ATHENS REGIONAL LIBRARY ATHENS, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS Russell W. Hinton State Auditor ATHENS REGIONAL LIBRARY - 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 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 BALANCE GOVERNMENTAL FUNDS 5 F RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES 6 G NOTES TO THE BASIC FINANCIAL STATEMENTS 7 SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND 19 ATHENS REGIONAL LIBRARY - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION SCHEDULES OF REVENUE 2 STATE 20 3 FEDERAL 21 4 LOCAL 23 5 SCHEDULE OF SALARIES AND TRAVEL 24 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 August 9, 2007 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the Board of Regents of the University System of Georgia and Director and Members of the Athens Regional Library Board INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Ladies and Gentlemen: We have audited the accompanying financial statements ofthe governmental activities and the major funds (Exhibits A through G) of the Athens Regional Library as of and for the year ended June 30, 2006, which collectively comprise the Library's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Athens Regional Library's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major funds of the Athens Regional Library, as of June 30, 2006, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. 2006ARL-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 19 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 ofinquiries ofmanagement 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 Athens Regional Library's basic financial statements. The accompanying supplementary information which consist of Schedules 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, ~-~-h Ru sell W. Hinton, CPA, CGFM State Auditor RWH:as 2006ARL-41 ATHENS REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 Management's discussion and analysis of the financial performance of the Athens Regional Library System (ARLS) is intended to provide the reader of these financial statements with an overview of the Library System's financial activities for the year ended June 30, 2006. Overview of The Athens Regional Library System A regional library system by definition is a group of county library boards located in multijurisdictional political areas with an operating agreement to provide centralized management, ordering of materials, financial responsibilities, and professional library services under the authority of a regional library board. Member library boards of the Athens Regional Library System are Athens-Clarke, Franklin, Madison, Oconee and Oglethorpe Counties. Government funding is received from each of the counties, several boards of education and some cities within each county. The accounting records of the Athens Regional Library System are maintained in a manner to allow each local board to receive a detailed statement of net assets and fund financial statements specific to its funding level. Regional dues are allocated to a separate fund to cover those expenditures that are incurred by the regional offices. The following reports combine all operating information into one government-wide financial statement. Financial Highlights for 2006 * End of Year June Rebate/Supplemental System Services Grant of $24,165 received from Georgia Public Library Services. Funds were used to buy materials, needed supplies and computer software for the region. * Received Library Services and Technology Act grant funds in the amount of $6,650 for 2006 Vacation Reading Program, $2,000 for the Network Security Grant and $5,700 for a Spanish Language Outreach Grant. * Continued Year 2 of the Institute of Library and Museum Sciences grant for Pinewoods Hispanic Library. This IMLS National Leadership Grant award was $70,421. * The Endowment continues its exclusive support for the Athens-Clarke County with over $589,679 in money market funds and investments. * General revenues were $2,262,313 and accounted for 65% of total revenue for fiscal year 2006. Program specific revenues in the form of charges for services and grants and contributions were $1,256,216. Expenses related to governmental activities were $3,725,415. - 1- ATHENS REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Library System's basic financial statements. The Library System's basic financial statements comprise three parts: government-wide financial statements, fund financial statements, and notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the Library System's finances, in a manner similar to a private-sector business by combining all funds into one reporting entity. By combining all funds the reader, can, at a glance, answer the question "How did we do financially during 2006?" The statement of net assets presents information on all of the Library System's assets and liabilities, with the difference between the two 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 based on the activities specific to a Library System. The activities (or functions) of the Library System include Public Service, Technical Services, Support Services, Maintenance and Operations and Information Technology. All revenues and expenditures are reported as soon as the underlying event occurs, regardless of when the cash will be affected. Thus, revenues and expenditures are reported in this statement for some items that will result in cash flows in future fiscal periods. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been separated for specific activities or objectives. The Library System uses fund accounting to ensure compliance with finance-related legal requirements. All of the funds of the Library System are considered governmental funds. Governmental funds are used to account for essentially the same functions reported in the government-wide financial statements. However, unlike the government-wide financial statements, fund financial statements focus on how money flows into and out of those funds and the balances left at year-end for spending in future periods. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Library System's general government operations and the basic services it provides. - ii - ATHENS REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 Financial Analysis Government-wide The Summary of the Regional Library System's Net Assets provides the perspective of the Library System as a whole. Table 1 provides a summary of the Library System's net assets for fiscal year 2006 compared to fiscal year 2005. Table 1 Net Assets Governmental Activities Fiscal Fiscal Year 2006 Year 2005 Assets Current and Other Assets Inventories Capital Assets, (Net of Depreciation) Accounts Receivable - Local Accounts Receivable - Federal Accounts Receivable - Other $ 1,204,788 14,233 3,091,463 150,171 75,046 38,493 $ 1,295,493 14,233 3,302,471 82,554 65,627 1 843 Total Assets $ 4,574,194 $ 4,762,221 Liabilities Accounts Payable Salaries Payable Long-Term Liabilities Due Within One Year Due in More Than One Year $ 4,626 6,237 $ 146,027 11,924 119,371 8,858 Total Liabilities $ 157,951 $ 139,092 Net Assets Invested in Capital Assets Restricted Unrestricted $ 3,091,463 589,679 735,101 $ 3,302,471 568,280 752,378 Total Net Assets $ 4,416,243 $ 4,623,129 Total Liabilities and Net Assets $ 4,574,194 $ 4,762,221 Net assets serve as an indicator of an entity's financial position. The Regional Library System's unrestricted net assets at June 30, 2006, were approximately $0.4 million. The decrease in Capital Assets (net of depreciation) is primarily due to the overstatement of the value of the materials collection which was adjusted during fiscal year 2006 to reflect accurate figures. - 111 - ATHENS REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 Table 2 shows the changes in net assets for fiscal year 2006 compared to the changes in net assets for fiscal year 2005. Table 2 Change in .Net Assets Revenues Pro~am Revenues: C arges for Services Operating Grants and Contributions Governmental Activities Fiscal Fiscal Year2006 Year 2005 $ 180,654 $ 120752562 165,512 9602677 Total Program Revenues $ 122562216 $ 121262189 General Revenues: Allotments from Participating Governments $ 2,162,298 Interest 41,793 Miscellaneous 582222 $ 2,088,070 20,106 762182 Total General Revenues $ 222622313 $ 221842358 Total Revenues $ 325182529 $ 323102547 ExCenditures urrent Public Service Technical Services Support Services Maintenance and Operations Information Technology Total Expenditures Change in Net Assets Net Assets, Beginning of Year Net Assets, End of Year $ 2,586,489 232,802 420,664 173,400 3122060 $ 32725,415 $ -206,886 426232129 $ 4,416,243 $ 2,269,758 243,327 511,604 156,680 2852058 $ 3,466,427 $ -155,880 427792009 $ 4,623.129 The Regional Library System's Funds The Regional Library System's Funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues of $3.5 million and expenditures of $3.4 million. The Regional Library System was able to meet current costs. General Fund Budgeting Highlights The Regional Library System's budget is prepared according to Georgia Law. The Library Board approves an annual budget in June for the following fiscal year that begins in July. The original budgeted expenditures were $3.5 million and were not significantly amended during the year. - IV - ATHENS REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 Capital Assets and Debt Administration At the end of fiscal year 2006, the Library had $3 .1 million invested in capital assets, all in governmental activities. Table 3, shown below, indicates balances in capital assets at June 30, 2006, compared with June 30, 2005 balances. Table 3 Capital Assets (Net of Depreciation) Governmental Activities Fiscal Fiscal Year 2006 Year 2005 Equipment Library Collections Total Capital Assets $ 105,938 2,985,525 $ 3,091,463 $ 82,272 3,220,199 $ 3,302,471 Debt At fiscal year end June 30, 2006, the Library had $0.1 million in compensated absences outstanding. Table 4, shown below, summarizes balances in compensated absences at June 30, 2006, compared with June 30, 2005 balances. Compensated Absences Table 4 Debt at June 30 Governmental Activities Fiscal Fiscal Year 2006 Year 2005 $====!:12=8-,2=2~9 Economic Factors and Next Year's Budget The Library's financial position for next year is expected to remain stable. State Grant Funds are expected to increase due to State Legislative approvals for increases in salaries and materials. Local funding agencies are expected to match at least the level of funding from the previous year. There are no known facts, decisions, or conditions that are expected to have a significant effect on the Library's financial position (net assets) or results of operations (revenues, expenses, and other changes in net assets). -v- ATHENS REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 Requests for Information This financial report is designed to provide a general overview of the Regional Library System's finances and to show the Library System's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Mamie Fike Simonds, Business Manager of the Athens Regional Library System, Athens, Georgia. You may email your questions to msimonds@athenslibrary.org. - VI - ATHENS REGIONAL LIBRARY ATHENS REGIONAL LIBRARY STATEMENT OF NET ASSETS JUNE 30, 2006 ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Local Federal Government Other Inventories Capital Assets Equipment Library Collections Less: Accumulated Depreciation Total Assets LIABILITIES Long-Term Liabilities Due Within One Year Due in More Than One Year Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for Endowment Fund Unrestricted Total Net Assets Total Liabilities and Net Assets EXHIBIT"A" GOVERNMENTAL ACTIVITIES $ 386,487 818,301 150,171 75,046 38,493 14,233 294,016 9,378,682 -6,581,235 $ =======4=5=7=4=1=9=4= $ 146,027 11 924 $ 157 951 $ 3,091,463 589,679 735 101 $ 4 416,243 $ =======4=5=7=4=1=9=4= The notes to the basic financial statements are an integral part of this statement. -1- ATHENS REGIONAL LIBRARY STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2006 EXHIBIT"B" EXPENSES PROGRAM REVENUES OPERATING CHARGES FOR GRANTS AND SERVICES CONTRIBUTIONS NET (EXPENSES) REVENUES AND CHANGES IN NET ASSETS GOVERNMENTAL ACTIVITIES Current Services Public Services Technical Services Support Services Maintenance and Operations Information Technology $ 2,586,489 $ 232,802 420,664 173,400 312,060 180,654 $ 789,785 $ 178,297 107,480 -1,616,050 -232,802 -242,367 -65,920 -312 060 Total Governmental Activities $ 3,725,415 $ General Revenues Allotments from Participating Governments Investment Earnings Miscellaneous 180 654 $ ======1=,0=75=,562 $ $ -2,469,199 2,162,298 41,793 58,222 Total General Revenues $ _ _ _2=,2~6-2,~3~13~ Change in Net Assets $ -206,886 Net Assets - Beginning of Year 4,623,129 Net Assets - End of Year $ --==4..,4.,.1,..6.2..4,..3.,, The notes to the basic financial statements are an integral part of this statement. -2- ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Local Federal Government Other Inventories Total Assets FUND BALANCE Reserved for: For Inventories for Resale For Endowment Unreserved Undesignated Reported in: General Fund Total Fund Balance ATHENS REGIONAL LIBRARY BALANCE SHEET GOVERNMENTAL FUND JUNE 30, 2006 EXHIBIT"C" GENERAL FUND SPECIAL REVENUE FUND ATHENS-CLARKE COUNTY ENDOWMENT FUND, INCORPORATED TOTAL $ 369,664 $ 245,445 150,171 75,046 38,493 14,233 16,823 $ 572,856 386,487 818,301 150,171 75,046 38,493 14,233 $ 893,052 $ 589 679 $ =====1A...8...2....,al.3..1= $ 14,233 $ 878,819 $ 893,052 $ $ 589,679 14,233 589,679 878,819 589 679 $ ====1=A=82=a=73=1= The notes to the basic financial statements are an integral part of this statement. -3- ATHENS REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUND BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30, 2006 EXHIBIT"D" Total Fund Balance - Governmental Fund (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 Long-Term Liabilities are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of: Compensated Absences $ 294,016 9,378,682 -6,581,235 1,482,731 3,091,463 -157,951 Net Assets of Governmental Activities (Exhibit "A") $ ==4=,4=16=,2=4=3 The notes to the basic financial statements are an integral part of this statement. -4- ATHENS REGIONAL LIBRARY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUND YEAR ENDED JUNE 30, 2006 EXHIBIT "E" REVENUES Local Funds State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current Public Services Technical Services Support Services Maintenance and Operations Information Technology Total Expenditures Net Change in Fund Balance Fund Balance - Beginning (Restated) Fund Balance - Ending GENERAL FUND SPECIAL REVENUE FUND ATHENS-CLARKE COUNTY ENDOWMENT FUND, INCORPORATED TOTAL $ 2,162,298 990,791 84,771 180,654 16,043 $ 56147 $ 3,490,704 $ $ 25,750 2075 27 825 $ 2,162,298 990,791 84,771 180,654 41,793 58,222 3,518,529 $ 2,307,961 $ 232,802 450,928 174,508 312,060 $ 3,478,259 $ $ 12,445 $ 880,607 $ 893,052 $ 6,426 $ 6426 $ 21,399 $ 568,280 2,314,387 232,802 450,928 174,508 312,060 3,484,685 33,844 1,448,887 589,679 $ =.,.;,,,1,4=8=2=7,=31.... The notes to the basic financial statements are an integral part of this statement. -5- ATHENS REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES JUNE 30, 2006 EXHIBIT"F" Total Net Change in Fund Balance - Governmental Fund (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 items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of: Increase in Compensated Absences Change in Net Assets of Governmental Activities (Exhibit "B") $ 33,844 $ 306,453 -517 461 -211,008 -29,722 $==-..,20=6=,8=86= The notes to the basic financial statements are an integral part of this statement. -6- ATHENS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006 EXHIBIT"G" Note 1: DESCRIPTION OF LIBRARY AND REPORTING ENTITY REPORTING ENTITY The Athens Regional 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 is comprised of 16 members which are also trustees ofthe member library which appointed them. The Library Board membership consists of4 members appointed from the AthensClarke County Library Board, 3 members appointed from the Franklin County Library Board, 3 members appointed from the Madison County Library Board, 3 members appointed from the Oconee County Library Board and 3 members appointed from the Oglethorpe County Library Board. 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 ofGeorgia for State and Federal flow through funding. Membership in the Library and participation in library services is at the discretion ofeach 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. The Athens Regional Library is therefore determined to be a joint venture. Blended Component Unit The Athens-Clarke County Endowment Fund, Inc. was organized exclusively for the charitable and educational purpose of establishing and maintaining an endowment fund for the Athens-Clarke County Library. The Endowment will raise funds from public donations and fundraising activities to establish an investment corpus. Income from the corpus will be used to either purchase materials for the Library's collection or make grants to the Library for the exclusive purpose ofpurchasing materials. The financial statements of the endowment fund have been blended with the Library as a Special Revenue Fund. 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 Athens Regional Library. Library-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe 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. -7- ATHENS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006 EXHIBIT "G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Statement ofActivities 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 of the Library's programs, such as office and maintenance personnel and accounting) are not allocated to programs. 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 fund: 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. Special Revenue Fund - Athens-Clarke County Endowment Fund, Incorporated for revenue sources legally restricted to expenditures for charitable and educational purposes for AthensClarke County Library. 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. -8- ATHENS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006 EXHIBIT"G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 except for compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. The Library funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the Library's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. RESTATEMENT OF PRIOR YEAR NET ASSETS For fiscal year 2006, the Library changed the presentation ofreporting its blended component unit (Athens-Clarke County Endowment Fund, Incorporated) general fund activity within the primary governments general fund to a special revenue fund in accordance with generally accepted accounting principles. CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the Library to deposit its funds in one or more solvent banks or insured Federal savings and loan associations. INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the Library in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Library to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (1) Obligations issued by the State of Georgia or by other states, -9- ATHENS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006 EXHIBIT"G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (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. RECEIVABLES Receivables consist ofamounts due from grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed 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 basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. INVENTORIES Inventories of goods for resale are valued at cost and are recorded as expenditures at the time of purchase. The inventories reported on the balance sheet are equally offset by a reservation of fund balance which indicates that this amount does not constitute "available spendable resources" even though they are a component of net current assets. 