THOMAS COUNTY PUBLIC LIBRARY SYSTEM A COMPONENT UNIT OF THOMAS COUNTY, 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 THOMAS COUNTY PUBLIC LIBRARY SYSTEM - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS EXHIBITS BASIC FINANCIAL STATEMENTS DISTRICT-WIDE FINANCIAL STATEMENTS A STATEMENTOFNETASSETS 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 1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERALFUND Page 1 2 3 4 5 7 8 17 THOMAS COUNTY PUBLIC LIBRARY SYSTEM - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION SCHEDULES OF REVENUE 2 STATE 18 3 FEDERAL 19 4 LOCAL 20 5 SCHEDULE OF SALARIES AND TRAVEL 21 SECTION II 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 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 October 1, 2008 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the Board ofRegents ofthe University System of Georgia and Director and Members of the Thomas County Public Library System 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 Thomas County Public Library System a component unit ofThomas County, Georgia as ofand for the year ended June 30, 2007, which collectively comprise the Library's basic financial statements as listed in the table ofcontents. These financial statements are the responsibility of the Thomas County Public Library System'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 of the Thomas County Public Library System, as ofJune 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 Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through vi and page 17 are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States ofAmerica. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the 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 Thomas County Public Library System'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, 9~L<)-~ Russell W. Hinton, CPA, CGFM State Auditor RWH:as 2007ARL-41 THOMAS COUNTY PUBLIC LIBRARY SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 This document is management's discussion and analysis of the Thomas County Public Library System (TCPLS) financial activities for the year ended June 30, 2007. OVERVIEW OF FINANCIAL STATEMENTS TCPLS statements are presented in three parts: governmental-wide financial statements, fund financial statements and notes to the basic financial statements. GOVERNMENT-WIDE STATEMENTS The Government-wide financial statements are presented using the accrual basis of accounting. These statements provide a financial view of the Library System as a result of all economic transactions. The accrual basis of accounting reports results of activities based on the occurrence of an economic event, regardless of the timing of revenue collections or payment of expenses. Thus, revenues and expenses are reported in the statement for some items that will only result in cash flows in future fiscal periods. Government-wide financial statements include the Statement ofNet Assets and the Statement of Activities. The Statement ofNet Assets presents the total assets and liabilities of the Library System with the difference reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Library System is improving or deteriorating. The Statement of Activities presents information showing how the Library System's net assets changed during the most recent fiscal year. The Statement of Activities presents governmental activity expenditures in the following categories: Public Service, Support Services, Maintenance and Operations and Information Technology. Program revenues include Charges for Services and Operating Grants and Contributions. General revenues include the contribution for Library operations from Thomas County funds, interest revenue and miscellaneous revenue from donations. As is evident from the Statement of Activities, the majority of Library System expenditures are paid from revenue provided by Thomas County. Please see Exhibits "A" and "B" to review the Government-wide financial statements. FUND FINANCIAL STATEMENTS A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. TCPLS, like other State and local governments, uses fund accounting to ensure and demonstrate compliance with finance related requirements. THOMAS COUNTY PUBLIC LIBRARY SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 The Library System uses two governmental funds: the general fund and the capital projects fund. These funds are accounted for using the modified accrual basis of accounting. Under this basis of accounting, revenue is posted when amounts