Audit report, Hart County Library, a component unit of Hart County, Georgia, year ended June 30, 1998

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AUDIT REPORT HART COUNTY LmRARY A COMPONENT UNIT OF HART COUNTY, GEORGIA YEAR ENDED JUNE 30, 1998 ~-----------------_/
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

HART COUNTY LffiRARY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

'.

ALL GOVERNMENTAL FUND TYPES

3

C NOTES TO TIIE GENERAL PURPOSE FINANCIAL STATEMENTS

4

ADDmONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

D

COMBINING BALANCE SHEET

10

E

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

11

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

12

SCHEDULE OF REVENUE

2

STATE

13

3

FEDERAL

14

4

LOCAL

15

5 SCHEDULE OF SALARIES AND TRAVEL

16

SECTIONn FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
July 23, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofTechnical and Adult Education
and Director and Members ofthe Hart County Library Board
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE
FINANCIAL STATEMENTS AND SupPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying general purpose financial statements of the Hart County Library, a component unit ofthe Hart County, Georgia, as ofand for the year ended June 30, 1998, as listed in the table of contents. These general purpose financial statements are the responsibility ofthe Hart County Library's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose 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 :fip.ancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in the notes to the generalpurpose financial statements, the Library's financial statements have been prepared using certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are described as follows:
* The general purpose financial statements of the Library did not contain a General Fixed Assets
Account Group to account for property, equipment and inexhaustible collections and books owned by the Library which should be included to conform to generally accepted accounting principles.

98ARL-42AX

* The Library did not present a combined statement ofrevenues, expenditures and changes in fund
balances - actual and budget, as a part ofits general purpose financial statements. Presentation of such a statement comparing actual and budgeted revenues, expenditures and changes in fund balances is required by generally accepted accounting principles.
The aggregate effects on the general purpose financial statements ofthese variances or omissions have not been determined, but are believed to be material.
In our opinion, except for the effects on the general purpose financial statements of the matters referred to in the third paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe Hart County Library as ofJune 30, 1998, and the results ofits operations for the year then ended, in conformity with generally accepted accounting principles.
The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally ofinquiries ofmanagement regarding the methods ofmeasurement and presentation ofthe supplementary information. However we did not audit the information and do not express an opinion on it. In addition, we do not provide assurance that Hart County Library is or will become year 2000 compliant, that the Library's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Hart County Library does business are or will become year 2000 compliant.
Our audit was performed for the purpose of forming an opinion on the general purpose financial statements ofthe Hart County Library taken as a whole. The accompanying combining statements (Exhibits D and E) and the financial schedules (Schedules 2 through 5), as listed in the table of contents, are presented for purposes ofadditional analysis and are not a required part ofthe general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe general purpose financial statements and in our opinion, except for the effects of the matters discussed in the third paragraph, such information is fairly presented in all ~terial respects in relation ~.general purpose financial statements taken as a w h o l e . ' "
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 ofthe State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,
~Lcl.~
Russell W. Hinton State Auditor
RWH:jb 98ARL-42AX

HART COUNTY LmRARY
j m ;w

HART COUNTY LIBRARY COMBINED BALANCE SHEET
ALL FUND TYPES
JUNE 30, 1998

EXHIBIT-A-

ASSETS cash and Cash Equivalents Accounts Receivable
Total Assets

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTALS (Memorandum Only)
JUNE 30,1998 JUNE 30,1997

$

23.456.62

$

23.456.62 $

3,020.20

35,464.89 $

4;;:.\,:::,:53:=2,::::.0:::.,0

39,996.89

1,648.84

$

58,921.51 $

4,532.00 $

63.453.51 $

4",;,l,.-6.69..-.0.4..

