Discovery Middle School COMPONENT UNIT FINANCIAL STATEMENTS September 30, 2015 Page - 1 -
Discovery Middle School Table of Contents September 30, 2015 Independent Auditors' Report 1 Component Unit Balance Sheet 3 Component Unit Statement of Revenues, Expenditures and Changes in Fund Balance 4 Notes to the Component Unit Financial Statements 5 SUPPLEMENTARY INFORMATION Component Unit Schedule of Revenues, Expenditures, Transfers and Fund Balance 10 Component Unit Supporting Schedule of Revenues and Expenditures 11 Page
Independent Auditors' Report Discovery Middle School We have audited the accompanying balance sheet of Discovery Middle School of the Madison City Board of Education as of September 30, 2015, and the related statement of revenues, expenditures and changes in fund balance for the year then ended. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Discovery Middle School as of September 30, 2015, and the revenues, expenditures and changes in fund balance for the year then ended, in accordance with accounting principles generally accepted in the United States of America.
Other Matters Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Discovery Middle School's financial statements. The accompanying supplementary information listed in the table of contents is presented for purposes of additional analysis, and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Birmingham, Alabama December 28, 2015
Discovery Middle School Component Unit Balance Sheet September 30, 2015 Assets Public Non-Public Cash Checking account $ 233,571 $ 487 Petty Cash 2,500 - Interfund Receivable 632 - Total assets $ 236,703 $ 487 Liabilities and fund balance Liabilities Accounts Payable $ - $ - Fund balance Fund Balance - Assigned 236,703 487 Total fund balance 236,703 487 Total liabilities and fund balance $ 236,703 $ 487 The accompanying notes are an integral part of these financial statements. - 3 -
Discovery Middle School Component Unit Statement of Revenues, Expenditures and Changes in Fund Balance For the Year Ended September 30, 2015 Public Non-Public Revenues Local Sources (See supporting schedule) $ 597,435 $ 8,155 Total revenues 597,435 8,155 Other Financing Sources Transfers in 19,804 - Total revenues and other financing sources 617,239 8,155 Expenditures (See supporting schedule) Instructional services 299,088 8,899 Instructional support 52,838 612 Operation and maintenance 12,607 150 Auxiliary services 91,506 2,106 Other expenditures 63,074 503 Total expenditures 519,113 12,270 Other Fund Uses: Transfers out 40,541 - Total expenditures and other fund uses 559,654 12,270 Excess revenues (expenditures) 57,585 (4,115) Fund balance, beginning of year 179,118 4,602 Fund balance, end of year $ 236,703 $ 487 The accompanying notes are an integral part of these financial statements. - 4 -
NOTE 1 - SUMMARY OF SIGNIFICANT POLICIES Discovery Middle School Notes to the Component Unit Financial Statements The financial statements of Discovery Middle School have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standardsetting body for establishing governmental accounting and financial reporting principles. The more significant of the Board's accounting policies are described below. Reporting Entity The Governmental Accounting Standards Board establishes standards for defining and reporting on the financial reporting entity. The definition of the reporting entity is based primarily on the notion of financial accountability. A primary government is financially accountable for agencies that make up its legal entity. It is also financially accountable for a legally separate agency if its officials appoint a voting majority of that agency's governing body and either it is able to impose its will on that agency or there is a potential for the agency to provide specific financial benefits to, or to impose financial burdens on, the primary government. There are no component units which should be included as part of the financial reporting entity of the school. However, the school is a component unit of the Madison City Board of Education. The financial statements of the component unit include local school funds that were included in the financial statements of the Madison City Board of Education. These funds consist of local school activity funds and other funds under the control of school principals. Fund accounting The schools use funds to report on financial position and results of operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. Funds are classified into three categories: governmental, proprietary and fiduciary. Each category, in turn, is divided into separate "fund types." Governmental Funds - Governmental Funds account for expendable financial resources, other than those accounted for in proprietary and fiduciary funds. The governmental fund measurement focus is upon determination of financial position and changes in financial position, rather than upon net income determination applicable to a commercial enterprise. The individual governmental funds are: Special Revenue Funds - The Special Revenue Fund on the financial statements of the Madison City Board of Education accounts for all revenues and expenditures applicable to the general operations of Discovery Middle School. - 5 -