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 ofthe assets is not capitalized. Depreciation is computed using the straight-line method. - 10- ATHENS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006 EXHIBIT"G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Capitalization thresholds and estimated useful lives of capital assets reported in the Library-wide statements are as follows: Capitalization Policy Estimated Useful Life Equipment Library Collections $ 5,000 10 years All 10 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. FUND BALANCES RESERVED Reserves represent those portions of fund balance equity that are legally segregated for a specific future use. The Athens-Clarke County Library Endowment Fund, Inc. was organized exclusively for the charitable and educational purpose of establishing and maintaining an endowment fund for the Athens-Clarke County Library. Income from the corpus will be used to either purchase materials for the Library's collection or make grants to the Library for the exclusive purpose of purchasing materials. 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 ofsuch 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. At June 30, $2,896 of deposits were not secured by surety bond, insurance or collateral as specified above. The Library is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the Library's deposits. 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, - 11 - ATHENS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006 EXHIBIT "G" Note 3: DEPOSITS AND INVESTMENTS (3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or ofthe State of Georgia, (4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities 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 of the State of Georgia, and (7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. CATEGORIZATION OF DEPOSITS At June 30, 2006, the bank balances were $811,487. The amounts of the total bank balances are classified into four categories of custodial credit risk: Category 1 - Cash that is insured (e.g., Federal Deposit Insurance) or collateralized with securities held by the Library or by the Library's agent in the Library's name. Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Library's name. Category 3 - Cash collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Library's name. Category 4 - Uncollateralized. The Library's deposits are classified by custodial credit risk category at June 30, 2006, as follows: Custodial Credit Risk Category Bank Balance 1 $ 317,597 2 18,161 3 475,729 4 0 Total $===="8=!=11""".4=="8==7 - 12 - ATHENS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006 EXHIBIT"G" Note 3: DEPOSITS AND INVESTMENTS CATEGORIZATION OF INVESTMENTS Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure ofthe counterparty to a transaction, the Library will not be able to recover the value ofthe investment or collateral securities that are in the possession of an outside party. The Library does not have a formal policy for managing custodial credit risk. At June 30, 2006, the carrying value ofthe Library's investments was $223,154 which is materially the same as fair value. Fair value is based on quoted market prices, unless otherwise noted. These investments consist ofU. S. Treasury Money Market Mutual Funds and Equity Mutual Funds (openend mutual funds) which are not required to be classified by categories of custodial credit risk. Type of Investment Carrying Amount Fair Value Other Investments Equity Mutual Funds Equity Securities - Domestic $ 219,376 $ 219,376 3 778 2,732 Total Investments $ 223,154 $==-2-22---10-8 Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Library does not have a formal policy for managing credit quality risk. The Equity Mutual Fund does not have a credit quality rating. Note 4: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year: - 13 - ATHENS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006 EXHIBIT "G" Note 4: CAPITAL ASSETS Balances July 1, 2005 Increases Decreases Balances June 30. 2006 Governmental Activities Capital Assets Being Depreciated Equipment Library Collections $ 254,571 $ 9,465,702 39,445 267,008 $ $ 294,016 354,028 9,378,682 Less Accumulated Depreciation for: Equipment Library Collections 172,299 6,245,503 15,779 501,682 354,028 188,078 6,393,157 Governmental Activity Capital Assets - Net $ 31302,~:Zl $ -211,008 $ 0 $ 3,021,463 Current year depreciation expense by function is as follows: Public Services Support Services Maintenance and Operations $ 509,388 3,236 4 837 Note 5: RESTRICTED ASSETS $==5==17=-=.4===6==1 Athens-Clarke County Endowment Fund, Inc. funds and contributions from donors restricted for the purchase ofmaterials for the Athens-Clarke County Library are reported as restricted assets in the Statement of Net Assets because their use is limited by applicable contractual agreements. Restricted Assets at June 30, 2006, were as follows: Restricted Cash and Cash Equivalents Restricted Investments Special Revenue Fund $ 16,823 $ 572,856 Note 6: 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 ofloss associated with torts, assets, errors or omissions and job related illness or injuries to employees. The Library has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Library's insurance coverage in any of the past three years. - 14 - ATHENS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006 EXHIBIT"G" Note 6: RISK MANAGEMENT The Library has elected to self-insure for all losses related to acts of God. The Library has not experienced any losses related to this risk in the past three years. The Library is self-insured with regard to unemployment compensation claims. The Library accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: Beginning of Year Liability Claims and Changes in Estimates Claims Paid EndofYear Liability 2005 2006 $ 0 $ 0 $ 0 $ 0 $ 0 $ 1 578 $ 1 578 $ 0 The Library has purchased a surety bond to provide additional insurance coverage as follows: Position Covered Amount All Employees $ 500,000 Note7: LONG-TERMDEBT COMPENSATED ABSENCES Compensated absences represent obligations ofthe Library relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. The Library uses the vesting method to compute compensated absences. The changes in Long-Term Debt during the fiscal year ended June 30, 2006, were as follows: - 15 - ATHENS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006 EXHIBIT "G" Note 7: LONG-TERM DEBT Governmental Funds Compensated Absences Balance July 1, 2005 $ 128,229 Additions Annual Leave Earned 146,027 Deductions Annual Leave Utilized 116,305 Balance June 30, 2006 Portion of Long-Term Debt Due within One Year $=====1-57,,,,.,,9=="5==1 $_ _14_6,~02_7 Note 8: RELATED PARTY TRANSACTIONS Mrs. Pam Blake, Administrative Assistant for the Athens Regional Library, is married to Mr. Dennis Blake, the Library's insurance agent. For the year under review, the Library's insurance policies were handled by Mr. Blake and his employer, The Boswell Group. Mr. Todd Emily, President ofthe Athens-Clarke County Endowment Fund during the fiscal year, is an investment advisor for Edward Jones. Edward Jones handles the Investment Portfolio for the Endowment Fund ofthe Library. Note 9: 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. - 16 - ATHENS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2006 EXHIBIT "G" Note 9: 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 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 2006 2005 2004 100% 100% 100% $ 162,703 $ 161,095 $ 156,802 - 17 - (This page left intentionally blank) ATHENS REGIONAL LIBRARY GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2006 SCHEDULE "1" REVENUES Local Funds State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current Public Services Technical Services Support Services Maintenance and Operations Information Technology Total Expenditures Net Change in Fund Balance Fund Balance - Beginning NONAPPROPRIATED BUDGETS ORIGINAL (1) FINAL (1) ACTUAL AMOUNTS $ 2,207,271 $ 2,207,271 $ 2,162,298 954,384 954,384 990,791 63,800 63,800 84,771 258,915 258,915 180,654 10,000 10,000 16,043 56147 $ 3,494,370 $ 3,494,370 $ 3,490,704 $ 2,298,795 $ 2,298,795 $ 2,307,961 232,035 232,035 232,802 631,293 631,293 450,928 175,126 175,126 174,508 157 121 157 121 312,060 $ 3,494,370 $ 3,494,370 $ 3,478,259 $ 0 $ 0 $ 12,445 797 921 797 921 880,607 Fund Balance - Ending $ 797 921 $ 797,921 $ =====8=9.,.3,=05..2. = Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the blended component unit. 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. -19- ATHENS REGIONAL LIBRARY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2006 AGENCY/FUNDING GRANTS Board of Regents of the University System of Georgia Office of Public Library Services Salaries Library Materials Maintenance and Operations Repairs and Maintenance Talking Book Centers SCHEDULE "2" GOVERNMENTAL FUND TYPE GENERAL FUND $ 632,729 72,285 107,480 36,408 141 889 $ ====99..,.0=7,=9===1 See notes to the basic financial statements. - 20 - ATHENS REGIONAL LIBRARY SCHEDULE OF FEDERAL REVENUE YEAR ENDED JUNE 30, 2006 AGENCY/FUNDING GRANTS Museum and Library Services, Institute of Through Board of Regents of the University System of Georgia Library Services and Technology Act State Library Program 2004 IMLS National Leadership Grant SCHEDULE "3" GOVERNMENTAL FUND TYPE GENERAL FUND $ 14,350 70 421 $ ======8=4 =77=1 See notes to the basic financial statements. - 21 - (This page left intentionally blank) ATHENS REGIONAL LIBRARY SCHEDULE OF LOCAL REVENUE YEAR ENDED JUNE 30, 2006 LOCAL SOURCES Boards of Education Franklin County Oconee County Oglethorpe County City Governments Arnoldsville Bogart Canon Carnesville Franklin Springs Lavonia Lexington Maxey Royston Winterville County Governments Boards of Commissioners Athens-Clarke County Franklin County Madison County Oconee County Oglethorpe County SCHEDULE "4" GOVERNMENTAL FUND TYPE GENERAL FUND $ 27,000 30,000 15,000 100 12,000 1,200 1,750 1,500 8,000 500 200 15,500 12,000 1,525,036 24,000 154,929 287,083 46500 $ =====2,==1.6.2.==,2=9=8 See notes to the basic financial statements. - 23- ATHENS REGIONAL LIBRARY SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2006 SCHEDULE "5" NAME ALEXANDER, GAYLE B. ALKE, ROSALYN PERKINS AMES, KATHRYN S. ANDERSON 11, RAYMOND V. ANDERSON, MICHELLE M. ARCHIBALD, WRENFORD N. ATWOOD, JUDY J. AUWARTER, CLARE AWADALLA, NICOL RENEE AZUEVO, JOHN ALEXANDER BACHARACH, SUZANNE B. BAK, TODD EDWARD BALLARD, REBECCA ELIZABETH BANKS, LINDA L. BASINGER, PHILIP E. BEST, GLENDA S. BETTINI, ALICE E. BILLINGS, JESSICA L. BLAKE, PHYLLIS M. BLASINGAME, AMY MARIE BLEVINS, ALISHA MARIE BOBILIN, ERIK VICTOR BOWDEN, HOLLY L. BOWER, ERIN COLLEEN BOYLAN, SAMANTHA MICHELLE BRAGG, DORIS MARIE BRAGG, JAMIE M. BROOKS, PHYLLIS M. BURROUGHS, JANET A. BUSH, EVAN MICHAEL CAMPBELL, JENNIFER LYNN CANTRELL, DORIS 0. CARLAN, MARSHA D. CARTER, LAURA W. CARTER, SARAS. CASTENGERA, VIVAN CASTLE, KIMBERLY ANNE CHANDLER, STACEY LEIGH CHANDLER, WESLEY C. CHITWOOD, ROSEMARY D. CLAPP, JANET E. CLAYTOR, ALISA YVONNE CODY, TOMMY L. COYNE, CARMEN ASHLEY CURRIE, NANCY L. DALTON, MAXINE A. DANIEL, DOROTHY D. DEAL, MARCUS GREGORY DEGRASSE, SUZANNE M. DEROSHIA, ELIZABETH ASHLEY DICKSON, GREG DIETZ, CHRISTINE H. DINGLER, NANCY F. DINGUS, LAYLA CERESE DOUGLAS, KAREN W. DRIVER, MARY ANNE DUARTE, ENRIQUETA DUARTE, MARIA GUADALUPE TITLE CATEGORY Library Assistant Library Assistant Director Security Guard Library Assistant Computer Technician Librarian Librarian Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Security Guard Library Assistant Library Assistant Library Assistant Admin Assistant Library Assistant Library Assistant Library Assistant Librarian Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Branch Manager Library Assistant Library Assistant Library Assistant Library Assistant Librarian Library Assistant Library Assistant Library Assistant Branch Manager Courier Branch Manager Library Assistant Library Assistant Custodian Library Assistant Library Assistant Library Assistant Library Assistant Computer Technician Branch Manager Library Assistant Security Guard Library Assistant Library Assistant Library Assistant Computer Technician Librarian Library Assistant Library Assistant - 24 - SALARIES $ 6,922 4,404 89,617 $ 4,582 759 35,222 71,317 71,317 333 753 1,799 2,694 3,936 784 108 6,641 24,102 7,374 30,980 421 808 7,325 52,157 469 411 7,710 1,289 9,120 26,669 16,672 518 3,786 21,201 65,832 25,834 11,075 711 9,635 4,576 15,140 10,345 23,000 1,800 861 66 434 23,000 46,350 29,489 22,500 5,784 6,643 239 5,984 22,000 53,300 742 8,200 TRAVEL 3,288 590 619 25 111 95 26 13 48 114 34 24 8 ATHENS REGIONAL LIBRARY SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2006 SCHEDULE "5" NAME DUNN, TARA LYNN ELLIOTT, BETH C. ELSNER, JACQUELINE C. FAUST, TWANNA B. FAVOLE, CHRISTINE MARIE FIRESTONE, GAIL C. FLAKE, KATHRYN SUZANNE FLEMING, ALFREDA W. FLOYD, ROBIN D. FREEMAN, LIZBETH P. GENTRY, MELISSA D. GERSON, TAMRA FRIED GIBSON, JAMES GIBSON, JOAN M. GIESZLER, CRISTINE P. GILMOUR, NATHAN GOLDBERG.DEBORAH GORDON, JANICE MARIE GORDON, MABLE LAVERN GRAHAM,SANDRALYNN GRAHAM, THERESA L. HARDY, SARAH L. HARRISON, DOROTHY D. HARTEL, MARY JEAN HATZIOS, ADAK. HAWKES, MONICA R. HAYEK, MATTHEW W. HAYNES, GLORIA K. HENZEL, JUDY HULSEY HIGTON, JANETH. HITCHCOCK, ANNEMARIE HOOVER, LUVERNE E. HUMPHRIES, CAROL JANE HUNTER, SARAH N. IVEY, JENNIFER F. JAMESON, CYNTHIA C. JEWELL, PRENTICE L. JOHNSON, DORIS K. JOHNSON, JESSIE L. JONES, EMMA L. KASTELLEC, MIKE ANDREW KEAM, PAULA DERELLE KHUWATSAMRIT, NATAYA KNAUFT, EVELYN ANDERSON KNIGHT, LARA R. KRAAZ, JAYMI LYNN KRUSKAMP, HELEN MARY LECROY, EMMA L. LEFFERT, KIMBERLY B. LESTER, MARY LOU LINNEMANN, MARY PALMER LOFTIS, DEANNA C. LOGAN, KRISTEN KERI LORD, THOMAS RAY MARKOV, CLAUDIA L. MARKOV, STEPHANIE LOUISE MAZZAFERRO, SARAH BETH MCLEAN, SARAH M. TITLE CATEGORY Library Assistant Library Assistant Librarian Library Assistant Library Assistant Librarian Library Assistant Purchasing ILL Security Guard Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Librarian Library Assistant Library Assistant SNLC Manager Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Custodian Library Assistant Library Assistant Custodian Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Branch Manager Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant - 25 - SALARIES TRAVEL $ 1,513 732 62,579 $ 261 26,993 2,294 56,201 262 161 28,719 11,509 4,072 15 882 15,600 68 3,846 4,042 4,190 3,870 1,568 302 28,987 2,277 22,287 29,705 5,540 57,269 406 13 24,459 22,503 477 25,600 36 2,837 40 198 4,733 5,752 6,520 6,744 5,902 150 26,314 27,856 224 3,997 21 17,973 7,077 22,880 1,741 1,384 7,029 784 891 363 15,140 85 7,598 14,974 12,390 69 2,501 2,382 27,379 528 618 1,624 25 ATHENS REGIONAL LIBRARY SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2006 SCHEDULE "5" NAME MILFORD, MEGAN ROSE MILFORD, SARAH DEVON MILLER, AMY LEIGH MONK, JONATHAN D. MOORE, VICKI C. MORENO, CELIA L. MUHAMMAD, ZAYN A. MUMAH, CARRIE ANN NEWTON, EMILY A. NICKELS, ROBERT R. OBERST, ANIKA OVERSTREET.STACEY PADGETT, DANIEL C. PAINTER, ROBERT D. PARROTT, LAURA PATEL, DIVA A. PATEL, PRIYAA. PEEPLES, LAUREN KAYLA PEEPLES, SUSAN W. PIERCE-TOMLIN, CHRISTINA MARIE POPE, GAIL R. PRESCOTT, KATIE ELIZABETH SANDIFORD, REBECCA J. SCHMIDT, MARION P. SCHROEDER, MARILYN ANITA SCOTT, TIMOTHY D. SEIGLER, PHILLIP E. SHACKLEFORD, MARTHA ANNE SHEPARD, KATHRYN J. SIMONDS, MAMIE FIKE SIMS, ANNETTE E. SLABODA, DONNA DOLORES SLABODA,LEVIJESSE SMITH, CLARA LOUISE STRICKLAND-MERRITT, MIRIAM SUMPTER, CHUTNEY KELLANE SWEENEY, RYAN P. TATE, WILLIAM JEFFERSON TAYLOR, MATHEWV. THOMPSON, KATHLEEN HILL THRASHER, DEBORAH SIMS TUCKER, LINDA H. TUMEN, JORGE A. UHALL, MICHAEL BENJAMIN UPSHAW, ROSHAE S. VICENTE, MIGUEL J. VON WALDNER, CHRISTINA ALLISON WARD, THERESA M. WATKINS, MILDRED C. WEBBER, GEORGE F. WEBSTER, BENJAMIN A. WEDDLE, KRISTEN L. WHITEHEAD, DONALD EARL WILKERSON, AMER R. WILLIAMS, DIANE T. WILLIAMS, ERIN ELIZABETH WILLIAMS, JENNIFER S. WILSON, KATHERINE E. TITLE CATEGORY Library Assistant $ Library Assistant Volunteer Coord, Store Manager Computer Technician Library Assistant Library Assistant Library Assistant PR Intern Library Assistant Library Assistant Library Assistant Pubic Relations Manager Floater Courier Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Librarian Security Guard Library Assistant Library Assistant Library Assistant Business Manager Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Librarian Library Assistant Library Assistant Branch Manager Library Assistant Library Assistant Library Assistant Library Assistant Branch Manager Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Library Assistant Librarian Library Assistant Library Assistant Library Assistant SALARIES 5,025 120 29,217 $ 33,000 7,278 56 2,365 518 3,868 4,974 1,036 29,815 519 1,662 12,174 1,240 2,911 4,123 252 1,073 3,608 3,329 2,633 3,234 13,240 8,902 25,300 112 1,178 48,500 4,876 602 906 1,414 961 788 24 44,001 775 1,Q70 57,488 359 304 5,809 1,039 32,000 364 1,617 5,361 24,000 2,532 1,276 279 11,107 33,800 4,997 84 1,604 -26- TRAVEL 1,092 32 596 NAME WILSON, RUBY WILSON, RYAN JAMES WINKLER, MARTHA J. WITZLER, RYLAND P. WRIGHT, JANET WRIGHT, LASKISHA Y. WRIGHT, NATALIE D. Accruals June 30, 2005 Totals per Report ATHENS REGIONAL LIBRARY SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2006 SCHEDULE "5" TITLE CATEGORY Library Assistant Library Assistant Library Assistant Library Assistant Librarian Branch Manager Library Assistant SALARIES TRAVEL $ 910 124 1,493 2,458 2,802 11,312 6 338 $ 2,106,160 $ 8,392 -6 237 $ 2,099,923 $ =======8=3=9=2 See notes to the basis financial statements. - 27 - SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS ATHENS REGIONAL LIBRARY AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-6292-04-01 FS-6292-04-02 FS-6292-04-03 FS-6292-04-04 FS-6292-05-01 FS-6292-05-02 FS-6292-05-03 FS-6292-05-04 FS-6292-05-05 Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented CORRECTIVE ACTION/RESPONSES CASH AND CASH EQUIVALENTS INVENTORIES REVENUES/RECEIVABLES/DISBURSEMENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number: FS-6292-05-02 We concur with this finding. We have hired additional staffto do the bank reconciliations in a timely manner during fiscal year 2007. Interest postings will be done timely. The "stale" outstanding checks will be reviewed and removed from the general ledger during fiscal year 2007. Investment interest will be posted timely during fiscal year 2007 with additional needed staff. We have corrected the inventory problems by having a Library Store inventory done in June of 2007. They will continue on a yearly basis to correct this finding. Accounts Receivable will be reviewed properly during fiscal year 2007. The incorrect receivables of$21,200 were set up by posting in an accounting software error. Steps to contact Fundware and correct this problem will be done during fiscal year 2007. The $150,024 expenditures were the IMLS year one expenditures which were received during fiscal year 2006 thereby zeroing out the receivable. The Accounts Payable set up incorrectly during fiscal year 2005 was system generated by the accounting software. We have contacted the software company to correct this problem during fiscal year 2007. - 1- ATHENS REGIONAL LIBRARY AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES CASH AND CASH EQUIVALENTS INVENTORIES REVENUES/RECEIVABLES/DISBURSEMENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number: FS-6292-05-02 The General Ledger was out of balance during fiscal year 2004 due to the accounting software error. The trial balance was in balance during the course of fieldwork. The general ledger was closed during the course offieldwork. We disagree with that particular part of this finding. The accounting software errors will be corrected during fiscal year 2007 by forcing Kintera Fundware to fix this problem in the accounting system. GENERAL LEDGER Failure to Report Athens-Clarke County Library Endowment Fund Finding Control Number: FS-6292-05-04 We concur with this finding. We were not aware of GASB 39 and its intent to present financial statements of Endowment Organizations of the general ledger. We feel that it was not management's failure to adhere to the By-Laws established by the Endowment Fund Board of Directors which is entirely volunteer. Management does not have the authority to call a Board meeting; this is the Board's responsibility. The checkbook did not have the balance written on the last stub; however, a formal system ofbank statements and account balances were maintained throughout the year and presented to the auditor. We agree that no annual tax return was filed due to the fact that the receipts for those years did not total over $25,000 per the IRS regulation. We will file the returns during fiscal year 2007. The Endowment did have a Treasurer and still maintains this Board Position. There were internal controls in place over the Endowment assets. These consisted and currently consist ofthe spending account maintained as 25% ifthe investment pool cannot be over spent by the Director. At no time did the Endowment have expenditures in excess of this amount, thereby following the internal controls as specified by the Board. Management has taken steps to present the Endowment in accordance with generally accepted accounting principles. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. -2- SECTION III FINDINGS AND QUESTIONED COSTS ATHENS REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006 CASH AND CASH EQUIVALENTS INVESTMENTS INVENTORIES REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Controls Reportable Condition - Material Weakness Finding Control Number: FS-6292-06-01 Condition: This is a repeat finding (FS-6292-05-02) from the year ended June 30, 2005. The accounting procedures of the Library were insufficient to provide for adequate controls over Cash and Cash Equivalents, Investments, Inventories, Revenues/Receivables/Receipts and Expenditures/Liabilities/Disbursements. Criteria: The Library's management is responsible for designing and maintaining internal controls that provide reasonable assurance that all financial activity is properly approved, documented, processed and reported within the accounting records in accordance with generally accepted accounting principles. Questioned Cost: NIA Information: Our examination of the accounting records revealed the following deficiencies: Cash and Cash Equivalents The reconciliation for the General Operating bank statement at June 30 contained numerous reconciling items that were either unidentified variances or could not be adequately documented by Library personnel. The reconciliation of the Bank Reconciliation Report (BRR) for the General Operating bank statement at June 30 did not tie to the general ledger by $5,641.59. Other than reconciliations for June 2005 and June 2006, which were prepared at the time ofaudit fieldwork and had unidentified variances, no other reconciliations have been prepared since June 2004. The Library's money market account activity had not been reported or updated within the accounting system since May 2004. An audit adjustment reducing cash by $14,506 was made. Investments Stocks and Certificates of Deposit were not reported on the general ledger at fair market value at June 30, 2006, resulting in an understatement of $6,640. - 1- ATHENS REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006 CASH AND CASH EQUIVALENTS INVESTMENTS INVENTORIES REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Controls Reportable Condition - Material Weakness Finding Control Number: FS-6292-06-01 Inventories No physical inventory was taken for fiscal year 2006. Inventory amounts included on the general ledger had not been updated since June 30, 2004. Revenues/Receivables/Receipts Negative receivables totaling $72,993 were noted on the general ledger at June 30, 2006. Library General Fund revenue of $290, 189 was deposited within the endowment operating account in error. An audit adjustment was made to properly reflect this activity within the general fund. The Library failed to properly record the revenue and expenditure activity for the state MMR grant for reconstruction on the Madison County Library. An audit entry increasing revenues and expenditures in the amount of $36,408 was made. Expenditures/Liabilities/Disbursements At June 30, 2006, invalid payables totaling $35,070 were noted on the general ledger. An audit entry was required to remove these invalid payables. One invoice for $2,054 was found to have been posted to the general ledger twice. Of30 items tested, three could not be located and five did not have proper supervisory approval. Credit card charges were noted totaling $6,432 that was not properly classified as employee travel. Unrecorded payables totaling $14,383 were noted in the subsequent period review. Cause: Management failed to reconcile subsidiary ledgers to the general ledger and failed to properly monitor cash, investments, inventories, revenues and expenditures adequately to ensure that financial activity was accurate and properly recorded within the accounting records. -2- ATHENS REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006 CASH AND CASH EQUIVALENTS INVESTMENTS INVENTORIES REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Controls Reportable Condition - Material Weakness Finding Control Number: FS-6292-06-01 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 ofcontrols could impact the reporting ofits financial position and results of operations. Recommendation: The Library should review the accounting procedures in place and design and implement procedures necessary to ensure that all financial activity is properly recorded and reflected within the accounting records. GENERAL LEDGER Inadequate Accounting Records Reportable Condition Finding Control Number: FS-6292-06-02 Condition: This is a repeat finding (FS-6292-05-04 and FS-6292-04-02) from the years ended June 30, 2005, and June 30, 2004, respectively. The Library failed to ensure that adequate accounting records were maintained for the Library Endowment Fund which was determined to be a blended component unit of the Library. Criteria: The Library's management is responsible for ensuring that all financial activity for the Athens-Clarke County Library Endowment Fund is properly documented and reported in accordance with generally accepted accounting principles to the extent necessary to comply with GASB Statement No. 39 Determining Whether Certain Organizations are Component Units. Questioned Cost: NIA Information: Our examination of the Endowment Fund revealed that a hand kept checkbook was the only accounting records maintained during fiscal year 2006. Additionally, Library General Fund revenues of $290,189 were incorrectly deposited into the Endowment Fund bank account. -3 - ATHENS REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006 GENERAL LEDGER Inadequate Accounting Records Reportable Condition Finding Control Number: FS-6292-06-02 Cause: Management failed to ensure that adequate accounting controls and records are established and maintained for the Endowment Fund. Effect: The failure ofthe Library to maintain an accurate general ledger can lead to inaccurate internal and external reporting. Recommendation: Administrative procedures should be implemented to ensure that all financial data is properly maintained for the Endowment Fund. -4- SECTION IV MANAGEMENT'S RESPONSES ATHENS REGIONAL LIBRARY SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDED JUNE 30, 2006 Finding Control Number: FS-6292-06-01 CASH AND CASH EQUIVALENTS We concur with this finding. This is a repeat finding (FS-6292-05-02) from the year ended June 30, 2005. We have attempted to correct this finding (during fiscal year 2007) by hiring one additional part-time Accounting Clerk in order to separate the function of duties as required by Georgia Department of Audits. Administrative review of the bank reconciliations will also be maintained during fiscal year 2007. The bank reconciliation list ofoutstanding checks has been importing erroneous journal entries and voided checks that should not be included on the reconciliation report. We believe that this is due to the accounting system used (Fundware, Inc., Accounting Systems). During fiscal year 2008, the Business Manager and Fundware Technology Technician ran various reports to correct this problem and have since formalized a report that corrects this finding. Although the bank reconciliation module used by the accounting system still does not tie to the general ledger, the Business Manager now manually does this each month in order to comply with generally accepted accounting principles. The Library's money market account activity has been reported during June of2007 to reflect on the general ledger. INVESTMENTS We concur with this finding. Stocks and Certificates ofDeposits are reported on the general ledger at fair market value to correct this finding during fiscal year 2007. INVENTORIES We concur with this finding. The Library Store did a physical inventory during June of 2007 in order to comply with this finding. REVENUES/RECEIVABLES/RECEIPTS We concur with this finding. All negative receivables have been corrected on the general ledger during fiscal year 2007. The Library General Fund revenue that was deposited into the Endowment operating account in error will be corrected by November of 2007 by writing a check from the Endowment to the Athens Regional Library System. This will correct this finding. All MMR grants for reconstruction of the Madison County Library are reported properly by depositing all checks into the Library's operating account and then writing checks to the appropriate agencies for the amount identified. EXPENDITURES/LIABILITIES/DISBURSEMENTS We concur with this finding. Once again, the additional staffwill be used to separate the invoicing from the general ledger function. All invalid payables were removed from the general ledger during fiscal year 2007. All travel charges are now coded with object code 55800 which complies with audit requirements. - 1- ATHENS REGIONAL LIBRARY SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDED JUNE 30, 2006 Finding Control Number: FS-6292-06-02 We concur with this finding. This is a repeat finding (FS-6292-05-04 and FS-6292-04-02) from the years ended June 30, 2005, and June 30, 2004, respectively. The Library does maintain accounting records for the Library Endowment Fund which was determined to be a Blended Component Unit of the Library, although the records are kept separate and are not included on the general ledger. The Endowment Board of Directors understands this and continues to maintain separate accounting records at this time. All Endowment records have been presented to the auditors and continue to remain a Blended Component Unit ofthe Library. The Endowment Board is aware of GASB 39 and its intent to present financial statements of Endowment Organizations on the general ledger. We feel that it was not management's failure to adhere to the By-Laws established by the Endowment Fund Board of Directors which is entirely volunteer. Management does not have the authority to call a Board meeting, it is the Board's responsibility. The Endowment does have a Treasurer and still maintains this Board Position. There are internal controls in place over the Endowment assets. These currently consist of the spending account maintained as 25% ofthe investment pool cannot be over spent by the Director. At no time did the Endowment have expenditures in excess of this amount, thereby following the internal controls as specified by the Board. Management has taken steps to present the Endowment in accordance with generally accepted accounting principles. Contact Person: Mamie Fike Simonds, Business Manager Phone: (706) 613-3650 Fax Number: (706) 613-3660 E-mail Address: msimonds@athenslibrary.org -2 -