LIABILITIES AND FUND EQUITY

LIABILITIES

Cash Overdraft

Accounts Payable

$

Expired Grant Balances Payable

Total Liabilities

$

FUND EQUITY

Fund Balances Reserved
For Expired Grant Balance/Questioned Cost $
Unreserved . Deficit Undesignated

Total Fund Equity

$

$ 34,926.92
56.08 34,983.00 $
1,202.74 $
22,735.77 23,938.51 $

1,682.00 $ 1,682.00 $

1,682.00 $ 34,926.92
56.08
36,665.00 $

6,770.24 247.82 95.46
7,113.52

2,850.00 $
0.00 2,850.00 $

4,052.74 $
22.735.77 26,788.51 $

2,850.00
-5,294.48 0.00
-2,444.48

Total Liabilities and Fund Equity

$

58,921.51 $

4,532.00 $

63,453.51 $

4I:.l',;;66;;:9~.04~

The notes to the general purpose financial statements are an integral part of this statement -2-

HART COUNTY LIBRARY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30,1998

EXHIBIT "B"

GENERAL FUND

SPECIAL REVENUE
FUND

TOTALS (Memorandum Only)
YEAR ENDED JUNE 30,1998 JUNE 30, 1997

REVENUES

State Funds Federal Funds Local Funds Other Funds

$ 152,769.28 $
93,614.40 1,502.24

$ 9,032.00

152,769.28 $ 9,032.00 93,614.40 1,502.24

137,774.24 4,000,00 90,126.00 1,174.35

Total Revenues

$ 247,885.92 $

9,032.00 $ 256,917.92 $ 233,074.59

EXPENDITURES

Current Program Services Technical Services Circulation Administration Maintenance and Operations

$ 107,790.43 $
42,221.54 52,729,69 30,114.94

4,500.00 $ 4,607.64

112,290.43 $ 4,607,64
42,221.54 52,729.69 30,114.94

84,836.37 4,000.00 43,866.23 63,488.69 29,706.32

Total Expendttures

$ 232,856.60 $

9,107.64 $ 241,964.24 $ 225,897,61

Excess of Revenues over (under) Expenditures

$ 15,029.32 $

-75.64 $ 14,953.68 $

7,176.98

OTHER FINANCING SOURCES (USES)

Insurance Recovery Operating Transfers In Operating Transfers Out

$ 14,279.31 $
-75.64

$ 75.64

14,279.31 75.64 -75.64

Total Other Financing SourceS (Uses)

$ 14,203.67 $

75.64 $ 14,279.31

Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses $ 29,232.99 $

0,00 $ 29,232.99 $ 7,176.98

FUND BALANCE JULY 1

-5,294.48

2,850.00

-2,444.48

-9,621.46

FUND BALANCE JUNE 30

$ 23,938.51 $

2,850.00 $ 26,788.51 $ -2,444.48

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

HART COUNTY LIBRARY

EXHIBIT "C"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARY OF SIGNlFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Hart County Library (Library) operates pursuant to Official Code ofGeorgia 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 ofGeorgia With the exception ofthe departures from generally accepted accounting principles disclosed in these notes, the financial statements of the Library have been prepared in conformity with generally accepted accounting principles as applied to governmental units and unless otherwise disclosed in these notes, the financial statements present all fund types and account groups ofthe Library.
The Library Board consists of7 members appointed jointly by the Hart County Board ofCommissioners, the Hartwell City Council and the Hart County Board ofEducation. The Library Board is without authority to determine the amount of its funding, except by submission ofbudget requests to local governmental units from which the Library receives support and to the State of Geo:r:gia for State and Federal 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 oflocal and other funds for continued operations and is the lowest level ofoversight responsibility for the Library's operations.
The Hart County Board of Commissioners participates in the appointment of all of the Library's Board members and provides a substantial majority offunding for the operations ofthe Libr8l'y. Consequently, the Library is deemed to have a financial benefit/burden relationship with the Hart County Board of Commissioners as defined by GASB. Accord41gly, the Hart County Library is considered to be a component unit of the Hart County Board ofCommissioners for financial reporting purposes.
FUND ACCOUNTING
The Library uses funds to report on its financial position and the results ofits 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.
General Fixed Assets, which includes the Library's inexhaustible collections and books, are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets AccoUnt Group is not presently maintained by the Library. To conform to generally accepted accounting principles, a General Fixed Assets Account Group ~hould be maintained for reporting the cost of assets acquired by governmental fund types.
The general purpose financial statements account for all State, Federal and Other funds under control of the Library, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds presented in this report are as follows:
-4-

HART COUNTY LmRARY

EXHIBIT "C"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
GOVERNMENTAL FUND TYPES - used to account for all or most of the Library's general activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources of the Library except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a Library.
SPECIAL REVENUE FUND - the fund used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. The primary type of special revenue fund consists of proceeds received from State and Federal sources to accomplish specific obj~ctives and are required to be accounted for separately.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities are generally included on the balance sheet.
\
Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accruaI (i.e., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are intergovernmental grants and investment income.
Expenditures are generally recognized when the related fund li~bility is incurred.
BUDGET
The Library was unable to present a combined statement of revenues, expenditures and changes in fund balances - budget and actual which results in an incomplete presentation of the financial statements. Generally accepted accounting principles require the presentation of such a statement comparing actual and budgeted revenue, expenditur~s and changes in fund balances.

