Three Rivers Regional Library, Brunswick, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2004

THREE RIVERS REGIONAL LIBRARY
BRUNSWICK, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2004
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

THREE RIVERS REGIONAL LIBRARY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

3

B

STATEMENT OF ACTIVITIES

4

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

5

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

6

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

7

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

9

G

NOTES TO THE BASIC FINANCIAL STATEMENTS

10

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

19

SUPPLEMENTARY INFORMATION

SCHEDULES OF REVENUE

2

STATE

20

3

FEDERAL

21

4

LOCAL

22

5 SCHEDULE OF SALARIES AND TRAVEL

23

THREE RIVERS REGIONAL LIBRARY - TABLE OF CONTENTS -
SECTION II FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS
SECTION III MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
July 22, 2005

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 Three Rivers 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 of the governmental activities and each major fund (Exhibits A through G) ofthe Three Rivers Regional Library as ofand for the year ended June 30, 2004, which collectively comprise the Library's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Three Rivers 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 ofthe governmental activities and each major fund ofthe Three Rivers Regional Library, as ofJune 30, 2004, and the respective changes in financial position thereoffor the year then ended in conformity with accounting principles generally accepted in the United States of America.

2004ARL-41

The Three Rivers Regional Library has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not to be part of, the basic financial statements.
As discussed in Note 2 to the basic financial statements, during fiscal year 2004, the Library completed a comprehensive inventory of its capital assets for inclusion in the basic financial statements. This change is in accordance with generally accepted accounting principles.
As described in Note 2, the Three Rivers Regional Library has implemented a new financial reporting model as required by provisions of Govemmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2004.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 19 is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Three Rivers 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 ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated section 506-24.
Respectfully submitted,

RWH:as 2004ARL-41

Ru sell W. Hinton State Auditor

THREE RIVERS REGIONAL LIBRARY

THREE RIVERS REGIONAL LIBRARY STATEMENT OF NET ASSETS JUNE 30, 2004
ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net
Local Federal Government Capital Assets Equipment Library Collections Less: Accumulated Depreciation
Total Assets
LIABILITIES Accounts Payable Contracts Payable Deposits and Deferred Revenues
Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for Capital Projects Unrestricted Total Net Assets
Total Liabilities and Net Assets

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

889,968

202,682

46,163 4,188

87,517 3,208,089 -2,240,897

$ ===2::::!::,1=9:::::!7,:::7=10=

$

8,256

104,849

8,404

$

121 ,509

$

1,054,709

369,015 652,477

$

2,076,201

$ ===2::::!::,1=9:::::!7,:::7=10=

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

THREE RIVERS REGIONAL LIBRARY STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30 2004

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
Total Governmental Activities

$ 520,808 $ 459,681 490,179 163,068 746
$ 1,634,482 $

23,995 $ 23,995 $

881,169 $ 126,936 1,008,105 $

384,356 -459,681 -490,179
-36,132 -746
-_6_02--'-,_38_2_

General Revenues Allotments from Participating Governments Investment Earnings Miscellaneous

$

813,041

12,679

40.497

Total General Revenues

$

---..;.8..;..66.;",1",2;;;;;..1~7_

Change in Net Assets

$

263,835

Net Assets - Beginning of Year (Restated)

1,812,366

Net Assets - End of Year

$ ===========2=,0=76=1=!:,=20=1=

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

THREE RIVERS REGIONAL LIBRARY BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30. 2004

EXHIBIT"C"

ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net
Local Government Federal Government
Total Assets
LIABILITIES AND FUND BALANCES LIABILITIES
Accounts Payable Contracts Payable Deposits and Deferred Revenue
Total Liabilities FUND BALANCES
Reserved for: Capital Projects
Unreserved Undesignated Reported in: General Fund Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

TOTAL

$

416,104 $

202,682

46,163 4,188

473,864 $

889,968 202,682
46,163 4,188

$

669.137 $

473.864 $

$

8,256

$

8,404

$

16.660 $

$ 104,849
104,849 $

8,256 104,849
8,404
121 ,509

$

$

652,477

$

652,477 $

369,015 $

369,015

369,015 $

652,477 1,021,492

$

669.137 $

473.864 $

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

THREE RIVERS REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30. 2004

EXHIBIT"D"

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

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

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

Equipment

$

Library Collections

Accumulated Depreciation

Total Capital Assets

$
87,517 3,208,089 -2,240,897

1,021,492 1,054,709

Net Assets of Governmental Activities (Exhibit "A")

$ ==2=,0=7=6=,2=01=

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

THREE RIVERS REGIONAL LIBRARY STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30. 2004

