abernathy independent school district annual …

ABERNATHY INDEPENDENT SCHOOL DISTRICT

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2013

BOLINGER, SEGARS, GILBERT & MOSS, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS

LUBBOCK, TEXAS

Bolinger, Segars, Gilbert & Moss, L.L.p. CERTIFIED PUBLIC ACCOUNTANTS


ANNUAL FINANCIAL REPORT



ABERNATHY INDEPENDENT SCHOOL DISTRICT ANNUAL FINANCIAL REPORT


TABLE OF CONTENTS Page Exhibit CERTIFICATE OF BOARD FINANCIAL SECTION Independent Auditors' Report Unqualified Opinion on the Basic Financial Statements ................................................... 1 Management’s Discussion and Analysis .......................................................................... 4 Basic Financial Statements Government Wide Financial Statements Statement of Net Position ....................................................................................... 10 A-1 Statement of Activities ............................................................................................ 11 B-1 Governmental Fund Financial Statements Balance Sheet ........................................................................................................ 12 C-1 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position ...................................................................................................... 13 C-2 Statement of Revenues, Expenditures, and Changes in Fund Balances ............... 14 C-3 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities .............. 15 C-4 Proprietary Fund Financial Statements Statement of Net Position ....................................................................................... 16 D-1 Statement of Revenues, Expenses, and Changes in Net Position ........................ 17 D-2 Statement of Cash Flows ....................................................................................... 18 D-3 Fiduciary Fund Financial Statements Statement of Fiduciary Net Position ....................................................................... 19 E-1 Notes to Financial Statements ..................................................................................... 20 Required Supplementary Information Budgetary Comparison Schedule – General Fund ...................................................... 35 G-1 Other Supplementary Information Combining Schedules Nonmajor Governmental Funds Combining Balance Sheet ................................................................................ 36 H-1 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ..................................................................................................... 37 H-2


ABERNATHY INDEPENDENT SCHOOL DISTRICT ANNUAL FINANCIAL REPORT


TABLE OF CONTENTS (CONTINUED) Page Exhibit Required Texas Education Agency Schedules Schedule of Delinquent Taxes Receivable…………………………………………….. 39 J-1 Schedule of Expenditures for Computation of Indirect Costs for 2014 – 2015…….. 40 J-2 Budgetary Comparison Schedule – Child Nutrition Fund…………………………….. 41 J-3 Budgetary Comparison Schedule – Debt Service Fund…………………….………… 42 J-4 Overall Compliance and Internal Control Section 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 .................................................. 43 Schedule of State Findings and Questioned Costs ..................................................... 45 Other TEA Required Schedule Schools First Questionnaire ......................................................................................... 46 L-1


CERTIFICATE OF BOARD

Abernathy Independent School District Hale 095-901 Name of School District County Co. - Dist. Number

We, the undersigned, certify that the attached annual financial reports of the above-named school district

were reviewed and (check one) ______ approved _____ disapproved for the year ended June 30, 2013,

at a meeting of the Board of Trustees of such school district on the __ day of _______, 2013.

Signature of Board Secretary Signature of Board President

If the Board of Trustees disapproved of the auditors' report, the reason(s) for disapproving it is(are): (attach list as necessary)


FINANCIAL SECTION


BOLINGER, SEGARS, GILBERT & MOSS, L.L.P. c e r t i f i e d p u b l i c a c c o u n t a n t s

PHONE: (806) 747-3806

FAX: (806) 747-3815

8215 Nashville Avenue

LUBBOCK, TEXAS 79423-1954

INDEPENDENT AUDITORS' REPORT

UNQUALIFIED OPINION ON THE BASIC FINANCIAL STATEMENTS Board of School Trustees Abernathy Independent School District Abernathy, Texas Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Abernathy Independent School District (the District), as of and for the year ended June 30, 2013, and related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. 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. Auditor’s Responsibility

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 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.

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-2- We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of Abernathy Independent School District, as of June 30, 2013, and the respective changes in financial position and the cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis and budgetary comparison information on pages 4-9 and 35, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide assurance. Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Abernathy Independent School District’s basic financial statements. The accompanying combining statements of revenues, expenditures and changes in fund balance for all general funds and all special revenue funds, combining statement of revenues, expenses and changes in net position and combining statement of cash flow for all proprietary funds are presented for purposes of additional analysis and are not a required part of the basic 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 basic 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, this accompanying information is fairly stated in all material respects in relation to the financial statements as a whole.


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Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated October 7, 2013, on our consideration of the District’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, 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 in the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.

Certified Public Accountants Lubbock, Texas

October 7, 2013


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ABERNATHY INDEPENDENT SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS

INTRODUCTION Our discussion and analysis of the Abernathy Independent School District’s financial performance provides an overview of the District's financial performance for the year ended June 30, 2013. It should be read in conjunction with the District's Basic Financial Statements and Independent Auditors’ Report. The Management’s Discussion and Analysis (MD&A) is an element of the financial reporting model adopted by the Governmental Accounting Standards Board (GASB) in their Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments, issued June, 1999. The Texas Education Agency mandated all school districts in Texas adopt the financial reporting model effective September 1, 2001. FINANCIAL HIGHLIGHTS · The net position of the District increased by $149,804 or 1.32%. This increase is primarily due to an increase in cash from bond issuance and increase in fixed assets offset by increases in debt, as well as property tax increases. The District’s statement of activities showed total revenues were $11,053,736, and expenses totaled $10,616,123. · The District ended the year, June 30, 2013, with total net position of $11,522,346, and unrestricted net position of $5,148,319. The balance of cash and investments at June 30, 2013, was $11,846,811. · Total general fund expenditures were $8,359,907 for the year ended June 30, 2013, this compares with general fund expenditures of $7,641,458 for the year ended June 30, 2012. This increase in expenditures relates to payment of recapture costs. · The District’s total revenues on the fund financial statements increased from $10,534,526 in 2011-12 to $11,072,465 in 2012-13, due to property tax collections resulting from an increase in property values. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of a series of financial statements and notes to those statements. The statements are organized so the reader can understand the District as a whole, and then proceed to provide an increasingly detailed look at specific financial activities. The government-wide financial statements include the Statement of Net Position and the Statement of Activities. These provide information about the activities of the District as a whole and present a longer-term view of the District's property and debt obligations and other financial matters. They reflect the flow of total economic resources in a manner similar to the financial reports of a business enterprise. Fund financial statements report the District's operations in more detail than the government-wide statements by providing information about the District's most significant funds. For governmental activities, these statements tell how services were financed in the short term as well as what resources remain for future spending. They reflect the flow of current financial resources, and supply the basis for tax levies and the appropriations budget. For proprietary activities, fund financial statements tell how the services of the District were sold to departments within the District. The fiduciary statements provide financial information about activities for which the District acts solely as a trustee. The notes to the financial statements provide narrative explanations and additional data needed for full disclosure in the government-wide statements and the fund financial statements.


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The combining statements for nonmajor funds contain information about the District's individual nonmajor funds. The sections labeled TEA Required Schedules and Federal Awards Section contain data used by monitoring or regulatory agencies for assurance that the District is using funds supplied in compliance with the terms of grants. Reporting the District as a Whole Government-Wide Financial Statements The analysis of the District's overall financial condition and operations is presented in the Statement of Net Position and the Statement of Activities. Its primary purpose is to show whether the District is better off or worse off as a result of the year's activities. The Statement of Net Position includes all the District's assets and liabilities at the end of the year while the Statement of Activities includes all the revenues and expenses generated by the District's operations during the year. These statements apply the accrual basis of accounting which is the basis used by private sector companies. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid. The District's revenues are divided into those provided by outside parties who share the costs of some programs, grants provided by the U.S. Department of Education to assist children with disabilities of from disadvantaged backgrounds (program revenues), and revenues provided by the taxpayers or by TEA in equalization funding processes (general revenues). All the District's assets are reported whether they serve the current year or future years. Liabilities are considered regardless of whether they must be paid in the current or future years. These two statements report the District's net position and changes in them. The District's net position (the difference between assets and liabilities) provide one measure of the District's financial health, or financial position. Over time, increases or decreases in the District's net position are one indicator of whether its financial health is improving or deteriorating. To fully assess the overall health of the District, however, you should consider nonfinancial factors as well, such as changes in the District's average daily attendance or its property tax base and the condition of the District's facilities. In the Statement of Net Position and the Statement of Activities, the District is reporting its governmental activities. The District currently has no business type activities or component units as defined in the GASB Statement No. 34. · Governmental activities – All of the District's basic services are reported here, including the instruction, counseling, co-curricular activities, food services, transportation, maintenance, community services, and general administration. Property taxes, tuition, fees, and state and federal grants finance most of these activities. Reporting the District's Most Significant Funds Fund Financial Statements The fund financial statements provide detailed information about the most significant funds–not the District as a whole. Laws and contracts require the District to establish some funds, such as grants received from the U.S. Department of Education through TEA. The District's administration establishes many other funds to help it control and manage money for particular purposes. The District's three fund types–governmental, proprietary and fiduciary – use different accounting approaches. Governmental funds – Most of the District's basic services are included in governmental funds. These use modified accrual accounting (a method that measures the receipt and disbursement of cash and all other financial assets that can be readily converted to cash) and report balances that are available for future spending. The governmental fund statements provide a detailed short-term view of the District's general operations and the basic services it provides. We describe the differences between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds in reconciliation schedules following the fund financial statements.