-5-

HART COUNTY LIBRARY

EXHIBIT "C"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
COMPOSmON OF DEPOSITS Cash and cash equivalents consist ofdeposits in authorized financial institutions. Georgia Laws authorize the Library to deposit its funds in one or more solvent banks, insured Federal savings and lban associations, or insured State chartered building and loan associations.
RECEIVABLES
Receivables consist ofgrant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed, allotted funds from participating local governments, and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general pmpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
INTERFUND TRANSACTIONS
The Library has the following types ofinterfund transactions:
Reimbursements ofexpenditures initially made from a fund that are properly applicable to another fund are
recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.
Operating transfers are recorded for all interfund transactions and reimbursements.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general pmpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles, nor is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation ofthis data Certain reclassifications have been made to the comparative data to conform to the current year classifications.
Note 2: DEPOSITS
COLLATERALIZATION OF DEPOSITS Official Code ofGeorgia 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 of the 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
-6-

HART COUNTY LmRARY

EXHIBIT "C"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

ruNE 30.1998

Note 2: DEPOSITS
secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public :funds may, in his discretion, waive the requirement for security in the case of operating :funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of anyone ofor any combination ofthe following:
(1) Surety bond signed by a surety company du1y 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 ofthe 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,
(5) Bonds ofany public authority created by the laws ofthe State ofGeorgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose,
(6) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws ofthe State of Georgia, and
(7) Bonds, bills, notes, certificates ofindebtedness, or other obligations ofa subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and 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, 1998, the bank balances were $40,373.50. The bank balances were entirely covered by Federal depository insurance or by collateral held by the Library'or the Library's agent in the Library's name.
Note 3: 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; natural disaster; and unemployment compensation.
Hart County, Georgia provides insurance coverage for the Library for the risk ofloss associated with torts, assets, errors and omissions, illness or injuries to employees and natural disaster.
-7-

HART COUNTY LmRARY

EXHIBIT "C"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 3: RISK MANAGEMENT
The Library is self-insured with regard to unemployment compensation claims. The Library accounts for claims within the General Fund with expenditure and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated. The Library has not experienced any unemployment compensation claims during the last two years.
The Hart County Government provides blanket bond coverage for all Hart County Library employees up to $150,000.00 each.
The Library incurred a theft offunds by employees which occurred during fiscal years 1995, 1996, 1997 and 1998. Individuals associated with this theft have been arrested. This loss was substantially recovered through the blanket bond coverage provided and the recovery is reflected as an accounts receivable amount as shown on Exhibit "A" ofthe general pUlpose financial statements. See Schedule of Findings and Questioned Cost (Finding Control Number 6732-97-01).
Note 4: CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This ~ould 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 5: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
TRS PLAN DESCRIPTION Substantially all librarians and clerical personnel employed by regionaland county libraries are covered by the Teachers Retirement System ofGeorgia (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 ofAudits and Accounts.
TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Library who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. The Library makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.81% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

-8-

HART COUNTY LmRARY

EXHIBIT "c"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 5: RETIREMENT PLANS
Fiscal Year
1998 1997 1996

Percentage Contributed
100% 100% 100%

Required Contribution
$ 9,247.79 $ 10,908.20 $ 10,469.31

-9-

HART COUNTY LIBRARY COMBINING BALANCE SHEET
SPECIAL REVENUE FUND JUNE 30,1998

EXHIBIT"D"

ASSETS cash and Cash Equivalents Accounts Receivable

LOTTERY PROGRAM

FEDERAL PROGRAM

TOTALS JUNE 30,1998 JUNE 30,1997

$

2,850.00

$

2,850.00 $

3,020.20

_ _ _ _ _ $ _ _--'-'4,.;;,.;53;.,;;2;;;,;;.0.;;,..0

4,532.00

Total Assets

$

2,850.00 $

4,532.00 $

7,382.00 $ ....:==~3,=02=0=.2=0

LIABILITIES AND FUND EQUITY

LIABILITIES

cash Overdraft Accounts Payable

Total Liabilities

FUND EqUITY

Fund Balances Reserved For Expired Grant Balancel Questioned Costs $ Unreserved Undesignated

