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STATE BOARD of ACCOUNTS 302 West Washington Street Room E418 INDIANAPOLIS, INDIANA 46204-2769

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STATE BOARD of ACCOUNTS 302 West Washington Street Room E418 INDIANAPOLIS, INDIANA 46204-2769 STATE BOARD OF ACCOUNTS 302 West Washington Street Room E418 INDIANAPOLIS, INDIANA 46204-2769 AUDIT REPORT OF GARY COMMUNITY SCHOOL CORPORATION LAKE COUNTY, INDIANA July 1, 2008 to June 30, 2010 TABLE OF CONTENTS Description Page Schedule of Officials .......................................................................................................................... 3 Independent Auditor's Report on Financial Statements and Supplementary Schedule of Expenditures of Federal Awards .................................................... 4-5 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 ............................................... 6-7 Basic Financial Statements: Government-Wide Financial Statements: Statement of Activities and Net Assets – Cash and Investment Basis ................................. 8-9 Fund Financial Statements: Governmental Funds: Statement of Assets and Fund Balances and Receipts, Disbursements, and Changes in Fund Balances – Cash and Investment Basis – Governmental Funds ............................................................................................ 10-11 Proprietary Funds: Statement of Assets and Fund Balances and Receipts, Disbursements, and Changes in Fund Balances – Cash and Investment Basis – Proprietary Fund ................................................................................................... 12-13 Fiduciary Funds: Statement of Cash and Investment Balances – Fiduciary Funds .................................. 14-15 Notes to Financial Statements ........................................................................................................... 16-28 Supplementary Information: Combining Schedule of Assets and Fund Balances and Receipts, Disbursements, and Changes in Fund Balances – Cash and Investment Basis – Other Governmental Funds ............................................................................................................. 29-40 Combining Schedule of Additions, Deductions, and Changes in Cash and Investment Balances – Agency Funds .................................................................................. 41-44 Schedule of Capital Assets .......................................................................................................... 45 Schedule of Long-Term Debt ...................................................................................................... 46 Other Reports ..................................................................................................................................... 47 Audit Results and Comments: Overdrawn Cash Balance – Agency Fund .................................................................................. 48 Academic Honors Diploma .......................................................................................................... 48 Transportation Contract ............................................................................................................... 48 Credit Card Claims ...................................................................................................................... 49 Payroll Voucher Certification ....................................................................................................... 49-50 Controls Over Capital Assets ...................................................................................................... 50-51 Textbook Rental Collections ........................................................................................................ 51 Textbook Rental Credit Balances ................................................................................................ 51-52 Textbook Rental Reimbursement Documentation ....................................................................... 52-53 Internal Controls Over Extra-Curricular Account Receipts, Disbursements, and Balances .............................................................................................. 53-54 -1- TABLE OF CONTENTS (Continued) Description Page Audit Results and Comments (continued): Records Not Provided For Audit .................................................................................................. 54 Field Trip Fund ............................................................................................................................. 54-55 Summary Collection Form SA-8 .................................................................................................. 55 Untimely Deposits ........................................................................................................................ 55-56 Interest Fund Sources and Uses ................................................................................................. 56-57 Disbursements Lacking Adequate Supporting Documentation and Other Inconsistencies ........ 57-59 Canceled Warrants Not Provided for Audit ................................................................................. 59 Building Rental ............................................................................................................................. 60 Special Donation Fund ................................................................................................................ 60-61 Reconciling Items ........................................................................................................................ 61 Grant Funds ................................................................................................................................. 61-62 Textbook Rental Receipt Issuance .............................................................................................. 62 Lock Fees .................................................................................................................................... 62-63 Transaction Recording ................................................................................................................ 63 Receipt Composition ................................................................................................................... 63-64 Prescribed Form .......................................................................................................................... 64 Supplemental Audit of Federal Awards: Independent Auditor's Report on Compliance With Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance With OMB Circular A-133 .......................................................... 66-67 Schedule of Expenditures of Federal Awards ............................................................................. 68-70 Notes to Schedule of Expenditures of Federal Awards ............................................................... 71 Schedule of Findings and Questioned Costs .............................................................................. 72-75 Auditee Prepared Schedules: Summary Schedule of Prior Audit Findings .......................................................................... 76 Corrective Action Plan ........................................................................................................... 77-82 Exit Conference .................................................................................................................................. 83 Official Response ............................................................................................................................... 84-91 -2- SCHEDULE OF OFFICIALS Office Official Term Treasurer Alesia Y. Pritchett 07-01-08 to 06-30-11 Superintendent of Schools Dr. Myrtle V. Campbell 07-01-08 to 06-30-11 President of the School Board Nellie F. Moore 07-01-08 to 06-30-09 Kenneth A. Stalling 07-01-09 to 06-30-11 -3- STATE OF INDIANA AN EQUAL OPPORTUNITY EMPLOYER STATE BOARD OF ACCOUNTS 302 WEST WASHINGTON STREET ROOM E418 INDIANAPOLIS, INDIANA 46204-2769 Telephone: (317) 232-2513 Fax: (317) 232-4711 Web Site: www.in.gov/sboa INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS TO: THE OFFICIALS OF THE GARY COMMUNITY SCHOOL CORPORATION, LAKE COUNTY, INDIANA We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Gary Com- munity School Corporation (School Corporation), as of and for the years ended June 30, 2009 and 2010, which collectively comprise the School Corporation's basic financial statements as listed in the Table of Contents. These financial statements are the responsibility of the School Corporation's 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
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