Atkins School District No. 18, Pope County, Arkansas, regulatory basis financial statements and other reports |
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LEGISLATIVE JOINT AUDITING COMMITTEE Atkins School District No. 18 Pope County, Arkansas Regulatory Basis Financial Statements and Other Reports June 30, 2007 ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS TABLE OF CONTENTS JUNE 30, 2007 Independent Auditor's Report Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards Report on Compliance With Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance With OMB Circular A- 133 REGULATORY BASIS FINANCIAL STATEMENTS Exhibit Balance Sheet – Regulatory Basis A Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds – Regulatory Basis B Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General and Special Revenue Funds – Regulatory Basis C Notes to Financial Statements SUPPLEMENTARY INFORMATION Schedule Schedule of Capital Assets ( Unaudited) 1 Expenditures of Federal Awards 2 Federal Award Programs – Findings and Questioned Costs 3 Federal Award Programs – Summary of Prior Audit Findings 4 INDEPENDENT AUDITOR'S REPORT Atkins School District No. 18 and School Board Members Legislative Joint Auditing Committee We have audited the accompanying financial statements of each major governmental fund and the aggregate remaining fund information of the Atkins School District No. 18 ( the " District"), as of and for the year ended June 30, 2007, which collectively comprise the District’s regulatory basis financial statements as listed in the table of contents. These financial statements are the responsibility of District management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. As described more fully in Note 1, the District has prepared these financial statements using accounting practices prescribed or permitted by Arkansas Code, which practices differ from accounting principles generally accepted in the United States of America. The effect on the financial statements of the variances between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. In our opinion, because of the effects of the matter discussed in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of the District as of June 30, 2007, or the changes in financial position for the year then ended. Further, the District has not presented a management’s discussion and analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not required to be part of, the basic financial statements. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each major governmental fund and the aggregate remaining fund information of the District as of June 30, 2007, and the respective changes in financial position and budgetary results for the year then ended, on the basis of accounting described in Note 1. In accordance with Government Auditing Standards, we have also issued our report dated April 1, 2008 on our consideration of the 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 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. - 2 - Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s regulatory basis financial statements. The Schedule of Capital Assets ( Schedule 1), Expenditures of Federal Awards ( Schedule 2), as required by U. S. Office of Management and Budget Circular A- 133, Audits of States, Local Governments, and Non- Profit Organizations, Federal Award Programs – Findings and Questioned Costs ( Schedule 3) and Federal Award Programs – Summary of Prior Audit Findings ( Schedule 4) are presented for purposes of additional analysis and are not a required part of the regulatory basis financial statements. The Expenditures of Federal Awards ( Schedule 2), Federal Award Programs – Findings and Questioned Costs ( Schedule 3) and Federal Award Programs – Summary of Prior Audit Findings ( Schedule 4) have been subjected to the auditing procedures applied in the audit of the regulatory basis financial statements and, in our opinion, are fairly stated in all material respects in relation to the regulatory basis financial statements taken as a whole. The Schedule of Capital Assets ( Schedule 1) has not been subjected to the auditing procedures applied in the audit of the regulatory basis financial statements and, accordingly, we express no opinion on it. DIVISION OF LEGISLATIVE AUDIT Roger A. Norman, JD, CPA, CFE Legislative Auditor Little Rock, Arkansas April 1, 2008 EDSD31107 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 Atkins School District No. 18 and School Board Members Legislative Joint Auditing Committee We have audited the financial statements of each major governmental fund and the aggregate remaining fund information of the Atkins School District No. 18 ( the " District"), as of and for the year ended June 30, 2007, which collectively comprise the District’s regulatory basis financial statements, and have issued our report thereon dated April 1, 2008. We issued an adverse opinion because the District prepared the financial statements using accounting practices prescribed or permitted by the Arkansas Code, which differ from accounting principles generally accepted in the United States of America. The effect on the financial statements of the variances between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. However, the financial statements present fairly, in all material respects, the respective financial position of each major governmental fund and the aggregate remaining fund information of the District as of June 30, 2007, and the respective changes in financial position and budgetary results for the year then ended, on the basis of accounting described in Note 1. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the District's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the regulatory basis financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified a certain deficiency in internal control over financial reporting that we consider to be a significant deficiency. A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the District's ability to initiate, authorize, record, process, or report financial data reliably in accordance with the regulatory basis of accounting as prescribed or permitted by Arkansas Code such that there is more than a remote likelihood that a misstatement of the District’s financial statements that is more than inconsequential will not be prevented or detected by the District’s internal control. We consider the deficiency described in the accompanying schedule of Federal Award Programs - Findings and Questioned Costs as item 2007- 1 to be a significant deficiency in internal control over financial reporting. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the District’s internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, of the significant deficiency described above, we consider item 2007- 1 in the accompanying schedule of Federal Award Programs - Findings and Questioned Costs to be a material weakness. - 4 - Compliance and Other Matters As part of obtaining reasonable assurance about whether the District's regulatory basis financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of the state constitution, state and federal laws and 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. The District’s response to the finding identified in our audit is described in the accompanying schedule of Federal Award Programs – Findings and Questioned Costs. We did not audit the District’s response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of the Legislative Joint Auditing Committee, the local school board and District management, state executive and oversight management, federal regulatory and oversight bodies, the federal awarding agencies and pass- through entities, and other parties as required by Arkansas Code, and is not intended to be and should not be used by anyone other than these specified parties. However, pursuant to Arkansas Code Annotated § 10- 4- 417, all reports presented to the Legislative Joint Auditing Committee are matters of public record and distribution is not limited. DIVISION OF LEGISLATIVE AUDIT Larry W. Hunter, CPA, CFE Deputy Legislative Auditor Little Rock, Arkansas April 1, 2008 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A- 133 Atkins School District No. 18 and School Board Members Legislative Joint Auditing Committee Compliance We have audited the compliance of the Atkins School District No. 18 ( the " District") with the types of compliance requirements described in the U. S. Office of Management and Budget ( OMB) Circular A- 133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2007. The District's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of Federal Award Programs - 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 the District's management. Our responsibility is to express an opinion on the District's compliance based on our audit. 