Total Fund Equity

$

$ $
2,850.00 0.00 $
2,850.00 $

4,532.00 $ 4,532.00 $

4,532.00 $
4,532.00 $

170.20 170.20

$ 0.00 0.00 $

2,850.00 $ 0.00
2,850.00 $

2,850.00 0.00
2,850.00

Total Liabilities and Fund Equity

$

2,850.00 $

4,532.00 $

7,382.00 $ ......=-"""3_,0.2..0....2..0'"=

See notes to the general purpose financial statements.

-10-

HART COUNTY LIBRARY

EXHIBIT "E"

COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES

SPECIAL REVENUE FUND

YEAR ENDED JUNE 3D. 1998

REVENUES
State Funds Federal Funds
Total Revenues
EXPENDITURES
Current Program Services Technical Services
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Operating Transfers In
Excess of Revenues and Other Financing Sources over (under) Expenditures
FUND BALANCE JULY 1

LOTTERY PROGRAM

FEDERAL PROGRAM

TOTALS YEAR ENDED JUNE 3D, 1998 JUNE 30,1997

$

0.00

$

0.00 $

2,850.00

$

9,032.00

9,032.00

4,000.00

$

0.00 $

9,032.00 $

9,032.00 $

6,850.00

$

0.00 $

4,500.00 $

4,500.00

4,607.64

4,607.64 $

4,000.00

$

0.00 $

9,107.64 $

9,107.64 $

4,000.00

$

0.00 $

-75.64 $

-75.64 $

2,850.00

$

0.00 $

2,850.00

75.64
0.00 $ 0.00

75.64

0.00 $ 2,850.00

2,850.00 0.00

FUND BALANCE JUNE 30

$ 2,850.00 $

0.00 $

2,850.00 $ =......,;;2.,8.5.0.0.;.0.0..

See notes to the general purpose financial statements.

-11 -

HART COUNTY LmRARY

SCHEDULE "1"

SCHEDULE OF REQUIRED SupPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

YEAR ENDED JUNE 30. 1998

At June 30, 1998, the Hart County Library had no outstanding contractual commitments for the purpose of making computer systems and other electronic equipment year 2000 compliant. The year 2000 issue is the result of shortcomings in many electronic data processing systems and other equipment that make operations beyond year 1999 troublesome. The year 2000 issue is of primary concern for the Library's financial accounting system. The following stages have been identified as necessary to implement a year 2000 compliant systems.
Awareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 Issue.
Assessment Stage - The actual process ofidentifying all ofits systems and individual components of the systems to check for compliance.
Remediation Stage - When changes are made to systems and equipment.
Validationffesting Stage - The process of ensuring that th~ chatlges made to systems and equipment will produce a year 2000 compliant system.
It will be necessary for the Library to progress through all four of these stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected. As ofJune 30, 1998, the financial accounting system was determined to be at the Awareness Stage.
The Library's financial accounting software (GENESIS) and hardware (Wang VS) is owned by the State (Georgia Department ofEducation). These systems have been determined to be critical to the Library's ability to successfully conduct operations. As ofJune 30, 1998, the State had not contracted for the remediation of either the Wang VS operating system or the GENESIS accounting software. In the subsequent period, the Georgia Department of Education remediated the Wang VS operating system and the updated operating system was installed at all GENESIS sites as ofDecember 9, 1998. The Georgia Department of Education has remediated the GENESIS software and conducted tests at nine pilot sites. The remediated GENESIS software has been provided to all libraries currently utilizing the GENESIS accounting software.

