Fitzgerald-Ben Hill County Library, Fitzgerald, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2006

FITZGERALD-BEN HILL COUNTY LIBRARY
FITZGERALD, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

FITZGERALD-BEN HILL COUNTY LIBRARY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND

SUPPLEMENTARY INFORMATION

SCHEDULES OF REVENUE

2

STATE

3

FEDERAL

4

LOCAL

5 SCHEDULE OF SALARIES AND TRAVEL

Page
1 2 3 4 5 6 7
17
18 19
20
21

FITZGERALD-BEN HILL COUNTY LIBRARY - TABLE OF CONTENTS -
SECTION II FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS
SECTION III MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
October 27, 2008

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe Board of Regents of the University System of Georgia
and Director and Members ofthe Fitzgerald-Ben Hill County Library Board
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying financial statements of the governmental activities and each major fund (Exhibits A through G) ofthe Fitzgerald-Ben Hill County Library as ofand for the year ended June 30, 2006, which collectively comprise the Library's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Fitzgerald-Ben Hill County Library'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 ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position ofthe governmental activities and each major fund ofthe FitzgeraldBen Hill County Library, as of June 30, 2006, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States ofAmerica.

2006ARL-41

The Fitzgerald-Ben Hill County Library has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not to be part of, the basic financial statements.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 17 is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Fitzgerald-Ben Hill County Library's basic financial statements. The accompanying supplementary information which consist ofSchedules 2 through 5, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe basic financial statements, and in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
~~w~ Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 2006ARL-41

FITZGERALD-BEN HILL COUNTY LIBRARY

FITZGERALD-BEN HILL COUNTY LIBRARY STATEMENT OF NET ASSETS JUNE 30, 2006
ASSETS Cash and Cash Equivalents Investments Capital Assets
Equipment Library Collections Less: Accumulated Depreciation
Total Assets
LIABILITIES Accounts Payable
NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for
Permanent Fund Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

95,255

62,779

14,672 537,006 -403 885

$ ====3=0=5=8=27=

$

2 607

$

147,793

51,419 104 008

$

303 220

$ ====3=0=5=8=27=

The notes to the basic financial statements are an integral part of this statement. - 1-

FITZGERALD-BEN HILL COUNTY LIBRARY STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2006

EXHIBIT"B"

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

GOVERNMENTAL ACTIVITIES

Current Services Public Services Technical Services Support Services Maintenance and Operations

$ 201,225 $ 17,398 66,838 57 781

10,168 $

12,624 $
39,462 41 289

-178,433 -17,398 -27,376 -16 492

Total Governmental Activities

343,242 $

10 168 $

93 375 $ _ _ _...,:-2:::3::;9i;:,6=:99=-

General Revenues Allotments from Participating Governments Investment Earnings Miscellaneous

$

254,624

2,500

4836

Total General Revenues

$ _ _ _....;2::.,:6;.:..1L::;96.:.,0:....

Change in Net Assets

$

22,261

Net Assets - Beginning of Year (Restated)

280,959

Net Assets - End of Year

$ ====3=0=3=,2=20=

The notes to the basic financial statements are an integral part of this statement. - 2-

FITZGERALD-BEN HILL COUNTY LIBRARY BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2006

EXHIBIT"C"

ASSETS Cash and Cash Equivalents Investments
Total Assets
LIABILITIES AND FUND BALANCES LIABILITIES
Accounts Payable FUND BALANCES
Reserved for: Permanent Fund
Unreserved Undesignated Reported in: General Fund Permanent Fund Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

PERMANENT FUND

TOTAL

$

94,548 $

707 $

95,255

2428

60 351

62,779

$

96 976 $

61 058 $ ==1=5=8=,0=34=

$

2 607

$

2 607

$

51,419 $

51,419

$

94,369

9639

94,369 9 639

$

94 369 $

61 058 $ 155,427

$

96 976 $

61 058 $ ==1=5=8!::,0=34=

The notes to the basic financial statements are an integral part of this statement. -3-

FITZGERALD-BEN HILL COUNTY LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2006

EXHIBIT"D"

Total Fund Balances - Governmental Funds (Exhibit "C")

$

Amounts reported for Governmental Activities in the Statement of Net Assets are different because:

Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:

Equipment Library Collections Accumulated Depreciation
Total Capital Assets

$

14,672

537,006

-403,885

155,427 147,793

Net Assets of Governmental Activities (Exhibit "A")

$===3=03=,2=2=0

The notes to the basic financial statements are an integral part of this statement. -4-

FITZGERALD-BEN HILL COUNTY LIBRARY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2006

EXHIBIT"E"

REVENUES
Local Funds State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Public Services Technical Services Support Services Maintenance and Operations
Total Expenditures
Net Change in Fund Balance
Fund Balance - Beginning (Restated)
Fund Balance - Ending

GENERAL FUND

PERMANENT FUND

TOTAL

$ 254,624
91,675 1,700
10,168
921 $
4 836
$ 363,924 $

$
1,579
1 579 $

254,624 91,675 1,700 10,168 2,500 4836
365,503

$ 202,696 $
17,398 66,838 57 781

$ 344 713 $

$

19,211 $

75,158

1,186 $
1 186 $ 393 $
60,665

203,882 17,398 66,838 57 781
345,899
19,604
135,823

$

94,369 $

61 058 $ 155,427

The notes to the basic financial statements are an integral part of this statement. - 5-

FITZGERALD-BEN HILL COUNTY LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2006

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense

$

$

32,061

-29 404

19,604 2 657

Change in Net Assets of Governmental Activities (Exhibit "B")

$ ===2=2='=,2=6=1

The notes to the basic financial statements are an integral part of this statement. -6 -

FITZGERALD-BEN HILL COUNTY LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"G"

Note 1: DESCRIPTION OF LIBRARY AND REPORTING ENTITY
REPORTING ENTITY
The Fitzgerald-Ben Hill County Library (Library) operates pursuant to Official Code of Georgia Annotated Sections 20-5-40 through 20-5-59 to provide public library services with costs shared by participating local governmental agencies and grants from the State of Georgia.
The Library Board consists of nine members; four members appointed by the Ben Hill County Commissioners and five members appointed by the Fitzgerald City Council. The Library Board is without authority to determine the amount ofits funding, except by submission ofbudget requests to local governmental units from which the Library receives support and to the State of Georgia for State and Federal flow through funding. Membership in the Library and participation in library services is at the discretion of each participating governmental agency. The Library Board has the power to designate management, the power to retain unreserved fund balances of local and other funds for continued operations and is the lowest level of oversight responsibility for the Library's operations.
While the Fitzgerald City Council appoints a majority of the Fitzgerald-Ben Hill County Library's Board, the Fitzgerald City Council is neither able to impose its will upon the Library nor is there a financial benefit/burden relationship between the two boards as defined by Governmental Accounting Standards Board. The Fitzgerald-Ben Hill County Library is therefore considered to be a related organization of the City of Fitzgerald, Georgia.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Library's basic financial statements are collectively comprised of the Library-wide financial statements, fund financial statements and notes to the basic financial statements of the FitzgeraldBen Hill County Library.
Library-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities of the overall Library. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through intergovernmental revenues and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the Library's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the Library related to the administration and support ofthe Library's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
-7 -

FITZGERALD-BEN HILL COUNTY LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the Library's funds. Eliminations have been made to minimize the double counting of internal activities. The emphasis of fund financial statements is on major governmental funds.
The Library reports the following major governmental funds:
General Fund is the Library's primary operating fund. It accounts for all financial resources of the Library, except those resources required to be accounted for in another fund.
Permanent Fund - Fitzgerald-Ben Hill County Library Foundation is used to account for an endowment ofwhich the corpus is to be invested and preserved intact with the resultant income to be .used exclusively for library programming.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The Library-wide governmental financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the Library gives (or receives) value without directly receiving (or giving) equal value in exchange, include grants and donations. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The Library uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The Library considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Interest is considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred. Capital asset acquisitions are reported as expenditures in governmental funds.