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 District'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 of the District's compliance with those requirements. In our opinion, the District complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2007. Internal Control Over Compliance The management of the District 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 the District's internal control over compliance with the requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, 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 District’s internal control over compliance. A control deficiency in an entity’s internal control over compliance 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 noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the District’s ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the District’s internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the District’s internal control. - 6 - Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the Legislative Joint Auditing Committee, the local school board and District management, state executive and oversight management, federal regulatory and oversight bodies, the federal awarding agencies and pass- through entities, and other parties as required by Arkansas Code, and is not intended to be and should not be used by anyone other than these specified parties. However, pursuant to Arkansas Code Annotated § 10- 4- 417, all reports presented to the Legislative Joint Auditing Committee are matters of public record and distribution is not limited. DIVISION OF LEGISLATIVE AUDIT Larry W. Hunter, CPA, CFE Deputy Legislative Auditor Little Rock, Arkansas April 1, 2008 Exhibit A Special Other Fiduciary General Revenue Aggregate Fund Types ASSETS Cash $ 1 ,658,520 $ 1 51,458 $ 2 ,348 $ 5 4,558 Deposit with paying agent 6 7,823 TOTAL ASSETS $ 1 ,726,343 $ 1 51,458 $ 2 ,348 $ 5 4,558 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 2 5,534 $ 1 0,817 Due student groups $ 5 4,558 Deferred taxes 1 44,853 Total Liabilities 1 70,387 1 0,817 5 4,558 Fund Balances: Reserved: Debt service 6 7,823 Capital projects $ 2 ,348 Unreserved: Undesignated 1 ,488,133 1 40,641 Total Fund Balances 1 ,555,956 1 40,641 2 ,348 TOTAL LIABILITIES AND FUND BALANCES $ 1 ,726,343 $ 1 51,458 $ 2 ,348 $ 5 4,558 The accompanying notes are an integral part of these financial statements. Major Governmental Funds ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS BALANCE SHEET - REGULATORY BASIS JUNE 30, 2007 - 7 - ( THIS PAGE INTENTIONALLY LEFT BLANK) Exhibit B Special Other General Revenue Aggregate REVENUES Property taxes ( including property tax relief trust distribution) $ 1,388,472 $ 677 State assistance 5,853,538 $ 4,388 Federal assistance 2,249 1,000,240 Activity revenues 114,240 Meal sales 138,776 Investment income 56,243 1,228 100 Other revenues 59,620 80,950 TOTAL REVENUES 7,474,362 1,225,582 777 EXPENDITURES Regular programs 3,386,500 161,063 25,875 Special education 434,538 164,048 Workforce education 272,324 15,954 Compensatory education 3,616 296,542 Other instructional programs 180,428 Student support services 242,726 106,360 Instructional staff support services 295,156 131,503 General administration support services 197,205 School administration support services 326,655 Business support services 93,226 Operation and maintenance of plant services 732,016 848 Student transportation services 305,954 21,274 Other support services 23,140 Food services operations 7,490 448,960 Facilities acquisition and construction services 286 Non- programmed costs 56,745 24,836 Activity expenditures 101,235 Debt Service: Principal retirement 72,949 135,000 Interest and fiscal charges 3,454 91,811 TOTAL EXPENDITURES 6,735,357 1,371,388 252,972 EXCESS OF REVENUES OVER ( UNDER) EXPENDITURES 739,005 ( 145,806) ( 252,195) OTHER FINANCING SOURCES ( USES) Transfers in 226,811 Transfers out ( 226,811) TOTAL OTHER FINANCING SOURCES ( USES) ( 226,811) 226,811 EXCESS OF REVENUES AND OTHER SOURCES OVER ( UNDER) EXPENDITURES AND OTHER USES 512,194 ( 145,806) ( 25,384) FUND BALANCES - JULY 1 1,043,762 286,447 27,732 FUND BALANCES - JUNE 30 $ 1,555,956 $ 140,641 $ 2,348 The accompanying notes are an integral part of these financial statements. Major GOVERNMENTAL FUNDS - REGULATORY BASIS FOR THE YEAR ENDED JUNE 30, 2007 ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - - 8 - Exhibit C Variance Variance Favorable Favorable Budget Actual ( Unfavorable) Budget Actual ( Unfavorable) REVENUES Property taxes ( including property tax relief trust distribution) $ 1,382,000 $ 1,388,472 $ 6,472 State assistance 5,791,737 5,853,538 61,801 $ 4,472 $ 4,388 $ ( 84) Federal assistance 250 2,249 1,999 1,025,142 1,000,240 ( 24,902) Activity revenues 114,240 114,240 Meal sales 136,140 138,776 2,636 Investment income 10,000 56,243 46,243 1,228 1,228 Other revenues 59,620 59,620 80,950 80,950 TOTAL REVENUES 7,183,987 7,474,362 290,375 1,165,754 1,225,582 59,828 EXPENDITURES Regular programs 3,510,376 3,386,500 123,876 157,281 161,063 ( 3,782) Special education 427,142 434,538 ( 7,396) 166,652 164,048 2,604 Workforce education 265,599 272,324 ( 6,725) 16,450 15,954 496 Compensatory education 3,616 ( 3,616) 287,124 296,542 ( 9,418) Other instructional programs 202,448 180,428 22,020 Student support services 231,975 242,726 ( 10,751) 115,670 106,360 9,310 Instructional staff support services 386,708 295,156 91,552 218,047 131,503 86,544 General administration support services 247,405 197,205 50,200 School administration support services 323,977 326,655 ( 2,678) Business support services 60,239 93,226 ( 32,987) Operation and maintenance of plant services 795,826 732,016 63,810 1,430 848 582 Student transportation services 419,167 305,954 113,213 21,769 21,274 495 Other support services 22,000 23,140 ( 1,140) Food services operations 7,490 ( 7,490) 421,157 448,960 ( 27,803) Community services 1,000 1,000 Other non- instructional services Facilities acquisition and construction services 20,000 20,000 Non- programmed costs 79,573 56,745 22,828 24,836 24,836 Activity expenditures 101,235 ( 101,235) Debt Service: Principal retirement 72,950 72,949 1 Interest and fiscal charges 3,514 3,454 60 TOTAL EXPENDITURES 7,068,899 6,735,357 333,542 1,431,416 1,371,388 60,028 FOR THE YEAR ENDED JUNE 30, 2007 ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL AND SPECIAL REVENUE FUNDS - REGULATORY BASIS General Special Revenue - 9 - Exhibit C Variance Variance Favorable Favorable Budget Actual ( Unfavorable) Budget Actual ( Unfavorable) FOR THE YEAR ENDED JUNE 30, 2007 ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL AND SPECIAL REVENUE FUNDS - REGULATORY BASIS General Special Revenue EXCESS OF REVENUES OVER ( UNDER) EXPENDITURES $ 115,088 $ 739,005 $ 623,917 $ ( 265,662) $ ( 145,806) $ 119,856 OTHER FINANCING SOURCES ( USES) Transfers in 3,798,441 ( 3,798,441) Transfers out ( 4,053,561) ( 226,811) 3,826,750 ( 10,530) 10,530 TOTAL OTHER FINANCING SOURCES ( USES) ( 255,120) ( 226,811) 28,309 ( 10,530) 10,530 EXCESS OF REVENUES AND OTHER SOURCES OVER ( UNDER) EXPENDITURES AND OTHER USES ( 140,032) 512,194 652,226 ( 276,192) ( 145,806) 130,386 FUND BALANCES - JULY 1 1,004,990 1,043,762 38,772 287,508 286,447 ( 1,061) FUND BALANCES - JUNE 30 $ 864,958 $ 1,555,956 $ 690,998 $ 11,316 $ 140,641 $ 129,325 The accompanying notes are an integral part of these financial statements. - 10 - ( THIS PAGE INTENTIONALLY LEFT BLANK) ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 11 - 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The Board of Education, a five member group, is the level of government, which has responsibilities over all activities related to public elementary and secondary school education within the jurisdiction of the Atkins School District ( District). There are no component units. B. Description of Funds Major governmental funds ( per the regulatory basis of accounting) are defined as General and Special Revenue. General Fund - The General Fund is the general operating fund and is used to account for all financial resources, except those required to be reported in another fund. Special Revenue Fund – The Special Revenue Fund is used to account for the proceeds of specific revenue sources ( other than trusts for individuals, private organizations, or other governments or for major capital projects) that are legally restricted to expenditures for specified purposes. Other governmental funds, presented in the aggregate, consist of the following: Capital Projects Fund – The Capital Projects Fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities ( other than those financed by proprietary funds or in trust funds for individuals, private organizations, or other governments). Debt Service Fund – The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long- term debt principal, interest and related costs. Fiduciary Fund types include the following: Agency Funds - Agency Funds are used to report resources held by the reporting government in a purely custodial capacity ( assets equal liabilities). C. Measurement Focus and Basis of Accounting The financial statements are prepared in accordance with a regulatory basis of accounting ( RBA). This basis of accounting is prescribed by Arkansas Code Annotated § 10- 4- 413( c), as provided in Act 2201 of 2005, and requires that financial statements be presented on a fund basis with, as a minimum, the general fund and special revenue fund presented separately and all other funds included in the audit presented in the aggregate. The law also stipulates that the financial statements consist of a balance sheet; a statement of revenues, expenditures, and changes in fund balances; a comparison of the final adopted budget to the actual expenditures for the general fund and special revenue funds of the entity; notes to financial statements; and a supplemental schedule of capital assets, including land, buildings, and equipment. The law further stipulates that the State Board of Education shall promulgate the rules necessary to administer the regulatory basis of presentation. ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 12 - 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued) C. Measurement Focus and Basis of Accounting ( Continued) The RBA is not in accordance with generally accepted accounting principles ( GAAP). GAAP require that basic financial statements present government- wide financial statements. Additionally, GAAP require the following major concepts: Management’s Discussion and Analysis, accrual basis of accounting for government- wide financial statements, including depreciation expense, modified accrual basis of accounting for fund financial statements, separate financial statements for fiduciary fund types, separate identification of special and extraordinary items, inclusion of capital assets and debt in the financial statements, specific procedures for the identification of major governmental funds and applicable note disclosures. The RBA does not require government- wide financial statements or the previously identified concepts. The accompanying financial statements are presented on a fund basis. A fund is defined as a fiscal and accounting entity with a self- balancing set of accounts, which are segregated for purposes of recording specific activities or attaining certain objectives. Revenues are reported by major sources and expenditures are reported by major function. Other transactions, which are not reported as revenues or expenditures, are reported as other financing sources and uses. Transactions related to the recording of installment contracts and capital leases are reported as other financing sources. Changes in private- purpose trust funds will be reflected in the notes to the financial statements. D. Revenue Recognition Policies Revenues are recognized when they become susceptible to accrual in accordance with the RBA, except for property taxes ( see Note 1 F below). E. Capital Assets Information on