See notes to the general purpose financial statements. -12 -

HART COUNTY LIBRARY SCHEDULE OF STATE REVENUE
YEAR ENDED JUNE 30,1998
AGENCY/FUNDING
GRANTS Technical and Adult Education, Georgia Department of Public Libraries Salaries Travel Library Materials Regular Governor's Reading Incentive Program Maintenance and Operation

SCHEDULE "2"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

92,012.86

2,175.50

11,827.00 34,926.92 11,827.00

$

152,769.28

See notes to the general purpose financial statements. -13 -

HART COUNTY LIBRARY SCHEDULE OF FEDERAL REVENUE
YEAR ENDED JUNE 30,1998
AGENCY/FUNDING GRANT Education, U. S. Department of Through Georgia Department of Technical and Adult Education Library Services and Construction Act Title I - Development Enhancement Grant Title I - Public Library Services

SCHEDULE "3"
GOVERNMENTAL FUND TYPE SPECIAL REVENUE FUND

$

4,532.00

4,500,00

$ =========9',=03=2=,0=0

See notes to the general purpose financial statements. -14 -

HART COUNTY LIBRARY SCHEDULE OF LOCAL REVENUE
YEAR ENDED JUNE 30,1998
LOCAL SOURCES Board of Education Hart County City Governments City of Hartwell County Governments Board of Commissioners Hart County

SCHEDULE "4"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

600.00

12,000.00

81,014.40

$

93,614,40

See notes to the general purpose financial statements. -15-

Bisso, Chandler, Harris, Hazelton, Madden, Mattox, Sanders, Sudderth,

Arthur Lucy Wayne George Anita Janie Richard Deborah

Accrual
June 30, 1997

Total per Report

HART COUNTY LIBRARY SCHEDULE OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30,1998

SCHEDULE "5"

TITLE CATEGORY
Library Director Library Assistant Computer Operator Assistant Library Director Bookkeeper Library Assistant Library Director Library Assistant