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Proprietary funds – The District reports the activities for which it charges users (other units of the District) in proprietary funds using the same accounting methods employed in the Statement of Net Position and the Statement of Activities. The internal service funds (the District’s only category of proprietary funds) report activities that provide worker’s compensation insurance coverage to the District's other programs and activities. Fiduciary funds – The District is the trustee, or fiduciary, for money raised by student activities. The District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. We exclude these activities from the government wide financial statements because the District cannot use these assets to finance its operations. GOVERNMENT-WIDE FINANCIAL ANALYSIS Changes in Net Position The District’s net position increased during the year ended June 30, 2013. The net position increased by $437,613 (before the prior period adjustment of $287,809 to write off bond issue costs) (see Table II). The net position of the District’s Internal Service Fund decreased by $16,621. Unrestricted net position – the part of net position that can be used to finance day-to-day operations without constraints established by debt covenants, enabling legislation, or other legal requirements – was $5,148,319 at June 30, 2013. This compares with the District’s unrestricted net position at June 30, 2012 of $5,715,898, a decrease of $567,579.

Table I

Abernathy Independent School DistrictNet Position

June 30, 2013 and 2012

June 30, June 30,2013 2012

Cash and Temporary Investments $ 11,846,811 $ 7,651,173Receivables 292,534 332,426Capitalized Bond and Other Debt Issuance Costs 287,809Capital Assets 27,356,565 18,624,534

Total Assets $ 39,495,910 $ 26,895,942

Current Liabilites $ 4,792,646 $ 3,117,712Long-Term Liabilities 23,180,918 12,805,688

Total Liabilities $ 27,973,564 $ 15,923,400

Net PositionInvested in Capital Assets Net of Related Debt $ 5,225,031 $ 4,914,337Restricted for Debt Service 847,419 720,657Restricted for Capital Projects 301,577 21,650Unrestricted Net Position 5,148,319 5,715,898

Total Net Position $ 11,522,346 $ 11,372,542


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Table II

Abernathy Independent School DistrictChanges in Net Position For the Years Ended

June 30, 2013 and 2012

2013 2012Revenues:

Program Revenues:Charges For Services $ 118,229 $ 111,252Operating Grants and Contributions 925,313 1,105,284

General Revenues:Maintenance and Operations Taxes 7,338,007 6,710,650Debt Service Taxes 2,068,097 1,890,989State Formula Aid 519,752 632,690Investment Earnings 58,152 17,989Miscellaneous 26,186 66,486

Total Revenue $ 11,053,736 $ 10,535,340

Expenses:Instruction and Instructional-Related Services $ 4,992,611 $ 4,883,334Instructional and School Leadership 578,515 603,496Student Support Services 255,051 247,401Student Transportation 194,667 210,889Food Services 300,954 300,809Extracurricular Activities 629,604 575,398General Administration 557,676 522,733Plant Maintenance and Operations 1,140,048 1,073,728Data Processing Services 239,895 145,327Community Services 11,272 10,304Debt Service 841,754 330,593Facilities Acquisition and Construction 50,691Contracted Instructional Services Between Schools 679,297Payments to Fiscal Agent/Member Districts 96,287 95,904Other Intergovernmental Charges 98,492 92,315

$ 10,616,123 $ 9,142,922

Increase in Net Position $ 437,613 $ 1,392,418

Net Position - Beginning of Year 11,372,542 9,980,124

Restatement - Prior Period Debt Issuance Cost (287,809)

Net Position - End of Year $ 11,522,346 $ 11,372,542

June 30,


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The District's total revenues increased from $10,535,340 in fiscal year 2012 to $11,053,736, an increase of $518,396. This increase was attributable to an increase in tax collections due to higher property values. The total expenses of the District increased by $1,473,201 from $9,142,922 to $10,616,123. Other factors impacting the District’s financial position include the following:

The District’s total property tax rate remained unchanged at $1.50 per 100 dollars of valuation. The District Appraised valuation of taxable property increased from $562,423,671 to $636,830,397, an increase of $74,406,726 or 13.23%. This increase is related primarily to increase in mineral values. The total school property taxes assessed for school year 2013 were $9,552,456. This is an increase of $1,116,101 from the $8,436,355 assessed in 2012, and is a result of higher property values.

The District’s average daily attendance (ADA) is the basis for most of the State funding received. The ADA decreased 2% from prior year, contributing to a decrease in base state revenues from $632,690 in 2011-12 to $519,752 in 2012-13 due to a decline in ADA and an increase in property tax revenue.

Fund Balances The District’s total Governmental Funds fund balance was $8,503,478. This fund balance is reported in the various Governmental funds as follows: General Fund Unassigned $3,291,237 – This balance is available for current spending, however, it has been the practice of the District to try and maintain a fund balance that is at least four months operating expenses. Assigned $4,771 – This represents amounts that management assigned for the use of Campus Activity Funds. Committed for Construction $1,900,000 – This represents amounts the Board of Trustees has earmarked for future facilities and transportation expenditures. Debt Service Restricted for Retirement of Long Term Debt $886,921 – These funds are restricted by debt service covenants to fund the principal and interest payments of the bond issue. Capital Projects Restricted for Capital Acquisitions and Contractual Obligations $2,420,459 – This balance is restricted for other facility improvements from bond proceeds sold in October 2012 and May 2013. Budgetary Highlights Over the course of the year, the Board of Trustees revised the District's budget several times. These budget amendments were necessary to accommodate changes in federal program allotments. None of the amendments made were considered to be significant changes. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At the end of 2013, the District had $27,356,565 of capital assets, net of accumulated depreciation. Financial statement footnote no. 6 discloses the capital asset activity of the District for the year ended June 30, 2013. Debt Financial statement footnotes no. 8 and 9 disclose the long-term debt and capital lease activity of the District for the year ended June 30, 2013.


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FACTORS BEARING ON THE DISTRICT’S FUTURE The District’s elected and appointed officials considered factors such as the economy and enrollment trends, when setting the fiscal year 2014 budget and tax rates. Amounts available for appropriation in the General Fund budget for 2014 are $8,345,810. Assessed property values for 2014 are $542,898,121, a decrease of 15% over the 2013 property values of $636,830,397. The District’s tax rate of $1.50 per $100 valuation in 2013 remains the same at $1.50 per $100 valuation in 2014 resulting in a decrease in local revenue of $1.2 million. Current attendance figures remain constant, and state revenues are expected to increase as a result of the District’s declining property values. For the 2013-2014 school year, the District continues to be a Chapter 41 District and has budgeted to pay approximately $964,000 in State Recapture payments for wealth equalization. Both of these factors were considered when setting the budgetary expenditures for 2014. Budgeted expenditures are expected to increase 5% to $9.3 million in 2014 from $8.8 million in 2013. This is due to the use of general funds to complete the facility improvements that are expected to exceed revenue from bonds sold in the 2013 fiscal year. The District has added no major new programs or initiatives to the 2014 budget and plans to continue all programs currently offered. CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, and creditors with a general overview of the District's finances and to show the District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the District's business office, at Abernathy Independent School District, 505 7th Street, Abernathy, Texas 79311.


BASIC FINANCIAL STATEMENTS


Exhibit A-1

PrimaryGovernment

DataControl GovernmentalCodes Activities

ASSETS AND OTHER DEBTS:1110 Cash and Temporary Investments $ 600,6221120 Current Investments 11,246,1891220 Property Taxes - Delinquent 180,9051230 Allowance for Uncollectible Taxes (8,801)1240 Due from Other Governments 120,430

Capital Assets:1510 Land 299,1301520 Buildings, Net 16,866,1581530 Furniture and Equipment, Net 195,4141540 Vehicles, Net 136,3051550 Leased Property Under Capital Leases 245,3211580 Construction in Progress 9,614,237

1000 Total Assets $ 39,495,910

LIABILITIES:2110 Accounts Payable $ 1,352,7202140 Interest Payable 241,1902150 Payroll Deductions and Withholdings 125,1912160 Accrued Wages Payable 203,7252180 Due to Other Governments 285,9022300 Unearned Revenues 1,441,5362501 Due Within One Year 1,142,3822502 Due in More Than One Year 22,887,6202516 Unamortized Premium (Discount) 293,298

2000 Total Liabilities $ 27,973,564

NET POSITION:3200 Net Invested in Capital Assets $ 5,225,0313850 Restricted for Debt Service 847,4193860 Restricted for Capital Projects 301,5773900 Unrestricted Net Position 5,148,319

3000 Total Net Position $ 11,522,346

-10-ABERNATHY INDEPENDENT SCHOOL DISTRICT

STATEMENT OF NET POSITIONJUNE 30, 2013

The accompanying notes are an integral part of this statement.