capital assets and related depreciation is reported at Schedule 1. Capital assets are capitalized at historical cost or estimated historical cost, if actual data is not available. Capital assets purchased are recorded as expenditures in the applicable fund at the time of purchase. Donated capital assets are reported at fair value when received. The District maintains a threshold level of $ 1,000 for capitalizing equipment. Library holdings are not capitalized. No salvage value is taken into consideration for depreciation purposes. All capital assets, other than land and construction in progress, are depreciated using the straight- line method over the following useful lives: Asset Class Estimated Useful Life in Years Improvements/ infrastructure 20 Buildings 50 Equipment 5- 20 ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 13 - 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued) F. Property Taxes Property taxes are levied in November based on property assessment made between January 1 and May 31 and are an enforceable lien on January 1 for real property and June 1 for personal property. The tax records are opened on the first business day of March of the year following the levy date and are considered delinquent after October 10 of the same calendar year. Property taxes are accrued or deferred, as applicable, in accordance with guidelines issued by the Arkansas Department of Education ( ADE), which were effective beginning with the fiscal year ended June 30, 2006. Arkansas law defines revenue receipts of a school district and includes forty percent ( 40%) of the proceeds of local taxes which are not pledged to secure bonded indebtedness or forty percent ( 40%) of the revenue from the uniform rate of tax whichever is greater collected in the succeeding calendar year, commonly known as 40% pullback, within that definition. The ADE has determined that school districts must utilize the 40% pullback amount, as calculated by the ADE and reflected on the respective county’s abstract of assessments, in recording property tax revenue as follows: • If the amount of 40% pullback collected by June 30th is less than the calculated 40% pullback amount, the difference must be accrued; • If the amount of 40% pullback collected by June 30th is more than the calculated 40% pullback amount, the excess must be recorded as deferred taxes. Amendment No. 74 to the Arkansas Constitution established a uniform minimum property tax millage rate of 25 mills for maintenance and operation of public schools. Ark. Code Ann. § 26- 80- 101 provides the uniform rate of tax ( URT) shall be assessed and collected in the same manner as other school property taxes, but the net revenues from the URT shall be remitted to the State Treasurer and distributed by the State to the county treasurer of each county for distribution to the school districts in that county. For reporting purposes, URT revenues are considered property taxes. G. Fund Balance Designations 1. Reserved fund balance - represents that portion of the fund balance which is not appropriable for expenditure or is legally segregated for a specific future use. 2. Undesignated fund balance - indicates that portion of the fund balance not reserved or designated. H. Budget and Budgetary Accounting The District is required by state law to prepare an annual budget. The annual budget is prepared on a fiscal year basis. The District does not prepare and submit amended budgets during the fiscal year. The State Department of Education’s regulations allow for the cash basis or the modified accrual basis. However, the majority of the school districts employ the cash basis method. The District budgets intra- fund transfers. Significant variances may result in the comparison of transfers at the Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General and Special Revenue Funds – Regulatory Basis because only interfund transfers are reported at the Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds – Regulatory Basis. ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 14 - 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued) H. Budget and Budgetary Accounting ( Continued) Budgetary perspective differences are not considered to be significant, because the structure of the information utilized in preparing the budget and the applicable fund financial statements is essentially the same. On- behalf payments as described at Note 7 are nonbudgeted data for the year ended June 30, 2007. Such payments are reported as actual revenues and expenditures in the Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General and Special Revenue Funds – Regulatory Basis ( Exhibit C). 2: CASH DEPOSITS WITH FINANCIAL INSTITUTIONS Cash deposits are carried at cost ( carrying value). A comparison of the bank balance and carrying value is as follows: Carrying Bank Amount Balance Insured ( FDIC) $ 100,000 $ 1 00,000 Collateralized: Collateral held by the pledging bank or pledging bank's trust department in the District's name 1 ,766,884 2,028,684 Total Deposits $ 1 ,866,884 $ 2 ,128,684 3: COMMITMENTS The District was contractually obligated for the following at June 30, 2007: A. Operating Leases ( noncapital leases with initial noncancellable lease terms in excess of one year) General description of leases and leasing arrangements: The District executed the following lease agreements for 60 months: ( a) One Canon 3300 copier, dated July 9, 2003, with monthly payment of $ 175 plus applicable sales taxes. ( b) One Canon 400S copier, dated June 1, 2004, with monthly payment of $ 198 plus applicable sales taxes. ( c) Two Canon 3300 copiers, dated July 7, 2004, with monthly payments of $ 189 each plus applicable sales taxes. ( d) One Canon 3300 copier, dated August 2, 2004, with monthly payments of $ 189 plus applicable sales taxes. ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 15 - 3: COMMITMENTS ( Continued) A. ( Continued) General description of leases and leasing arrangements: ( Continued) 1. Future minimum rental payments ( aggregate) at June 30, 2007: $ 22,183 2. Future minimum rental payments for the succeeding years: Year Ended June 30, Amount 2008 $ 1 2,233 2009 9 ,745 2010 2 05 Total $ 22,183 Rental payments for the operating leases described above were approximately $ 12,233 for the year ended June 30, 2007. B. Long- term Debt Issued and Outstanding The District is presently paying on the following long- term debt: Amount Debt Maturities Date Date of Final Rate of Authorized Outstanding To of Issue Maturity Interest and Issued June 30, 2007 June 30, 2007 8/ 1/ 03 6/ 1/ 20 3.6 - 3.85% $ 2 ,855,275 $ 2 ,330,000 $ 5 25,275 5/ 30/ 05 5/ 30/ 15 1 10,468 110,468 6/ 18/ 03 6/ 18/ 13 1 26,681 126,681 Totals $ 3 ,092,424 $ 2 ,567,149 $ 5 25,275 Changes in Long- term Debt Balance Balance July 1, 2006 Retired June 30, 2007 Bonds payable $ 2 ,465,000 $ 135,000 $ 2,330,000 Postdated warrants 3 10,098 7 2,949 237,149 Totals $ 2 ,775,098 $ 207,949 $ 2,567,149 ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 16 - 3: COMMITMENTS ( Continued) B. Long- term Debt Issued and Outstanding ( Continued) Total long- term debt principal and interest payments are as follows: Year Ended June 30, Principal Interest Total 2008 $ 1 40,000 $ 8 6,270 $ 226,270 2009 1 50,000 8 1,230 231,230 2010 1 55,000 7 5,830 230,830 2011 1 55,000 7 0,870 225,870 2012 1 65,000 6 5,600 230,600 2013- 2017 1 ,157,149 2 32,795 1,389,944 2018- 2020 6 45,000 5 0,435 695,435 Totals $ 2 ,567,149 $ 6 63,030 $ 3,230,179 Qualified Zone Academy Bond ( QZAB) On June 18, 2003 and May 30, 2005, respectively, the District obtained funding through the Qualified Zone Academy Bond ( QZAB) program, a financial arrangement created by the Tax Relief Act of 1997. A QZAB does not generally require interest payments from the borrower. The eligible financial institution holding the bond receives a tax credit in lieu of interest payments. The principal is not due until the end of the term. The District borrowed $ 126,681 and $ 110,468, respectively, through this program by issuing postdated warrants. The District will deposit $ 11,694 and $ 10,524 annually into a sinking fund for 10 years for a total of $ 116,940 and $ 105,240, respectively. This amount plus interest will be used to retire the debt when due. 4: ACCOUNTS PAYABLE The accounts payable balance of $ 36,351 at June 30, 2007, was comprised of the following: Special Description General Revenue Total Vendor payables $ 2 5,534 $ 10,817 $ 36,351 Major Governmental Funds 5: INTERFUND TRANSFERS The District transferred $ 226,811 from the general fund to the other aggregate funds for debt related payments. ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 17 - 6: RETIREMENT PLANS Arkansas Teacher Retirement System Plan Description. The District contributes to the Arkansas Teacher Retirement System ( ATRS), a cost-sharing multiple- employer defined benefit pension plan that covers all Arkansas public school employees, except certain nonteachers hired prior to July 1, 1989. ATRS provides retirement and disability benefits, annual cost- of- living adjustments, and death benefits to plan members and beneficiaries. Benefit and contribution provisions are established by State law and can be amended only by the Arkansas General Assembly. The Arkansas Teacher Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for ATRS. That report may be obtained by writing to Arkansas Teacher Retirement System, 1400 West Third Street, Little Rock, Arkansas 72201 or by calling 1- 800- 666- 2877. Funding Policy. ATRS has contributory and non- contributory plans. Contributory members are required by law to contribute 6% of their salary. Each participating employer is required by law to contribute at a rate established by the Arkansas General Assembly. The current employer rate is 14%. The District's contributions to ATRS for the years ended June 30, 2007, 2006 and 2005 were $ 665,956, $ 649,736 and $ 606,296, respectively, equal to the required contributions for each year. Arkansas Public Employees Retirement System Plan Description. The District contributes to the Arkansas Public Employees Retirement System ( PERS), a cost- sharing multiple- employer defined benefit pension plan that covers certain nonteaching Arkansas public school employees hired before July 1, 1989. PERS provides retirement and disability benefits, annual cost-of- living adjustments, and death benefits to plan members and beneficiaries. Benefit and contribution provisions are established by State law and can be amended only by the Arkansas General Assembly. The Arkansas Public Employees Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for PERS. That report may be obtained by writing to Arkansas Public Employees Retirement System, One Union National Plaza, 124 W. Capitol, Little Rock, Arkansas 72201 or by calling 1- 800- 682- 7377. Funding Policy. PERS has contributory and non- contributory plans. Contributory members are required by law to contribute 6% of their salary. Each participating employer is required by law to contribute at a rate established by the Arkansas General Assembly. The current statutory employer rate is 4% of annual covered payroll. The District's contributions to PERS for the years ended June 30, 2007, 2006 and 2005 were $ 4,737, $ 4,874 and $ 4,857, respectively, equal to the required contributions for each year. 7: ON- BEHALF PAYMENTS The accompanying financial statements reflect on- behalf payments of $ 74,603 for health insurance premiums paid by the Arkansas Department of Education. 