are both measurable and available to fund current operations. Expenditures are posted when amounts will be disbursed in the near future (typically within sixty days). Because the focus of the fund financial statements is narrower than that of the Government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the Government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. The fund balance of $693,562 reported in Exhibit 11C" in the Balance Sheet, Governmental Funds are reconciled to the total ending net assets of $1,455,138 reported in Exhibit 11A" in the Statement of Net Assets. The difference in these is due to capital assets are not financial resources and are not reported in the funds. See Exhibit 11D" Reconciliations of the Governmental Funds Balance Sheet for the difference. In addition, the net change in fund balance of $119,388 reported in Exhibit "EII of the Statement of Revenues, Expenditures and Changes in Fund Balances is reconciled to the change in net assets of $172,966 reported in Exhibit "BII in the Statement of Activities. See Exhibit F11 11, Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities for the differences. NOTES TO THE BASIC FINANCIAL STATEMENTS The Notes to the Basic Financial Statements included in audit report provide additional information that is essential to the full understanding of data provided in the Government-wide and fund financial statements. ADDITIONAL INFORMATION Following the Notes to the Basic Financial Statements section is the Schedule of Revenues, Expenditures and Changes in Fund Balances; Budget and Actual Schedule 11 111 This schedule is required supplementary information to the basic financial statements. The format used is similar to the Combined Statement of Revenues, Expenditures and Changes in Fund Balances. This schedule shows the original budget adopted at the beginning of the fiscal year and final adjusted budget, which includes any changes to the budget during the fiscal year. FINANCIAL ANALYSIS OF THE THOMAS COUNTY PUBLIC LIBRARY SYSTEM Net assets may serve over time as a useful indicator of the Library System's financial position. At the close of fiscal year 2007, the Library System's net assets totaled $1,455,138. 11 THOMAS COUNTY PUBLIC LIBRARY SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 Table 1 Net Assets Governmental Activities Fiscal Year2007 Assets Cash and Cash Equivalents Investments Capital Assets Building and Building Improvements Equipment Library Collections Less: Accumulated Depreciation $ 357,127 336,808 90,279 280,255 2,291,308 -1,900,266 Total Assets $ 1,455,511 Liabilities Accounts Payable $_ _"-'37-"'-3 Net Assets Invested in Capital Assets, Net of Related Debt Restricted for Capital Projects Unrestricted $ 761,577 43,458 650,103 Total Net Assets $ 1,455,138 Total Liabilities and Net Assets $ IA552511 The capital assets reported consist of the Library facilities, furniture, general office equipment, computers and related equipment, durable supplies and the collection of materials that comprises the circulating and non-circulating collection of books magazines, microfilm, video, CD's, DVD's, cassette tapes, etc. There is no outstanding debt. Capital assets are reported net of depreciation. The total fund balance has been designated for future use in future annual operating budgets, and profound repair or replacements of capital assets due to conditions not reimbursed by insurance claims. GOVERNMENT-WIDE (ACCRUAL BASIS) The Library's overall financial position and operations at the Government-wide level for the past two years is summarized as follows: THOMAS COUNTY PUBLIC LIBRARY SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 Table 2 Governmental Activities Fiscal Fiscal Year 2007 Year 2006 Increase/ Decrease Current Assets Net Capital Assets $ 693,935 761,576 $ 574,174 $ 119,761 707,998 53,578 Total Assets $1,455,511 $1,282.172 $ 173,339 Current Liabilities $ 373 $ 0 $ 373 Investment in Capital Assets Restricted Net Assets for Capital Projects Unrestricted Net Assets $ 761,577 43,458 650,103 $ 707,998 $ 53,579 0 574,174 43,458 75,929 Total Net Assets $1,455.138 $1,282.172 $ 172.966 General Revenues Charges for Services Operating Grants Local Funds Other General Revenues $ 29,434 210,566 851,499 114.684 $ 53,254 165,505 742,500 282,038 $ -23,820 45,061 108,999 -167,354 Total Revenues $1,206.183 $1,243,297 $ -37,114 Program Expenses Public Services Technical Services Support Services Maintenance and Operations Information Technology $ 