Exhibit B-1STATEMENT OF ACTIVITIES


Net (Expense)Revenue andChanges inNet Position

1 3 4 6Data Operating Total

Control Charges for Grants and GovernmentalCodes Expenses Services Contributions Activities

11 Instruction $ 4,842,825 $ 24,464 $ 462,203 $ (4,356,158)12 Instructional Resources and Media Services 73,221 3,157 (70,064)13 Curriculum and Staff Development 76,565 3,440 (73,125)21 Instructional Leadership 47,237 42,255 (4,982)23 School Leadership 531,278 23,832 (507,446)31 Guidance, Counseling, and Evaluation Services 195,085 63,064 (132,021)33 Health Services 59,966 2,244 (57,722)34 Student Transportation 194,667 4,665 (190,002)35 Food Services 300,954 47,595 245,828 (7,531)36 Extracurricular Activities 629,604 46,170 10,848 (572,586)41 General Administration 557,676 17,289 (540,387)51 Plant Maintenance and Operations 1,140,048 30,869 (1,109,179)52 Security and Monitoring Services 8,342 (8,342)53 Data Processing Services 231,553 5,536 (226,017)61 Community Services 11,272 10,083 (1,189)72 Interest on Long-Term Debt 658,920 (658,920)73 Bond Issuance Cost and Fees 182,834 (182,834)91 Contracted Instructional Services Between Schools 679,297 (679,297)93 Payments to Member Districts of SSA 93,837 (93,837)95 Payments to Juvenile Justice Alt.Ed.Prg. 2,450 (2,450)99 Other Intergovernmental Charges 98,492 (98,492)

TP Total Primary Government $ 10,616,123 $ 118,229 $ 925,313 $ (9,572,581)

DataControl Codes General Revenues:

MT Property Taxes, Levied for General Purposes $ 7,338,007DT Property Taxes, Levied for Debt Service 2,068,097SF State Aid Formula Grants 519,752IE Investment Earnings 58,152MI Miscellaneous Local and Intermediate Revenue 26,186

TR Total General Revenues and Special Items $ 10,010,194

CN Change in Net Position $ 437,613

NB Net Position - Beginning 11,372,542

PA Restatement - Prior Period Debt Issuance Cost (287,809)

NE Net Position - Ending $ 11,522,346


Program Revenues

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EXHIBIT C-1

10 50 60 98Data Other Total

Control General Debt Service Capital Governmental GovernmentalCodes Fund Fund Projects Funds Funds

ASSETS1110 Cash and Temporary Investments $ 539,800 $ 442 $ 920 $ 4,771 $ 545,9331120 Investments - Current 6,626,654 886,479 3,733,056 11,246,1891220 Property Taxes - Delinquent 149,635 31,270 180,9051230 Allowance for Uncollectible Taxes (8,801) (8,801)1240 Receivables from Other Governments 76,393 44,037 120,4301260 Due from Other Funds 42,858 42,858

1000 Total Assets $ 7,426,539 $ 918,191 $ 3,733,976 $ 48,808 $ 12,127,514

LIABILITIES AND FUND BALANCESLiabilities:

2110 Accounts Payable $ 39,203 $ $ 1,313,517 $ $ 1,352,7202150 Payroll Deductions and Withholdings Payable 125,191 125,1912160 Accrued Wages Payable 203,725 203,7252170 Due to Other Funds 42,858 42,8582180 Due to Other Governments 285,902 285,9022300 Unearned Revenue 1,581,191 31,270 1,179 1,613,6402000 Total Liabilities $ 2,235,212 $ 31,270 $ 1,313,517 $ 44,037 $ 3,624,036

Fund Balances:Restricted for:

3470 Capital Acquisitions and Contractual Obligations $ $ $ 2,420,459 $ $ 2,420,4593480 Debt Service 886,921 886,921

Committed for:3510 Construction 1,900,000 1,900,000

Assigned for:3590 Campus Activity Funds 4,771 4,7713600 Unassigned 3,291,327 3,291,3273000 Total Fund Balances $ 5,191,327 $ 886,921 $ 2,420,459 $ 4,771 $ 8,503,478

4000 Total Liabilities and Fund Balances $ 7,426,539 $ 918,191 $ 3,733,976 $ 48,808 $ 12,127,514

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BALANCE SHEETGOVERNMENTAL FUNDS

JUNE 30, 2013




Exhibit C-2

DataControl Codes

Total Fund Balances - Governmental Funds (Exhibit C-1) $ 8,503,478

1 54,689

2 5,180,958

Bond issuances provide current financial resources to governmental funds but does noteffect the Statement of Activities. During the year, the district issued capital bonds of$14,335,000 as well as retired $(2,410,000) recognizing $314,538 for bond discounts

3 and capital appreciation bond premiums. (12,239,538)

4 (36,648)

5 11,118,641

6 (943,529)

7 (115,705)

19 Net Position - Governmental Activities (Exhibit A-1) $ 11,522,346


RECONCILIATION OF THE GOVERNMENTAL FUNDSBALANCE SHEET TO THE STATEMENT

Current year capital outlays and long-term debt principal payments are expenditures in thefund financial statement, but they should be shown as increases in capital assets andreductions in long-term debt in the government-wide financial statements. The net effect ofincluding the 2013 capital outlays $9,675,560 and debt principal payments $1,443,081 is toincrease net position.

Various other reclassifications and eliminations are necessary to convert from the modifiedaccrual basis of accounting to accrual basis of accounting. These include recognizingdeferred property tax revenue as revenue, eliminating interfund transactions, andrecognizing the write off of bond issuance costs. The net effect of these reclassificationsand recognitions is to decrease net position.

The 2013 depreciation expense and loss on disposal of assets increases accumulateddepreciation. The net effect of the current year's depreciation and loss on disposal ofassets is to decrease net position.

OF NET POSITIONJUNE 30, 2013

The District uses internal service funds to charge the costs of certain activities, such asworkers compensation, to appropriate functions in other funds. The assets and liabilities ofthe internal service fund are included in governmental activities in the statement of netposition. The net effect of this consolidation is to increase net position.

Capital assets used in governmental activities are not financial resources and therefore arenot reported in governmental funds. At the beginning of the year, the cost of these assetswas $25,040,495 and the accumulated depreciation was $(6,415,961). The beginning long-term debt was $(13,443,576). The net effect of the beginning balances for capital assetsnet of depreciation and long-term debt is to increase net position.

Current year net accretion on capital appreciation bonds and premium amortization, as wellas accrued interest payable.



Exhibit C-3

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDS


98Data 10 50 60 Other Total

Control General Debt Service Capital Governmental GovernmentalCodes Fund Fund Projects Funds Funds

Revenues:

5700 Local and Intermediate Sources $ 7,520,732 $ 2,096,704 $ 9,961 $ 49,182 $ 9,676,5795800 State Program Revenues 843,517 60,954 904,4715900 Federal Program Revenues 491,415 491,415

5030 Total Revenues $ 8,364,249 $ 2,096,704 $ 9,961 $ 601,551 $ 11,072,465

Expenditures:

0011 Instruction $ 4,102,940 $ $ $ 245,098 $ 4,348,0380012 Instructional Resources and Media Services 65,448 65,4480013 Curriculum and Staff Development 68,357 68,3570021 Instructional Leadership 42,255 42,2550023 School Leadership 474,506 474,5060031 Guidance, Counseling, and Evaluation Services 117,586 56,699 174,2850033 Health Services 53,521 53,5210034 Student Transportation 173,079 173,0790035 Food Services 269,209 269,2090036 Extracurricular Activities 561,583 1,585 563,1680041 General Administration 498,376 498,3760051 Plant Maintenance and Operations 1,031,847 1,031,8470052 Security and Monitoring Services 22,212 22,2120053 Data Processing Services 207,084 207,0840061 Community Services 10,084 10,0840071 Principal on Long-Term Debt 88,081 1,355,000 1,443,0810072 Interest on Long-Term Debt 18,126 575,995 594,1210073 Bond Issuance Cost and Fees 41,800 169,185 210,9850081 Facilities Acquisition and Construction 3,085 9,611,152 9,614,2370091 Contacted Instructional Services Between Schools 679,297 679,2970093 Payments to Member Districts of SSA 93,837 93,8370095 Payments to Juvenile Justice Alternative Ed. Prg. 2,450 2,4500099 Other Intergovernmental Charges 98,492 98,492