8: RISK MANAGEMENT The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The District carries commercial insurance for board liability and student accidents. Settled claims have not exceeded this commercial coverage in any of the past three fiscal years. There were no significant reductions in insurance coverage from the prior year in the major categories of risk. ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 18 - 8: RISK MANAGEMENT ( Continued) The District participates in the Arkansas School Boards Association – Workers’ Compensation Trust ( the Trust), a self- insurance trust voluntarily established on July 1, 1994 pursuant to state law. The Trust is responsible for obtaining and administering workers’ compensation insurance coverage for its members, as well as obtaining reinsurance coverage for those claims that exceed the standard policy limits. In its administrative capacity, the Trust is responsible for monitoring, negotiating and settling claims that have been filed on behalf of and against member districts. The District contributes annually to this program. Additionally, the District participates in the Arkansas School Boards Association – Risk Management Program ( the Association), a self- insurance program voluntarily established on February 1, 1984 pursuant to state law. The Association is responsible for obtaining and administering insurance coverage for property and vehicles for its members, as well as obtaining reinsurance coverage for those claims that exceed the standard policy limits. In its administrative capacity, the Association is responsible for monitoring, negotiating and settling claims that have been filed against member districts. The District pays an annual premium for its coverage of buildings, contents and vehicles. The District participates in the Arkansas Fidelity Bond Trust Fund administered by the Governmental Bonding Board. This program provides coverage for actual losses sustained by its members through fraudulent or dishonest acts committed by officials or employees. Each loss is limited to $ 250,000 with a $ 1,000 deductible. Premiums for coverage are paid by the Chief Fiscal Officer of the State of Arkansas from funds withheld from the Public School Fund. Schedule 1 Balance June 30, 2007 Nondepreciable capital assets: Land $ 4 04,711 Depreciable capital assets: Buildings 6 ,377,618 Improvements/ infrastructure 4 84,306 Equipment 1 ,704,306 Total depreciable capital assets 8 ,566,230 Less accumulated depreciation for: Buildings 2 ,266,025 Improvements/ infrastructure 1 96,494 Equipment 1 ,098,784 Total accumulated depreciation 3,561,303 Total depreciable capital assets, net 5,004,927 Capital assets, net $ 5,409,638 ( Unaudited) ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS SCHEDULE OF CAPITAL ASSETS FOR THE YEAR ENDED JUNE 30, 2007 - 19 - Schedule 2 Federal Pass- Through CFDA Entity Identifying Federal Number Number Expenditures 10.553 58- 01 $ 6 4,428 10.555 58- 01 2 13,096 TOTAL CHILD NUTRITION CLUSTER 2 77,524 OTHER PROGRAMS U. S. Department of Agriculture Food Donation ( Note 2) 10.550 1 ,193 Passed Through State Department of Health and Human Services: Food Donation ( Note 3) 10.550 58- 01 2 9,152 Total U. S. Department of Agriculture 3 0,345 U. S. Department of Education Passed Through State Department of Education: 84.010 58- 01 3 68,866 84.027 58- 01 2 23,590 84.186 58- 01 6 ,171 84.298 58- 01 2 ,101 Education Technology State Grants 84.318 58- 01 5 ,640 Rural Education 84.358 58- 01 4 0,069 Improving Teacher Quality State Grants 84.367 58- 01 1 61,550 Hurricane Education Recovery 84.938 58- 01 1 0,530 Passed Through Russellville School District: Career and Technical Education - Basic Grants to States 84.048 58- 01 1 5,954 8 34,471 TOTAL OTHER PROGRAMS 8 64,816 $ 1 ,142,340 Note 1: Passed Through State Department of Education: NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Basis of Presentation - The accompanying schedule of expenditures of federal awards includes the federal grant activity of Atkins School District No. 18 and is presented on the regulatory basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A- 133, Audits of States, Local Governments, and Non- Profit Organizations . Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the regulatory basis financial statements. School Breakfast Program National School Lunch Program Safe and Drug- Free Schools and Communities - Special Education - Grants to States State Grants Federal Grantor/ Pass- Through Grantor/ Program or Cluster Title CHILD NUTRITION CLUSTER U. S. Department of Agriculture ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2007 Title I Grants - Local Educational Agencies Nonmonetary assistance is reported at the approximate value as provided by the U. S. Department of Defense through an agreement with the U. S. Department of Agriculture. TOTAL EXPENDITURES OF FEDERAL AWARDS Total U. S. Department of Education State Grants for Innovative Programs Note 4: During the year ended June 30, 2007, the District received Medicaid funding of $ 75,186 from the State Department of Health and Human Services. Such payments are not considered Federal awards expended and therefore are not included in the above schedule. Note 2: Note 3: Nonmonetary assistance is reported at the approximate value as provided by the State Department of Health and Human Services. - 20 - Schedule 3 FINANCIAL STATEMENTS Material weakness( es) identified? Material weakness( es) identified? Type of auditor's report issued on compliance for major programs: unqualified Any audit findings disclosed that are required to be reported in accordance with Section 510( a) of OMB Circular A- 133? Noncompliance material to financial statements noted? FEDERAL AWARDS Internal control over major programs: Significant deficiencies identified that are not considered to be material weakness( es)? Identification of major programs: CFDA Numbers Name of Federal Programs or Cluster ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS FEDERAL AWARD PROGRAMS - FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2007 SECTION I - SUMMARY OF AUDITOR'S RESULTS Internal control over financial reporting: Significant deficiencies identified that are not considered to be material weakness( es)? Types of auditor's reports issued: Regulatory basis opinion units - unqualified GAAP basis of reporting - adverse Dollar threshold used to distinguish between Type A and Type B programs: $ 3 00,000 84.027 84.010 Title I Grants - Local Educational Agencies Special Education - Grants to States Auditee qualified as low- risk auditee? yes no yes none reported yes no yes no yes none reported yes no yes no - 21 - ATKINS SCHOOL DISTRICT NO. 18 Schedule 3 POPE COUNTY, ARKANSAS FEDERAL AWARD PROGRAMS - FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2007 SIGNIFICANT DEFICIENCY 2007- 1. Segregation of Duties SECTION II - FINANCIAL STATEMENT FINDINGS Effect: Financial accounting duties are not distributed among the District’s employees to sufficiently reduce the risk that a material misstatement of the financial statements due to fraud or error will not be prevented or detected. SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No findings and questioned costs noted. Criteria: Financial accounting duties should be distributed among appropriate employees to enhance the design of the internal control process to ensure the preparation of reliable financial statements that are fairly presented in conformity with the regulatory basis of accounting. Condition: The District has not segregated financial accounting duties among appropriate employees to provide reasonable assurance about the achievement of the entity's objectives with regard to reliability of financial reporting. Context: Completion of internal control questionnaire. Views of responsible officials and planned corrective actions: We concur with the recommendation. Cause: Cost/ benefit implications hinder the District’s ability to adequately segregate financial accounting duties among employees. Recommendation: To achieve effective internal control over financial reporting, accounting duties should be distributed among appropriate employees. - 22 - Schedule 4 FOR THE YEAR ENDED JUNE 30, 2007 There were no findings in the prior audit. ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS FEDERAL AWARD PROGRAMS - SUMMARY OF PRIOR AUDIT FINDINGS - 23 -
Object Description
Title | Atkins School District No. 18, Pope County, Arkansas, regulatory basis financial statements and other reports |
Subject | Atkins School District No. 18 (Pope County, Ark.)--Auditing.; School districts--Arkansas--Auditing |
Description | June 30, 2004-; Available via Internet at the legislative audit website; requires Adobe Acrobat reader. Electronic holdings begin June 30, 2004- |
Publisher | Legislative Joint Auditing Committee |
Contributors | Arkansas. General Assembly. Legislative Joint Auditing Committee. |
Date-Issued | June 30, 2004- |
Type | Text |
Publication Type | Audit report |
Digital Collection | Legislative Audit Reports |
Classification Number | GE 29.7:A 92-4/A 85/online |
Digital Characteristics | Application/pdf |
Language | eng |
Related Items | http://worldcat.org/oclc/64576676/viewonline |