EXHIBIT"E"

Fund Balance - Ending

$

652,477 $

369,015 $ 1,021,492

The notes to the basic financial statements are an integral part of this statement. -7-

THREE RIVERS REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30. 2004

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

$ 271,694 -179,000

171,141 92,694

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

$ ===26=3=,8=3==5

The notes to the basic financial statements are an integral part of this statement. - 9-

THREE RIVERS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "G"

Note 1: DESCRIPTION OF LIBRARY AND REPORTING ENTITY
REPORTING ENTITY
The Three Rivers 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 consists of 15 members; 2 members appointed by Brantley County Library Board, 2 members appointed by Camden County Library Board, 2 members appointed by Charlton County Library Board, 3 members appointed by Glynn County Library Board, 2 members appointed by Long County Library Board, 2 members appointed by McIntosh County Library Board and 2 members appointed by Wayne County Library Board. The Library Board is without authority to determine the amount ofits funding, except by submission ofbudget requests to local governmental units from which the Library receives support and to the State ofGeorgia for State and Federal flow through funding. Membership in the Library and participation in library services is at the discretion of each participating governmental agency. The Library Board has the power to designate management, the power to retain unreserved fund balances of local and other funds for continued operations and is the lowest level ofoversight responsibility for the Library's operations. The Three Rivers Regional Library is therefore determined to be a joint venture.
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 ofthe Three Rivers Regional Library.
Library-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities of the overall Library. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through intergovernmental revenues and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the Library's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the Library related to the administration and support ofthe Library's programs, such as office and maintenance personnel and accounting) are not allocated to programs.

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THREE RIVERS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

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. Proceeds of acquisitions under capital leases are reported as other financing sources.

- 11 -

THREE RIVERS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

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.

CHANGES IN ACCOUNTING PRINCIPLES

The Three Rivers Regional Library has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis -for State and Local Governments, as of June 30, 2004.

The provisions of GASB Statement No. 34 require the inclusion ofa Statement ofNet Assets. The elements comprising Net Assets - Beginning include the following:

General Fund July 1, 2003 Capital Projects Fund

$ 706,510 143,841

Governmental Funds (Restated) July 1, 2003 Capital Assets Accumulated Depreciation

$ 850,351 3,049,344 -2,087,329

Net Assets Beginning (See Exhibit "B")

$ 1,812,366

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 of deposit) 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

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THREE RIVERS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 ofretum 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.
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.
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.

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THREE RIVERS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

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

Land Land Improvements Buildings and Improvements Equipment Library Collections

Any Amount

$

5,000

$

5,000

$

5,000

Any Amount

N/A 80 years 25 to 80 years 5 to 15 years 10 years

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

Note 3: -DEPOSITS

COLLATERALIZATION OF DEPOSITS Official Code ofOeorgia Annotated (OCOA) 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 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. 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. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.

Acceptable security for deposits consists of anyone 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,

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THREE RIVERS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2004

EXHIBIT"G"

Note 3: DEPOSITS

(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.

CATEGORIZATION OF DEPOSITS At June 30, 2004, the bank balances were $907,639. The amounts of the total bank balances are classified into three categories of credit risk:

Category 1 - Cash that is insured (e.g., Federal depository 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 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Library's name.)

The Library's deposits are classified by risk category at June 30, 2004, as follows:

Risk Category

Bank Balance

1

$ 100,000

2

807,639

3

o

Total

Note 4: CAPITAL ASSETS

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

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THREE RIVERS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT"G"

Note 4: CAPITAL ASSETS

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

Balances July 1,2003

Increases

Balances Decreases June 30, 2004

$

70,706 $

2,978,638

16,811 254,883 $

$

87,517

25,432

3,208,089

52,328 2,035,001
$ 962,015 $

5,554 173,446
92,694 $

25,432

57,882 2,183,015

0 $ 1,054,709

Current year depreciation expense by function is as follows:

Public Services Support Services

$ 143,200 35,800

$ 179,000

Note 5: RESTRICTED ASSETS

Georgia State Financing and Investment Commission (GSFIC) funds and contributions from local governments restricted for capital improvements are reported as restricted assets in the Statement of Net Assets because their use is limited by applicable contractual agreements or statutory provisions. Restricted assets at June 30, 2004, were as follows:

Capital Projects

Restricted Cash and Cash Equivalents: Capital Acquisitions

$ 473,864

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 and acts of God.

The Library has obtained commercial insurance for risk of loss associated with torts, assets 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.