6050 Total Expenditures $ 8,359,907 $ 1,972,795 $ 9,780,337 $ 624,930 $ 20,737,969

1100 Excess (Deficit) of Revenues Over Expenditures $ 4,342 $ 123,909 $ (9,770,376) $ (23,379) $ (9,665,504)

Other Financing Sources (Uses):7901 Refunding Bonds Issued $ $ 2,410,000 $ $ $ 2,410,0007911 Capital Related Debt Issues (Regular Bonds) 11,925,000 11,925,0007915 Transfers In 254,996 23,381 278,3777916 Premium or Discount on Issuance of Bonds 70,353 244,185 314,5388911 Transfers Out (Use) (278,377) (278,377)8940 Payment to Bond Refunding Escrow Agent (2,410,000) (2,410,000)

7080 Total Other Financing Sources (Uses) $ (23,381) $ 70,353 $ 12,169,185 $ 23,381 $ 12,239,538

1200 Net Change in Fund Balance $ (19,039) $ 194,262 $ 2,398,809 $ 2 $ 2,574,034

0100 July 1 - Fund Balance 5,210,366 692,659 21,650 4,769 5,929,444

3000 June 30 - Fund Balance $ 5,191,327 $ 886,921 $ 2,420,459 $ 4,771 $ 8,503,478

ABERNATHY INDEPENDENT SCHOOL DISTRICT-14-



Exhibit C-4

Net Change in Fund Balances - Total Governmental Funds (Exhibit C-3) $ 2,574,034

8,732,031

(18,726)

(12,239,538)

1,443,081

(36,648)

(16,621)

Change in Net Position of Governmental Activities (Exhibit B-1) $ 437,613

OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIESFOR THE YEAR ENDED JUNE 30, 2013


RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCE

Internal service funds are used by management to charge the costs of certain activities,such as workers' compensation, to individual funds. The net revenue of the internalservice fund is reported with governmental activities. (Exhibit D-2)

Current year accretion on capital appreciation bonds, premium amortization, andaccrued interest payable.

Governmental funds report capital outlays as expenditures. However, in the statementof activities, the cost of those assets is allocated over their estimated useful lives asdepreciation expense. This is the amount by which capital outlays $9,675,560 exceededdepreciation $(876,025) and loss on disposal of assets of $(67,504) in the currentperiod.

Amounts reported for governmental activities in the statement of activities (Exhibit B-1) aredifferent because:

Property tax revenues in the statement of activities that do not provide current financialresources are not reported as revenues in the funds. This is the net amount by whichdeferred property tax revenue changed between the current year $(190,830) and theprior year $172,104.

Bond issuances provide current financial resources to governmental funds but does noteffect the Statement of Activities. During the year, the district issued capital bonds of$(14,335,000) as well as retired $2,410,000 recognizing $(314,538) for bond premiums.

Repayment of the bond and other long-term debt principal $1,443,031 is an expenditurein the governmental funds, but the repayment reduces long-term liabilities in theStatement of Net Position.



Exhibit D-1STATEMENT OF NET POSITION

PROPRIETARY FUNDJUNE 30, 2013

GovernmentalActivitiesInternal Workers'

Compensation Service Fund

ASSETS:Cash and Temporary Investments $ 54,689

Total Assets $ 54,689

NET POSITION:

Unrestricted Net Position $ 54,689




Exhibit D-2STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN

NET POSITIONPROPRIETARY FUND


GovernmentalActivitiesInternal

Workers'CompensationService Fund

OPERATING REVENUESCharges to Other Funds $ 63,484

Total Revenues $ 63,484

OPERATING EXPENSESFixed Costs and Fees $ 21,888Claims Paid 53,946Cost Sharing 4,271

Total Expenses $ 80,105

Change in Net Position $ (16,621)

Net Position - July 1 (Beginning) $ 71,310

Net Position - June 30 (Ending) $ 54,689




Exhibit D-3 STATEMENT OF CASH FLOWS

PROPRIETARY FUNDFOR THE YEAR ENDED JUNE 30, 2013

GovernmentalActivitiesInternal

Workers'CompensationService Fund

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

Cash Flows from Operating ActivitiesCash Receipts from Charges to Other Funds $ 63,484Cash Payments to Suppliers for Goods and Services (80,105)

Net Cash Used in Operating Activities $ (16,621)

Net Decrease in Cash and Cash Equivalents $ (16,621)

Cash and Cash Equivalents at Beginning of the Year 71,310

Cash and Cash Equivalents at End of Year $ 54,689

RECONCILIATION OF OPERATING LOSS TO NET CASH USED IN OPERATING ACTIVITIES

Operating Loss $ (16,621)Changes in Assets and Liabilities

(Increase) Decrease in Due from Other Funds 0

Net Cash Used in Operating Activities $ (16,621)




Exhibit E-1STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDJUNE 30, 2013

AgencyFunds

ASSETS:Cash and Temporary Investments $ 83,688

Total Assets $ 83,688

LIABILITIES:Due to Student Groups $ 83,688

Total Liabilities $ 83,688

NET POSITION:Unrestricted Net Position $ 0




-20- ABERNATHY INDEPENDENT SCHOOL DISTRICT

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Abernathy Independent School District's (the District) basic financial statements have been prepared

in conformity with accounting principles generally accepted in the United States of America promulgated by the Governmental Accounting Standards Board and other authoritative sources identified in Statement on Auditing Standards No. 69 of the American Institute of Certified Public Accountants; as applied to governmental units in conjunction with the Texas Education Agency's Financial Accountability System Resource Guide (FAR). The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant accounting policies of the District are described below.

A. REPORTING ENTITY

The Board of School Trustees (the Board), a seven member group, has fiscal accountability over all activities related to public elementary and secondary education within the jurisdiction of the District. The Board of Trustees is elected by the public. The Board has the exclusive power and duty to govern and oversee the management of the District. All powers and duties not specifically delegated by statute to the Texas Education Agency (the Agency) or to the State Board of Education are reserved for the Board, and the Agency may not substitute its judgment for the lawful exercise of those powers and duties by the Board. The District is not included in any other governmental "reporting entity" as defined in governmental accounting and financial reporting standards. There are no component units included within the reporting entity. The District receives funding from local, state, and federal government sources and must comply with the requirements of these funding entities.

B. BASIS OF ACCOUNTING AND PRESENTATION GOVERNMENT-WIDE FINANCIAL STATEMENTS The Statement of Net Position and the Statement of Activities display information about the government-wide entity as a whole. These statements report information on all of the nonfiduciary activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes, state foundation funds, grants, and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support (i.e., internal service funds are considered governmental activities and not business-type activities). The District currently has no business-type activities.

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities or statement of net position. Bond issue costs were written off as a prior period adjustment in the current year, in accordance with GASB Statements No. 63 and 65.




These government-wide financial statements were prepared using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The Statement of Activities demonstrates how other people or entities that participate in programs the District operates have shared in the payment of the direct costs. The “charges for services” column includes payments made by parties that purchase, use, or directly benefit from goods or services provided by a given function or segment of the District. Examples include tuition paid by students not residing in the District, school lunch charges, etc. The “grants and contributions” column includes amounts paid by organizations outside the District to help meet the operational or capital requirements of a given function. Examples include grants under the Elementary and Secondary Education Act. If a revenue is not a program revenue, it is a general revenue used to support all of the District’s functions. Taxes are always general revenues. The District reports all direct expenses by function in the Statement of Activities. Direct expenses are those that are clearly identifiable with a function. Indirect expenses of other functions are not allocated to those functions but are reported separately in the Statement of Activities. Depreciation expense is specifically identified by function and is included in the direct expense to each function allocated. Interest on general long-term debt is considered an indirect expense and is reported separately on the Statement of Activities. FUND FINANCIAL STATEMENTS Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds. Since the resources in the fiduciary funds cannot be used for District operations, they are not included in the government-wide statements. Major governmental funds are reported as separate columns in the fund financial statements. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Revenues from local sources consist primarily of property taxes. No amounts have been recorded for property tax revenues collected after June 30, 2013. State revenues are recognized under the susceptible-to-accrual concept. Miscellaneous revenues are recorded as revenue when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned, since they are both measurable and available. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures and claims and judgments are recorded only when payment is due. In the fund financial statements, governmental fund types recognize the face amount of the debt issued as other financing sources.




