reporting, as well as, noncompliance with generally accepted accounting principles. \r\n \r\nRecommendation: Management should take appropriate steps to ensure the time and resources are made available to implement controls over capital assets to ensure records are accurate and conform to the School District's approved capital asset policy. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFS 2017-005 Control Category: \r\nInternal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls at the Central Office Accounting Controls (Overall) Expenditures/Liabilities/Disbursements Significant Deficiency None FS 2016-005 \r\n \r\nDescription: The accounting procedures of the School District were insufficient to provide adequate internal controls at the Central Office. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures. \r\n \r\nCondition: Accounting Controls (Overall) \r\n The School District does not have adequate logical access controls in place to ensure only appropriate users have access to significant financial applications and supporting infrastructure. We noted several users with access rights that exceeded their need to complete their assigned job functions. Further, the access granted did not adequately separate the functions of initiating, authorizing, and recording transactions, reconciliations, and maintaining the custody of assets. \r\n Inadequate physical access controls are in place over the server rooms. It was noted that both the main server room and supplementary server room were unlocked and in high traffic areas. \r\n Proper anti-virus protection was not in place at the workstation level. For efficiency, IT personnel performs a full memory wipe and restore for any workstation that becomes compromised. This exposes the entity to unnecessary risk from cyber threats. \r\n There are no established written organizational standards or procedures over IT functions and key processes. Considering the School District has only one full time IT personnel, formal written procedures such as back-up policies, job scheduling, and IT risk assessment is crucial. \r\n Back-ups over the point of sale system are not properly documented or maintained in a separate location from the main sever. \r\n \r\nExpenditures/Liabilities/Disbursements Our examination of thirty-five expenditures revealed the following deficiency: \r\n Supporting documentation for three expenditure transactions selected for review could not be provided by the School District. \r\n- 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCause: In discussing this deficiency with School District, they stated that these issues were a result of management's failure to ensure that internal controls were established, implemented, and functioning. \r\n \r\nEffect or Potential Effect: Without satisfactory accounting controls and procedures in place, the School District could place itself in a position where potential misappropriation of assets could occur. In addition, the lack of proper controls impacts its reporting and financial position and results of operations. \r\n \r\nRecommendation: The School District should implement procedures to ensure that key accounting functions are appropriately separated and/or utilize management oversight for these incompatible activities. In addition, the School District should ensure server rooms are properly safeguarded and monitored, and adequate protection from cyber threats exists on all workstations. The School District should review accounting procedures in place and design and implement procedures relative to expenditures to strengthen the internal controls over the accounting function. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFS 2017-006 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over Financial Reporting Financial Reporting Significant Deficiency None FS 2016-006 \r\n \r\nDescription: The School District did not have adequate controls in place over the financial statement reporting process to ensure all required activity was correctly included in the financial statement information presented for audit. The original financial statements, as presented for audit, contained numerous material and significant errors and omissions. \r\n \r\nCriteria: Management is responsible for having adequate controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). The School District's internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills, and experience to prepare GAAP based financial statements and include all disclosures as required by the Governmental Accounting Standards Board (GASB). \r\nGASB Statement No. 34, Basic Financial Statements  Management's Discussion and Analysis  for State and Local Governments (Statement), requires governments to present government-wide and fund financial statements as well as summary reconciliation of the (a) total governmental funds balances to the net position of governmental activities in the Statement of Net Position, and (b) total changes in governmental fund balances to the change in the net position of governmental activities in the Statement of Activities. In addition, the statement requires information about the government's major and nonmajor funds in the aggregate, to be provided in the fund financial statements. \r\n \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nChapter II2, Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles. \r\nCondition: The following errors and omissions were noted in the School District's financial statement presented for audit: \r\n A material audit reclassification was proposed and accepted by the School District to correctly report restricted for debt service net position and restricted for capital projects net position. Restricted for capital projects was overstated by $316,849.53 and restricted for debt service was understated by $316,849.53. \r\n A review of federal grant fund balances revealed that several grants were not properly closed out at year-end. Federal programs should be reviewed each year to determine if funds should be refunded to the grantor or if a transfer or receivable is necessary to cover a deficit balance. \r\n Several other audit adjustments and reclassifications were proposed by auditors and accepted by the School District to properly present the financial statement and note disclosures. \r\nCause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of review of the financial statements and note disclosures as prepared by their consultant. \r\nEffect or Potential Effect: Material and significant misstatements and misclassifications were included in the financial statements presented for audit. Numerous adjustments were necessary for the School District's financial statements to be in conformity with GAAP. The lack of controls and monitoring could impact the reporting of the School District's financial position and results of operations. \r\nRecommendation: The School District should strengthen their internal controls and preparation and review procedures over financial reporting to ensure that the financial statements, including disclosures, presented for audit are complete and accurate. These procedures should be performed by a properly trained individual(s) possessing a thorough understanding of the applicable GAAP, GASB pronouncements and knowledge of the School District's activities and operations. The School District should also consider implementing the use of a review checklist to assist in the review process over the financial statements. \r\nViews of Responsible Officials: We concur with this finding. \r\n- 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2017-001 Compliance Requirements: \r\nInternal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\nFederal Award Numbers: \r\nQuestioned Costs: Repeat of Prior Year Finding: \r\n \r\nImprove Controls Over Expenditures Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education Title I Grants to Local Education Agencies (CFDA 84.010) Child Nutrition Cluster (CFDA 10.553 \u0026 10.555) S010A150010, S010A160010 17175GA324N1099  School Breakfast Program 17175GA324N1100  National School Lunch Program $19,662.20 FA 2016-002 \r\n \r\nDescription: A review of expenditures charged to the Title I Grants to Local Education Agencies (CFDA 84.010) program and Child Nutrition Cluster (CFDA 10.553 and 10.555) revealed that the School District's internal control procedures were not operating appropriately to ensure that expenditures were properly reviewed, approved and documented. \r\n \r\nCriteria: 2 CFR 200.403 states in part that \"costs must meet the following general criteria in order to be allowable under federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles... (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity...\" (g) Be adequately documented...\" \r\n \r\nIn addition, 2 CFR 200.430(i)(1) states in part that \"charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.\" \r\n \r\nFurthermore, 2 CFR 200.303(a) states that the non-Federal entity must \"establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award.\" \r\n \r\nCondition: All employees paid with Child Nutrition Cluster funds were selected for testing. These employees were reviewed to determine if internal controls were functioning properly and applicable compliance requirements were met. Timesheets for seven out of the eight employees tested lacked evidence of review and approval. \r\n \r\nFor the Title I Grants to Local Educational Agencies program, all accounts payable items and all expenditures recorded in the three months after the period of performance were selected for testing. These items were reviewed to determine if internal controls were functioning properly and applicable compliance requirements were met. The following deficiencies were noted: \r\n \r\n- 9 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\n The two accounts payable expenditure transactions tested by the auditor lacked supporting documentation. \r\n Two out of six expenditure transactions recorded after the period of performance lacked supporting documentation. These expenditures were reported on the School District's Fiscal Year 2017 Completion Report for Title I-A, Improving the Academic Achievement of the Disadvantaged. \r\n \r\nQuestioned Cost: Questioned costs of $19,662.20 were identified for Title I program expenditures that lacked appropriate supporting documentation. \r\n \r\nCause: In discussing this deficiency with the School District, they stated these issues were a result of poor record retention of previous central office employees. \r\n \r\nEffect or Potential Effect: Failure to ensure that supporting documentation of expenditures is properly maintained and that appropriate reviews and approvals of expenditures occur exposes the School District to unnecessary risk of error and misuse of Federal funds. Additionally, the School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. \r\n \r\nRecommendation: The School District should review current internal control procedures related to Child Nutrition Cluster and Title I program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect evidence of review and approval, including employee timesheets. In addition, all expenditure voucher packages should contain all required components. Furthermore, management should develop and implement a monitoring process to ensure that controls are properly implemented. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFA 2017-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Questioned Costs: Repeat of Prior Year Finding: \r\n \r\nImprove Controls Over the Cash Management Process Cash Management Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education Title I Grants to Local Education Agencies (CFDA 84.010) S010A150010, S010A160010 None identified FA 2016-001, FA 2015-002, FA 2014-003 \r\n \r\nDescription: The School District made cash drawdowns in excess of immediate cash needs for the Title I program. \r\n \r\n- 10 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nCriteria: 2 CFR 200.305(b) states, \"For non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the pass-through entity and the disbursement by the non-Federal entity.\" In addition, 2 CFR 200.302(b)(6) requires that the entity develop written cash management procedures. \r\n \r\nCondition: Upon review of cash drawdowns and disbursements related to the Title I program, cash balances in excess of Title I program materiality were observed for a quarter of the fiscal year. Additionally, it was noted that the School District did not have appropriate controls in place over the cash drawdown process. \r\n \r\nQuestioned Cost: N/A \r\n \r\nCause: In discussing the issues with management, they indicated that the failure to reverse the prior year salary accruals until the end of the fiscal year resulted in excess cash drawdown requests. \r\n \r\nEffect or Potential Effect: The School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. In addition, the School District could potentially accrue a Federal interest liability that would be owed to the Federal government. \r\n \r\nRecommendation: The School District should develop and implement procedures to accurately forecast the cash needs of the Title I program and minimize the time elapsing between the transfer of funds from the Georgia Department of Education and the disbursement of such funds by the School District. These procedures should be documented in accordance with 2 CFR 200.302(b)(6). In addition, management should develop and implement a monitoring process to ensure that these procedures are followed. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFA 2017-003 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: \r\nQuestioned Costs: Repeat of Prior Year Finding: \r\n \r\nImprove Controls over Equipment Equipment and Real Property Management Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 \u0026 10.555) 17175GA324N1099  School Breakfast Program 17175GA324N1100  National School Lunch Program None Identified FA 2016-003 \r\n \r\nDescription: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Child Nutrition Cluster. \r\n \r\n- 11 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nCriteria: 2 CFR 200.313(d)(1) states, \"Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.\" In addition, 2 CFR 200.313(d)(2) states, \"A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years.\" \r\nCondition: The following deficiencies were noted when reviewing the Child Nutrition Cluster equipment listing: \r\n Property records did not include the following required components: (1) Percentage of Federal participation in the project costs for the Federal award under which the property was acquired (2) who holds the title and (3) condition of property. \r\n There was no evidence that a physical inventory has been performed in either the current year or the previous year. \r\nCause: The internal control process by which equipment items get aggregated and reported does not appear fully effective. In discussing the deficiency with management, they state that communication difficulties exist between the responsible parties of purchasing equipment, labeling equipment, performance of the annual inventory, and recording equipment items on the listings. \r\nEffect or Potential Effect: Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or Federal funds. Additionally, the School District is not in compliance with the Uniform Guidance and Georgia Department of Education Guidance. \r\nRecommendation: The School District should strengthen controls over Child Nutrition Cluster equipment to ensure that the equipment records are complete and accurate. Management should update the equipment listing to reflect all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. Management should perform a physical inventory of equipment at least once every two years and reconcile the results of the physical inventory to the Child Nutrition Cluster equipment listing. \r\nViews of Responsible Officials: We concur with this finding. \r\n- 12 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2017-004 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Questioned Costs: \r\n \r\nStrengthen Controls over Financial Reporting Reporting Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Educational Agencies S010A150010, S010A160010 None Identified \r\n \r\nDescription: The School District did not file accurate completion reports for the Title I Grants to Local Educational Agencies program. \r\n \r\nCriteria: 2 CFR 200.302(a) states in part that \"the non-Federal entity's financial management systems must... be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.\" In addition, 2 CFR 200.302(b)(2) states in part that the non-Federal entity's financial management systems must provide for \"accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.\" \r\n \r\nFurthermore, 2 CFR 200.303(a) states in part that the \"non-Federal must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award... (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards.\" \r\n \r\nCondition: A review of the School District's accounting records and the program completion reports revealed the following: \r\n \r\n1. The Title I-A, Improving Academic Achievement completion report for the period ending June 30, 2017 was under reported by $1,691.69. \r\n2. The Title I-A, School Improvement completion report for the period ending June 30, 2017 was under reported by $27,536.74. \r\n \r\nCause: In discussing this deficiency with the School District, they stated these issues were a result of turnover within the Central Office. \r\n \r\nEffect or Potential Effect: Failure to accurately report Federal award expenditures through the completion report process could lead to the filing of reimbursement requests that do not agree to actual expenditures. Therefore, the School District may obtain more or less Federal funding than they were eligible to receive. Additionally, the School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. \r\n \r\n- 13 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nRecommendation: The School District should revise and implement internal control procedures to ensure that completion reports submitted to the Georgia Department of Education are supported by the accounting records and reimbursement requests are prepared based upon actual expenditures incurred. In addition, management should develop and implement a monitoring process to ensure that control procedures are being followed. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFA 2017-005 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Questioned Costs: \r\n \r\nImprove Controls over the Schoolwide Program Special Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Educational Agencies S010A150010, S010A160010 None Identified \r\n \r\nDescription: The policies and procedures of the School District did not provide adequate internal controls over the schoolwide program and schoolwide plan associated with the Title I Grants to Local Educational Agencies program. \r\n \r\nCriteria: 34 CFR 200.26(c) states, \"A school operating a schoolwide program must  (1) Annually evaluate the implementation of, and results achieved by, the schoolwide program, using data from the State's annual assessments and other indicators of academic achievement; (2) Determine whether the schoolwide program has been effective in increasing the achievement of students in meeting the State's academic standards, particularly for those students who had been furthest from achieving the standards; and (3) Revise the plan, as necessary, based on the results of the evaluation, to ensure continuous improvement of students in the schoolwide program.\" \r\n \r\nCondition: Upon performing a review of the School District's schoolwide program and schoolwide plan, it was noted that the annual evaluation of results achieved by the schoolwide program was not completed appropriately. The schoolwide plan associated with the Fiscal Year 2016 schoolwide program was utilized in Fiscal Year 2017 and was not revised as necessary based upon the results of the School District's standardized testing or comparable academic achievement assessments. \r\n \r\nCause: In discussing the deficiency with the School District, management stated they misunderstood communication from Georgia Department of Education on approval. \r\n \r\n- 14 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nEffect or Potential Effect: Failure to appropriately implement procedures to evaluate the results of schoolwide program and make appropriate adjustments to the schoolwide plan could result in the use of Title I program funds for purposes that do not address the most critical needs of the students within each school. Additionally, the School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. \r\n \r\nRecommendation: The School District should evaluate their internal control processes regarding the operation of a schoolwide program and formation of the schoolwide plan. The School District should, then, develop or modify procedures to ensure that an annual evaluation of results achieved by the schoolwide program is performed and the schoolwide plan is revised appropriately based upon these results. In addition, management should develop and implement a monitoring process to ensure that these procedures are properly implemented. \r\n \r\nViews of Responsible Officials: We concur with this finding. \r\n \r\nFA 2017-006 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Questioned Costs: \r\n \r\nStrengthen Controls over Consultation with Private School Officials Special Tests and Provisions Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Educational Agencies S010A150010, S010A160010 None Identified \r\n \r\nDescription: The policies and procedures of the School District were insufficient to provide adequate internal controls over consulting private school officials regarding the participation of private school children in the Title I Grants to Local Educational Agencies program. \r\n \r\nCriteria: 34 CFR 200.55(a) states in part that \"After timely and meaningful consultation with appropriate officials of private schools, an LEA must (1) ... provide special educational services or other benefits... on an equitable basis and in a timely manner, to eligible children who are enrolled in private elementary and secondary schools.\" \r\n \r\nIn addition, 34 CFR 200.56(a) states in part that \"in order to have timely and meaningful consultation, an LEA must consult with the appropriate officials of private schools during the design and development of the LEA's program for eligible private school children.\" More specifically, 34 CFR 200.56(c)(1) states in part that \"consultation by the LEA must (i) include meetings of the LEA and appropriate officials of the private schools; and (ii) occur before the LEA makes any decision that affects the opportunity of eligible private school children to participate in Title I programs.\" \r\n \r\n- 15 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2017 \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Condition: The School District did not conduct timely and meaningful consultation with private school officials regarding private school children's participation in the Title I Grants to Local Educational Agencies program. The School District was unable to locate any evidence that private school officials were contacted about involvement in the Title I Grants to Local Educational Agencies program for the fiscal year under review. Therefore, Title I program services were not offered to eligible private school children appropriately. Cause: In discussing deficiency with the School District, they stated that the cause was direct result of lack of time and resources to fully monitor and implement procedures to ensure letters were sent out. Effect or Potential Effect: Failure to conduct appropriate consultations with private school officials regarding participation in the Title I program could lead to the School District's failure to set aside appropriate Title I funding to provide services to eligible private school children. Additionally, the School District is not in compliance with U.S. Department of Education and Georgia Department of Education guidance. Recommendation: The School District should review current internal control procedures related to consultation with private school officials. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that timely and meaningful consultation occurs with private school officials and that services are provided to eligible private school children, as necessary. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding. \r\n- 16 - \r\n \r\n SECTION V MANAGEMENT'S CORRECTIVE ACTION \r\n \r\n (This page left intentionally blank) \r\n \r\n V{|t X \r\nT|t fx|xwx 9 W|xv y V|v \r\n \r\ngtu V Utw y Xwvt| \r\nWA ]tx Vtx? fx|xwx \r\n \r\nUtw `xux \r\nd|xt Vtx? i|vx V{t|t W||v D ]tx fxx? W||v E \r\nf{txt [t? V{t|t W||v F Vt `t{x? W||v G [t| Vv{? W||v H \r\n \r\nCORRECTIVE ACTION PLAN: FINANCIAL AUDIT FINDINGS \r\n \r\nFinding: FS 2017-001 \r\n \r\nInternal Control Procedures \r\n \r\nControl Category: \r\n \r\nCash and Cash Equivalents \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: FS 2016-001, FS 2015-001, FS-7301-14-01, FS-7301-13-02 \r\n \r\nResponse: The Finance Director will meet with all parties involved to discuss the findings, examine our current procedure and seek ways to diminish the risks. We will make adjustments to procedures as needed. We will meet periodically to share ideas, discuss adjustments to procedures and provide additional training. \r\n \r\nFS 2017-002 \r\n \r\nInternal Controls over School Activity Accounts \r\n \r\nControl Category: \r\n \r\nCash and Cash Equivalents \r\n \r\nRevenues/Receivables/Receipts \r\n \r\nExpenditures/Liabilities/Disbursements \r\n \r\nAccounting Controls (Overall) \r\n \r\nGeneral Ledger \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: FS 2016-002, FS 2015-002, FS-7301-14-02, FS-7301-13-03 \r\n \r\nResponse: The school district has hired a new Finance/Business Director that will review the current accounting procedure and ensure that internal controls are in place. In addition, the school district has received quotes in reference to purchasing a new software that will be implemented for school accounting that has features to eliminate issues with school level purchases. The Business/Finance Director will meeting periodically to share ideas, discuss adjustments to procedures (if any), and provide additional training, if needed. \r\n \r\nFS 2017-003 \r\n \r\nInternal Controls over Employee Compensation \r\n \r\nControl Category: \r\n \r\nEmployee Compensation \r\n \r\nInternal Control Impact: Significant Deficiency \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: FS 2016-004, FS 2015-004, FS-7301-14-05, FS-7301-13-04 \r\n \r\n945 N. Washington Avenue \r\n \r\nP. O. Box 515 Determined to Achieve; Dedicated to Succeed \r\n \r\nTalbotton, GA 31827 \r\n \r\n Response: The Board will ensure that internal controls are establish, implemented and functioning at the system level to adequately address controls over employee compensation procedures and ensure that all said employee compensation is properly calculated. \r\n \r\nFS 2017-004 \r\n \r\nInternal Controls over Capital Assets \r\n \r\nControl Category: \r\n \r\nCapital Assets \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: FS 2016-005, FS 2015-005, FS-7301-14-06, FS-7301-1-05 \r\n \r\nResponse: Management concurs with this finding; Additional resources will be committed as well as controls designed and implemented to the capital asset inventory management process to ensure records are properly maintained. Further, the School District is in the process of implementing a better control system to assist with the capital asset activity. \r\n \r\nFS 2017-005 \r\n \r\nInternal Controls at the Central Office \r\n \r\nControl Category: \r\n \r\nAccounting Controls (Overall) \r\n \r\nExpenditures/Liabilities/Disbursements \r\n \r\nInternal Control Impact: Significant Deficiency \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: FS 2016-005 \r\n \r\nResponse: The School District has hired a new Chief Financial Officer to oversee the accounting procedures and ensure that internal controls are in place. In addition, the School District will review the current accounting procedures and controls and will implement procedures to help strengthen the internal controls. \r\n \r\nFS 2017-006 \r\n \r\nInternal Controls over Financial Reporting \r\n \r\nControl Category: \r\n \r\nFinancial Reporting \r\n \r\nInternal Control Impact: Significant Deficiency \r\n \r\nCompliance Impact: \r\n \r\nNone \r\n \r\nRepeat of Prior Year Finding: FS 2016-006 \r\n \r\nResponse: The School District has hired a new Chief Financial Officer to oversee the accounting procedures and ensure that internal controls are in place. In addition, the School District will review the current accounting procedures and controls and will implement procedures to help strengthen the internal controls. \r\n \r\nFA 2017-001 Compliance Requirement: \r\nInternal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\nFederal Award Numbers: \r\n \r\nImprove Controls Over Expenditures Activities Allowed or Unalloyed Allowable Costs/Cost Principles Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education Title I Grants to Local Education Agencies (CFDA 84.010) Child Nutrition Cluster (CFDA 10.553 \u0026 10.555) S010A150010, S010A160010 17175GA324N1099-School Breakfast Program \r\n \r\n945 N. Washington Avenue \r\n \r\nP. O. Box 515 Determined to Achieve; Dedicated to Succeed \r\n \r\nTalbotton, GA 31827 \r\n \r\n 17175GA324N1100- National School Lunch Program \r\n \r\nQuestioned Costs: \r\n \r\n$19,662.20 \r\n \r\nRepeat of Prior Year Funding: FA2016-001 \r\n \r\nResponse: In discussing this deficiency with the School District, they stated these issues were a result of poor record retention of previous central employees. The School District has hired a new Chief Financial Officer to oversee the accounting procedure and ensure that internal controls are in place. In addition, the School District has implemented purchasing and approval procedures to ensure that expenditures are reviewed appropriately. \r\n \r\nFA 2017-002 \r\n \r\nImprove Controls Over the Cash Management Process \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: Material Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: Title I Grants to Local Education Agencies (CFDA 84.010) \r\n \r\nFederal Award Numbers: S010A150010 \r\n \r\nRepeat of Prior Year Finding: FA 2016-002, FA 2015-003 \r\n \r\nResponse: In discussing the issues with management, they indicated that the failure to reverse the prior year salary accruals until the end of the fiscal year resulted in excess cash drawdown requests. \r\n \r\nFA 2017-003 \r\n \r\nImprove Controls over Equipment \r\n \r\nCompliance Requirement: Equipment and Real Property Management \r\n \r\nInternal Control Impact: Significant Deficiency \r\n \r\nCompliance Impact: \r\n \r\nNonmaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: Child Nutrition Cluster (CFDA 10.553 \u0026 10.555) \r\n \r\nFederal Award Number: 16165GA324N1099-School Breakfast Program \r\n \r\n17175GA324N1100-National School Lunch Program \r\n \r\nQuestioned Costs: \r\n \r\nNone Identified \r\n \r\nRepeat of Prior Year Finding: FA2016-003 \r\n \r\nResponse: Management concurs with this finding. Controls will be designed and implemented to ensure complete and accurate tracking of equipment to include physical inventory audits in accordance with federal regulations, 2 CFR 200.313. In addition, the School District will review the current procedure and control to ensure this control is properly maintained and communicate the difficulties (if any) that exists between the responsible parties of purchasing equipment, labeling equipment, performance of annual inventory, and recording equipment items on listings. \r\n \r\nFA 2017-004 Compliance Requirement: Internal Control Impact : Compliance Impact: Federal Awarding Agency: Pass-Through Entity: \r\n \r\nStrengthen Cntrols over Financial Reporting Reporting Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education \r\n \r\n945 N. Washington Avenue \r\n \r\nP. O. Box 515 Determined to Achieve; Dedicated to Succeed \r\n \r\nTalbotton, GA 31827 \r\n \r\n CFDA Number and Title: Federal Award Numbers: Questioned Costs: \r\n \r\n84.010 Title I Grants to Local Educational Agencies S010A150010, S010A160010 None Identified \r\n \r\nResponse: The School District has hired a new Chief Financial Officer to oversee the accounting procedures and ensure that internal controls are in place. In addition, the School District will review the current accounting procedures and controls and will implement procedures to help strengthen the internal controls. \r\n \r\nFA 2017-005 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Questioned Costs: \r\n \r\nImprove Controls over the Schoolwide Program Special Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Educational Agencies S010A150010, S010A160010 Non Identified \r\n \r\nFA 2017-006 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Questioned Costs: \r\n \r\nStrengthen Controls over Consultation with Private School Officials Special Tests and Provisions Material Weakness Material Noncompliance U. S. Department of Education Georgia Department of Education 84.010 Title I Grants to Local Educational Agencies S010A160010, S010A170010 None Identified \r\n \r\nResponse: The School District has hired a new Chief Financial Officer to oversee the accounting procedures and ensure that internal controls are in place. In addition, the School District will review the current accounting procedures and controls and will implement procedures to help strengthen the internal controls. \r\n \r\nEstimated Completion Date: June 30, 2021 \r\n___________________________________ Dr. James Catrett, Superintendent Contact Information: JCatrett@talbot.k12.ga.us \r\n(706) 665-8528 \r\n \r\n945 N. Washington Avenue \r\n \r\nP. O. Box 515 Determined to Achieve; Dedicated to Succeed \r\n \r\nTalbotton, GA 31827 \r\n \r\n "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2014-belec-p-btext","title":"Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended 2014 June 30 (including independent auditor's reports)","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2017-01-30"],"dcterms_description":["Annual financial report for the Talbot County Board of Education."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Georgia. Department of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Talbot County Board of Education (Ga.)--Appropriations and expenditures--Periodicals.","Education--Georgia--Talbot County--Auditing--Periodicals.","Education--Georgia--Talbot County--Finance--Statistics--Periodicals.","Georgia Government Documents--Serial"],"dcterms_title":["Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended 2014 June 30 (including independent auditor's reports)"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2014-belec-p-btext"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2014-belec-p-btext"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records","audits","financial records","financial statements"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"TALBOT COUNTY BOARD OF EDUCATION \r\nTALBOTTON, GEORGIA \r\nANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2014 \r\n(Including Independent Auditor's Reports) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\n \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nSECTION I FINANCIAL \r\n \r\nEXHIBITS \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nDISTRICT-WIDE FINANCIAL STATEMENTS \r\n \r\nA \r\n \r\nSTATEMENT OF NET POSITION \r\n \r\nB \r\n \r\nSTATEMENT OF ACTIVITIES \r\n \r\nFUND FINANCIAL STATEMENTS \r\n \r\nC \r\n \r\nBALANCE SHEET \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nD \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\n \r\nTO THE STATEMENT OF NET POSITION \r\n \r\nE \r\n \r\nSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES \r\n \r\nIN FUND BALANCES \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nF \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT \r\n \r\nOF REVENUES, EXPENDITURES AND CHANGES IN FUND \r\n \r\nBALANCES TO THE STATEMENT OF ACTIVITIES \r\n \r\nG \r\n \r\nSTATEMENT OF FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\nH \r\n \r\nSTATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\nI NOTES TO THE BASIC FINANCIAL STATEMENTS \r\n \r\nSCHEDULES \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND \r\n \r\nSUPPLEMENTARY INFORMATION \r\n \r\n2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES \r\nGENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM \r\n \r\nPage \r\n1 2 4 5 6 7 8 9 11 \r\n27 28 29 30 31 \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\nSECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 \r\nSECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\nSECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION I FINANCIAL \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJanuary 30, 2017 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S REPORT \r\nLadies and Gentlemen: \r\nReport on the Financial Statements \r\nWe have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Talbot County Board of Education, as of and for the year ended June 30, 2014, and the related notes to the financial statements (Exhibits A through I), which collectively comprise the Board's basic financial statements as listed in the table of contents. \r\nManagement's Responsibility for the Financial Statements \r\nManagement is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. \r\nAuditor's Responsibility \r\nOur responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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. \r\nAn audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the \r\n2014ARL-14 \r\n \r\n (This page left intentionally blank) \r\n \r\n effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. \r\nWe believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. \r\nBasis for Qualified Opinion on Aggregate Remaining Fund Information \r\nManagement has not segregated the school activity (principal's) accounts maintained at the individual schools between the governmental activities, general fund or agency fund (which is reported in the aggregate remaining fund information). Accounting principles generally accepted in the United States of America require that the assets, liabilities, revenues, expense or expenditures, and the respective changes in financial position of these accounts be segregated in these financial statements as appropriate. The aggregate effect on the financial statements of this variance or omission has not been determined. \r\nQualified Opinion \r\nIn our opinion, except for the effects of the matter described in the \"Basis for Qualified Opinion on the Aggregate Remaining Fund information\" paragraph, the financial statements referred to above present fairly, in all material respects, the respective financial position of the aggregate remaining fund information of the Talbot County Board of Education, as of June 30, 2014, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. \r\nUnmodified Opinions \r\nIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the Talbot County Board of Education, as of June 30, 2014, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. \r\nEmphasis of Matter \r\nAs described in Note 2 to the financial statements, in 2014 the Talbot County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinions are not modified with respect to this matter. \r\nAs discussed in Note 2 to the financial statements, in 2014, the Talbot County Board of Education restated the prior period financial statements to correct a misstatement. Our opinions are not modified with respect to this matter. \r\nOther Matters \r\nRequired Supplementary Information \r\nManagement has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic \r\n2014ARL-14 \r\n \r\n (This page left intentionally blank) \r\n \r\n financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. \r\nAccounting principles generally accepted in the United States of America require that the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 27, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. \r\nOther Information \r\nOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Talbot County Board of Education's basic financial statements. The accompanying supplementary information, consisting of Schedules 2 through 5, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. \r\nThe accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole. \r\nOur audit was conducted as required by Section 50-6-6(a) of the Official Code of Georgia Annotated. We provided basic accounting assistance limited to services such as preparing draft financial statements that were based on the School District's chart of accounts and general ledgers including any adjusting, correcting, and closing entries that have been approved by the School District's management; prepared draft notes to the financial statements based on information determined and approved by the School District's management; and prepared trial balances on the School District's chart of accounts. \r\n2014ARL-14 \r\n \r\n (This page left intentionally blank) \r\n \r\n Other Reporting Required by Government Auditing Standards \r\nIn accordance with Government Auditing Standards, we have also issued our report dated January 30, 2017, on our consideration of the Talbot County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Talbot County Board of Education's internal control over financial reporting and compliance. \r\nA copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24. \r\nRespectfully submitted, \r\n \r\nGSG:es 2014ARL-14 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2014 \r\nASSETS \r\nCash and Cash Equivalents Investments Accounts Receivable, Net \r\nTaxes State Government Federal Government Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation) \r\nTotal Assets \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Interest Payable Contracts Payable Retainage Payable Deposits and Unearned Revenues Long-Term Liabilities \r\nDue Within One Year Due in More Than One Year \r\nTotal Liabilities \r\nNET POSITION \r\nNet Investment in Capital Assets Restricted for \r\nContinuation of Federal Programs Continuation of State Programs Debt Service Capital Projects Bus Replacement Unrestricted \r\nTotal Net Position \r\n \r\nEXHIBIT \"A\" \r\n \r\nGOVERNMENTAL ACTIVITIES \r\n \r\n$ \r\n \r\n2,176,746.48 \r\n \r\n65,000.00 \r\n \r\n224,865.61 2,050,724.22 \r\n139,028.92 15,009.47 \r\n8,600,794.24 2,115,378.48 \r\n \r\n15,387,547.42 \r\n \r\n81,821.26 496,064.16 \r\n64,474.79 29,529.17 1,810,790.40 377,529.45 \r\n5,202.54 \r\n340,000.00 1,525,000.00 \r\n4,730,411.77 \r\n \r\n8,851,172.72 \r\n271,059.46 16,459.96 \r\n345,905.83 20,956.20 39,451.00 \r\n1,112,130.48 \r\n \r\n$ \r\n \r\n10,657,135.65 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES \r\nFOR THE YEAR ENDED JUNE 30, 2014 \r\n \r\nGOVERNMENTAL ACTIVITIES \r\nInstruction Support Services \r\nPupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt \r\nTotal Governmental Activities \r\nGeneral Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous \r\nTotal General Revenues \r\nChange in Net Position \r\nNet Position - Beginning of Year, Restated \r\n \r\nEXPENSES \r\n \r\nCHARGES FOR SERVICES \r\n \r\nPROGRAM REVENUE \r\n \r\n$ \r\n \r\n3,469,513.76 $ \r\n \r\n431,336.12 140,013.81 111,720.56 356,124.96 338,583.76 \r\n72,913.01 531,774.93 467,327.76 \r\n26,790.04 \r\n \r\n2,085.48 484,598.18 \r\n71,899.17 \r\n \r\n$ \r\n \r\n6,504,681.54 $ \r\n \r\n5,028.52 \r\n23,831.44 28,859.96 \r\n \r\nNet Position - End of Year \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 2 - \r\n \r\n EXHIBIT \"B\" \r\n \r\nPROGRAM REVENUES OPERATING GRANTS AND \r\nCONTRIBUTIONS \r\n \r\nCAPITAL GRANTS AND CONTRIBUTIONS \r\n \r\nNET (EXPENSES) REVENUES \r\nAND CHANGES IN NET POSITION \r\n \r\n$ \r\n \r\n1,668,269.08 $ \r\n \r\n2,168,713.18 $ \r\n \r\n114,414.38 31,958.87 76,441.00 \r\n349,809.70 184,241.32 \r\n14,912.82 192,282.51 231,660.39 \r\n \r\n8,356.53 34,865.35 \r\n \r\n449,616.92 \r\n \r\n323,013.55 \r\n \r\n$ \r\n \r\n3,313,606.99 $ \r\n \r\n2,534,948.61 \r\n \r\n372,497.02 \r\n-316,921.74 -108,054.94 \r\n-35,279.56 2,041.27 \r\n-154,342.44 -58,000.19 \r\n-304,627.07 -235,667.37 \r\n-26,790.04 \r\n-2,085.48 311,863.73 -71,899.17 \r\n-627,265.98 \r\n \r\n3,238,374.10 25,007.57 \r\n419,392.98 17,439.77 4,668.45 99,603.70 \r\n3,804,486.57 \r\n3,177,220.59 \r\n7,479,915.06 \r\n \r\n$ \r\n \r\n10,657,135.65 \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION BALANCE SHEET \r\nGOVERNMENTAL FUNDS JUNE 30, 2014 \r\n \r\nEXHIBIT \"C\" \r\n \r\nASSETS \r\nCash and Cash Equivalents Investments Accounts Receivable, Net \r\nTaxes State Government Federal Government Inventories \r\n \r\nGENERAL FUND \r\n \r\nDISTRICT-WIDE CAPITAL PROJECTS FUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 1,313,230.36 $ 65,000.00 \r\n \r\n769,709.68 $ \r\n \r\n93,806.44 $ \r\n \r\n2,176,746.48 65,000.00 \r\n \r\n181,343.74 235,245.00 139,028.92 \r\n15,009.47 \r\n \r\n43,521.87 1,815,479.22 \r\n \r\n224,865.61 2,050,724.22 \r\n139,028.92 15,009.47 \r\n \r\nTotal Assets \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Contracts Payable Retainage Payable Deposits and Unearned Revenue \r\nTotal Liabilities \r\nDEFERRED INFLOWS OF RESOURCES \r\nUnavailable Revenue - Property Taxes \r\nFUND BALANCES \r\nNonspendable Restricted Assigned Unassigned \r\nTotal Fund Balances \r\n \r\n$ 1,948,857.49 $ 2,628,710.77 $ 93,806.44 $ 4,671,374.70 \r\n \r\n$ \r\n \r\n81,821.26 \r\n \r\n496,064.16 \r\n \r\n64,474.79 \r\n \r\n$ 1,810,790.40 \r\n \r\n377,529.45 \r\n \r\n5,202.54 \r\n \r\n647,562.75 \r\n \r\n2,188,319.85 \r\n \r\n$ \r\n \r\n81,821.26 \r\n \r\n496,064.16 \r\n \r\n64,474.79 \r\n \r\n1,810,790.40 \r\n \r\n377,529.45 \r\n \r\n5,202.54 \r\n \r\n2,835,882.60 \r\n \r\n144,575.18 \r\n \r\n144,575.18 \r\n \r\n15,009.47 311,960.95 \r\n19,762.89 809,986.25 \r\n1,156,719.56 \r\n \r\n302,584.76 $ 137,806.16 \r\n \r\n93,806.44 \r\n \r\n440,390.92 \r\n \r\n93,806.44 \r\n \r\n15,009.47 708,352.15 157,569.05 809,986.25 \r\n1,690,916.92 \r\n \r\nTotal Liabilities, Deferred Inflows of Resources, and Fund Balances \r\n \r\n$ 1,948,857.49 $ 2,628,710.77 $ 93,806.44 $ 4,671,374.70 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\nTO THE STATEMENT OF NET POSITION JUNE 30, 2014 \r\n \r\nEXHIBIT \"D\" \r\n \r\nTotal Fund Balances - Governmental Funds (Exhibit \"C\") \r\nAmounts reported for Governmental Activities in the Statement of Net Position are different because: \r\nCapital Assets used in Governmental Activities are not financial resources and therefore are not reported as assets in governmental funds. These assets consist of: \r\nLand Construction in Progress Land Improvements Buildings and Improvements Equipment Accumulated Depreciation \r\nTotal Capital Assets \r\nTaxes that are not available to pay for current period expenditures are deferred in the governmental funds. \r\nProperty Taxes \r\nLong-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of: \r\nBonds Payable Accrued Interest Payable \r\nTotal Long-Term Liabilities \r\nNet Position of Governmental Activities (Exhibit \"A\") \r\n \r\n$ 1,690,916.92 \r\n \r\n$ \r\n \r\n354,857.93 \r\n \r\n8,245,936.31 \r\n \r\n558,998.55 \r\n \r\n3,507,218.42 \r\n \r\n1,732,400.23 \r\n \r\n-3,683,238.72 \r\n \r\n10,716,172.72 \r\n \r\n144,575.18 \r\n \r\n$ -1,865,000.00 -29,529.17 \r\n \r\n-1,894,529.17 \r\n \r\n$ 10,657,135.65 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES \r\nGOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2014 \r\n \r\nEXHIBIT \"E\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent 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 Other Support Services Enterprise Operations Food Services Operation \r\nCapital Outlay Debt Services \r\nPrincipal Interest \r\nTotal Expenditures \r\nExcess of Revenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nTransfers In Transfers Out \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning, Restated \r\nFund Balances - Ending \r\n \r\nGENERAL FUND \r\n \r\nDISTRICT-WIDE CAPITAL PROJECTS FUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ \r\n \r\n3,319,221.13 \r\n \r\n17,439.77 $ \r\n \r\n419,392.98 \r\n \r\n2,230,303.62 \r\n \r\n2,519,164.61 \r\n \r\n1,099,087.37 \r\n \r\n28,859.96 \r\n \r\n1,041.67 \r\n \r\n3,333.82 $ \r\n \r\n99,603.70 \r\n \r\n6,795,557.22 \r\n \r\n2,941,891.41 \r\n \r\n$ \r\n292.96 292.96 \r\n \r\n3,319,221.13 436,832.75 \r\n4,749,468.23 1,099,087.37 \r\n28,859.96 4,668.45 \r\n99,603.70 \r\n9,737,741.59 \r\n \r\n3,376,583.07 \r\n431,336.12 140,013.81 111,720.56 355,777.17 338,583.76 \r\n72,843.01 528,911.37 387,973.71 \r\n26,790.04 2,085.48 \r\n471,154.69 \r\n6,243,772.79 \r\n551,784.43 \r\n \r\n7,028,876.14 \r\n7,028,876.14 -4,086,984.73 \r\n \r\n325,000.00 77,045.00 \r\n402,045.00 \r\n-401,752.04 \r\n \r\n3,376,583.07 \r\n431,336.12 140,013.81 111,720.56 355,777.17 338,583.76 \r\n72,843.01 528,911.37 387,973.71 \r\n26,790.04 2,085.48 \r\n471,154.69 7,028,876.14 \r\n325,000.00 77,045.00 \r\n13,674,693.93 \r\n-3,936,952.34 \r\n \r\n551,784.43 604,935.13 \r\n \r\n-150,000.00 -150,000.00 -4,236,984.73 4,677,375.65 \r\n \r\n150,000.00 \r\n150,000.00 -251,752.04 345,558.48 \r\n \r\n150,000.00 -150,000.00 \r\n0.00 -3,936,952.34 5,627,869.26 \r\n \r\n$ \r\n \r\n1,156,719.56 $ \r\n \r\n440,390.92 $ \r\n \r\n93,806.44 $ 1,690,916.92 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF \r\nREVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2014 \r\n \r\nEXHIBIT \"F\" \r\n \r\nTotal Net Change in Fund Balances - Governmental Funds (Exhibit \"E\") \r\nAmounts reported for Governmental Activities in the Statement of Activities are different because: \r\nCapital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are: \r\nCapital Outlay Depreciation Expense \r\nExcess of Capital Outlay over Depreciation Expense \r\nTaxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. \r\nRepayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Position. In the current year, these amounts consist of: \r\nBond Principal Retirements \r\nSome items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of: \r\nNet Decrease in Accrued Interest on Issuance of Bonds \r\nChange in Net Position of Governmental Activities (Exhibit \"B\") \r\n \r\n$ -3,936,952.34 \r\n \r\n$ 7,024,065.64 -184,199.08 \r\n \r\n6,839,866.56 \r\n \r\n-55,839.46 \r\n \r\n325,000.00 \r\n \r\n5,145.83 $ 3,177,220.59 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS JUNE 30, 2014 \r\n \r\nEXHIBIT \"G\" \r\n \r\nASSETS Cash and Cash Equivalents \r\nLIABILITIES Funds Held for Others \r\nNET POSITION Held in Trust for Private Purposes \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\nAGENCY FUNDS \r\n \r\n$ \r\n \r\n2,784.13 $ \r\n \r\n28.51 \r\n \r\n$ \r\n \r\n28.51 \r\n \r\n$ \r\n \r\n2,784.13 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS YEAR ENDED JUNE 30, 2014 \r\nADDITIONS Investment Earnings Interest \r\nDEDUCTIONS None Reported Change in Net Position \r\nNet Position - Beginning \r\nNet Position - Ending \r\n \r\nEXHIBIT \"H\" \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\n$ \r\n \r\n4.01 \r\n \r\n0.00 4.01 2,780.12 \r\n \r\n$ \r\n \r\n2,784.13 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 9 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2014 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY \r\nREPORTING ENTITY \r\nThe Talbot County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is 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. \r\nNOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nBASIS OF PRESENTATION \r\nThe School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Talbot County Board of Education. \r\nDistrict-wide Statements: \r\nThe Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. \r\nThe Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. \r\n Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. \r\n Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. \r\nFund Financial Statements: \r\nThe fund financial statements provide information about the School District's funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. \r\nThe School District reports the following major governmental funds: \r\n General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund. \r\n District-wide Capital Projects Fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) and grants from Georgia State Financing and Investment Commission that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. \r\n Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest. \r\n \r\n- 11 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2014 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe School District reports the following fiduciary fund types: \r\n Private Purpose Trust fund reports trust arrangements under which principal and income benefit are used to provide scholarships to business administration and business education students with junior standing at an accredited college or university. \r\n Agency funds account for assets held by the School District as an agent for various funds, governments, and individuals. \r\nBASIS OF ACCOUNTING \r\nThe basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied. \r\nThe School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. \r\nGovernmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end, except for reimbursable grants. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities are reported as other financing sources. \r\nThe School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, both restricted and unrestricted resources are available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. \r\nRESTATEMENT OF PRIOR YEAR NET POSITION/FUND BALANCE \r\nFor fiscal year 2014, the School District made a prior period adjustment due to errors in deferred revenues and accounts receivable, which requires the restatement of the June 30, 2013, net position in Governmental Activities and fund balance in the General Fund. The result is an increase in Net Position and fund balance at July 1, 2013, of $265,611.60. This change is in accordance with generally accepted accounting principles. \r\n \r\n- 12 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2014 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNet Position, July 1, 2013, as previously reported Adjustment to Accounts Receivable Adjustment to Deferred Revenue \r\nNet Position, July 1, 2013, as restated \r\nFund Balance, July 1, 2013, as previously reported Adjustment to Accounts Receivable Adjustment to Deferred Revenue \r\nFund Balance, July 1, 2013, as restated \r\n \r\n$ \r\n \r\n7,214,303.46 \r\n \r\n64,826.25 \r\n \r\n200,785.35 \r\n \r\n$ \r\n \r\n7,479,915.06 \r\n \r\n$ \r\n \r\n5,362,257.66 \r\n \r\n64,826.25 \r\n \r\n200,785.35 \r\n \r\n$ \r\n \r\n5,627,869.26 \r\n \r\nNEW ACCOUNTING PRONOUNCEMENTS \r\nIn fiscal year 2014, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. The provisions of this statement establish accounting and financial reporting standards that reclassify, as deferred outflows or inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows or inflows of resources, certain items that were previously reported as assets and liabilities. \r\nFUTURE ACCOUNTING PRONOUNCEMENTS \r\nIn fiscal year 2015, the School District will adopt Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. Implementation of this statement will require the School District to record a liability on the District's financial statements for its proportionate share of the Net Pension Liability of pension plans in which it participates. Based on information provided by the Teachers' Retirement System of Georgia (TRS), the School District's proportionate share of the Net Pension Liability of the pension plan administered through TRS is estimated to be $3.8 million at June 30, 2015. \r\nCASH AND CASH EQUIVALENTS \r\nComposition of Deposits \r\nCash and cash equivalents consist of cash 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. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. \r\n \r\n- 13 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2014 \r\n \r\nEXHIBIT \"I\" \r\n \r\nINVESTMENTS \r\nComposition of Investments \r\nInvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: \r\n1. Obligations issued by the State of Georgia or by other states, \r\n2. Obligations issued by the United States government, \r\n3. Obligations fully insured or guaranteed by the United States government or a United States government agency, \r\n4. Obligations of any corporation of the United States government, \r\n5. Prime banker's acceptances, \r\n6. The local government investment pool (Georgia Fund 1) administered by the State of Georgia, Office of the State Treasurer, \r\n7. Repurchase agreements, and \r\n8. Obligations of other political subdivisions of the State of Georgia. \r\nThe School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks. \r\nRECEIVABLES \r\nReceivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. \r\nPROPERTY TAXES \r\nThe Talbot County Board of Commissioners adopted the property tax levy for the 2013 tax digest year (calendar year) on October 20, 2013 (levy date) based on property values as of January 1, 2013. Taxes were due on December 20, 2013 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2013 tax digest are reported as revenue in the governmental funds for fiscal year 2014. The Talbot County Board of Commissioners bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2014, for maintenance and operations amounted to $3,188,038.91. \r\n \r\n- 14 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2014 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe tax millage rate levied for the 2013 tax year (calendar year) for the Talbot County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value): \r\n \r\nSchool Operations \r\n \r\n14.1 mills \r\n \r\nAdditionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $106,174.65 during fiscal year ended June 30, 2014. \r\n \r\nSALES TAXES \r\nEducation Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $419,392.98 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. \r\n \r\nINVENTORIES \r\nFood Inventories \r\nOn the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. \r\n \r\nCAPITAL ASSETS \r\nCapital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District. \r\n \r\nCapitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows: \r\n \r\nCapitalization Policy \r\n \r\nEstimated Useful Life \r\n \r\nLand \r\n \r\nLand Improvements \r\n \r\n$ \r\n \r\nBuildings and Improvements \r\n \r\n$ \r\n \r\nEquipment \r\n \r\n$ \r\n \r\nIntagible Assets \r\n \r\n$ \r\n \r\nAll 10,000.00 10,000.00 \r\n5,000.00 100,000.00 \r\n \r\nN/A 20 to 70 years up to 70 years \r\n5 to 25 years 15 to 50 years \r\n \r\nDepreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized. \r\n \r\n- 15 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2014 \r\n \r\nEXHIBIT \"I\" \r\n \r\nAmortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets. \r\nDEFERRED OUTFLOWS/INFLOWS OF RESOURCES \r\nIn addition to assets, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. The School District did not have any items that qualified for reporting in this category for the year ended June 30, 2014. \r\nIn addition to liabilities, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period and therefore will not be recognized as an inflow of resources (revenue) until that time. The School District has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reporting only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and grants and these amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available. \r\nGENERAL OBLIGATION BONDS \r\nThe School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued. \r\nIn the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Position. \r\nNET POSITION \r\nThe School District's Net Position in the District-wide Statements is classified as follows: \r\nInvestment in Capital Assets - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of Net Investment in Capital Assets. \r\nRestricted Net Position - This represents resources for which the School District is legally or contractually obligated to spend resources for continuation of Federal Programs, debt service and capital projects in accordance with restrictions imposed by external third parties. \r\nUnrestricted Net Position - Unrestricted Net Position represents resources derived from property taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes. \r\n \r\n- 16 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2014 \r\n \r\nEXHIBIT \"I\" \r\n \r\nFUND BALANCES \r\nThe School District's fund balances are classified as follows: \r\nNonspendable  Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact. \r\nRestricted  Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. \r\nCommitted  Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. \r\nAssigned  Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes. \r\nUnassigned  The residual classification for the General Fund. This classification represents fund balances that have not been assigned to other funds and that have not been restricted, committed, or assigned to specific purposes within the General Fund. \r\nFund Balances of the Governmental Funds at June 30, 2014, are as follows: \r\n \r\nNonspendable Inventories \r\nRestricted Bus Replacement Capital Projects Continuation of Federal Programs Continuation of State Programs Debt Service \r\nAssigned Banquet Account Local Capital Outlay Projects School Activity Accounts \r\nUnassigned \r\n \r\n$ \r\n \r\n15,009.47 \r\n \r\n$ \r\n \r\n39,451.00 \r\n \r\n20,956.20 \r\n \r\n256,049.99 \r\n \r\n16,459.96 \r\n \r\n375,435.00 \r\n \r\n708,352.15 \r\n \r\n4,967.84 137,806.16 \r\n14,795.05 \r\n \r\n157,569.05 809,986.25 \r\n \r\nFund Balance, June 30, 2014 \r\n \r\n$ 1,690,916.92 \r\n \r\nWhen multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds. \r\nUSE OF ESTIMATES \r\nThe preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. \r\n \r\n- 17 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2014 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 3: BUDGETARY DATA \r\nThe budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America. \r\nThe budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. 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, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated 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. \r\nThe Superintendent is authorized by the Board to approve adjustments of no more than five percent of the amount budgeted for expenditures in any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any budget function for any fund is anticipated to be more than five percent of the budgeted amount, the Superintendent shall request Board approval for the budget amendment. Under no circumstance is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board. \r\nSee Schedule 1  General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances  Budget to Actual for a detail of any over/under expenditures during the fiscal year under review. \r\nNOTE 4: DEPOSITS \r\nCOLLATERALIZATION OF DEPOSITS \r\nOfficial Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance. \r\nAt June 30, 2014, $1,290,023.20 of deposits were not secured by surety bond, insurance or collateral as specified above. The School District is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the School District's deposits. \r\nAcceptable security for deposits consists of any one of or any combination of the following: \r\n1. Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, \r\n2. Insurance on accounts provided by the Federal Deposit Insurance Corporation, \r\n3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, \r\n \r\n- 18 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2014 \r\n \r\nEXHIBIT \"I\" \r\n \r\n4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, \r\n \r\n5. 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, \r\n \r\n6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and \r\n \r\n7. 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 or securities guaranteed 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. \r\n \r\nCATEGORIZATION OF DEPOSITS \r\nCustodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2014, the School District had deposits with a carrying amount of $2,244,559.12, which includes $65,000.00 in Certificates of Deposit that are reported as Investments, and a bank balance of $3,329,722.58. The bank balances insured by Federal depository insurance were $590,041.99, and the bank balances collateralized with securities held by the pledging institution or by the pledging financial institution's trust department or agent in the School District's name were $1,449,657.39. The amounts exposed to custodial credit risk are classified into three categories as follows: \r\n \r\nCategory 1 Category 2 - \r\nCategory 3 - \r\n \r\nUncollateralized, Cash collateralized with securities held by the pledging financial institution, or Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name. \r\n \r\nThe School District's deposits by custodial risk category at June 30, 2014, are as follows: \r\n \r\nCustodial Credit Risk Category \r\n \r\nBank Balance \r\n \r\n1 \r\n \r\n$ 1,290,023.20 \r\n \r\n2 \r\n \r\n0.00 \r\n \r\n3 \r\n \r\n0.00 \r\n \r\nTotal \r\n \r\n$ 1,290,023.20 \r\n \r\nNOTE 5: NON-MONETARY TRANSACTIONS \r\nThe School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2  Inventories. \r\n \r\n- 19 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2014 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 6: CAPITAL ASSETS \r\nThe following is a summary of changes in the Capital Assets during the fiscal year: \r\n \r\nBalances July 1, 2013 \r\n \r\nIncreases \r\n \r\nDecreases \r\n \r\nBalances June 30, 2014 \r\n \r\nGovernmental Activities Capital Assets, Not Being Depreciated: \r\nLand Construction in Progress \r\n \r\n$ \r\n \r\n354,857.93 \r\n \r\n1,221,870.67 $ \r\n \r\n7,024,065.64 $ \r\n \r\n$ 0.00 \r\n \r\n354,857.93 8,245,936.31 \r\n \r\nTotal Capital Assets Not Being Depreciated \r\n \r\n1,576,728.60 \r\n \r\n7,024,065.64 \r\n \r\n0.00 \r\n \r\n8,600,794.24 \r\n \r\nCapital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements \r\nLess Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements \r\n \r\n3,507,218.42 1,732,400.23 \r\n558,998.55 \r\n1,810,121.51 1,292,487.87 \r\n396,430.26 \r\n \r\n68,342.28 97,902.80 17,954.00 \r\n \r\n0.00 \r\n \r\n3,507,218.42 1,732,400.23 \r\n558,998.55 \r\n1,878,463.79 1,390,390.67 \r\n414,384.26 \r\n \r\nTotal Capital Assets, Being Depreciated, Net \r\n \r\n2,299,577.56 \r\n \r\n-184,199.08 \r\n \r\n0.00 \r\n \r\n2,115,378.48 \r\n \r\nGovernmental Activity Capital Assets - Net $ \r\n \r\n3,876,306.16 $ \r\n \r\n6,839,866.56 $ \r\n \r\n0.00 $ 10,716,172.72 \r\n \r\nCurrent year depreciation expense by function is as follows: \r\n \r\nInstruction Support Services \r\nGeneral Administration Maintenance and Operation of Plant Student Transportation Services Food Services \r\n \r\n$ \r\n \r\n$ \r\n \r\n347.79 \r\n \r\n1,451.06 \r\n \r\n79,354.05 \r\n \r\n89,602.69 \r\n81,152.90 13,443.49 \r\n \r\n$ 184,199.08 \r\n \r\nNOTE 7: INTERFUND TRANSFERS \r\nInterfund transfers for the year ended June 30, 2014, consisted of the following: \r\n \r\nTransfers to \r\n \r\nTransfers From District-wide \r\nCapital Projects \r\n \r\nDebt Service Fund $ \r\n \r\n150,000.00 \r\n \r\nTransfers are used to move sales tax revenue collected by the Capital Projects Fund to the Debt Service Fund to pay debt service according to the approved SPLOST referendum. \r\n \r\n- 20 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2014 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 8: RISK MANAGEMENT \r\nThe 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. \r\nThe School District has obtained commercial insurance for risk of loss associated with torts, assets, and errors or omissions. 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. \r\nThe School District has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses relate to this risk in the past three years. \r\nThe School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. \r\nChanges in the unemployment compensation claims liability during the last two fiscal years are as follows: \r\n \r\nBeginning of Year Liability \r\n \r\nClaims and Changes in Estimates \r\n \r\nClaims Paid \r\n \r\nEnd of Year Liability \r\n \r\n2013 $ 2014 $ \r\n \r\n0.00 $ 0.00 $ \r\n \r\n30,764.00 $ 7,770.00 $ \r\n \r\n30,764.00 $ 7,770.00 $ \r\n \r\n0.00 0.00 \r\n \r\nThe School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general worker's compensation insurance coverage. Specific excess of loss insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2 million. The Trust covers the first $1 million of each Employers liability claim with Safety National providing additional Employers Liability limits up to a $2 million per occurrence maximum. Safety National Casualty Company also provides $2 million in aggregate coverage to the Trust, attaching at 110% of the loss fund and based on the Fund's annual normal premium. \r\n \r\nThe School District has purchased surety bonds to provide additional insurance coverage as follows: \r\n \r\nPosition Covered \r\n \r\nAmount \r\n \r\nSuperintendent Bookkeeper Payroll Clerk School Food Director All Employees \r\n \r\n$ \r\n \r\n30,000.00 \r\n \r\n$ \r\n \r\n10,000.00 \r\n \r\n$ \r\n \r\n10,000.00 \r\n \r\n$ \r\n \r\n10,000.00 \r\n \r\n$ 100,000.00 \r\n \r\n- 21 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2014 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 9: OPERATING LEASES \r\nTalbot County Board of Education has entered into various leases as lessee for copiers and a postage meter. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2014, for governmental funds amounted to $7,737.82. \r\n \r\nNOTE 10: SHORT-TERM DEBT \r\nThe School District issues tax anticipation notes in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred. \r\nShort-term debt activity for the fiscal year is as follows: \r\n \r\nBeginning Balance \r\n \r\nIssued \r\n \r\nRedeemed \r\n \r\nEnding Balance \r\n \r\nTax Anticipation Notes $ \r\n \r\n0.00 $ 900,000.00 $ 900,000.00 $ \r\n \r\n0.00 \r\n \r\nNOTE 11: LONG-TERM LIABILITIES GENERAL OBLIGATION DEBT OUTSTANDING \r\nGeneral Obligation Bonds currently outstanding are as follows: \r\n \r\nPurpose \r\n \r\nInterest Rate \r\n \r\nGeneral Government - Series 2003 \r\n \r\n3.80% \r\n \r\n$ \r\n \r\nAmount 1,865,000.00 \r\n \r\nThe changes in Long-Term Liabilities during the fiscal year ended June 30, 2014, were as follows: \r\n \r\nG.O. Bonds \r\n \r\nBalance July 1, 2013 \r\n \r\nAdditions \r\n \r\nGovernmental Activities \r\n \r\nBalance \r\n \r\nDeductions \r\n \r\nJune 30, 2014 \r\n \r\nDue Within One Year \r\n \r\n$ 2,190,000.00 $ \r\n \r\n0.00 $ 325,000.00 $ 1,865,000.00 $ 340,000.00 \r\n \r\nAt June 30, 2014, payments due by fiscal year which includes principal and interest for these items are as follows: \r\n \r\nFiscal Year Ended June 30: \r\n \r\nGeneral Obligation Debt \r\n \r\nPrincipal \r\n \r\nInterest \r\n \r\n2015 2016 2017 2018 2019 \r\n \r\n$ \r\n \r\n340,000.00 $ \r\n \r\n355,000.00 \r\n \r\n370,000.00 \r\n \r\n390,000.00 \r\n \r\n410,000.00 \r\n \r\n64,410.00 51,205.00 37,430.00 22,990.00 \r\n7,790.00 \r\n \r\nTotal Principal and Interest \r\n \r\n$ \r\n \r\n1,865,000.00 $ \r\n \r\n183,825.00 \r\n \r\n- 22 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2014 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 12: ON-BEHALF PAYMENTS \r\nThe School District has recognized revenues and costs in the amount of $291,492.00 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. \r\nGeorgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Certificated Personnel In the amount of $276,960.00 \r\nOffice of the State Treasurer Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $14,532.00 \r\nFunds paid to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District are reported as part of the Quality Basic Education revenue allotments on Schedule 3  Schedule of State Revenue. \r\nNOTE 13: SIGNIFICANT COMMITMENTS \r\nThe following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2014, together with funding available: \r\n \r\nProject \r\n \r\nUnearned Executed Contracts \r\n \r\nFunding Available From State \r\n \r\nCentral Elementary/High Facility \r\n \r\n$ \r\n \r\n2,330,450.57 $ \r\n \r\n2,696,355.39 \r\n \r\nThe amounts described in this note are not reflected in the basic financial statements. \r\nNOTE 14: SIGNIFICANT CONTINGENT LIABILITIES \r\nAmounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. \r\nThe School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements. \r\nNOTE 15: POST-EMPLOYMENT BENEFITS \r\nGEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND \r\nPlan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. \r\n- 23 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2014 \r\n \r\nEXHIBIT \"I\" \r\n \r\nFunding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012, pay approximately 25% of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy. \r\n \r\nParticipating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected \"payas-you-go\" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. \r\n \r\nThe combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2014: \r\n \r\nFor certificated teachers, librarians and regional educational service agencies and certain other eligible participants: \r\n \r\nJuly 1, 2013  June 30, 2014 \r\n \r\n$945.00 per member per month \r\n \r\nFor non-certificated school personnel: \r\n \r\nJuly 1, 2013  June 30,2014 \r\n \r\n$596.20 per member per month \r\n \r\nNo additional contribution was required by the Board for fiscal year 2014 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation. \r\n \r\nThe School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage Contributed \r\n \r\nRequired Contribution \r\n \r\n2014 2013 2012 \r\n \r\n100% 100% 100% \r\n \r\n$ \r\n \r\n672,167.60 \r\n \r\n$ \r\n \r\n614,133.38 \r\n \r\n$ \r\n \r\n740,616.54 \r\n \r\n- 24 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2014 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 16: RETIREMENT PLANS \r\nTEACHERS' RETIREMENT SYSTEM OF GEORGIA (TRS) \r\nPlan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. 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. \r\nOn October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers' Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits. \r\n \r\nTRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service. \r\nNormal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available. \r\n \r\nFunding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2014, were 6% of annual salary. Employer contributions required for fiscal year 2014 were 12.28% of annual salary as required by the June 30, 2011, actuarial valuation. \r\n \r\nEmployer contributions for the current fiscal year and the preceding two fiscal years are as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage Contributed \r\n \r\nRequired Contribution \r\n \r\n2014 2013 2012 \r\n \r\n100% 100% 100% \r\n \r\n$ \r\n \r\n380,692.79 \r\n \r\n$ \r\n \r\n383,370.28 \r\n \r\n$ \r\n \r\n386,730.40 \r\n \r\nPUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS) \r\nBus drivers, lunchroom personnel, and maintenance and custodial personnel are members of the Public School Employees Retirement System of Georgia. The System is funded by contributions by the employees and by the State of Georgia. The School District makes no contribution to this plan. \r\n \r\n- 25 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND \r\nSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL \r\nYEAR ENDED JUNE 30, 2014 \r\n \r\nSCHEDULE \"1\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent 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 Other Support Services Enterprise Operations Food Services Operation \r\nTotal Expenditures \r\nExcess of Revenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nOperating Transfers From Other Funds Operating Transfers To Other Funds \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\nAdjustments \r\nFund Balances - Ending \r\n \r\nNONAPPROPRIATED BUDGETS \r\n \r\nORIGINAL (1) \r\n \r\nFINAL (1) \r\n \r\nACTUAL AMOUNTS \r\n \r\nVARIANCE OVER/UNDER \r\n \r\n$ \r\n \r\n3,000,721.00 $ \r\n \r\n3,000,721.00 $ \r\n \r\n3,319,221.13 $ \r\n \r\n70,112.00 \r\n \r\n70,112.00 \r\n \r\n17,439.77 \r\n \r\n2,127,766.32 \r\n \r\n2,227,910.32 \r\n \r\n2,230,303.62 \r\n \r\n1,193,369.00 \r\n \r\n1,243,659.34 \r\n \r\n1,099,087.37 \r\n \r\n60,000.00 \r\n \r\n60,000.00 \r\n \r\n28,859.96 \r\n \r\n1,100.00 \r\n \r\n1,100.00 \r\n \r\n1,041.67 \r\n \r\n120,500.00 \r\n \r\n120,500.00 \r\n \r\n99,603.70 \r\n \r\n6,573,568.32 \r\n \r\n6,724,002.66 \r\n \r\n6,795,557.22 \r\n \r\n318,500.13 -52,672.23 \r\n2,393.30 -144,571.97 \r\n-31,140.04 -58.33 \r\n-20,896.30 \r\n71,554.56 \r\n \r\n3,578,199.32 \r\n293,048.00 253,874.00 123,965.99 341,574.00 354,669.00 \r\n80,193.00 475,609.00 405,054.00 \r\n25,000.00 \r\n502,000.00 \r\n6,433,186.31 \r\n140,382.01 \r\n \r\n3,795,860.84 \r\n395,295.00 169,933.00 123,965.99 308,975.00 349,943.32 \r\n80,193.00 484,109.00 405,084.50 \r\n25,000.00 \r\n515,494.00 \r\n6,653,853.65 \r\n70,149.01 \r\n \r\n3,376,583.07 \r\n431,336.12 140,013.81 111,720.56 355,777.17 338,583.76 \r\n72,843.01 528,911.37 387,973.71 \r\n26,790.04 2,085.48 \r\n471,154.69 \r\n6,243,772.79 \r\n551,784.43 \r\n \r\n419,277.77 \r\n-36,041.12 29,919.19 12,245.43 -46,802.17 11,359.56 \r\n7,349.99 -44,802.37 17,110.79 \r\n-1,790.04 -2,085.48 44,339.31 \r\n410,080.86 \r\n481,635.42 \r\n \r\n145,000.00 -145,000.00 \r\n0.00 140,382.01 741,535.66 \r\n26,437.94 \r\n \r\n145,000.00 -145,000.00 \r\n0.00 70,149.01 741,535.66 \r\n2,519.50 \r\n \r\n551,784.43 604,935.13 \r\n \r\n-145,000.00 145,000.00 \r\n0.00 481,635.42 -136,600.53 \r\n-2,519.50 \r\n \r\n$ \r\n \r\n908,355.61 $ \r\n \r\n814,204.17 $ \r\n \r\n1,156,719.56 $ \r\n \r\n342,515.39 \r\n \r\nNotes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (1) Original and Final Budget amounts do not include the actual revenues ($47,415.77) or expenditures ($49,017.72) of the various principal accounts. \r\nThe accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 27 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\nYEAR ENDED JUNE 30, 2014 \r\n \r\nSCHEDULE \"2\" \r\n \r\nFUNDING AGENCY PROGRAM/GRANT \r\nAgriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program \r\nTotal Child Nutrition Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Food Services Fresh Fruit and Vegetable Program \r\nTotal U. S. Department of Agriculture \r\nEducation, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants \r\nTotal Special Education Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Improving Teacher Quality State Grants Title I Grants to Local Educational Agencies \r\nTotal Other Programs \r\nTotal U. S. Department of Education \r\nJustice, U. S. Department of Pass-Through From Children and Youth Coordinating Council Juvenile Justice and Delinquency Prevention \r\nDefense, U. S. Department of Direct Department of the Army R.O.T.C. Program \r\n \r\nCFDA NUMBER \r\n \r\nPASSTHROUGH \r\nENTITY ID \r\nNUMBER \r\n \r\nEXPENDITURES IN PERIOD \r\n \r\n* 10.553 * 10.555 \r\n \r\nN/A \r\n \r\nN/A \r\n \r\n$ \r\n \r\n(2) 442,840.27 (1) \r\n442,840.27 \r\n \r\n10.582 \r\n \r\nN/A \r\n \r\n14,697.02 457,537.29 \r\n \r\n84.027 \r\n \r\nN/A \r\n \r\n84.173 \r\n \r\nN/A \r\n \r\n84.048 \r\n \r\nN/A \r\n \r\n84.367 \r\n \r\nN/A \r\n \r\n* 84.010 \r\n \r\nN/A \r\n \r\n16.540 \r\n \r\nN/A \r\n \r\n144,161.42 18,155.00 \r\n162,316.42 \r\n6,948.87 93,370.61 360,710.63 461,030.11 623,346.53 \r\n21,191.34 \r\n64,932.65 \r\n \r\nTotal Expenditures of Federal Awards \r\n \r\n$ \r\n \r\n1,167,007.81 \r\n \r\nN/A = Not Available \r\n \r\nNotes to the Schedule of Expenditures of Federal Awards \r\n \r\n(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $30,053.97. \r\n \r\n(2) Expenditures for the funds earned on the School Breakfast Program ($118,022.77) were not maintained separately and are included in the 2014 National School Lunch Program. \r\n \r\nMajor Programs are identified by an asterisk (*) in front of the CFDA number. \r\n \r\nThe School District did not provide Federal Assistance to any Subrecipient. \r\n \r\nThe accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Talbot County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 28 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2014 \r\n \r\nSCHEDULE \"3\" \r\n \r\nAGENCY/FUNDING \r\nGRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program \r\nEducation, Georgia Department of Quality Basic Education (1) Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Sparsity Other State Programs Food Services Math and Science Supplements Preschool Handicapped Program Technology to Support Digital Learning Bonds Vocational Education \r\nGeorgia State Financing and Investment Commission Reimbursement on Construction Projects \r\nOffice of the State Treasurer Public School Employees Retirement \r\n \r\nGOVERNMENTAL FUND TYPES \r\n \r\nCAPITAL \r\n \r\nGENERAL \r\n \r\nPROJECTS \r\n \r\nFUND \r\n \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 57,620.30 \r\n \r\n$ 57,620.30 \r\n \r\n110,440.00 3,056.00 \r\n298,928.00 12,274.00 \r\n137,292.00 12,243.00 \r\n297,522.00 213,361.00 \r\n80,146.00 335,176.00 \r\n63,163.00 17,824.00 43,151.00 13,953.00 \r\n8,235.00 \r\n218,557.00 102,979.00 100,194.00 -274,005.00 \r\n162,043.00 19,195.00 \r\n121,368.00 \r\n8,798.00 12,535.32 \r\n5,333.00 15,784.00 18,606.00 \r\n \r\n110,440.00 3,056.00 \r\n298,928.00 12,274.00 \r\n137,292.00 12,243.00 \r\n297,522.00 213,361.00 \r\n80,146.00 335,176.00 \r\n63,163.00 17,824.00 43,151.00 13,953.00 \r\n8,235.00 \r\n218,557.00 102,979.00 100,194.00 -274,005.00 \r\n162,043.00 19,195.00 \r\n121,368.00 \r\n8,798.00 12,535.32 \r\n5,333.00 15,784.00 18,606.00 \r\n \r\n2,519,164.61 2,519,164.61 \r\n \r\n14,532.00 \r\n \r\n14,532.00 \r\n \r\n$ 2,230,303.62 $ 2,519,164.61 $ 4,749,468.23 \r\n(1) Payments to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District in the amount of $276,960.00 are included as part of the Quality oBnasbiechEadlfuocfathioenSrechveonoul De iasltlroictmt ienntthseaabmovoeu.nt of $276,960.00 are included as part of the Quality \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 29 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS \r\nYEAR ENDED JUNE 30, 2014 \r\n \r\nSCHEDULE \"4\" \r\n \r\nPROJECT \r\n \r\nORIGINAL ESTIMATED \r\nCOST (1) \r\n \r\nCURRENT ESTIMATED COSTS (2) \r\n \r\nAMOUNT EXPENDED IN CURRENT YEAR (3) \r\n \r\nAMOUNT EXPENDED IN PRIOR YEARS (3) \r\n \r\nTOTAL COMPLETION \r\nCOST \r\n \r\nEXCESS PROCEEDS NOT \r\nEXPENDED \r\n \r\nESTIMATED COMPLETION \r\nDATE \r\n \r\nAcquiring, construction and equipping one new elementary school, adding to, renovating, repairing, improving and equipping existing school buildings and other buildings and facilities useful or desirable in connection therewith; payment of capitalized interest to the bonds through and including August 1, 2003; and the costs of issuing the bonds. \r\n$ \r\n \r\n2,500,000.00 $ 11,441,988.81 $ 7,105,921.14 $ 4,336,067.67 \r\n \r\n30-Jun-15 \r\n \r\n(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. \r\n(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion. \r\n(3) The voters of Talbot County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 30 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) \r\nALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2014 \r\n \r\nSCHEDULE \"5\" \r\n \r\nDESCRIPTION \r\nDirect Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category III Category IV Category V Remedial Education Program Alternative Education Program \r\nTOTAL DIRECT INSTRUCTIONAL PROGRAMS \r\nMedia Center Program Staff and Professional Development \r\n \r\nALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) \r\n \r\nELIGIBLE QBE PROGRAM COSTS \r\n \r\nSALARIES \r\n \r\nOPERATIONS \r\n \r\nTOTAL \r\n \r\n$ \r\n \r\n177,960.00 $ \r\n \r\n139,782.78 $ \r\n \r\n8,895.89 $ \r\n \r\n148,678.67 \r\n \r\n7,220.00 \r\n \r\n20,799.27 \r\n \r\n20,799.27 \r\n \r\n456,909.00 \r\n \r\n352,111.93 \r\n \r\n24,836.04 \r\n \r\n376,947.97 \r\n \r\n20,160.00 \r\n \r\n20,846.89 \r\n \r\n20,846.89 \r\n \r\n214,402.00 \r\n \r\n251,796.48 \r\n \r\n8,386.09 \r\n \r\n260,182.57 \r\n \r\n20,113.00 460,726.00 336,894.00 122,879.00 496,673.00 \r\n84,282.00 29,081.00 \r\n \r\n15,720.94 \r\n357,615.63 507,372.41 204,183.89 \r\n5,431.55 35,893.02 155,532.48 149,323.25 43,278.10 82,951.42 33,959.85 \r\n \r\n-6,069.44 17,839.18 20,808.16 \r\n5,778.09 \r\n353.71 168.60 \r\n \r\n15,720.94 -6,069.44 375,454.81 528,180.57 209,961.98 \r\n5,431.55 35,893.02 155,532.48 149,676.96 43,278.10 83,120.02 33,959.85 \r\n \r\n2,427,299.00 \r\n \r\n2,376,599.89 \r\n \r\n80,996.32 \r\n \r\n2,457,596.21 \r\n \r\n66,542.00 12,231.00 \r\n \r\n77,404.13 1,103.49 \r\n \r\n6,516.43 10,380.51 \r\n \r\n83,920.56 11,484.00 \r\n \r\nTOTAL QBE FORMULA FUNDS \r\n \r\n$ \r\n \r\n2,506,072.00 $ \r\n \r\n2,455,107.51 $ \r\n \r\n97,893.26 $ \r\n \r\n2,553,000.77 \r\n \r\n(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 31 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJanuary 30, 2017 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\nLadies and Gentlemen: \r\nWe have audited, 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, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Talbot County Board of Education as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise Talbot County Board of Education's basic financial statements and have issued our report thereon dated January 30, 2017. \r\nInternal Control Over Financial Reporting \r\nIn planning and performing our audit of the financial statements, we considered Talbot County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Talbot County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Talbot County Board of Education's internal control. \r\nOur consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies. \r\n \r\n2014YB-40 \r\n \r\n (This page left intentionally blank) \r\n \r\n A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS 2014-001, FS 2014-002, FS 2014-003 and FS 2014-005 to be material weaknesses. \r\nA significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs as item FS 2014-004 to be a significant deficiency. \r\nCompliance and Other Matters \r\nAs part of obtaining reasonable assurance about whether Talbot County Board of Education's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. \r\nWe noted certain matters that we have reported to management of Talbot County Board of Education in a separate letter dated January 30, 2017. \r\nTalbot County Board of Education's Response to Findings \r\nTalbot County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Talbot County Board of Education's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. \r\nPurpose of this Report \r\nThe purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nGSG:es 2014YB-40 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJanuary 30, 2017 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 \r\nLadies and Gentlemen: \r\nReport on Compliance for Each Major Federal Program \r\nWe have audited Talbot County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2014. Talbot County 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. \r\nManagement's Responsibility \r\nManagement is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. \r\nAuditor's Responsibility \r\nOur responsibility is to express an opinion on compliance for each of Talbot County Board of Education's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, 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 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 Talbot County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. \r\n \r\n2014SA-65 \r\n \r\n (This page left intentionally blank) \r\n \r\n We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Talbot County Board of Education's compliance. \r\nBasis for Qualified Opinion on Title I Grants to Local Education Agencies \r\nAs described in the accompanying Schedule of Findings and Questioned Costs, Talbot County Board of Education did not comply with requirements regarding Title I Grants to Local Education Agencies as described in item FA 2014-002 for Reporting and item FA 2014-003 for Cash Management. Compliance with such requirements is necessary, in our opinion, for Talbot County Board of Education to comply with requirements applicable to that program. \r\nQualified Opinion on Title I Grants to Local Education Agencies \r\nIn our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the Talbot County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on Title I Grants to Local Education Agencies for the year ended June 30, 2014. \r\nUnmodified Opinion on the Other Major Federal Program \r\nIn our opinion, Talbot County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its other major federal program identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs for the year ended June 30, 2014. \r\nOther Matters \r\nTalbot County Board of Education's response to the noncompliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Talbot County Board of Education's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. \r\nReport on Internal Control over Compliance \r\nManagement of Talbot County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Talbot County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Talbot County Board of Education's internal control over compliance. \r\nOur consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be a material weakness and a significant deficiency. \r\n2014SA-65 \r\n \r\n (This page left intentionally blank) \r\n \r\n A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as items FA 2014-002 and FA 2014-003 to be material weaknesses. \r\nA significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiency in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as item FA 2014-001 to be a significant deficiency. \r\nTalbot County Board of Education's response to the internal control over compliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Talbot County Board of Education's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. \r\nThe purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nGSG:es 2014SA-65 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFS-7301-12-01 FS-7301-12-02 FS-7301-12-03 FS-7301-12-04 FS-7301-12-05 FS-7301-12-06 FS-7301-13-01 FS-7301-13-02 FS-7301-13-03 FS-7301-13-04 FS-7301-13-05 FS-7301-13-06 \r\n \r\nPreviously Reported Corrective Implemented Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nCASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Finding Control Number: FS-7301-12-02 \r\n \r\nThe Board will implement controls over cash to ensure that cash is properly reconciled to general ledger and cash activity. \r\n \r\nCASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS ACCOUNTING CONTROLS (OVERALL) FINANCIAL REPORTING Inadequate Internal Controls over School Activity Accounts Finding Control Number: FS-7301-12-03 \r\n \r\nManagement will ensure that transactions are processed according to procedures and accurately monitored and reconciled to the general ledger. \r\n \r\nEMPLOYEE COMPENSATION Inadequate Internal Controls over Employee Compensation Process Finding Control Number: FS-7301-12-04 \r\n \r\nThe Board will implement policies and procedures to ensure that business procedures are followed for all salaries, ensuring that salaries are paid according to approved salary schedules and adequate documentation will be maintained to support the salary payments. \r\n \r\nCAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-7301-12-05 \r\n \r\nThe Board will implement procedures to ensure capital asset records conform to the approved capital assets policy. \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014 \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nFINANCIAL REPORTING Inadequate Controls over Financial Reporting Finding Control Number: FS-7301-12-06 \r\nManagement will monitor and ensure the financial statements are properly prepared in accordance with generally accepted accounting principles. \r\nCASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Finding Control Number: FS-7301-13-01 \r\nThe Board will implement controls over cash to ensure that cash is properly reconciled to general ledger and cash activity. \r\nCASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS ACCOUNTING CONTROLS (OVERALL) FINANCIAL REPORTING Inadequate Internal Controls over School Activity Accounts Finding Control Number: FS-7301-13-02 \r\nManagement will ensure that transactions are processed according to procedures and accurately monitored and reconciled to the general ledger. \r\nREVENUES/RECEIVABLES/RECEIPTS GENERAL LEDGER Inadequate Controls over Grants and Contracts Finding Control Number: FS-7301-13-03 \r\nManagement has implemented controls over grants to ensure that all grants are properly reconciled to the general budget and cash activities according to generally accepted accounting principles. \r\nFINANCIAL REPORTING Inadequate Controls over Financial Reporting Finding Control Number: FS-7301-13-04 \r\nManagement will monitor and ensure the financial statements are properly prepared in accordance with generally accepted accounting principles. \r\nEMPLOYEE COMPENSATION Inadequate Internal Controls over Employee Compensation Process Finding Control Number: FS-7301-13-05 \r\nThe Board will implement policies and procedures to ensure that business procedures are followed for all salaries, ensuring that salaries are paid according to approved salary schedules and adequate documentation will be maintained to support the salary payments. \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-7301-13-06 \r\n \r\nThe Board will implement procedures to ensure capital asset records conform to the approved capital assets policy. \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFA-7301-10-01 FA-7301-11-01 FA-7301-12-01 FA-7301-12-02 \r\n \r\nPreviously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented \r\n \r\n- 3 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION IV FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2014 \r\n \r\nI SUMMARY OF AUDITOR'S RESULTS \r\n \r\nFinancial Statements \r\n \r\nType of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund Aggregate Remaining Fund Information \r\n \r\nUnmodified Qualified \r\n \r\nInternal control over financial reporting: \r\n \r\n Material weaknesses identified? \r\n \r\nYes \r\n \r\n Significant deficiency identified? \r\n \r\nYes \r\n \r\nNoncompliance material to financial statements noted: \r\n \r\nNo \r\n \r\nFederal Awards \r\n \r\nInternal Control over major programs: \r\n \r\n Material weakness identified? \r\n \r\nYes \r\n \r\n Significant deficiency identified? \r\n \r\nYes \r\n \r\nType of auditor's report issued on compliance for major programs: \r\n \r\nUnmodified for all major programs except for Title I Grants to Local Education Agencies, which was qualified. \r\n \r\nAny audit findings disclosed that are required to be reported in \r\n \r\naccordance with OMB Circular A-133, Section 510(a)? \r\n \r\nYes \r\n \r\nIdentification of major programs: \r\n \r\nCFDA Numbers \r\n \r\nName of Federal Program or Cluster \r\n \r\n10.553, 10.555 84.010 \r\n \r\nChild Nutrition Cluster Title I Grants to Local Education Agencies \r\n \r\nDollar threshold used to distinguish between Type A and Type B programs: \r\n \r\n$300,000.00 \r\n \r\nAuditee qualified as low-risk auditee? \r\n \r\nNo \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2014 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2014-001 Inadequate Internal Control Procedures \r\n \r\nControl Category: \r\n \r\nCash and Cash Equivalents \r\n \r\nInternal Control Impact: \r\n \r\nMaterial Weakness \r\n \r\nDescription: This is a repeat finding (FS-7301-13-01, FS-7301-12-02, FS-7301-11-02, and FS-7301-10-02) from the years ended June 30, 2013, June 30, 2012, June 30, 2011, and June 30, 2010, respectively. The accounting procedures of the School District were insufficient to provide adequate internal controls over the Cash and Cash Equivalents function. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls over Cash and Cash Equivalents. \r\n \r\nCondition: Deficiencies relating to Cash and Cash Equivalents were noted as follows: \r\n Bank reconciliations were not performed by someone independent of the general ledger function. \r\n Bank reconciliations were not consistently dated and/or signed by the preparer or approver.  Cash activity was not maintained in the proper fund in the general ledger. A review of bank \r\naccount activity by fund noted Private Purpose Trust Fund cash was recorded in the General Fund and Special Purpose Local Option Sales Tax cash was recorded in the General Fund.  At June 30, 2014, $1,290,023.20 of deposits were not secured by surety bond, by guarantee of insurance, or by collateral in accordance with Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the cause was a direct result of the lack of time and resources to fully separate duties to ensure that internal controls were effective. \r\n \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over cash activity increases the risk significant misstatements could occur in the financial statements due to error or fraud. \r\n \r\nRecommendation: Management should take the appropriate steps to ensure the time and resources are made available to implement controls over cash to ensure monthly bank reconciliations are performed accurately by someone independent of the general ledger, cash activity is maintained in the proper funds, and all deposits are adequately collateralized. \r\n \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. The Board has implemented control over cash to ensure that cash is properly reconciled to general ledger and cash activities. Bank reconciliation are monitored by someone independent of the general ledger and cash activity is in the proper fund. \r\n \r\nContact Person: Dr. James Catrett, Superintendent Telephone: 706-665-8528 Fax: 706-665-3620 E-mail: jcatrett@talbot.k12.ga.us \r\n \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2014 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2014-002 Inadequate Internal Controls over School Activity Accounts \r\n \r\nControl Categories: \r\n \r\nCash and Cash Equivalents \r\n \r\nRevenues/Receivables/Receipts \r\n \r\nAccounting Controls (Overall) \r\n \r\nInternal Control Impact: \r\n \r\nMaterial Weakness \r\n \r\nDescription: This is a repeat finding (FS-7301-13-02, FS-7301-12-03, FS-7301-11-03, and FS-7301-10-03) from the years ended June 30, 2013, June 30, 2012, June 30, 2011, and June 30, 2010, respectively. The accounting procedures of the School District were insufficient to provide adequate internal controls over school activity accounts. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and provide reasonable assurance transactions are processed according to established procedures. \r\n \r\nCondition: Cash and Cash Equivalents \r\n One School Activity bank account was not reconciled to the general ledger resulting in an unidentified variance of $11,686.84. \r\n \r\nRevenues/Receivables/Receipts  The deposit preparation function was not separated from the bank reconciliations and general ledger functions.  Dues/Fees collected from students were not receipted by the teachers.  The depositing of funds in the bank was not a standard process for all school activity accounts.  Receipt documentation for gate receipts and concessions could not be provided. \r\n \r\nAccounting Controls (Overall)  An administrative review of the bank reconciliation process, cash receipt process, and cash disbursement process to determine if established procedures were being followed was not performed.  The School District did not have a formal process for documenting agency fund sponsors, purpose of accounts, allowable activities of accounts, source of funds, and final disposition of funds related to individual agency fund accounts.  Purchase orders are not consistently or properly approved and invoices not consistently attached. \r\n \r\nGeneral Ledger  The amounts recorded to the central office's books at year-end did not agree to the school ledger balances.  Agency Funds reported deficit balances in several funds totaling $4,430.95. \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2014 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Cause: In discussing these deficiencies with the School District, they stated that the internal control deficiencies related to school activity accounts occurred due to a shortage of personnel at the school and a failure of those personnel to follow the established policies and procedures. Effect or Potential Effect: Failure to maintain adequate internal controls over school activity accounts increases the risk that misstatements could occur in the financial statements due to error or fraud. Recommendation: Management should take the appropriate steps to ensure the time and resources are made available to ensure proper separation of duties is established, proper approval process for disbursements is followed, safe keeping of receipt documentation is implemented, accounting processes are adequately monitored, school activity accounts are properly classified, financial statement amounts are reconciled to the schools' general ledger balances and bank statement balance, standard procedures are implemented over the depositing of funds, amounts reported in consolidation spreadsheet for school activity accounts is accurate, and agency fund accounts are properly documented. Views of Responsible Officials and Corrective Action Plans: We concur with this finding. Management has implemented control to ensure that transactions for the school activity accounts are processed according to procedures and accurately monitored. Administrative personnel changes have been made to ensure that accounting procedures are adhered to. Contact Person: Dr. James Catrett, Superintendent Telephone: 706-665-8528 Fax: 706-665-3620 E-mail: jcatrett@talbot.k12.ga.us \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2014 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2014-003 Inadequate Controls over Financial Reporting \r\n \r\nControl Category: \r\n \r\nFinancial Reporting \r\n \r\nInternal Control Impact: \r\n \r\nMaterial Weakness \r\n \r\nDescription: This is a repeat finding (FS-7301-13-04, FS-7301-12-06 and FS-7301-11-07) from the years ended June 30, 2013, June 30, 2012 and June 30, 2011, respectively. The School District did not prepare their financial statements in accordance with generally accepted accounting principles. \r\n \r\nCriteria: Management is responsible for having adequate controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). The School District's internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills and experience to prepare GAAP based financial statements and include all disclosures as required by the Governmental Accounting Standards Board (GASB). \r\nGASB Statement No. 34, Basic Financial Statement  Management's Discussion and Analysis  for State and Local Governments (Statement), requires governments to present government-wide and fund financial statements as well as a summary reconciliation of the (a) total governmental funds balances to the net position of governmental activities in the Statement of Net Position, and (b) total change in governmental fund balances to the change in the net position of governmental activities in the Statement of Activities. In addition, the statement requires information about the government's major and non-major funds in the aggregate, to be provided in the fund financial statements. \r\nChapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles. \r\n \r\nCondition: The Department of Audits and Accounts provided basic accounting assistance limited to services such as preparing draft financial statements that were based on the entity's chart of accounts and general ledgers including adjusting, correcting, and closing entries that have been approved by the entity's staff; prepared draft notes to the financial statements based on information determined and approved by management; and prepared trial balances based on the entity's chart of accounts. \r\n \r\nCause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of time and resources to train Board personnel to accomplish the preparation of financial statements and/or the lack of funding to secure outside services to prepare the financial statements. \r\n \r\nEffect or Potential Effect: The School District did not comply with the requirements of the U.S. Department of Education regarding financial reporting. Several adjustments were necessary in order for the School District's financial statements to be in conformity with generally accepted accounting principles. \r\n \r\nRecommendation: Management should take the appropriate steps to ensure the time and resources are made available to establish and implement controls over the financial statement reporting process as required by the Financial Management for Georgia Local Units of Administration. \r\n \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2014 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. Management has implemented control over the preparation of financial statements in accordance with generally accepted accounting principles. The Board has hired a CPA to do the financial statements. \r\nContact Person: Dr. James Catrett, Superintendent Telephone: 706-665-8528 Fax: 706-665-3620 E-mail: jcatrett@talbot.k12.ga.us \r\n \r\nFS 2014-004 Inadequate Controls over Employee Compensation \r\n \r\nControl Category: \r\n \r\nEmployee Compensation \r\n \r\nInternal Control Impact: \r\n \r\nSignificant Deficiency \r\n \r\nDescription: This is a repeat finding (FS-7301-13-05, FS-7301-12-04, FS-7301-11-05, and FS-7301-10-05) from the years ended June 30, 2013, June 30, 2012, June 30, 2011, and June 30, 2010, respectively. The accounting procedures of the School District were insufficient to provide adequate internal controls over employee compensation. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance employees are paid according to approved salary schedules and documentation is maintained to support the salary payments. \r\n \r\nCondition: Based on a review of employees' payroll records the following deficiencies were noted: \r\n \r\n A review of employee compensation revealed several instances where salaries were not properly approved, supported by signed contracts and/or Board approved salary schedules. \r\n A review of purchased professional and technical service expenditures revealed additional compensation paid to an employee of the School District in the amount of $1,110.00 that did not flow through the normal business process for salaries as established by the School District. \r\n A review of certificated employees revealed that one employee was paid $2,253.51 more than the contracted amount. \r\n A review of substitute personnel revealed personnel files are not being maintained for all substitutes and one monthly timesheet could not be provided for proof of substitute's hours worked. \r\n \r\nCause: In discussing these deficiencies with the School District, they indicated that appropriate procedures to ensure salary amounts are supported by adequate documentation had not been implemented. \r\n \r\nEffect or Potential Effect: The failure to maintain adequate internal controls over Employee Compensation increases the risk misstatements could occur in the financial statements due to error or fraud. \r\n \r\n- 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2014 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nRecommendation: The School District should implement policies and procedures to ensure normal business procedures are followed for all salaries, which includes ensuring salaries are paid according to approved salary schedules and adequate documentation is maintained to support the salary payments. The School District should seek reimbursement of the salary overpayment for deposit into the General Fund. \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. Management has procedures and controls to ensure business procedures for all salaries are followed according to approved salary schedules and with maintained documentation to support salary. \r\nContact Person: Dr. James Catrett, Superintendent Telephone: 706-665-8528 Fax: 706-665-3620 E-mail: jcatrett@talbot.k12.ga.us \r\n \r\nFS 2014-005 Failure to Adequately Maintain Capital Assets \r\n \r\nControl Category: \r\n \r\nCapital Assets \r\n \r\nInternal Control Impact: \r\n \r\nMaterial Weakness \r\n \r\nDescription: This is a repeat finding (FS-7301-13-06, FS-7301-12-05, and FS-7301-11-06) from the years ended June 30, 2013, June 30, 2012, and June 30, 2011, respectively. The School District did not maintain an adequate capital assets listing. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that capital assets inventory reports are properly maintained. Chapter 37 Implementing a Capital Assets Management System of the Financial Management for Georgia Local Units of Administration provides that School Districts must establish capital asset policies, define system requirements, implement a capital asset system and maintain capital asset inventory reports. \r\n \r\nCondition: A review of the School District's capital asset records revealed the following exceptions: \r\n \r\n The capital asset listing does not have adequate descriptions and/or inventory numbers assigned to assets. \r\n During our physical inspection of inventory items, we noted that assets are not tagged and the equipment inventory does not include all information technology related capital assets. \r\n An analysis of construction projects was not maintained which resulted in material unrecorded Construction-in-Progress in the amount of $7,024,065.64. \r\n The capital asset listing contained items that were identified as obsolete during the annual physical inventory performed by the School District. \r\n The School District did not maintain an updated capital asset listing for current year additions/deletions including the calculation of depreciation expense. Current year asset additions and depreciation expense were determined by the auditors. \r\n \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2014 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCause: In discussing these deficiencies with the School District, they stated that the cause was a direct result of the lack of time and resources to fully monitor and implement procedures over Capital Assets which follow Board policy. Additionally, they stated the cause was a direct result of new construction in which staff has not been trained on how to complete a construction analysis and ensure proper accounting of construction activity for the year. \r\nEffect or Potential Effect: The failure of the School District to maintain a complete and accurate capital assets listing can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles. \r\nRecommendation: The School District's management should review the capital assets records and make appropriate adjustments to ensure that the capital assets records conform to the School District's approved capital asset policy. \r\nViews of Responsible Officials and Corrective Action Plans: We concur with the finding. Management has established internal controls to ensure that capital assets inventory reports are properly maintained. \r\nContact Person: Dr. James Catrett, Superintendent Telephone: 706-665-8528 Fax: 706-665-3620 E-mail: jcatrett@talbot.k12.ga.us \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2014-001 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nFailure to Maintain Title 1 Schoolwide Plan Special Tests and Provisions/Schoolwide Program Significant Deficiency Non-Material Noncompliance U.S. Department of Education Georgia Department of Education Title 1 Grants to Local Education Agencies (CFDA 84.010) \r\n \r\nDescription: The School District could not provide the fiscal year 2014 Schoolwide plan for audit. \r\n \r\nCriteria: Provisions of the OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, require that: \r\n \r\nTo operate a Schoolwide Program, a school must include the following three core elements: (1) Comprehensive needs assessment of the entire school (34 CFR section 200.26(a)). (2) Comprehensive plan based on data from the needs assessment (34 CFR section 200.26(b)). (3) Annual evaluation of, and results achieved by, the schoolwide program and revision of the schoolwide plan based on that evaluation (34 CFR section 200.26(c)). \r\n \r\n- 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2014 \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Condition: A review of the Title I Grants to Local Education Agencies program revealed compliance procedures related to the required components of Schoolwide Plan could not be performed because the School District was unable to provide a copy of the plan. Questioned Cost: N/A Cause: In discussing the issue with the management, they stated the documentation of the Schoolwide Plan was most likely misplaced during the relocation of the School District office. Effect or Potential Effect: The failure of the School District to maintain the required documentation leads to noncompliance with requirements of the Federal grant. Recommendation: The School District should ensure they retain all documentation relevant to evaluating compliance with Federal grant requirements. Views of Responsible Officials and Corrective Action Plans: The Talbot County School District historically maintained annual improvement documents in the principal office and district office. During the year in question, the entire district was undergoing renovation and some computers and hard copy documents were displaced. Currently, we have committed to the following guidelines to secure and maintain school wide plan documents. Approved school improvement plans will be forwarded (electronic and hard copy) to the Superintendent, Assistant Superintendent, Principal, Title I Director and Instructional Specialist annually. This procedure will ensure that the system has access to the school improvement plan for current and past years. Contact Person: Dr. James Catrett, Superintendent Telephone: 706-665-8528 Fax: 706-665-3620 E-mail: jcatrett@talbot.k12.ga.us \r\n- 9 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2014 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2014-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: \r\n \r\nFailure to Refund Unexpended Grants Reporting Material Weakness Material Noncompliance U.S. Department of Education None Early Reading First (CFDA 84.359) U.S. Department of Health and Human Services None Child Care and Development Block Grant (CFDA 93.575) U.S. Department of Justice Children and Youth Coordinating Council Juvenile Justice and Delinquency Prevention (CFDA 16.540) U.S. Department of Education Georgia Department of Education Title 1 Grants to Local Education Agencies (CFDA 84.010) Improving Teacher Quality State Grants (CFDA 84.367) \r\n \r\nDescription: The School District failed to refund unearned grant balances to the U. S. Department of Education, the U. S. Department of Health and Human Services, the U. S. Department of Justice and the Georgia Department of Education. \r\n \r\nCriteria: In accordance with provisions of OMB Circular A-133, Part 3 Compliance Supplement, Subpart L Reporting, states in part, \"Each recipient must report program outlays and program income as prescribed by the Federal awarding agency. The reporting requirements for sub recipients are as specified by the pass-through entity\". \r\nChapter 41, State and Federal Fiscal Rules and Procedures of the Financial Management for Georgia Local Units of Administration states, \"This chapter sets forth the principal requirements that a School District must meet to account for and externally report its budget and financial operations relating to State and Federally funded programs administered by the Georgia Department of Education.