510,666 62,771 240,777 147,274 71,729 $ 532,904 54,195 211,810 161,430 79,622 $ -22,238 8,576 28,967 -14,156 -7.893 Total Expenses $1,033,217 $1,039,961 $ -6.744 Change in Net Assets $ 172.966 $ 203,336 $ -30,370 At June 30, 2007, the assets of Thomas County Public Library System exceeded its liabilities by $1,455,138. The most significant portion of net assets is the Library System's investment in capital assets totaling $761,576. The Library System uses the assets (furniture equipment, books and collections) to provide services to library customers, so they are not available to fund current operations. The remaining $650,103 represents unrestricted net assets available to fund Library operations and $43,458 represents restricted net assets available for capital projects work. IV THOMAS COUNTY PUBLIC LIBRARY SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 Net assets showed an increase of $172,966 due to an increase of $53,579 in investments in capital assets, an increase of $75,929 in unrestricted net assets and an increase of $43,458 in restricted assets. Total revenues decreased $37,114 due to decreased funding from the Board of Regents of the University System of Georgia and Federal funding. Total expenses decreased by $6,744, primarily as a result of decreased funding. FUND LEVEL (MODIFIED ACCRUAL BASIS) The Library System's overall financial position and operations at the fund level for the past two years is summarized as follows from Exhibit "C" and Exhibit "E": Table 3 Governmental Activities Fiscal Fiscal Year 2007 Year 2006 Net Change Exhibit "C" Total Assets Total Liabilities Total Fund Balance Exhibit "E" Total Revenues Total Expenditures $ 693,935 $ 574,174 $ 119,761 373 373 $ 693,562 $ 574,174 $ 119,388 $1,206,183 $1,246,608 $ -40,425 $1,086,795 $1,052,514 $ 34,281 Total assets had a net increase of $119,761 due primarily to increased funding. The unreserved, undesignated fund balance of the general fund increased by $75,930 is due primarily to the net result of excess revenues over expenditures. GENERAL FUND BUDGETARY VARIANCES The budget for the Library System's operation is presented on Schedule "1 ". The final revenue budget exceeded the original budget by $109,852. This change was the result of an increase in revenues. The expenditure budget was increased for governmental activities. CAPITAL ASSETS The Library System's capital assets consist of building and building improvements, furniture, equipment and library materials. V THOMAS COUNTY PUBLIC LIBRARY SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 OTHER POTENTIALLY SIGNIFICANT MATTERS Construction/renovation is in progress for the use of SPLOST funding for all libraries in 2008 until completed. REQUESTS FOR ADDITIONAL INFORMATION This financial report is designed to provide a general overview of Thomas County Public Library System's finances for our citizens, taxpayers and governmental entities to which we are accountable. If you have any additional questions about this report, please contact the Accounting Department at 229-225-5252. vi THOMAS COUNTY PUBLIC LIBRARY SYSTEM THOMAS COUNTY PUBLIC LIBRARY SYSTEM STATEMENT OF NET ASSETS JUNE 30, 2007 EXHIBIT"A" ASSETS Cash and Cash Equivalents Investments Capital Assets Buildings and Building Improvements Equipment Library Collections Less: Accumulated Depreciation Total Assets LIABILITIES Accounts Payable NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for Capital Projects Unrestricted Total Net Assets Total Liabilities and Net Assets GOVERNMENTAL ACTIVITIES $ 357,127 336,808 90,279 280,255 2,291,308 -1,900,266 $ ====-1=45=5=5=1=1 $ 373 $ 761,577 43,458 650,103 $ 1455138 $ ====1,=45=5=5=1=1 The notes to the basic financial statements are an integral part of this statement. - 1- THOMAS COUNTY PUBLIC LIBRARY SYSTEM 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 Information Technology $ 510,666 $ 62,771 240,777 147,274 71 729 29.434 $ 49,687 $ 137,604 23,275 -431,545 -62,771 -103, 173 -123,999 -71 729 Total Governmental Activities $ 1,033,217 $ 29 434 $ 210566 $ _ _ _ _-_79_3~,2_1_7 General Revenues Allotments From Participating Governments Investment Earnings Miscellaneous Revenue $ 851,499 18,626 96058 Total General Revenues $ _ _ ___;9::..:6:..::6..i.;1c::8=.3 Change in Net Assets $ 172,966 Net Assets - Beginning of Year 1282172 Net Assets - End of Year $ ====-1=45=5=1=3=8 The notes to the basic financial statements are an integral part of this statement. -2- THOMAS COUNTY PUBLIC LIBRARY SYSTEM BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2007 EXHIBIT"C" ASSETS Cash and Cash Equivalents Investments Total Assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable FUND BALANCES Reserved for: Capital Projects Unreserved Designated Jarrell Funds for Books Undesignated Reported in: General Fund Total Fund Balances Total Liabilities and Fund Balances GENERAL FUND CAPITAL PROJECTS FUND TOTAL $ 313,669 $ 336,808 43,458 $ 357,127 336,808 $ 650477 $ 43458 $======69=3=,9=35= $ 373 $ 373 $ $ 5,000 645104 $ 650104 $ 43,458 $ 43 458 $ 43,458 5,000 645 104 693,562 $ 650 477 $ 43458 $======69=3=,9=3=5 The notes to the basic financial statements are an integral part of this statement. -3- THOMAS COUNTY PUBLIC LIBRARY SYSTEM 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: Buildings and Building Improvements Equipment Library Collections Accumulated Depreciation Total Capital Assets $ 693,562 $ 90,279 280,255 2,291,308 -1,900,266 761 576 Net Assets of Governmental Activities (Exhibit "A") $ =====1,=45=5=,1=3=8 The notes to the basic financial statements are an integral part of this statement. -4 - THOMAS COUNTY PUBLIC LIBRARY SYSTEM 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 Information Technology Facilities Acquisition and Construction Total Expenditures Net Change in Fund Balances Fund Balances - Beginning GENERAL FUND CAPITAL PROJECTS FUND TOTAL $ 795,947 $ 184,127 26,439 29,434 18,558 96 058 $ 1,150,563 $ 55,552 $ 68 55,620 $ 851,499 184,127 26,439 29,434 18,626 96058 1,206,183 $ 555,071 $ 62,771 240,777 147,274 68,740 $ 1,074,633 $ $ 75,930 $ 574174 1,333 $ 10,829 12,162 $ 43,458 $ 0 556,404 62,771 240,777 147,274 68,740 10 829 1,086.795 119,388 574174 Fund Balances - Ending $ 650,104 $ 43458 $===6=9=3=,5=62= The notes to the basic financial statements are an integral part of this statement. -5- (This page left intentionally blank) THOMAS COUNTY PUBLIC LIBRARY SYSTEM 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 Capital Outlay over Depreciation Expense $ 153,343 -99,765 119,388 53,578 Change in Net Assets of Governmental Activities (Exhibit "B") $ ===1=72=,9=6===6 The notes to the basic financial statements are an integral part of this statement. -7- THOMAS COUNTY PUBLIC LIBRARY SYSTEM NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "G" Note 1: DESCRIPTION OF LIBRARY AND REPORTING ENTITY REPORTING ENTITY The Thomas County Public Library System (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 ofnine members; four members appointed by Thomas County Board of Commissioners, three members appointed by City ofThomasville, and two members appointed by small towns in Thomas County. The Library Board is without authority to determine the amount of its funding, except by submission of budget 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 oflocal and other funds for continued operations and is the lowest level of oversight responsibility for the Library's operations. The Thomas County Board of Commissioners provides a substantial majority of funding for the operations of the Library, consequently, the Library is deemed to have a financial benefit/burden relationship with Thomas County as defined by the Governmental Accounting Standards Board. Accordingly, the Thomas County Public Library System is considered to be a component unit ofthe Thomas County, Georgia for financial reporting purposes. 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 Thomas County Public Library System. 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. -8- THOMAS COUNTY PUBLIC LIBRARY SYSTEM 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 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. Capital Projects Fund accounts for financial resources including grants from Federal and State sources to be used for the acquisition, construction or renovation of major capital facilities. 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. -9- THOMAS COUNTY PUBLIC LIBRARY SYSTEM 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. Georgia Laws OCGA 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 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 ofreturn 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 (8) Obligations of other political subdivisions of the State of Georgia. - 10 - THOMAS COUNTY PUBLIC LIBRARY SYSTEM NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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. 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. 