The proprietary fund and the fiduciary fund financial statements reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. The District applies all GASB pronouncements, as well as the Financial Accounting Standards Board pronouncements issued on or before November 30, 1989, unless these pronouncements conflict or contradict GASB pronouncements. Propriety funds distinguish operating revenues and expenses from nonoperating items. Operating revenues result from providing goods and services in connection with a proprietary fund’s principal ongoing operations, they usually come from exchange or exchange-like transactions. Interest income earned on the operating cash account is considered operating revenue. All other revenues are non-operating. GOVERNMENTAL FUND TYPES The District reports the following major governmental funds:

General Fund – This fund is established to account for resources used for general operations. All general tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund are accounted for in this fund. This is a budgeted fund and undesignated fund balances are considered resources available for current operations. Capital Projects Fund – This governmental fund is established to account for proceeds, on a modified accrual basis, from the sale of bonds and other resources to be used for Board-authorized construction of major capital facilities. Upon completion of a project, any unused bond proceeds are transferred to the debt service fund and are used to retire related bond principal. Debt Service Fund – This fund is used to account for payment of principal and interest on long-term general obligation debt and other long-term debts for which tax has been dedicated. This is a budgeted fund and any unused sinking fund balances will be transferred to the general fund after all of the related debt obligations have been met.

Additionally, the government reports the following fund types: Special Revenue Funds – These funds are used to account for resources restricted to, or designated for, specific purposes by a grantor. Federal financial assistance generally is accounted for in a special revenue fund. Except for the food service fund, any unused balances are returned to the grantor at the close of specified project periods. The food service fund is the only required budgeted special revenue fund. For all other funds in this fund type, project accounting is employed to maintain integrity for the various sources of funds. The District's food service fund is considered a special revenue fund since the general fund subsidizes the food service program for all expenditures in excess of NSLP and user fees. Food service fund balances, if any, are used exclusively for child nutrition program purposes.




PROPRIETARY FUND TYPES

Internal Service Funds – Internal service funds are used to account for revenues and expenses related to services provided to parties inside the District, specifically for the operation of its partially-funded insurance plan for workers' compensation on a cost-reimbursement basis.

FIDUCIARY FUND TYPES Agency Funds – These custodial funds are used to account for activities of student groups and other organizational activities requiring clearing accounts. Financial resources for the agency funds are recorded as assets and liabilities; therefore, these funds do not include revenues and expenditures and have no fund equity. Student activity organizations exist with the explicit approval of, and are subject to revocation by, the District’s Board of Trustees. If any unused resources are declared surplus by the student groups, they are transferred to the general fund with a recommendation to the Board for an appropriate utilization through a budgeted program.

C. BASIS OF ACCOUNTING APPLICABLE TO ALL FINANCIAL STATEMENTS

Capital assets, which include buildings and improvements, furniture and equipment, vehicles and work in progress, are reported in the government-wide financial statements. Capital assets are defined by the District as assets with an individual cost of more than $5,000. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the assets useful lives are not capitalized.

Revenues from state and federal grants are considered to be earned to the extent of expenditures made under the provisions of the grant. Funds received but unexpended are reflected as unearned revenues, and funds expended but not yet received are shown as receivables. If balances have not been expended by the end of the project period, grantors generally require the District to refund all or part of the unused amount.

Supplies and materials are debited as expenditures when purchased.

It is the District’s policy to permit some employees to accumulate earned but unused vacation and sick pay benefits. Retiring employees meeting the District’s local leave reimbursement policy, will be paid lump sum up to a specified amount. This amount is deemed immaterial and is not reflected in the District’s financial statements. Since Internal Service Funds support the operations of governmental funds, they are consolidated with the governmental funds in the government-wide financial statements. The expenditures of governmental funds that create the revenues of internal service funds are eliminated to avoid “grossing up” the revenues and expenses of the District as a whole. When the District incurs an expense for which it may use either restricted or unrestricted assets, it uses the restricted assets first whenever they will have to be returned if they are not used.




In accordance with the FAR, the District has adopted and installed an accounting system which exceeds the minimum requirements prescribed by the State Board of Education and approved by the State Auditor. Specifically, the District’s accounting system uses codes and the code structure presented in the Accounting Code Section of the FAR. Mandatory codes are utilized in the form provided in that section.

D. BUDGETARY DATA The official budget was prepared on the modified accrual basis of accounting, which is consistent with accounting principles generally accepted in the United States of America, for the general fund and the food service special revenue fund. The remaining special revenue funds adopt project-length budgets which do not correspond to the District’s fiscal year. The following procedures are followed in establishing the budgetary data reflected in the basic financial statements:

a. Prior to June 20 of the preceding fiscal year, the District prepares a budget for the next succeeding fiscal year beginning July 1. The operating budget includes proposed expenditures and the means of financing them.

b. A meeting of the Board is then called for the purpose of adopting the proposed budget. At least 10 days public notice of the meeting must be given.

c. Prior to July 1, the budget is legally enacted through passage of a resolution by the Board.

The budget is prepared and controlled at the function level within each fund and is amended at this level as needed. Amendments are presented to the Board at its regular meetings. Each amendment must have Board approval. Such amendments are made before the fact and they are reflected in the official minutes of the Board. During the year, several amendments were necessary.

E. ENCUMBRANCE ACCOUNTING Encumbrances for goods or purchased services are documented by purchase orders or

contracts. Under Texas law, appropriations lapse at June 30, and encumbrances outstanding at that time are to be either cancelled or appropriately provided for in the subsequent year's budget. There were no outstanding encumbrances at June 30, 2013.

F. FUND EQUITY The District has adopted GASB Statement 54, which redefined how fund balances of the

governmental funds are presented in the financial statements. Fund balances are classified as follows:

Restricted – Amounts that can be spent only for specific purposes because of restrictions by

external sources (creditors, laws of other governments, etc) or by constitutional provision or enabling legislation.

Committed – Amounts that can be used only for specific purposes determined by formal action by

the Board of Trustees, the highest level of decision making authority.




Assigned – Amounts that can be used for a specific purpose as expressed by the authorized

administrator, the Superintendent. Unassigned – Amounts not included in other spendable classifications. When an expenditure is incurred for purposes for which both restricted and unrestricted fund

balance is available, the District considers restricted funds to have been spent first. When an expenditure for which committed, assigned, or unassigned fund balances are available, the District considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the Board has provided otherwise in its commitment or assignment actions.

The Board of Trustees has adopted a minimum fund balance policy for the general fund. The

policy requires the unassigned fund balance at fiscal year end to be at least 20% of the current fiscal expenditures less capital outlay and transfers out budgeted for the fund.

G. NET POSITION ON THE STATEMENT OF NET POSITION

Net position on the statement of net position includes the following: Net Invested in Capital Assets – this component of net position represents the difference between capital assets less both the accumulated depreciation and the outstanding balance of debt, which is directly attributable to the acquisition, construction or improvement of those assets. Restricted for Capital Projects – this component of net position represents the difference between assets and liabilities, net of unspent bond proceeds. Restricted for Debt Service – this component of net position represents the difference between assets and liabilities of the debt service fund that consists of assets with constraints placed on their use by creditors. Unrestricted – the difference between assets and liabilities that is not reported in Net Invested in Capital Assets.

H. CASH AND CASH EQUIVALENTS – PROPRIETARY FUNDS For purposes of the statement of cash flows for proprietary fund types, the District considers highly liquid investments to be cash equivalents if they have a maturity of three months or less when purchased.

I. MANAGEMENT’S USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates.




2. DEPOSITS AND INVESTMENTS Legal and Contractual Provisions Governing Deposits and Investments The Public Funds Investment Act (Government Code Chapter 2256) (the Act) contains specific

provisions in the areas of investment practices, management reports and establishment of appropriate policies. Among other things, it requires the District to adopt, implement, and publicize an investment policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, and (9) bid solicitation preferences for certificates of deposit. Statutes authorize the District to invest in (1) obligations of the U.S. Treasury, certain U.S. agencies, and the State of Texas; (2) certificates of deposit, (3) certain municipal securities, (4) money market savings accounts, (5) repurchase agreements, (6) bankers’ acceptances, (7) Mutual Funds, (8) investment pools, (9) guaranteed investment contracts, and (10) common trust funds. The Act also requires the District to have independent auditors perform test procedures related to investment practices as provided by the Act. The District is in substantial compliance with the requirements of the Act and with local policies.

Policies Governing Deposits and Investments In compliance with the Public Funds Investment Act, the District has adopted a deposit and

investment policy. That policy does not address the following risks: a. Custodial Credit Risk – Deposits and Investments: In the case of deposits, this is the risk that in

the event of a bank failure, the government's deposits and investments in certificates of deposits may not be returned to it. The District's policy does not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits and investments, other than the following: The State of Texas requires that a financial institution secure deposits and investments made by state or local governments by pledging securities in excess of the highest cash balance of the government. The District is not exposed to custodial credit risk for its deposits and investments in certificates of deposit are all covered by depository insurance and pledged securities held by a third party in the District’s name.

b. Concentration of Credit Risk – The investment policy of the District contains no limitations on the

amount that can be invested in any one issuer. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of the total entity investments represent a concentration risk. At June 30, 2013, all of the District’s investments are in certificates of deposit with its depository bank, and are completely covered by pledged securities as described in the preceding paragraph.

c. Credit Risk – Not applicable d. Interest Rate Risk – Not applicable e. Foreign Currency Risk – Not applicable




The carrying amount of the District’s cash and temporary investments at June 30, 2013, approximates fair value and consisted of the following shown below:

Debt Capital Government-

General Service Projects Other Wide Agency

Fund Fund Fund Funds Total Fund Total

Cash in Bank $ 385,565 $ 442 $ 920 $ 59,460 $ 446,387 $ 83,688 $ 530,075

Money Market Account 154,235 154,235 154,235

Lone Star Investments 6,626,654 886,479 3,733,056 11,246,189 11,246,189

$ 7,166,454 $ 886,921 $ 3,733,976 $ 59,460 $ 11,846,811 $ 83,688 $ 11,930,499

Public Funds Investment Pools Public funds investment pools in Texas (Pools) are established under the authority of the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and are subject to the provisions of the Public Funds Investment Act, Chapter 2256 of the Texas Government Code. In addition to other provisions of the Act designed to promote liquidity and safety of principal, the Act requires Pools to: 1) have an advisory board composed of participants in the pool and other persons who do not have a business relationship with the pool and are qualified to advise the pool; 2) maintain a continuous rating of no lower than AAA or AAA-m or an equivalent rating by at least one nationally recognized rating service; and 3) maintain the market value of its underlying investment portfolio within one half of one percent of the value of its shares. The District’s investment in Pools are reported at an amount determined by the fair value per share of the pool’s underlying portfolio, unless the pool is 2a7-like, in which case they are reported at share value. A 2a7-like pool is one which is not registered with the Securities and Exchange Commission as an investment company, but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC’s Rule 2a7 of the Investment Company Act of 1940.

3. PROPERTY TAXES

Property taxes are levied by October 1 on the assessed value listed as of the prior January 1 for all real and business personal property located in the District in conformity with Subtitle E, Texas Property Tax Code. Taxes are due on receipt of the tax bill and are delinquent if not paid before February 1 of the year following the year in which imposed. On January 1 of each year, a tax lien attaches to property to secure the payment of all taxes, penalties, and interest ultimately imposed. Delinquent taxes are recorded in the general fund as the District has no debt service requirements. All property taxes remaining uncollected after 10 years are provided for in the allowance for uncollectible taxes. Uncollectible personal property taxes are periodically reviewed and written off, but the District is prohibited from writing off real property taxes without specific statutory authority from the Texas legislature.




4. RECEIVABLE FROM OTHER GOVERNMENTS The amount due from other governments consisted of $120,430 due primarily from the State for amount earned and receivable under the Foundation and Per Capita programs and unreimbursed grant expenditures.

5. INTERFUND RECEIVABLES AND PAYABLES

Interfund balances at June 30, 2013, consisted of the following individual fund receivables and payables:

Due from Due toOther Funds Other Funds

General Fund Special Revenue Funds $ 42,858 $ 0

Special Revenue FundsGeneral Fund $ 0 $ 42,858

6. CAPITAL ASSETS

Capital asset activity for the year ended June 30, 2013, was as follows:

7/1/12 Additions Deletions 6/30/13Capital Assets:

Land $ 299,130 $ $ $ 299,130Work in Progress 9,614,237 9,614,237Building and Improvements 22,812,190 800,560 22,011,630Furniture and Equipment 410,658 34,743 29,838 415,563Capital Lease Items 762,438 762,438Vehicles 756,079 26,580 782,659

$ 25,040,495 $ 9,675,560 $ 830,398 $ 33,885,657Accumulated Depreciation

Building and Improveme $ 5,172,864 $ 706,070 $ 733,462 $ 5,145,472Furniture and Equipment 208,833 40,748 29,432 220,149Capital Lease Items 424,697 92,420 517,117Vehicles 609,567 36,787 646,354

$ 6,415,961 $ 876,025 $ 762,894 $ 6,529,092Total Net Capital Assets $ 18,624,534 $ 8,799,535 $ 67,504 $ 27,356,565




Depreciation expense and loss on disposal of assets were charged to functions of the primary government as follows:

Instruction $ 512,718 Instruction Resources and Media Services 7,718 Curriculum and Instructional Staff Development 8,061 Instructional Leadership 4,983 School Leadership 55,953 Guidance, Counseling, and Evaluation Services 20,552 Health Services 6,311 Student (Pupil) Transportation 20,409 Food Services 31,745 Cocurricular/Extracurricular Activities 66,408 General Administration 58,768 Plant Maintenance and Operations 121,675 Security and Monitoring Services 2,619 Data Processing Services 24,419 Community Services 1,189

$ 943,528

Capital assets are being depreciated using the straight line method over the following useful lives: Buildings and Improvements 15 – 30 years Furniture and Equipment 5 – 12 years Vehicles 5 – 10 years 7. UNEARNED REVENUES

Governmental funds report unearned revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Unearned revenues consisted of the following at June 30, 2013.

Debt SpecialGeneral Service Revenue

Fund Fund Fund TotalOverpayment from State $ 1,440,357 $ $ $ 1,440,357Other 1,179 1,179

Unearned Revenues - GWFS $ 1,440,357 $ 0 $ 1,179 $ 1,441,536

Property Taxes - Delinquent $ 149,635 $ 31,270 $ $ 180,905Less: Allowance for Uncollectible Taxes (8,801) (8,801)

Total Tax Unearned Revenues $ 140,834 $ 31,270 $ 0 $ 172,104Unearned Revenues - FFS $ 1,581,191 $ 31,270 $ 1,179 $ 1,613,640




8. LONG-TERM DEBT General Obligation Bonds

A summary of changes in bonds payable for the year ended June 30, 2013, is as follows:

Amount Amount Issued Increases Retired Amount

Interest Originally Outstanding Current Current Current Outstanding

Description Rate Issued 7/1/2012 Year Year Year 6/30/2013

2009 Unlimited Tax

School Building Bonds 2.5 - 5.0% $ 7,470,000 $ 6,530,000 $ $ $ 160,000 $ 6,370,000

2009A Unlimited Tax

School Building Bonds 2.5 - 4.75% 2,410,000 2,410,000 2,410,000 0

2011 Unlimited Tax

School Building Bonds 2.0 - 3.0% 4,900,000 4,220,000 795,000 3,425,000

2012 Unlimited Tax

School Building Bonds 2.0 - 4.0% 9,465,000 9,465,000 280,000 9,185,000

2012R Unlimited Tax

Refunding Bonds 2.49% 2,345,000 2,345,000 120,000 2,225,000

Capital Appreciation

Bonds 1.75 - 2.0% 65,000 65,000 15,502 80,502

2013 Unlimited Tax

School Building Bonds 1.5 - 2.0% 2,460,000 2,460,000 2,460,000

$ 29,115,000 $ 13,160,000 $ 14,335,000 $ 15,502 $ 3,765,000 $ 23,745,502

On August 15, 2009, the District issued $7,470,000 in unlimited school building with an average interest rate of 3.89%. The District used the bonds to renovate the high school building, construct new gymnasium, and other facility improvements. Interest expenditures for bonded debt for the year ended June 30, 2013, totaled $286,238.

On February 15, 2011, the District issued $4,900,000 in unlimited school building bonds with an

average interest rate of 2.27%. The District is using the bonds to construct a new Field House and Ag Building. Interest expenditures for the bonded debt for the year ended June 30, 2013, totaled $89,975. On August 13, 2012, the District issued $9,465,000 in Unlimited School Building Bonds with an average interest rate of 2.49%. The District is using the bonds to renovate the Elementary School Building. Interest expenditures for the bonded debt for the year ended June 30, 2013, totaled $115,397. On October 14, 2012, the District issued $2,410,000 of Unlimited Tax Refunding Bonds, Series 2012 with an interest rate of 2.49% with annual maturities from February 2013 through February 2029. Interest expenditures on this bonded debt totaled $27,701 for the year ended June 30, 2013. In addition, accrued interest of $20,776 is recognized in the government-wide financials. The net proceeds of $2,480,353 (after issuance costs of $40,250 plus premium of $70,353) were used to advance refund the outstanding Unlimited Tax School Building Bonds Series 2009A with a total principal of $2,410,000 and an average rate of 3.71%. This advance refunding was undertaken to




reduce the remaining debt service payments by $349,270 (cash flow gain) and resulted in an economic gain (difference between the present value of the debt service on the old and the new bonds) of approximately $311,759. On May 29, 2013, the District issued $2,460,000 in unlimited school building bonds with an average interest rate of 1.75%. The District is using the bonds to renovate the Elementary School Building. Interest expenditures for the bonded debt for the year ended June 30, 2013 totaled $0.

Debt Service requirements are as follows:

Fiscal YearEnding June 30, Principal Interest Principal Interest Total

2014 $ 985,000 $ 341,294 $ $ 398,821 $ 1,725,1152015 1,015,000 318,800 135,000 322,141 1,790,9412016 1,040,000 296,306 135,000 318,779 1,790,0852017 1,075,000 272,937 125,000 315,542 1,788,4792018 190,000 257,737 700,000 307,655 1,455,3922019-2023 1,045,000 1,173,709 3,725,000 1,320,922 7,264,6312024-2028 1,295,000 930,660 4,300,000 807,893 7,333,5532029-2033 2,520,000 505,197 3,945,000 335,076 7,305,2732034 630,000 15,750 805,000 10,063 1,460,813

$ 9,795,000 $ 4,112,390 $ 13,870,000 $ 4,136,892 $ 31,914,282

2009 and 2011 2012 and 2013

9. OBLIGATIONS UNDER CAPITAL LEASE A summary of the activity for the District’s capital lease obligations is as follows:

Amounts Issued Retired AmountsDate of Interest Outstanding Current Current OutstandingIssue Description Rate 7/1/2012 Year Year 6/30/2013

8/31/2002 Energy Mgmt. System 6.20% $ 204,700 $ $ 34,446 $ 170,2548/31/2011 Dell Computers (Teachers) 4.28% 167,881 53,635 114,246

Total Leases $ 372,581 $ 0 $ 88,081 $ 284,500

The Energy Management System lease is a 15-year lease originating August, 2002. Payments are

due quarterly. Four payments totaling $34,447, which included interest of $10,949, were made during the year.

The Dell Computer (Teachers) lease is a four year lease originating August, 2011. Payments are

made annually. One payment totaling $53,635, which included interest of $7,177 was made during the year.




Future minimum payments for these leases are as follows:

Fiscal YearEnding June 30,

2014 $ 106,2072015 106,2072016 45,3962017 45,396

2018 11,348Total Payments $ 314,554Less: Interest (30,054)Total Principal $ 284,500

10. REVENUES FROM LOCAL AND INTERMEDIATE SOURCES

During the current year, revenues from local and intermediate sources consisted of the following:

Special Debt Capital

General Revenue Service Projects

Fund Fund Fund Fund Total

Property Taxes, Penalties, Interest,

and Other Tax-Related Income $ 7,360,005 $ $ 2,064,825 $ $ 9,424,830

Food Sales 47,595 47,595

Honda Special Education Coop 24,464 24,464

Interest Income 16,312 31,879 9,961 58,152

Co-curricular Student Activities 46,170 46,170

Insurance Recovery 15,476 15,476

Foundations/Gifts 3,200 3,200

Rent 12,760 12,760

Other 42,345 1,587 43,932

$ 7,520,732 $ 49,182 $ 2,096,704 $ 9,961 $ 9,676,579

11. DEFINED BENEFIT PENSION PLAN

Plan Description – All employees of the District employed for one-half or more of the standard work load and who are not exempt from membership under Texas Government Code, participate in the Teacher Retirement System of Texas (TRS), a cost sharing multiple-employer defined benefit pension plan. TRS administers retirement and disability annuities, and death and survivor benefits to employees and beneficiaries of employees of the public school system of Texas. It operates primarily under the provisions of the Texas Constitution and Texas Government Code. TRS also administers proportional retirement benefits and service credit transfers under Texas Government Code. TRS issues a publicly available financial report that includes financial statements and required supplementary information for the defined benefit pension plan. That report may be obtained by writing to the TRS Communications Department, 1000 Red River Street, Austin, Texas 78701, by




calling TRS at 1-800-223-8778, or by downloading the report from the TRS Internet website, www.trs.state.tx.us, under the TRS Publication heading. Funding Policy – State law provides for fiscal years 2011, 2012, and 2013, a state contribution rate of 6.4% and a member contribution rate of 6.4%. In certain instances the District is required to make all or a portion of the State’s 6.4% contribution. Contribution requirements are not actuarially determined but are legally established each biennium pursuant to state funding policy. State contributions TRS made on behalf of the District’s employees for the years ended June 30 2011, 2012, and 2013, were $346,672, $318,499, and $305,063, respectively. The amounts contributed by the State are reflected in the financial statements in the general fund by respective function, in accordance with Governmental Accounting Standards Board Statement No. 24. The District paid additional state contributions for the years ended June 30, 2011, 2012, and 2013, in the amount of $41,073, $37,113, and $40,699, respectively, on the portion of the employees’ salaries that exceeded the statutory minimum and those salaries funded from federal grants, equal to the required contributions for each year. Additionally, payments made on behalf of the District by the State for Medicare Part D fringe benefits and salaries amounted to $18,702 for the year ended June 30, 2013. The payroll for employees covered by the System for the years ended June 30, 2011, 2012, and 2013, were $5,086,527, $4,972,138, and $4,982,534, respectively. The District's total payroll was $5,179,899, $5,075,696, and $5,176,550, respectively.

12. SELF-INSURANCE – WORKMEN'S COMPENSATION The District participates in a public entity risk pool for its Workmen's Compensation Insurance needs.

Over one hundred school districts participate in the pool administered by Claims Administrative Services, Inc. The agreement between the District and the pool is renewable annually on September 1. The District's maximum loss under the agreement for 2013 was set at $44,190, excluding fixed costs of $22,051. The pool is protected against unanticipated catastrophic loss by stop loss coverage provided through Midwest Employers Casualty Corporation. The stop loss policy covers individual claims in excess of $500,000. The District accounts for its costs associated with the pool through an internal service fund.

The claims administrator for the pool has estimated the District's share of unpaid claims as of August

31, 2013, to be $19,310 including estimated claims incurred but not reported of $10,339. The District has not recorded any claims payable at June 30, 2013, related to this liability.

13. LITIGATION

There is no litigation pending against the District which would have a material effect on the financial statements.

14. COMMITMENTS AND CONTINGENCIES

Federal and State Funding The District participates in numerous state and federal grant programs which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the District has not complied with the rules and regulations governing the grants, refunds of any money received may be required and the collectability of any related receivable may be impaired. In




the opinion of the District, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying combined financial statements for such contingencies.

15. SUBSEQUENT EVENTS

The District's management has evaluated subsequent events through October 7, 2013, the date which the financial statements were available for issue.

16. HEALTH CARE COVERAGE

During the year ended June 30, 2013, employees of the District were covered by a health insurance plan through TRS Active Care. The District contributed $225 of the employee-only premium per month and employees, at their option, authorized payroll withholdings to pay contributions for dependents. Under this plan, the District is not liable for costs incurred beyond the premiums paid.


REQUIRED SUPPLEMENTARY INFORMATION


Exhibit G-1BUDGETARY COMPARISON SCHEDULE

GENERAL FUNDFOR THE YEAR ENDED JUNE 30, 2013

VarianceWith Final

Data 1 2 3 BudgetControl FavorableCodes Original Final Actual (Unfavorable)

Revenues:

5700 Local and Intermediate Sources $ 8,109,223 $ 7,520,423 $ 7,520,732 $ 3095800 State Program Revenues 773,125 803,164 843,517 40,3535900 Federal Program Revenues 14,000 (14,000)

5020 Total Revenues $ 8,882,348 $ 8,337,587 $ 8,364,249 $ 26,662

Expenditures:

0011 Instruction $ 4,142,316 $ 4,119,816 $ 4,102,940 $ 16,8760012 Instructional Resources and Media Services 68,559 68,559 65,448 3,1110013 Curriculum and Staff Development 68,912 69,912 68,357 1,5550023 School Leadership 496,884 482,884 474,506 8,3780031 Guidance, Counseling, and Evaluation Services 116,210 119,210 117,586 1,6240033 Health Services 55,243 55,243 53,521 1,7220034 Student Transportation 270,681 180,681 173,079 7,6020036 Extracurricular Activities 560,091 567,091 561,583 5,5080041 General Administration 502,270 500,270 498,376 1,8940051 Plant Maintenance and Operations 1,122,859 1,052,859 1,031,847 21,0120052 Security and Monitoring Services 6,225 23,725 22,212 1,5130053 Data Processing Services 217,090 217,090 207,084 10,0060071 Principal on Long-Term Debt 106,215 88,085 88,081 40072 Interest on Long-Term Debt 18,130 18,126 40081 Facilities Acquisition and Construction 186,339 4,339 3,085 1,2540091 Contracted Instructional Services Between Schools 707,852 686,852 679,297 7,5550093 Payments to Fiscal Agent/Member District of SSA 117,000 94,000 93,837 1630095 Payments to Juvenile Justice Alternative Ed. Prg. 5,500 5,500 2,450 3,0500099 Other Intergovernmental Charges 108,500 108,500 98,492 10,008

6030 Total Expenditures $ 8,858,746 $ 8,462,746 $ 8,359,907 $ 102,839

1100 Excess (Deficiency) of Revenues Over (Under) Expenditures $ 23,602 $ (125,159) $ 4,342 $ 129,501

Other Financing Sources (Uses):

7915 Transfers In $ 273,196 $ 254,996 $ 254,996 $ 08911 Transfers Out (296,798) (278,598) (278,377) 221

7080 Total Other Financing Sources (Uses) $ (23,602) $ (23,602) $ (23,381) $ 221

1200 Net Change in Fund Balance $ 0 $ (148,761) $ (19,039) $ 129,722

0100 July 1 - Fund Balance 5,210,366 5,210,366 5,210,366 0

3000 June 30 - Fund Balance $ 5,210,366 $ 5,061,605 $ 5,191,327 $ 129,722

Budgeted Amounts



OTHER SUPPLEMENTARY INFORMATION EXHIBITS H-1 THROUGH J-4


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-39-


ABERNATHY INDEPENDENT SCHOOL DISTRICTExhibit J-2

SCHEDULE OF EXPENDITURES FOR COMPUTATION OF INDIRECT COST FOR 2014-2015


Function 41 and Related Function 53 - General Administration, 99 - Appraisal Direct Cost

1 2 3 4 5 6 7702 703 701 750 720 Other

Account School Tax Supt.'s Indirect Direct Miscel-Number Board Collection Office Cost Cost laneous Total

611X - 6146 $ $ $ 192,051 $ 143,340 $ $ $ 335,3916149-All Functions 1,788 1,788

6211 9,253 9,2536212 19,500 19,5006213 145,629 145,629621X 06220 06230 600 20,432 21,0326240 06250 06260 7,851 7,8516290 3,315 3,3156320 06330 063XX 6,261 1,399 1,596 7,375 16,6316410 4,678 9,947 4,575 19,2006420 4,025 4,0256430 7,990 7,9906490 10,403 2,885 4,373 1,832 19,4936500 06600 0

6000 - Total $ 23,671 $ 151,890 $ 206,282 $ 210,795 $ 18,460 $ 0 $ 611,098

Total Expenditures/Expenses for the General and Special Revenue Funds (Exhibit C-3) (9) $ 8,984,837

Less: Deduction of Unallowable Costs

FISCAL YEARCapital Outlay (6600) (Only Funds 100-199/200-499) (10) $ 58,506Total Debt and Lease (6500) (Only Funds 100-199/200-499) (11) $ 106,207Plant Maintenance (Function 51, 6100-6400) (12) $ 1,013,593Food (Function 35, 6341and 6499) (13) $ 112,082Stipends (6413) (14) $Column 4 (above) - Total Indirect Cost $ 210,795 Subtotal $ 1,501,183

Net Allowed Direct Costs $ 7,483,654

CUMULATIVETotal Cost of Buildings before Depreciation (1520) (15) $ 22,011,630Historical Cost of Building Over 50 Years Old (16) $Amount of Federal Money in Building Cost (Net of #16 Above) (17) $Total Cost of Furniture & Equipment before Depreciation (1530 & 1540) (18) $ 1,198,222Historical Cost of Furniture and Equipment over 16 years old (19) $ 208,533Amount of Federal Money in Furniture & Equipment (Net of #19 Above) (20) $ 36,153

(8)- Note A - $14,233 of amounts in Function 53 expenditures are included in this report on administrative costs.Note B - $98,492 of amounts in Function 99 expenditures are included in this report on administrative costs.

GENERAL AND SPECIAL REVENUE FUNDS

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Exhibit J-3BUDGETARY COMPARISON SCHEDULE

CHILD NUTRITION FUNDFOR THE YEAR ENDED JUNE 30, 2013

VarianceWith Final


Revenues:

5700 Local and Intermediate Sources $ 54,000 $ 47,749 $ 47,595 $ (154)5800 State Program Revenues 1,850 1,850 1,811 (39)5900 Federal Program Revenues 192,000 198,251 196,422 (1,829)

5020 Total Revenues $ 247,850 $ 247,850 $ 245,828 $ (2,022)

Expenditures:

0035 Food Services $ 271,452 $ 271,452 $ 269,209 $ 2,243

6030 Total Expenditures $ 271,452 $ 271,452 $ 269,209 $ 2,243

1100 Deficiency of Revenues Under Expenditures $ (23,602) $ (23,602) $ (23,381) $ 221

Other Financing Sources:

7915 Transfers In $ 23,602 $ 23,602 $ 23,381 $ (221)

1200 Net Change in Fund Balance $ 0 $ 0 $ 0 $ 0

0100 July 1 - Fund Balance 0 0 0 0

1300 June 30 - Fund Balance $ 0 $ 0 $ 0 $ 0

Budgeted Amounts



Exhibit J-4BUDGETARY COMPARISON SCHEDULE

DEBT SERVICE FUNDFOR THE YEAR ENDED JUNE 30, 2013

VarianceWith Final


Revenues:

5700 Local and Intermediate Sources $ 2,253,926 $ 2,104,926 $ 2,096,704 $ (8,222)

5020 Total Revenues $ 2,253,926 $ 2,104,926 $ 2,096,704 $ (8,222)

Expenditures:

0071 Principal on Long-Term Debt $ 1,606,611 $ 1,356,611 $ 1,355,000 $ 1,6110072 Interest on Long-Term Debt 576,894 576,894 575,995 8990073 Issuance Costs and Fees 42,500 42,500 41,800 700

6030 Total Expenditures $ 2,226,005 $ 1,976,005 $ 1,972,795 $ 3,210

1100 Excess of Revenues Over Expenditures $ 27,921 $ 128,921 $ 123,909 $ (5,012)

Other Financing Sources:

7916 Premium or Discount on Issuance of Bonds $ $ 70,354 $ 70,353 $ (1)

1200 Net Change in Fund Balance $ 27,921 $ 199,275 $ 194,262 $ (5,013)

0100 July 1 - Fund Balance 692,659 692,659 692,659 0

1300 June 30 - Fund Balance $ 720,580 $ 891,934 $ 886,921 $ (5,013)


Budgeted Amounts

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OVERALL COMPLIANCE AND INTERNAL CONTROL SECTION


BOLINGER, SEGARS, GILBERT & MOSS, L.L.P. c e r t i f i e d p u b l i c a c c o u n t a n t s

PHONE: (806) 747-3806

FAX: (806) 747-3815

8215 Nashville Avenue

LUBBOCK, TEXAS 79423-1954

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS

PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Independent Auditor’s Report Board of School Trustees Abernathy Independent School District Abernathy, Texas We have audited, in accordance with the auditing standards generally accepted in the Unites States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Abernathy Independent School District (the District) as of and for the year ended June 30, 2013, and related notes to the financial statements, which collectively comprise the District’s basic financial statements and have issued our report thereon dated October 7, 2013. Internal Control Over Financial Reporting In planning and performing our audit, we considered Abernathy Independent School District’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the 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. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However material weaknesses may exist that have not been identified.

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Compliance and Other Matters

As part of obtaining reasonable assurance about whether Abernathy Independent School District’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Certified Public Accountants Lubbock, Texas

October 7, 2013



SCHEDULE OF STATE FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2013

Current Year Findings – None Corrective Action Plan – N/A Status of Prior Year Findings –

N/A


OTHER TEA REQUIRED SCHEDULES


Exhibit L-1

SF2No

SF4Yes

SF5No

SF9No

SF10$ 15,502

Did the Annual Financial Report disclose any instances of material weaknesses ininternal controls?

Were there any disclosures in the Annual Financial Report of material noncompliance?

Total accumulated accretion on capital appreciation bonds included in government-wide financial statements at fiscal year end.


SCHOOLS FIRST QUESTIONNAIRE

Were there any disclosures in the Annual Financial Report and/or other sources ofinformation concerning default on bonded indebtness obligations?

Did the District receive a clean audit? - Was there an unmodified opinion in the AnnualFinancial Report?

abernathy independent school district annual …

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