\" Unearned funds must be returned to the Georgia Department of Education. \r\n \r\nCondition: A review of the School District's accounting records revealed the following: \r\n The School District did not return unearned Title 1 Grants to Local Education Agencies funds of $143,566.34, on hand as of June 30, 2014. \r\n The School District did not return unearned Improving Teacher Quality funds of $1,111.24 on hand as of June 30, 2014. \r\n The School District did not return unearned Early Reading First funds of $28,420.81 on hand as of June 30, 2014. \r\n The School District did not return unearned Child Care and Development Block Grant funds of $38,229.72 on hand as of June 30, 2014. \r\n The School District did not return unearned Juvenile Justice and Delinquency Prevention funds $5,673.67 on hand as of June 30, 2014. \r\n \r\nQuestioned Cost: $217,001.78 \r\n \r\n- 10 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2014 \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Cause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of time and resources to investigate these balances which have been carried for several years. Effect or Potential Effect: The lack of monitoring of expenditures and funds drawn down resulted in noncompliance with the Federal grant requirements, and could impact the School District's ability to obtain future grants. Recommendation: The School District should implement procedures to ensure that unearned funds on hand at the end of the grant period are returned to the grantor timely. The U.S. Department of Education, the U.S. Department of Health and Human Services, the U.S. Department of Justice, and the Georgia Department of Education should review this matter to determine if a reclaim of funds is appropriate. Views of Responsible Officials and Corrective Action Plans: We concur with this finding. This is a long on going finding that we wish to work with the Georgia Department of Education's federal program division for conclusion of these long standing findings. Contact Person: Dr. James Catrett, Superintendent Telephone: 706-665-8528 Fax: 706-665-3620 E-mail: jcatrett@talbot.k12.ga.us \r\n- 11 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2014 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2014-003 Inadequate Controls Over the Cash Management Process \r\n \r\nCompliance Requirement: Cash Management \r\n \r\nInternal Control Impact: \r\n \r\nMaterial Weakness \r\n \r\nCompliance Impact: \r\n \r\nMaterial Noncompliance \r\n \r\nFederal Awarding Agency: U.S. Department of Education \r\n \r\nPass-Through Entity: \r\n \r\nGeorgia Department of Education \r\n \r\nCFDA Number and Title: \r\n \r\nTitle 1 Grants to Local Education Agencies (CFDA 84.010) \r\n \r\nDescription: The School District made cash drawdowns in excess of immediate cash needs for the Title I program. \r\n \r\nCriteria: In accordance with 34 CFR 80.21, when School Districts are funded on a reimbursement basis, program costs must be paid for by School District funds before reimbursement is requested. \r\n \r\nCondition: The School District maintained excessive cash balances for all twelve months for the Title I program. The average monthly cash balance was in excess of 4% of the total Title I cash receipts for the 2014 fiscal year. \r\n \r\nCause: The School District had an excessive beginning cash balance that was not considered when requests for reimbursement were made. \r\n \r\nEffect or Potential Effect: Failure to monitor the cash needs of the program resulted in noncompliance with requirements of the Federal grant. \r\n \r\nRecommendation: The School District should implement procedures to monitor the monthly cash balance for the program prior to requesting reimbursement from the Georgia Department of Education. \r\n \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. Management has implemented procedures to monitor the cash monthly balances for all programs when requesting reimbursement for federal and state programs. \r\n \r\nContact Person: Dr. James Catrett, Superintendent Telephone: 706-665-8528 Fax: 706-665-3620 E-mail: jcatrett@talbot.k12.ga.us \r\n \r\n- 12 - \r\n \r\n "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2015-belec-p-btext","title":"Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended 2015 June 30 (including independent auditor's reports)","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2017-01-30"],"dcterms_description":["Annual financial report for the Talbot County Board of Education."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Georgia. Department of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Talbot County Board of Education (Ga.)--Appropriations and expenditures--Periodicals.","Education--Georgia--Talbot County--Auditing--Periodicals.","Education--Georgia--Talbot County--Finance--Statistics--Periodicals.","Georgia Government Documents--Serial"],"dcterms_title":["Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended 2015 June 30 (including independent auditor's reports)"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2015-belec-p-btext"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2015-belec-p-btext"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records","audits","financial records","financial statements"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"TALBOT COUNTY BOARD OF EDUCATION \r\nTALBOTTON, GEORGIA \r\nANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2015 \r\n(Including Independent Auditor's Reports) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\n \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nSECTION I FINANCIAL \r\n \r\nPage \r\n \r\nEXHIBITS \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nDISTRICT-WIDE FINANCIAL STATEMENTS \r\n \r\nA \r\n \r\nSTATEMENT OF NET POSITION \r\n \r\n1 \r\n \r\nB \r\n \r\nSTATEMENT OF ACTIVITIES \r\n \r\n2 \r\n \r\nFUND FINANCIAL STATEMENTS \r\n \r\nC \r\n \r\nBALANCE SHEET \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\n4 \r\n \r\nD \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\n \r\nTO THE STATEMENT OF NET POSITION \r\n \r\n5 \r\n \r\nE \r\n \r\nSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES \r\n \r\nIN FUND BALANCES \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\n6 \r\n \r\nF \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT \r\n \r\nOF REVENUES, EXPENDITURES AND CHANGES IN FUND \r\n \r\nBALANCES TO THE STATEMENT OF ACTIVITIES \r\n \r\n7 \r\n \r\nG \r\n \r\nSTATEMENT OF FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\n8 \r\n \r\nH \r\n \r\nSTATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\n9 \r\n \r\nI NOTES TO THE BASIC FINANCIAL STATEMENTS \r\n \r\n10 \r\n \r\nSCHEDULES \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY \r\n \r\nTEACHERS' RETIREMENT SYSTEM OF GEORGIA \r\n \r\n29 \r\n \r\n2 SCHEDULE OF CONTRIBUTIONS  TEACHERS' RETIREMENT SYSTEM OF GEORGIA \r\n \r\n30 \r\n \r\n3 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n32 \r\n \r\n4 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES \r\n \r\nIN FUND BALANCES - BUDGET AND ACTUAL \r\n \r\nGENERAL FUND \r\n \r\n33 \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\n \r\nSCHEDULES \r\nSUPPLEMENTARY INFORMATION \r\n5 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 6 SCHEDULE OF STATE REVENUE 7 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 8 ALLOTMENTS AND EXPENDITURES \r\nGENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM \r\n \r\nPage \r\n34 35 36 37 \r\n \r\nSECTION II \r\nCOMPLIANCE AND INTERNAL CONTROL REPORTS \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\nINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 \r\n \r\nSECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\nSECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION I FINANCIAL \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJanuary 30, 2017 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S REPORT \r\nLadies and Gentlemen: \r\nReport on the Financial Statements \r\nWe have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Talbot County Board of Education, as of and for the year ended June 30, 2015, and the related notes to the financial statements (Exhibits A through I), which collectively comprise the Board's basic financial statements as listed in the table of contents. \r\nManagement's Responsibility for the Financial Statements \r\nManagement is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. \r\nAuditor's Responsibility \r\nOur responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 from material misstatement. \r\nAn audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the \r\n2015ARL-14 \r\n \r\n (This page left intentionally blank) \r\n \r\n effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. \r\nWe believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. \r\nBasis for Qualified Opinion on Aggregate Remaining Fund Information \r\nManagement has not segregated the school activity (principal's) accounts maintained at the individual schools between the governmental activities, general fund or agency fund (which is reported in the aggregate remaining fund information). Accounting principles generally accepted in the United States of America require that the assets, liabilities, revenues, expense or expenditures, and the respective changes in financial position of these accounts be segregated in these financial statements as appropriate. The aggregate effect on the financial statements of this variance or omission has not been determined. \r\nQualified Opinion \r\nIn our opinion, except for the effects of the matter described in the \"Basis for Qualified Opinion on the Aggregate Remaining Fund information\" paragraph, the financial statements referred to above present fairly, in all material respects, the respective financial position of the aggregate remaining fund information of the Talbot County Board of Education, as of June 30, 2015, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. \r\nUnmodified Opinions \r\nIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the Talbot County Board of Education, as of June 30, 2015, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. \r\nEmphasis of Matter \r\nAs described in Note 2 to the financial statements, in 2015, the Talbot County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions  an amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date  an amendment of GASB Statement No. 68. The School District restated beginning Net Position for the cumulative effect of these accounting changes. Our opinions are not modified with respect to this matter. \r\nOther Matters \r\nRequired Supplementary Information \r\nManagement has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, \r\n2015ARL-14 \r\n \r\n (This page left intentionally blank) \r\n \r\n is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. \r\nAccounting principles generally accepted in the United States of America require that the Schedule of Proportionate Share of the Net Pension Liability, Schedule of Contributions to Retirement Systems, the Notes to the Required Supplementary Information and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual as presented on pages 29 through 33 respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. \r\nOther Information \r\nOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Talbot County Board of Education's basic financial statements. The accompanying supplementary information, consisting of Schedules 5 through 8, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. \r\nThe accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole. \r\nOur audit was conducted as required by Section 50-6-6(a) of the Official Code of Georgia Annotated. We provided basic accounting assistance limited to services such as preparing draft financial statements that were based on the School District's chart of accounts and general ledgers including any adjusting, correcting, and closing entries that have been approved by the School District's management; prepared draft notes to the financial statements based on information determined and approved by the School District's management; and prepared trial balances on the School District's chart of accounts. \r\n2015ARL-14 \r\n \r\n (This page left intentionally blank) \r\n \r\n Other Reporting Required by Government Auditing Standards \r\nIn accordance with Government Auditing Standards, we have also issued our report dated January 30, 2017, on our consideration of the Talbot County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Talbot County Board of Education's internal control over financial reporting and compliance. \r\nA copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24. \r\nRespectfully submitted, \r\n \r\nGSG:es 2015ARL-14 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2015 \r\nASSETS \r\nCash and Cash Equivalents Investments \r\nTaxes State Government Federal Government Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation) \r\nTotal Assets \r\nDEFERRED OUTFLOWS OF RESOURCES \r\nRelated to Defined Benefit Pension Plan \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Interest Payable Contracts Payable Retainages Payable Long-Term Liabilities \r\nDue Within One Year Due in More Than One Year Net Pension Liability \r\nTotal Liabilities \r\nDEFERRED INFLOWS OF RESOURCES \r\nRelated to Defined Benefit Pension Plan \r\nNET POSITION \r\nNet Investment in Capital Assets Restricted for \r\nContinuation of Federal Programs Continuation of State Programs Debt Service Capital Projects Bus Replacement Unrestricted (Deficit) \r\nTotal Net Position \r\n \r\nEXHIBIT \"A\" \r\n \r\nGOVERNMENTAL ACTIVITIES \r\n \r\n$ \r\n \r\n2,313,662.60 \r\n \r\n65,000.00 \r\n \r\n540,504.39 \r\n \r\n346,450.03 \r\n \r\n124,049.10 \r\n \r\n9,524.31 \r\n \r\n354,857.93 \r\n \r\n12,807,326.87 \r\n \r\n16,561,375.23 \r\n \r\n412,697.58 \r\n \r\n61,047.61 527,987.45 106,793.17 \r\n24,145.83 68,693.10 360,029.45 \r\n355,000.00 1,170,000.00 3,839,123.00 \r\n6,512,819.61 \r\n \r\n1,645,219.00 \r\n \r\n11,637,184.80 \r\n268,896.34 16,459.96 \r\n358,508.45 18,222.61 39,451.00 \r\n-3,522,688.96 \r\n \r\n$ \r\n \r\n8,816,034.20 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES \r\nFOR THE YEAR ENDED JUNE 30, 2015 \r\n \r\nGOVERNMENTAL ACTIVITIES \r\nInstruction Support Services \r\nPupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt \r\nTotal Governmental Activities \r\nGeneral Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous \r\nTotal General Revenues \r\nChange in Net Position \r\nNet Position - Beginning of Year, Restated \r\nNet Position - End of Year \r\n \r\nEXPENSES \r\n \r\nCHARGES FOR SERVICES \r\n \r\n$ \r\n \r\n3,619,853.82 \r\n \r\n376,830.43 238,662.89 122,329.98 297,714.95 363,911.85 \r\n69,575.68 446,318.61 460,963.23 \r\n17,650.00 32,142.75 $ \r\n \r\n703.44 466,251.32 \r\n59,026.66 \r\n \r\n$ \r\n \r\n6,571,935.61 $ \r\n \r\n41,192.83 41,192.83 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 2 - \r\n \r\n EXHIBIT \"B\" \r\n \r\nPROGRAM REVENUES OPERATING GRANTS AND \r\nCONTRIBUTIONS \r\n \r\nCAPITAL GRANTS AND CONTRIBUTIONS \r\n \r\nNET (EXPENSES) REVENUES \r\nAND CHANGES IN NET POSITION \r\n \r\n$ \r\n \r\n2,034,998.74 $ \r\n \r\n55,133.25 123,100.58 \r\n81,354.90 411,275.40 194,757.89 \r\n513.57 186,922.49 221,471.30 \r\n \r\n1,566,125.16 $ \r\n30,930.20 69,060.42 45,640.76 230,728.83 109,260.75 \r\n104,076.87 \r\n \r\n501,177.26 \r\n \r\n$ \r\n \r\n3,810,705.38 $ \r\n \r\n280,174.60 2,435,997.59 \r\n \r\n-18,729.92 \r\n-290,766.98 -46,501.89 4,665.68 344,289.28 -59,893.21 -69,062.11 \r\n-155,319.25 -239,491.93 \r\n-17,650.00 9,050.08 \r\n-703.44 315,100.54 -59,026.66 \r\n-284,039.81 \r\n \r\n3,138,489.28 \r\n \r\n466,033.40 5,667.70 2,022.79 \r\n121,648.19 \r\n3,733,861.36 \r\n3,449,821.55 \r\n5,366,212.65 \r\n \r\n$ \r\n \r\n8,816,034.20 \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION BALANCE SHEET \r\nGOVERNMENTAL FUNDS JUNE 30, 2015 \r\n \r\nEXHIBIT \"C\" \r\n \r\nASSETS \r\nCash and Cash Equivalents Investments Accounts Receivable, Net \r\nTaxes State Government Federal Government Inventories \r\n \r\nGENERAL FUND \r\n \r\nDISTRICT-WIDE CAPITAL PROJECTS FUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 1,480,973.54 $ 65,000.00 \r\n490,986.00 346,450.03 124,049.10 \r\n9,524.31 \r\n \r\n744,338.59 $ 88,350.47 $ 49,518.39 \r\n \r\n2,313,662.60 65,000.00 \r\n540,504.39 346,450.03 124,049.10 \r\n9,524.31 \r\n \r\nTotal Assets \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Contracts Payable Retainages Payable \r\nTotal Liabilities \r\nDEFERRED INFLOWS OF RESOURCES \r\nUnavailable Revenue - Property Taxes \r\nFUND BALANCES \r\nNonspendable Restricted Assigned Unassigned \r\nTotal Fund Balances \r\n \r\n$ 2,516,982.98 $ 793,856.98 $ 88,350.47 $ \r\n \r\n3,399,190.43 \r\n \r\n$ \r\n \r\n61,047.61 \r\n \r\n527,987.45 \r\n \r\n106,793.17 \r\n \r\n$ \r\n \r\n695,828.23 \r\n \r\n68,693.10 360,029.45 \r\n428,722.55 \r\n \r\n$ \r\n \r\n61,047.61 \r\n \r\n527,987.45 \r\n \r\n106,793.17 \r\n \r\n68,693.10 \r\n \r\n360,029.45 \r\n \r\n1,124,550.78 \r\n \r\n252,357.57 \r\n \r\n252,357.57 \r\n \r\n9,524.31 315,282.99 \r\n8,255.81 1,235,734.07 \r\n1,568,797.18 \r\n \r\n312,526.42 $ 52,608.01 \r\n \r\n88,350.47 \r\n \r\n365,134.43 \r\n \r\n88,350.47 \r\n \r\n9,524.31 716,159.88 \r\n60,863.82 1,235,734.07 \r\n2,022,282.08 \r\n \r\nTotal Liabilities, Deferred Inflows of Resources, and Fund Balances $ 2,516,982.98 $ 793,856.98 $ 88,350.47 $ \r\n \r\n3,399,190.43 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\nTO THE STATEMENT OF NET POSITION JUNE 30, 2015 \r\n \r\nEXHIBIT \"D\" \r\n \r\nTotal Fund Balances - Governmental Funds (Exhibit \"C\") \r\nAmounts reported for Governmental Activities in the Statement of Net Position are different because: \r\nCapital Assets used in Governmental Activities are not financial resources and therefore are not reported as assets in governmental funds. These assets consist of: \r\nLand Land Improvements Buildings and Improvements Equipment Accumulated Depreciation \r\nTotal Capital Assets \r\nSome liabilities, including net pension obligations, are not due and payable in the current period and, therefore, are not reported in the funds. \r\nNet Pension Liability \r\nDeferred Outflows and Inflows of Resources related to pensions are applicable to future periods and, therefore, are not reported in the governmental funds. \r\nTaxes that are not available to pay for current period expenditures are deferred in the governmental funds. \r\nProperty Taxes \r\nLong-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. These consist of: \r\nBonds Payable Accrued Interest Payable \r\nTotal Long-Term Liabilities \r\nNet Position of Governmental Activities (Exhibit \"A\") \r\n \r\n$ 2,022,282.08 \r\n \r\n$ \r\n \r\n354,857.93 \r\n \r\n570,221.23 \r\n \r\n14,285,080.32 \r\n \r\n1,887,436.20 \r\n \r\n-3,935,410.88 \r\n \r\n13,162,184.80 \r\n \r\n-3,839,123.00 -1,232,521.42 \r\n \r\n252,357.57 \r\n \r\n$ -1,525,000.00 -24,145.83 \r\n \r\n-1,549,145.83 \r\n \r\n$ 8,816,034.20 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES \r\nGOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 \r\n \r\nEXHIBIT \"E\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation \r\nCapital Outlay Debt Services \r\nPrincipal Interest \r\nTotal Expenditures \r\nExcess of Revenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nTransfers In Transfers Out \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\nFund Balances - Ending \r\n \r\nGENERAL FUND \r\n \r\nDISTRICT-WIDE CAPITAL PROJECTS FUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 3,030,706.85 \r\n \r\n5,667.70 $ 466,033.40 \r\n \r\n2,707,529.03 \r\n \r\n2,434,997.59 \r\n \r\n1,115,172.35 \r\n \r\n41,192.83 \r\n \r\n1,296.78 \r\n \r\n686.26 $ \r\n \r\n121,648.19 \r\n \r\n7,023,213.73 \r\n \r\n2,901,717.25 \r\n \r\n$ \r\n39.75 39.75 \r\n \r\n3,030,706.85 471,701.10 \r\n5,142,526.62 1,115,172.35 \r\n41,192.83 2,022.79 \r\n121,648.19 \r\n9,924,970.73 \r\n \r\n3,649,102.95 \r\n375,192.51 244,802.69 126,496.27 318,198.62 373,779.38 \r\n69,062.11 529,289.19 415,450.12 \r\n32,142.75 703.44 \r\n476,916.08 \r\n6,611,136.11 \r\n412,077.62 \r\n \r\n4,488.54 \r\n23,995.33 17,650.00 \r\n2,531,925.59 340,000.00 64,410.00 \r\n2,578,059.46 404,410.00 323,657.79 -404,370.25 \r\n \r\n3,649,102.95 \r\n379,681.05 244,802.69 126,496.27 318,198.62 373,779.38 \r\n69,062.11 553,284.52 415,450.12 \r\n17,650.00 32,142.75 \r\n703.44 476,916.08 2,531,925.59 \r\n340,000.00 64,410.00 \r\n9,593,605.57 \r\n331,365.16 \r\n \r\n412,077.62 1,156,719.56 \r\n \r\n-398,914.28 -398,914.28 \r\n-75,256.49 440,390.92 \r\n \r\n398,914.28 \r\n398,914.28 -5,455.97 93,806.44 \r\n \r\n398,914.28 -398,914.28 \r\n0.00 \r\n331,365.16 \r\n1,690,916.92 \r\n \r\n$ 1,568,797.18 $ 365,134.43 $ 88,350.47 $ 2,022,282.08 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF \r\nREVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2015 \r\n \r\nEXHIBIT \"F\" \r\n \r\nTotal Net Change in Fund Balances - Governmental Funds (Exhibit \"E\") \r\nAmounts reported for Governmental Activities in the Statement of Activities are different because: \r\nCapital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are: \r\nCapital Outlay Depreciation Expense \r\nExcess of Capital Outlay over Depreciation Expense \r\nTaxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. \r\nRepayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Position. In the current year, these amounts consist of: \r\nBond Principal Retirements \r\nSome items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. The net adjustments consist of: \r\nAccrued Interest on Issuance of Bonds Pension Expense \r\nTotal Additional Expenditures \r\nChange in Net Position of Governmental Activities (Exhibit \"B\") \r\n \r\n$ \r\n \r\n331,365.16 \r\n \r\n$ 2,698,184.24 -252,172.16 \r\n \r\n2,446,012.08 \r\n \r\n107,782.39 \r\n \r\n340,000.00 \r\n \r\n$ \r\n \r\n5,383.34 \r\n \r\n219,278.58 \r\n \r\n224,661.92 \r\n \r\n$ 3,449,821.55 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 7 - \r\n \r\n ASSETS Cash and Cash Equivalents \r\nLIABILITIES Funds Held for Others \r\nNET POSITION Held in Trust for Private Purposes \r\n \r\nTALBOT COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS JUNE 30, 2015 \r\n \r\nEXHIBIT \"G\" \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\nAGENCY FUNDS \r\n \r\n$ \r\n \r\n2,788.14 $ \r\n \r\n5,760.73 \r\n \r\n$ \r\n \r\n5,760.73 \r\n \r\n$ \r\n \r\n2,788.14 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS YEAR ENDED JUNE 30, 2015 \r\nADDITIONS Investment Earnings Interest \r\nDEDUCTIONS None Reported Change in Net Position \r\nNet Position - Beginning \r\nNet Position - Ending \r\n \r\nEXHIBIT \"H\" \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\n$ \r\n \r\n4.01 \r\n \r\n0.00 4.01 2,784.13 \r\n \r\n$ \r\n \r\n2,788.14 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 9 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY \r\nREPORTING ENTITY \r\nThe Talbot County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is 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. \r\nNOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nBASIS OF PRESENTATION \r\nThe School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Talbot County Board of Education. \r\nDistrict-wide Statements: The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. \r\nThe Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. \r\n Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. \r\n Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. \r\nFund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each reported in a separate column. \r\nThe School District reports the following major governmental funds: \r\n General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund. \r\n District-wide Capital Projects Fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) and grants from Georgia State Financing and Investment Commission that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. \r\n Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest. \r\n \r\n- 10 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe School District reports the following fiduciary fund types: \r\n Private Purpose Trust funds report trust arrangements under which principal and income benefit scholarships to business administration and business education students with junior standing at an accredited college or university. \r\n Agency funds account for assets held by the School District as an agent for various funds, governments, and individuals. \r\nBASIS OF ACCOUNTING \r\nThe basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied. \r\nThe School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. \r\nGovernmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general longterm debt which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities are reported as other financing sources. \r\nThe School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, both restricted and unrestricted resources are available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. \r\nRESTATEMENT OF PRIOR YEAR NET POSITION \r\nFor fiscal year 2015, the School District made several prior period adjustments due to the adoption of GASB Statement No. 68 and GASB Statement No. 71, as described in \"New Accounting Pronouncements\" below, which require the restatement of the June 30, 2014, Net Position in Governmental Activities. The result is a decrease in Net Position at July 1, 2014 of $5,290,923.00. This change is in accordance with generally accepted accounting principles. \r\n \r\n- 11 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNet Position, July 1, 2014, as previously reported Prior Period adjustment - Implementation of GASB 68: Net Pension Liability (measurement date) TRS Deferred Outflows - School District's contribution made during fiscal year 2014 TRS \r\n \r\n$ 10,657,135.65 -5,671,624.00 380,701.00 \r\n \r\nNet Position, July 1, 2014, as restated \r\n \r\n$ 5,366,212.65 \r\n \r\nNEW ACCOUNTING PRONOUNCEMENTS \r\nIn fiscal year 2015, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. The adoption of this statement has a significant impact on the School District's financial statements. As noted above the School District restated beginning Net Position for the cumulative effect of this accounting change. \r\nIn fiscal year 2015, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 69, Government Combinations and Disposals of Government Operations. This statement provides specific accounting and financial reporting guidance for combinations in the governmental environment. This statement also requires that disclosures be made by governments about combination arrangements in which they engage and for disposals of government operations. The School District did not have any activities of this type during the fiscal year and the adoption of this statement does not have a significant impact on the School District's financial statements. \r\nIn fiscal year 2015, the School District adopted Governmental Accounting Standards Board (GASB) Statement 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB No. 68. The objective of this statement is to improve accounting and financial reporting by addressing an issue in Statement No. 68, Accounting and Financial Reporting for Pensions, concerning transition provisions related to certain pension contributions made to defined benefit pension plans prior to implementation of statement. This statement amends paragraph 137 of Statement No. 68 which limited recognition of pension-related deferred inflows of resources at the transition to circumstances in which it is practical to determine the amounts of all deferred outflows of resources and deferred inflows of resources related to pensions. The adoption of this statement has a significant impact on the School District's financial statements. As noted above the School District restated beginning Net Position for the cumulative effect of this accounting change. \r\nCASH AND CASH EQUIVALENTS \r\nComposition of Deposits Cash and cash equivalents consist of cash 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. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. \r\nINVESTMENTS \r\nComposition of Investments Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a \r\n- 12 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nmaturity at purchase greater than one year and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: \r\n1. Obligations issued by the State of Georgia or by other states, \r\n2. Obligations issued by the United States government, \r\n3. Obligations fully insured or guaranteed by the United States government or a United States government agency, \r\n4. Obligations of any corporation of the United States government, \r\n5. Prime banker's acceptances, \r\n6. The local government investment pool (Georgia Fund 1) administered by the State of Georgia, Office of the State Treasurer, \r\n7. Repurchase agreements, and \r\n8. Obligations of other political subdivisions of the State of Georgia. \r\nThe School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks, or foreign current risks. \r\nRECEIVABLES \r\nReceivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. \r\nPROPERTY TAXES \r\nThe Talbot County Board of Commissioners adopted the property tax levy for the 2014 tax digest year (calendar year) on September 30, 2014 (levy date) based on property values as of January 1, 2014. Taxes were due on December 20, 2014 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2014 tax digest are reported as revenue in the governmental funds for fiscal year 2015. The Talbot County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2015, for maintenance and operations amounted to $2,904,656.98. \r\nThe tax millage rate levied for the 2014 tax year (calendar year) for the Talbot County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value): \r\n \r\nSchool Operations \r\n \r\n14.10 mills \r\n \r\nAdditionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $126,049.87 during fiscal year ended June 30, 2015. \r\n \r\n- 13 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nSALES TAXES \r\nEducation Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $466,033.40 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. \r\nINVENTORIES \r\nFood Inventories On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. \r\nCAPITAL ASSETS \r\nCapital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District. \r\nCapitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows: \r\n \r\nCapitalization Policy \r\n \r\nEstimated Useful Life \r\n \r\nLand \r\n \r\nLand Improvements \r\n \r\n$ \r\n \r\nBuildings and Improvements $ \r\n \r\nEquipment \r\n \r\n$ \r\n \r\nIntangible Assets \r\n \r\n$ \r\n \r\nALL 10,000.00 10,000.00 5,000.00 \r\n100,000.00 \r\n \r\nN/A 20 to 70 years up to70 years \r\n5 to 25 years 15 to 50 years \r\n \r\nDepreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized. \r\n \r\nAmortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets. \r\n \r\n- 14 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nDEFERRED OUTFLOWS/INFLOWS OF RESOURCES \r\nIn addition to assets, the statement of net position and/or the balance sheet will report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. Under the full accrual method of accounting, the School District has reported deferred outflows of resources related to a defined benefit pension plan, as discussed in Note 14  Retirement Plans. \r\nIn addition to liabilities, the statement of net position and/or the balance sheet will report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time. Under the full accrual method of accounting, the School District has reported deferred inflows of resources related to a defined benefit pension plan, as discussed in Note 14  Retirement Plans. This item is reported only in the District-wide Statement of Net Position. The School District has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reporting only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and this amount is deferred and will be recognized as an inflow of resources in the period in which the amount becomes available. \r\nGENERAL OBLIGATION BONDS \r\nThe School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued. \r\nIn the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Position. \r\nPENSIONS \r\nFor purposes of measuring the Net Pension Liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teachers' Retirement System of Georgia (TRS), the Public School Employees Retirement System (PSERS) and additions to/deductions from TRS/PSERS's fiduciary net position have been determined on the same basis as they are reported by TRS/PSERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. See Note 14 - Retirement Plans. \r\n \r\n- 15 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNET POSITION \r\nThe School District's Net Position in the District-wide Statements is classified as follows: \r\nNet Investment in Capital Assets - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of Net Investment in Capital Assets. \r\nRestricted Net Position - This represents resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal Programs, debt service, and capital projects in accordance with restrictions imposed by external third parties. \r\nUnrestricted Net Position - Unrestricted Net Position is the net amount of the assets, deferred outflows of resources, liabilities and deferred inflows of resources that are not included in the determination of Net Investment of Capital Assets and Restricted Net Position. Included in the net deficit reported is the School District's Net Pension Liability of $3,839,123.00 which is required for financial reporting. \r\nFUND BALANCES \r\nThe School District's fund balances are classified as follows: \r\nNonspendable  Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact. \r\nRestricted  Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. \r\nCommitted  Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. Assigned  Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes. \r\nUnassigned  The residual classification for the General Fund. This classification represents fund balances that have not been assigned to other funds and that have not been restricted, committed, or assigned to specific purposes within the General Fund. \r\n \r\n- 16 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nFund Balances of the Governmental Funds at June 30, 2015, are as follows: \r\n \r\nNonspendable Inventories \r\nRestricted Bus Replacement Continuation of Federal Programs Continuation of State Programs Capital Projects Debt Service \r\nAssigned Local Capital Outlay Projects School Activity Accounts \r\nUnassigned \r\n \r\n$ \r\n \r\n9,524.31 \r\n \r\n$ \r\n \r\n39,451.00 \r\n \r\n259,372.03 \r\n \r\n16,459.96 \r\n \r\n18,222.61 \r\n \r\n382,654.28 \r\n \r\n716,159.88 \r\n \r\n$ \r\n \r\n52,608.01 \r\n \r\n8,255.81 \r\n \r\n60,863.82 \r\n \r\n1,235,734.07 \r\n \r\nFund Balance, June 30, 2015 \r\n \r\n$ 2,022,282.08 \r\n \r\nWhen multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds. \r\nUSE OF ESTIMATES \r\nThe preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. \r\nNOTE 3: BUDGETARY DATA \r\nThe budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America. \r\nThe budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. 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, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated 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 yearend. \r\n \r\n- 17 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe Superintendent is authorized by the Board to approve adjustments of no more than five percent of the amount budgeted for expenditures in any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any budget function for any fund is anticipated to be more than five percent of the budgeted amount, the Superintendent shall request Board approval for the budget amendment. Under no circumstance is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board. \r\nSee Schedule 4  General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances  Budget to Actual for a detail of any over/under expenditures during the fiscal year under review. \r\nNOTE 4: DEPOSITS \r\nCOLLATERALIZATION OF DEPOSITS \r\nOfficial Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance. \r\nAcceptable security for deposits consists of any one of or any combination of the following: \r\n1. Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, \r\n2. Insurance on accounts provided by the Federal Deposit Insurance Corporation, \r\n3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, \r\n4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, \r\n5. 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, \r\n6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and \r\n7. 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 or securities guaranteed 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. \r\nCATEGORIZATION OF DEPOSITS \r\nCustodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2015, the School District had deposits with a carrying amount of $2,387,211.47, which includes $65,000.00 in Certificates of Deposit that are reported as Investments, and a bank balance of $2,697,614.70. The bank balances insured by Federal depository insurance were $592,734.76, and the bank balances collateralized with securities held by the pledging institution or by the pledging financial institution's trust department or agent in the School District's name were $2,104,879.94. \r\n- 18 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 5: NON-MONETARY TRANSACTIONS \r\nThe School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2  Inventories. \r\nNOTE 6: CAPITAL ASSETS \r\nThe following is a summary of changes in the Capital Assets during the fiscal year: \r\n \r\nBalances July 1, 2014 \r\n \r\nIncreases \r\n \r\nDecreases \r\n \r\nTransfers \r\n \r\nBalances June 30, 2015 \r\n \r\nGovernmental Activities Capital Assets, Not Being Depreciated: \r\nLand Construction in Progress \r\n \r\n$ \r\n \r\n354,857.93 \r\n \r\n8,245,936.31 $ \r\n \r\n2,531,925.59 $ \r\n \r\n$ 0.00 $ -10,777,861.90 \r\n \r\n354,857.93 0.00 \r\n \r\nTotal Capital Assets Not Being Depreciated \r\n \r\n8,600,794.24 \r\n \r\n2,531,925.59 \r\n \r\n0.00 -10,777,861.90 \r\n \r\n354,857.93 \r\n \r\nCapital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements \r\n \r\n3,507,218.42 1,732,400.23 \r\n558,998.55 \r\n \r\n155,035.97 11,222.68 \r\n \r\n0.00 \r\n \r\n10,777,861.90 \r\n \r\n14,285,080.32 1,887,436.20 570,221.23 \r\n \r\nLess Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements \r\n \r\n1,878,463.79 1,390,390.67 \r\n414,384.26 \r\n \r\n141,411.88 92,432.19 18,328.09 \r\n \r\n2,019,875.67 1,482,822.86 \r\n432,712.35 \r\n \r\nTotal Capital Assets, Being Depreciated, Net \r\n \r\n2,115,378.48 \r\n \r\n-85,913.51 \r\n \r\n0.00 \r\n \r\n10,777,861.90 12,807,326.87 \r\n \r\nGovernmental Activity Capital Assets - Net $ 10,716,172.72 $ 2,446,012.08 $ \r\n \r\n0.00 $ \r\n \r\n0.00 $ 13,162,184.80 \r\n \r\nCurrent year depreciation expense by function is as follows: \r\n \r\nInstruction \r\n \r\nSupport Services \r\n \r\nGeneral Administration \r\n \r\n$ \r\n \r\nMaintenance and Operation of Plant \r\n \r\nStudent Transportation Services \r\n \r\nFood Services \r\n \r\n$ \r\n347.79 12,121.87 62,976.28 \r\n \r\n$ \r\n \r\n163,938.45 \r\n75,445.94 12,787.77 252,172.16 \r\n \r\n- 19 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nNOTE 7: INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2015, consisted of the following: \r\n \r\nTransfers to \r\n \r\nTransfers From District-wide \r\nCapital Projects \r\n \r\nEXHIBIT \"I\" \r\n \r\nDebt Service Fund \r\n \r\n$ \r\n \r\n398,914.28 \r\n \r\nTransfers are used to move sales tax revenue collected by the Capital Projects Fund to the Debt Service Fund to pay debt service according to the approved SPLOST referendum. \r\nNOTE 8: RISK MANAGEMENT \r\n \r\nThe 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. \r\n \r\nThe School District has obtained commercial insurance for risk of loss associated with torts, assets, and errors or omissions. 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. \r\n \r\nThe School District has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years. \r\n \r\nThe School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. \r\n \r\nChanges in the unemployment compensation claims liability during the last two fiscal years are as follows: \r\n \r\nBeginning of Year Liability \r\n \r\nClaims and Changes in Estimates \r\n \r\nClaims Paid \r\n \r\nEnd of Year Liability \r\n \r\n2014 $ 2015 $ \r\n \r\n0.00 $ 0.00 $ \r\n \r\n7,770.00 $ 7,458.00 $ \r\n \r\n7,770.00 $ 7,458.00 $ \r\n \r\n0.00 0.00 \r\n \r\nThe School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general worker's compensation insurance coverage. Specific excess of loss insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2 million. The Trust covers the first $1 million of each Employers liability claim with Safety National providing additional Employers Liability limits up to a $2 million per occurrence maximum. Safety National Casualty Company also provides $2 million in aggregate coverage to the Trust, attaching at 110% of the loss fund and based on the Fund's annual normal premium. \r\n \r\n- 20 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe School District has purchased a surety bond to provide additional insurance coverage as follows: \r\n \r\nPosition Covered \r\n \r\nAmount \r\n \r\nSuperintendent \r\n \r\n$ 30,000.00 \r\n \r\nNOTE 9: OPERATING LEASES \r\n \r\nTalbot County Board of Education has entered into various leases as lessee for copiers and a postage meter. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2015, for governmental funds amounted to $17,729.02. \r\n \r\nNOTE 10: LONG-TERM LIABILITIES \r\n \r\nGENERAL OBLIGATION DEBT OUTSTANDING \r\n \r\nGeneral Obligation Bonds currently outstanding are as follows: \r\n \r\nPurpose \r\n \r\nInterest Rate \r\n \r\nAmount \r\n \r\nGeneral Government - Series 2003 \r\n \r\n3.80% \r\n \r\n$ 1,525,000.00 \r\n \r\nThe changes in Long-Term Liabilities during the fiscal year ended June 30, 2015, were as follows: \r\n \r\nBalance July 1, 2014 \r\n \r\nAdditions \r\n \r\nGovernmental Activities \r\n \r\nBalance \r\n \r\nDeductions \r\n \r\nJune 30, 2015 \r\n \r\nDue Within One Year \r\n \r\nG.O. Bonds \r\n \r\n$ 1,865,000.00 $ \r\n \r\n0.00 $ 340,000.00 $ 1,525,000.00 $ 355,000.00 \r\n \r\nAt June 30, 2015, payments due by fiscal year which includes principal and interest for these items are as follows: \r\n \r\nFiscal Year Ended June 30: \r\n \r\nGeneral Obligation Debt \r\n \r\nPrincipal \r\n \r\nInterest \r\n \r\n2016 2017 2018 2019 \r\n \r\n$ \r\n \r\n355,000.00 $ \r\n \r\n370,000.00 \r\n \r\n390,000.00 \r\n \r\n410,000.00 \r\n \r\n51,205.00 37,430.00 22,990.00 \r\n7,790.00 \r\n \r\nTotal Principal and Interest \r\n \r\n$ \r\n \r\n1,525,000.00 $ \r\n \r\n119,415.00 \r\n \r\nNOTE 11: ON-BEHALF PAYMENTS \r\nThe School District has recognized revenues and costs in the amount of $16,199.00 for retirement contributions paid on the School District's behalf by the following State Agencies. \r\nOffice of the State Treasurer Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $16,199.00 \r\nFunds paid on behalf of the School District are reported in governmental funds. See Note 14 Retirement Plans for the State support related to the Net Pension Liability. \r\n \r\n- 21 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 12: SIGNIFICANT CONTINGENT LIABILITIES \r\nAmounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. \r\nThe School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements. \r\nNOTE 13: POST-EMPLOYMENT BENEFITS \r\nGEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND \r\nPlan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. \r\nFunding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012, pay approximately 25% of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy. \r\nParticipating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected \"payas-you-go\" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. \r\n \r\n- 22 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2015: \r\n \r\nFor certificated teachers, librarians and regional educational service agencies and certain other eligible participants: \r\n \r\nJuly 1, 2014  June 30, 2015 For non-certificated school personnel: \r\n \r\n$945.00 per member per month \r\n \r\nJuly 1, 2014  June 30, 2015 \r\n \r\n$596.20 per member per month \r\n \r\nNo additional contribution was required by the Board for fiscal year 2015 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation. \r\n \r\nThe School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage Contributed \r\n \r\nRequired Contribution \r\n \r\n2015 2014 2013 \r\n \r\n100% 100% 100% \r\n \r\n$ \r\n \r\n619,598.88 \r\n \r\n$ \r\n \r\n672,167.60 \r\n \r\n$ \r\n \r\n614,133.38 \r\n \r\nNOTE 14: RETIREMENT PLANS \r\n \r\nTalbot County Board of Education participates in various retirement plans administered by the State of Georgia, as further explained below. \r\n \r\nTEACHERS' RETIREMENT SYSTEM OF GEORGIA (TRS) \r\nPlan Description: All teachers of the School District as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) and certain other support personnel as defined by 47-3-63 are provided pension through the Teachers' Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers' Retirement System of Georgia issues a publicly available separate financial audit report that can be obtained at www.trsga.com/publications. \r\n \r\nBenefits Provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death. \r\n \r\n- 23 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nContributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2015. The school district's contractually required contribution rate for the year ended June 30, 2015 was 13.15% of annual school district payroll. \r\n \r\nEmployer contributions for the current fiscal year and the preceding two fiscal years are as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage Contributed \r\n \r\nRequired Contribution \r\n \r\n2015 2014 2013 \r\n \r\n100% 100% 100% \r\n \r\n$ \r\n \r\n412,697.58 \r\n \r\n$ \r\n \r\n380,692.79 \r\n \r\n$ \r\n \r\n383,370.28 \r\n \r\nPUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS) \r\nPlan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers' Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs. \r\nBenefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service. \r\n \r\nUpon retirement, the member will receive a monthly benefit of $14.75, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits. \r\nContributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. \r\n \r\nIndividuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. \r\n \r\n- 24 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nPension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension \r\nAt June 30, 2015, the School District reported a liability of $3,839,123.00 for its proportionate share of the Net Pension Liability for TRS. \r\nThe Net Pension Liability was measured as of June 30, 2014. The total pension liability used to calculate the Net Pension Liability was based on an actuarial valuation as of June 30, 2013. An expected total pension liability as of June 30, 2014 was determined using standard roll-forward techniques. The School District's proportion of the Net Pension Liability was based on contributions to TRS during the fiscal year ended June 30, 2014. \r\nAt June 30, 2014, the School District's TRS proportion was 0.030388%, which was a decrease of 0.002161% from its proportion measured as of June 30, 2013. \r\nAt June 30, 2015, the School District did not have a PSERS liability for a proportionate share of the Net Pension Liability because of a Special Funding Situation with the State of Georgia, which is responsible for the Net Pension Liability of the plan. The amount of the State's proportionate share of the Net Pension Liability associated with the School District is $59,907.00. \r\nThe PSERS Net Pension Liability was measured as of June 30, 2014. The total pension liability used to calculate the Net Pension Liability was based on an actuarial valuation as of June 30, 2013. An expected total pension liability as of June 30, 2014 was determined using standard roll-forward techniques. The State's proportion of the Net Pension Liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2014. \r\nFor the year ended June 30, 2015, the School District recognized pension expense of $193,419.00 for TRS and $5,203.00 for PSERS with revenue of $5,203.00 for PSERS. The revenue is support provided by the State of Georgia. \r\nAt June 30, 2015, the School District reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources: \r\n \r\nTRS \r\n \r\nDeferred Outflows of Resources \r\n \r\nDeferred Inflows of Resources \r\n \r\nNet difference between projected and actual earnings on pension plan investments \r\n \r\n$ 1,338,400.00 \r\n \r\nChanges in proportion and differences between School District contributions and proportionate share of contributions \r\n \r\n306,819.00 \r\n \r\nSchool District contributions subsequent to the measurement date \r\nTotal \r\n \r\n$ \r\n \r\n412,697.58 \r\n \r\n$ \r\n \r\n412,697.58 $ 1,645,219.00 \r\n \r\n- 25 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nTalbot County Board of Education contributions subsequent to the measurement date of June 30, 2014 for TRS are reported as deferred outflows of resources and will be recognized as a reduction of the Net Pension Liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: \r\n \r\nYear Ended June 30: \r\n \r\nTRS \r\n \r\n2016 2017 2018 2019 2020 \r\n \r\n$ -404,332.00 $ -404,332.00 $ -404,332.00 $ -404,332.00 $ -27,891.00 \r\n \r\nActuarial assumptions: The total pension liability as of June 30, 2014 was determined by an actuarial valuation as of June 30, 2013, using the following actuarial assumptions, applied to all periods included in the measurement: \r\n \r\nTeachers' Retirement System: \r\n \r\nInflation \r\n \r\n3.00% \r\n \r\nSalary increases \r\n \r\n3.75  7.00%, average, including inflation \r\n \r\nInvestment rate of return \r\n \r\n7.50%, net of pension plan investment expense, including inflation \r\n \r\nMortality rates were based on the RP-2000 Combined Mortality Table for Males or Females set back two years for males and set back three years for females. \r\nThe actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period July 1, 2004  June 30, 2009. \r\n \r\nPublic School Employees Retirement System: \r\n \r\nInflation \r\n \r\n3.00% \r\n \r\nSalary increases \r\n \r\nN/A \r\n \r\nInvestment rate of return \r\n \r\n7.50%, net of pension plan investment expense, including inflation \r\n \r\nMortality rates were based on the RP-2000 Combined Mortality Table set forward one year for males for the period after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back two years for males and set forward one year for females for the period after disability retirement. \r\nThe actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period July 1, 2004  June 30, 2009. \r\n \r\n- 26 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2015 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe long-term expected rate of return on TRS and PSERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: \r\n \r\nAsset class Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks \r\nTotal \r\n \r\nTarget allocation \r\n30.00% 39.70% 3.70% \r\n1.60% 18.90% 6.10% 100.00% \r\n \r\nLong-term expected real rate of return* \r\n3.00% 6.50% 10.00% 13.00% 6.50% 11.00% \r\n \r\n* Rates shown are net of the 3.00% assumed rate of inflation \r\n \r\nDiscount rate: The discount rate used to measure the total TRS, ERS and PSERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS, ERS, and PSERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. \r\nSensitivity of the Talbot County Board of Education's proportionate share of the Net Pension Liability to changes in the discount rate: The following presents the School District's proportionate share of the Net Pension Liability calculated using the discount rate of 7.50%, as well as what the School District's proportionate share of the Net Pension Liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate: \r\n \r\nTeachers' Retirement System: \r\nSchool District's proportionate share of the Net Pension Liability \r\n \r\n1% Decrease (6.50%) \r\n \r\nCurrent Discount Rate (7.50%) \r\n \r\n1% Increase (8.50%) \r\n \r\n$ 7,074,989.00 $ \r\n \r\n3,839,123.00 $ 1,174,455.00 \r\n \r\nPension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS and PSERS financial report which is publically available at www.trsga.com/publications and www.ers.ga.gov/formspubs/formspubs. \r\n \r\n- 27 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS' RETIREMENT SYSTEM OF GEORGIA \r\nFOR THE YEAR ENDED JUNE 30, 2015 \r\nSchool District's proportion of the net pension liability School District's proportionate share of the net pension liability School District's covered-employee payroll School District's proportionate share of the net pension liability \r\nas a percentage of its covered employee payroll Plan fiduciary net position as a percentage of the total pension liability \r\n \r\nSCHEDULE \"1\" \r\n2015 0.030388% $ 3,839,123.00 $ 3,100,171.01 \r\n123.84% 84.03% \r\n \r\nThis schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by Talbot County Board of Education. \r\n- 29 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION \r\nSCHEDULE OF CONTRIBUTIONS TEACHERS' RETIREMENT SYSTEM OF GEORGIA \r\nFOR THE YEAR ENDED JUNE 30 \r\n \r\nContractually required contribution Contributions in relation to the contractually required contribution Contribution deficiency (excess) School District's covered-employee payroll Contributions as a percentage of covered-employee payroll \r\n \r\n2015 \r\n \r\n2014 \r\n \r\n2013 \r\n \r\n$ \r\n \r\n412,697.58 $ \r\n \r\n380,692.79 $ 383,370.28 \r\n \r\n412,697.58 \r\n \r\n380,692.79 \r\n \r\n383,370.28 \r\n \r\n$ \r\n \r\n0.00 $ \r\n \r\n0.00 $ \r\n \r\n0.00 \r\n \r\n$ 3,138,384.64 $ 3,100,171.01 $ 3,359,949.87 \r\n \r\n13.15% \r\n \r\n12.28% \r\n \r\n11.41% \r\n \r\nThis schedule is intended to show information for 10 years. Due to the retention policy of the Talbot County Board of Education, the School District is only able to display 9 years of information. Additional years will be displayed as they become available. \r\n- 30 - \r\n \r\n SCHEDULE \"2\" \r\n \r\n2012 \r\n \r\n$ \r\n \r\n386,730.40 $ \r\n \r\n386,730.40 \r\n \r\n$ \r\n \r\n0.00 $ \r\n \r\n$ 3,761,968.87 $ \r\n \r\n10.28% \r\n \r\n2011 419,130.30 $ 419,130.30 \r\n0.00 $ 4,077,143.00 $ \r\n10.28% \r\n \r\n2010 \r\n \r\n2009 \r\n \r\n444,832.43 $ \r\n \r\n419,136.12 $ \r\n \r\n444,832.43 \r\n \r\n419,136.12 \r\n \r\n0.00 $ \r\n \r\n0.00 $ \r\n \r\n4,567,068.07 $ 4,516,553.02 $ \r\n \r\n9.74% \r\n \r\n9.28% \r\n \r\n2008 442,548.18 $ 442,548.18 \r\n0.00 $ 4,768,838.15 $ \r\n9.28% \r\n \r\n2007 406,039.06 406,039.06 \r\n0.00 4,375,420.91 \r\n9.28% \r\n \r\n- 31 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION \r\nFOR THE YEAR ENDED JUNE 30, 2015 \r\n \r\nTeachers' Retirement System \r\n \r\nChanges of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP-2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience. \r\nMethod and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2015 reported in that schedule: \r\n \r\nValuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation rate Salary increases Investment rate of return \r\n \r\nJune 30, 2012 Entry age Level percentage of payroll, open 30 years Seven-year smoothed market 3.00% 3.75  7.00%, including inflation 7.50%, net of pension plan investment \r\nexpense, including inflation \r\n \r\nSCHEDULE \"3\" \r\n \r\n- 32 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND \r\nSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL \r\nYEAR ENDED JUNE 30, 2015 \r\n \r\nSCHEDULE \"4\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent 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 Other Support Services Enterprise Operations Food Services Operation \r\nTotal Expenditures \r\nExcess of Revenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nTransfers In Transfers Out \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\nAdjustments \r\n \r\nNONAPPROPRIATED BUDGETS \r\n \r\nORIGINAL (1) \r\n \r\nFINAL (1) \r\n \r\nACTUAL AMOUNTS \r\n \r\nVARIANCE OVER/UNDER \r\n \r\n$ \r\n \r\n3,119,491.00 $ 3,119,491.00 $ \r\n \r\n3,030,706.85 $ \r\n \r\n14,555.00 \r\n \r\n14,555.00 \r\n \r\n5,667.70 \r\n \r\n2,727,746.52 \r\n \r\n2,925,210.52 \r\n \r\n2,707,529.03 \r\n \r\n1,215,533.33 \r\n \r\n1,148,346.78 \r\n \r\n1,115,172.35 \r\n \r\n60,000.00 \r\n \r\n60,000.00 \r\n \r\n41,192.83 \r\n \r\n1,100.00 \r\n \r\n1,100.00 \r\n \r\n1,296.78 \r\n \r\n85,500.00 \r\n \r\n85,500.00 \r\n \r\n121,648.19 \r\n \r\n7,223,925.85 \r\n \r\n7,354,203.30 \r\n \r\n7,023,213.73 \r\n \r\n-88,784.15 -8,887.30 \r\n-217,681.49 -33,174.43 -18,807.17 196.78 36,148.19 \r\n-330,989.57 \r\n \r\n4,259,213.85 \r\n405,681.00 179,199.00 143,210.00 329,900.00 294,005.00 \r\n81,442.00 546,661.00 451,614.00 \r\n25,000.00 \r\n508,000.00 \r\n7,223,925.85 \r\n0.00 \r\n \r\n4,459,034.85 \r\n333,149.08 240,837.00 143,210.00 325,700.00 373,791.00 \r\n81,442.00 546,661.00 452,927.00 \r\n25,000.00 \r\n522,578.86 \r\n7,504,330.79 \r\n-150,127.49 \r\n \r\n3,649,102.95 \r\n375,192.51 244,802.69 126,496.27 318,198.62 373,779.38 \r\n69,062.11 529,289.19 415,450.12 \r\n32,142.75 703.44 \r\n476,916.08 \r\n6,611,136.11 \r\n412,077.62 \r\n \r\n101,962.00 -101,962.00 \r\n0.00 0.00 0.00 \r\n \r\n145,000.00 -145,000.00 \r\n0.00 -150,127.49 1,474,453.21 \r\n-5,485.16 \r\n \r\n412,077.62 1,156,719.56 \r\n \r\n809,931.90 \r\n-42,043.43 -3,965.69 16,713.73 7,501.38 11.62 12,379.89 17,371.81 37,476.88 -7,142.75 -703.44 45,662.78 \r\n893,194.68 \r\n562,205.11 \r\n-145,000.00 145,000.00 \r\n0.00 \r\n562,205.11 \r\n-317,733.65 \r\n5,485.16 \r\n \r\nFund Balances - Ending \r\n \r\n$ \r\n \r\n0.00 $ 1,318,840.56 $ \r\n \r\n1,568,797.18 $ \r\n \r\n249,956.62 \r\n \r\nNotes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (1) Original and Final Budget amounts do not include the budgeted revenues or expenditures of the various principal accounts. \r\nThe actual revenues and expenditures of the various principal accounts are $64,958.30 and $71,497.54, respectively. The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. \r\nSee notes to the basic financial statements. \r\n- 33 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\nYEAR ENDED JUNE 30, 2015 \r\n \r\nSCHEDULE \"5\" \r\n \r\nFUNDING AGENCY PROGRAM/GRANT \r\nAgriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program \r\nOther Programs Pass-Through From Georgia Department of Education Food Services Fresh Fruit and Vegetable Program \r\nTotal U. S. Department of Agriculture \r\nEducation, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants \r\nTotal Special Education Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Improving Teacher Quality State Grants Title I Grants to Local Educational Agencies \r\nTotal Other Programs \r\nTotal U. S. Department of Education \r\nDefense, U. S. Department of Direct Department of the Army R.O.T.C. Program \r\n \r\nCFDA NUMBER \r\n \r\nPASSTHROUGH \r\nENTITY ID \r\nNUMBER \r\n \r\nEXPENDITURES IN PERIOD \r\n \r\n* 10.553 * 10.555 \r\n \r\nN/A \r\n \r\nN/A \r\n \r\n$ \r\n \r\n(2) 469,173.92 (1) \r\n \r\n10.582 \r\n \r\nN/A \r\n \r\n14,630.30 483,804.22 \r\n \r\n84.027 \r\n \r\nN/A \r\n \r\n84.173 \r\n \r\nN/A \r\n \r\n84.048 \r\n \r\nN/A \r\n \r\n84.367 \r\n \r\nN/A \r\n \r\n* 84.010 \r\n \r\nN/A \r\n \r\n108,572.92 18,156.00 \r\n126,728.92 \r\n10,206.30 82,004.00 395,482.00 487,692.30 614,421.22 \r\n63,099.01 \r\n \r\nTotal Expenditures of Federal Awards \r\n \r\n$ \r\n \r\n1,161,324.45 \r\n \r\nN/A = Not Available \r\n \r\nNotes to the Schedule of Expenditures of Federal Awards \r\n(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $24,776.84. \r\n(2) Expenditures for the funds earned on the School Breakfast Program ($126,955.63) were not maintained separately and are included in the 2015 National School Lunch Program. \r\n \r\nMajor Programs are identified by an asterisk (*) in front of the CFDA number. \r\n \r\nThe School District did not provide Federal Assistance to any Subrecipient. \r\nThe accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Talbot County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 34 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2015 \r\n \r\nSCHEDULE \"6\" \r\n \r\nAGENCY/FUNDING \r\nGRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program \r\nEducation, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Principal Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Sparsity Other State Programs Agriculture Construction Related Equipment - State Bonds Food Services Math and Science Supplements Preschool Handicapped Program Vocational Education Vocational Construction Related Equipment - State Bonds \r\nGeorgia State Financing and Investment Commission Reimbursement on Construction Projects \r\nOffice of the State Treasurer Public School Employees Retirement \r\n \r\nGOVERNMENTAL FUND TYPES \r\n \r\nCAPITAL \r\n \r\nGENERAL \r\n \r\nPROJECTS \r\n \r\nFUND \r\n \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ \r\n \r\n60,185.34 \r\n \r\n$ \r\n \r\n60,185.34 \r\n \r\n169,232.00 10,577.00 \r\n287,013.00 50,567.00 \r\n121,965.00 34,718.00 \r\n289,956.00 255,586.00 \r\n89,900.00 339,163.00 \r\n6,216.00 19,845.00 44,839.00 14,648.00 \r\n7,429.00 224.00 \r\n225,962.00 107,135.00 101,827.00 -197,642.00 \r\n163,061.00 45,000.00 \r\n264,304.00 \r\n39,178.30 10,612.65 14,776.52 \r\n2,360.00 17,476.00 95,216.22 \r\n \r\n169,232.00 10,577.00 \r\n287,013.00 50,567.00 \r\n121,965.00 34,718.00 \r\n289,956.00 255,586.00 \r\n89,900.00 339,163.00 \r\n6,216.00 19,845.00 44,839.00 14,648.00 \r\n7,429.00 224.00 \r\n225,962.00 107,135.00 101,827.00 -197,642.00 \r\n163,061.00 45,000.00 \r\n264,304.00 \r\n39,178.30 10,612.65 14,776.52 \r\n2,360.00 17,476.00 95,216.22 \r\n \r\n$ 2,434,997.59 \r\n \r\n2,434,997.59 \r\n \r\n16,199.00 \r\n \r\n16,199.00 \r\n \r\n$ 2,707,529.03 $ 2,434,997.59 $ 5,142,526.62 \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 35 - \r\n \r\n PROJECT \r\n \r\nTALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF LOCAL OPTION SALES TAX PROJECTS \r\nYEAR ENDED JUNE 30, 2015 \r\n \r\nSCHEDULE \"7\" \r\n \r\nORIGINAL ESTIMATED \r\nCOST (1) \r\n \r\nCURRENT ESTIMATED COSTS (2) \r\n \r\nAMOUNT EXPENDED IN CURRENT \r\nYEAR (3) \r\n \r\nAMOUNT EXPENDED IN PRIOR YEARS (3) \r\n \r\nTOTAL COMPLETION \r\nCOST \r\n \r\nEXCESS PROCEEDS NOT \r\nEXPENDED \r\n \r\nESTIMATED COMPLETION \r\nDATE \r\n \r\nAcquiring, construction and equipping one new \r\n \r\nelementary school, adding to, renovating, \r\n \r\nrepairing, improving and equipping existing \r\n \r\nschool building and other buildings and facilities \r\n \r\nuseful or desirable in connection therewith \r\n \r\npayment of capitalized interest to the bonds \r\n \r\nthrough and including August 1, 2003; and the \r\n \r\ncosts of issuing the bonds. \r\n \r\n$ \r\n \r\n2,500,000.00 $ 14,084,458.27 $ 2,642,469.46 $ \r\n \r\n11,441,988.81 \r\n \r\n9/4/2015 \r\n \r\n(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. \r\n(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion. \r\n(3) The voters of Talbot County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. \r\n \r\n- 36 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) \r\nALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2015 \r\n \r\nSCHEDULE \"8\" \r\n \r\nDESCRIPTION \r\nDirect Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category III Category IV Category V Remedial Education Program Alternative Education Program \r\nTOTAL DIRECT INSTRUCTIONAL PROGRAMS \r\nMedia Center Program Staff and Professional Development \r\n \r\nALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) \r\n \r\nELIGIBLE QBE PROGRAM COSTS \r\n \r\nSALARIES \r\n \r\nOPERATIONS \r\n \r\nTOTAL \r\n \r\n$ \r\n \r\n241,525.00 $ \r\n \r\n176,344.20 $ \r\n \r\n7,601.02 $ \r\n \r\n183,945.22 \r\n \r\n14,587.00 \r\n \r\n10,712.35 \r\n \r\n10,712.35 \r\n \r\n429,630.00 \r\n \r\n431,279.54 \r\n \r\n36,245.29 \r\n \r\n467,524.83 \r\n \r\n67,897.00 \r\n \r\n25,328.30 \r\n \r\n25,328.30 \r\n \r\n185,167.00 \r\n \r\n285,009.11 \r\n \r\n28,625.67 \r\n \r\n313,634.78 \r\n \r\n47,419.00 433,927.00 373,680.00 132,070.00 502,106.00 \r\n18,924.00 29,383.00 \r\n \r\n25,196.01 410,530.60 688,315.33 198,171.16 \r\n8,866.00 66,887.49 150,126.21 143,120.93 74,033.30 \r\n18,075.47 \r\n \r\n27,573.71 51,887.42 \r\n5,730.10 \r\n1,230.51 1,230.51 \r\n33.67 \r\n \r\n25,196.01 438,104.31 740,202.75 203,901.26 \r\n8,866.00 66,887.49 151,356.72 144,351.44 74,033.30 \r\n33.67 18,075.47 \r\n \r\n2,476,315.00 \r\n \r\n2,711,996.00 \r\n \r\n160,157.90 \r\n \r\n2,872,153.90 \r\n \r\n66,517.00 11,066.00 \r\n \r\n90,590.67 3,287.18 \r\n \r\n8,105.60 7,719.82 \r\n \r\n98,696.27 11,007.00 \r\n \r\nTOTAL QBE FORMULA FUNDS \r\n \r\n$ \r\n \r\n2,553,898.00 $ \r\n \r\n2,805,873.85 $ \r\n \r\n175,983.32 $ \r\n \r\n2,981,857.17 \r\n \r\n(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 37 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJanuary 30, 2017 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\nLadies and Gentlemen: \r\nWe have audited, 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, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Talbot County Board of Education as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise Talbot County Board of Education's basic financial statements and have issued our report thereon dated January 30, 2017. \r\nInternal Control Over Financial Reporting \r\nIn planning and performing our audit of the financial statements, we considered Talbot County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Talbot County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Talbot County Board of Education's internal control. \r\nOur consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies. \r\nA deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and \r\n2015YB-40 \r\n \r\n (This page left intentionally blank) \r\n \r\n corrected on a timely basis. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS 2015-001, FS 2015-002, FS 2015-003 and FS 2015-005 to be material weaknesses. \r\nA significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs as item FS 2015-004 to be a significant deficiency. \r\nCompliance and Other Matters \r\nAs part of obtaining reasonable assurance about whether Talbot County Board of Education's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. \r\nWe noted certain matters that we have reported to management of Talbot County Board of Education in a separate letter dated January 30, 2017. \r\nTalbot County Board of Education's Response to Findings \r\nTalbot County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Talbot County Board of Education's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. \r\nPurpose of this Report \r\nThe purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nGSG:es 2015YB-40 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJanuary 30, 2017 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 \r\nLadies and Gentlemen: \r\nReport on Compliance for Each Major Federal Program \r\nWe have audited Talbot County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2015. Talbot County 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. \r\nManagement's Responsibility \r\nManagement is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. \r\nAuditor's Responsibility \r\nOur responsibility is to express an opinion on compliance for each of Talbot County Board of Education's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, 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 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 Talbot County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. \r\n \r\n2015SA-65 \r\n \r\n (This page left intentionally blank) \r\n \r\n We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Talbot County Board of Education's compliance. \r\nBasis for Qualified Opinion on Title I Grants to Local Education Agencies \r\nAs described in the accompanying Schedule of Findings and Questioned Costs, Talbot County Board of Education did not comply with requirements regarding Title I Grants to Local Education Agencies as described in item FA 2015-001 for Reporting and item FA 2015-002 for Cash Management. Compliance with such requirements is necessary, in our opinion, for Talbot County Board of Education to comply with requirements applicable to that program. \r\nQualified Opinion on Title I Grants to Local Education Agencies \r\nIn our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the Talbot County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on Title I Grants to Local Education Agencies for the year ended June 30, 2015. \r\nUnmodified Opinion on Each of the Other Major Federal Programs \r\nIn our opinion, Talbot County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its other major federal programs identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs for the year ended June 30, 2015. \r\nOther Matters \r\nTalbot County Board of Education's response to the noncompliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Talbot County Board of Education's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. \r\nReport on Internal Control over Compliance \r\nManagement of Talbot County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Talbot County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Talbot County Board of Education's internal control over compliance. \r\nOur consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses. \r\n2015SA-65 \r\n \r\n (This page left intentionally blank) \r\n \r\n A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as items FA 2015-001 and FA 2015-002 to be material weaknesses. \r\nA significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. \r\nTalbot County Board of Education's response to the internal control over the compliance finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Talbot County Board of Education's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. \r\nThe purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nGSG:es 2015SA-65 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2015 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFS-7301-12-02 FS-7301-12-03 FS-7301-12-04 FS-7301-12-05 FS-7301-12-06 FS-7301-13-01 FS-7301-13-02 FS-7301-13-03 FS-7301-13-04 FS-7301-13-05 FS-7301-13-06 FS 2014-001 FS 2014-002 FS 2014-003 FS 2014-004 FS 2014-005 \r\n \r\nUnresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nCASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Finding Control Number: FS-7301-12-02 \r\n \r\nThe Board will implement controls over cash to ensure that cash is properly reconciled to general ledger and cash activity. \r\n \r\nCASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS ACCOUNTING CONTROLS (OVERALL) FINANCIAL REPORTING Inadequate Internal Controls over School Activity Accounts Finding Control Number: FS-7301-12-03 \r\n \r\nManagement will ensure that transactions are processed according to procedures and accurately monitored and reconciled to the general ledger. \r\n \r\nEMPLOYEE COMPENSATION Inadequate Internal Controls over Employee Compensation Process Finding Control Number: FS-7301-12-04 \r\n \r\nThe Board will implement policies and procedures to ensure that business procedures are followed for all salaries, ensuring that salaries are paid according to approved salary schedules and adequate documentation will be maintained to support the salary payments. \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2015 \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-7301-12-05 \r\nThe Board will implement procedures to ensure capital asset records conform to the approved capital assets policy. \r\nFINANCIAL REPORTING Inadequate Controls over Financial Reporting Finding Control Number: FS-7301-12-06 \r\nManagement will monitor and ensure the financial statements are properly prepared in accordance with generally accepted accounting principles. \r\nCASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Finding Control Number: FS-7301-13-01 \r\nThe Board will implement controls over cash to ensure that cash is properly reconciled to general ledger and cash activity. \r\nCASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS ACCOUNTING CONTROLS (OVERALL) FINANCIAL REPORTING Inadequate Internal Controls over School Activity Accounts Finding Control Number: FS-7301-13-02 \r\nManagement will ensure that transactions are processed according to procedures and accurately monitored and reconciled to the general ledger. \r\nREVENUES/RECEIVABLES/RECEIPTS GENERAL LEDGER Inadequate Controls over Grants and Contracts Finding Control Number: FS-7301-13-03 \r\nManagement has implemented controls over grants to ensure that all grants are properly reconciled to the general budget and cash activities according to generally accepted accounting principles. \r\nFINANCIAL REPORTING Inadequate Controls over Financial Reporting Finding Control Number: FS-7301-13-04 \r\nManagement will monitor and ensure the financial statements are properly prepared in accordance with generally accepted accounting principles. \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2015 \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nEMPLOYEE COMPENSATION Inadequate Internal Controls over Employee Compensation Process Finding Control Number: FS-7301-13-05 \r\nThe Board will implement policies and procedures to ensure that business procedures are followed for all salaries, ensuring that salaries are paid according to approved salary schedules and adequate documentation will be maintained to support the salary payments. \r\nCAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-7301-13-06 \r\nThe Board will implement procedures to ensure capital asset records conform to the approved capital assets policy. \r\nCASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Finding Control Number: FS 2014-001 \r\nThe Board will implement controls over cash to ensure that cash is properly reconciled to general ledger and cash activity. \r\nCASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS ACCOUNTING CONTROLS (OVERALL) Inadequate Internal Controls over School Activity Accounts Finding Control Number: FS 2014-002 \r\nManagement will ensure that transactions are processed according to procedures and accurately monitored and reconciled to the general ledger. \r\nFINANCIAL REPORTING Inadequate Controls over Financial Reporting Finding Control Number: FS 2014-003 \r\nManagement will monitor and ensure the financial statements are properly prepared in accordance with generally accepted accounting principles. \r\nEMPLOYEE COMPENSATION Inadequate Internal Controls over Employee Compensation Finding Control Number: FS 2014-004 \r\nThe Board will implement policies and procedures to ensure that business procedures are followed for all salaries, ensuring that salaries are paid according to approved salary schedules and adequate documentation will be maintained to support the salary payments. \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2015 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS 2014-005 \r\n \r\nThe Board will implement procedures to ensure capital asset records conform to the approved capital assets policy. \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFA 2014-001 FA 2014-002 FA 2014-003 \r\n \r\nUnresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nSPECIAL TESTS AND PROVISIONS Failure to Maintain Title 1 Schoolwide Plan U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA 2014-001 \r\n \r\nThe Talbot County School District historically maintained annual improvement documents in the principal office and the district office. During the year in question, the entire district was undergoing renovation and some computers and hard copy documents were displaced. \r\n \r\nCurrently, we have committed to the following guidelines to secure and maintain school-wide plan documents: \r\nApproved school improvement plans will be forwarded (electronic and hard copy) to the Superintendent, Assistant Superintendent, Principal, Title I Director and Instructional Specialist annually. This procedure will ensure that the system has access to the school improvement plan for current and past years. \r\n \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2015 \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS REPORTING Failure to Refund Unexpended Grants U.S. Department of Education Early Reading First (CFDA 84.359) U.S. Department of Health and Human Services Child Care and Development Block Grant (CFDA 93.575) U.S. Department of Justice Through Children and Youth Coordinating Council Juvenile Justice and Delinquency Prevention (CFDA 16.540) U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Improving Teacher Quality State Grants (CFDA 84.367) Finding Control Number: FA 2014-002 Management is working to determine what happened with these grants. We are trying to determine what caused these errors and correct them appropriately. CASH MANAGEMENT Inadequate Control Over the Cash Management Process U.S. Department of Education Through Georgia Department of Education Title I Grants to Local Educational Agencies (CFDA 84.010) Finding Control Number: FA 2014-003 Management is working on procedures to control cash management. \r\n- 5 - \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION IV FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2015 \r\n \r\nI SUMMARY OF AUDITOR'S RESULTS \r\n \r\nFinancial Statements \r\n \r\nType of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund Aggregate Remaining Fund Information \r\n \r\nUnmodified Qualified \r\n \r\nInternal control over financial reporting: \r\n \r\n Material weaknesses identified? \r\n \r\nYes \r\n \r\n Significant deficiency identified? \r\n \r\nYes \r\n \r\nNoncompliance material to financial statements noted: \r\n \r\nNo \r\n \r\nFederal Awards \r\n \r\nInternal Control over major programs: \r\n \r\n Material weaknesses identified? \r\n \r\nYes \r\n \r\n Significant deficiencies identified? \r\n \r\nNo \r\n \r\nType of auditor's report issued on compliance for major programs: \r\n \r\nUnmodified for all major programs except for Title I Grants to Local Educational Agencies, which was qualified. \r\n \r\nAny audit findings disclosed that are required to be reported in \r\n \r\naccordance with OMB Circular A-133, Section 510(a)? \r\n \r\nYes \r\n \r\nIdentification of major programs: \r\n \r\nCFDA Numbers \r\n \r\nName of Federal Program or Cluster \r\n \r\n10.553, 10.555 84.010 \r\n \r\nChild Nutrition Cluster Title I Grants to Local Education Agencies \r\n \r\nDollar threshold used to distinguish between Type A and Type B programs: \r\n \r\n$300,000.00 \r\n \r\nAuditee qualified as low-risk auditee? \r\n \r\nNo \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2015 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2015-001 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Control Procedures Cash and Cash Equivalents Material Weakness None FS 2014-001, FS-7301-13-01, and FS-7301-12-02 \r\n \r\nDescription: The accounting procedures of the School District were insufficient to provide adequate internal controls over the Cash and Cash Equivalents function. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls over Cash and Cash Equivalents. \r\n \r\nCondition: Deficiencies relating to Cash and Cash Equivalents were noted as follows: \r\n Bank reconciliations were not performed by someone independent of the general ledger function. \r\n Cash activity was not maintained in the proper fund in the general ledger. A review of bank account activity by fund noted Private Purpose Trust Fund cash was recorded in the General Fund and Special Purpose Local Option Sales Tax cash was recorded in the General Fund. \r\n An immaterial, likely misstatement was noted between cash per financial statements and general ledger detail. \r\n Three bank accounts were not reconciled to the general ledger properly at June 30, 2015.  Ten bank reconciliations were not documented as far as who prepared the reconciliation.  Seven bank reconciliations were not documented as far as who approved the reconciliation.  Thirty-five bank reconciliations had no documentation as far as when the bank reconciliation \r\nwas performed. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the cause was a direct result of the lack of time and resources to fully separate duties to ensure that internal controls were effective. \r\n \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over cash activity increases the risk significant misstatements could occur in the financial statements due to error or fraud. \r\n \r\nRecommendation: Management should take appropriate steps to ensure the time and resources are made available to implement controls over cash to ensure monthly bank reconciliations are performed accurately by someone independent of the general ledger and cash activity is maintained in the proper funds. \r\n \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. The Board has implemented control over cash to ensure that cash is properly reconciled to general ledger and cash activates. Bank reconciliation are monitored by someone independent of the general ledger and cash activity is in the proper fund. \r\n \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2015 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nContact Person: Dr. James Catrett, Superintendent Telephone: 706-665-8528 Fax: 706-665-3620 E-mail: jcatrett@talbot.k12.ga.us \r\n \r\nFS 2015-002 Control Category: \r\nInternal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nInternal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Accounting Controls (Overall) General Ledger Material Weakness None FS 2014-002, FS-7301-13-02, FS-7301-12-03 \r\n \r\nDescription: The accounting procedures of the School District were insufficient to provide adequate internal controls over school activity accounts. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and provide reasonable assurance transactions are processed according to established procedures. \r\n \r\nCondition: Cash and Cash Equivalents \r\n One School Activity bank account was not reconciled to the general ledger resulting in an unidentified variance of $9,960.47. \r\n \r\nRevenues/Receivables/Receipts  The deposit preparation function was not separated from the bank reconciliations and general ledger functions.  The depositing of funds in the bank was not a standard process for all school activity accounts.  No receipt documentation was provided for any of the twenty-six receipts selected for review. \r\n \r\nExpenditures/Liabilities/Disbursements A review of nineteen vouchers revealed the following deficiencies: \r\n None of the vouchers had evidence of review or approval;  Six expenditures were not supported by an invoice or any other applicable documentation;  One expenditure was recorded in the wrong period. \r\n \r\nAccounting Controls (Overall)  An administrative review of the bank reconciliation process, cash receipt process, and cash disbursement process to determine if established procedures were being followed was not performed.  The School District did not have a formal process for documenting agency fund sponsors, purpose of accounts, allowable activities of accounts, source of funds, and final disposition of funds related to individual agency fund accounts. \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2015 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nGeneral Ledger  The amounts recorded to the central office's books at year-end did not agree to the school ledger balances.  Agency Funds reported deficit balances in several funds totaling $3,051.02. \r\nCause: In discussing these deficiencies with the School District, they stated that the internal control deficiencies related to school activity accounts occurred due to a shortage of personnel at the school and a failure of those personnel to follow the established policies and procedures. \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over school activity accounts increases the risk that misstatements could occur in the financial statements due to error or fraud. \r\nRecommendation: Management should take appropriate steps to ensure the time and resources are made available to ensure proper separation of duties is established, proper approval process for disbursements is followed, safe keeping of receipt documentation is implemented, accounting processes are adequately monitored, school activity accounts are properly classified, financial statement amounts are reconciled to the schools' general ledger balances and bank statement balance, standard procedures are implemented over the depositing of funds, amounts reported in consolidation spreadsheet for school activity accounts is accurate, and agency fund accounts are properly documented. \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. Management has implemented control to ensure that transactions for the school activity accounts are processed according to procedures and accurately monitored. Administrative personnel changes have been made to ensure that accounting procedures are adhered to. \r\nContact Person: Dr. James Catrett, Superintendent Telephone: 706-665-8528 Fax: 706-665-3620 E-mail: jcatrett@talbot.k12.ga.us \r\n \r\nFS 2015-003 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nControls over Financial Reporting Financial Reporting Material Weakness None FS 2014-003, FS-7301-13-04 and FS-7301-12-06 \r\n \r\nDescription: The School District did not prepare their financial statements in accordance with generally accepted accounting principles. \r\n \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2015 \r\n \r\nII \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCriteria: Management is responsible for having adequate controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). The School District's internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills and experience to prepare GAAP based financial statements and include all disclosures as required by the Governmental Accounting Standards Board (GASB). \r\nGASB Statement No. 34, Basic Financial Statement  Management's Discussion and Analysis  for State and Local Governments (Statement), requires governments to present government-wide and fund financial statements as well as a summary reconciliation of the (a) total governmental funds balances to the net position of governmental activities in the Statement of Net Position, and (b) total change in governmental fund balances to the change in the net position of governmental activities in the Statement of Activities. In addition, the statement requires information about the government's major and non-major funds in the aggregate, to be provided in the fund financial statements. \r\nChapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles. \r\n \r\nCondition: The Department of Audits and Accounts provided basic accounting assistance limited to services such as preparing draft financial statements that were based on the entity's chart of accounts and general ledgers including adjusting, correcting, and closing entries that have been approved by the entity's staff; prepared draft notes to the financial statements based on information determined and approved by management; and prepared trial balances based on the entity's chart of accounts. \r\n \r\nCause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of time and resources to train Board personnel to accomplish the preparation of financial statements and/or the lack of funding to secure outside services to prepare the financial statements. \r\n \r\nEffect or Potential Effect: The School District did not comply with the requirements of the Department of Education regarding financial reporting. Several adjustments were necessary in order for the School District's financial statements to be in conformity with generally accepted accounting principles. \r\n \r\nRecommendation: Management should take appropriate steps to ensure the time and resources are made available to establish and implement controls over the financial statement reporting process as required by the Financial Management for Georgia Local Units of Administration. \r\n \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. Management has implemented control over the preparation of financial statements in accordance with generally accepted accounting principles. The Board has hired a CPA to do the financial statements. \r\n \r\nContact Person: Dr. James Catrett, Superintendent Telephone: 706-665-8528 Fax: 706-665-3620 E-mail: jcatrett@talbot.k12.ga.us \r\n \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2015 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2015-004 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nControls over Employee Compensation Employee Compensation Significant Deficiency None FS 2014-004, FS-7301-13-05, FS-7301-12-04 \r\n \r\nDescription: The accounting procedures of the School District were insufficient to provide adequate internal controls over employee compensation. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance employees are paid according to approved salary schedules and documentation is maintained to support the salary payments. \r\n \r\nCondition: Based on a review of employees' payroll records the following deficiencies were noted: \r\n \r\n A review of employee compensation revealed several instances where salaries and/or hourly payments were not properly supported by signed contracts and/or Board approved salary schedules. \r\n A review of employee compensation revealed that four employees were underpaid a total of $5,019.75 in comparison to their proper pay rates per Board approved salary scales and/or approved contracts. \r\n A review of employee hourly pay revealed that one timesheet in relation to payments of $946.05 could not be provided by the School District. Additionally, many timesheets provided were not approved by the employee and/or an appropriate supervisor. \r\n \r\nCause: In discussing these deficiencies with the School District, they indicated that appropriate procedures to ensure salary amounts are supported by adequate documentation had not been implemented. \r\n \r\nEffect or Potential Effect: The failure to maintain adequate internal controls over Employee Compensation increases the risk misstatements could occur in the financial statements due to error or fraud. \r\n \r\nRecommendation: The School District should implement policies and procedures to ensure normal business procedures are followed for all salaries, which includes ensuring salaries are paid according to approved salary schedules and adequate documentation is maintained to support the salary payments. \r\n \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. Management has procedures and controls to ensure business procedures for all salaries are followed according to approved salary schedules and with maintained documentation to support salary. \r\n \r\nContact Person: Dr. James Catrett, Superintendent Telephone: 706-665-8528 Fax: 706-665-3620 E-mail: jcatrett@talbot.k12.ga.us \r\n- 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2015 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2015-005 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nMaintenance of Capital Assets Capital Assets Material Weakness None FS 2014-005, FS-7301-13-06, and FS-7301-12-05 \r\n \r\nDescription: The School District did not maintain an adequate capital assets listing. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that capital assets inventory reports are properly maintained. Chapter 37 Implementing a Capital Assets Management System of the Financial Management for Georgia Local Units of Administration provides that School Districts must establish capital asset policies, define system requirements, implement a capital asset system and maintain capital asset inventory reports. \r\n \r\nCondition: A review of the School District's capital asset records revealed the following exceptions: \r\n The capital asset listing does not have adequate descriptions and/or inventory numbers assigned to assets. \r\n During our physical inspection of inventory items, we noted that assets are not tagged and the equipment inventory does not include all information technology related Capital Assets. \r\n An analysis of construction projects was not maintained which resulted in material unrecorded Construction-in-Progress in the amount of $2,531,925.59. \r\n The capital asset listing contained items that were identified as obsolete during the annual physical inventory performed by the School District. \r\n The School District does not maintain an updated capital asset listing for current year additions/deletions including the calculation of depreciation expense. Current year asset additions and depreciation expense were determined by the auditors. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the cause was a direct result of the lack of time and resources to fully monitor and implement procedures over Capital Assets which follow Board policy. Additionally, they stated the cause was a direct result of new construction in which staff has not been trained on how to complete a construction analysis and ensure proper accounting of construction activity for the year. \r\n \r\nEffect or Potential Effect: The failure of the School District to maintain a complete and accurate capital assets listing can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles. \r\n \r\nRecommendation: The School District's management should review the capital assets records and make appropriate adjustments to ensure that the capital assets records conform to the School District's approved capital asset policy. \r\n \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2015 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nViews of Responsible Officials and Corrective Action Plans: We concur with the finding. Management has established internal controls to ensure that capital assets inventory reports are properly maintained. \r\nContact Person: Dr. James Catrett, Superintendent Telephone: 706-665-8528 Fax: 706-665-3620 E-mail: jcatrett@talbot.k12.ga.us \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2015-001 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Repeat of Prior Year Finding: \r\n \r\nRefund of Unexpended Grants Reporting Material Weakness Material Noncompliance U.S. Department of Education None Early Reading First (CFDA 84.359) U.S. Department of Health and Human Services Children and Youth Coordinating Council Child Care and Development Block Grant (CFDA 93.575) U.S. Department of Justice Children and Youth Coordinating Council Juvenile Justice and Delinquency Prevention (CFDA 16.540) U.S. Department of Education Georgia Department of Education Title 1 Grants to Local Education Agencies (CFDA 84.010) FA 2014-002 \r\n \r\nDescription: The School District failed to refund unearned grant balances to the U. S. Department of Education, the U. S. Department of Health and Human Services, the U. S. Department of Justice and the Georgia Department of Education. \r\n \r\nCriteria: In accordance with provisions of OMB Circular A-133, Part 3 Compliance Supplement, Subpart L Reporting, states in part, \"Each recipient must report program outlays and program income...as prescribed by the Federal awarding agency. The reporting requirements for subrecipients are as specified by the pass-through entity\". \r\n \r\nChapter 41, State and Federal Fiscal Rules and Procedures of the Financial Management for Georgia Local Units of Administration states, \"This chapter sets forth the principal requirements that a School District must meet to account for and externally report its budget and financial operations relating to state and Federally funded programs administered by the Georgia Department of Education\". Unearned funds must be returned to the Georgia Department of Education\". \r\n \r\n- 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2015 \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nCondition: A review of the School District's accounting records revealed the following: \r\n The School District did not return unearned Title 1 Grants to Local Education Agencies funds of $163,615.63 on hand as of June 30, 2015. \r\n The School District did not return unearned Early Reading First funds of $28,420.81 on hand as of June 30, 2015. \r\n The School District did not return unearned Child Care and Development Block Grant funds of $38,229.72 on hand as of June 30, 2015. \r\n The School District did not return unearned Juvenile Justice and Delinquency Prevention funds $5,673.67 on hand as of June 30, 2015. \r\nQuestioned Cost: $235,939.83 \r\nCause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of time and resources to investigate these balances which have been carried for several years. \r\nEffect or Potential Effect: The lack of monitoring of expenditures and funds drawn down resulted in noncompliance with the Federal grant requirements, and could impact the School District's ability to obtain future grants. \r\nRecommendation: The School District should implement procedures to ensure that unearned funds on hand at the end of the grant period are returned to the grantor timely. The U. S. Department of Education, the U. S. Department of Health and Human Services, the U. S. Department of Justice, and the Georgia Department of Education should review this matter to determine if a reclaim of funds is appropriate. \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. This is a long ongoing finding that we wish to work with the Georgia Department of Education's federal program division for conclusion for these long standing findings. \r\nContact Person: Dr. James Catrett, Superintendent Telephone: 706-665-8528 Fax: 706-665-3620 E-mail: jcatrett@talbot.k12.ga.us \r\n- 9 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2015 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFA 2015-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Repeat of Prior Year Finding: \r\n \r\nControls Over the Cash Management Process Cash Management Material Weakness Material Noncompliance U.S. Department of Education Georgia Department of Education Title 1 Grants to Local Education Agencies (CFDA 84.010) FA 2014-003 \r\n \r\nDescription: The School District made cash drawdowns in excess of immediate cash needs for the Title I program. \r\n \r\nCriteria: In accordance with 34 CFR 80.21, when School Districts are funded on a reimbursement basis, program costs must be paid for by School District funds before reimbursement is requested. \r\n \r\nCondition: The School District maintained excessive cash balances for all twelve months for the Title I program. The average monthly cash balance was in excess of 4% of the total Title I cash receipts for the 2015 fiscal year. \r\n \r\nCause: The School District had an excessive beginning cash balance that was not considered when requests for reimbursement were made. \r\n \r\nEffect or Potential Effect: Failure to monitor the cash needs of the program resulted in noncompliance with requirements of the Federal grant. \r\n \r\nRecommendation: The School District should implement procedures to monitor the monthly cash balance for the program prior to requesting reimbursement from the Georgia Department of Education. \r\n \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. Management has implemented procedures to monitor the cash monthly balances for all programs when requesting reimbursement for federal and state programs. \r\n \r\nContact Person: Dr. James Catrett, Superintendent Telephone: 706-665-8528 Fax: 706-665-3620 E-mail: jcatrett@talbot.k12.ga.us \r\n \r\n- 10 - \r\n \r\n "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2012-h2013-belec-p-btext","title":"Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended June 30, 2013 (including independent auditor's reports)","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, Talbot County, 32.69949, -84.53301"],"dcterms_creator":["Georgia. Department of Audits"],"dc_date":["2013-06-30"],"dcterms_description":["Began with fiscal year ended June 30, 2009; ceased with: Fiscal year ended June 30, 2020.","Report year covers fiscal year.","Fiscal year ended June 30, 2014 (Received via FTP 3/27/17 from Georgia Dept. of Audits and Accounts) (online surrogate); title from PDF cover (Georgia Government Publications database, viewed July 11, 2023).","Fiscal year ended June 30, 2020, released in 2021? (online surrogate); (Georgia Government Publications database, viewed July 11, 2023)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Dept. of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Talbot County Board of Education (Ga.)--Appropriations and expenditures--Periodicals.","Education--Georgia--Talbot County--Auditing--Periodicals.","Education--Georgia--Talbot County--Finance--Statistics--Periodicals.","Georgia Government Documents--Serial"],"dcterms_title":["Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended June 30, 2013 (including independent auditor's reports)"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2012-h2013-belec-p-btext"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2012-h2013-belec-p-btext"],"dcterms_temporal":null,"dcterms_rights_holder":["\u0026copy; Georgia Department of Audits"],"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"TALBOT COUNTY BOARD OF EDUCATION \r\nTALBOTTON, GEORGIA \r\nANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2013 \r\n(Including Independent Auditor's Reports) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nEXHIBITS \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nDISTRICT-WIDE FINANCIAL STATEMENTS \r\n \r\nA \r\n \r\nSTATEMENT OF NET POSITION \r\n \r\nB \r\n \r\nSTATEMENT OF ACTIVITIES \r\n \r\nFUND FINANCIAL STATEMENTS \r\n \r\nC \r\n \r\nBALANCE SHEET \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nD \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\n \r\nTO THE STATEMENT OF NET POSITION \r\n \r\nE \r\n \r\nSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES \r\n \r\nIN FUND BALANCES \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nF \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT \r\n \r\nOF REVENUES, EXPENDITURES AND CHANGES IN FUND \r\n \r\nBALANCES TO THE STATEMENT OF ACTIVITIES \r\n \r\nG \r\n \r\nSTATEMENT OF FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\nH \r\n \r\nSTATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\nI \r\n \r\nNOTES TO THE BASIC FINANCIAL STATEMENTS \r\n \r\nSCHEDULES \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND \r\n \r\nSUPPLEMENTARY INFORMATION \r\n \r\n2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES \r\nGENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM \r\n \r\nPage \r\n1 2 3 4 5 6 7 8 9 \r\n25 26 28 29 31 \r\n \r\n  TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\nSECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 \r\nSECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\nSECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\n \r\n  SECTION I FINANCIAL \r\n \r\n  Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJuly 25, 2014 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S REPORT \r\nLadies and Gentlemen: \r\nReport on the Financial Statements \r\nWe have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through I) of the Talbot County Board of Education, as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the Board's basic financial statements as listed in the table of contents. \r\nManagement's Responsibility for the Financial Statements \r\nManagement is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. \r\nAuditor's Responsibility \r\nOur responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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. \r\nAn audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express \r\n2013ARL-11 \r\n \r\n  no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. \r\nWe believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. \r\nOpinions \r\nIn our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Talbot County Board of Education, as of June 30, 2013, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. \r\nEmphasis of Matter \r\nAs described in Note 2 to the financial statements, in 2013, the Talbot County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. Our opinion is not modified with respect to this matter. \r\nOther Matters \r\nRequired Supplementary Information \r\nManagement has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. Accounting principles generally accepted in the United States of America require that the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual, as presented on page 25, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. \r\nOther Information \r\nOur audit was conducted as required by section 50-6-6(a) of the Official Code of Georgia Annotated. We provided basic accounting assistance limited to services such as preparing draft financial statements that were based on the School District's chart of accounts and general ledgers including any adjusting, correcting, and closing entries that have been approved by the School District's management; prepared draft notes to the financial statements based on information determined and approved by the School District's management; and prepared trial balances based on the School District's chart of accounts. \r\n2013ARL-11 \r\n \r\n  Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Talbot County Board of Education's basic financial statements. The accompanying supplementary information, consisting of Schedules 2 through 5, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. \r\nThe accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole. \r\nOther Reporting Required by Governm ent Auditing Standards \r\nIn accordance with Government Auditing Standards, we have also issued our report dated July 25, 2014, on our consideration of the Talbot County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Talbot County Board of Education's internal control over financial reporting and compliance. \r\nA copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. \r\nRespectfully submitted, \r\n \r\nGSG:as 2013ARL-11 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n  TALBOT COUNTY BOARD OF EDUCATION \r\n \r\n  TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2013 \r\nASSETS \r\nCash and Cash Equivalents Investments Accounts Receivable, Net \r\nTaxes State Government Federal Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation) \r\nTotal Assets \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Interest Payable Contracts Payable Retainages Payable Deferred Revenues Long-Term Liabilities \r\nDue Within One Year Due in More Than One Year \r\nTotal Liabilities \r\nNET POSITION \r\nInvestment in Capital Assets Restricted for \r\nBus Replacement Continuation of Federal Programs Debt Service Capital Projects Unrestricted \r\nTotal Net Position \r\n \r\nEXHIBIT \"A\" \r\n \r\nGOVERNMENTAL ACTIVITIES \r\n \r\n$ 6,485,162.95 163,831.03 \r\n289,700.04 223,806.89 \r\n89,707.30 3,793.24 \r\n12,489.97 1,576,728.60 2,299,577.56 \r\n$ 11,144,797.58 \r\n \r\n$ \r\n \r\n47,545.50 \r\n \r\n580,359.86 \r\n \r\n68,979.76 \r\n \r\n34,675.00 \r\n \r\n732,665.45 \r\n \r\n75,483.20 \r\n \r\n200,785.35 \r\n \r\n325,000.00 1,865,000.00 \r\n \r\n$ 3,930,494.12 \r\n \r\n$ 3,876,306.16 \r\n39,451.00 85,069.74 331,935.00 4,518,517.97 -1,636,976.41 \r\n \r\n$ 7,214,303.46 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES \r\nFOR THE YEAR ENDED JUNE 30, 2013 \r\n \r\nEXHIBIT \"B\" \r\n \r\nGOVERNMENTAL ACTIVITIES \r\nInstruction Support Services \r\nPupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Operations of Non-Instructional Services Food Services Interest on Short-Term and Long-Term Debt \r\nTotal Governmental Activities \r\nGeneral Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous \r\nTotal General Revenues \r\nChange in Net Position \r\nNet Position - Beginning of Year \r\n \r\nEXPENSES \r\n \r\nPROGRAM REVENUES \r\n \r\nOPERATING \r\n \r\nCHARGES FOR \r\n \r\nGRANTS AND \r\n \r\nSERVICES \r\n \r\nCONTRIBUTIONS \r\n \r\nNET (EXPENSES) REVENUES \r\nAND CHANGES IN NET POSITION \r\n \r\n$ 3,583,491.13 $ \r\n286,479.13 265,196.02 136,467.87 329,962.46 387,633.34 \r\n75,372.33 431,708.40 518,439.29 \r\n26,607.50 \r\n470,270.95 84,201.67 \r\n$ 6,595,830.09 $ \r\n \r\n47,829.64 $ 1,778,907.10 $ \r\n \r\n66,385.06 185,992.77 \r\n79,929.98 394,086.56 226,641.26 \r\n5,107.26 162,762.12 253,463.02 \r\n4,459.57 \r\n \r\n29,529.68 \r\n \r\n391,401.47 \r\n \r\n77,359.32 $ 3,549,136.17 $ \r\n \r\n-1,756,754.39 \r\n-220,094.07 -79,203.25 -56,537.89 64,124.10 \r\n-160,992.08 -70,265.07 \r\n-268,946.28 -264,976.27 \r\n-22,147.93 \r\n-49,339.80 -84,201.67 \r\n-2,969,334.60 \r\n \r\n$ 3,105,945.43 23,924.74 \r\n \r\n471,254.94 11,230.53 6,868.84 \r\n153,716.95 \r\n \r\n$ 3,772,941.43 \r\n \r\n$ \r\n \r\n803,606.83 \r\n \r\n6,410,696.63 \r\n \r\nNet Position - End of Year \r\n \r\n$ 7,214,303.46 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION BALANCE SHEET \r\nGOVERNMENTAL FUNDS JUNE 30, 2013 \r\n \r\nEXHIBIT \"C\" \r\n \r\nASSETS \r\nCash and Cash Equivalents Investments Accounts Receivable, Net \r\nTaxes State Government Federal Government Other Inventories \r\nTotal Assets \r\n \r\nGENERAL FUND \r\n \r\nDISTRICTWIDE \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 778,783.98 $ 5,360,820.49 $ 345,558.48 $ 6,485,162.95 \r\n \r\n79,046.49 \r\n \r\n84,784.54 \r\n \r\n163,831.03 \r\n \r\n249,780.77 223,806.89 \r\n89,707.30 3,793.24 \r\n12,489.97 \r\n \r\n39,919.27 \r\n \r\n289,700.04 223,806.89 \r\n89,707.30 3,793.24 \r\n12,489.97 \r\n \r\n$ 1,437,408.64 $ 5,485,524.30 $ 345,558.48 $ 7,268,491.42 \r\n \r\nLIABILITIES AND FUND BALANCES \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Contracts Payable Retainages Payable Deposits and Deferred Revenue \r\nTotal Liabilities \r\nFUND BALANCES \r\nNonspendable Restricted Assigned Unassigned \r\nTotal Fund Balances \r\nTotal Liabilities and Fund Balances \r\n \r\n$ 47,545.50 \r\n \r\n$ \r\n \r\n580,359.86 \r\n \r\n68,979.76 \r\n \r\n$ 732,665.45 \r\n \r\n75,483.20 \r\n \r\n401,199.99 \r\n \r\n$ 1,098,085.11 $ 808,148.65 $ \r\n \r\n0.00 $ \r\n \r\n47,545.50 580,359.86 \r\n68,979.76 732,665.45 \r\n75,483.20 401,199.99 \r\n \r\n0.00 $ 1,906,233.76 \r\n \r\n$ 12,489.97 \r\n \r\n$ 12,489.97 \r\n \r\n112,030.77 $ 4,539,569.49 $ 345,558.48 4,997,158.74 \r\n \r\n21,361.26 \r\n \r\n137,806.16 \r\n \r\n159,167.42 \r\n \r\n193,441.53 \r\n \r\n193,441.53 \r\n \r\n$ 339,323.53 $ 4,677,375.65 $ 345,558.48 $ 5,362,257.66 \r\n \r\n$ 1,437,408.64 $ 5,485,524.30 $ 345,558.48 $ 7,268,491.42 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\nTO THE STATEMENT OF NET POSITION JUNE 30, 2013 \r\n \r\nEXHIBIT \"D\" \r\n \r\nTotal Fund Balances - Governmental Funds (Exhibit \"C\") \r\nAmounts reported for Governmental Activities in the Statement of Net Position are different because: \r\nCapital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of: \r\nLand Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation \r\nTotal Capital Assets \r\nTaxes that are not available to pay for current period expenditures are deferred in the funds. \r\nProperty Taxes \r\nLong-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of: \r\nBonds Payable Accrued Interest \r\nTotal Long-Term Liabilities \r\nNet Position of Governmental Activities (Exhibit \"A\") \r\n \r\n$ 5,362,257.66 \r\n \r\n$ 354,857.93 1,221,870.67 558,998.55 3,507,218.42 1,732,400.23 -3,499,039.64 \r\n \r\n3,876,306.16 \r\n \r\n200,414.64 \r\n \r\n$ -2,190,000.00 -34,675.00 \r\n \r\n-2,224,675.00 \r\n \r\n$ 7,214,303.46 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES \r\nGOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2013 \r\n \r\nEXHIBIT \"E\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent 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 Other Support Services Food Services Operation \r\nCapital Outlay Debt Services \r\nPrincipal Interest \r\nTotal Expenditures \r\nExcess of Revenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nTransfers In Transfers Out \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\nFund Balances - Ending \r\n \r\nGENERAL FUND \r\n \r\nDISTRICTWIDE \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 3,034,882.70 11,230.53 $ \r\n2,340,684.18 1,208,451.99 \r\n77,359.32 1,042.37 \r\n153,716.95 \r\n \r\n471,254.94 5,534.39 $ \r\n \r\n$ 6,827,368.04 $ 476,789.33 $ \r\n \r\n292.08 \r\n \r\n$ 3,034,882.70 482,485.47 \r\n2,340,684.18 1,208,451.99 \r\n77,359.32 6,868.84 \r\n153,716.95 \r\n \r\n292.08 $ 7,304,449.45 \r\n \r\n$ 3,486,410.77 \r\n \r\n$ 3,486,410.77 \r\n \r\n286,479.13 \r\n \r\n265,196.02 \r\n \r\n136,467.87 \r\n \r\n328,271.46 $ \r\n \r\n123.10 \r\n \r\n387,633.34 \r\n \r\n75,372.33 \r\n \r\n420,380.42 \r\n \r\n9,876.92 \r\n \r\n411,454.88 \r\n \r\n26,607.50 \r\n \r\n456,827.46 \r\n \r\n1,221,870.67 \r\n \r\n286,479.13 265,196.02 136,467.87 328,394.56 387,633.34 \r\n75,372.33 430,257.34 411,454.88 \r\n26,607.50 456,827.46 1,221,870.67 \r\n \r\n$ 310,000.00 89,110.00 \r\n \r\n310,000.00 89,110.00 \r\n \r\n$ 6,281,101.18 $ 1,231,870.69 $ 399,110.00 $ 7,912,081.87 \r\n \r\n$ 546,266.86 $ -755,081.36 $ -398,817.92 $ -607,632.42 \r\n \r\n$ \r\n \r\n0.00 \r\n \r\n$ 399,110.00 $ 399,110.00 \r\n \r\n$ -399,110.00 \r\n \r\n-399,110.00 \r\n \r\n$ \r\n \r\n0.00 $ -399,110.00 $ 399,110.00 $ \r\n \r\n0.00 \r\n \r\n$ 546,266.86 $ -1,154,191.36 $ \r\n \r\n292.08 $ -607,632.42 \r\n \r\n-206,943.33 \r\n \r\n5,831,567.01 \r\n \r\n345,266.40 5,969,890.08 \r\n \r\n$ 339,323.53 $ 4,677,375.65 $ 345,558.48 $ 5,362,257.66 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF \r\nREVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2013 \r\n \r\nEXHIBIT \"F\" \r\n \r\nTotal Net Change in Fund Balances - Governmental Funds (Exhibit \"E\") \r\nAmounts reported for Governmental Activities in the Statement of Activities are different because: \r\nCapital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are: \r\nCapital Outlay Depreciation Expense \r\nExcess of Capital Outlay over Depreciation Expense \r\nTaxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. \r\nRepayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Position. In the current year, these amounts consist of: \r\nBond Principal Retirements \r\nSome items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of: \r\nNet Decrease in Accrued Interest \r\n \r\n$ \r\n \r\n-607,632.42 \r\n \r\n$ 1,221,870.67 -220,527.22 \r\n \r\n1,001,343.45 \r\n \r\n94,987.47 \r\n \r\n310,000.00 \r\n \r\n4,908.33 \r\n \r\nChange in Net Position of Governmental Activities (Exhibit \"B\") \r\n \r\n$ \r\n \r\n803,606.83 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS JUNE 30, 2013 \r\n \r\nEXHIBIT \"G\" \r\n \r\nASSETS Cash and Cash Equivalents \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\nAGENCY FUNDS \r\n \r\n$ \r\n \r\n2,780.12 $ \r\n \r\n0.00 \r\n \r\nLIABILITIES Cash Overdraft Accounts Payable Funds Held for Others \r\nTotal Liabilities \r\n \r\n$ \r\n \r\n523.80 \r\n \r\n3,793.24 \r\n \r\n-4,317.04 \r\n \r\n$ \r\n \r\n0.00 \r\n \r\nNET POSITION Held in Trust for Private Purposes \r\n \r\n$ \r\n \r\n2,780.12 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\nFIDUCIARY FUNDS YEAR ENDED JUNE 30, 2013 \r\nADDITIONS Investment Earnings Interest \r\nDEDUCTIONS None Reported Change in Net Position \r\nNet Position - Beginning \r\nNet Position - Ending \r\n \r\nEXHIBIT \"H\" \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\n$ \r\n \r\n17.11 \r\n \r\n0.00 \r\n \r\n$ \r\n \r\n17.11 \r\n \r\n2,763.01 \r\n \r\n$ \r\n \r\n2,780.12 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2013 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY \r\nREPORTING ENTITY \r\nThe Talbot County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is 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. \r\nNOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nBASIS OF PRESENTATION \r\nThe School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Talbot County Board of Education. \r\nDistrict-wide Statements: \r\nThe Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. \r\nThe Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. \r\n Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. \r\n Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. \r\nFund Financial Statements: \r\nThe fund financial statements provide information about the School District's funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds. The School District reports the following major governmental funds: \r\n General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund. \r\n District-wide Capital Projects Fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) and Bond Proceeds that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. \r\n Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (property) legally restricted for the payment of general long-term principal and interest. \r\n \r\n- 9 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2013 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe School District reports the following fiduciary fund types: \r\n Private Purpose Trust fund reports trust arrangements under which principal and income benefit are used to provide scholarships to business administration and business education students with junior standing at an accredited college or university. \r\n Agency funds account for assets held by the School District as an agent for various funds, governments, and individuals. \r\nBASIS OF ACCOUNTING \r\nThe basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied. \r\nThe School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. \r\nGovernmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end, except for reimbursable grants. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt and claims and judgments, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities are reported as other financing sources. \r\nThe School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, both restricted and unrestricted resources are available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. \r\nNEW ACCOUNTING PRONOUNCEMENTS \r\nIn fiscal year 2013, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements. The provisions of this Statement establish accounting and financial reporting standards for governments who enter into Service Concession Arrangements (SCA) with other governmental or nongovernmental entities. As of June 30, 2013, the School District has not entered into any arrangements that meet the qualifications to be reported as a SCA in accordance with this standard. \r\nIn fiscal year 2013, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The provisions of this Statement incorporate certain accounting and financial reporting guidance into authoritative GASB literature. \r\n \r\n- 10 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2013 \r\n \r\nEXHIBIT \"I\" \r\n \r\nIn fiscal year 2013, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position. The provisions of this Statement establish financial reporting standards for the presentation of deferred outflows of resources and deferred inflows of resources and their effects on a government's net position. The School District changed its presentation of net assets to net position for fiscal year 2013. There were no other applicable reporting changes for the School District. \r\nCASH AND CASH EQUIVALENTS \r\nComposition of Deposits \r\nCash and cash equivalents consist of cash 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. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. \r\nINVESTMENTS \r\nComposition of Investments \r\nInvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning 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 and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: \r\n1. Obligations issued by the State of Georgia or by other states, \r\n2. Obligations issued by the United States government, \r\n3. Obligations fully insured or guaranteed by the United States government or a United States government agency, \r\n4. Obligations of any corporation of the United States government, \r\n5. Prime banker's acceptances, \r\n6. The Georgia Fund 1 administered by the State of Georgia, Office of the State Treasurer, \r\n7. Repurchase agreements, and \r\n8. Obligations of other political subdivisions of the State of Georgia. \r\nThe School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration credit risks, interest rate risks or foreign currency risks. \r\nRECEIVABLES \r\nReceivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. \r\n \r\n- 11 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2013 \r\n \r\nEXHIBIT \"I\" \r\n \r\nPROPERTY TAXES \r\nThe Talbot County Board of Commissioners adopted the property tax levy for the 2012 tax digest year (calendar year) on August 1, 2012 (levy date) based on property values as of January 1, 2012. Taxes were due on December 20, 2012 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2012 tax digest are reported as revenue in the governmental funds for fiscal year 2013. The Talbot County Board of Commissioners bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2013, for maintenance and operations amounted to $2,973,988.74. \r\nThe tax millage rate levied for the 2012 tax year (calendar year) for the Talbot County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value): \r\n \r\nSchool Operations \r\n \r\n14.11 mills \r\n \r\nAdditionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $36,969.22 during fiscal year ended June 30, 2013. \r\nSALES TAXES \r\nEducation Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $471,254.94 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. \r\nINVENTORIES \r\nFood Inventories \r\nOn the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. \r\nCAPITAL ASSETS \r\nCapital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District. \r\n \r\n- 12 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2013 \r\n \r\nEXHIBIT \"I\" \r\n \r\nCapitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows: \r\n \r\nCapitalization Policy \r\n \r\nEstimated Useful Life \r\n \r\nLand \r\n \r\nLand Improvements \r\n \r\n$ \r\n \r\nBuildings and Improvements $ \r\n \r\nEquipment \r\n \r\n$ \r\n \r\nIntangible Assets \r\n \r\n$ \r\n \r\nAll 10,000.00 10,000.00 \r\n5,000.00 100,000.00 \r\n \r\nN/A 20 to 70 years up to 70 years \r\n5 to 25 years 15 to 50 years \r\n \r\nDepreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized. \r\nAmortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets, generally 105 to 250 years. \r\nGENERAL OBLIGATION BONDS \r\nThe School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide and fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. To conform to generally accepted accounting principles, bond premiums and discounts, as well as bond issuance costs should be amortized over the life of the bonds on the District-wide statements. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Position. \r\nNET POSITION \r\nThe School District's net position in the District-wide Statements is classified as follows: \r\nInvestment in capital assets - This represents the School District's total investment in capital assets. \r\nRestricted net position - This represents resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal Programs, debt service, and capital projects in accordance with restrictions imposed by external third parties. \r\nUnrestricted net position - Unrestricted net position represents resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes. \r\nFUND BALANCES \r\nThe School District's fund balances are classified as follows: \r\nNonspendable - Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact. \r\n \r\n- 13 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2013 \r\n \r\nEXHIBIT \"I\" \r\n \r\nRestricted - Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. \r\nCommitted - Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. \r\nAssigned - Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes. \r\nUnassigned - The residual classification for the General Fund. This classification represents fund balances that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund. \r\nFund Balances of the Governmental Funds at June 30, 2013, are as follows: \r\n \r\nNonspendable Inventories \r\nRestricted Bus Replacement Continuation of Federal Programs Capital Projects Debt Service \r\nAssigned School Activity Accounts Banquet Account Local Capital Outlay Projects \r\nUnassigned \r\n \r\n$ \r\n \r\n12,489.97 \r\n \r\n$ \r\n \r\n39,451.00 \r\n \r\n72,579.77 \r\n \r\n4,518,517.97 \r\n \r\n366,610.00 \r\n \r\n4,997,158.74 \r\n \r\n$ \r\n \r\n16,397.00 \r\n \r\n4,964.26 \r\n \r\n137,806.16 \r\n \r\n159,167.42 193,441.53 \r\n \r\nFund Balance, June 30, 2012 \r\n \r\n$ 5,362,257.66 \r\n \r\nWhen multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds. \r\nUSE OF ESTIMATES \r\nThe preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. \r\nNOTE 3: BUDGETARY DATA \r\nThe budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function, and object. The legal level of budgetary control was established by the Board at the aggregate level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America. \r\n \r\n- 14 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2013 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. 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, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated 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. \r\nThe Superintendent is authorized by the Board to approve adjustments of no more than five percent of the amount budgeted for expenditures in any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any budget function for any fund is anticipated to be more than five percent of the budgeted amount, the Superintendent shall request Board approval for the budget amendment. Under no circumstance is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board. \r\nSee Schedule 1 - General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual for a detail of any over/under expenditures during the fiscal year under review. \r\nNOTE 4: DEPOSITS AND INVESTMENTS \r\nCOLLATERALIZATION OF DEPOSITS \r\nOfficial Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance. \r\nAt June 30, 2013, $225,306.86 of deposits were not secured by surety bond, insurance or collateral as specified above. The School District is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the School District's deposits. \r\nAcceptable security for deposits consists of any one of or any combination of the following: \r\n1. Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, \r\n2. Insurance on accounts provided by the Federal Deposit Insurance Corporation, \r\n3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, \r\n4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, \r\n5. 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, \r\n6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and \r\n \r\n- 15 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2013 \r\n \r\nEXHIBIT \"I\" \r\n \r\n7. 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 or securities guaranteed 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. \r\n \r\nCATEGORIZATION OF DEPOSITS \r\n \r\nCustodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2013, the bank balances were $6,820,279.20. Only $6,594,972.20 of the bank balances were collateralized with securities held by the pledging financial institution in the School District's name. The amounts exposed to custodial credit risk are classified into three categories as follows: \r\n \r\nCategory 1 Category 2 - \r\nCategory 3 - \r\n \r\nUncollateralized, Cash collateralized with securities held by the pledging financial institution, or Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name. \r\n \r\nThe School District's deposits by custodial risk category at June 30, 2013, are as follows: \r\n \r\nCustodial Credit Risk Category \r\n \r\nBank Balance \r\n \r\n1 \r\n \r\n$ \r\n \r\n225,306.86 \r\n \r\n2 \r\n \r\n0.00 \r\n \r\n3 \r\n \r\n0.00 \r\n \r\nTotal \r\n \r\n$ \r\n \r\n225,306.86 \r\n \r\nCATEGORIZATION OF INVESTMENTS \r\nAt June 30, 2013, the carrying value of the School District's total investments was $98,831.03, which is materially the same as fair value. This investment consisted entirely of funds invested in the Georgia Fund 1, formerly referred to as LGIP, administered by the State of Georgia, Office of the State Treasurer which is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.ga.gov/SGD/cafr.html. \r\nThe Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAf rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2013, was 43 days. \r\nNOTE 5: NON-MONETARY TRANSACTIONS \r\nThe School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories \r\n \r\n- 16 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2013 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 6: CAPITAL ASSETS \r\nThe following is a summary of changes in the Capital Assets during the fiscal year: \r\n \r\nBalances July 1, 2012 \r\n \r\nIncreases \r\n \r\nDecreases \r\n \r\nBalances June 30, 2013 \r\n \r\nGovernmental Activities Capital Assets, Not Being Depreciated: \r\nLand Construction in Progress \r\n \r\n$ \r\n \r\n354,857.93 \r\n \r\n0.00 $ 1,221,870.67 $ \r\n \r\n$ 0.00 \r\n \r\n354,857.93 1,221,870.67 \r\n \r\nTotal Capital Assets Not Being Depreciated \r\n \r\n$ \r\n \r\n354,857.93 $ 1,221,870.67 $ \r\n \r\n0.00 $ 1,576,728.60 \r\n \r\nCapital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements \r\n \r\n$ 3,507,218.42 1,732,400.23 558,998.55 \r\n \r\n$ \r\n \r\n0.00 $ 3,507,218.42 \r\n \r\n1,732,400.23 \r\n \r\n558,998.55 \r\n \r\nLess Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements \r\n \r\n1,741,779.23 $ 1,158,256.93 \r\n378,476.26 \r\n \r\n68,342.28 134,230.94 \r\n17,954.00 \r\n \r\n1,810,121.51 1,292,487.87 \r\n396,430.26 \r\n \r\nTotal Capital Assets, Being Depreciated, Net $ 2,520,104.78 $ -220,527.22 $ \r\n \r\n0.00 $ 2,299,577.56 \r\n \r\nGovernmental Activity Capital Assets - Net $ 2,874,962.71 $ 1,001,343.45 $ \r\n \r\n0.00 $ 3,876,306.16 \r\n \r\nCurrent year depreciation expense by function is as follows: \r\n \r\nInstruction \r\n \r\nSupport Services \r\n \r\nGeneral Administration \r\n \r\n$ \r\n \r\nMaintenance and Operation of Plant \r\n \r\nStudent Transportation Services \r\n \r\nFood Services \r\n \r\n$ \r\n1,567.90 1,451.06 106,984.41 \r\n \r\n$ \r\n \r\n97,080.36 \r\n110,003.37 13,443.49 \r\n220,527.22 \r\n \r\nNOTE 7: INTERFUND TRANSFERS \r\nInterfund transfers for the year ended June 30, 2013, consisted of the following: \r\n \r\nTransfer to \r\n \r\nTransfers From District-wide Capital Projects \r\n \r\nDebt Service Fund \r\n \r\n$ \r\n \r\n399,110.00 \r\n \r\nTransfers are used to move sales tax revenue collected by the Capital Projects Fund to the Debt Service Fund to pay debt service according to the approved SPLOST referendum. \r\n \r\n- 17 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2013 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 8: RISK MANAGEMENT \r\nThe 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. \r\n \r\nThe School District has obtained commercial insurance for risk of loss associated with torts, assets, and errors or omissions. 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. \r\n \r\nThe School District has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years. \r\n \r\nThe School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. \r\nChanges in the unemployment compensation claims liability during the last two fiscal years are as follows: \r\n \r\nBeginning of Year Liability \r\n \r\nClaims and Changes in Estimates \r\n \r\nClaims Paid \r\n \r\nEnd of Year Liability \r\n \r\n2012 $ 2013 $ \r\n \r\n0.00 $ 0.00 $ \r\n \r\n23,907.97 $ 30,764.00 $ \r\n \r\n23,907.97 $ 30,764.00 $ \r\n \r\n0.00 0.00 \r\n \r\nThe School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general worker's compensation insurance coverage. Specific excess of loss insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2 million. The Trust covers the first $1 million of each Employers liability claim with Safety National providing additional Employers Liability limits up to a $2 million per occurrence maximum. Safety National Casualty Company also provides $2 million in aggregate coverage to the Trust, attaching at 110% of the loss fund and based on the Fund's annual normal premium. \r\nThe School District has purchased surety bonds to provide additional insurance coverage as follows: \r\n \r\nPosition Covered \r\n \r\nAmount \r\n \r\nSuperintendent Bookkeeper Payroll Clerk School Food Director All Employees \r\n \r\n$ \r\n \r\n30,000.00 \r\n \r\n$ \r\n \r\n10,000.00 \r\n \r\n$ \r\n \r\n10,000.00 \r\n \r\n$ \r\n \r\n10,000.00 \r\n \r\n$ \r\n \r\n100,000.00 \r\n \r\n- 18 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2013 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 9: OPERATING LEASES \r\nTalbot County Board of Education has entered into various leases as lessee for copiers and a postage meter. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2013, for governmental funds amounted to $8,968.49. \r\n \r\nNOTE 10: SHORT-TERM DEBT \r\nThe School District issues tax anticipation notes in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred. \r\n \r\nShort-term debt activity for the fiscal year is as follows: \r\n \r\nBeginning Balance \r\n \r\nIssued \r\n \r\nRedeemed \r\n \r\nEnding Balance \r\n \r\nTax Anticipation Notes $ \r\n \r\n0.00 $ 900,000.00 $ 900,000.00 $ \r\n \r\n0.00 \r\n \r\nNOTE 11: LONG-TERM DEBT \r\n \r\nGENERAL OBLIGATION DEBT OUTSTANDING \r\nGeneral Obligation Bonds currently outstanding are as follows: \r\n \r\nPurpose \r\n \r\nInterest Rate \r\n \r\nGeneral Government - Series 2003 \r\n \r\n3.80% \r\n \r\nAmount $ 2,190,000.00 \r\n \r\nThe changes in Long-Term Debt during the fiscal year ended June 30, 2013, were as follows: \r\n \r\nBalance July 1, 2012 \r\n \r\nAdditions \r\n \r\nGovernmental Activities \r\n \r\nBalance \r\n \r\nDeductions \r\n \r\nJune 30, 2013 \r\n \r\nDue Within One Year \r\n \r\nG. O. Bonds \r\n \r\n$ 2,500,000.00 $ \r\n \r\n0.00 $ 310,000.00 $ 2,190,000.00 $ 325,000.00 \r\n \r\nAt June 30, 2013, payments due by fiscal year which includes principal and interest for these items are as follows: \r\n \r\nFiscal Year Ended June 30: \r\n \r\nGeneral Obligation Debt \r\n \r\nPrincipal \r\n \r\nInterest \r\n \r\n2014 2015 2016 2017 2018 2019 \r\n \r\n$ \r\n \r\n325,000.00 $ \r\n \r\n340,000.00 \r\n \r\n355,000.00 \r\n \r\n370,000.00 \r\n \r\n390,000.00 \r\n \r\n410,000.00 \r\n \r\n77,045.00 64,410.00 51,205.00 37,430.00 22,990.00 \r\n7,790.00 \r\n \r\nTotal Principal and Interest \r\n \r\n$ 2,190,000.00 $ \r\n \r\n260,870.00 \r\n \r\n- 19 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2013 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 12: ON-BEHALF PAYMENTS \r\nThe School District has recognized revenues and costs in the amount of $400,630.00 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. \r\nGeorgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Certificated Personnel In the amount of $386,340.00 \r\nOffice of the State Treasurer Paid to the Public School Employees' Retirement System For Public School Employees' Retirement (PSERS) Employer's Cost In the amount of $14,290.00 \r\nFunds paid to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District are reported as part of the Quality Basic Education revenue allotments on Schedule 3 - Schedule of State Revenue. \r\n \r\nNOTE 13: SIGNIFICANT COMMITMENTS \r\nThe following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2013, together with funding available: \r\n \r\nProject \r\n \r\nUnearned Executed Contracts \r\n \r\nFunding Available From State \r\n \r\nCentral Elementary/High Facility \r\n \r\n$ \r\n \r\n1,863,312.31 $ \r\n \r\n5,215,520.00 \r\n \r\nThe amounts described in this note are not reflected in the basic financial statements. \r\nNOTE 14: SIGNIFICANT CONTINGENT LIABILITIES \r\nAmounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. \r\nThe School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements. \r\nNOTE 15: POST-EMPLOYMENT BENEFITS \r\nGEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND \r\nPlan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. \r\n \r\n- 20 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2013 \r\n \r\nEXHIBIT \"I\" \r\n \r\nFunding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2013, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2013, pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2013, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy. \r\nParticipating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected \"pay-as-you-go\" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. \r\nThe combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2013: \r\nFor certificated teachers, librarians and regional educational service agencies and certain other \r\neligible participants: \r\n \r\nJuly 2012 - February 2013 March 2013 - June 2013 \r\n \r\n$912.34 per member per month $937.34 per member per month \r\n \r\nFor non-certificated school personnel: \r\n \r\nJuly 2012 - June 2013 \r\n \r\n$446.20 per member per month \r\n \r\nNo additional contribution was required by the Board for fiscal year 2013 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation. \r\n \r\nThe School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage Contributed \r\n \r\nRequired Contribution \r\n \r\n2013 2012 2011 \r\n \r\n100% 100% 100% \r\n \r\n$ \r\n \r\n614,133.38 \r\n \r\n$ \r\n \r\n740,616.54 \r\n \r\n$ \r\n \r\n577,548.76 \r\n \r\n- 21 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2013 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 16: RETIREMENT PLANS \r\n \r\nTEACHERS' RETIREMENT SYSTEM OF GEORGIA (TRS) \r\nPlan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. 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. \r\n \r\nOn October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers' Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits. \r\n \r\nTRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service. \r\nNormal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available. \r\nFunding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2013, were 6.00% of annual salary. Employer contributions required for fiscal year 2013 were 11.41% of annual salary as required by the June 30, 2010, actuarial valuation. The employer contribution rate will increase to 12.28% effective July 1, 2013. \r\nEmployer contributions for the current fiscal year and the preceding two fiscal years are as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage Contributed \r\n \r\nRequired Contribution \r\n \r\n2013 2012 2011 \r\n \r\n100% 100% 100% \r\n \r\n$ \r\n \r\n383,370.28 \r\n \r\n$ \r\n \r\n386,730.40 \r\n \r\n$ \r\n \r\n419,130.30 \r\n \r\n- 22 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2013 \r\n \r\nEXHIBIT \"I\" \r\n \r\nPUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM (PSERS) \r\nBus drivers, lunchroom personnel, and maintenance and custodial personnel are members of the Public School Employees' Retirement System of Georgia. The System is funded by contributions by the employees and by the State of Georgia. The School District makes no contribution to this plan. \r\n \r\n- 23 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND \r\nSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL \r\nYEAR ENDED JUNE 30, 2013 \r\n \r\nSCHEDULE \"1\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent 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 \r\nTotal Expenditures \r\nExcess of Revenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nOperating Transfers From Other Funds Operating Transfers To Other Funds \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\n \r\nNONAPPROPRIATED BUDGETS \r\n \r\nORIGINAL (1) \r\n \r\nFINAL (1) \r\n \r\nACTUAL AMOUNTS \r\n \r\nVARIANCE OVER/UNDER \r\n \r\n$ 2,949,785.57 $ 2,973,710.31 $ 3,034,882.70 $ \r\n \r\n1,600.00 \r\n \r\n3,600.00 \r\n \r\n11,230.53 \r\n \r\n3,019,664.12 \r\n \r\n3,138,745.01 \r\n \r\n2,340,684.18 \r\n \r\n1,260,800.00 \r\n \r\n1,342,934.00 \r\n \r\n1,208,451.99 \r\n \r\n60,000.00 \r\n \r\n60,000.00 \r\n \r\n77,359.32 \r\n \r\n2,200.00 \r\n \r\n2,200.00 \r\n \r\n1,042.37 \r\n \r\n61,000.00 \r\n \r\n101,000.00 \r\n \r\n153,716.95 \r\n \r\n61,172.39 7,630.53 \r\n-798,060.83 -134,482.01 \r\n17,359.32 -1,157.63 52,716.95 \r\n \r\n$ 7,355,049.69 $ 7,622,189.32 $ 6,827,368.04 $ -794,821.28 \r\n \r\n$ 3,899,214.98 $ 4,171,630.06 $ 3,486,410.77 $ 685,219.29 \r\n \r\n299,000.00 328,356.00 123,531.00 305,599.00 312,674.00 \r\n81,282.00 519,233.00 388,081.00 \r\n5,500.00 20,000.00 521,600.00 \r\n \r\n323,091.00 325,395.63 157,217.91 319,720.00 370,414.88 \r\n81,720.40 521,233.00 394,988.39 \r\n5,500.00 22,500.00 530,315.00 \r\n \r\n286,479.13 265,196.02 136,467.87 328,271.46 387,633.34 \r\n75,372.33 420,380.42 411,454.88 \r\n26,607.50 456,827.46 \r\n \r\n36,611.87 60,199.61 20,750.04 -8,551.46 -17,218.46 \r\n6,348.07 100,852.58 -16,466.49 \r\n5,500.00 -4,107.50 73,487.54 \r\n \r\n$ 6,804,070.98 $ 7,223,726.27 $ 6,281,101.18 $ 942,625.09 \r\n \r\n$ 550,978.71 $ 398,463.05 $ 546,266.86 $ 147,803.81 \r\n \r\n$ 145,000.00 $ 145,000.00 $ \r\n \r\n-145,000.00 \r\n \r\n-145,000.00 \r\n \r\n0.00 $ -145,000.00 145,000.00 \r\n \r\n$ \r\n \r\n0.00 $ \r\n \r\n0.00 $ \r\n \r\n0.00 $ \r\n \r\n0.00 \r\n \r\n$ 550,978.71 $ 398,463.05 $ 546,266.86 $ 147,803.81 \r\n \r\n286,857.96 \r\n \r\n277,105.80 \r\n \r\n-206,943.33 \r\n \r\n-484,049.13 \r\n \r\nFund Balances - Ending \r\n \r\n$ 837,836.67 $ 675,568.85 $ 339,323.53 $ -336,245.32 \r\n \r\nNotes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual \r\n(1) Original and Final Budget amounts do not include actual revenues ($66,446.17) or expenditures ($74,887.59) of the various principal accounts. \r\nThe accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 25 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\nYEAR ENDED JUNE 30, 2013 \r\n \r\nSCHEDULE \"2\" \r\n \r\nFUNDING AGENCY PROGRAM/GRANT \r\nAgriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program \r\nTotal Child Nutrition Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Food Services Fresh Fruit and Vegetable Program \r\nTotal U. S. Department of Agriculture \r\nEducation, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants \r\nTotal Special Education Cluster \r\nTitle I, Part A Cluster Pass-Through From Georgia Department of Education Title I Grants to Local Educational Agencies \r\nOther Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Education Jobs Fund Even Start - State Educational Agencies Improving Teacher Quality State Grants Safe and Drug-Free Schools and Communities - State Grants \r\nTotal Other Programs \r\nTotal U. S. Department of Education \r\nHealth and Human Services, U. S. Department of Child Care and Development Fund Cluster Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning ARRA - Child Care and Development Block Grant \r\nJustice, U. S. Department of Pass-Through From Children and Youth Coordinating Council Juvenile Justice and Delinquency Prevention \r\nDefense, U. S. Department of Direct Department of the Army R.O.T.C. Program \r\n \r\nTotal Expenditures of Federal Awards N/A = Not Available \r\n \r\n- 26 - \r\n \r\nCFDA NUMBER \r\n \r\nPASSTHROUGH \r\nENTITY ID \r\nNUMBER \r\n \r\nEXPENDITURES IN PERIOD \r\n \r\n* 10.553 * 10.555 \r\n \r\nN/A \r\n \r\n(2) \r\n \r\nN/A $ 430,622.58 (1) \r\n \r\n$ 430,622.58 \r\n \r\n10.582 \r\n \r\nN/A \r\n \r\n15,852.88 \r\n \r\n$ 446,475.46 \r\n \r\n84.027 84.173 \r\n \r\nN/A $ 193,007.69 \r\n \r\nN/A \r\n \r\n18,388.00 \r\n \r\n$ 211,395.69 \r\n \r\n* 84.010 \r\n \r\nN/A $ 386,521.76 \r\n \r\n84.048 84.410 84.213 84.367 84.186 \r\n \r\nN/A $ N/A N/A N/A N/A \r\n \r\n11,391.00 265.00 \r\n18,023.11 86,548.42 \r\n978.79 \r\n \r\n$ 117,206.32 \r\n \r\n$ 715,123.77 \r\n \r\n93.575 \r\n \r\nN/A $ \r\n \r\n5,233.93 \r\n \r\n16.540 \r\n \r\nN/A \r\n \r\n$ \r\n \r\n40,724.03 \r\n \r\n$ \r\n \r\n49,699.67 \r\n \r\n$ 1,257,256.86 \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\nYEAR ENDED JUNE 30, 2013 \r\n \r\nSCHEDULE \"2\" \r\n \r\nNotes to the Schedule of Expenditures of Federal Awards \r\n(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $23,394.25. \r\n(2) Expenditures for the funds earned on the School Breakfast Program ($122,787.19) were not maintained separately and are included in the 2013 National School Lunch Program. \r\nMajor Programs are identified by an asterisk (*) in front of the CFDA number. \r\nThe School District did not provide Federal Assistance to any Subrecipient. \r\nThe accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Talbot County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 27 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2013 \r\nAGENCY/FUNDING \r\nGRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program \r\nEducation, Georgia Department of Quality Basic Education (1) Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Sparsity Food Services Nursing Services Mid-term Adjustment Hold-Harmless Vocational Education Amended Formula Adjustment Other State Programs Math and Science Supplements Preschool Handicapped Program Vocational Supervisors \r\nOffice of the State Treasurer Public School Employees' Retirement \r\n(1) Payments to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District in the amount of $386,340.00 are included as part of the Quality Basic Education revenue allotments above. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 28 - \r\n \r\nSCHEDULE \"3\" \r\n \r\nGOVERNMENTAL FUND TYPE GENERAL FUND \r\n \r\n$ \r\n \r\n49,214.09 \r\n \r\n161,562.00 16,266.00 \r\n295,456.00 13,058.00 \r\n157,089.00 16,381.00 \r\n320,786.00 265,405.00 \r\n79,558.00 253,918.00 \r\n-2,570.00 26,539.00 45,533.00 15,147.00 \r\n7,589.00 \r\n233,526.00 111,258.00 \r\n98,495.00 \r\n215,891.00 121,368.00 \r\n10,352.00 45,000.00 47,694.00 24,107.00 -337,718.00 \r\n17,361.09 11,098.00 \r\n7,031.00 \r\n14,290.00 \r\n$ 2,340,684.18 \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS \r\nYEAR ENDED JUNE 30, 2013 \r\n \r\nSCHEDULE \"4\" \r\n \r\nPROJECT \r\nAcquiring, constructing and equipping one new elementary school; adding to, renovating, repairing, improving, and equipping existing school buildings and other buildings and facilities useful or desirable in connection therewith; payment of capitalized interest on the bonds through and including August 1, 2003; and the costs of issuing the bonds. \r\n \r\nORIGINAL ESTIMATED \r\nCOST (1) \r\n \r\nCURRENT ESTIMATED COSTS (2) \r\n \r\nAMOUNT EXPENDED IN CURRENT YEAR (3) \r\n \r\nAMOUNT EXPENDED IN PRIOR YEARS (3) \r\n \r\nTOTAL COMPLETION \r\nCOST \r\n \r\nEXCESS PROCEEDS NOT \r\nEXPENDED \r\n \r\nESTIMATED COMPLETION \r\nDATE \r\n \r\n$ 2,500,000.00 $ 4,336,067.67 $ 1,310,980.69 $ 3,025,086.98 $ \r\n \r\n0.00 $ \r\n \r\n0.00 September 2014 \r\n \r\n(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. \r\n(2) The School District's current estimate of total cost for the project. Includes all cost from project inception to completion. \r\n(3) The voters of Talbot County approved the imposition of a 1% sales tax to fund the above project and retire associated debt. Amounts expended for this project may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 29 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) \r\nALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2013 \r\n \r\nSCHEDULE \"5\" \r\n \r\nDESCRIPTION \r\nDirect Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category II Category III Category IV Remedial Education Program Alternative Education Program \r\nTOTAL DIRECT INSTRUCTIONAL PROGRAMS \r\nMedia Center Program Staff and Professional Development \r\nTOTAL QBE FORMULA FUNDS \r\n \r\nALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) (3) \r\n \r\nELIGIBLE QBE PROGRAM COSTS \r\n \r\nSALARIES \r\n \r\nOPERATIONS \r\n \r\nTOTAL \r\n \r\n$ \r\n \r\n238,577.00 $ 226,436.19 $ 1,105.80 $ 227,541.99 \r\n \r\n23,815.00 \r\n \r\n10,591.25 \r\n \r\n10,591.25 \r\n \r\n459,193.00 \r\n \r\n353,347.08 \r\n \r\n1,459.01 \r\n \r\n354,806.09 \r\n \r\n29,392.00 \r\n \r\n46,297.77 \r\n \r\n46,297.77 \r\n \r\n245,002.00 \r\n \r\n254,275.79 \r\n \r\n6,385.73 \r\n \r\n260,661.52 \r\n \r\n29,330.00 \r\n501,841.00 409,037.00 125,406.00 397,403.00 \r\n5,118.00 41,161.00 \r\n \r\n50,999.00 322.80 \r\n337,335.24 562,178.09 274,478.99 \r\n95,157.87 173,552.54 \r\n7,873.63 20,995.41 32,153.24 \r\n \r\n2,220.02 2,052.29 5,046.31 2,191.68 \r\n121.20 \r\n \r\n50,999.00 2,542.82 \r\n339,387.53 567,224.40 276,670.67 \r\n95,279.07 173,552.54 \r\n7,873.63 20,995.41 32,153.24 \r\n \r\n$ \r\n \r\n2,505,275.00 $ 2,445,994.89 $ 20,582.04 $ 2,466,576.93 \r\n \r\n70,820.00 11,526.00 \r\n \r\n111,258.01 \r\n \r\n4,010.77 \r\n \r\n115,268.78 \r\n \r\n$ \r\n \r\n2,587,621.00 $ 2,557,252.90 $ 24,592.81 $ 2,581,845.71 \r\n \r\n(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment. (3) Allotments do not include the State Health payments made by GDOE to the Department of Community Health for the certified employees. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 31 - \r\n \r\n  SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS \r\n \r\n  Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJuly 25, 2014 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\nLadies and Gentlemen: \r\nWe have audited, 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, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Talbot County Board of Education as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise Talbot County Board of Education's basic financial statements and have issued our report thereon dated July 25, 2014. \r\nInternal Control Over Financial Reporting \r\nIn planning and performing our audit of the financial statements, we considered Talbot County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Talbot County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Talbot County Board of Education's internal control. \r\nOur consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and a significant deficiency. \r\n \r\n2013YB-40 \r\n \r\n  A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS-7301-13-01, FS-7301-13-03, FS-7301-13-04, and FS7301-13-06 to be material weaknesses. \r\nA significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs as items FS-7301-13-02 and FS-7301-13-05 to be significant deficiencies. \r\nCompliance and Other Matters \r\nAs part of obtaining reasonable assurance about whether Talbot County Board of Education's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. \r\nWe noted certain matters that we have reported to management of Talbot County Board of Education in a separate letter dated July 25, 2014. \r\nTalbot County Board of Education's Response to Findings \r\nTalbot County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Talbot County Board of Education's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. \r\nPurpose of this Report \r\nThe purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nGSG:as 2013YB-40 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n  Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJuly 25, 2014 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 \r\nLadies and Gentlemen: \r\nReport on Compliance for Each Major Federal Program \r\nWe have audited Talbot County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2013. Talbot County 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. \r\nManagement's Responsibility \r\nManagement is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its Federal programs. \r\nAuditor's Responsibility \r\nOur responsibility is to express an opinion on compliance for each of Talbot County Board of Education's major Federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, 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 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 Talbot County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. \r\nWe believe that our audit provides a reasonable basis for our opinion on compliance for each major Federal program. However, our audit does not provide a legal determination of Talbot County Board of Education's compliance. \r\n2013SA-10 \r\n \r\n  Opinion on Each Major Federal Program \r\nIn our opinion, the Talbot County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2013. \r\nReport on Internal Control over Compliance \r\nManagement of Talbot County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Talbot County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major Federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major Federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Talbot County Board of Education's internal control over compliance. \r\nA deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. \r\nOur consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. \r\nThe purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. \r\nRespectfully submitted, \r\n \r\nGSG:as 2013SA-10 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n  SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n  TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2013 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER \r\n \r\nAUDITEE'S RESPONSE/STATUS \r\n \r\nSEE AUDITOR'S COMMENTS \r\n \r\nFS-7301-11-01 FS-7301-11-02 FS-7301-11-03 FS-7301-11-05 FS-7301-11-06 FS-7301-11-07 FS-7301-12-01 FS-7301-12-02 FS-7301-12-03 FS-7301-12-04 FS-7301-12-05 FS-7301-12-06 \r\n \r\nFurther Action Not Warranted \r\n \r\n(1) \r\n \r\nFurther Action Not Warranted \r\n \r\n(1) \r\n \r\nFurther Action Not Warranted \r\n \r\n(1) \r\n \r\nFurther Action Not Warranted \r\n \r\n(1) \r\n \r\nFurther Action Not Warranted \r\n \r\n(1) \r\n \r\nFurther Action Not Warranted \r\n \r\n(1) \r\n \r\nPartially Resolved - See Corrective Action/Responses \r\n \r\nUnresolved - See Corrective Action/Responses \r\n \r\nUnresolved - See Corrective Action/Responses \r\n \r\nUnresolved - See Corrective Action/Responses \r\n \r\nUnresolved - See Corrective Action/Responses \r\n \r\nUnresolved - See Corrective Action/Responses \r\n \r\nAUDITOR'S COMMENTS \r\n \r\n(1) Finding of this nature has been repeated in both fiscal year 2012 and fiscal year 2013. \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nBUDGET PREPARATION/EXECUTION Deficit Fund Balance Finding Control Number: FS-7301-12-01 \r\n \r\nThe Board is awaiting a review from Georgia Department of Education. \r\n \r\nCASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Finding Control Number: FS-7301-12-02 \r\n \r\nThe Board will implement controls over cash to ensure that cash is properly reconciled to general ledger and cash activity is maintained in the proper fund. Additional staff will be assigned the duty of monthly bank reconciliations and will monitor as well as review with signatures from the Superintendent. \r\n \r\nCASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS ACCOUNTING CONTROLS (OVERALL) FINANCIAL REPORTING Inadequate Internal Controls over School Activity Accounts Finding Control Number: FS-7301-12-03 \r\n \r\nThe Board will revise and implement internal controls to ensure that proper separation of duties are established. Accounting procedures will be accurately monitored and financial statement amounts will be reconciled to the general ledger balances. \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2013 \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES EMPLOYEE COMPENSATION Inadequate Internal Controls over Employee Compensation Process Finding Control Number: FS-7301-12-04 The Board will implement policies and procedures to ensure that business procedures are followed for all salaries, ensuring that salaries are paid according to approved salary schedules and adequate documentation will be maintained to support the salary payments. CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-7301-12-05 The Board will implement procedures to ensure capital assets records conform to the approved capital assets policy. FINANCIAL REPORTING Inadequate Controls over Financial Reporting Finding Control Number: FS-7301-12-06 The Board will implement procedures to ensure that all required activity in the form of journal entries are in the financial statements. Management will ensure that the financial statements are in accordance with Chapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration. Additionally, financial statements will be prepared in accordance with generally accepted accounting principles. \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2013 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER \r\n \r\nAUDITEE'S RESPONSE/STATUS \r\n \r\nSEE AUDITOR'S COMMENTS \r\n \r\nFA-7301-10-01 FA-7301-11-01 FA-7301-11-02 FA-7301-11-03 FA-7301-12-01 FA-7301-12-02 \r\n \r\nPartially Resolved See Corrective Action/Responses \r\n \r\nPartially Resolved See Corrective Action/Responses \r\n \r\nFurther Action Not Warranted \r\n \r\n(1) \r\n \r\nFurther Action Not Warranted \r\n \r\n(1) \r\n \r\nPartially Resolved - See Corrective Action/Responses \r\n \r\nPartially Resolved - See Corrective Action/Responses \r\n \r\nAUDITOR'S COMMENTS \r\n \r\n(1) Finding has been closed with no further action required by the Georgia Department of Education (Grantor). \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nALLOWABLE COSTS/COST PRINCIPLES Salaries Not Properly Supported U. S. Department of Education Through Georgia Department of Education Title 1, Part A Cluster (CFDA 84.010 and 84.389) Special Education Cluster (CFDA 84.027, 84.173, 84.391 and 84.392) Questioned Cost: $2,163.55 Special Education Cluster (CFDA 84.027, 84.173, 84.391 and 84.392) $36,290.87 Title 1, Part A Cluster (CFDA 84.010 and 84.389) Finding Control Number: FA-7301-10-01 \r\n \r\nThe Board is awaiting a review from Georgia Department of Education. \r\n \r\nALLOWABLE COSTS/COST PRINCIPLES Non-Title I Personnel Paid with Title I Funds U. S. Department of Education Through Georgia Department of Education Title I, Part A Cluster (CFDA 84.010 and 84.389) Questioned Cost: $52,150.50 Finding Control Number: FA-7301-11-01 \r\n \r\nThe Board is awaiting a review from Georgia Department of Education. \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2013 \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES CASH MANAGEMENT Excessive Cash Balances U. S. Department of Education Through Georgia Department of Education Title I, Part A Cluster (CFDA 84.010 and 84.389) Finding Control Number: FA-7301-12-01 The Board is awaiting a review from Georgia Department of Education. REPORTING Failure to File Accurate Completion Reports U. S. Department of Education Through Georgia Department of Education Title I, Part A Cluster (CFDA 84.010) Finding Control Number: FA-7301-12-02 The Board is awaiting a review from Georgia Department of Education. \r\n- 4 - \r\n \r\n SECTION IV FINDINGS AND QUESTIONED COSTS \r\n \r\n  TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2013 \r\n \r\nI SUMMARY OF AUDITOR'S RESULTS \r\n \r\nFinancial Statements \r\n \r\nType of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information \r\n \r\nUnmodified \r\n \r\nInternal control over financial reporting: \r\n \r\n Material weaknesses identified? \r\n \r\nYes \r\n \r\n Significant deficiency identified? \r\n \r\nYes \r\n \r\nNoncompliance material to financial statements noted: \r\n \r\nNo \r\n \r\nFederal Awards \r\n \r\nInternal Control over major programs:  Material weakness identified?  Significant deficiency identified? \r\n \r\nNo None Reported \r\n \r\nType of auditor's report issued on compliance for major programs: All major programs \r\n \r\nUnmodified \r\n \r\nAny audit findings disclosed that are required to be reported in \r\n \r\naccordance with OMB Circular A-133, Section 510(a)? \r\n \r\nNo \r\n \r\nIdentification of major programs: \r\n \r\nCFDA Numbers \r\n \r\nName of Federal Program or Cluster \r\n \r\n10.553, 10.555 84.010 \r\n \r\nChild Nutrition Cluster Title I, Part A Cluster \r\n \r\nDollar threshold used to distinguish between Type A and Type B programs: \r\n \r\n$300,000.00 \r\n \r\nAuditee qualified as low-risk auditee? \r\n \r\nNo \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2013 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFinding Control Number: \r\nControl Category: Internal Control Impact: \r\n \r\nFS-7301-13-01 Inadequate Internal Control Procedures Cash and Cash Equivalents Material Weakness \r\n \r\nDescription: This is a repeat finding (FS-7301-12-02, FS-7301-11-02, and FS-7301-10-02) from the years ended June 30, 2012, June 30, 2011, and June 30, 2010, respectively. The accounting procedures of the School District were insufficient to provide adequate internal controls over the Cash and Cash Equivalents function. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls over Cash and Cash Equivalents. \r\n \r\nCondition: Weaknesses in internal controls relating to Cash and Cash Equivalents were noted as follows: \r\n An administrative review of monthly bank reconciliations, to determine that bank reconciliations were correct and that all required adjustments had been made, was not performed. \r\n Cash activity was not maintained in the proper fund in the general ledger. A review of bank account activity by fund noted Private Purpose Trust Fund cash was recorded in the General Fund and Special Purpose Local Option Sales Tax cash was recorded in the General Fund. \r\n Bank reconciliations were not performed by someone independent of the general ledger function. \r\n At June 30, 2013, $225,307 of deposits were not secured by surety bond, by guarantee of insurance, or by collateral in accordance with Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the cause was a direct result of the lack of time and resources to fully separate duties and ensure an administrative review is completed. \r\n \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over cash activity increases the risk significant misstatements could occur in the financial statements due to error or fraud. \r\n \r\nRecommendation: The School District should design and implement controls over cash to ensure (1) monthly bank reconciliations are adequately reviewed, (2) cash activity is maintained in the proper funds, and (3) bank reconciliations are performed by someone independent of the general ledger. \r\n \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. The Board has implemented controls over cash to ensure that cash is properly reconciled to general ledger and cash activities. Bank reconciliations are monitored by someone independent of the general ledger. \r\n \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2013 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nContact Person: Telephone: Fax: E-mail: \r\n \r\nDr. James Catrett, Superintendent (706) 665-8528 (706) 665-3620 jcatrett@talbot.k12.ga.us \r\n \r\nFinding Control Number: Control Category: \r\nInternal Control Impact: \r\n \r\nFS-7301-13-02 Inadequate Internal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Accounting Controls (Overall) Financial Reporting Significant Deficiency \r\n \r\nDescription: This is a repeat finding (FS-7301-12-03, FS-7301-11-03, and FS-7301-10-03) from the years ended June 30, 2012, June 30, 2011, and June 30, 2010, respectively. The accounting procedures of the School District were insufficient to provide adequate internal controls over school activity accounts. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and provide reasonable assurance transactions are processed according to established procedures. \r\n \r\nCondition: Cash and Cash Equivalents \r\n One school activity bank account was not reconciled to the general ledger resulting in an unidentified variance of $11,864. \r\n \r\nRevenues/Receivables/Receipts  The deposit preparation function was not separated from the bank reconciliation and general ledger functions.  Gate receipts were not maintained in a secured location prior to depositing in the bank.  Dues/Fees collected from students were not receipted by the teachers.  The depositing of funds in the bank was not a standard process for all school activity accounts. \r\n \r\nAccounting Controls (Overall) \r\n An administrative review of the bank reconciliation process, cash receipt process, and cash disbursement process to determine if established procedures were being followed was not performed. \r\n The School District did not have a formal process for documenting agency fund sponsors, purpose of accounts, allowable activities of accounts, source of funds, and final disposition of funds related to individual agency fund accounts. \r\n \r\nGeneral Ledger  Agency Funds reported deficit balances of $4,317 in total. Governmental Funds were used to cover these deficits. \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2013 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFinancial Reporting  School activity account balances used for financial statement reporting did not agree with school activity general ledgers.  Several school activity accounts that were not fiduciary in nature were misclassified as agency funds instead of governmental activities. \r\n Beginning fund balance reported on the consolidation worksheet used to record school activity accounts to the central office's general ledger did not agree to the prior year ending balance. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the internal control deficiencies related to school activity accounts occurred due to a shortage of personnel at the school and a failure of those personnel to follow the established policies and procedures. \r\n \r\nEffect or Potential Effect: Failure to maintain adequate internal controls over school activity accounts increases the risk that misstatements could occur in the financial statements due to error or fraud. \r\n \r\nRecommendation: The School District should revise and implement internal controls to ensure proper separation of duties is established, accounting processes are adequately monitored, school activity accounts are properly classified, financial statement amounts are reconciled to general ledger balances, standard procedures are implemented over the depositing of funds, amounts reported in consolidation spreadsheet for school activity accounts is accurate, and agency fund accounts are properly documented. \r\n \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. Management has implemented controls to ensure that transactions are processed according to procedures and accurately monitored. \r\n \r\nContact Person: Telephone: Fax: E-mail: \r\n \r\nDr. James Catrett, Superintendent (706) 665-8528 (706) 665-3620 jcatrett@talbot.k12.ga.us \r\n \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2013 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFinding Control Number: Control Category: Internal Control Impact: \r\n \r\nFS-7301-13-03 Inadequate Controls over Grants and Contracts Revenues/Receivables/Receipts General Ledger Material Weakness \r\n \r\nDescription: Balances in Federal program funds were not properly monitored. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to generally accepted accounting principles. \r\n \r\nCondition: Several Federal programs maintained excess fund balances at year end. The School District did not properly defer and/or refund the excess revenue for the following programs: \r\n Title I - $174,334  Career and Technical Education - Basic Grants to States - $313  Improving Teacher Quality - $2,133  Early Reading First - $28,421  Child Care and Development Block Grant - $38,230  Juvenile Justice and Delinquency Prevention - $5,674 \r\n \r\nIn addition, the Special Education Federal program maintained a deficit fund balance of $385.97. \r\n \r\nCause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of time and resources to investigate these balances. \r\n \r\nEffect or Potential Effect: Federal Program revenue was not properly recognized in accordance with generally accepted accounting principles \r\n \r\nRecommendation: The School District should implement internal controls to ensure all Federal programs are properly reconciled and closed at year end. \r\n \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. The Board has implemented controls over grants to ensure that grants are properly reconciled to general ledger and cash activities according to generally accepted accounting principles. \r\n \r\nContact Person: Telephone: Fax: E-mail: \r\n \r\nDr. James Catrett, Superintendent (706) 665-8528 (706) 665-3620 jcatrett@talbot.k12.ga.us \r\n \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2013 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFinding Control Number: \r\nControl Category: Internal Control Impact: \r\n \r\nFS-7301-13-04 Inadequate Controls over Financial Reporting Financial Reporting Material Weakness \r\n \r\nDescription: This is a repeat finding (FS-7301-12-06 and FS-7301-11-07) from the years ended June 30, 2012 and June 30, 2011, respectively. The School District did not have adequate internal controls in place over the financial statement reporting process. \r\n \r\nCriteria: Chapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles. \r\n \r\nCondition: The Department of Audits and Accounts provided basic accounting assistance limited to services such as preparing draft financial statements that were based on the entity's chart of accounts and general ledgers including adjusting, correcting, and closing entries that have been approved by the entity's staff; prepared draft notes to the financial statements based on information determined and approved by management; and prepared trial balances based on the entity's chart of accounts. \r\n \r\nCause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of time and resources to train Board personnel to accomplish the preparation of financial statements and/or the lack of funding to secure outside services to prepare the financial statements. \r\n \r\nEffect or Potential Effect: The School District did not comply with the requirements of the Department of Education regarding financial reporting. Adjustments were necessary in order for the School District's financial statements to be in conformity with generally accepted accounting principles. \r\n \r\nRecommendation: The School District should establish and implement controls over the financial statement reporting process as required by the Financial Management for Georgia Local Units of Administration. \r\n \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. Management will ensure the financial statements are properly prepared in accordance with generally accepted accounting principles. \r\n \r\nContact Person: Telephone: Fax: E-mail: \r\n \r\nDr. James Catrett, Superintendent (706) 665-8528 (706) 665-3620 jcatrett@talbot.k12.ga.us \r\n \r\n- 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2013 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFinding Control Number: \r\nControl Category: Internal Control Impact: \r\n \r\nFS-7301-13-05 Inadequate Internal Controls over Employee Compensation Process Employee Compensation Significant Deficiency \r\n \r\nDescription: This is a repeat finding (FS-7301-12-04, FS-7301-11-05, and FS-7301-10-05) from the years ended June 30, 2012, June 30, 2011, and June 30, 2010, respectively. The accounting procedures of the School District were insufficient to provide for adequate internal controls over employee compensation. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance employees are paid according to approved salary schedules and documentation is maintained to support the salary payments. \r\n \r\nCondition: \r\n A review of employee compensation revealed several instances where salaries were not properly approved, supported by signed contracts and/or Board approved salary schedules. \r\n A review of certificated employees revealed that one employee was not paid in accordance with their certificate level. The employee gained additional certification during the year without additional compensation. \r\n A review of purchased professional and technical service expenditures revealed additional compensation paid to an employee of the School District in the amount of $862.50 that did not flow through the normal business process for salaries as established by the School District. \r\n \r\nCause: In discussing these deficiencies with the School District, they indicated that appropriate procedures to ensure salary amounts are supported by adequate documentation had not been implemented. \r\n \r\nEffect or Potential Effect: The failure to maintain adequate internal controls over Employee Compensation increases the risk misstatements could occur in the financial statements due to error or fraud. \r\n \r\nRecommendation: The School District should implement policies and procedures to ensure normal business procedures are followed for all salaries, which includes ensuring salaries are paid according to approved salary schedules and adequate documentation is maintained to support the salary payments. \r\n \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. Management has implemented policies and procedures to ensure that business procedures are followed for all salaries, ensuring that salaries are paid according to approved salary schedules and adequate documentation will be maintained to support the salary payments. \r\n \r\nContact Person: Telephone: Fax: E-mail: \r\n \r\nDr. James Catrett, Superintendent (706) 665-8528 (706) 665-3620 jcatrett@talbot.k12.ga.us \r\n \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2013 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFinding Control Number: \r\nControl Category: Internal Control Impact: \r\n \r\nFS-7301-13-06 Failure to Adequately Maintain Capital Assets Capital Assets Material Weakness \r\n \r\nDescription: This is a repeat finding (FS-7301-12-05 and FS-7301-11-06) from the years ended June 30, 2012 and June 30, 2011, respectively. The School District did not maintain an adequate capital assets listing. \r\n \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that capital assets inventory reports are properly maintained. Chapter 37 Implementing a Capital Assets Management System of the Financial Management for Georgia Local Units of Administration provides that School Districts must establish capital asset policies, define system requirements, implement a capital asset system and maintain capital asset inventory reports. \r\n \r\nCondition: A review of the School District's capital asset records revealed the following exceptions: \r\n \r\n The capital asset listing does not have adequate descriptions and/or inventory numbers assigned to assets. \r\n During our physical inspection of inventory items we noted that assets are not tagged.  An analysis of construction projects was not maintained which resulted in material \r\nunrecorded Construction-in-Progress in the amount of $808,148.65.  The capital asset listing contained items that were identified as obsolete during the annual \r\nphysical inventory performed by the School District. \r\n \r\nCause: In discussing these deficiencies with the School District, they stated that the cause was a result of the lack of time and resources to fully monitor and implement procedures over Capital Assets which follow Board policy. Additionally, they stated the cause was a result of new construction in which staff has not been trained on how to complete a construction analysis and ensure proper accounting of construction activity for the year. \r\n \r\nEffect or Potential Effect: The failure of the School District to maintain a complete and accurate capital assets listing can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles. \r\n \r\nRecommendation: The School District's management should review the capital assets records and make appropriate adjustments to ensure that the capital assets records conform to the School District's approved capital asset policy. \r\n \r\n- 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2013 \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. Management has implemented procedures to ensure capital assets records conform to the approved capital asset policy. Management will review capital assets and make appropriate adjustments. \r\n \r\nContact Person: Telephone: Fax: E-mail: \r\n \r\nDr. James Catrett, Superintendent (706) 665-8528 (706) 665-3620 jcatrett@talbot.k12.ga.us \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nNo matters were reported. \r\n \r\n- 9 - \r\n \r\n "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2011-h2012-belec-p-btext","title":"Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended June 30, 2012 (including independent auditor's reports)","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, Talbot County, 32.69949, -84.53301"],"dcterms_creator":["Georgia. Department of Audits"],"dc_date":["2012-06-30"],"dcterms_description":["Began with fiscal year ended June 30, 2009; ceased with: Fiscal year ended June 30, 2020.","Report year covers fiscal year.","Fiscal year ended June 30, 2014 (Received via FTP 3/27/17 from Georgia Dept. of Audits and Accounts) (online surrogate); title from PDF cover (Georgia Government Publications database, viewed July 11, 2023).","Fiscal year ended June 30, 2020, released in 2021? (online surrogate); (Georgia Government Publications database, viewed July 11, 2023)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Dept. of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Talbot County Board of Education (Ga.)--Appropriations and expenditures--Periodicals.","Education--Georgia--Talbot County--Auditing--Periodicals.","Education--Georgia--Talbot County--Finance--Statistics--Periodicals.","Georgia Government Documents--Serial"],"dcterms_title":["Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended June 30, 2012 (including independent auditor's reports)"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2011-h2012-belec-p-btext"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2011-h2012-belec-p-btext"],"dcterms_temporal":null,"dcterms_rights_holder":["\u0026copy; Georgia Department of Audits"],"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"TALBOT COUNTY BOARD OF EDUCATION \r\nTALBOTTON, GEORGIA \r\nANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2012 \r\n(Including Independent Auditor's Reports) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\n \r\nEXHIBITS \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nDISTRICT-WIDE FINANCIAL STATEMENTS \r\n \r\nA \r\n \r\nSTATEMENT OF NET ASSETS \r\n \r\nB \r\n \r\nSTATEMENT OF ACTIVITIES \r\n \r\nFUND FINANCIAL STATEMENTS \r\n \r\nC \r\n \r\nBALANCE SHEET \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nD \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\n \r\nTO THE STATEMENT OF NET ASSETS \r\n \r\nE \r\n \r\nSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES \r\n \r\nIN FUND BALANCES \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nF \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT \r\n \r\nOF REVENUES, EXPENDITURES AND CHANGES IN FUND \r\n \r\nBALANCES TO THE STATEMENT OF ACTIVITIES \r\n \r\nG \r\n \r\nSTATEMENT OF FIDUCIARY NET ASSETS \r\n \r\nFIDUCIARY FUNDS \r\n \r\nH \r\n \r\nSTATEMENT OF CHANGES IN FIDUCIARY NET ASSETS \r\n \r\nFIDUCIARY FUNDS \r\n \r\nI \r\n \r\nNOTES TO THE BASIC FINANCIAL STATEMENTS \r\n \r\nSCHEDULES \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND \r\n \r\nSUPPLEMENTARY INFORMATION \r\n \r\n2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE \r\n \r\nPage \r\n1 2 4 5 6 7 8 9 10 \r\n25 26 28 \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\nFINANCIAL \r\nSCHEDULES \r\nSUPPLEMENTARY INFORMATION \r\n4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES \r\nGENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM \r\n \r\nPage \r\n29 31 \r\n \r\nSECTION II \r\nCOMPLIANCE AND INTERNAL CONTROL REPORTS \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\nINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 \r\n \r\nSECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\nSECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\nSECTION V MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES \r\n \r\n SECTION I FINANCIAL \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJune 28, 2013 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\nLadies and Gentlemen: \r\nWe have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through I) of the Talbot County Board of Education, as of and for the year ended June 30, 2012, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Talbot County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit. \r\nWe 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. 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Board's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. \r\nIn our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Talbot County Board of Education, as of June 30, 2012, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. \r\nManagement has omitted Management's Discussion and Analysis that accounting principles generally accepted in the United States of America requires to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an \r\n2012ARL-11 \r\n \r\n essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. \r\nIn accordance with Government Auditing Standards, we have also issued our report dated June 28, 2013, on our consideration of the Talbot County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. \r\nThe Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented page 25, is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. \r\nOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Talbot County Board of Education's financial statements as a whole. The accompanying supplementary information consists of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. \r\nA copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. \r\nRespectfully submitted, \r\n \r\nGSG:as 2012ARL-11 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2012 \r\nASSETS \r\nCash and Cash Equivalents Investments Accounts Receivable, Net \r\nTaxes State Government Federal Government Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation) \r\nTotal Assets \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Interest Payable Deferred Revenues Long-Term Liabilities \r\nDue Within One Year Due in More Than One Year \r\nTotal Liabilities \r\nNET ASSETS \r\nInvested in Capital Assets, Net of Related Debt Restricted for \r\nBus Replacement Continuation of Federal Programs Debt Service Capital Projects Unrestricted (Deficit) \r\nTotal Net Assets \r\nTotal Liabilities and Net Assets \r\n \r\nEXHIBIT \"A\" \r\n \r\nGOVERNMENTAL ACTIVITIES \r\n \r\n$ \r\n \r\n3,907,671.91 \r\n \r\n2,537,371.97 \r\n \r\n213,095.40 269,401.80 \r\n49,478.50 18,197.33 354,857.93 2,520,104.78 \r\n \r\n$ \r\n \r\n9,870,179.62 \r\n \r\n$ \r\n \r\n88,733.56 \r\n \r\n598,309.07 \r\n \r\n72,989.56 \r\n \r\n39,583.33 \r\n \r\n159,867.47 \r\n \r\n310,000.00 2,190,000.00 \r\n \r\n$ \r\n \r\n3,459,482.99 \r\n \r\n$ \r\n \r\n2,730,476.01 \r\n \r\n39,451.00 104,451.98 317,916.67 3,326,013.95 -107,612.98 \r\n \r\n$ \r\n \r\n6,410,696.63 \r\n \r\n$ \r\n \r\n9,870,179.62 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES \r\nFOR THE YEAR ENDED JUNE 30, 2012 \r\n \r\nGOVERNMENTAL ACTIVITIES \r\nInstruction Support Services \r\nPupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt \r\nTotal Governmental Activities \r\nGeneral Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous \r\nTotal General Revenues \r\nChange in Net Assets \r\nNet Assets - Beginning of Year \r\nNet Assets - End of Year \r\n \r\nEXPENSES \r\n \r\nCHARGES FOR SERVICES \r\n \r\n$ \r\n \r\n3,966,544.88 \r\n \r\n415,583.58 467,354.08 142,576.85 448,930.11 517,685.89 \r\n71,130.63 515,885.41 413,292.27 \r\n30,499.61 \r\n \r\n46,580.78 $ 16,634.77 546,765.34 95,918.33 \r\n \r\n$ \r\n \r\n7,695,382.53 $ \r\n \r\n43,235.87 31,291.41 \r\n74,527.28 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 2 - \r\n \r\n EXHIBIT \"B\" \r\n \r\nPROGRAM REVENUES OPERATING GRANTS AND \r\nCONTRIBUTIONS \r\n \r\nCAPITAL GRANTS AND CONTRIBUTIONS \r\n \r\nNET (EXPENSES) REVENUES \r\nAND CHANGES IN NET ASSETS \r\n \r\n$ \r\n \r\n2,176,281.14 $ \r\n \r\n79,217.95 387,703.36 \r\n63,307.22 356,078.21 242,431.64 \r\n1,902.36 170,432.07 234,280.78 \r\n7,056.72 \r\n \r\n555.00 347,768.90 \r\n \r\n$ \r\n \r\n4,067,015.35 $ \r\n \r\n106,979.93 $ 228,803.50 335,783.43 $ \r\n \r\n-1,683,283.81 \r\n-336,365.63 -79,650.72 -79,269.63 -92,851.90 \r\n-275,254.25 -69,228.27 \r\n-345,453.34 49,792.01 -23,442.89 \r\n-3,344.91 -16,079.77 -167,705.03 -95,918.33 \r\n-3,218,056.47 \r\n \r\n$ \r\n \r\n2,968,209.06 \r\n \r\n23,252.73 \r\n \r\n520,699.07 31,600.24 56,628.65 \r\n108,556.04 \r\n \r\n$ \r\n \r\n3,708,945.79 \r\n \r\n$ \r\n \r\n490,889.32 \r\n \r\n5,919,807.31 \r\n \r\n$ \r\n \r\n6,410,696.63 \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION BALANCE SHEET \r\nGOVERNMENTAL FUNDS JUNE 30, 2012 \r\n \r\nEXHIBIT \"C\" \r\n \r\nASSETS \r\nCash and Cash Equivalents Investments Accounts Receivable, Net \r\nTaxes State Government Federal Government Inventories \r\nTotal Assets \r\n \r\nGENERAL FUND \r\n \r\nDISTRICTWIDE \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ \r\n \r\n263,759.55 $ 3,298,645.96 $ \r\n \r\n345,266.40 $ \r\n \r\n3,907,671.91 \r\n \r\n79,024.61 \r\n \r\n2,458,347.36 \r\n \r\n2,537,371.97 \r\n \r\n138,521.71 269,401.80 \r\n49,478.50 18,197.33 \r\n \r\n74,573.69 \r\n \r\n213,095.40 269,401.80 \r\n49,478.50 18,197.33 \r\n \r\n$ \r\n \r\n818,383.50 $ 5,831,567.01 $ \r\n \r\n345,266.40 $ \r\n \r\n6,995,216.91 \r\n \r\nLIABILITIES AND FUND BALANCES \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Deposits and Deferred Revenue \r\nTotal Liabilities \r\nFUND BALANCES \r\nNonspendable Restricted Assigned Unassigned (Deficit) \r\nTotal Fund Balances \r\nTotal Liabilities and Fund Balances \r\n \r\n$ \r\n \r\n88,733.56 \r\n \r\n598,309.07 \r\n \r\n72,989.56 \r\n \r\n265,294.64 \r\n \r\n$ 1,025,326.83 \r\n \r\n$ \r\n \r\n88,733.56 \r\n \r\n598,309.07 \r\n \r\n72,989.56 \r\n \r\n265,294.64 \r\n \r\n$ 1,025,326.83 \r\n \r\n$ \r\n \r\n18,197.33 \r\n \r\n125,705.65 $ 5,693,760.85 $ \r\n \r\n137,806.16 \r\n \r\n-350,846.31 \r\n \r\n$ -206,943.33 $ 5,831,567.01 $ \r\n \r\n$ 345,266.40 \r\n345,266.40 $ \r\n \r\n18,197.33 6,164,732.90 \r\n137,806.16 -350,846.31 \r\n5,969,890.08 \r\n \r\n$ \r\n \r\n818,383.50 $ 5,831,567.01 $ \r\n \r\n345,266.40 $ \r\n \r\n6,995,216.91 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\nTO THE STATEMENT OF NET ASSETS JUNE 30, 2012 \r\n \r\nEXHIBIT \"D\" \r\n \r\nTotal Fund Balances - Governmental Funds (Exhibit \"C\") \r\nAmounts reported for Governmental Activities in the Statement of Net Assets are different because: \r\nCapital Assets used in Governmental Activities are not financial resources and therefore are not reported as assets in governmental funds. These assets consist of: \r\nLand Land Improvements Buildings Equipment Accumulated Depreciation \r\nTotal Capital Assets \r\nTaxes that are not available to pay for current period expenditures are deferred in the governmental funds. \r\nProperty Taxes \r\nLong-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of: \r\nBonds Payable Accrued Interest \r\nTotal Long-Term Liabilities \r\n \r\n$ 5,969,890.08 \r\n \r\n$ 354,857.93 558,998.55 \r\n3,507,218.42 1,732,400.23 -3,278,512.42 \r\n \r\n2,874,962.71 \r\n \r\n105,427.17 \r\n \r\n$ -2,500,000.00 -39,583.33 \r\n \r\n-2,539,583.33 \r\n \r\nNet Assets of Governmental Activities (Exhibit \"A\") \r\n \r\n$ 6,410,696.63 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES \r\nGOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2012 \r\n \r\nEXHIBIT \"E\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent 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 Other Support Services Enterprise Operations Community Services Food Services Operation \r\nDebt Services Principal Interest \r\nTotal Expenditures \r\nExcess of Revenues over (under) Expenditures \r\nOTHER FINANCING SOURCES \r\nInsurance Proceeds \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\nFund Balances - Ending \r\n \r\nGENERAL FUND \r\n \r\nDISTRICTWIDE \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 2,980,468.63 31,600.24 $ \r\n2,840,653.31 1,455,165.54 \r\n74,527.28 631.49 \r\n108,556.04 \r\n$ 7,491,602.53 $ \r\n \r\n520,699.07 55,456.77 $ \r\n576,155.84 $ \r\n \r\n$ \r\n540.39 540.39 $ \r\n \r\n2,980,468.63 552,299.31 \r\n2,840,653.31 1,455,165.54 \r\n74,527.28 56,628.65 108,556.04 \r\n8,068,298.76 \r\n \r\n$ 3,850,280.08 $ \r\n415,583.58 467,354.08 142,576.85 445,331.18 517,685.89 \r\n73,018.13 589,423.33 581,163.60 \r\n30,499.61 46,580.78 16,634.77 525,822.77 \r\n$ 7,701,954.65 $ \r\n$ -210,352.12 $ \r\n \r\n38,274.50 \r\n \r\n$ \r\n \r\n38,774.22 \r\n$ 290,000.00 100,510.00 \r\n77,048.72 $ 390,510.00 $ 499,107.12 $ -389,969.61 $ \r\n \r\n3,888,554.58 \r\n415,583.58 467,354.08 142,576.85 445,331.18 517,685.89 \r\n73,018.13 628,197.55 581,163.60 \r\n30,499.61 46,580.78 16,634.77 525,822.77 \r\n290,000.00 100,510.00 \r\n8,169,513.37 \r\n-101,214.61 \r\n \r\n115,736.62 \r\n \r\n115,736.62 \r\n \r\n$ \r\n \r\n-94,615.50 $ 499,107.12 $ -389,969.61 $ \r\n \r\n14,522.01 \r\n \r\n$ -112,327.83 \r\n \r\n5,332,459.89 \r\n \r\n735,236.01 $ 5,955,368.07 \r\n \r\n$ -206,943.33 $ 5,831,567.01 $ 345,266.40 $ 5,969,890.08 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF \r\nREVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2012 \r\n \r\nEXHIBIT \"F\" \r\n \r\nTotal Net Change in Fund Balances - Governmental Funds (Exhibit \"E\") \r\nAmounts reported for Governmental Activities in the Statement of Activities are different because: \r\nCapital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are: \r\nCapital Outlay Depreciation Expense - Equipment Depreciation Expense - Buildings and Building Improvements Depreciation Expense - Land Improvements \r\nExcess of Capital Outlay over Depreciation Expense \r\nThe net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, donations, and disposals) is to decrease net assets. \r\nTaxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. \r\nRepayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of: \r\nBond Principal Retirements \r\nSome items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of: \r\nNet Increase (Decrease) in Accrued Interest \r\n \r\n$ \r\n \r\n14,522.01 \r\n \r\n$ 482,785.48 -218,999.50 -61,928.81 -17,954.00 \r\n \r\n183,903.17 -13,120.69 10,993.16 \r\n \r\n290,000.00 \r\n \r\n4,591.67 \r\n \r\nChange in Net Assets of Governmental Activities (Exhibit \"B\") \r\n \r\n$ 490,889.32 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS \r\nFIDUCIARY FUNDS JUNE 30, 2012 \r\n \r\nEXHIBIT \"G\" \r\n \r\nASSETS Cash and Cash Equivalents \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\nAGENCY FUNDS \r\n \r\n$ \r\n \r\n2,763.01 $ \r\n \r\n4,096.26 \r\n \r\nLIABILITIES Funds Held for Others \r\nNET ASSETS Held in Trust for Private Purposes \r\nTotal Liabilities and Net Assets \r\n \r\n$ \r\n \r\n4,096.26 \r\n \r\n$ \r\n \r\n2,763.01 \r\n \r\n$ \r\n \r\n2,763.01 $ \r\n \r\n4,096.26 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS \r\nFIDUCIARY FUNDS YEAR ENDED JUNE 30, 2012 \r\nADDITIONS None Reported \r\nDEDUCTIONS None Reported Change in Net Assets \r\nNet Assets - Beginning \r\nNet Assets - Ending \r\n \r\nEXHIBIT \"H\" \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\n$ \r\n \r\n0.00 \r\n \r\n$ \r\n \r\n0.00 \r\n \r\n$ \r\n \r\n0.00 \r\n \r\n2,763.01 \r\n \r\n$ \r\n \r\n2,763.01 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 9 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2012 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY \r\nREPORTING ENTITY \r\nThe Talbot County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is 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. \r\nNOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nBASIS OF PRESENTATION \r\nThe School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Talbot County Board of Education. \r\nDistrict-wide Statements: The Statement of Net Assets and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. \r\nThe Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. \r\n Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. \r\n Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. \r\nFund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. \r\nThe School District reports the following major governmental funds: \r\n General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund. \r\n District-wide Capital Projects Fund accounts for and reports financial resources including Special Purpose Local Option Sales Tax (SPLOST) and Bond Proceeds that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. \r\n Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (property) legally restricted for the payment of general long-term principal and interest. \r\n \r\n- 10 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2012 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe School District reports the following fiduciary fund types: \r\n Private Purpose Trust fund reports trust arrangements under which principal and income are used to provide scholarships to business administration and business education students with junior standing at an accredited college or university. \r\n Agency funds account for assets held by the School District as an agent for various funds, governments or individuals. \r\nBASIS OF ACCOUNTING \r\nThe basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. \r\nThe School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. \r\nGovernmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end, except for reimbursable grants. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt and claims and judgments, which is recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities are reported as other financing sources. \r\nThe School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. \r\nCASH AND CASH EQUIVALENTS \r\nComposition of Deposits Cash and cash equivalents consist of cash 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. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. \r\nINVESTMENTS \r\nComposition of Investments Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning contracts and money market investments with a maturity at purchase of one year or less are \r\n- 11 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2012 \r\n \r\nEXHIBIT \"I\" \r\n \r\nreported 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 School District 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: \r\n1. Obligations issued by the State of Georgia or by other states, \r\n2. Obligations issued by the United States government, \r\n3. Obligations fully insured or guaranteed by the United States government or a United States government agency, \r\n4. Obligations of any corporation of the United States government, \r\n5. Prime banker's acceptances, \r\n6. The Georgia Fund 1 administered by the State of Georgia, Office of the State Treasurer, \r\n7. Repurchase agreements, and \r\n8. Obligations of other political subdivisions of the State of Georgia. \r\nThe School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks. \r\nRECEIVABLES \r\nReceivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. \r\nPROPERTY TAXES \r\nThe Talbot County Board of Commissioners fixed the property tax levy for the 2011 tax digest year (calendar year) on October 20, 2011 (levy date). Taxes were due on December 20, 2011 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2011 tax digest are reported as revenue in the governmental funds for fiscal year 2012. The Talbot County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.50% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2012, for maintenance and operations amounted to $2,957,215.90. \r\nThe tax millage rate levied for the 2011 tax year (calendar year) for the Talbot County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value): \r\n \r\nSchool Operations \r\n \r\n14.11 m ills \r\n \r\nSALES TAXES \r\nSpecial Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $520,699.07 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. \r\n \r\n- 12 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2012 \r\n \r\nEXHIBIT \"I\" \r\n \r\nINVENTORIES \r\n \r\nFood Inventories On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. \r\n \r\nCAPITAL ASSETS \r\n \r\nCapital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. \r\n \r\nDuring the fiscal year under review, Central Elementary/High School band room sustained water damage in the amount of $23,995.78 and the gym suffered fire damage in the amount of $89,400.00, which resulted in an impairment of $8,113.28 and $643.41, respectively. The School District received insurance proceeds in the amount of $19,076.62 to cover the cost of the repairs related to the band room and $96,660.00 to cover the cost of the repairs related to the gym. No other events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District. \r\n \r\nCapitalization thresholds and estimated useful lives of capital assets reported in the District-wide \r\n \r\nstatements are as follows: \r\n \r\nCapitalization \r\n \r\nEstimated \r\n \r\nPolicy \r\n \r\nUseful Life \r\n \r\nLand Land Improvements Buildings and Improvements Equipment \r\n \r\nAll $ 10,000.00 $ 20,000.00 $ 5,000.00 \r\n \r\nN/A 20 to 50 years up to 50 years \r\n5 to 50 years \r\n \r\nDepreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. \r\nGENERAL OBLIGATION BONDS \r\nThe School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide and fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. To conform to generally accepted accounting principles, bond premiums and discounts, as well as bond issuance costs should be amortized over the life of the bonds on the \r\n \r\n- 13 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2012 \r\n \r\nEXHIBIT \"I\" \r\n \r\nDistrict-wide statements. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets. \r\nNET ASSETS \r\nThe School District's net assets in the District-wide Statements are classified as follows: \r\nInvested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt. \r\nRestricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal Programs, debt service and capital projects in accordance with restrictions imposed by external third parties. \r\nUnrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes. \r\nFUND BALANCES \r\nThe School District's fund balances are classified as follows: \r\nNonspendable  Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact. \r\nRestricted  Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. \r\nCommitted  Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. \r\nAssigned  Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes. \r\nUnassigned  The residual classification for the General Fund. This classification represents fund balances that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund. \r\n \r\n- 14 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2012 \r\n \r\nEXHIBIT \"I\" \r\n \r\nFund Balances of the Governmental Funds at June 30, 2012, are as follows: \r\n \r\nNonspendable Inventories \r\nRestricted Bus Replacement Continuation of Federal Programs Capital Projects Debt Service \r\nAssigned Capital Projects \r\nUnassigned General Fund \r\n \r\n$ 18,197.33 \r\n \r\n$ 39,451.00 8 6 ,2 5 4 .6 5 \r\n5 ,6 8 1 ,5 2 7 .2 5 3 5 7 ,5 0 0 .0 0 \r\n \r\n6 ,1 6 4 ,7 3 2 .9 0 \r\n \r\n1 3 7 ,8 0 6 .1 6 \r\n \r\n-3 5 0 ,8 4 6 .3 1 \r\n \r\nFund Balance, June 30, 2012 \r\n \r\n$ 5,969,890.08 \r\n \r\nWhen multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds. \r\nDEFICIT FUND BALANCES \r\n \r\nThe fund reporting a deficit fund balance at June 30, 2012, is as follows: \r\n \r\nFund Type/Fund Name \r\n \r\nDeficit Balance \r\n \r\nGeneral Fund \r\n \r\n$ 350,846.31 \r\n \r\nThe School District plans to eliminate the deficit through a reduction in spending and an increase in millage rate. \r\nUSE OF ESTIMATES \r\nThe preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. \r\nNOTE 3: BUDGETARY DATA \r\nThe budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America. \r\nThe budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. 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, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of \r\n \r\n- 15 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2012 \r\n \r\nEXHIBIT \"I\" \r\n \r\nOfficial Code of Georgia Annotated 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. \r\nThe Superintendent is authorized by the Board to approve adjustments of no more than five percent of the amount budgeted for expenditures in any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any budget function for any fund is anticipated to be more than five percent of the budgeted amount, the Superintendent shall request Board approval for the budget amendment. In such case, the expenditure shall be reported to the Board at its regularly scheduled meeting. Under no circumstance is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board. \r\nSee Schedule 1  General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances  Budget to Actual for a detail of any over/under expenditures during the fiscal year under review. \r\nNOTE 4: DEPOSITS AND INVESTMENTS \r\nCOLLATERALIZATION OF DEPOSITS \r\nOfficial Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance. \r\nAcceptable security for deposits consists of any one of or any combination of the following: \r\n1. Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, \r\n2. Insurance on accounts provided by the Federal Deposit Insurance Corporation, \r\n3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, \r\n4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, \r\n5. 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, \r\n6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and \r\n7. 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 or securities guaranteed 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. \r\n \r\n- 16 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2012 \r\n \r\nEXHIBIT \"I\" \r\n \r\nCATEGORIZATION OF DEPOSITS \r\nCustodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2012, the bank balances were $6,964,692.55. The bank balances were entirely covered by Federal depository insurance or collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name. \r\nCATEGORIZATION OF INVESTMENTS \r\nAt June 30, 2012, the carrying value of the School District's total investments was $98,677.12, which is materially the same as fair value. This investment consisted entirely of funds invested in the Georgia Fund 1, formerly referred to as LGIP, administered by the State of Georgia, Office of the State Treasurer which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.ga.gov/SGD/CAFR.html. \r\nThe Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2012, was 48 days. \r\nNOTE 5: NON-MONETARY TRANSACTIONS \r\nThe School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2  Inventories \r\n \r\n- 17 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2012 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 6: CAPITAL ASSETS \r\n \r\nThe following is a summary of changes in the Capital Assets during the fiscal year: \r\n \r\nGovernmental Activities Capital Assets, Not Being Depreciated: \r\nLand \r\n \r\nBalances July 1, 2011 \r\n \r\nIncreases \r\n \r\nDecreases \r\n \r\nBalances June 30, 2012 \r\n \r\n$ 354,857.93 $ \r\n \r\n0.00 $ \r\n \r\n0.00 $ \r\n \r\n354,857.93 \r\n \r\nCapital Assets, Being Depreciated: Buildings and Improvements Equipment Land Improvements \r\n \r\n$ 3,411,016.28 $ 113,395.78 $ 17,193.64 $ 1,812,094.78 369,389.70 449,084.25 558,998.55 \r\n \r\n3,507,218.42 1,732,400.23 \r\n558,998.55 \r\n \r\nLess: Accumulated Depreciation: Buildings and Improvements Equipment Land Improvements \r\n \r\n1,688,287.27 1,383,977.78 \r\n360,522.26 \r\n \r\n61,928.81 218,999.50 \r\n17,954.00 \r\n \r\n8,436.85 444,720.35 \r\n \r\n1,741,779.23 1,158,256.93 \r\n378,476.26 \r\n \r\nTotal Capital Assets, Being Depreciated, Net $ 2,349,322.30 $ 183,903.17 $ 13,120.69 $ 2,520,104.78 \r\n \r\nGovernmental Activity Capital Assets - Net $ 2,704,180.23 $ 183,903.17 $ 13,120.69 $ 2,874,962.71 \r\n \r\nCurrent year depreciation expense by function is as follows: \r\n \r\nInstruction \r\n \r\n$ 112,613.69 \r\n \r\nSupport Services \r\n \r\nGeneral Adm inistration \r\n \r\n$ 2,788.01 \r\n \r\nM aintenance and Operation of Plant \r\n \r\n1 ,7 6 5 .3 1 \r\n \r\nStudent Transportation Services \r\n \r\n1 0 9 ,3 7 5 .1 0 \r\n \r\n1 1 3 ,9 2 8 .4 2 \r\n \r\nFood Services \r\n \r\n7 2 ,3 4 0 .2 0 \r\n \r\n$ 298,882.31 \r\n \r\nNOTE 7: RISK MANAGEMENT \r\nThe 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. \r\nThe School District has obtained commercial insurance for risk of loss associated with torts, assets, and errors or omissions. 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. \r\nThe School District has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years. \r\nThe School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. \r\n \r\n- 18 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2012 \r\n \r\nEXHIBIT \"I\" \r\n \r\nChanges in the unemployment compensation claims liability during the last two fiscal years are as \r\n \r\nfollows: \r\n \r\nClaims and \r\n \r\nBeginning of Year \r\n \r\nChanges in \r\n \r\nC laim s \r\n \r\nEnd of Year \r\n \r\nLiability \r\n \r\nEstim ate s \r\n \r\nPaid \r\n \r\nLiability \r\n \r\n2011 \r\n \r\n$ \r\n \r\n2012 \r\n \r\n$ \r\n \r\n0.00 $ 0.00 $ \r\n \r\n65,459.12 $ 23,907.97 $ \r\n \r\n65,459.12 $ 23,907.97 $ \r\n \r\n0 .0 0 0 .0 0 \r\n \r\nThe School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Safety National Casualty Company with a loss fund percentage of 100%, based on the Fund's annual normal premium, up to a maximum limit of indemnity of aggregate limit of $2 million. \r\n \r\nThe School District has purchased surety bonds to provide additional insurance coverage as follows: \r\n \r\nPosition Covered \r\n \r\nAmount \r\n \r\nSuperintendent Bookkeeper Payroll Clerk School Food Director All Em ployees \r\n \r\n$ \r\n \r\n3 0 ,0 0 0 .0 0 \r\n \r\n$ \r\n \r\n1 0 ,0 0 0 .0 0 \r\n \r\n$ \r\n \r\n1 0 ,0 0 0 .0 0 \r\n \r\n$ \r\n \r\n1 0 ,0 0 0 .0 0 \r\n \r\n$ \r\n \r\n1 0 0 ,0 0 0 .0 0 \r\n \r\nNOTE 8: OPERATING LEASES \r\n \r\nTalbot County Board of Education has entered into various leases as lessee for copiers and a postage meter. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2012, for governmental funds amounted to $9,627.59. \r\nNOTE 9: SHORT-TERM DEBT \r\n \r\nThe School District issues tax anticipation notes in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred. \r\n \r\nShort-term debt activity for the fiscal year is as follows: \r\n \r\nB e gi n n i n g Balance \r\n \r\nIssued \r\n \r\nRedeemed \r\n \r\nEnding Balance \r\n \r\nTemporary Loans \r\n \r\n$ 250,000.00 $ 650,000.00 $ 900,000.00 $ \r\n \r\n0.00 \r\n \r\n- 19 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2012 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 10: LONG-TERM DEBT GENERAL OBLIGATION DEBT OUTSTANDING \r\n \r\nGeneral Obligation Bonds currently outstanding are as follows: \r\n \r\nPurpose \r\n \r\nInterest Rate \r\n \r\nGeneral Governm ent - Series 2003 \r\n \r\n3 .8 0 % \r\n \r\nAmount $ 2,500,000.00 \r\n \r\nThe changes in Long-Term Debt during the fiscal year ended June 30, 2012, were as follows: \r\n \r\nBalance July 1, 2011 \r\n \r\nAdditions \r\n \r\nGovernmental Funds Balance \r\nDeductions June 30, 2012 \r\n \r\nDue Within One Year \r\n \r\nG. O. Bonds \r\n \r\n$ 2,790,000.00 $ \r\n \r\n0.00 $ 290,000.00 $ 2,500,000.00 $ 310,000.00 \r\n \r\nAt June 30, 2012, payments due by fiscal year which includes principal and interest for these items are as follows: \r\n \r\nGeneral Obligation Debt \r\n \r\nPrincipal \r\n \r\nI n te r e st \r\n \r\nFiscal Year Ended June 30: \r\n \r\n2013 2014 2015 2016 2017 2018 - 2019 \r\n \r\n$ 310,000.00 $ 325,000.00 340,000.00 355,000.00 370,000.00 800,000.00 \r\n \r\n89,110.00 77,045.00 64,410.00 51,205.00 37,430.00 30,780.00 \r\n \r\nTotal Principal and Interest \r\n \r\n$ 2,500,000.00 $ 349,980.00 \r\n \r\nNOTE 11: ON-BEHALF PAYMENTS \r\nThe School District has recognized revenues and costs in the amount of $448,997.00 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. \r\nGeorgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Certificated Personnel In the amount of $439,212.00 \r\nOffice of the State Treasurer Paid to the Public School Employees' Retirement System For Public School Employees' Retirement (PSERS) Employer's Cost In the amount of $9,785.00 \r\n \r\n- 20 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2012 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 12: SIGNIFICANT CONTINGENT LIABILITIES \r\nAmounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. \r\nThe School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements. \r\nNOTE 13: RELATED PARTY TRANSACTIONS \r\nThe School District receives local tax receipts from the Talbot County Tax Commissioner's office. The Tax Commissioner is the spouse of the Interim Superintendent who served during the fiscal year until March 2012. \r\nNOTE 14: POST-EMPLOYMENT BENEFITS \r\nGEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND \r\nPlan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. \r\nFunding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012, pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy. \r\nParticipating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected \"pay-as-you-go\" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. \r\n \r\n- 21 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2012 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2012: \r\nFor certificated teachers, librarians and regional educational service agencies and certain other eligible participants: \r\n \r\nJune 2011 July 2011 August 2011 - March 2012 April 2012 - June 2012 \r\n \r\n1.429% of covered payroll for July coverage 18.534% of covered payroll for August coverage 24.000% of covered payroll for September - April coverage \r\n3.958% of covered payroll for May - July coverage \r\n \r\nFor non-certificated school personnel: \r\n \r\nJuly 2011 - August 2011 \r\n \r\n$246.20 per member per month \r\n \r\nSeptember 2011 - June 2012 $296.20 per member per month \r\n \r\nNo additional contribution was required by the Board for fiscal year 2012 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation. \r\n \r\nThe School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage Contributed \r\n \r\nRequired Contribution \r\n \r\n2012 2011 2010 \r\n \r\n100% 100% 100% \r\n \r\n$ \r\n \r\n740,616.54 \r\n \r\n$ \r\n \r\n577,548.76 \r\n \r\n$ \r\n \r\n667,167.09 \r\n \r\nNOTE 15: RETIREMENT PLANS \r\nTEACHERS' RETIREMENT SYSTEM OF GEORGIA (TRS) \r\nPlan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. 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. \r\nOn October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers' Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits. \r\nTRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service. \r\n- 22 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2012 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNormal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available. \r\nFunding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2012, were 5.53% of annual salary. The member contribution rate will increase to 6.00% effective July 1, 2012. Employer contributions required for fiscal year 2012 were 10.28% of annual salary as required by the June 30, 2009, actuarial valuation. The employer contribution rate will increase to 11.41% effective July 1, 2012. \r\n \r\nEmployer contributions for the current fiscal year and the preceding two fiscal years are as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage C o ntrib ute d \r\n \r\nRequired C o ntrib utio n \r\n \r\n2012 2011 2010 \r\n \r\n100% 100% 100% \r\n \r\n$ \r\n \r\n3 8 6 ,7 3 0 .4 0 \r\n \r\n$ \r\n \r\n4 1 9 ,1 3 0 .3 0 \r\n \r\n$ \r\n \r\n4 4 4 ,8 3 2 .4 3 \r\n \r\nPUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM (PSERS) \r\nBus drivers, lunchroom personnel, and maintenance and custodial personnel are members of the Public School Employees' Retirement System of Georgia. The System is funded by contributions by the employees and by the State of Georgia. The School District makes no contribution to this plan. \r\n \r\n- 23 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND \r\nSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL \r\nYEAR ENDED JUNE 30, 2012 \r\n \r\nSCHEDULE \"1\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation \r\nDebt Service \r\nTotal Expenditures \r\nExcess of Revenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nInsurance Proceeds Operating Transfers From Other Funds Operating Transfers To Other Funds \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\nAdjustments \r\nFund Balances - Ending \r\n \r\nNONAPPROPRIATED BUDGETS \r\n \r\nORIGINAL (1) \r\n \r\nFINAL (1) \r\n \r\nACTUAL AMOUNTS \r\n \r\nVARIANCE OVER/UNDER \r\n \r\n$ 2,974,803.00 $ 2,974,803.00 $ 2,980,468.63 $ \r\n \r\n342.68 \r\n \r\n31,600.24 \r\n \r\n2,758,953.55 \r\n \r\n2,916,108.62 \r\n \r\n2,840,653.31 \r\n \r\n740,803.00 \r\n \r\n1,537,932.76 \r\n \r\n1,455,165.54 \r\n \r\n55,000.00 \r\n \r\n55,000.00 \r\n \r\n74,527.28 \r\n \r\n8,261.00 \r\n \r\n8,261.00 \r\n \r\n631.49 \r\n \r\n61,000.00 \r\n \r\n67,385.00 \r\n \r\n108,556.04 \r\n \r\n$ 6,598,820.55 $ 7,559,833.06 $ 7,491,602.53 $ \r\n \r\n5,665.63 31,257.56 -75,455.31 -82,767.22 19,527.28 -7,629.51 41,171.04 \r\n-68,230.53 \r\n \r\n$ 3,663,139.13 $ 4,059,573.64 $ 3,850,280.08 $ \r\n \r\n319,023.66 296,481.97 145,765.00 407,086.64 431,339.20 \r\n75,782.00 548,363.33 377,601.00 \r\n11,000.00 30,304.19 \r\n511,500.00 3,652.20 \r\n \r\n329,439.66 494,508.01 145,765.00 421,346.44 507,028.20 \r\n75,782.00 548,361.60 618,335.72 \r\n11,000.00 35,477.19 \r\n511,500.00 16,634.77 \r\n \r\n415,583.58 467,354.08 142,576.85 445,331.18 517,685.89 \r\n73,018.13 589,423.33 581,163.60 \r\n30,499.61 46,580.78 16,634.77 525,822.77 \r\n \r\n$ 6,821,038.32 $ 7,774,752.23 $ 7,701,954.65 $ \r\n \r\n$ -222,217.77 $ -214,919.17 $ -210,352.12 $ \r\n \r\n209,293.56 \r\n-86,143.92 27,153.93 \r\n3,188.15 -23,984.74 -10,657.69 \r\n2,763.87 -41,061.73 37,172.12 11,000.00 \r\n4,977.58 -46,580.78 -16,634.77 -14,322.77 16,634.77 \r\n72,797.58 \r\n4,567.05 \r\n \r\n$ 115,736.62 $ 115,736.62 \r\n \r\n$ \r\n \r\n95,000.00 $ 137,756.17 \r\n \r\n-137,756.17 \r\n \r\n-95,000.00 \r\n \r\n-137,756.17 \r\n \r\n137,756.17 \r\n \r\n$ \r\n \r\n0.00 $ \r\n \r\n0.00 $ 115,736.62 $ 115,736.62 \r\n \r\n$ -222,217.77 $ -214,919.17 $ \r\n \r\n-94,615.50 $ 120,303.67 \r\n \r\n297,774.00 \r\n \r\n297,774.00 \r\n \r\n-112,327.83 \r\n \r\n-410,101.83 \r\n \r\n1,618.44 \r\n \r\n266,545.27 \r\n \r\n-266,545.27 \r\n \r\n$ \r\n \r\n77,174.67 $ 349,400.10 $ -206,943.33 $ -556,343.43 \r\n \r\nNotes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual \r\n(1) Original and Final Budget amounts do not include actual revenues ($70,345.42) or expenditures ($77,835.91) of the various principal accounts. \r\nThe accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. \r\nSee notes to the basic financial statements. \r\n- 25 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\nYEAR ENDED JUNE 30, 2012 \r\n \r\nSCHEDULE \"2\" \r\n \r\nFUNDING AGENCY PROGRAM/GRANT \r\nAgriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program \r\nTotal Child Nutrition Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Food Services Fresh Fruit and Vegetable Program \r\nTotal U. S. Department of Agriculture \r\nEducation, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants \r\nTotal Special Education Cluster \r\nTitle I, Part A Cluster Pass-Through From Georgia Department of Education ARRA - Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies \r\nTotal Title I, Part A Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Education Jobs Fund Even Start - State Educational Agencies Improving Teacher Quality State Grants Safe and Drug-Free Schools and Communities - State Grants \r\nTotal Other Programs \r\nTotal U. S. Department of Education \r\nHealth and Human Services, U. S. Department of Child Care and Development Fund Cluster Pass-Through From Georgia Department of Human Services Child Care and Development Block Grant \r\nJustice, U. S. Department of Pass-Through From Children and Youth Coordinating Council Juvenile Justice and Delinquency Prevention \r\nDefense, U. S. Department of Direct Department of the Army R.O.T.C. Program \r\n \r\nCFDA NUMBER \r\n \r\nPASSTHROUGH \r\nENTITY ID \r\nNUMBER \r\n \r\nEXPENDITURES IN PERIOD \r\n \r\n* 10.553 * 10.555 \r\n \r\nN/A \r\n \r\nN/A \r\n \r\n$ \r\n \r\n$ \r\n \r\n(2) 484,005.45 (1) \r\n484,005.45 \r\n \r\n10.582 \r\n \r\nN/A $ \r\n \r\n30,213.32 514,218.77 \r\n \r\n* 84.027 * 84.173 \r\n \r\nN/A \r\n \r\n$ \r\n \r\nN/A \r\n \r\n$ \r\n \r\n122,990.16 18,909.00 \r\n141,899.16 \r\n \r\n* 84.389 * 84.010 \r\n \r\nN/A \r\n \r\n$ \r\n \r\nN/A \r\n \r\n$ \r\n \r\n27,419.06 632,922.18 \r\n660,341.24 \r\n \r\n84.048 84.410 84.213 84.367 84.186 \r\n \r\nN/A \r\n \r\n$ \r\n \r\nN/A \r\n \r\nN/A \r\n \r\nN/A \r\n \r\nN/A \r\n \r\n$ \r\n \r\n$ \r\n \r\n11,381.19 1,636.00 \r\n141,558.92 56,039.34 5,777.55 \r\n216,393.00 \r\n1,018,633.40 \r\n \r\n93.575 16.540 \r\n \r\nN/A \r\n \r\n$ \r\n \r\nN/A \r\n \r\n$ \r\n \r\n16,634.77 7,410.96 \r\n \r\n$ \r\n \r\n57,068.76 \r\n \r\nTotal Expenditures of Federal Awards N/A = Not Available \r\n \r\n- 26 - \r\n \r\n$ \r\n \r\n1,613,966.66 \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\nYEAR ENDED JUNE 30, 2012 \r\n \r\nSCHEDULE \"2\" \r\n \r\nNotes to the Schedule of Expenditures of Federal Awards \r\n(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $30,064.05. \r\n(2) Expenditures for the funds earned on the School Breakfast Program ($103,051.44) were not maintained separately and are included in the 2012 National School Lunch Program. \r\nMajor Programs are identified by an asterisk (*) in front of the CFDA number. \r\nThe School District did not provide Federal Assistance to any Subrecipient. \r\nThe accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Talbot County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 27 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2012 \r\n \r\nAGENCY/FUNDING \r\nGRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program \r\nEducation, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Prevention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operation Mid-term Adjustment Hold-Harmless Categorical Grants Pupil Transportation Regular Sparsity Food Services Nursing Services State Health Reimbursement Vocational Supervisors Amended Formula Adjustment Other State Programs Math and Science Supplements Preschool Handicapped Program Pupil Transportation - State Bonds Vocational Education \r\nOffice of State Treasurer Public School Employees Retirement \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 28 - \r\n \r\nSCHEDULE \"3\" \r\n \r\nGOVERNMENTAL FUND TYPE GENERAL FUND \r\n \r\n$ \r\n \r\n54,804.84 \r\n \r\n102,970.00 3,139.00 \r\n276,202.00 43,782.00 \r\n149,692.00 23,016.00 54,265.00 \r\n441,630.00 137,851.00 233,233.00 \r\n27,626.00 24,382.00 43,655.00 14,324.00 \r\n7,974.00 \r\n214,483.00 103,258.00 103,424.00 111,003.00 \r\n213,961.00 121,368.00 \r\n11,604.00 27,682.00 439,212.00 \r\n7,047.00 -424,305.00 \r\n3,289.17 18,054.00 228,803.50 13,438.80 \r\n9,785.00 \r\n$ 2,840,653.31 \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS \r\nYEAR ENDED JUNE 30, 2012 \r\n \r\nSCHEDULE \"4\" \r\n \r\nPROJECT \r\n \r\nORIGINAL ESTIMATED \r\nCOST (1) \r\n \r\nCURRENT ESTIMATED COSTS (2) \r\n \r\nAMOUNT EXPENDED IN CURRENT YEAR (3) \r\n \r\nAMOUNT EXPENDED IN PRIOR YEARS (3) \r\n \r\nTOTAL COMPLETION \r\nCOST \r\n \r\nEXCESS PROCEEDS NOT \r\nEXPENDED \r\n \r\nESTIMATED COMPLETION \r\nDATE \r\n \r\nAcquiring, constructing and equipping one new elementary school; adding to, renovating, repairing, improving, and equipping existing school buildings and other buildings and facilities useful or desirable in connection therewith; payment of capitalized interest on the bonds through and including August 1, 2003; and the costs of issuing the bonds. \r\n \r\n$ 2,500,000.00 $ 3,025,086.98 $ 177,558.72 $ 2,847,528.26 $ \r\n \r\n0.00 $ \r\n \r\n0.00 September 2014 \r\n \r\n(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. \r\n(2) The School District's current estimate of total cost for the project. Includes all cost from project inception to completion. \r\n(3) The voters of Talbot County approved the imposition of a 1% sales tax to fund the above project and retire associated debt. Amounts expended for this project may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 29 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) \r\nALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2012 \r\n \r\nSCHEDULE \"5\" \r\n \r\nDESCRIPTION \r\nDirect Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category II Category III Category IV Remedial Education Program Alternative Education Program \r\nTOTAL DIRECT INSTRUCTIONAL PROGRAMS \r\nMedia Center Program Staff and Professional Development \r\n \r\nALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) \r\n \r\nELIGIBLE QBE PROGRAM COSTS \r\n \r\nSALARIES \r\n \r\nOPERATIONS \r\n \r\nTOTAL \r\n \r\n$ \r\n \r\n152,119.00 $ 174,924.61 $ 4,606.70 $ \r\n \r\n179,531.31 \r\n \r\n14,111.00 \r\n \r\n30,528.76 \r\n \r\n30,528.76 \r\n \r\n414,181.00 \r\n \r\n352,268.11 \r\n \r\n20,143.39 \r\n \r\n372,411.50 \r\n \r\n72,089.00 \r\n \r\n39,164.88 \r\n \r\n39,164.88 \r\n \r\n225,368.00 \r\n \r\n182,676.49 \r\n \r\n9,101.09 \r\n \r\n191,777.58 \r\n \r\n45,766.00 \r\n \r\n57,473.24 \r\n \r\n57,473.24 \r\n \r\n66,525.00 402,611.00 352,645.00 124,363.00 373,013.00 \r\n50,208.00 36,707.00 \r\n \r\n634,625.57 593.16 \r\n491,440.04 315,388.11 \r\n67,079.24 248,623.59 \r\n83,630.27 41,322.04 21,875.78 \r\n \r\n6,323.50 18,449.29 24,356.03 24,107.24 \r\n3,158.00 \r\n88.24 \r\n \r\n640,949.07 19,042.45 \r\n515,796.07 339,495.35 \r\n70,237.24 248,623.59 \r\n83,718.51 41,322.04 21,875.78 \r\n \r\n$ \r\n \r\n2,329,706.00 $ 2,741,613.89 $ 110,333.48 $ 2,851,947.37 \r\n \r\n66,662.00 12,063.00 \r\n \r\n109,464.01 \r\n \r\n5,189.11 9,573.58 \r\n \r\n114,653.12 9,573.58 \r\n \r\nTOTAL QBE FORMULA FUNDS \r\n \r\n$ \r\n \r\n2,408,431.00 $ 2,851,077.90 $ 125,096.17 $ 2,976,174.07 \r\n \r\n(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 31 - \r\n \r\n SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJune 28, 2013 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\nLadies and Gentlemen: \r\nWe have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Talbot County Board of Education as of and for the year ended June 30, 2012, which collectively comprise Talbot County Board of Education's basic financial statements and have issued our report thereon dated June 28, 2013. 