SALARIES

$

36,083,75 $

3,780,00

10,136.00

40,158.00

6,912.00

3,150.00

2,121,12

9,272.00

$ 111,612.87 $

TRAVEL
972.76 77,62
1,050.38 -n,62

$

111.612,87 $===9=7=2=.7=6

See notes to the general purpose financial statements.
-16 -

SECTIONll FINDINGS AND QUESTIONED COSTS

HART COUNTY LIBRARY
SCHEDULE OF FINDlNGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998
PRIOR YEAR
AUDIT FOLLOW-UPIRESOLUTION Improper Lottery Fund Expenditures Amount: $5,899.11 Finding Control Number: 6732-96-03
The audit report for the year ended June 30, 1996, disclosed that the Library's Lottery Fund Retrofit for Technology Program included expenditures totaling $5,899.11 that were not made in accordance with the intended purpose ofthe grant. Grant funds for this program are for retrofit purposes only.
This situation occurred because management failed to follow the program guidelines issued by the State of Georgia, including failure to obtain an approved budget for the spending of these funds. The Georgia Department of Technical and Adult Education should review this matter to determine if a reclaim of funds is appropriate.
AUDIT FOLLOW-UPIRESOLUTION Lack ofDocumentation for Expenditures Amount: $2,515.80 Finding Control Number: 6732-96-05
The audit report for the year ended June 30, 1996, disclosed that a review ofjournal entries posted to the LSCA - Title I Basic Grant Program (CFDA 84.034), 1996 project revealed that $2,515.80 ofexpenditures were transferred from the General Fund to the LSCA - Title I Program without supporting documentation as required by Chapter 41, ofthe Financial Management for Georgia Local Units of Administration.
This situation was the result ofmanagement's attempt to spend all ofTitle I funds by moving expenditures from the General Fund to the Title I fund. Appropriate internal controls should be established by the Library to ensure that all expenditures charged to the LSCA Title 1 program are based on identifiable transactions. The Georgia Department of Technical and Adult Education should review this matter to determine if a reclaim of funds is appropriate.
AUDIT FOLLOW-UPIRESOLUTION Lack ofExpenditure/Obligation Documentation Amount: $2,850.00 Finding Control Number: 6732-97-02
The audit report for the year ended June 30, 1997, disclosed that the Library's Lottery Fund Assistive Technology Program included expenditures totaling $2,850.00 that were not supported by adequate documentation.
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HART COUNTY LmRARY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1998
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Lack ofExpenditure/Obligation Documentation Amount: $2,850.00 . Finding Control Number: 6732-97-02
This situation occurred because management did not have adequate control procedures over the voucher preparation and approval process and because management misstated expenditures of the Lottery Fund Assistive Technology Program. Appropriate internal controls should be established by the Library to ensure that all expenditures charged to the Lottery Fund Assistive Technology Program are adequately documented. The Library should submit a final Lottery Programs Completion Report to the Georgia Department of Technical and Adult Education and should include a refund of $2,850.00.
PRIQR YEAR/CURRENT YEAR
ACCOUNTING CONTROLS (OVERALL) Inadequate Separation ofDuties Finding Control Number: 6732-93-01
The audit report for the year ended June 30, 1997, stated that the Library did not provide for adequate separation ofemployee duties in the performance ofaccounting functions and related procedures for all funds. For the year under review, the Library did not make any improvements regarding separation of employee's duties. This deficiency was a result of management's failure to develop and implement internal control procedures. Management should restructure employee duties to achieve a higher degree ofinternal control with existing staff.
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: 6732-93-02
The audit report for the year ended June 30, 1997, noted that the management ofthe Hart County Library has chosen not to maintain a system wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. In the year under review, the Library did not .establish a General Fixed Assets Account Group within the formal accounting records. This condition results in the general purpose financial statements of the Library being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Library to establish accounting controls and procedures to provide for maintenance ofa General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings, equipment and inexhaustible collections and books owned by the Library and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group.
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HART COUNTY LmRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 1998
PRIOR YEAR/CURRENT YEAR
EMPLOYEE COMPENSATION Payroll Authorization Documentation Finding Control Number: 6732-93-04
The audit report for the year ended June 30, 1997, noted that the Library's personnel :files did not contain compensation agreements and documentation to support salaries paid. In addition, the Library did not maintain adequate leave records for employees. For the year under review, the Library again failed to provide compensation agreements to support salaries paid and failed to maintain adequate leave records. Corrective action should be taken by the Library to ensure that personnel :files are complete and updated to include appropriate documentation for salaries paid and appropriate leave records for all employees.
EXPENDITURESILIABILITIESIDISBURSEMENTS Lack ofProper Travel Cost Documentation Finding Control Number: 6732-93-05
The audit report for the year ended June 30, 1997 disclosed travel was paid without the employee submitting travel expense reports. For the year under review, an examination oftravel expenditures, disclosed travel was again paid without the employee submitting travel expense reports as required.
This situation occurred because management disregarded travel regulations as set forth in Chapter 40, Section 50f the Financial Management for Georgia Local Units of Administration. Library management should develop and implement internal controls to ensure that all travel expenditures are reviewed for proper documentation and compliance with travel regulations prior to payment.
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Con:trol Number: 6732-95-01
The audit report for the year ended June 30, 1997, stated that the Library's accounting procedures were insufficient to provide adequate internal control over the bank reconciliation process. During the year under review, problems continued to exist with the bank reconciliation process as noted below:
(1) Bank reconciliation procedures were not performed on all months.
(2) Seventy-four (74) instances were noted where checks cleared the Bank for amounts different from those recorded on the accounting records.
(3) Two checks were found to have the same check number; both of which appeared on the bank statement, but only one appeared.on the accounting records.
(4) There was no indication that the bank reconciliations performed by the Library were reviewed by appropriate personnel.
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HART COUNTY LmRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998

PRIOR YEAR/CURRENT YEAR

CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number: 6732-95-01

These deficiencies were a result ofmanagement's total disregard ofproper internal control procedures over cash and bank. reconciliations that are necessary to adequately safeguard and report the cash operations ofthe Library. The deficiencies in the accounting procedures were discussed with the Library's management.

EXPENDITURESILIABILITIESIDISBURSEMENTS Grant Completion Report Deficiencies Finding Control Number: 6732-95-02

The audit report for the year ended June 30, 1997, noted that the Library failed to submit the grant completion report for the State Materials, State Salaries, and State Travel grants as required. The Library's grant completion report for the year under review was not submitted until July 1999 and was not supported by the accounting records.

This deficiency was a result of management's disregard of the requirements of the Georgia Department of Technical and Adult Education. Procedures should be implemented to ensure that grant completion reports are accurately completed, verifiable to the accounting records, and submitted in a timely manner.

CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number: 6732-96-01

The audit report for the year ended, June 30, 1997, noted that the Library's accounting procedures were insufficient to provide for adequate internal control over the pettycash process. This deficiency continued to exist in the year under review. The petty cash activity of the Library is not periodically balanced or reconciled to the recorded petty cash amount.

This situation was the result ofmanagement's disregard for proper internal control procedures over the petty cash process. Control procedures in this area are necessary to adequately safeguard and report the cash operations ofthe Library. This deficiency in accounting procedUres was discussed with the Director.

REVENUES/RECENABLES/RECEIPTS Inadequate Accounting Procedures Finding Control Number: 6732-96-02

The audit report for the year ended June 30, 1997, noted that the Library's accounting procedures did not provide for adequate control over the cash receipt process. Cash receipt books are not utilized by the Library and there are no procedures in place to document funds received. This deficiency continued to exist in the year under review.

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HART COUNTY LffiRARY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 1998
PRIOR YEAR/CURRENT YEAR
REVENUES/RECENABLES/RECEIPTS Inadequate Accounting Procedures Finding Control Number: 6732-96-02
This condition occurred because the Library failed to implementa cash receipt system that would document the funds received and provide supporting documentation for bank deposits. Appropriate procedures should be implemented by the Library to ensure that all cash receipts are documented and traceable to bank deposits.
EXPENDITURESILIABILITIESIDISBURSEMENTS Inadequate Documentation Finding Control Number: 6732-96-04
The audit report for the year ended June 30, 1997, noted that an examination ofthe Library's expenditure vouchers revealed numerous deficiencies. For the year under reyjew, an examination of sixty (60) expenditure vouchers was performed to test the validity and accuracy of the expenditure transactions. Deficiencies continued to exist in the year under review as indicated below:
(1) Forty-four (44) vouchers did not contain an invoice or receiving report.
(2) All sixty (60) vouchers were not properly approved before payment.
These deficiencies were the result of managemenfs failure to adequately document and approve all exPenditures. The management ofthe Library should develop and implement written procedures to ensure that all expenditures are sufficiently documented before payments are made.
GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number: 6732-96-06
The audit report for the year ended June 30, 1997, stated that the Library's accounting procedures were insufficient to provide for adequate internal control over the journal entry process. Deficiencies continued to exist during the year under review and are summarized as follows:
(1) Journal entries were not supported by either adequate documentation or explanation.
(2) Journal entries were made to the accounting records without proper authorization.
These conditions were a result ofmanagement's failure to adequately monitor and document journal entries. Procedures should be implemented by Library management to ensure that all journal entries are adequately documented.
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HART COUNTY LmRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1998

~RIOR YEAR/CURRENT YEAR

CASH AND CASH EQUNALENTS Theft ofFunds Amount: $40,678,89 Finding Control Number: 6732-97-01

In March of 1998, a theft of funds was discovered at the Hart County Library, The former Director and bookkeeper, who had access to the accounting system, checks, and bank statements have been charged with forgery and/or altering checks totaling $40,678,89 for personal use, An analysis of this theft by fiscal year is as follows:

Fiscal Year

1995 1996 1997 1998

$ 582,29 563,27
13,815,75 25,717,58

$ =40,678,89

Inadequacies in internal controls over the bank reconciliation process, cash receipts and check writing functions contributed to this theft, Procedures should be implemented to ensure that internal controls are
established and are operating effectively. In the subsequent fiscal year insurance proceeds in the amount of
$39,996.89 were received and are included in the accounts receivable amount as reflected on Exhibit "A" of the general purpose financial statements.

The individuals associated with the theft have been arrested and are no longer employed by the Library.

GENERAL LEDGER Failure to Follow Closeout Procedures Finding Control Number: 6732-97-03

The audit report for the year ended June 30, 1997, noted that the Library failed to closeout the General Ledger in a timely manner. For the year under review, the Library again failed to perform monthly closeout procedures in a timely manner.

Appropriate action should be taken by the Library to establish accounting controls to ensure that monthly close out procedures and the fiscal year end close out of the accounting records is conducted in a timely manner.

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HART COUNTY LlBRARY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1998
CURRENT YEAR EXPENDITURESILIABILITIESIDISBURSEMENTS Lack ofExpenditure/Obligation Documentation Amount: $1,202.74 Finding Control Number: 6732-98-01 For the year under review, the Library's Travel Grant Fund had an unobligated grant balance of $1,202.74. This situation occurred because amounts reported on the General Ledger for travel expenditures were less than State Travel grant funds received. The Library should refund $1,202.74 to the Georgia Department of Technical and Adult Education for Travel funds unearned in the grant period.
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