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 Buildings and Improvements Equipment Library Collections $ 5,000 25 to 60 years $ 5,000 5 to 25 years All 10 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. 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 capital projects in accordance with restrictions imposed by external third parties. - 11 - THOMAS COUNTY PUBLIC LIBRARY SYSTEM NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 of the 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 of money which has not been secured by surety bond, by guarantee of insurance, 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. If a 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 of the State of Georgia, (4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the 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 ofthe 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. - 12 - THOMAS COUNTY PUBLIC LIBRARY SYSTEM NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "G" Note 3: DEPOSITS AND INVESTMENTS CATEGORIZATION OF DEPOSITS At June 30, 2007, the bank balances were $683,923. 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 2 578,918 3 0 Total $====5===78-,9==1==8 CATEGORIZATION OF INVESTMENTS At June 30, 2007, the carrying value of the Library's total investments was $39,529 which is materially the same as fair value. This investment consisted entirely of funds invested in two Investment Pools administrated by the Community Foundation ofSouthwest Georgia, Incorporated, which are not required to be categorized since the Library did not own any specific identifiable securities in the pools. The investment policy ofthe Community Foundation of Southwest Georgia, Incorporated for the two Investment Pools (Fixed Income Investment Portfolio and Balanced Growth/Income Investment Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Fixed Income Investment Portfolio and Balanced Growth/Income Investment Portfolio is as follows: The Fixed Income Investment Pool consists ofinvestments comprised of92% cash equivalents and 8% bonds with a weighted average maturity of 1-5 years. The Balanced Growth/Income Investment Portfolio consists of 100% stock investments. The pool distributes earnings on a monthly basis. For its services, the Community Foundation ofSouthwest Georgia, Incorporated, charges a management fee of 1.25% annually. The Community Foundation of Southwest Georgia, Incorporated, is established as a public charity and is exempt from Federal and State income taxes as described in the Internal Revenue Code Section 501(3)c. The Community Foundation of Southwest Georgia, Incorporated is not registered with the Securities and Exchange Commission because it is not an investment company. Participation in the Community Foundation of Southwest Georgia, Incorporated, is voluntary and deposits consist offunds from nonprofit organizations, individuals, businesses, civic clubs and other donors who wish to contribute funds to the charitable organization. - 13 - THOMAS COUNTY PUBLIC LIBRARY SYSTEM NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "G" Note 3: DEPOSITS AND INVESTMENTS Interest Rate Risk Interest rate risk is the risk that changes in interest rates ofdebt investments will adversely affect the fair value of an investment. The Library does not have a formal policy for managing interest rate risk. 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 Buildings and Improvements Equipment Library Collections Less Accumulated Depreciation for: Buildings and Improvements Equipment Library Collections Governmental Activity Capital Assets - Net Balances July 1, 2006 Increases Decreases Balances June 30, 2007 $ 79,450 $ 280,255 2,231,265 10,829 142,514 $ $ 82,471 90,279 280,255 2,291,308 3,178 185,883 1,693,911 $ 107,998 $ 3,611 11,765 84 389 53 578 $ 82 471 6,789 197,648 1,695,829 0 $ 761 576 Current year depreciation expense by function is as follows: Public Services Information Technology $ 96,776 2 989 Note5: RISKMANAGEMENT $==-99='=7'=='6=5 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 and acts of God. The Library has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and acts of God. However, the errors or omissions policy excludes coverage for 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 participates in the Association County Commissioners ofGeorgia-Selflnsured Workers' Compensation Fund, a public entity risk pool organized on July 1, 1982, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The Library pays an annual premium