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. \r\nInternal Control Over Financial Reporting \r\nManagement of Talbot County Board of Education is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered Talbot County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Talbot County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Talbot County Board of Education's internal control over financial reporting. \r\nOur consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses and therefore, there can be no assurances that all deficiencies, significant deficiencies or material weaknesses have been identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses and other deficiencies that we consider to be significant deficiencies. \r\n \r\n2012YB-40 \r\n \r\n A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider items FS-7301-12-01 and FS-7301-12-05 to be material weaknesses. \r\nA significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider items FS-7301-12-02, FS-7301-12-03, FS-7301-12-04 and FS-7301-1206 in the accompanying Schedule of Findings and Questioned Costs to be significant deficiencies in internal control over financial reporting. \r\nCompliance and Other Matters \r\nAs part of obtaining reasonable assurance about whether Talbot County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. \r\nWe noted certain matters that we have reported to management of Talbot County Board of Education in a separate letter dated June 28, 2013. \r\nTalbot County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Talbot County Board of Education's response and, accordingly, we express no opinion on the response. \r\nThis report is intended solely for the information and use of management, members of the Talbot County Board of Education, others within the entity, 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. \r\nRespectfully submitted, \r\n \r\nGSG:as 2012YB-40 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJune 28, 2013 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 \r\nLadies and Gentlemen: \r\nCompliance \r\nWe have audited Talbot County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2012. Talbot County 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 with the requirements of laws, regulations, contracts, and grants applicable to each of its major Federal programs is the responsibility of Talbot County Board of Education's management. Our responsibility is to express an opinion on Talbot County Board of Education's compliance based on our audit. \r\nWe conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, 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 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 Talbot County 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 Talbot County Board of Education's compliance with those requirements. \r\nAs described in item FA-7301-12-02, in the accompanying Schedule of Findings and Questioned Costs, Talbot County Board of Education did not comply with requirements regarding Reporting that are applicable to its Title 1, Part A Cluster. Compliance with such requirements is necessary, in our opinion, for Talbot County Board of Education to comply with requirements applicable to that program. \r\n2012SA-65 \r\n \r\n In our opinion, except for the noncompliance described in the preceding paragraph, Talbot County Board of Education complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2012. \r\nInternal Control Over Compliance \r\nManagement of Talbot County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal programs. In planning and performing our audit, we considered Talbot County Board of Education's internal control over compliance with the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Talbot County Board of Education's internal control over compliance. \r\nOur consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses and other deficiencies that we consider to be significant deficiencies. \r\nA deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiency in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as item FA-7301-12-02 to be a material weakness. \r\nA significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiency in internal controls over compliance described in the accompanying Schedule of Findings and Questioned Costs as item FA-7301-12-01 to be a significant deficiency. \r\nTalbot County Board of Education's responses to the findings identified in our audit are described in the accompanying Schedule of Management's Responses. We did not audit Talbot County Board of Education's responses and, accordingly, we express no opinion on the responses. \r\n2012SA-65 \r\n \r\n This report is intended solely for the information and use of management, members of the Talbot County Board of Education, others within the entity, 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. \r\nRespectfully submitted, \r\n \r\nGSG:as 2012SA-65 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2012 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER \r\n \r\nAUDITEE'S RESPONSE/STATUS \r\n \r\nSEE AUDITOR'S COMMENTS \r\n \r\nFS-7301-10-01 \r\n \r\nFurther Action Not Warranted \r\n \r\nFS-7301-10-02 \r\n \r\nFurther Action Not Warranted \r\n \r\nFS-7301-10-03 \r\n \r\nFurther Action Not Warranted \r\n \r\nFS-7301-10-04 \r\n \r\nFurther Action Not Warranted \r\n \r\nFS-7301-10-05 \r\n \r\nFurther Action Not Warranted \r\n \r\nFS-7301-11-01 \r\n \r\nUnresolved - See Corrective Action/Responses \r\n \r\nFS-7301-11-02 \r\n \r\nUnresolved - See Corrective Action/Responses \r\n \r\nFS-7301-11-03 \r\n \r\nUnresolved - See Corrective Action/Responses \r\n \r\nFS-7301-11-04 \r\n \r\nFurther Action Not Warranted \r\n \r\n(1) \r\n \r\nFS-7301-11-05 \r\n \r\nUnresolved - See Corrective Action/Responses \r\n \r\nFS-7301-11-06 \r\n \r\nUnresolved - See Corrective Action/Responses \r\n \r\nFS-7301-11-07 \r\n \r\nUnresolved - See Corrective Action/Responses \r\n \r\nAUDITOR'S COMMENTS \r\n \r\n(1) Findings/internal control deficiencies of this nature, that are not deemed significant deficiencies or material weaknesses and do not require reporting in the audit report in accordance with Statements on Auditing Standards (SAS) 115 or Governmental Auditing Standards (Yellow Book), will be communicated in a management letter. \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nBUDGET PREPARATION/EXECUTION Deficit Fund Balance Finding Control Number: FS-7301-11-01 \r\n \r\nThe Board will establish policies and procedures designed to ensure that in the future the School District does not report a deficit balance. \r\n \r\nCASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Finding Control Number: FS-7301-11-02 \r\n \r\nThe Board will implement controls over cash to ensure that cash is properly reconciled to general ledger and cash activity is maintained in the proper fund. Additional staff will be assigned the duty of monthly bank reconciliations and will monitor as well as review with signatures from the Superintendent. \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2012 \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCORRECTIVE ACTION/RESPONSES \r\nCASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS ACCOUNTING CONTROLS (OVERALL) FINANCIAL REPORTING Inadequate Internal Controls over School Activity Accounts Finding Control Number: FS-7301-11-03 \r\nThe Board will revise and implement internal controls to ensure that proper separation of duties are established. Accounting procedures will be accurately monitored and financial statement amounts will be reconciled to the general ledger balances. \r\nEMPLOYEE COMPENSATION Inadequate Internal Controls over Employee Compensation Process Finding Control Number: FS-7301-11-05 \r\nThe Board will implement policies and procedures to ensure that business procedures are followed for all salaries, ensuring that salaries are paid according to approved salary schedules and adequate documentation will be maintained to support the salary payments. \r\nCAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-7301-11-06 \r\nThe Board will implement procedures to ensure capital assets records conform to the approved capital assets policy. \r\nFINANCIAL REPORTING Inadequate Controls over Financial Reporting Finding Control Number: FS-7301-11-07 \r\nThe Board will implement procedures to ensure that all required activity in the form of journal entries are in the financial statements. Management will ensure that the financial statements are in accordance with Chapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration. Additionally, financial statements will be prepared in accordance with generally accepted accounting principles. \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2012 \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER \r\n \r\nAUDITEE'S RESPONSE/STATUS \r\n \r\nFA-7301-10-01 FA-7301-11-01 FA-7301-11-02 FA-7301-11-03 FA-7301-11-04 \r\n \r\nPartially Resolved  See Corrective Action/Responses Partially Resolved  See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nALLOWABLE COSTS/COST PRINCIPLES Salaries Not Properly Supported U. S. Department of Education Through Georgia Department of Education Title 1, Part A Cluster (CFDA 84.010 and 84.389) Special Education Cluster (CFDA 84.027, 84.173, 84.391 and 84.392) Questioned Cost: $2,163.55 Special Education Cluster (CFDA 84.027, 84.173, 84.391 and 84.392) $36,290.87 Title 1, Part A Cluster (CFDA 84.010 and 84.389) Finding Control Number: FA-7301-10-01 \r\n \r\nThe School District has implemented policies and procedures to ensure that normal business procedures are followed for all salaries, which includes ensuring that Federal funded salaries are paid according to approved salary schedules. \r\n \r\nALLOWABLE COSTS/COST PRINCIPLES Non-Title I Personnel Paid with Title I Funds U. S. Department of Education Through Georgia Department of Education Title I, Part A Cluster (CFDA 84.010 and 84.389) Questioned Cost: $52,150.50 Finding Control Number: FA-7301-11-01 \r\n \r\nThe Board is awaiting a review from Georgia Department of Education. \r\n \r\nCASH MANAGEMENT Excessive Cash Balances U. S. Department of Education Through Georgia Department of Education Title I, Part A Cluster (CFDA 84.010 and 84.389) Finding Control Number: FA-7301-11-02 \r\n \r\nThe Board will implement procedures to accurately forecast the cash needs. Management will maintain supporting documentation for the drawdowns and procedures to minimize lapsing time between transfers. \r\n \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2012 \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES REPORTING Failure to File Accurate Completion Reports U. S. Department of Education Through Georgia Department of Education Title I, Part A Cluster (CFDA 84.010 and 84.389) Finding Control Number: FA-7301-11-03 The Board will implement procedures to ensure that accounting records for completion reports agree with actual expenditures. \r\n- 4 - \r\n \r\n SECTION IV FINDINGS AND QUESTIONED COSTS \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2012 \r\n \r\nI SUMMARY OF AUDITOR'S RESULTS \r\n \r\nFinancial Statements \r\n \r\nType of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information \r\n \r\nUnqualified \r\n \r\nInternal control over financial reporting: \r\n \r\n Material weaknesses identified? \r\n \r\nYes \r\n \r\n Significant deficiencies identified? \r\n \r\nYes \r\n \r\nNoncompliance material to financial statements noted: \r\n \r\nNo \r\n \r\nFederal Awards \r\n \r\nInternal Control over major programs: \r\n \r\n Material weakness identified? \r\n \r\nYes \r\n \r\n Significant deficiency identified? \r\n \r\nYes \r\n \r\nType of auditor's report issued on compliance for major programs: Unqualified for all major programs, except for Title I, Part A Cluster which is qualified. \r\n \r\nAny audit findings disclosed that are required to be reported in \r\n \r\naccordance with OMB Circular A-133, Section 510(a)? \r\n \r\nYes \r\n \r\nIdentification of major programs: \r\n \r\nCFDA Numbers \r\n \r\nName of Federal Program or Cluster \r\n \r\n10.553, 10.555 84.010, 84.389 84.027, 84.173 \r\n \r\nChild Nutrition Cluster Title I, Part A Cluster Special Education Cluster \r\n \r\nDollar threshold used to distinguish between Type A and Type B programs: \r\n \r\n$300,000.00 \r\n \r\nAuditee qualified as low-risk auditee? \r\n \r\nNo \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nBUDGET PREPARATION/EXECUTION Deficit Fund Balance Failure to Adopt a Balanced Budget Material Weakness Finding Control Number FS-7301-12-01 \r\n \r\nCondition: This is a repeat finding (FS-7301-11-01, FS-7301-10-01, and FS-7301-09-01) from the years ended June 30, 2011, June 30, 2010 and June 30, 2009, respectively. The General Fund of the School District reported a deficit fund balance. \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2012 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCriteria: Chapter 25 Reporting for LUAs with Governmental Fund Deficit Balances of the Financial Management for Georgia Local Units of Administration states in part: \"The seriousness of fund balance deficits cannot be overstated. The Georgia Department of Education requires those LUAs with deficit governmental fund balances to meet certain reporting requirements\". \r\nQuestioned Cost: N/A \r\nInformation: The School District's General Fund reported a deficit fund balance in the amount of $350,846.31. \r\nCause: The School District's General Fund incurred expenditures in excess of revenues during the previous years. In addition, management failed to use effective budgeting techniques and continued charging expenditures to state and Federal programs after the award amounts had been depleted. \r\nEffect: A financial statement irregularity in accordance with Official Code of Georgia Annotated 20-2-67. \r\nRecommendation: The School District should establish policies and procedures designed to ensure that in future period the School District does not report a deficit fund balance. \r\nCASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Significant Deficiency Finding Control Number: FS-7301-12-02 \r\nCondition: This is a repeat finding (FS-7301-11-02, FS-7301-10-02 and FS 7301-09-02) from the years ended June 30, 2011, June 30, 2010, and June 30, 2009, respectively. The accounting procedures of the School District were insufficient to provide adequate internal controls over the Cash and Cash Equivalents function. \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls over Cash and Cash Equivalents. \r\nQuestioned Cost: N/A \r\nInformation: Weaknesses in internal controls relating to Cash and Cash Equivalents were noted as follows: \r\n An administrative review of monthly bank reconciliations, to determine that bank reconciliations were correct and that all required adjustments had been made, was not performed. \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2012 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n Processes were not in place to ensure cash activity was maintained in the proper fund in the general ledger. A review of bank account activity by fund noted Private Purpose Trust Fund cash was recorded in the General Fund and Special Purpose Local Option Sales Tax cash was recorded in the General Fund. \r\n Bank reconciliations were not performed by someone independent of the general ledger function. \r\nCause: The School District did not design internal controls to properly reconcile and maintain cash activity on the general ledger. \r\nEffect: Failure to maintain adequate internal controls over cash activity increases the risk significant misstatements could occur in the financial statements due to error or fraud. \r\nRecommendation: The School District should design and implement controls over cash to ensure (1) monthly bank reconciliations are adequately reviewed, (2) cash activity is maintained in the proper funds, and (3) bank reconciliations are performed by someone independent of the general ledger. \r\nCASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS ACCOUNTING CONTROLS (OVERALL) FINANCIAL REPORTING Inadequate Internal Controls over School Activity Accounts Significant Deficiency Finding Control Number: FS-7301-12-03 \r\nCondition: This is a repeat finding (FS 7301-11-03, FS-7301-10-03 and FS-7301-09-04) from the years ended June 30, 2011, June 30, 2010, and June 30, 2009, respectively. The accounting procedures of the School District were insufficient to provide adequate internal controls over school activity accounts. \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and provide reasonable assurance transactions are processed according to established procedures. \r\nQuestioned Cost: N/A \r\nInformation: Cash and Cash Equivalents \r\n The CSS Internal School Fund account was not reconciled to the general ledger resulting in an unidentified variance. \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2012 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nRevenues/Receivables/Receipts  The deposit preparation function was not separated from the bank reconciliations and general ledger functions.  Gate receipts were not kept in a secured location prior to depositing in the bank.  Dues/Fees collected from students were not receipted by the teachers.  The depositing of funds to the bank was not a standard process for all school activity accounts. \r\nAccounting Controls (Overall)  An administrative review of the bank reconciliation process, cash receipt process, and cash disbursement process to determine if established accounting procedures were being followed was not performed.  The School District did not have a formal process for documenting agency funds sponsors, purpose of accounts, allowable activities of accounts, sources of funds, and final disposition of funds related to individual agency fund accounts. \r\nFinancial Reporting  School activity account balances used for financial statements reporting did not agree with school activity general ledgers.  Several school activity accounts were misclassified as governmental accounts instead of agency accounts.  Several beginning fund balances reported on the consolidation worksheet used to record School Activity Accounts to the central office's general ledger did not agree to the prior year ending balances. \r\nCause: These deficiencies were a result of management's failure to ensure internal controls were properly designed and functioning at the school level. \r\nEffect: Failure to maintain adequate internal controls over school activity accounts increases the risk misstatements could occur in the financial statements due to error or fraud. \r\nRecommendation: The School District should revise and implement internal controls to ensure proper separation of duties is established, accounting processes are adequately monitored, school activity accounts are properly classified, financial statement amounts are reconciled to general ledger balances, standard procedures are implemented over the depositing of funds, amounts reported in consolidation spreadsheet for school activity accounts is accurate, and agency fund accounts are properly documented. \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2012 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nEMPLOYEE COMPENSATION Inadequate Internal Controls over Employee Compensation Process Significant Deficiency Finding Control Number: FS-7301-12-04 \r\nCondition: This is a repeat finding (FS-7301-11-05, FS-7301-10-05, and FS-7301-09-08) from the years ended June 30, 2011, June 30, 2010, and June 30 2009, respectively. The accounting procedures of the School District were insufficient to provide for adequate internal controls over employee compensation. \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance employees are paid according to approved salary schedules and documentation is maintained to support the salary payments. \r\nQuestioned Cost: N/A \r\nInformation:  A review of employee compensation revealed several instances where salaries were not properly approved, supported by signed contracts and/or Board approved salary schedules.  During review of the Board minutes, it was noted that all employees should be furloughed. During employee compensation testing, it was noted that furloughs were not taken for all employees, resulting in an overpayment of $8,147.07.  One employee's salary totaling $7,628.37 was excluded from the salary information reported to the Georgia Department of Audits and Accounts.  A review of purchased professional and technical service expenditures revealed additional compensation paid to employees of the School District in the amount of $17,996.00 that did not flow though the normal business process for salaries as established by the School District. \r\nCause: The School District's management did not implement appropriate procedures to ensure salary amounts are supported by adequate documentation. \r\nEffect: Failure to maintain adequate internal controls over Employee Compensation increases the risk misstatements could occur in the financial statements due to error or fraud. \r\nRecommendation: The School District should implement policies and procedures to ensure normal business procedures are followed for all salaries, which includes ensuring salaries are paid according to approved salary schedules and adequate documentation is maintained to support the salary payments. \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2012 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCAPITAL ASSETS Failure to Adequately Maintain Capital Assets Material Weakness Finding Control Number: FS-7301-12-05 \r\nCondition: This is a repeat finding (FS-7301-11-06) from the year ended June 30, 2011. The School District failed to adequately maintain a capital assets listing. \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance capital assets inventory records are properly maintained. \r\nChapter 37 Implementing a Capital Assets Management System of the Financial Management for Georgia Local Units of Administration provides that School Districts must establish fixed asset policies, define system requirements, implement a fixed asset system and maintain fixed asset inventory records. \r\nQuestioned Cost: N/A \r\nInformation: A review of the School District's capital assets records revealed the following exceptions: \r\n During our physical inspection of inventory items, we identified items (1) not tagged, (2) not included on the asset listing, and (3) impaired or obsolete. \r\n The School District does not have policies and procedures in place to identify the possible impairments of assets. The auditor's prepared and the entity accepted an entry to correctly present impaired assets on the entity's financial statements. \r\n The School District has not conducted a proper annual physical inventory.  A reconciliation of current year expense to fixed assets additions to identify unrecorded \r\nassets was not performed.  The capital assets listing does not have adequate descriptions and/or inventory numbers \r\nassigned to assets. \r\nCause: The School District failed to properly maintain capital assets records in accordance with the approved capital assets policy. \r\nEffect: The failure of the School District to maintain a complete and accurate capital assets listing can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles. \r\nRecommendation: The School District's management should review the capital assets records and make appropriate adjustments to ensure the capital assets records conform to the School District's approved capital assets policy. \r\n- 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2012 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nFINANCIAL REPORTING Inadequate Controls over Financial Reporting Significant Deficiency Finding Control Number: FS-7301-12-06 \r\nCondition: This is a repeat finding (FS-7301-11-07) from the year ended June 30, 2011. The School District did not have adequate controls in place to ensure that all required activity was included in the financial statement information presented for audit. \r\nCriteria: Chapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles. \r\nQuestioned Cost: N/A \r\nInformation: The Governmental Accounting Standards Board (GASB) Statement 34 reporting model requires the presentation of both fund level and entity-wide level statements in the School District's financial statements. During the audit, numerous correcting entries were proposed by the auditors and accepted by the client to properly present the entity's fund level and entity-wide level financial statements, including note disclosures. In addition, the auditors identified numerous immaterial uncorrected misstatements which management determined that their effects were immaterial, both individually and in the aggregate, to the financial statements as a whole. \r\nCause: The School District did not implement an adequate system of internal control over the financial reporting process. \r\nEffect: The School District did not have adequate controls in place to ensure the financial statements were properly prepared in accordance with generally accepted accounting principles. \r\nRecommendation: The School District should implement internal controls over the financial reporting process to ensure all required activity is included in the financial statement information. \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2012 \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nCASH MANAGEMENT Excessive Cash Balances Significant Deficiency U. S. Department of Education Through Georgia Department of Education Title I, Part A Cluster (CFDA 84.010 and 84.389) Finding Control Number: FA-7301-12-01 \r\nCondition: This is a repeat finding (FA-7301-11-02) from the year ended June 30, 2011. The School District made cash drawdowns that were in excess of immediate cash needs. \r\nCriteria: In accordance with 34 CFR 80.21, when funds are advanced, School Districts must follow procedures to minimize the time lapsing between the transfer of funds from the Georgia Department of Education and disbursement \r\nQuestioned Cost: N/A \r\nInformation:  The School District maintained excessive cash balances for eight months.  A review of several cash drawn downs revealed the supporting documentation did not tie to the amounts drawn down. \r\nCause: The School District did not accurately forecast the actual cash needs of the programs resulting in noncompliance with grant requirements. \r\nEffect: Failure to monitor the cash needs of the programs can result in material noncompliance with requirements of the Federal grants. \r\nRecommendation: The School District should implement procedures to accurately forecast the actual cash needs of the Title I programs and maintain supporting documentation for the cash draw downs. Management should implement procedures to minimize the time lapsing between the transfer of funds from the Georgia Department of Education and disbursement. \r\n- 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2012 \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nREPORTING Failure to File Accurate Completion Reports Material Weakness Material Noncompliance U. S. Department of Education Through Georgia Department of Education Title I, Part A Cluster (CFDA 84.010) Finding Control Number: FA-7301-12-02 \r\nCondition: This is a repeat finding (FA-7301-11-03) from the year ended June 30, 2011. The School District failed to file accurate completion reports for the Title I, Part A Cluster (CFDA 84.010). \r\nCriteria: In accordance with provisions of OMB Circular A-133, Part 3 Compliance Supplement, Subpart L  Reporting, states in part, \"Each recipient must report program outlays and program income...as prescribed by the Federal awarding agency. The reporting requirements for sub recipients are as specified by the pass-through entity.\" \r\nChapter 41, State and Federal Fiscal Rules and Procedures of the Financial Management for Georgia Local Unit of Administration states, \"This chapter sets forth the principal requirements that a School District must meet to account for and externally report its budget and financial operations relating to state and Federally-funded programs administered by the Georgia Department of Education.\" \r\nQuestioned Cost: N/A \r\nInformation: A review of the School District's accounting records revealed the following: \r\n1. Actual Title I, Part A Cluster expenditures for the School Improvement grant period ending September 30, 2012, totaled $107,207.48 while expenditures were reported on the completion report as $81,385.00, resulting in a variance of $25,822.48. \r\n2. Actual Title I, Part A Cluster expenditures for Improving the Academic Achievement of the Disadvantaged grant period ending September 30, 2012, totaled $551,119.50 while expenditures were reported on the completion reports as $523,028.92, resulting in a variance of $28,090.58. \r\nCause: Management failed to implement procedures to ensure amounts on the completion reports agreed with actual expenditures. \r\n- 9 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2012 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Effect: Failure to accurately report Federal expenditures can result in inaccurate and incomplete disclosures for Federal grant reporting purposes and can result in excessive claims for reimbursement. Recommendation: Management should implement procedures to ensure completion reports, submitted to the Georgia Department of Education, (1) include all activity of the reporting period, (2) are supported by applicable accounting records and (3) are properly presented in accordance with program requirements. \r\n- 10 - \r\n \r\n SECTION V MANAGEMENT'S RESPONSES \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES \r\nYEAR ENDED JUNE 30, 2012 \r\n \r\nFinding Control Number: FS-7301-12-01 \r\n \r\nWe concur with this finding. The Board will establish policies and procedures designed to ensure that the School District does not report a deficit balance in the future. \r\n \r\nFinding Control Number: FS-7301-12-02 \r\n \r\nWe concur with this finding. The Board will implement control over cash to ensure that cash is properly reconciled to general ledger and cash activities. \r\n \r\nFinding Control Number: FS-7301-12-03 \r\n \r\nWe concur with this finding. Management will ensure that transactions are processed according to procedures and accurately monitored and reconciled to the general ledger. \r\n \r\nFinding Control Number: FS-7301-12-04 \r\n \r\nWe concur with this finding. Management will implement policies and procedures to ensure that business procedures are followed for all salaries, ensuring that salaries are paid according to approved salary schedules and adequate documentation will be maintained to support the salary payments. \r\n \r\nFinding Control Number: FS-7301-12-05 \r\n \r\nWe concur with this finding. Management will implement procedures to ensure capital assets records conform to approved capital assets policy. \r\n \r\nFinding Control Number: FS-7301-12-06 \r\n \r\nWe concur with the finding. Management will monitor and ensure the financial statements are properly prepared in accordance with generally accepted accounting principles. \r\n \r\nFinding Control Number: FA-7301-12-01 \r\n \r\nWe concur with the finding. Management will implement procedures to accurately forecast the cash needs. Management will maintain supporting documentation for the draw downs and procedures to minimize lapsing time between transfers. \r\n \r\nFinding Control Number: FA-7301-12-02 \r\n \r\nWe concur with the finding. Management will implement procedures to ensure that accounting records for completion reports agree with actual expenditures. \r\n \r\nContact Person: Telephone: Fax: Email: \r\n \r\nDr. James Catrett, Superintendent (706) 665-8528 (706) 665-3620 jcatrett@talbot .k12.ga.us \r\n \r\n "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2010-h2011-belec-p-btext","title":"Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended June 30, 2011 (including independent auditor's reports)","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, Talbot County, 32.69949, -84.53301"],"dcterms_creator":["Georgia. Department of Audits"],"dc_date":["2011-06-30"],"dcterms_description":["Began with fiscal year ended June 30, 2009; ceased with: Fiscal year ended June 30, 2020.","Report year covers fiscal year.","Fiscal year ended June 30, 2014 (Received via FTP 3/27/17 from Georgia Dept. of Audits and Accounts) (online surrogate); title from PDF cover (Georgia Government Publications database, viewed July 11, 2023).","Fiscal year ended June 30, 2020, released in 2021? (online surrogate); (Georgia Government Publications database, viewed July 11, 2023)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Dept. of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Talbot County Board of Education (Ga.)--Appropriations and expenditures--Periodicals.","Education--Georgia--Talbot County--Auditing--Periodicals.","Education--Georgia--Talbot County--Finance--Statistics--Periodicals.","Georgia Government Documents--Serial"],"dcterms_title":["Talbot County Board of Education, Talbotton, Georgia, annual financial report for the fiscal year ended June 30, 2011 (including independent auditor's reports)"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2010-h2011-belec-p-btext"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-be26-bt13-b2010-h2011-belec-p-btext"],"dcterms_temporal":null,"dcterms_rights_holder":["\u0026copy; Georgia Department of Audits"],"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"TALBOT COUNTY BOARD OF EDUCATION \r\nTALBOTTON, GEORGIA \r\nANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2011 \r\n(Including Independent Auditor's Reports) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\n \r\nEXHIBITS \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nDISTRICT-WIDE FINANCIAL STATEMENTS \r\n \r\nA \r\n \r\nSTATEMENT OF NET ASSETS \r\n \r\nB \r\n \r\nSTATEMENT OF ACTIVITIES \r\n \r\nFUND FINANCIAL STATEMENTS \r\n \r\nC \r\n \r\nBALANCE SHEET \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nD \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\n \r\nTO THE STATEMENT OF NET ASSETS \r\n \r\nE \r\n \r\nSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES \r\n \r\nIN FUND BALANCES \r\n \r\nGOVERNMENTAL FUNDS \r\n \r\nF \r\n \r\nRECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT \r\n \r\nOF REVENUES, EXPENDITURES AND CHANGES IN FUND \r\n \r\nBALANCES TO THE STATEMENT OF ACTIVITIES \r\n \r\nG \r\n \r\nSTATEMENT OF FIDUCIARY NET ASSETS \r\n \r\nFIDUCIARY FUNDS \r\n \r\nH \r\n \r\nSTATEMENT OF CHANGES IN FIDUCIARY NET ASSETS \r\n \r\nFIDUCIARY FUNDS \r\n \r\nI \r\n \r\nNOTES TO THE BASIC FINANCIAL STATEMENTS \r\n \r\nSCHEDULES \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND \r\n \r\nSUPPLEMENTARY INFORMATION \r\n \r\n2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE \r\n \r\nPage \r\n1 2 3 4 5 6 7 8 9 \r\n23 24 26 \r\n \r\n  TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\nFINANCIAL \r\nSCHEDULES \r\nSUPPLEMENTARY INFORMATION \r\n4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES \r\nGENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM \r\n \r\nPage \r\n27 29 \r\n \r\nSECTION II \r\nCOMPLIANCE AND INTERNAL CONTROL REPORTS \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\nINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 \r\n \r\nSECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\nSECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\n \r\n  TALBOT COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - \r\nSECTION V MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES \r\n \r\n  SECTION I FINANCIAL \r\n \r\n  Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJuly 6, 2012 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\nLadies and Gentlemen: \r\nWe have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through I) of the Talbot County Board of Education, as of and for the year ended June 30, 2011, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Talbot County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit. \r\nWe 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. 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Board's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. \r\nIn our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Talbot County Board of Education, as of June 30, 2011, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. \r\n \r\n2011ARL-11 \r\n \r\n  The Talbot County Board of Education has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not to be part of, the basic financial statements. \r\nIn accordance with Government Auditing Standards, we have also issued our report dated July 6, 2012, on our consideration of the Talbot County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. \r\nThe Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 23, is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. \r\nOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Talbot County Board of Education's financial statements as a whole. The accompanying supplementary information consists of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. \r\nA copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. \r\nRespectfully submitted, \r\n \r\nGSG:as 2011ARL-11 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n  TALBOT COUNTY BOARD OF EDUCATION \r\n \r\n  TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2011 \r\nASSETS \r\nCash and Cash Equivalents Investments Accounts Receivable, Net \r\nTaxes State Government Federal Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation) \r\nTotal Assets \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Short-Term Debt Interest Payable Deferred Revenue Long-Term Liabilities \r\nDue Within One Year Due in More Than One Year \r\nTotal Liabilities \r\nNET ASSETS \r\nInvested in Capital Assets, Net of Related Debt Restricted for \r\nBus Replacement Continuation of Federal Programs Debt Service Capital Projects Unrestricted (Deficit) \r\nTotal Net Assets \r\nTotal Liabilities and Net Assets \r\n \r\nEXHIBIT \"A\" \r\n \r\nGOVERNMENTAL ACTIVITIES \r\n \r\n$ \r\n \r\n3,881,486.45 \r\n \r\n2,530,910.90 \r\n \r\n233,855.98 350,508.00 139,678.06 \r\n2,642.01 22,268.88 354,857.93 2,349,322.30 \r\n \r\n$ \r\n \r\n9,865,530.51 \r\n \r\n$ \r\n \r\n62,688.15 \r\n \r\n614,955.38 \r\n \r\n84,008.59 \r\n \r\n250,000.00 \r\n \r\n44,175.00 \r\n \r\n99,896.08 \r\n \r\n290,000.00 2,500,000.00 \r\n \r\n$ \r\n \r\n3,945,723.20 \r\n \r\n$ \r\n \r\n2,236,319.91 \r\n \r\n39,451.00 189,738.64 739,669.34 2,872,514.05 -157,885.63 \r\n \r\n$ \r\n \r\n5,919,807.31 \r\n \r\n$ \r\n \r\n9,865,530.51 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES \r\nFOR THE YEAR ENDED JUNE 30, 2011 \r\n \r\nEXHIBIT \"B\" \r\n \r\nEXPENSES \r\n \r\nPROGRAM REVENUES \r\n \r\nOPERATING \r\n \r\nCHARGES FOR \r\n \r\nGRANTS AND \r\n \r\nSERVICES \r\n \r\nCONTRIBUTIONS \r\n \r\nNET (EXPENSES) REVENUES \r\nAND CHANGES IN NET ASSETS \r\n \r\nGOVERNMENTAL ACTIVITIES \r\n \r\nInstruction Support Services \r\nPupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt \r\nTotal Governmental Activities \r\n \r\n$ 4,169,674.67 $ \r\n359,175.07 568,696.62 145,320.01 496,353.08 626,114.95 \r\n72,684.06 451,720.72 556,981.39 \r\n368.51 50,849.61 \r\n48,376.77 6,086.00 \r\n442,328.17 106,906.67 \r\n$ 8,101,636.30 $ \r\n \r\n9,704.50 $ \r\n37,735.01 28,765.65 \r\n \r\n2,617,689.90 $ \r\n90,548.30 382,647.37 \r\n84,758.05 406,459.38 268,158.28 \r\n3,588.82 199,862.02 238,342.42 \r\n249.68 9,071.51 \r\n5,311.35 411,049.98 \r\n \r\n76,205.16 $ 4,717,737.06 $ \r\n \r\n-1,542,280.27 \r\n-268,626.77 -186,049.25 \r\n-60,561.96 -89,893.70 -357,956.67 -69,095.24 -251,858.70 -318,638.97 \r\n-118.83 -41,778.10 \r\n-10,641.76 -774.65 \r\n-2,512.54 -106,906.67 \r\n-3,307,694.08 \r\n \r\nGeneral Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous \r\n \r\n$ \r\n \r\n2,943,091.94 \r\n \r\n635,369.61 17,524.50 11,687.61 50,008.47 \r\n \r\nTotal General Revenues \r\n \r\n$ \r\n \r\n3,657,682.13 \r\n \r\nChanges in Net Assets \r\n \r\n$ \r\n \r\n349,988.05 \r\n \r\nNet Assets - Beginning of Year \r\n \r\n5,569,819.26 \r\n \r\nNet Assets - End of Year \r\n \r\n$ \r\n \r\n5,919,807.31 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION BALANCE SHEET \r\nGOVERNMENTAL FUNDS JUNE 30, 2011 \r\n \r\nEXHIBIT \"C\" \r\n \r\nASSETS \r\nCash and Cash Equivalents Investments Accounts Receivable, Net \r\nTaxes State Government Federal Government Other Inventories \r\nTotal Assets \r\nLIABILITIES AND FUND BALANCES \r\nLIABILITIES \r\nAccounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Short-Term Debt Deposits and Deferred Revenue \r\nTotal Liabilities \r\nFUND BALANCES \r\nNonspendable Restricted Assigned Unassigned (Deficit) \r\nTotal Fund Balances \r\nTotal Liabilities and Fund Balances \r\n \r\nGENERAL FUND \r\n \r\nDISTRICTWIDE \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 362,983.09 $ 2,783,267.35 $ 735,236.01 $ \r\n \r\n79,007.73 \r\n \r\n2,451,903.17 \r\n \r\n136,566.61 350,508.00 139,678.06 \r\n2,642.01 22,268.88 \r\n \r\n97,289.37 \r\n \r\n3,881,486.45 2,530,910.90 \r\n233,855.98 350,508.00 139,678.06 \r\n2,642.01 22,268.88 \r\n \r\n$ 1,093,654.38 $ 5,332,459.89 $ 735,236.01 $ \r\n \r\n7,161,350.28 \r\n \r\n$ \r\n \r\n62,688.15 \r\n \r\n614,955.38 \r\n \r\n84,008.59 \r\n \r\n250,000.00 \r\n \r\n194,330.09 \r\n \r\n$ 1,205,982.21 \r\n \r\n$ \r\n \r\n62,688.15 \r\n \r\n614,955.38 \r\n \r\n84,008.59 \r\n \r\n250,000.00 \r\n \r\n194,330.09 \r\n \r\n$ \r\n \r\n1,205,982.21 \r\n \r\n$ \r\n \r\n22,268.88 \r\n \r\n$ \r\n \r\n229,189.64 $ 5,194,653.73 $ 735,236.01 \r\n \r\n35,087.44 \r\n \r\n-398,873.79 \r\n \r\n137,806.16 \r\n \r\n$ -112,327.83 $ 5,332,459.89 $ 735,236.01 $ \r\n \r\n22,268.88 6,159,079.38 \r\n35,087.44 -261,067.63 \r\n5,955,368.07 \r\n \r\n$ 1,093,654.38 $ 5,332,459.89 $ 735,236.01 $ \r\n \r\n7,161,350.28 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET \r\nTO THE STATEMENT OF NET ASSETS JUNE 30, 2011 \r\n \r\nEXHIBIT \"D\" \r\n \r\nTotal Fund Balances - Governmental Funds (Exhibit \"C\") \r\nAmounts reported for Governmental Activities in the Statement of Net Assets are different because: \r\nCapital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of: \r\nLand Land Improvements Buildings Equipment Accumulated Depreciation \r\nTotal Capital Assets \r\nSome of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures. \r\nLong-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of: \r\nBonds Payable Accrued Interest \r\nTotal Long-Term Liabilities \r\nNet Assets of Governmental Activities (Exhibit \"A\") \r\n \r\n$ 5,955,368.07 \r\n \r\n$ \r\n \r\n354,857.93 \r\n \r\n558,998.55 \r\n \r\n3,411,016.28 \r\n \r\n1,812,094.78 \r\n \r\n-3,432,787.31 \r\n \r\n2,704,180.23 \r\n \r\n94,434.01 \r\n \r\n$ -2,790,000.00 -44,175.00 \r\n \r\n-2,834,175.00 \r\n \r\n$ 5,919,807.31 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES \r\nGOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2011 \r\n \r\nEXHIBIT \"E\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation \r\nCapital Outlay Debt Services \r\nPrincipal Interest \r\nTotal Expenditures \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\nFund Balances - Ending \r\n \r\nGENERAL FUND \r\n \r\nDISTRICTWIDE \r\nCAPITAL PROJECTS \r\nFUND \r\n \r\nDEBT SERVICE \r\nFUND \r\n \r\nTOTAL \r\n \r\n$ 2,968,976.85 17,461.33 $ \r\n2,866,367.37 1,851,369.69 \r\n76,205.16 7,262.05 \r\n50,008.47 \r\n \r\n635,369.61 $ 3,678.70 \r\n \r\n$ 7,837,650.92 $ 639,048.31 $ \r\n \r\n$ 63.18 \r\n746.86 810.04 $ \r\n \r\n2,968,976.85 652,894.12 \r\n2,866,367.37 1,851,369.69 \r\n76,205.16 11,687.61 50,008.47 \r\n8,477,509.27 \r\n \r\n$ 4,060,327.39 \r\n \r\n$ \r\n \r\n359,175.07 568,696.62 145,875.01 492,921.93 626,114.95 \r\n72,684.06 445,903.90 437,249.57 \r\n368.52 50,849.61 48,376.77 \r\n6,086.00 430,378.53 \r\n$ \r\n \r\n45,544.53 \r\n \r\n$ 280,000.00 111,340.00 \r\n \r\n$ 7,745,007.93 $ \r\n \r\n45,544.53 $ 391,340.00 $ \r\n \r\n$ \r\n \r\n92,642.99 $ 593,503.78 $ -390,529.96 $ \r\n \r\n-204,970.82 \r\n \r\n4,738,956.11 \r\n \r\n1,125,765.97 \r\n \r\n4,060,327.39 \r\n359,175.07 568,696.62 145,875.01 492,921.93 626,114.95 \r\n72,684.06 445,903.90 437,249.57 \r\n368.52 50,849.61 48,376.77 \r\n6,086.00 430,378.53 \r\n45,544.53 \r\n280,000.00 111,340.00 \r\n8,181,892.46 \r\n295,616.81 \r\n5,659,751.26 \r\n \r\n$ \r\n \r\n-112,327.83 $ 5,332,459.89 $ 735,236.01 $ \r\n \r\n5,955,368.07 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF \r\nREVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2011 \r\nTotal Net Change in Fund Balances - Governmental Funds (Exhibit \"E\") \r\nAmounts reported for Governmental Activities in the Statement of Activities are different because: \r\nCapital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, the amount is: \r\nDepreciation Expense \r\nTaxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenue in the funds. \r\nRepayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of: \r\nBond Principal Retirements \r\nSome items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of: \r\nNet Increase in Accrued Interest \r\nChange in Net Assets of Governmental Activities (Exhibit \"B\") \r\n \r\nEXHIBIT \"F\" \r\n \r\n$ \r\n \r\n295,616.81 \r\n \r\n-204,177.18 -25,884.91 \r\n \r\n280,000.00 \r\n \r\n4,433.33 \r\n \r\n$ \r\n \r\n349,988.05 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS \r\nFIDUCIARY FUNDS JUNE 30, 2011 \r\n \r\nEXHIBIT \"G\" \r\n \r\nASSETS Cash and Cash Equivalents \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\nAGENCY FUNDS \r\n \r\n$ 2,763.01 $ \r\n \r\n7,169.75 \r\n \r\nLIABILITIES Funds Held for Others \r\nNET ASSETS Held in Trust for Private Purposes \r\nTotal Liabilities and Net Assets \r\n \r\n$ \r\n \r\n7,169.75 \r\n \r\n$ 2,763.01 \r\n \r\n$ 2,763.01 $ \r\n \r\n7,169.75 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS \r\nFIDUCIARY FUNDS YEAR ENDED JUNE 30, 2011 \r\nADDITIONS None Reported \r\nDEDUCTIONS None Reported Change in Net Assets \r\nNet Assets - Beginning \r\nNet Assets - Ending \r\n \r\nEXHIBIT \"H\" \r\n \r\nPRIVATE PURPOSE TRUSTS \r\n \r\n$ \r\n \r\n0.00 \r\n \r\n$ \r\n \r\n0.00 \r\n \r\n$ \r\n \r\n0.00 \r\n \r\n2,763.01 \r\n \r\n$ \r\n \r\n2,763.01 \r\n \r\nThe notes to the basic financial statements are an integral part of this statement. - 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2011 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY \r\nREPORTING ENTITY \r\nThe Talbot County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is 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. \r\nNOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \r\nBASIS OF PRESENTATION \r\nThe School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Talbot County Board of Education. \r\nDistrict-wide Statements: \r\nThe Statement of Net Assets and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. \r\nThe Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. \r\n Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. \r\n Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. \r\nFund Financial Statements: \r\nThe fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. \r\nThe School District reports the following major governmental funds: \r\n General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund. \r\n District-wide Capital Projects Fund accounts for and reports financial resources including Special Purpose Local Option Sales Tax (SPLOST) and Bond Proceeds that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. \r\n Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (property) legally restricted for the payment of general long-term principal and interest. - 9 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2011 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe School District reports the following fiduciary fund types: \r\n Private Purpose Trust fund reports trust arrangements under which principal and income are used to provide scholarships to business administration and business education students with junior standing at an accredited college or university. \r\n Agency funds account for assets held by the School District as an agent for various funds, governments or individuals. \r\nBASIS OF ACCOUNTING \r\nThe basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. \r\nThe School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. \r\nGovernmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt and claims and judgments, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities are reported as other financing sources. \r\nThe School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. \r\nThe State of Georgia reimburses the School System for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are contracted for the school year (July 1  June 30) and paid over a twelve month contract period, generally September 1 through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School System over the same twelve month period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, the School System recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition. \r\n \r\n- 10 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2011 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNEW ACCOUNTING PRONOUNCEMENTS \r\nIn fiscal year 2011, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. The provisions of this Statement establish accounting and financial reporting standards for all governments that report governmental funds. It establishes criteria for classifying fund balances into specifically defined classifications and clarifies definitions for governmental funds. \r\nCASH AND CASH EQUIVALENTS Composition of Deposits \r\nCash and cash equivalents consist of cash 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. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. \r\nINVESTMENTS Composition of Investments \r\nInvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning 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 School District 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: \r\n1. Obligations issued by the State of Georgia or by other states, \r\n2. Obligations issued by the United States government, \r\n3. Obligations fully insured or guaranteed by the United States government or a United States government agency, \r\n4. Obligations of any corporation of the United States government, \r\n5. Prime banker's acceptances, \r\n6. The Georgia Fund 1 administered by the State of Georgia, Office of the State Treasurer, \r\n7. Repurchase agreements, and \r\n8. Obligations of other political subdivisions of the State of Georgia. \r\nThe School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks. \r\nRECEIVABLES \r\nReceivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. \r\n- 11 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2011 \r\n \r\nEXHIBIT \"I\" \r\n \r\nPROPERTY TAXES \r\nThe Talbot County Board of Commissioners fixed the property tax levy for the 2010 tax digest year (calendar year) on October 20, 2010 (levy date). Taxes were due on December 20, 2010 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2010 tax digest are reported as revenue in the governmental funds for fiscal year 2011. The Talbot County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.50% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2011, for maintenance and operations amounted to $2,968,976.85. \r\nThe tax millage rate levied for the 2010 tax year (calendar year) for the Talbot County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value): \r\n \r\nSchool Operations \r\n \r\n13.08 m ills \r\n \r\nSALES TAXES \r\nSpecial Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $635,369.61 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. \r\nINVENTORIES \r\nFood Inventories \r\nOn the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. \r\nCAPITAL ASSETS \r\nCapital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District. \r\n \r\n- 12 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2011 \r\n \r\nEXHIBIT \"I\" \r\n \r\nCapitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows: \r\n \r\nCapitalization Policy \r\n \r\nEstimated Useful Life \r\n \r\nLand Land Improvements Buildings and Improvements Equipment \r\n \r\nAll $ 10,000.00 $ 20,000.00 $ 5,000.00 \r\n \r\nN/A 20 to 50 years up to 50 years \r\n5 to 50 years \r\n \r\nDepreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. \r\nGENERAL OBLIGATION BONDS \r\nThe School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide and fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. To conform to generally accepted accounting principles, bond premiums and discounts, as well as bond issuance costs should be amortized over the life of the bonds on the District-wide statements. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets. \r\nNET ASSETS \r\nThe School District's net assets in the District-wide Statements are classified as follows: \r\nInvested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt. \r\nRestricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal Programs, debt service and capital projects in accordance with restrictions imposed by external third parties. \r\nUnrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes. \r\nFUND BALANCES \r\nThe School District's fund balances are classified as follows: \r\nNonspendable  Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact. \r\n \r\n- 13 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2011 \r\n \r\nEXHIBIT \"I\" \r\n \r\nRestricted  Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. \r\n \r\nCommitted  Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. \r\nAssigned  Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes. \r\n \r\nUnassigned  The residual classification for the General Fund. This classification represents fund balances that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund. \r\nFund Balances of the Governmental Funds at June 30, 2011, are as follows: \r\n \r\nNonspendable Inventories \r\nRestricted Bus Replacement Continuation of Federal Programs Capital Projects Debt Service \r\nAssigned Banquet Account Student Activities \r\nUnassigned General Fund Capital Projects \r\n \r\n$ \r\n \r\n$ \r\n \r\n39,451.00 \r\n \r\n189,738.64 \r\n \r\n5,194,653.73 \r\n \r\n735,236.01 \r\n \r\n$ \r\n \r\n4,953.11 \r\n \r\n30,134.33 \r\n \r\n$ -398,873.79 137,806.16 \r\n \r\n22,268.88 \r\n6,159,079.38 35,087.44 \r\n-261,067.63 \r\n \r\nFund Balance, June 30, 2011 \r\n \r\n$ \r\n \r\n5,955,368.07 \r\n \r\nWhen multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds. \r\nDEFICIT FUND BALANCES \r\nThe fund reporting a deficit fund balance at June 30, 2011, is as follows: \r\n \r\nFund Type/Fund Name \r\n \r\nDeficit Balance \r\n \r\nGeneral Fund \r\n \r\n$ 398,873.79 \r\n \r\nThe School District plans to eliminate the deficit through a reduction in spending and an increase in millage rate. \r\n \r\n- 14 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2011 \r\n \r\nEXHIBIT \"I\" \r\n \r\nUSE OF ESTIMATES \r\nThe preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. \r\nNOTE 3: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS \r\nOfficial Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance. \r\nAcceptable security for deposits consists of any one of or any combination of the following: \r\n1. Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, \r\n2. Insurance on accounts provided by the Federal Deposit Insurance Corporation, \r\n3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, \r\n4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, \r\n5. 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, \r\n6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and \r\n7. 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 or securities guaranteed 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. \r\nCATEGORIZATION OF DEPOSITS \r\nCustodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2011, the bank balances were $6,862,318.30. The bank balances were entirely covered by Federal depository insurance or collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name. \r\nCATEGORIZATION OF INVESTMENTS \r\nAt June 30, 2011, the carrying value of the School District's total investments was $98,558.28, which is materially the same as fair value. This investment consisted entirely of funds invested in the Georgia Fund 1, formerly referred to as LGIP, administered by the State of Georgia, Office of the \r\n- 15 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2011 \r\n \r\nEXHIBIT \"I\" \r\n \r\nState Treasurer which are not required to be categorized since the School District did not own any \r\nspecific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the \r\nState Treasurer for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in \r\nderivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.ga.gov/SGD/cafr.html. \r\n \r\nThe Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2011, was 59 days. \r\n \r\nNOTE 4: NON-MONETARY TRANSACTIONS \r\n \r\nThe School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2  Inventories \r\n \r\nNOTE 5: CAPITAL ASSETS \r\n \r\nThe following is a summary of changes in the Capital Assets during the fiscal year: \r\n \r\nBalances \r\n \r\nJuly 1, 2010 \r\n \r\nIncreases \r\n \r\nDecreases \r\n \r\nGovernmental Activities \r\n \r\nCapital Assets, Not Being Depreciated: \r\n \r\nLand \r\n \r\n$ \r\n \r\n354,857.93 $ \r\n \r\n0.00 $ \r\n \r\n0.00 $ \r\n \r\nBalances June 30, 2011 \r\n354,857.93 \r\n \r\nCapital Assets, Being Depreciated: Buildings and Improvements Equipment Land Improvements \r\n \r\n$ 3,411,016.28 1,812,094.78 558,998.55 \r\n \r\n$ \r\n \r\n0.00 $ 3,411,016.28 \r\n \r\n1,812,094.78 \r\n \r\n558,998.55 \r\n \r\nLess: Accumulated Depreciation: Buildings and Improvements Equipment Land Improvements \r\n \r\n1,626,358.46 $ 1,259,683.41 \r\n342,568.26 \r\n \r\n61,928.81 124,294.37 \r\n17,954.00 \r\n \r\n1,688,287.27 1,383,977.78 \r\n360,522.26 \r\n \r\nTotal Capital Assets, Being Depreciated, Net $ 2,553,499.48 $ -204,177.18 $ \r\n \r\n0.00 $ 2,349,322.30 \r\n \r\nGovernmental Activity Capital Assets - Net $ 2,908,357.41 $ -204,177.18 $ \r\n \r\nCurrent year depreciation expense by function is as follows: \r\n \r\nInstruction \r\n \r\nSupport Services \r\n \r\nGeneral Administration \r\n \r\n$ \r\n \r\nMaintenance and Operation of Plant \r\n \r\nStudent Transportation Services \r\n \r\nFood Services \r\n \r\n$ \r\n2,788.01 4,726.51 97,289.18 \r\n \r\n$ \r\n \r\n0.00 $ 2,704,180.23 \r\n89,663.69 \r\n104,803.70 9,709.79 \r\n204,177.18 \r\n \r\n- 16 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2011 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 6: RISK MANAGEMENT \r\n \r\nThe 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. \r\n \r\nThe School District has obtained commercial insurance for risk of loss associated with torts, assets, and errors or omissions. 