Earlier Title | Atkins School District No. 18, Pope County, Arkansas, general purpose financial statements and other reports (electronic resource) |
OCLC number | 64576676 |
Description
Title | Atkins School District No. 18, Pope County, Arkansas, regulatory basis financial statements and other reports |
Subject | Atkins School District No. 18 (Pope County, Ark.)--Auditing.; School districts--Arkansas--Auditing |
Description | June 30, 2007; Available via Internet at the legislative audit website; requires Adobe Acrobat reader |
Publisher | Legislative Joint Auditing Committee |
Contributors | Arkansas. General Assembly. Legislative Joint Auditing Committee. |
Date-Issued | June 30, 2007 |
Type | Text |
Digital Collection | Legislative Audit Reports |
Digital Characteristics | Application/pdf; file size 252.18 KB |
Language | eng |
Related Items | http://worldcat.org/oclc/64576676/viewonline |
Earlier Title | Atkins School District No. 18, Pope County, Arkansas, general purpose financial statements and other reports (text) |
Reference URL | http://cdm15021.contentdm.oclc.org/u?/p266101coll9,165 |
Transcript | LEGISLATIVE JOINT AUDITING COMMITTEE Atkins School District No. 18 Pope County, Arkansas Regulatory Basis Financial Statements and Other Reports June 30, 2007 ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS TABLE OF CONTENTS JUNE 30, 2007 Independent Auditor's Report Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards Report on Compliance With Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance With OMB Circular A- 133 REGULATORY BASIS FINANCIAL STATEMENTS Exhibit Balance Sheet – Regulatory Basis A Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds – Regulatory Basis B Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General and Special Revenue Funds – Regulatory Basis C Notes to Financial Statements SUPPLEMENTARY INFORMATION Schedule Schedule of Capital Assets ( Unaudited) 1 Expenditures of Federal Awards 2 Federal Award Programs – Findings and Questioned Costs 3 Federal Award Programs – Summary of Prior Audit Findings 4 INDEPENDENT AUDITOR'S REPORT Atkins School District No. 18 and School Board Members Legislative Joint Auditing Committee We have audited the accompanying financial statements of each major governmental fund and the aggregate remaining fund information of the Atkins School District No. 18 ( the " District"), as of and for the year ended June 30, 2007, which collectively comprise the District’s regulatory basis financial statements as listed in the table of contents. These financial statements are the responsibility of District management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. As described more fully in Note 1, the District has prepared these financial statements using accounting practices prescribed or permitted by Arkansas Code, which practices differ from accounting principles generally accepted in the United States of America. The effect on the financial statements of the variances between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. In our opinion, because of the effects of the matter discussed in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of the District as of June 30, 2007, or the changes in financial position for the year then ended. Further, the District has not presented a management’s discussion and analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not required to be part of, the basic financial statements. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each major governmental fund and the aggregate remaining fund information of the District as of June 30, 2007, and the respective changes in financial position and budgetary results for the year then ended, on the basis of accounting described in Note 1. In accordance with Government Auditing Standards, we have also issued our report dated April 1, 2008 on our consideration of the 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 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. - 2 - Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s regulatory basis financial statements. The Schedule of Capital Assets ( Schedule 1), Expenditures of Federal Awards ( Schedule 2), as required by U. S. Office of Management and Budget Circular A- 133, Audits of States, Local Governments, and Non- Profit Organizations, Federal Award Programs – Findings and Questioned Costs ( Schedule 3) and Federal Award Programs – Summary of Prior Audit Findings ( Schedule 4) are presented for purposes of additional analysis and are not a required part of the regulatory basis financial statements. The Expenditures of Federal Awards ( Schedule 2), Federal Award Programs – Findings and Questioned Costs ( Schedule 3) and Federal Award Programs – Summary of Prior Audit Findings ( Schedule 4) have been subjected to the auditing procedures applied in the audit of the regulatory basis financial statements and, in our opinion, are fairly stated in all material respects in relation to the regulatory basis financial statements taken as a whole. The Schedule of Capital Assets ( Schedule 1) has not been subjected to the auditing procedures applied in the audit of the regulatory basis financial statements and, accordingly, we express no opinion on it. DIVISION OF LEGISLATIVE AUDIT Roger A. Norman, JD, CPA, CFE Legislative Auditor Little Rock, Arkansas April 1, 2008 EDSD31107 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 Atkins School District No. 18 and School Board Members Legislative Joint Auditing Committee We have audited the financial statements of each major governmental fund and the aggregate remaining fund information of the Atkins School District No. 18 ( the " District"), as of and for the year ended June 30, 2007, which collectively comprise the District’s regulatory basis financial statements, and have issued our report thereon dated April 1, 2008. We issued an adverse opinion because the District prepared the financial statements using accounting practices prescribed or permitted by the Arkansas Code, which differ from accounting principles generally accepted in the United States of America. The effect on the financial statements of the variances between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. However, the financial statements present fairly, in all material respects, the respective financial position of each major governmental fund and the aggregate remaining fund information of the District as of June 30, 2007, and the respective changes in financial position and budgetary results for the year then ended, on the basis of accounting described in Note 1. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the District's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the regulatory basis financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified a certain deficiency in internal control over financial reporting that we consider to be a significant deficiency. A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the District's ability to initiate, authorize, record, process, or report financial data reliably in accordance with the regulatory basis of accounting as prescribed or permitted by Arkansas Code such that there is more than a remote likelihood that a misstatement of the District’s financial statements that is more than inconsequential will not be prevented or detected by the District’s internal control. We consider the deficiency described in the accompanying schedule of Federal Award Programs - Findings and Questioned Costs as item 2007- 1 to be a significant deficiency in internal control over financial reporting. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the District’s internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, of the significant deficiency described above, we consider item 2007- 1 in the accompanying schedule of Federal Award Programs - Findings and Questioned Costs to be a material weakness. - 4 - Compliance and Other Matters As part of obtaining reasonable assurance about whether the District's regulatory basis financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of the state constitution, state and federal laws and 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. The District’s response to the finding identified in our audit is described in the accompanying schedule of Federal Award Programs – Findings and Questioned Costs. We did not audit the District’s response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of the Legislative Joint Auditing Committee, the local school board and District management, state executive and oversight management, federal regulatory and oversight bodies, the federal awarding agencies and pass- through entities, and other parties as required by Arkansas Code, and is not intended to be and should not be used by anyone other than these specified parties. However, pursuant to Arkansas Code Annotated § 10- 4- 417, all reports presented to the Legislative Joint Auditing Committee are matters of public record and distribution is not limited. DIVISION OF LEGISLATIVE AUDIT Larry W. Hunter, CPA, CFE Deputy Legislative Auditor Little Rock, Arkansas April 1, 2008 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A- 133 Atkins School District No. 18 and School Board Members Legislative Joint Auditing Committee Compliance We have audited the compliance of the Atkins School District No. 18 ( the " District") with the types of compliance requirements described in the U. S. Office of Management and Budget ( OMB) Circular A- 133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2007. The District's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of Federal Award Programs - 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 the District's management. Our responsibility is to express an opinion on the District's compliance based on our audit. 