to the Fund for its general insurance coverage. Additional - 14 - THOMAS COUNTY PUBLIC LIBRARY SYSTEM NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT"G" Note 5: RISK MANAGEMENT insurance coverage is provided through an agreement by the Fund with Safety National Casualty Corporation to provide coverage for potential losses by the Fund in excess of $600,000 loss per occurrence, up to $2,000,000. The Library has purchased a surety bond to provide additional insurance coverage as follows: Position Covered Amount All Employees $ 50,000 Note 6: 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 9.28% 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% $ 37,611 $ 34,321 $ 30,745 - 15 - (This page left intentionally blank) THOMAS COUNTY PUBLIC LIBRARY SYSTEM SCHEDULE "1" GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2007 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 Information Technology Total Expenditures Net Change in Fund Balance Fund Balance - Beginning NONAPPROPRIATED BUDGETS ORIGINAL FINAL ACTUAL AMOUNTS $ 750,000 $ 798,372 $ 795,947 173,098 184,127 184,127 26,439 41,200 45,303 29,434 4,000 4,071 18,558 18 500 64 777 96 058 $ 986 798 $ 1,096,650 $ 1 150 563 $ 492,873 $ 619,023 $ 555,071 61,489 66,446 62,771 222,986 228,582 240,777 126,964 130,441 147,274 74 792 66,926 68 740 $ 979 104 $ 1111 418 $ 1 074 633 $ 7,694 $ -14,768 $ 75,930 574174 574 174 574 174 Fund Balance - Ending $ 581 868 $ 559406 $====65=0=1=0===4 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 - THOMAS COUNTY PUBLIC LIBRARY SYSTEM 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 $ 137,604 23,248 23,275 $ ====18=4=,1=2=7 See notes to the basic financial statements. - 18 - THOMAS COUNTY PUBLIC LIBRARY SYSTEM SCHEDULE OF FEDERAL REVENUE YEAR ENDED JUNE 30, 2007 SCHEDULE "3" AGENCY/FUNDING GRANT Museum and Library Services, Institute of Through Board of Regents of the University System of Georgia Library Services and Technology Act State Library Program GOVERNMENTAL FUND TYPE GENERAL FUND $ ====2=6==,4=3=9 See notes to the basic financial statements. - 19 - THOMAS COUNTY PUBLIC LIBRARY SYSTEM SCHEDULE OF LOCAL REVENUE YEAR ENDED JUNE 30, 2007 SCHEDULE "4" LOCAL SOURCES County Government Board of Commissioners Thomas County GOVERNMENTAL FUND TYPES CAPITAL GENERAL PROJECTS FUND FUND TOTAL $ 795 947 $ 55 552 $ =====8=5=1=4=99= See notes to the basic financial statements. - 20- THOMAS COUNTY PUBLIC LIBRARY SYSTEM SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2007 SCHEDULE "5" NAME Barker, Beckwith, Brooks, Cook, Cooper, Crawford, Currie, Chrille, Depew, Epps, Floyd, Godwin, Goodin, Gross, Hagan, Hardman, Hemphill, Jackson, Jones, Jones, Kelly, Karier, Lewis, Love, McCollough, McCoy, McCoy, McGuire, Mitchell, Monroe, Moore, Jr., Ramsey, Redker, Smith, Summers, Tillinghast, Vainer, Walker, Wray, NickiC. Betty L. DollyM. Janita F. Joseph Robert L. Staci D. Hailey A. Betty L. Nikoilya Y. Rebecca A. Connie B. Hilda S. Mary J. Samantha L. Barbara M. Revonda M. Shannon L. Angela J. Donna S. Joseph E. Dolores S. Gloria J. Stacey L. Kristy B. Latasha N. Trish A. Angela B. Perida A. Janet Joseph Deanna P. Amanda I. Patricia E. Keesha C. Nancy L. Charles E. Sharon M. Judy F. Totals per Report TITLE CATEGORY Reference Assistant Branch Assistant Branch Manager Branch Manager Maintenance Circulation Assistant Reference Assistant Reference Assistant Mending Assistant Reference Assistant Circulation Assistant Circulation Assistant Adm AssUBookkeeper Library Assistant Branch Assistant Processing Assistant Branch Manager Branch Assistant Children's Assistant Processing Manager Children's Assistant Library Assistant Asst Bookkeeper Children's Manager Branch Assistant Reference Assistant Branch Manager Branch Mgr/ILL Mgr Reference Manager Library Assistant Systems Administrator Outreach Coordinator Children's Manager Branch Assistant Senior Librarian Director Circulation Assistant Circulation Manager Library Assistant SALARIES TRAVEL $ 1,862 6,538 13,823 $ 134 17,316 60 889 10,188 756 1,363 3,469 938 2,963 8,717 30,275 837 947 3,896 17,866 478 9,443 206 5,333 4,684 20,582 385 602 1,587 18,575 533 11,256 16,605 60 17,212 21,445 241 25,699 241 27,914 5,426 30,087 437 27,092 239 17,212 57 5,016 13 47,950 558 70,651 2,560 1,818 20,784 59 2 770 $ 531549 $======7=0=9=8 See notes to the basic financial statements. - 21 - SECTION II FINDINGS AND QUESTIONED COSTS THOMAS COUNTY PUBLIC LIBRARY SYSTEM SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported.