Fitzgerald-Ben Hill County Library, Fitzgerald, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2007

FITZGERALD-BEN HILL COUNTY LIBRARY
FITZGERALD, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2007
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

I

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

3

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

4

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

5

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

6

G

NOTES TO THE BASIC FINANCIAL STATEMENTS

7

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

I SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

17

SUPPLEMENTARY INFORMATION

SCHEDULES OF REVENUE

2

STATE

18

3

FEDERAL

19

4

LOCAL

20

5 SCHEDULE OF SALARIES AND TRAVEL

21

FITZGERALD-BEN HILL COUNTY LIBRARY - TABLE OF CONTENTS -
SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION III FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS
SECTION IV 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 of the General Assembly Members ofthe Board of Regents ofthe 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, 2007, 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe Library's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 of the governmental activities and each major fund ofthe FitzgeraldBen Hill County Library, as of June 30, 2007, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
2007ARL-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 2007ARL-41

FITZGERALD-BEN HILL COUNTY LIBRARY

FITZGERALD-BEN HILL COUNTY LIBRARY STATEMENT OF NET ASSETS JUNE 30, 2007
ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net
Other 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

$

143,702

63,950

7,204

14,672 582,158 -434 612

$ =======37=7=0=7=4

$

1 644

$

162,218

51,419 161 793

$

375430

$ ====3=7=7=0=74=

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, 2007

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

$

211,231 $

24,573

103,957

25 697

18,134 $

30,868 $ 364
38,738 70056

-162,229 -24,209 -65,219 44359

Total Governmental Activities

$===3=65=,4=58= $

General Revenues Allotments from Participating Governments Investment Earnings Miscellaneous

18 134 $ =======1=40=0=26= $ $

-207,298
249,183 4,362
25963

Total General Revenues

Change in Net Assets

$

72,210

Net Assets - Beginning of Year

303 220

Net Assets - End of Year

$ ======37=5=4=3==0

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, 2007

EXHIBIT"C"

ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net
Other
Total Assets
LIABILITIES AND FUND BALANCES LIABILITIES
Accounts Payable Deferred Revenue
Total Liabilities 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

$

143,491 $

1,231

7 204

211 $ 62,719

143,702 63,950
7 204

$

151,926 $

62,930 $ ====21=4=8=5=6

$

1,644

6102

$

7 746

$

1,644

6102

$

7 746

$

$

144,180

$

144 180 $

51,419 $
11 511 62,930 $

51,419
144,180 11 511
207 110

$

62,930 $ ======21=4=8=5=6

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, 2007

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
Some of the Library's fines and fees revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.
Net Assets of Governmental Activities (Exhibit "A")

$

207,110

$

14,672

582,158

-434,612

162,218 6102

$ ===37=5=,4=3=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, 2007

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
Fund Balance - Ending

GENERAL FUND

PERMANENT FUND

TOTAL

$

249,183

134,580

5,446

12,032

1,864 $

20,780

$ 2,498

249,183 134,580
5,446 12,032 4,362 20780

$

423,885 $

2 498 $

426,383

$

219,847 $

24,573

103,957

25,697

626 $

220,473 24,573 103,957 25697

$

374 074 $

626 $

374 700

$

49,811 $

1,872 $

51,683

94,369

61,058

155427

$

144 180 $

62,930 $ ===2=07..,,1..1.=0

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, 2007

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 Depreciation Expense over Capital Outlay
Some Capital Assets acquired this year were donated. In Governmental Funds, these assets, as well as, the associated revenue are not recognized, but in the Statement of Activities, the contribution of donated Capital Assets is recognized as a miscellaneous revenue.
Fines and Fee Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in Government Funds.

$
$ 40,489 -31 247

51,683
9,242 5,183 6102

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

$ =====72:!:2=1=0

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, 2007

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, 2007

EXHIBIT"G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Program revenues include (a) charges paid by the recipients of goods 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 the fund used to account for an endowment of which 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, 2007

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.
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. Official Code ofGeorgia Annotated Section 45-8-14 authorizes 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,
(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

-9-

FITZGERALD-BEN HILL COUNTY LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

The Library does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.

RECEIVABLES

Receivables consist ofamounts due from uncollectible fines and fees from patrons. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do include amounts which would necessitate the need for an allowance for uncollectible receivables.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). 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 ofassets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The Library does not capitalize works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the Library.

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, 2007

EXHIBIT"G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET ASSETS
The Library's net assets in the Library-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the Library's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets - These represent resources for which the Library is legally or contractually obligated to spend resources for permanent funds in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the general operations ofthe Library, and may be used at the discretion of the Library to meet current expenses for those purposes.
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 ofmoney 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 of securities 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 ofthe 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 of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities ofthe State of Georgia,

FITZGERALD-BEN HILL COUNTY LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "G"

Note 3: DEPOSITS AND INVESTMENTS

(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, 2007, the bank balances were $240,775. The amounts of the total uninsured bank balances are classified into three categories of custodial credit risk:

Category 1 - Uncollateralized Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the Library's name.

The Library's deposits are classified by custodial credit risk category at June 30, 2007, as follows:

Custodial Credit Risk Category

Bank Balance

1

$

0

2

77,487

3

0

Total

$====77'="4===8==7

CATEGORIZATION OF INVESTMENTS The Library's investments as of June 30, 2007, are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Type

Fair Value

Other Investments Equity Securities - Domestic

$====1=2=3==1

- 12 -

FITZGERALD-BEN HILL COUNTY LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "G"

Note 3: DEPOSITS AND INVESTMENTS

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 are 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:

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

Balances July 1, 2006

Increases

Decreases

Balances June 30, 2007

$

14,672

537,006 $

45,672 $

14,672 389,213
$ 147,793 $

31 247 14 425 $

$ 520

14,672 582,158

520 0 $

14,672 419 940
162,218

Current year depreciation expense by function is as follows:

Public Services

Note 5: RISK MANAGEMENT

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.

- 13 -

FITZGERALD-BEN HILL COUNTY LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "G"

Note 5: RISK MANAGEMENT

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:

2006 2007

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

EndofYear Liability

$

0 $

5 700 $

5 700 $

0

$

0 $

0 $

0 $

0

The Library participates through the City of Fitzgerald 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 costs 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.

- 14 -

FITZGERALD-BEN HILL COUNTY LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT"G"

Note 7: RETIREMENT PLANS

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 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2007 2006 2005

100% 100% 100%

$

14,633

$

13,984

$

13,014

- 15 -

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FITZGERALD-BEN HILL COUNTY LIBRARY GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2007

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 Balance
Fund Balance - Beginning

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

ACTUAL AMOUNTS

$

249,168 $

249,168 $

249,183

73,194

131,902

134,580

5,446

12,032

1,864

12 000

12 000

20 780

$

334 362 $

393 070 $

423,885

$

190,978 $

238,978 $

219,847

24,950

24,950

24,573

83,434

86,934

103,957

35 000

42208

25 697

$

334,362 $

393,070 $

374 074

$

0 $

0 $

49,811

94 369

94 369

94 369

Fund Balance - Ending

$

94 369 $

94 369 $====14=4=,1=8=0

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, 2007
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

$

55,755

8,769

70 056

$ =======13=4=5=8=0

See notes to the basic financial statements.

- 18 -

FITZGERALD-BEN HILL COUNTY LIBRARY SCHEDULE OF FEDERAL REVENUE YEAR ENDED JUNE 30, 2007
AGENCY/FUNDING GRANTS Museum and Library Services, Institute of Through Board of Regents of the University System of Georgia Library Services and Technology Act Family Literacy Program State Vacation Reading Program

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

4,296

1 150

$ =====5,.,,4=4=6

See notes to the basic financial statements.

- 19 -

FITZGERALD-BEN HILL COUNTY LIBRARY SCHEDULE OF LOCAL REVENUE YEAR ENDED JUNE 30, 2007
LOCAL SOURCES City Government Fitzgerald County Government Board of Commissioners Ben Hill

SCHEDULE "4"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

123,654

125,529

$

249 183

See notes to the basic financial statements.

- 20 -

FITZGERALD-BEN HILL COUNTY LIBRARY SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2007

SCHEDULE "5"

NAME
Braziel, Chasteen, Chavez, Dierker, Dixon, Harmon, Hester, Hostetler, Hunter, McKinely, Melton, Paulk, Rakestraw, Shelton, Southerland, Wetherington,

Laura Ginny Mayra Altaleas Chassity Hope Sandra Linda Margaret William Rahmer J. Sara Karen Laketa Shanita Jodi

Totals per Report

TITLE CATEGORY
Part Time Clerk Children's Clerk Circulation Assistant Circulation Assistant Circulation Assistant Circulation Assistant Director Bookkeeper Circulation Assistant Circulation Assistant Circulation Assistant Assistant Director Circulation Assistant Circulation Assistant Part Time Clerk Circulation Assistant

SALARIES

TRAVEL

$

2,252

14,080

355

3,834

2,848 $

18

8,115

57

44,925

1,555

32,299

526

21,786

14,418

203

5,527

22,229

1,170

2,593

453

$

177 087 $ ===2=1=5=6

See notes to the basic financial statements.

- 21 -

SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

FITZGERALD-BEN HILL COUNTY LIBRARY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6092-06-01 FS-6092-06-02

Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

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

The Library changed to new software in fiscal year 2008 which should resolve this issue.

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

The Library changed to new software in fiscal year 2008 which should resolve this issue.

SECTION III FINDINGS AND QUESTIONED COSTS

FITZGERALD-BEN HILL COUNTY LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES

The auditor is required to communicate to management and those charged with governance control deficiencies identified during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness.

A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Fitzgerald-Ben Hill County Library's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Fitzgerald-Ben Hill County Library's financial statements that is more than inconsequential will not be prevented or detected by the Fitzgerald-Ben Hill County Library's internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Fitzgerald-Ben Hill County Library's internal control.

Any identified deficiencies in internal controls that we did not consider to be significant deficiencies and/or material weaknesses have been communicated to management and those charged with governance within a separate management letter dated October 27, 2008. Internal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below:

CASH AND CASH EQUIVALENTS GENERAL LEDGER Inadequate Controls over Accounting Functions Significant Deficiency Finding Control Number: FS-6092-07-01

Condition:

This is a repeat finding (FS-6092-06-01) from fiscal year 2006. Our examination of the accounting records of the 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 accurately reflect the cash activity of the Library.

Questioned Cost: NIA

Information:

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

- 1-

FITZGERALD-BEN HILL COUNTY LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

CASH AND CASH EQUIVALENTS GENERAL LEDGER Inadequate Controls over Accounting Functions Significant Deficiency Finding Control Number: FS-6092-07-01

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.

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Significant Deficiency Finding Control Number: FS-6092-07-02

Condition:

The Library failed to adequately maintain capital assets records.

Criteria:

The Library's management is responsible for designing, implementing and monitoring internal controls to ensure that capital assets are properly recorded, maintained, and documented in accordance with generally accepted accounting principles.

Questioned Cost: NIA

Information:

A review of the Library's Capital Assets policies and procedures and the related Capital Assets records disclosed the following deficiencies: (1) the Library had donated collections of $5,183 without sufficient supporting documentation, and (2) of the 3,319 volumes added during the year under review, 140 were added with a zero value.

Cause:

The Library's management failed to implement satisfactory controls to record and maintain its capital assets records.

Effect:

Without satisfactory accounting controls and procedures in place, the Library could place itself in a position where potential misappropriation of assets could occur. In addition, the lack of controls could impact the reporting of its' financial position and results of operations.

-2-

FITZGERALD-BEN HILL COUNTY LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Significant Deficiency Finding Control Number: FS-6092-07-02

Recommendation:

The Library should implement appropriate controls to ensure that capital assets activity and records are properly maintained, accurate and sufficiently documented.

GENERAL LEDGER Inadequate Controls over the General Ledger Material Weakness Finding Control Number: FS-6092-06-03

Condition:

This is a repeat finding (FS-6092-06-02) from fiscal year 2006. Our examination of the accounting records of the 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

Information:

The General Ledger as presented for audit was out of balance. This was originally noted as an error in the 2006 audit. However, due to the timing of that engagement, the error was not corrected on the Library's 2007 general ledger. An adjustment of $14,420.00 was proposed by the auditors and accepted by the Library to correct the beginning fund balance reported in the 2007 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.

-3 -

FITZGERALD-BEN HILL COUNTY LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-6092-07-04

Condition:

The Library did not have adequate controls in place over the financial statement reporting process.

Criteria:

Management is responsible for having adequate controls over the financial reporting process, which not only includes proper recording oftransactions to the general ledger, but extends to accurate preparation and presentation ofthe financial statements, including note disclosures.

Questioned Cost: NIA

Information:

The Governmental Accounting Standards Board (GASB) Statement 34 reporting model requires the presentation ofboth fund level and entity-wide level statements in the Library's financial statements. Due to a lack of adequate controls over the financial statement preparation and reporting process, the auditors had to prepare the appropriate fund level and entitywide level financial statements from the Library's general ledger.

Cause:

The Library did not implement an adequate system of internal control over the financial statement reporting process.

Effect:

The Library does not have adequate controls in place to ensure that the financial statements were properly prepared in accordance with generally accepted accounting principles.

Recommendation:

The Library should develop and implement internal controls over the financial statement reporting process to ensure that activity is properly recorded in the general ledger; to verify that financial statements (including note disclosures) properly reflect activity reported in the general ledger; and to include a monitoring process to evaluate the accuracy of the financials presented for audit.

-4-

SECTION IV MANAGEMENT'S RESPONSES

FITZGERALD-BEN HILL COUNTY LIBRARY SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2007
Fitzgerald-Ben Hill County Library's responses to the findings described below were not audited and accordingly, we express no opinion on it.
Finding Control Number: FS-6092-07-01
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. Audits for fiscal year 2006 and 2007 were conducted uninterruptedly, thus, the Library had no time to correct this finding between audits.
Finding Control Number: FS-6092-07-02
We concur with this finding. The Library's technical services department has begun taking steps to ensure that donated materials are priced using fair market value and to correct those items entered with a zero value.
Finding Control Number: FS-6092-07-03
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. Audits for fiscal year 2006 and 2007 were conducted uninterruptedly, thus, the Library had no time to correct this finding between audits.
Finding Control Number: FS-6092-07-04
We concur with this finding. Library Administration did not have the necessary training to prepare the financial statements for fiscal year 2007. Library Administration has since attended training sessions hosted by Georgia Public Library Service, the Department ofAudits, and the Carl Vinson Institute ofGovernment. The Library Board converted to new accounting software in August, 2008, which will greatly improve the Library's ability to provide adequate and accurate financial statements for future audits.
Contact Person: Sandy Hester, Director Phone: (229) 426-5080 Fax: (229) 426-5084 E-mail: shester@fbhcl.org