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 District'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 of the District's compliance with those requirements. In our opinion, the District complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2007. Internal Control Over Compliance The management of the District 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 the District's internal control over compliance with the requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, 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 District’s internal control over compliance. A control deficiency in an entity’s internal control over compliance 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 noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the District’s ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the District’s internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the District’s internal control. - 6 - Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the Legislative Joint Auditing Committee, the local school board and District management, state executive and oversight management, federal regulatory and oversight bodies, the federal awarding agencies and pass- through entities, and other parties as required by Arkansas Code, and is not intended to be and should not be used by anyone other than these specified parties. However, pursuant to Arkansas Code Annotated § 10- 4- 417, all reports presented to the Legislative Joint Auditing Committee are matters of public record and distribution is not limited. DIVISION OF LEGISLATIVE AUDIT Larry W. Hunter, CPA, CFE Deputy Legislative Auditor Little Rock, Arkansas April 1, 2008 Exhibit A Special Other Fiduciary General Revenue Aggregate Fund Types ASSETS Cash $ 1 ,658,520 $ 1 51,458 $ 2 ,348 $ 5 4,558 Deposit with paying agent 6 7,823 TOTAL ASSETS $ 1 ,726,343 $ 1 51,458 $ 2 ,348 $ 5 4,558 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 2 5,534 $ 1 0,817 Due student groups $ 5 4,558 Deferred taxes 1 44,853 Total Liabilities 1 70,387 1 0,817 5 4,558 Fund Balances: Reserved: Debt service 6 7,823 Capital projects $ 2 ,348 Unreserved: Undesignated 1 ,488,133 1 40,641 Total Fund Balances 1 ,555,956 1 40,641 2 ,348 TOTAL LIABILITIES AND FUND BALANCES $ 1 ,726,343 $ 1 51,458 $ 2 ,348 $ 5 4,558 The accompanying notes are an integral part of these financial statements. Major Governmental Funds ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS BALANCE SHEET - REGULATORY BASIS JUNE 30, 2007 - 7 - ( THIS PAGE INTENTIONALLY LEFT BLANK) Exhibit B Special Other General Revenue Aggregate REVENUES Property taxes ( including property tax relief trust distribution) $ 1,388,472 $ 677 State assistance 5,853,538 $ 4,388 Federal assistance 2,249 1,000,240 Activity revenues 114,240 Meal sales 138,776 Investment income 56,243 1,228 100 Other revenues 59,620 80,950 TOTAL REVENUES 7,474,362 1,225,582 777 EXPENDITURES Regular programs 3,386,500 161,063 25,875 Special education 434,538 164,048 Workforce education 272,324 15,954 Compensatory education 3,616 296,542 Other instructional programs 180,428 Student support services 242,726 106,360 Instructional staff support services 295,156 131,503 General administration support services 197,205 School administration support services 326,655 Business support services 93,226 Operation and maintenance of plant services 732,016 848 Student transportation services 305,954 21,274 Other support services 23,140 Food services operations 7,490 448,960 Facilities acquisition and construction services 286 Non- programmed costs 56,745 24,836 Activity expenditures 101,235 Debt Service: Principal retirement 72,949 135,000 Interest and fiscal charges 3,454 91,811 TOTAL EXPENDITURES 6,735,357 1,371,388 252,972 EXCESS OF REVENUES OVER ( UNDER) EXPENDITURES 739,005 ( 145,806) ( 252,195) OTHER FINANCING SOURCES ( USES) Transfers in 226,811 Transfers out ( 226,811) TOTAL OTHER FINANCING SOURCES ( USES) ( 226,811) 226,811 EXCESS OF REVENUES AND OTHER SOURCES OVER ( UNDER) EXPENDITURES AND OTHER USES 512,194 ( 145,806) ( 25,384) FUND BALANCES - JULY 1 1,043,762 286,447 27,732 FUND BALANCES - JUNE 30 $ 1,555,956 $ 140,641 $ 2,348 The accompanying notes are an integral part of these financial statements. Major GOVERNMENTAL FUNDS - REGULATORY BASIS FOR THE YEAR ENDED JUNE 30, 2007 ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - - 8 - Exhibit C Variance Variance Favorable Favorable Budget Actual ( Unfavorable) Budget Actual ( Unfavorable) REVENUES Property taxes ( including property tax relief trust distribution) $ 1,382,000 $ 1,388,472 $ 6,472 State assistance 5,791,737 5,853,538 61,801 $ 4,472 $ 4,388 $ ( 84) Federal assistance 250 2,249 1,999 1,025,142 1,000,240 ( 24,902) Activity revenues 114,240 114,240 Meal sales 136,140 138,776 2,636 Investment income 10,000 56,243 46,243 1,228 1,228 Other revenues 59,620 59,620 80,950 80,950 TOTAL REVENUES 7,183,987 7,474,362 290,375 1,165,754 1,225,582 59,828 EXPENDITURES Regular programs 3,510,376 3,386,500 123,876 157,281 161,063 ( 3,782) Special education 427,142 434,538 ( 7,396) 166,652 164,048 2,604 Workforce education 265,599 272,324 ( 6,725) 16,450 15,954 496 Compensatory education 3,616 ( 3,616) 287,124 296,542 ( 9,418) Other instructional programs 202,448 180,428 22,020 Student support services 231,975 242,726 ( 10,751) 115,670 106,360 9,310 Instructional staff support services 386,708 295,156 91,552 218,047 131,503 86,544 General administration support services 247,405 197,205 50,200 School administration support services 323,977 326,655 ( 2,678) Business support services 60,239 93,226 ( 32,987) Operation and maintenance of plant services 795,826 732,016 63,810 1,430 848 582 Student transportation services 419,167 305,954 113,213 21,769 21,274 495 Other support services 22,000 23,140 ( 1,140) Food services operations 7,490 ( 7,490) 421,157 448,960 ( 27,803) Community services 1,000 1,000 Other non- instructional services Facilities acquisition and construction services 20,000 20,000 Non- programmed costs 79,573 56,745 22,828 24,836 24,836 Activity expenditures 101,235 ( 101,235) Debt Service: Principal retirement 72,950 72,949 1 Interest and fiscal charges 3,514 3,454 60 TOTAL EXPENDITURES 7,068,899 6,735,357 333,542 1,431,416 1,371,388 60,028 FOR THE YEAR ENDED JUNE 30, 2007 ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL AND SPECIAL REVENUE FUNDS - REGULATORY BASIS General Special Revenue - 9 - Exhibit C Variance Variance Favorable Favorable Budget Actual ( Unfavorable) Budget Actual ( Unfavorable) FOR THE YEAR ENDED JUNE 30, 2007 ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL AND SPECIAL REVENUE FUNDS - REGULATORY BASIS General Special Revenue EXCESS OF REVENUES OVER ( UNDER) EXPENDITURES $ 115,088 $ 739,005 $ 623,917 $ ( 265,662) $ ( 145,806) $ 119,856 OTHER FINANCING SOURCES ( USES) Transfers in 3,798,441 ( 3,798,441) Transfers out ( 4,053,561) ( 226,811) 3,826,750 ( 10,530) 10,530 TOTAL OTHER FINANCING SOURCES ( USES) ( 255,120) ( 226,811) 28,309 ( 10,530) 10,530 EXCESS OF REVENUES AND OTHER SOURCES OVER ( UNDER) EXPENDITURES AND OTHER USES ( 140,032) 512,194 652,226 ( 276,192) ( 145,806) 130,386 FUND BALANCES - JULY 1 1,004,990 1,043,762 38,772 287,508 286,447 ( 1,061) FUND BALANCES - JUNE 30 $ 864,958 $ 1,555,956 $ 690,998 $ 11,316 $ 140,641 $ 129,325 The accompanying notes are an integral part of these financial statements. - 10 - ( THIS PAGE INTENTIONALLY LEFT BLANK) ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 11 - 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The Board of Education, a five member group, is the level of government, which has responsibilities over all activities related to public elementary and secondary school education within the jurisdiction of the Atkins School District ( District). There are no component units. B. Description of Funds Major governmental funds ( per the regulatory basis of accounting) are defined as General and Special Revenue. General Fund - The General Fund is the general operating fund and is used to account for all financial resources, except those required to be reported in another fund. Special Revenue Fund – The Special Revenue Fund is used to account for the proceeds of specific revenue sources ( other than trusts for individuals, private organizations, or other governments or for major capital projects) that are legally restricted to expenditures for specified purposes. Other governmental funds, presented in the aggregate, consist of the following: Capital Projects Fund – The Capital Projects Fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities ( other than those financed by proprietary funds or in trust funds for individuals, private organizations, or other governments). Debt Service Fund – The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long- term debt principal, interest and related costs. Fiduciary Fund types include the following: Agency Funds - Agency Funds are used to report resources held by the reporting government in a purely custodial capacity ( assets equal liabilities). C. Measurement Focus and Basis of Accounting The financial statements are prepared in accordance with a regulatory basis of accounting ( RBA). This basis of accounting is prescribed by Arkansas Code Annotated § 10- 4- 413( c), as provided in Act 2201 of 2005, and requires that financial statements be presented on a fund basis with, as a minimum, the general fund and special revenue fund presented separately and all other funds included in the audit presented in the aggregate. The law also stipulates that the financial statements consist of a balance sheet; a statement of revenues, expenditures, and changes in fund balances; a comparison of the final adopted budget to the actual expenditures for the general fund and special revenue funds of the entity; notes to financial statements; and a supplemental schedule of capital assets, including land, buildings, and equipment. The law further stipulates that the State Board of Education shall promulgate the rules necessary to administer the regulatory basis of presentation. ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 12 - 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued) C. Measurement Focus and Basis of Accounting ( Continued) The RBA is not in accordance with generally accepted accounting principles ( GAAP). GAAP require that basic financial statements present government- wide financial statements. Additionally, GAAP require the following major concepts: Management’s Discussion and Analysis, accrual basis of accounting for government- wide financial statements, including depreciation expense, modified accrual basis of accounting for fund financial statements, separate financial statements for fiduciary fund types, separate identification of special and extraordinary items, inclusion of capital assets and debt in the financial statements, specific procedures for the identification of major governmental funds and applicable note disclosures. The RBA does not require government- wide financial statements or the previously identified concepts. The accompanying financial statements are presented on a fund basis. A fund is defined as a fiscal and accounting entity with a self- balancing set of accounts, which are segregated for purposes of recording specific activities or attaining certain objectives. Revenues are reported by major sources and expenditures are reported by major function. Other transactions, which are not reported as revenues or expenditures, are reported as other financing sources and uses. Transactions related to the recording of installment contracts and capital leases are reported as other financing sources. Changes in private- purpose trust funds will be reflected in the notes to the financial statements. D. Revenue Recognition Policies Revenues are recognized when they become susceptible to accrual in accordance with the RBA, except for property taxes ( see Note 1 F below). E. Capital Assets Information on capital assets and related depreciation is reported at Schedule 1. Capital assets are capitalized at historical cost or estimated historical cost, if actual data is not available. Capital assets purchased are recorded as expenditures in the applicable fund at the time of purchase. Donated capital assets are reported at fair value when received. The District maintains a threshold level of $ 1,000 for capitalizing equipment. Library holdings are not capitalized. No salvage value is taken into consideration for depreciation purposes. All capital assets, other than land and construction in progress, are depreciated using the straight- line method over the following useful lives: Asset Class Estimated Useful Life in Years Improvements/ infrastructure 20 Buildings 50 Equipment 5- 20 ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 13 - 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued) F. Property Taxes Property taxes are levied in November based on property assessment made between January 1 and May 31 and are an enforceable lien on January 1 for real property and June 1 for personal property. The tax records are opened on the first business day of March of the year following the levy date and are considered delinquent after October 10 of the same calendar year. Property taxes are accrued or deferred, as applicable, in accordance with guidelines issued by the Arkansas Department of Education ( ADE), which were effective beginning with the fiscal year ended June 30, 2006. Arkansas law defines revenue receipts of a school district and includes forty percent ( 40%) of the proceeds of local taxes which are not pledged to secure bonded indebtedness or forty percent ( 40%) of the revenue from the uniform rate of tax whichever is greater collected in the succeeding calendar year, commonly known as 40% pullback, within that definition. The ADE has determined that school districts must utilize the 40% pullback amount, as calculated by the ADE and reflected on the respective county’s abstract of assessments, in recording property tax revenue as follows: • If the amount of 40% pullback collected by June 30th is less than the calculated 40% pullback amount, the difference must be accrued; • If the amount of 40% pullback collected by June 30th is more than the calculated 40% pullback amount, the excess must be recorded as deferred taxes. Amendment No. 74 to the Arkansas Constitution established a uniform minimum property tax millage rate of 25 mills for maintenance and operation of public schools. Ark. Code Ann. § 26- 80- 101 provides the uniform rate of tax ( URT) shall be assessed and collected in the same manner as other school property taxes, but the net revenues from the URT shall be remitted to the State Treasurer and distributed by the State to the county treasurer of each county for distribution to the school districts in that county. For reporting purposes, URT revenues are considered property taxes. G. Fund Balance Designations 1. Reserved fund balance - represents that portion of the fund balance which is not appropriable for expenditure or is legally segregated for a specific future use. 2. Undesignated fund balance - indicates that portion of the fund balance not reserved or designated. H. Budget and Budgetary Accounting The District is required by state law to prepare an annual budget. The annual budget is prepared on a fiscal year basis. The District does not prepare and submit amended budgets during the fiscal year. The State Department of Education’s regulations allow for the cash basis or the modified accrual basis. However, the majority of the school districts employ the cash basis method. The District budgets intra- fund transfers. Significant variances may result in the comparison of transfers at the Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General and Special Revenue Funds – Regulatory Basis because only interfund transfers are reported at the Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds – Regulatory Basis. ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 14 - 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued) H. Budget and Budgetary Accounting ( Continued) Budgetary perspective differences are not considered to be significant, because the structure of the information utilized in preparing the budget and the applicable fund financial statements is essentially the same. On- behalf payments as described at Note 7 are nonbudgeted data for the year ended June 30, 2007. Such payments are reported as actual revenues and expenditures in the Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General and Special Revenue Funds – Regulatory Basis ( Exhibit C). 2: CASH DEPOSITS WITH FINANCIAL INSTITUTIONS Cash deposits are carried at cost ( carrying value). A comparison of the bank balance and carrying value is as follows: Carrying Bank Amount Balance Insured ( FDIC) $ 100,000 $ 1 00,000 Collateralized: Collateral held by the pledging bank or pledging bank's trust department in the District's name 1 ,766,884 2,028,684 Total Deposits $ 1 ,866,884 $ 2 ,128,684 3: COMMITMENTS The District was contractually obligated for the following at June 30, 2007: A. Operating Leases ( noncapital leases with initial noncancellable lease terms in excess of one year) General description of leases and leasing arrangements: The District executed the following lease agreements for 60 months: ( a) One Canon 3300 copier, dated July 9, 2003, with monthly payment of $ 175 plus applicable sales taxes. ( b) One Canon 400S copier, dated June 1, 2004, with monthly payment of $ 198 plus applicable sales taxes. ( c) Two Canon 3300 copiers, dated July 7, 2004, with monthly payments of $ 189 each plus applicable sales taxes. ( d) One Canon 3300 copier, dated August 2, 2004, with monthly payments of $ 189 plus applicable sales taxes. ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 15 - 3: COMMITMENTS ( Continued) A. ( Continued) General description of leases and leasing arrangements: ( Continued) 1. Future minimum rental payments ( aggregate) at June 30, 2007: $ 22,183 2. Future minimum rental payments for the succeeding years: Year Ended June 30, Amount 2008 $ 1 2,233 2009 9 ,745 2010 2 05 Total $ 22,183 Rental payments for the operating leases described above were approximately $ 12,233 for the year ended June 30, 2007. B. Long- term Debt Issued and Outstanding The District is presently paying on the following long- term debt: Amount Debt Maturities Date Date of Final Rate of Authorized Outstanding To of Issue Maturity Interest and Issued June 30, 2007 June 30, 2007 8/ 1/ 03 6/ 1/ 20 3.6 - 3.85% $ 2 ,855,275 $ 2 ,330,000 $ 5 25,275 5/ 30/ 05 5/ 30/ 15 1 10,468 110,468 6/ 18/ 03 6/ 18/ 13 1 26,681 126,681 Totals $ 3 ,092,424 $ 2 ,567,149 $ 5 25,275 Changes in Long- term Debt Balance Balance July 1, 2006 Retired June 30, 2007 Bonds payable $ 2 ,465,000 $ 135,000 $ 2,330,000 Postdated warrants 3 10,098 7 2,949 237,149 Totals $ 2 ,775,098 $ 207,949 $ 2,567,149 ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 16 - 3: COMMITMENTS ( Continued) B. Long- term Debt Issued and Outstanding ( Continued) Total long- term debt principal and interest payments are as follows: Year Ended June 30, Principal Interest Total 2008 $ 1 40,000 $ 8 6,270 $ 226,270 2009 1 50,000 8 1,230 231,230 2010 1 55,000 7 5,830 230,830 2011 1 55,000 7 0,870 225,870 2012 1 65,000 6 5,600 230,600 2013- 2017 1 ,157,149 2 32,795 1,389,944 2018- 2020 6 45,000 5 0,435 695,435 Totals $ 2 ,567,149 $ 6 63,030 $ 3,230,179 Qualified Zone Academy Bond ( QZAB) On June 18, 2003 and May 30, 2005, respectively, the District obtained funding through the Qualified Zone Academy Bond ( QZAB) program, a financial arrangement created by the Tax Relief Act of 1997. A QZAB does not generally require interest payments from the borrower. The eligible financial institution holding the bond receives a tax credit in lieu of interest payments. The principal is not due until the end of the term. The District borrowed $ 126,681 and $ 110,468, respectively, through this program by issuing postdated warrants. The District will deposit $ 11,694 and $ 10,524 annually into a sinking fund for 10 years for a total of $ 116,940 and $ 105,240, respectively. This amount plus interest will be used to retire the debt when due. 4: ACCOUNTS PAYABLE The accounts payable balance of $ 36,351 at June 30, 2007, was comprised of the following: Special Description General Revenue Total Vendor payables $ 2 5,534 $ 10,817 $ 36,351 Major Governmental Funds 5: INTERFUND TRANSFERS The District transferred $ 226,811 from the general fund to the other aggregate funds for debt related payments. ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 17 - 6: RETIREMENT PLANS Arkansas Teacher Retirement System Plan Description. The District contributes to the Arkansas Teacher Retirement System ( ATRS), a cost-sharing multiple- employer defined benefit pension plan that covers all Arkansas public school employees, except certain nonteachers hired prior to July 1, 1989. ATRS provides retirement and disability benefits, annual cost- of- living adjustments, and death benefits to plan members and beneficiaries. Benefit and contribution provisions are established by State law and can be amended only by the Arkansas General Assembly. The Arkansas Teacher Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for ATRS. That report may be obtained by writing to Arkansas Teacher Retirement System, 1400 West Third Street, Little Rock, Arkansas 72201 or by calling 1- 800- 666- 2877. Funding Policy. ATRS has contributory and non- contributory plans. Contributory members are required by law to contribute 6% of their salary. Each participating employer is required by law to contribute at a rate established by the Arkansas General Assembly. The current employer rate is 14%. The District's contributions to ATRS for the years ended June 30, 2007, 2006 and 2005 were $ 665,956, $ 649,736 and $ 606,296, respectively, equal to the required contributions for each year. Arkansas Public Employees Retirement System Plan Description. The District contributes to the Arkansas Public Employees Retirement System ( PERS), a cost- sharing multiple- employer defined benefit pension plan that covers certain nonteaching Arkansas public school employees hired before July 1, 1989. PERS provides retirement and disability benefits, annual cost-of- living adjustments, and death benefits to plan members and beneficiaries. Benefit and contribution provisions are established by State law and can be amended only by the Arkansas General Assembly. The Arkansas Public Employees Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for PERS. That report may be obtained by writing to Arkansas Public Employees Retirement System, One Union National Plaza, 124 W. Capitol, Little Rock, Arkansas 72201 or by calling 1- 800- 682- 7377. Funding Policy. PERS has contributory and non- contributory plans. Contributory members are required by law to contribute 6% of their salary. Each participating employer is required by law to contribute at a rate established by the Arkansas General Assembly. The current statutory employer rate is 4% of annual covered payroll. The District's contributions to PERS for the years ended June 30, 2007, 2006 and 2005 were $ 4,737, $ 4,874 and $ 4,857, respectively, equal to the required contributions for each year. 7: ON- BEHALF PAYMENTS The accompanying financial statements reflect on- behalf payments of $ 74,603 for health insurance premiums paid by the Arkansas Department of Education. 8: RISK MANAGEMENT The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The District carries commercial insurance for board liability and student accidents. Settled claims have not exceeded this commercial coverage in any of the past three fiscal years. There were no significant reductions in insurance coverage from the prior year in the major categories of risk. ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 - 18 - 8: RISK MANAGEMENT ( Continued) The District participates in the Arkansas School Boards Association – Workers’ Compensation Trust ( the Trust), a self- insurance trust voluntarily established on July 1, 1994 pursuant to state law. The Trust is responsible for obtaining and administering workers’ compensation insurance coverage for its members, as well as obtaining reinsurance coverage for those claims that exceed the standard policy limits. In its administrative capacity, the Trust is responsible for monitoring, negotiating and settling claims that have been filed on behalf of and against member districts. The District contributes annually to this program. Additionally, the District participates in the Arkansas School Boards Association – Risk Management Program ( the Association), a self- insurance program voluntarily established on February 1, 1984 pursuant to state law. The Association is responsible for obtaining and administering insurance coverage for property and vehicles for its members, as well as obtaining reinsurance coverage for those claims that exceed the standard policy limits. In its administrative capacity, the Association is responsible for monitoring, negotiating and settling claims that have been filed against member districts. The District pays an annual premium for its coverage of buildings, contents and vehicles. The District participates in the Arkansas Fidelity Bond Trust Fund administered by the Governmental Bonding Board. This program provides coverage for actual losses sustained by its members through fraudulent or dishonest acts committed by officials or employees. Each loss is limited to $ 250,000 with a $ 1,000 deductible. Premiums for coverage are paid by the Chief Fiscal Officer of the State of Arkansas from funds withheld from the Public School Fund. Schedule 1 Balance June 30, 2007 Nondepreciable capital assets: Land $ 4 04,711 Depreciable capital assets: Buildings 6 ,377,618 Improvements/ infrastructure 4 84,306 Equipment 1 ,704,306 Total depreciable capital assets 8 ,566,230 Less accumulated depreciation for: Buildings 2 ,266,025 Improvements/ infrastructure 1 96,494 Equipment 1 ,098,784 Total accumulated depreciation 3,561,303 Total depreciable capital assets, net 5,004,927 Capital assets, net $ 5,409,638 ( Unaudited) ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS SCHEDULE OF CAPITAL ASSETS FOR THE YEAR ENDED JUNE 30, 2007 - 19 - Schedule 2 Federal Pass- Through CFDA Entity Identifying Federal Number Number Expenditures 10.553 58- 01 $ 6 4,428 10.555 58- 01 2 13,096 TOTAL CHILD NUTRITION CLUSTER 2 77,524 OTHER PROGRAMS U. S. Department of Agriculture Food Donation ( Note 2) 10.550 1 ,193 Passed Through State Department of Health and Human Services: Food Donation ( Note 3) 10.550 58- 01 2 9,152 Total U. S. Department of Agriculture 3 0,345 U. S. Department of Education Passed Through State Department of Education: 84.010 58- 01 3 68,866 84.027 58- 01 2 23,590 84.186 58- 01 6 ,171 84.298 58- 01 2 ,101 Education Technology State Grants 84.318 58- 01 5 ,640 Rural Education 84.358 58- 01 4 0,069 Improving Teacher Quality State Grants 84.367 58- 01 1 61,550 Hurricane Education Recovery 84.938 58- 01 1 0,530 Passed Through Russellville School District: Career and Technical Education - Basic Grants to States 84.048 58- 01 1 5,954 8 34,471 TOTAL OTHER PROGRAMS 8 64,816 $ 1 ,142,340 Note 1: Passed Through State Department of Education: NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Basis of Presentation - The accompanying schedule of expenditures of federal awards includes the federal grant activity of Atkins School District No. 18 and is presented on the regulatory basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A- 133, Audits of States, Local Governments, and Non- Profit Organizations . Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the regulatory basis financial statements. School Breakfast Program National School Lunch Program Safe and Drug- Free Schools and Communities - Special Education - Grants to States State Grants Federal Grantor/ Pass- Through Grantor/ Program or Cluster Title CHILD NUTRITION CLUSTER U. S. Department of Agriculture ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2007 Title I Grants - Local Educational Agencies Nonmonetary assistance is reported at the approximate value as provided by the U. S. Department of Defense through an agreement with the U. S. Department of Agriculture. TOTAL EXPENDITURES OF FEDERAL AWARDS Total U. S. Department of Education State Grants for Innovative Programs Note 4: During the year ended June 30, 2007, the District received Medicaid funding of $ 75,186 from the State Department of Health and Human Services. Such payments are not considered Federal awards expended and therefore are not included in the above schedule. Note 2: Note 3: Nonmonetary assistance is reported at the approximate value as provided by the State Department of Health and Human Services. - 20 - Schedule 3 FINANCIAL STATEMENTS Material weakness( es) identified? Material weakness( es) identified? Type of auditor's report issued on compliance for major programs: unqualified Any audit findings disclosed that are required to be reported in accordance with Section 510( a) of OMB Circular A- 133? Noncompliance material to financial statements noted? FEDERAL AWARDS Internal control over major programs: Significant deficiencies identified that are not considered to be material weakness( es)? Identification of major programs: CFDA Numbers Name of Federal Programs or Cluster ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS FEDERAL AWARD PROGRAMS - FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2007 SECTION I - SUMMARY OF AUDITOR'S RESULTS Internal control over financial reporting: Significant deficiencies identified that are not considered to be material weakness( es)? Types of auditor's reports issued: Regulatory basis opinion units - unqualified GAAP basis of reporting - adverse Dollar threshold used to distinguish between Type A and Type B programs: $ 3 00,000 84.027 84.010 Title I Grants - Local Educational Agencies Special Education - Grants to States Auditee qualified as low- risk auditee? yes no yes none reported yes no yes no yes none reported yes no yes no - 21 - ATKINS SCHOOL DISTRICT NO. 18 Schedule 3 POPE COUNTY, ARKANSAS FEDERAL AWARD PROGRAMS - FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2007 SIGNIFICANT DEFICIENCY 2007- 1. Segregation of Duties SECTION II - FINANCIAL STATEMENT FINDINGS Effect: Financial accounting duties are not distributed among the District’s employees to sufficiently reduce the risk that a material misstatement of the financial statements due to fraud or error will not be prevented or detected. SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No findings and questioned costs noted. Criteria: Financial accounting duties should be distributed among appropriate employees to enhance the design of the internal control process to ensure the preparation of reliable financial statements that are fairly presented in conformity with the regulatory basis of accounting. Condition: The District has not segregated financial accounting duties among appropriate employees to provide reasonable assurance about the achievement of the entity's objectives with regard to reliability of financial reporting. Context: Completion of internal control questionnaire. Views of responsible officials and planned corrective actions: We concur with the recommendation. Cause: Cost/ benefit implications hinder the District’s ability to adequately segregate financial accounting duties among employees. Recommendation: To achieve effective internal control over financial reporting, accounting duties should be distributed among appropriate employees. - 22 - Schedule 4 FOR THE YEAR ENDED JUNE 30, 2007 There were no findings in the prior audit. ATKINS SCHOOL DISTRICT NO. 18 POPE COUNTY, ARKANSAS FEDERAL AWARD PROGRAMS - SUMMARY OF PRIOR AUDIT FINDINGS - 23 - |
OCLC number | 64576676 |