-8-

FITZGERALD-BEN HILL COUNTY LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Library funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the Library's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
RESTATEMENT OF PRIOR YEAR NET ASSETS
For fiscal year 2006, the Library restated various Capital Assets due to errors and omissions which resulted in an increase in Net Assets at July 1, 2006of$112,166. Additionally, the Library, in prior years, has shown the Fitzgerald-Ben Hill County Library Foundation as a Private-Purpose Trust fund. It was determined that the Foundation would be more appropriately shown as a Permanent Fund. The result is an increase in Net Assets on the Statement of Activities (Exhibit "B") and Fund Balance on the Statement ofRevenues, Expenditures and Changes in Fund Balances (Exhibit "E") at July 1, 2006 of$60,665. The total change in Net Assets at July 1, 2006 is an increase of$172,831.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the Library to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the Library in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Library to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,

-9-

FITZGERALD-BEN HILL COUNTY LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,

(4) Obligations of any corporation of the United States government,

(5) Prime banker's acceptances,

(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,

(7) Repurchase agreements, and

(8) Obligations of other political subdivisions of the State of Georgia.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time ofpurchase. On the Library-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method.

Capitalization thresholds and estimated useful lives of capital assets reported in the Library-wide statements are as follows:

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings and Improvements Equipment Library Collections

Any Amount

$

5,000

$

5,000

$

5,000

All

NIA 15 years 40 years 7 to 10 years 10 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

- 10 -

FITZGERALD-BEN HILL COUNTY LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "G"

Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or ofthe State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities ofthe State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 2006, the bank balances were $173,968. The amounts of the total bank balances are classified into four categories of custodial credit risk:
Category 1 - Cash that is insured (e.g., Federal Deposit Insurance) or collateralized with securities held by the Library or by the Library's agent in the Library's name.

- 11 -

FITZGERALD-BEN HILL COUNTY LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"G"

Note 3: DEPOSITS AND INVESTMENTS

Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Library's name.
Category 3 - Cash collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Library's name.
Category 4 - Uncollateralized.

The Library's deposits are classified by custodial credit risk category at June 30, 2006, as follows:

Custodial Credit Risk Category

Bank Balance

1

$ 162,370

2

11,598

3

0

4

0

Total

$=====1==73-,9==6==8

CATEGORIZATION OF INVESTMENTS Investments are classified as to custodial credit risk by the categories described below:

Category 1 - Insured or registered, or securities held by the Library or the Library's agent in the Library's name.
Category 2 - Uninsured or unregistered, with securities held by the counterparty's trust department or agent in the Library's name.
Category 3 - Uninsured or unregistered, with securities held by the counterparty's trust department or agent, but not in the Library's name.

At June 30, 2006, the fair value ofthe Library's total investments was $2,428 and this entire amount consisted of stocks which was equity securities - domestic.

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The Library does not have a formal policy for managing concentration ofcredit risk. More than 5% ofthe Library's investments are in equity securities - domestic. These investments represent 100% of the Library's total investments.

Note 4: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

- 12 -

FITZGERALD-BEN HILL COUNTY LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT"G"

Note 4: CAPITAL ASSETS

Governmental Activities Capital Assets Being Depreciated
Equipment Library Collections
Less Accumulated Depreciation for: Equipment Library Collections
Governmental Activity Capital Assets - Net

Balances July 1, 2005 (Restated)

Increases

Balances Decreases June 30, 2006

$

14,672

533,911 $

32,061 $

$ 28,966

14,672 537,006

14,672 388,775
$ 145,136 $

29.404 2,657 $

28,966 0 $

14,672 389,213
147 793

Current year depreciation expense by function is as follows:

Public Services Note 5: RISK MANAGEMENT

$===='2,,,,,9='=,4==0==4

The Library is exposed to various risks ofloss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.

The Library has obtained commercial insurance for risk of loss associated with torts, assets and errors or omissions. However, the errors or omissions policy excludes coverage for sexual harassment and discrimination. The Library has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Library's insurance coverage in any ofthe past three years.

The Library has elected to self-insure for all losses related to acts of God. The Library has not experienced any losses related to this risk in the past three years.

The Library is self-insured with regard to unemployment compensation claims. The Library accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated.

Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:

- 13 -

FITZGERALD-BEN HILL COUNTY LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "G"

Note 5: RISK MANAGEMENT

2005 2006

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

EndofYear Liability

$

0 $

2 148 $

2 148 $

0

$

0 $

5 700 $

5 700 $

0

The Library participates through the City ofFitzgerald in the Georgia Interlocal Risk Management Agency, a public entity risk pool organized on January 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The Library pays an annual premium to the City of Fitzgerald for its general insurance coverage.

The Library has purchased a surety bond to provide additional insurance coverage as follows:

Position Covered

Amount

Each Employee

$

25,000

Note 6: SIGNIFICANT CONTINGENT LIABILITIES

Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grant terms. The Library believes that such disallowances, if any, will be immaterial to its overall financial position.

Note 7: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all librarians and clerical personnel employed by regional and county libraries are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Library who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The Library makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

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FITZGERALD-BEN HILL COUNTY LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "G"

Note 7: RETIREMENT PLANS
Fiscal Year
2006 2005 2004

Percentage Contributed
100% 100% 100%

Required Contribution

$

13,984

$

13,014

$

19,951

- 15 -

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FITZGERALD-BEN HILL COUNTY LIBRARY GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006

SCHEDULE "1"

REVENUES
Local Funds State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Public Services Technical Services Support Services Maintenance and Operations
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

ACTUAL AMOUNTS

$

245,448 $

245,448 $

254,624

69,957

73,194

91,675

1,700

10,168

921

12 000

12 000

4 836

$

327,405 $

330,642 $

363,924

$

193,950 $

193,950 $

202,696

24,278

24,278

17,398

77,227

77,227

66,838

31 950

31 950

57 781

$

327 405 $

327 405 $

344 713

$

0 $

3,237 $

19,211

75 158

75158

75158

Fund Balances - Ending

$

75 158 $

78 395 $ ======9=4=3=69==

Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual
The accompanying schedule of revenues, expenditures, and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 17 -

FITZGERALD-BEN HILL COUNTY LIBRARY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2006
AGENCY/FUNDING GRANTS Board of Regents of the University System of Georgia Office of Public Library Services Salaries Library Materials Maintenance and Operations

SCHEDULE "2"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

44,739

5,647

41,289

$ =======91=6=7=5

See notes to the basic financial statements.

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FITZGERALD-BEN HILL COUNTY LIBRARY SCHEDULE OF FEDERAL REVENUE YEAR ENDED JUNE 30, 2006

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Museum and Library Services, Institute of Through Board of Regents of the University System of Georgia Library Services and Technology Act State Vacation Reading Program General Technology

GOVERNMENTAL FUND TYPE GENERAL FUND

$

300

1 400

$ =====1=,7=0=0

See notes to the basic financial statements.

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FITZGERALD-BEN HILL COUNTY LIBRARY SCHEDULE OF LOCAL REVENUE YEAR ENDED JUNE 30, 2006
LOCAL SOURCES City Government Fitzgerald County Government Board of Commissioners Ben Hill

SCHEDULE "4"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

120,849

133 775

$ ====2=5=4=,6=24=

See notes to the basic financial statements.

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FITZGERALD-BEN HILL COUNTY LIBRARY SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2006

SCHEDULE "5"

NAME
Braziel, Brown, Chasteen, Hall, Harmon, Hester, Hostetler, Hunter, McKinely, Paramore, Rakestraw, Sasser, Shelton, Southerland,

Laura Thelma Ginny Mary Hope Sandra Linda Margaret William Rebecca Karen Mariana Laketa Shanita

Totals per Report

TITLE CATEGORY
Part Time Clerk Circulation Clerk Children's Clerk Technical Services Circulation Clerk Director Bookkeeper Circulation Clerk Circulation Clerk Circulation Clerk Circulation Clerk Part Time Clerk Circulation Clerk Part Time Clerk

SALARIES

$

1,755

1,873

13,455

5,790 $

4,328

42,110

29,810

20,071

13,704

388

20,474

1,628

2,239

2 737

TRAVEL
257 351 133
16

$

160 362 $ = = = = =75=7

See notes to the basic financial statements.

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SECTION II FINDINGS AND QUESTIONED COSTS

FITZGERALD-BEN HILL COUNTY LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

CASH AND CASH EQUIVALENTS GENERAL LEDGER Inadequate Internal Controls over Accounting Functions Reportable Condition Finding Control Number: FS-6092-06-01

Condition:

Our examination ofthe accounting records ofthe Fitzgerald-Ben Hill County Library revealed that the Library did not provide for adequate internal controls over the bank reconciliation process.

Criteria:

The Library's management is responsible for designing and maintaining internal controls that provide reasonable assurance that bank reconciliations are properly prepared and accurately reflect the cash activity ofthe Library.

Questioned Cost: NIA

Information:

The General Operating bank account reconciliation had an undocumented variance of $4,767.

Cause:

This deficiency was a result of management's failure to ensure that internal controls were established, implemented and functioning at the Library.

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation:

Management should review the accounting procedures in place, design procedures which would enhance internal controls relative to the bank reconciliation process and implement those procedures to strengthen the internal controls over accounting functions.

GENERAL LEDGER Inadequate Controls over General Ledger Reportable Condition - Material Weakness Finding Control Number: FS-6092-06-02

Condition:

Our examination ofthe accounting records ofthe Fitzgerald-Ben Hill County Library revealed that the Library did not provide for adequate internal controls over the general ledger.

Criteria:

The Library's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions of the Library are processed according to established procedures and properly reflected on their accounting records.

Questioned Cost: NIA

- 1-

FITZGERALD-BEN HILL COUNTY LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

GENERAL LEDGER Inadequate Controls over General Ledger Reportable Condition - Material Weakness Finding Control Number: FS-6092-06-02

Information:

The General Ledger as presented for audit was out of balance. An adjustment of $14,420.00 was proposed by the auditors and accepted by the Library to correct the General Ledger.

Cause:

This deficiency was a result of management's failure to ensure that internal controls were established, implemented and functioning at the library.

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation:

Management should review the accounting procedures in place, design procedures which would enhance internal controls relative to the General Ledger and implement those procedures to strengthen the internal controls over accounting functions.

-2 -

SECTION III MANAGEMENT'S RESPONSES

FITZGERALD-BEN HILL COUNTY LIBRARY SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-6092-06-01
We concur with this finding. The Library Board converted to new accounting software in August, 2008, which allows for greater control over the bank reconciliation process. Library Administration has also instituted additional steps to increase the separation ofduties as related to deposits and bank reconciliations.
Finding Control Number: FS-6092-06-02
We concur with this finding. The Library Board converted to new accounting software in August, 2008, which allows for greater control over the general ledger and other accounting functions. Library Administration will now have the opportunity to identify data paths to ensure that all elements of the general ledger are being properly reported.
Contact Person: Sandy Hester, Director Phone: (229) 426-5080 Fax: (229) 426-5084 E-mail: shester@fbhcl.org