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. \r\n \r\nThe School District has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years. \r\n \r\nThe School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. \r\n \r\nChanges in the unemployment compensation claims liability during the last two fiscal years are as follows: \r\n \r\nBeginning of Year Liability \r\n \r\nClaims and Changes in Estim ate s \r\n \r\nC laim s Paid \r\n \r\nEnd of Year Liability \r\n \r\n2010 \r\n \r\n$ \r\n \r\n2011 \r\n \r\n$ \r\n \r\n0.00 $ 0.00 $ \r\n \r\n29,368.46 $ 65,459.12 $ \r\n \r\n29,368.46 $ 65,459.12 $ \r\n \r\n0 .0 0 0 .0 0 \r\n \r\nThe School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1,000,000.00 loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Safety National Casualty Company with a loss fund percentage of 100%, based on the Fund's annual normal premium, up to a maximum limit of indemnity of aggregate limit of $2,000,000.00. \r\n \r\nThe School District has purchased surety bonds to provide additional insurance coverage as follows: \r\n \r\nPosition Covered \r\n \r\nAmount \r\n \r\nSuperintendent Bookkeeper Payroll Clerk Finance Director Each Em ployee \r\n \r\n$ \r\n \r\n3 0 ,0 0 0 .0 0 \r\n \r\n$ \r\n \r\n1 0 ,0 0 0 .0 0 \r\n \r\n$ \r\n \r\n1 0 ,0 0 0 .0 0 \r\n \r\n$ \r\n \r\n1 0 ,0 0 0 .0 0 \r\n \r\n$ \r\n \r\n1 0 0 ,0 0 0 .0 0 \r\n \r\nNOTE 7: OPERATING LEASES \r\nTalbot County Board of Education has entered into various leases as lessee for copiers and a postage meter. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2011, for governmental funds amounted to $9,901.29 \r\n \r\n- 17 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2011 \r\n \r\nEXHIBIT \"I\" \r\n \r\nNOTE 8: SHORT-TERM DEBT \r\n \r\nThe School District issues tax anticipation notes in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred. \r\n \r\nShort-term debt activity for the fiscal year is as follows: \r\n \r\nB e gi n n i n g Balance \r\n \r\nIssued \r\n \r\nRedeemed \r\n \r\nEnding Balance \r\n \r\nTemporary Loans \r\n \r\n$ 850,000.00 $ 600,000.00 $ 1,200,000.00 $ 250,000.00 \r\n \r\nNOTE 9: LONG-TERM DEBT GENERAL OBLIGATION DEBT OUTSTANDING \r\n \r\nGeneral Obligation Bonds currently outstanding are as follows: \r\n \r\nPurpose \r\n \r\nInterest Rate \r\n \r\nGeneral Government - Series 2003 \r\n \r\n3.80% \r\n \r\nAmount $ 2,790,000.00 \r\n \r\nThe changes in Long-Term Debt during the fiscal year ended June 30, 2011, were as follows: \r\n \r\nBalance July 1, 2010 \r\n \r\nAdditions \r\n \r\nGovernmental Funds \r\n \r\nBalance \r\n \r\nDeductions \r\n \r\nJune 30, 2011 \r\n \r\nDue Within One Year \r\n \r\nG. O. Bonds \r\n \r\n$ 3,070,000.00 $ \r\n \r\n0.00 $ 280,000.00 $ 2,790,000.00 $ 290,000.00 \r\n \r\nAt June 30, 2011, payments due by fiscal year which includes principal and interest for these items are as follows: \r\n \r\nFiscal Year Ended June 30: \r\n \r\nGeneral Obligation Debt \r\n \r\nPrincipal \r\n \r\nI n te r e st \r\n \r\n2012 2013 2014 2015 2016 2017 - 2019 \r\n \r\n$ 290,000.00 $ 310,000.00 325,000.00 340,000.00 355,000.00 \r\n1,170,000.00 \r\n \r\n100,510.00 89,110.00 77,045.00 64,410.00 51,205.00 68,210.00 \r\n \r\nTotal Principal and Interest \r\n \r\n$ 2,790,000.00 $ 450,490.00 \r\n \r\nNOTE 10: ON-BEHALF PAYMENTS \r\nThe School District has recognized revenues and costs in the amount of $17,845.42 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. \r\n \r\n- 18 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2011 \r\n \r\nEXHIBIT \"I\" \r\n \r\nGeorgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certificated Personnel In the amount of $12,605.42 \r\nOffice of the State Treasurer Paid to the Public School Employees' Retirement System For Public School Employees' Retirement (PSERS) Employer's Cost In the amount of $5,240.00 \r\nNOTE 11: SIGNIFICANT CONTINGENT LIABILITIES \r\nAmounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. \r\nThe School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements. \r\nNOTE 12: RELATED PARTY TRANSACTIONS \r\nThe School District receives local tax receipts from the Talbot County Tax Commissioner's office. The Tax Commissioner is the spouse of the Interim Superintendent. \r\nNOTE 13: POST-EMPLOYMENT BENEFITS \r\nGEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND \r\nPlan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. \r\nFunding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 percent of the cost of the health insurance coverage. \r\nParticipating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected \"pay-as-you-go\" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. \r\n \r\n- 19 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2011 \r\n \r\nEXHIBIT \"I\" \r\n \r\nThe combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2011: \r\nFor certificated teachers, librarians and regional educational service agencies: \r\n \r\nJuly 2010 - April 2011 May 2011 - June 2011 \r\n \r\n21.955% of covered payroll for August - May Coverage 1.429% of covered payroll for June - July Coverage \r\n \r\nFor non-certificated school personnel: \r\n \r\nJuly 2010 - December 2010 January 2011 - May 2011 June 2011 \r\n \r\n$162.72 per member per month $218.20 per member per month $246.20 per member per month \r\n \r\nThe Department of Education was appropriated an additional $25,081,633 for non-certificated personnel health insurance payments. The amount attributable to the School District is reflected in the On-behalf note disclosure. \r\nNo additional contribution was required by the Board for fiscal year 2011 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation. \r\n \r\nThe School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage C o ntrib ute d \r\n \r\nRequired C o ntrib utio n \r\n \r\n2011 2010 2009 \r\n \r\n100% 100% 100% \r\n \r\n$ \r\n \r\n5 7 7 ,5 4 8 .7 6 \r\n \r\n$ \r\n \r\n6 6 7 ,1 6 7 .0 9 \r\n \r\n$ \r\n \r\n4 7 7 ,1 2 2 .8 7 \r\n \r\nNOTE 14: RETIREMENT PLANS \r\nTEACHERS' RETIREMENT SYSTEM OF GEORGIA (TRS) \r\nPlan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. 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. \r\nOn October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers' Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits. \r\n \r\n- 20 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS \r\nJUNE 30, 2011 \r\n \r\nEXHIBIT \"I\" \r\n \r\nTRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service. \r\n \r\nNormal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available. \r\n \r\nFunding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2011, were 5.53% of annual salary. The member contribution rate will increase to 6.00% effective July 1, 2012. Employer contributions required for fiscal year 2011 were 10.28% of annual salary as required by the June 30, 2008, actuarial valuation. The employer contribution rate will increase to 11.41% effective July 1, 2012. \r\n \r\nEmployer contributions for the current fiscal year and the preceding two fiscal years are as follows: \r\n \r\nFiscal Year \r\n \r\nPercentage C o ntrib ute d \r\n \r\nRequired C o ntrib utio n \r\n \r\n2011 2010 2009 \r\n \r\n100% 100% 100% \r\n \r\n$ \r\n \r\n4 1 9 ,1 3 0 .3 0 \r\n \r\n$ \r\n \r\n4 4 4 ,8 3 2 .4 3 \r\n \r\n$ \r\n \r\n4 1 9 ,1 3 6 .1 2 \r\n \r\nPUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM (PSERS) \r\nBus drivers, lunchroom personnel, and maintenance and custodial personnel are members of the Public School Employees' Retirement System of Georgia. The System is funded by contributions by the employees and by the State of Georgia. The School District makes no contribution to this plan. \r\n \r\n- 21 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND \r\nSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL \r\nYEAR ENDED JUNE 30, 2011 \r\n \r\nSCHEDULE \"1\" \r\n \r\nREVENUES \r\nProperty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous \r\nTotal Revenues \r\nEXPENDITURES \r\nCurrent Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation \r\nTotal Expenditures \r\nExcess of Revenues over (under) Expenditures \r\nOTHER FINANCING SOURCES (USES) \r\nOperating Transfers From Other Funds Operating Transfers To Other Funds \r\nTotal Other Financing Sources (Uses) \r\nNet Change in Fund Balances \r\nFund Balances - Beginning \r\nAdjustments \r\n \r\nNONAPPROPRIATED BUDGETS \r\n \r\nORIGINAL (1) \r\n \r\nFINAL (1) \r\n \r\nACTUAL AMOUNTS \r\n \r\n$ 3,049,886.00 $ 3,049,886.00 $ 2,968,976.85 \r\n \r\n17,461.33 \r\n \r\n3,317,505.67 \r\n \r\n3,400,911.81 \r\n \r\n2,866,367.37 \r\n \r\n895,728.48 \r\n \r\n2,030,110.89 \r\n \r\n1,851,369.69 \r\n \r\n36,000.00 \r\n \r\n45,704.50 \r\n \r\n76,205.16 \r\n \r\n7,500.00 \r\n \r\n12,500.00 \r\n \r\n7,262.05 \r\n \r\n81,000.00 \r\n \r\n135,685.63 \r\n \r\n50,008.47 \r\n \r\n$ 7,387,620.15 $ 8,674,798.83 $ 7,837,650.92 \r\n \r\n$ 3,451,284.07 $ 4,274,533.25 $ 4,060,327.39 \r\n \r\n469,196.51 325,463.37 \r\n96,424.21 418,980.96 626,301.61 \r\n92,016.44 526,019.00 538,023.99 \r\n7,500.00 58,022.86 \r\n507,100.00 \r\n \r\n521,579.14 755,802.25 \r\n96,943.34 427,305.91 691,117.36 \r\n92,223.53 533,245.33 717,045.75 \r\n11,600.00 66,985.13 13,638.93 10,378.22 525,379.68 \r\n \r\n359,175.07 568,696.62 145,875.01 492,921.93 626,114.95 \r\n72,684.06 445,903.90 437,249.57 \r\n368.52 50,849.61 48,376.77 \r\n6,086.00 430,378.53 \r\n \r\n$ 7,116,333.02 $ 8,737,777.82 $ 7,745,007.93 \r\n \r\n$ 271,287.13 $ \r\n \r\n-62,978.99 $ \r\n \r\n92,642.99 \r\n \r\n$ 155,106.96 -155,106.96 \r\n \r\n$ \r\n \r\n0.00 \r\n \r\n$ 271,287.13 $ \r\n \r\n-62,978.99 $ \r\n \r\n92,642.99 \r\n \r\n325,806.84 \r\n \r\n325,806.84 \r\n \r\n-204,970.82 \r\n \r\n-1,108.81 \r\n \r\n-28,111.40 \r\n \r\nFund Balances - Ending \r\n \r\n$ 595,985.16 $ 234,716.45 $ -112,327.83 \r\n \r\nNotes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual \r\n \r\n(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts. \r\n \r\nThe accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 23 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\nYEAR ENDED JUNE 30, 2011 \r\n \r\nSCHEDULE \"2\" \r\n \r\nFUNDING AGENCY PROGRAM/GRANT \r\nAgriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program \r\nTotal Child Nutrition Cluster \r\nOther Programs Pass-Through From Georgia Department of Education Food Services Fresh Fruit and Vegetable Program \r\nTotal U. S. Department of Agriculture \r\nEducation, U. S. Department of Education Technology State Grants Cluster Pass-Through From Georgia Department of Education Education Technology State Grants \r\nSchool Improvement Grants Cluster Pass-Through From Georgia Department of Education School Improvement Grants \r\nSpecial Education Cluster Pass-Through From Georgia Department of Education Special Education ARRA - Grants to States Grants to States Preschool Grants \r\nTotal Special Education Cluster \r\nTitle I, Part A Cluster Pass-Through From Georgia Department of Education ARRA - Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies \r\nTotal Title I, Part A Cluster \r\nOther Programs Direct Early Reading First Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Education Jobs Fund Even Start - State Educational Agencies Improving Teacher Quality State Grants Reading First State Grants Rural Education \r\nTotal Other Programs \r\nTotal U. S. Department of Education \r\n \r\nCFDA NUMBER \r\n \r\nPASSTHROUGH \r\nENTITY ID \r\nNUMBER \r\n \r\nEXPENDITURES IN PERIOD \r\n \r\n10.553 10.555 \r\n \r\nN/A \r\n \r\nN/A \r\n \r\n$ \r\n \r\n$ \r\n \r\n(2) 377,284.87 (1) \r\n377,284.87 \r\n \r\n10.582 \r\n \r\nN/A $ \r\n \r\n18,279.68 395,564.55 \r\n \r\n84.318 \r\n \r\nN/A \r\n \r\n$ \r\n \r\n84.377 \r\n \r\nN/A \r\n \r\n$ \r\n \r\n5,155.00 4,415.99 \r\n \r\n* 84.391 * 84.027 * 84.173 \r\n \r\nN/A \r\n \r\n$ \r\n \r\nN/A \r\n \r\nN/A \r\n \r\n$ \r\n \r\n43,698.12 141,530.51 \r\n18,604.00 \r\n203,832.63 \r\n \r\n* 84.389 * 84.010 \r\n \r\nN/A \r\n \r\n$ \r\n \r\nN/A \r\n \r\n$ \r\n \r\n163,234.15 466,839.64 \r\n630,073.79 \r\n \r\n84.359 \r\n84.048 * 84.410 \r\n84.213 84.367 84.357 84.358 \r\n \r\n$ \r\nN/A N/A N/A N/A N/A N/A \r\n$ \r\n$ \r\n \r\n13,193.89 \r\n13,436.62 133,539.00 217,028.19 \r\n90,131.49 53,475.99 16,002.00 \r\n536,807.18 \r\n1,380,284.59 \r\n \r\n- 24 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS \r\nYEAR ENDED JUNE 30, 2011 \r\n \r\nSCHEDULE \"2\" \r\n \r\nFUNDING AGENCY PROGRAM/GRANT \r\nHealth and Human Services, U. S. Department of Child Care and Development Fund Cluster Pass-Through From Georgia Department of Human Services Child Care and Development Block Grant Child Care Mandatory and Matching Funds of the Child Care and Development Fund \r\nTotal U. S. Department of Health and Human Services \r\nDefense, U. S. Department of Direct Department of the Army R.O.T.C. Program \r\n \r\nCFDA NUMBER \r\n \r\nPASSTHROUGH \r\nENTITY ID \r\nNUMBER \r\n \r\nEXPENDITURES IN PERIOD \r\n \r\n93.575 93.596 \r\n \r\nN/A \r\n \r\n$ \r\n \r\nN/A \r\n \r\n$ \r\n \r\n4,672.00 48,606.48 53,278.48 \r\n \r\n$ \r\n \r\n51,169.97 \r\n \r\nTotal Expenditures of Federal Awards \r\n \r\n$ \r\n \r\n1,880,297.59 \r\n \r\nN/A = Not Available \r\n \r\nNotes to the Schedule of Expenditures of Federal Awards \r\n \r\n(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $26,196.51. \r\n(2) Expenditures for the funds earned on the School Breakfast Program ($112,795.52) were not maintained separately and are included in the 2011 National School Lunch Program. \r\n \r\nMajor Programs are identified by an asterisk (*) in front of the CFDA number. \r\n \r\nThe School District did not provide Federal Assistance to any Subrecipient. \r\n \r\nThe accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Talbot County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 25 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2011 \r\n \r\nAGENCY/FUNDING \r\nGRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program \r\nEducation, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Prevention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operation Categorical Grants Pupil Transportation Regular Sparsity Nursing Services Vocational Supervisors Mid-term Adjustment Hold-Harmless Food Services Vocational Education Amended Formula Adjustment Other State Programs Health Insurance Preschool Handicapped Program \r\nOffice of State Treasurer Public School Employees Retirement \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 26 - \r\n \r\nSCHEDULE \"3\" \r\n \r\nGOVERNMENTAL FUND TYPE GENERAL FUND \r\n \r\n$ \r\n \r\n122,005.95 \r\n \r\n105,333.00 49,252.00 \r\n354,212.00 91,791.00 \r\n168,033.00 89,250.00 \r\n310,894.00 282,603.00 141,192.00 365,741.00 \r\n75,276.00 28,196.00 55,610.00 18,322.00 \r\n9,468.00 \r\n255,772.00 126,190.00 121,259.00 \r\n204,954.00 132,100.00 \r\n27,839.00 7,318.00 \r\n22,913.00 13,860.00 13,833.00 -350,201.00 \r\n12,605.42 5,506.00 \r\n5,240.00 \r\n$ 2,866,367.37 \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS \r\nYEAR ENDED JUNE 30, 2011 \r\n \r\nSCHEDULE \"4\" \r\n \r\nPROJECT \r\n \r\nORIGINAL ESTIMATED \r\nCOST (1) \r\n \r\nCURRENT ESTIMATED COSTS (2) \r\n \r\nAMOUNT EXPENDED IN CURRENT \r\nYEAR (3) \r\n \r\nAMOUNT EXPENDED IN PRIOR YEARS (3) \r\n \r\nPROJECT STATUS \r\n \r\nAcquiring, constructing and equipping one new \r\n \r\nelementary school; adding to, renovating, \r\n \r\nrepairing, improving, and equipping existing \r\n \r\nschool buildings and other buildings and \r\n \r\nfacilities useful or desirable in connection \r\n \r\ntherewith; payment of capitalized interest on \r\n \r\nthe bonds through and including August 1, \r\n \r\n2003; and the costs of issuing the bonds. \r\n \r\n$ 2,500,000.00 $ 2,847,528.26 $ 156,884.53 $ 2,690,643.73 \r\n \r\nOngoing \r\n \r\n(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. \r\n(2) The School District's current estimate of total cost for the project. Includes all cost from project inception to completion. \r\n(3) The voters of Talbot County approved the imposition of a 1% sales tax to fund the above project and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the project. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 27 - \r\n \r\n (This page left intentionally blank) \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE) \r\nALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2011 \r\n \r\nSCHEDULE \"5\" \r\n \r\nDESCRIPTION \r\nDirect Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category II Category III Category IV Remedial Education Program Alternative Education Program \r\nTOTAL DIRECT INSTRUCTIONAL PROGRAMS \r\nMedia Center Program Staff and Professional Development \r\n \r\nALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) \r\n \r\nELIGIBLE QBE PROGRAM COSTS \r\n \r\nSALARIES \r\n \r\nOPERATIONS \r\n \r\nTOTAL \r\n \r\n$ \r\n \r\n149,657.00 $ 180,574.83 $ \r\n \r\n69,880.00 \r\n \r\n42,890.40 \r\n \r\n443,652.00 \r\n \r\n524,277.55 \r\n \r\n114,811.00 \r\n \r\n77,917.90 \r\n \r\n246,646.00 \r\n \r\n291,317.31 \r\n \r\n114,563.00 436,825.00 \r\n403,148.00 198,779.00 489,172.00 \r\n104,964.00 40,195.00 \r\n \r\n69,108.99 372,228.36 \r\n4,027.73 453,534.84 309,625.55 \r\n146,191.19 157,030.72 \r\n89,186.70 38,813.40 24,282.49 \r\n \r\n$ \r\n \r\n2,812,292.00 $ 2,781,007.96 $ \r\n \r\n78,302.00 13,286.00 \r\n \r\n136,145.39 13,385.00 \r\n \r\n3,151.02 $ 4,119.49 3,216.60 \r\n \r\n183,725.85 42,890.40 \r\n528,397.04 77,917.90 \r\n294,533.91 \r\n \r\n7,611.54 6,127.75 13,002.96 \r\n \r\n69,108.99 372,228.36 \r\n11,639.27 459,662.59 322,628.51 \r\n \r\n1,276.86 \r\n \r\n146,191.19 158,307.58 \r\n89,186.70 38,813.40 24,282.49 \r\n \r\n38,506.22 $ 2,819,514.18 \r\n \r\n9,244.28 \r\n \r\n145,389.67 13,385.00 \r\n \r\nTOTAL QBE FORMULA FUNDS \r\n \r\n$ \r\n \r\n2,903,880.00 $ 2,930,538.35 $ \r\n \r\n47,750.50 $ 2,978,288.85 \r\n \r\n(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment. \r\n \r\nSee notes to the basic financial statements. \r\n \r\n- 29 - \r\n \r\n  SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS \r\n \r\n  Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJuly 6, 2012 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\nLadies and Gentlemen: \r\nWe have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Talbot County Board of Education as of and for the year ended June 30, 2011, which collectively comprise Talbot County Board of Education's basic financial statements and have issued our report thereon dated July 6, 2012. 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. \r\nInternal Control Over Financial Reporting \r\nManagement of Talbot County Board of Education is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered Talbot County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Talbot County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Talbot County Board of Education's internal control over financial reporting. \r\nOur consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses and therefore, there can be no assurances that all deficiencies, significant deficiencies or material weaknesses have been identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses and other deficiencies that we consider to be significant deficiencies. \r\n \r\n2011YB-40 \r\n \r\n  A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider items FS-7301-11-01, FS-7301-11-04 and FS-7301-11-06 to be material weaknesses. \r\nA significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider items FS-7301-11-02, FS-7301-11-03, FS-7301-11-05 and FS-7301-1107 in the accompanying Schedule of Findings and Questioned Costs to be significant deficiencies in internal control over financial reporting. \r\nCompliance and Other Matters \r\nAs part of obtaining reasonable assurance about whether Talbot County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. \r\nWe noted certain matters that we have reported to management of Talbot County Board of Education in a separate letter dated July 6, 2012. \r\nTalbot County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Talbot County Board of Education's response and, accordingly, we express no opinion on it. \r\nThis report is intended solely for the information and use of management, members of the Talbot County Board of Education, others within the entity, 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. \r\nRespectfully submitted, \r\n \r\nGSG:as 2011YB-40 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n  Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nJuly 6, 2012 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education \r\nand Superintendent and Members of the Talbot County Board of Education \r\nINDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 \r\nLadies and Gentlemen: \r\nCompliance \r\nWe have audited Talbot County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2011. Talbot County 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 with the requirements of laws, regulations, contracts, and grants applicable to each of its major Federal programs is the responsibility of Talbot County Board of Education's management. Our responsibility is to express an opinion on Talbot County Board of Education's compliance based on our audit. \r\nWe conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, 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 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 Talbot County 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 Talbot County Board of Education's compliance with those requirements. \r\nAs described in items FA-7301-11-01 and FA-7301-11-03 in the accompanying Schedule of Findings and Questioned Costs, Talbot County Board of Education did not comply with requirements regarding Allowable Costs/Cost Principles and Reporting that are applicable to its Title 1, Part A Cluster. In addition, as described in item FA-7301-11-04, the Talbot County Board of Education did not comply with requirements regarding Matching, Level of Effort and Earmarking that is applicable to its Special Education Cluster. Compliance with such requirements is necessary, in our opinion, for Talbot County Board of Education to comply with requirements applicable to these programs. \r\n2011SA-65 \r\n \r\n  In our opinion, except for the noncompliance described in the preceding paragraph, Talbot County Board of Education complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2011. \r\nInternal Control Over Compliance \r\nManagement of Talbot County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal programs. In planning and performing our audit, we considered Talbot County Board of Education's internal control over compliance with the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Talbot County Board of Education's internal control over compliance. \r\nOur consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses and other deficiencies that we consider to be significant deficiencies. \r\nA deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as items FA-7301-11-01, FA-7301-11-03, and FA-7301-11-04 to be material weaknesses. \r\nA significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as item FA-7301-11-02 to be a significant deficiency. \r\nTalbot County Board of Education's responses to the findings identified in our audit are described in the accompanying Schedule of Management's Responses. We did not audit Talbot County Board of Education's responses and, accordingly, we express no opinion on the responses. \r\n2011SA-65 \r\n \r\n  This report is intended solely for the information and use of management, members of the Talbot County Board of Education, others within the entity, 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. \r\nRespectfully submitted, \r\n \r\nGSG:as 2011SA-65 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n  SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n  TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2011 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFS-7301-09-01 FS-7301-09-02 FS-7301-09-04 FS-7301-09-05 FS-7301-09-08 FS-7301-10-01 FS-7301-10-02 FS-7301-10-03 FS-7301-10-04 FS-7301-10-05 \r\n \r\nFurther Action Not Warranted Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nBUDGET PREPARATION/EXECUTION Deficit Fund Balance Finding Control Number: FS-7301-10-01 \r\n \r\nThe Board will establish policies and procedures designed to ensure that in the future the School District does not report a deficit balance. \r\n \r\nCASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Finding Control Number: FS-7301-10-02 \r\n \r\nThe Board will implement controls over cash to ensure that cash is properly reconciled to general ledger and cash activity is maintained in the proper fund. Additional staff will be assigned the duty of monthly bank reconciliations and will monitor as well as review with signatures from the Finance Director and Superintendent. \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS ACCOUNTING CONTROLS (OVERALL) FINANCIAL REPORTING Inadequate Internal Controls over School Activity Accounts Finding Control Number: FS-7301-10-03 \r\n \r\nThe Board will revise and implement internal controls to ensure that proper separation of duties are established. Accounting processes are accurately monitored and financial statement amounts are reconciled to the general ledger balances. \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE \r\nSUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2011 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nREVENUES/RECEIVABLES/RECEIPTS GENERAL LEDGER Inadequate Internal Controls over Grants and Contracts Finding Control Number: FS-7301-10-04 \r\n \r\nThe Board will implement and revise internal controls to ensure that all state and Federal Programs are properly closed out at the program year end. Additional controls will be implemented to ensure that State and Federal program funds will be closely monitored so that a deficit fund balance will not occur. \r\n \r\nEMPLOYEE COMPENSATION Inadequate Internal Controls over Employee Compensation Process Finding Control Number: FS-7301-10-05 \r\n \r\nThe Board has implemented procedures to ensure that all compensation paid to employees will flow through payroll. In addition, procedures will be implemented to ensure that additional compensation will be properly approved and documented. \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFA-7301-10-01 FA-7301-10-02 FA-7301-10-03 \r\n \r\nPartially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\n \r\nALLOWABLE COSTS/COST PRINCIPLES Salaries Not Properly Supported U. S. Department of Education Through Georgia Department of Education Title 1, Part A Cluster (CFDA 84.010 and 84.389) Special Education Cluster (CFDA 84.027, 84.173, 84.391 and 84.392) Questioned Cost: $2,163.55 Special Education Cluster (CFDA 84.027, 84.173, 84.391 and 84.392) $36,290.87 Title 1, Part A Cluster (CFDA 84.010 and 84.389) Finding Control Number: FA-7301-10-01 \r\n \r\nThe School District has implemented policies and procedures to ensure that normal business procedures are followed for all salaries, which includes ensuring that Federal funded salaries are paid according to approved salary schedules. \r\n \r\n- 2 - \r\n \r\n SECTION IV FINDINGS AND QUESTIONED COSTS \r\n \r\n  TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2011 \r\n \r\nI SUMMARY OF AUDITOR'S RESULTS \r\n \r\nFinancial Statements \r\n \r\nType of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information \r\n \r\nUnqualified \r\n \r\nInternal control over financial reporting: \r\n \r\n Material weaknesses identified? \r\n \r\nYes \r\n \r\n Significant deficiencies identified? \r\n \r\nYes \r\n \r\nNoncompliance material to financial statements noted: \r\n \r\nNo \r\n \r\nFederal Awards \r\n \r\nInternal Control over major programs: \r\n \r\n Material weaknesses identified? \r\n \r\nYes \r\n \r\n Significant deficiencies identified? \r\n \r\nYes \r\n \r\nType of auditor's report issued on compliance for major programs: Unqualified for Education Jobs Fund Qualified for Title I, Part A Cluster and Special Education Cluster \r\n \r\nAny audit findings disclosed that are required to be reported in \r\n \r\naccordance with OMB Circular A-133, Section 510(a)? \r\n \r\nYes \r\n \r\nIdentification of major programs: \r\n \r\nCFDA Numbers \r\n \r\nName of Federal Program or Cluster \r\n \r\n84.010, 84.389 84.027, 84.173, 84.391 84.410 \r\n \r\nTitle I, Part A Cluster Special Education Cluster Education Jobs Fund \r\n \r\nDollar threshold used to distinguish between Type A and Type B programs: \r\n \r\n$300,000.00 \r\n \r\nAuditee qualified as low-risk auditee? \r\n \r\nNo \r\n \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nBUDGET PREPARATION/EXECUTION Deficit Fund Balance Material Weakness Finding Control Number: FS-7301-11-01 \r\n \r\nCondition: This is a repeat finding (FS-7301-10-01 and FS-7301-09-01) from the years ended June 30, 2010, and June 30, 2009, respectively. The General Fund of the School District reported a deficit fund balance. \r\n \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2011 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCriteria: Chapter 25 Governmental Fund Deficits of the Financial Management for Georgia Local Units of Administration states in part: \"The seriousness of fund balances deficits cannot be overstated. The Georgia Department of Education requires those LUAs with deficit governmental fund balances to meet certain reporting requirements\". \r\nQuestioned Cost: N/A \r\nInformation: The School District's General Fund reported a deficit fund balance in the amount of $398,873.79. \r\nCause: The School District's General Fund incurred expenditures in excess of revenues during the previous years. In addition, management failed to use effective budgeting techniques and continued charging expenditures to state and Federal programs after the award amounts had been depleted. \r\nEffect: A financial statement irregularity in accordance with Official Code of Georgia Annotated (O.C.G.A.) 20-2-67. \r\nRecommendation: The School District should establish policies and procedures designed to ensure that in future periods the School District does not report a deficit fund balance. \r\nCASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Significant Deficiency Finding Control Number: FS-7301-11-02 \r\nCondition: This is a repeat finding (FS-7301-10-02 and FS-7301-09-02) from the years ended June 30, 2010, and June 30, 2009, respectively. The accounting procedures of the School District were insufficient to provide adequate internal controls over the Cash and Cash Equivalents function. \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls over the Cash and Cash Equivalents. \r\nQuestioned Cost: N/A \r\nInformation: Weaknesses in internal controls relating to Cash and Cash Equivalents were noted as follows: \r\n An administrative review of monthly bank reconciliations, to determine that bank reconciliations were correct and that all required adjustments had been made, was not performed. \r\n- 2 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2011 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n Processes were not in place to ensure that cash activity was maintained in the proper fund in the general ledger. A review of bank account activity by fund noted Private Purpose Trust Fund cash was recorded in the General Fund and Special Purpose Local Option Sales Tax cash was recorded in the General Fund. \r\n Bank reconciliations were not performed by someone independent of the general ledger function. \r\nCause: The School District did not design internal controls to properly reconcile and maintain cash activity on the general ledger. \r\nEffect: Failure to maintain adequate internal controls over cash activity increases the risk that significant misstatements could occur in the financial statements due to error or fraud. \r\nRecommendation: The School District should design and implement controls over cash to ensure that (1) monthly bank reconciliations are adequately reviewed, (2) cash activity is maintained in the proper funds, and (3) bank reconciliations are performed by someone independent of the general ledger function. \r\nCASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS ACCOUNTING CONTROLS (OVERALL) FINANCIAL REPORTING Inadequate Internal Controls over School Activity Accounts Significant Deficiency Finding Control Number: FS-7301-11-03 \r\nCondition: This is a repeat finding (FS-7301-10-03 and FS-7301-09-04) from the years ended June 30, 2010, and June 30, 2009, respectively. The accounting procedures of the School District were insufficient to provide adequate internal controls over school activity accounts. \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and provide reasonable assurance that transaction are processed according to established procedures. \r\nQuestioned Cost: N/A \r\nInformation: Cash and Cash Equivalents \r\n The CSS Internal School Fund account was not properly reconciled to the general ledger resulting in an unidentified variance. \r\n- 3 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2011 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nRevenues/Receivables/Receipts  The deposit preparation function was not separated from the bank reconciliations and general ledger functions.  Gate receipts were not kept in a secured location prior to depositing in the bank.  Dues/Fees collected from students were not receipted by the teachers.  The depositing of funds to the bank was not a standard process for all school activity accounts. \r\nAccounting Controls (Overall)  An administrative review of the bank reconciliation process, cash receipt process, and cash disbursement process to determine if established accounting procedures were being followed was not performed.  The School District did not have a formal process for documenting agency funds sponsors, purpose of accounts, allowable activities of accounts, sources of funds, and final disposition of funds related to individual agency fund accounts. \r\nFinancial Reporting  School activity account balances used for financial statements reporting did not agree with school activity general ledgers.  Several school activity accounts were found misclassified as governmental accounts instead of agency accounts.  Several beginning fund balances reported on the consolidation worksheet used to record School Activity Accounts to the central office's general ledger did not agree to the prior year ending balances. \r\nCause: These deficiencies were a result of management's failure to ensure that internal controls were properly designed and functioning at the school level. \r\nEffect: Failure to maintain adequate internal controls over school activity accounts increases the risk that misstatements could occur in the financial statements due to error or fraud. \r\nRecommendation: The School District should revise and implement internal controls to ensure that proper separation of duties is established, accounting processes are adequately monitored, school activity accounts are properly classified, and financial statement amounts are reconciled to general ledger balances. In addition, standard procedures should be implemented over the depositing of funds and amounts reported in consolidation spreadsheet for school activity accounts. Finally, agency fund accounts should be properly documented. \r\n- 4 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2011 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nREVENUES/RECEIVABLES/RECEIPTS GENERAL LEDGER Inadequate Internal Controls over Grants and Contracts Material Weakness Finding Control Number: FS-7301-11-04 \r\nCondition: This is a repeat finding (FS-7301-10-04 and FS-7301-09-05) from the years ended June 30, 2010, and June 30, 2009, respectively. The accounting procedures of the School District were insufficient to provide adequate internal controls over state and Federal programs funds. \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures. \r\nQuestioned Cost: N/A \r\nInformation: Several of the School District's state and Federal programs maintained deficit fund balances at year end related to current year and/or prior year grants. \r\n Career, Technical, and Agriculture - $23.26  21st Century - $1,678.30  USDA-FFV - $1,967.15  Family Connection - $19,902.85  School Nutrition (Cafeteria) - $5,673.67  Special Education - $302.72  Early Reading First - $11,218.64 \r\nIn addition, several state and Federal programs maintained excess fund balances at year end. The School District did not properly defer and/or refund the excess revenue for the following programs. \r\n Title 1 - $266,647.35  Rural and Low Income - $47.39  Drug Free - $6,756.34  Improving Teaching Quality - $5,799.08  Child Care and Development Block Grant - $38,440.73  Lottery-Pre-K - $13,091.85 \r\nCause: This deficiency was a result of management's failure to ensure that state and Federal programs were properly closed out at year end. \r\nEffect: Errors and/or irregularities may not be detected in a timely manner. \r\n- 5 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2011 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nRecommendation: The School District should implement internal controls to ensure that all state and Federal programs are properly closed out at year end. \r\nEMPLOYEE COMPENSATION Inadequate Internal Controls over Employee Compensation Process Significant Deficiency Finding Control Number: FS-7301-11-05 \r\nCondition: This is a repeat finding (FS-7301-10-05, FS-7301-09-08 and FS-7031-08-03) from the years ended June 30, 2010, June 30 2009, and June 30, 2008, respectively. The accounting procedures of the School District were insufficient to provide for adequate internal controls over employee compensation. \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance employees are paid according to approved salary schedules and that documentation is maintained to support the salary payments. \r\nQuestioned Cost: N/A \r\nInformation:  A review of employee compensation revealed several instances where salaries were not properly approved, supported by signed contracts and/or Board approved salary schedules.  During employee compensation testing, the School District provided a contract for an employee that was signed by the former Interim Superintendent; however, the former Superintendent stated that she did not sign the contract. Of the $96,684.71 paid to this employee, the state salary schedule and board approved supplemental pay supported all but $4,748.37 of this employee's pay. This issue is currently being followed up on by the current Superintendent. \r\nCause: The School District's management failed to implement appropriate procedures to ensure that salary amounts are supported by adequate documentation. \r\nEffect: Failure to maintain adequate internal controls over employee compensation increases the risk that misstatements could occur in the financial statements due to error or fraud. \r\nRecommendation: The School District should implement policies and procedures to ensure that normal business procedures are followed for all salaries, which includes ensuring that salaries are paid according to approved salary schedules and that adequate documentation is maintained to support the salary payments. \r\n- 6 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2011 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nCAPITAL ASSETS Failure to Adequately Maintain Capital Assets Material Weakness Finding Control Number: FS-7301-11-06 \r\nCondition: The School District failed to adequately maintain a capital asset listing. \r\nCriteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that capital assets inventory records are properly maintained. \r\nChapter 37 Implementing a Capital Assets Management System of the Financial Management for Georgia Local Units of Administration provides that School Districts must establish fixed asset policies, define system requirements, implement a fixed asset system and maintain fixed asset inventory records. \r\nQuestioned Cost: N/A \r\nInformation: A review of the School District's capital asset records revealed the following exceptions: \r\n During our physical inspection of inventory items, we identified equipment items (1) not tagged, (2) missing, (3) not included on the asset listing or (4) impaired or obsolete. \r\n The School District does not have policies and procedures in place to identify the possible impairments of assets. \r\n The School District has not conducted a proper annual physical inventory.  A reconciliation of current year expense to fixed assets additions to identify unrecorded \r\nassets is not performed.  The capital asset listing does not have adequate descriptions and/or inventory numbers \r\nassigned to assets. \r\nCause: The School District failed to properly maintain capital assets records in accordance with the approved capital assets policy. \r\nEffect: The failure of the School District to maintain a complete and accurate capital assets listing can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles. \r\nRecommendation: The School District's management should review the capital assets records and make appropriate adjustments to ensure that the capital assets records conform to the School District's approved capital assets policy. \r\n- 7 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2011 \r\nII FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\nFINANCIAL REPORTING Inadequate Controls over Financial Reporting Significant Deficiency Finding Control Number: FS-7301-11-07 \r\nCondition: The School District did not have adequate controls in place to ensure that all required activity was included in the financial statement information presented for audit. \r\nCriteria: Chapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles. \r\nQuestioned Cost: N/A \r\nInformation: The Governmental Accounting Standards Board (GASB) Statement 34 reporting model requires the presentation of both fund level and entity-wide level statements in the School District's financial statements. During the audit, numerous correcting entries were proposed by the auditors and accepted by the client to properly present the entity's fund level and entity-wide level financial statements, including note disclosures. In addition, the auditors identified numerous immaterial uncorrected misstatements. Management determined that their effects are immaterial, both individually and in the aggregate, to the financial statements as a whole. \r\nCause: The School District did not implement an adequate system of internal control over the financial reporting process. \r\nEffect: The School District did not have adequate controls in place to ensure that the financial statements were properly prepared in accordance with generally accepted accounting principles. \r\nRecommendation: The School District should implement and implement internal controls over the financial statement reporting process to ensure that all required activity is included in the financial statement information. \r\n- 8 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2011 \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nALLOWABLE COSTS/COST PRINCIPLES Non-Title 1 Personnel Paid with Title 1 Funds Material Weakness Material Noncompliance U. S. Department of Education Through Georgia Department of Education Title 1, Part A Cluster (CFDA 84.010 and 84.389) Finding Control Number: FA-7301-11-01 \r\nCondition: The School District used Title 1, Part A funds for unallowable direct costs. \r\nCriteria: OMB Circular A-87 states that \"A cost is allocable to a particular cost objective if the goods or services involved are charges or assignable to such cost objective in accordance with relative benefits received\" and \"Typical direct costs chargeable to Federal awards are compensation of employees for the time devoted and identified specifically to the performance of those awards\". \r\nQuestioned Cost: $52,150.50 \r\nInformation: During our review of employee compensation, four employees were paid with Title 1, Part A funds that were not approved by the Federal Programs Director and did not devote any time to the performance of the program. \r\nCause: Management did not implement controls to monitor compliance with Federal guidelines to ensure that direct costs were allowable for this Federal grant. \r\nEffect: Failure to monitor direct costs charged to this grant can result in noncompliance with the requirements of this grant. \r\nRecommendation: The School District should implement policies and procedures to ensure that salaries and wages paid from Title 1, Part A funds are allowable. The Georgia Department of Education should review this matter to determine if a reclaim of funds is appropriate. \r\n- 9 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2011 \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nCASH MANAGEMENT Excessive Cash Balances Significant Deficiency U. S. Department of Education Through Georgia Department of Education Title 1, Part A Cluster (CFDA 84.010 and 84.389) Finding Control Number: FA-7301-11-02 \r\nCondition: The School District made cash drawdowns that were in excess of immediate cash needs. \r\nCriteria: In accordance with 34 CFR 80.21, when funds are advanced, School Districts must follow procedures to minimize the time lapsing between the transfer of funds from the Georgia Department of Education and disbursement. \r\nQuestioned Cost: N/A \r\nInformation:  The School District maintained excessive cash balances for four months.  A review of several cash drawn downs revealed that the supporting documentation did not agree to the amounts drawn down. \r\nCause: The School District failed to accurately forecast the actual cash needs of the programs resulting in noncompliance with grant requirements. \r\nEffect: Failure to monitor the cash needs of the programs can result in material noncompliance with requirements of the Federal grants. \r\nRecommendation: The School District should implement procedures to accurately forecast the actual cash needs of the Title 1 programs and maintain supporting documentation for the cash draw downs. Management should implement procedures to minimize the time lapsing between the transfer of funds from the Georgia Department of Education and disbursement. \r\n- 10 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2011 \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\nREPORTING Failure to File Accurate Completion Reports Material Weakness Material Noncompliance U. S. Department of Education Through Georgia Department of Education Title 1, Part A Cluster (CFDA 84.010 and 84.389) Finding Control Number: FA-7301-11-03 \r\nCondition: The School District failed to file accurate completion reports for the Title 1, Part A Cluster (CFDA 84.010 and CFDA 84.389). \r\nCriteria: In accordance with provisions of OMB Circular A-133, Part 3 Compliance Supplement, Subpart L  Reporting, states in part, \"Each recipient must report program outlays and program income...as prescribed by the Federal awarding agency. The reporting requirements for sub recipients are as specified by the pass-through entity.\" \r\nChapter 41, State and Federal Fiscal Rules and Procedures of the Financial Management for Georgia Local Unit of Administration states, \"This chapter sets forth the principal requirements that a School District must meet to account for and externally report its budget and financial operations relating to state and Federally funded programs administered by the Georgia Department of Education.\" \r\nQuestioned Cost: N/A \r\nInformation: A review of the School District's accounting records revealed the following: \r\n1. Actual Title I, Part A Cluster expenditures for the School Improvement  ARRA Grant period ending September 30, 2010, were $66,097.13, while expenditures were reported on the completion report as $79,653.67, resulting in a variance of $13,556.54. \r\n2. Actual Title I, Part A Cluster expenditures for the ARRA Grant period ending September 30, 2010, were $181,007.02, while expenditures were reported on the completion report as $194,978.14, resulting in a variance of $13,971.12. For Grant period ending September 30, 2011, actual expenditures were $152,480.92, while expenditures were reported on the completion report as $149,070.00, resulting in a variance of $-3,410.92. \r\n3. Actual Title I, Part A Cluster expenditures for the School Improvement Grant period ending September 30, 2010, were $94,080.20, while expenditures were reported on the completion report as $94,119.00, resulting in a variance of $38.80. For Grant period ending September 30, 2011, actual expenditures were $65,494.76, while expenditures were reported on the completion report as $85,873.00, resulting in a variance of $20,378.24. \r\n- 11 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2011 \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n4. Actual Title I, Part A Cluster expenditures for the Improving the Academic Achievement of the Disadvantage program period ending September 30, 2010, were $415,391.39, while expenditures were reported on the completion report as $486,213.64, resulting in a variance of $70,822.25. For Grant period ending September 30, 2011, actual expenditures were $421,751.65, while expenditures were reported on the completion report as $424,210.25, resulting in a variance of $2,458.60. \r\nNo fund balances resulted due to the reporting errors. \r\nCause: Management failed to implement procedures to ensure that amounts on the completion reports agreed with actual expenditures. \r\nEffect: Failure to accurately report Federal expenditures can result in inaccurate and incomplete disclosures for Federal grant reporting purposes and can result in excessive claims for reimbursement. \r\nRecommendation: Management should implement procedures to ensure that completion reports, submitted to the Georgia Department of Education, (1) include all activity of the reporting period, (2) are supported by applicable accounting records and (3) are properly presented in accordance with program requirements. \r\nMATCHING, LEVEL OF EFFORT AND EARMARKING Failure to Meet Maintenance of Effort Requirements Material Weakness Material Noncompliance U. S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027and 84.391) Finding Control Number: FA-7301-11-04 \r\nCondition: The School District did not meet maintenance of effort requirements. \r\nCriteria: 34 CFR 300.203(a) and the Compliance Supplement, Part 4 (4-48.027, III, G.2.1., IDEA, Part B) indicate that funds received by a Local Educational Agency (LEA), cannot be used, except under certain limited circumstances, to reduce the level of expenditures for the education of children with disabilities made by the LEA from local funds below the level of those expenditures for the preceding fiscal year. To meet this requirement, an LEA must expend in any particular fiscal year, an amount of local funds for the education of children with disabilities that is at least equal to the amount of local funds expended for this purpose by the LEA in the prior fiscal year. \r\nQuestioned Cost: $9,953.35 \r\n- 12 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2011 \r\n \r\nIII FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \r\n \r\nInformation: \r\n \r\nState and Local funds for the education of children with disabilities decreased both in aggregate and \r\n \r\nper pupil during the year under review. \r\n \r\nFiscal \r\n \r\nFiscal \r\n \r\nYear 2011 \r\n \r\nYear 2010 \r\n \r\nState and Local Expenditures \r\n \r\n$ \r\n \r\n399,191.47 $ 409,145.02 \r\n \r\nNumber of Students \r\n \r\n74 \r\n \r\n67 \r\n \r\nState and Local Expenditures per Student $ \r\n \r\n5,394.48 $ \r\n \r\n6,106.64 \r\n \r\nCause: The School District did not properly manage their funds to meet the maintenance of effort requirements related to the education of children with disabilities. \r\n \r\nEffect: Failure to monitor expenditures for compliance with maintenance of effort requirements can lead to a material noncompliance with the provision of the Federal grant. \r\n \r\nRecommendation: The School District should implement appropriate procedures to ensure that maintenance of effort is met regarding the education of children with disabilities. The Georgia Department of Education should review this matter to determine if a refund is appropriate. \r\n \r\n- 13 - \r\n \r\n  SECTION V MANAGEMENT'S RESPONSES \r\n \r\n  TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES \r\nYEAR ENDED JUNE 30, 2011 \r\nFinding Control Number: FS-7301-11-01 \r\nWe concur with this finding. The Board will establish policies and procedures designed to ensure that the School District does not report a deficit balance in the future. \r\nFinding Control Number: FS-7301-11-02 \r\nWe concur with this finding. The Board will implement control over cash to ensure that cash is properly reconciled to general ledger and cash activities. \r\nFinding Control Number: FS-7301-11-03 \r\nWe concur with this finding. Management will ensure that transactions are processed according to procedures and accurately monitored and reconciled to the general ledger. \r\nFinding Control Number: FS-7301-11-04 \r\nWe concur with this finding. Management will monitor and implement procedures to assure that the amounts of the Federal funds requested for reimbursement from the GDOE is aligned closely with actual program expenditures. \r\nFinding Control Number: FS-7301-11-05 \r\nWe concur with this finding. Management will implement policies and procedures to ensure that business procedures are followed for all salaries, ensuring that salaries are paid according to approved salary schedules and adequate documentation will be maintained to support the salary payments. \r\nFinding Control Number: FS-7301-11-06 We concur with this finding. Management will implement procedures to ensure capital assets records conform to approved capital assets policy. \r\nFinding Control Number: FS-7301-11-07 \r\nWe concur with this finding. The School District will implement procedures to ensure that all required activity in the form of journal entries are in the financial statements. Management will ensure that the financial statements are in accordance with Chapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration. And financial statement will be prepared in accordance with generally accepted accounting principles. \r\nFinding Control Number: FA-7301-11-01 \r\nWe concur with this finding. Management will monitor and implement procedures to ensure that direct costs (salaries) are allowable with Federal grants and their guidelines. \r\nFinding Control Number: FA-7301-11-02 \r\nWe concur with this finding. Management will implement procedures to accurately forecast the cash needs. Management will maintain supporting documentation for the draw downs and procedures to minimize lapsing time between transfers. \r\n- 1 - \r\n \r\n TALBOT COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES \r\nYEAR ENDED JUNE 30, 2011 \r\n \r\nFinding Control Number: FA-7301-11-03 \r\n \r\nWe concur with this finding. Management will implement procedures to ensure that accounting records for completion reports agree with actual expenditures. \r\n \r\nFinding Control Number: FA-7301-11-04 \r\n \r\nWe concur with this finding. The School District will implement procedures so that the education of children with disabilities will meet the maintenance of efforts requirements. \r\n \r\nContact Person: Telephone: Fax: Email: \r\n \r\nDr. James Catrett, Superintendent (706) 665-8528 (706) 665-3620 jcatrett@talbot.k12.ga.us \r\n \r\n- 2 - \r\n \r\n "}],"pages":{"current_page":1,"next_page":2,"prev_page":null,"total_pages":2,"limit_value":10,"offset_value":0,"total_count":12,"first_page?":true,"last_page?":false},"facets":[{"name":"type_facet","items":[{"value":"Text","hits":12}],"options":{"sort":"count","limit":16,"offset":0,"prefix":null}},{"name":"creator_facet","items":[{"value":"Georgia. Department of Audits and Accounts","hits":7},{"value":"Georgia. 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