NOTE 1 - SUMMARY OF SIGNIFICANT POLICIES (CONTINUED) Discovery Middle School Notes to the Component Unit Financial Statements Governmental Fund Financial Statements - In the fund financial statements, governmental funds report fund balances as follows: Non-spendable - That portion of fund balance that is not in spendable form (e.g. inventories, prepaids) or that is legally or contractually required to be maintained intact (e.g. principal balance of permanent funds). Restricted - The portion of fund balance that has externally imposed restrictions by creditors, laws, or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. Committed - The portion of fund balance that may be used for specific purposes pursuant to constraints imposed by formal action of the Board. These funds can be used for an alternative purpose if due approval process is followed (i.e., a commitment is not legally enforceable.) Assigned - The portion of fund balance constrained by the Board's intent, but not restricted or committed. The entire amount of the fund balance of Discovery Middle School is assigned. Unassigned - The residual fund balance that is not non-spendable, restricted, committed, or assigned. When expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) funds are available, it is the policy of the Board to consider restricted amounts to have been reduced first. When an expenditure is incurred for the purposes for which amounts in any of the unrestricted fund balance classifications could be used, it is the policy of the Board that committed amounts are reduced first, followed by assigned amounts and then unassigned amounts. Basis of Accounting The basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds and expendable trust funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. - 6 -
NOTE 1 - SUMMARY OF SIGNIFICANT POLICIES (CONTINUED) Discovery Middle School Notes to the Component Unit Financial Statements All governmental fund types and agency funds use the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred. Principal and interest on general long-term debt are recorded as fund liabilities when due or when amounts have been accumulated in the debt service fund for payments to be made early in the following year. Budgets Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States. Annual appropriated budgets are adopted for the general, special revenue and debt service funds. All annual appropriations lapse at fiscal year-end. Project-length financial plans are adopted for all capital projects funds. Encumbrances represent commitments related to unperformed contracts for goods and/or services. Encumbrance accounting under which purchase orders, contracts and other commitments for the expenditures of resources are recorded to reserve that portion of the applicable appropriation is utilized in the governmental funds. Encumbrances outstanding at year-end are reported as reservations of fund balances and do not constitute expenditures or liabilities because the commitments will be honored during the subsequent year. Cash and Investments Cash and Investments Cash includes amounts in demand deposits as well as short-term investments with a maturity date within three months of the date acquired by the Board. There were no short-term investments at September 30, 2015. The State Attorney General has issued a legal opinion that boards of education may not put public funds at risk by investing in companies not insured by the federal government. Short-term Interfund Receivable/Payable Interfund receivables and payable arise from interfund transactions and are recorded by all funds affected in the period in which transactions are executed. Estimates Preparation of financial statements in conformity with the generally accepted accounting principles of the United States of America requires use of management's estimates. Management has made estimates related to accruals of revenues and expenses. - 7 -
NOTE 2 - DEPOSITS AND INVESTMENTS Discovery Middle School Notes to the Component Unit Financial Statements At September 30, 2015 unrestricted deposits on hand at banks and in certificates of deposit were fully collateralized by banks qualifying under the Security for Alabama Funds Enhancement Act (SAFE) as qualified public depositories. Funds held by the banks' trust departments or agents are invested in U.S. Government securities or are secured by U.S. Government Securities. NOTE 3 - SUBSEQUENT EVENTS Subsequent events were evaluated through the report date, which is the date the financial statements are available to be issued. - 8 -
Supplementary Information
Discovery Middle School Component Unit Schedule of Revenues, Expenditures, Transfers and Fund Balance For the Year Ended September 30, 2015 Fund Balance, Revenues and Expenditures Fund Balance, 9/30/2014 Transfers and Transfers 9/30/2015 Fees $ 19,856 $ 160,969 $ 150,122 $ 30,703 General 28,483 74,397 80,781 22,099 Clubs 14,904 9,575 21,611 2,868 Classes 45,068 51,178 54,129 42,117 Accommodation 2,698 6,362 5,345 3,715 Athletics 33,516 210,278 158,006 85,788 Student Activities 37,462 104,854 100,892 41,424 Other 1,733 7,781 1,038 8,476 $ 183,720 $ 625,394 $ 571,924 $ 237,190-10 -
Discovery Middle School Component Unit Supporting Schedule of Revenues and Expenditures For the Year Ended September 30, 2015 Revenues Public Non-Public Local Sources: Admissions $ 43,963 $ - Accommodations 283,063 413 Appropriations 8,599 - Concessions 48,747 931 Commissions 2,997 - Dues & Fees 55,623 - Fines & Penalties 1,293 - Fund Raiser 84,869 - Sales 22,525 - Donations 28,978 6,811 Other 16,778 - Total Local Sources 597,435 8,155 Expenditures Instructional Services: Purchased services 29,597 3,816 Materials and supplies 185,173 100 Other objects 84,318 4,983 Total Instructional Services 299,088 8,899 Instructional Support: Purchased services 32,270 - Materials and supplies 20,171 612 Capital outlay 397 - Total Instructional Support 52,838 612 Operation and Maintenance: Purchased services 4,306 150 Materials and supplies 8,301 - Total Operation and Maintenance $ 12,607 $ 150-11 -
Discovery Middle School Component Unit Supporting Schedule of Revenues and Expenditures For the Year Ended September 30, 2015 (Continued) Public Non-Public Auxiliary Services: Purchased services $ 91,230 $ 2,106 Materials and supplies 276 - Total Auxiliary Services 91,506 2,106 Other Expenditures: Materials and supplies 58,425 - Other objects 4,649 503 Total Instructional Support $ 63,074 $ 503-12 -