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THREE RIVERS REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "G"

Note 6: RISK MANAGEMENT

The Library has elected to self-insure for all losses related to acts of God. In addition, the Library has elected to self-insure for errors or omissions, which includes, among other risks, risks for sexual harassment and discrimination. The Library has not experienced any losses related to these risks in the past three years.

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

Position Covered

Amount

Library Treasurer Library Assistant Treasurer All Other Employees

$

30,000

$

30,000

$

30,000

Note 7: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

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

Fiscal Year

Percentage Contributed

Required Contribution

2004 2003 2002

100% 100% 100%

$

91,251

$

92,428

$

84,965

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THREE RIVERS REGIONAL LIBRARY

SCHEDULE "1"

GENERAL FUND

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL

YEAR ENDED JUNE 30. 2004

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

$

383,459 $

383,459 $

544,811

849,325

849,325

983,393

24,712

24,848

24,848

23,995

22,000

22,000

9,025

315,000

315,000

40,497

$

1,594,632 $

1,594,632 $

t626,433

$

943,225 $

943,225 $

581,688

97,113

97,113

459,681

440,437

440,437

475,283

110,827

110,827

163,068

3,030

3,030

746

$

1,594,632 $

1,594,632 $

1,680,466

$

0$

0$

-54,033

740,930

706,510

706,510

Fund Balance - Ending

$

740,930 $

706,510 $ ===6=5:::::::!2,=47=7=

The accompanying schedule of revenue, 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-

THREE RIVERS REGIONAL LIBRARY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2004
AGENCY/FUNDING
GRANTS Board of Regents of the University System of Georgia Office of Public Library Services Salaries Travel Library Materials Talking Book Centers Maintenance and Operations

SCHEDULE "2"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

684,251

1,750

48,430

122,026

126,936

$ ====9=8=3=3,=93=

See notes to the basic financial statements.

- 20-

THREE RIVERS REGIONAL LIBRARY SCHEDULE OF FEDERAL REVENUE
YEAR ENDED JUNE 30. 2004
AGENCY/FUNDING
GRANTS Humanities, National Endowment for the Direct Forever Free: Abraham Lincoln's Journey to Emancipation Pass-Through Georgia Humanities Council The Great Experiment: George Washington and the American Republic Forever Free: Abraham Lincoln's Journey to Emancipation
Museum and Library Services, Institute of Through Board of Regents of the University System of Georgia Library Services and Technology Act State Library Program

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

174

1,400 2,000

21! 138 $ =====2=4=,7=1=2

See notes to the basic financial statements.

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LOCAL SOURCES Boards of Education Brantley County Camden County Charlton County Glynn County Long County Mcintosh County City Government Brunswick County Governments Boards of Commissioners Camden Charlton Glynn Long Mcintosh Wayne

THREE RIVERS REGIONAL LIBRARY SCHEDULE OF LOCAL REVENUE YEAR ENDED JUNE 30. 2004

SCHEDULE "4"

GOVERNMENTAL FUND TYPES

DISTRICT-WIDE

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

2,426

4,628

1,633

2,300

817

944

21,420 $

7,969 42,549 283,900 29,949 49,301 96,975

$ 268,230

2,426 4,628 1,633 2,300
817 944
289,650
7,969 42,549 283,900 29,949 49,301 96,975

$

268,230 $===81=3=,0=4=1

See notes to the basic financial statements.

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THREE RIVERS REGIONAL LIBRARY SCHEDULE OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30. 2004

SCHEDULE "5"

NAME

Barber, Beckham, Bennett, Blanton, Brooks, Brown, Cody, Coleman, Crummey, Danley, Darby, Doster, Douglas, Eastman, Fernandez, Gibson, Gowen, Hall, Haven, Hildebrand, Jackson, Johnson, Knapp, Lang, Leggett, Maney, McArthur, Mcintyre, McKenzie, Montgomery, Moon, Morgan, Murphy, Nettles, O'Quinn, Parker, Patch, Powell, Ransom, Rice, Routsong, Sawyer, Scott, Sellers, Sharp, Shinnick, Smith, Taylor, Way, Wayne, Wendt, Wiley, Williamson, Wright,

Virginia Tabitha Erreka Carolyn Christina Angelia Sara Deborah Shelley Robert Jim Katherine Paul Gary Agustin Joseph Amber Cynthia Karen Jane Diane Shirley Carolyn Nellie Marvin Paulette Tammy Venus Betty Dorinda Robert Teena Terrie Cyndee Diane Barbara Margaret Kathleen Betty Kristie Scott Barbara Karla Mary Wanda Joseph Ceil Marian Albert Virginia James Ann Edna Susan

TITLE CATEGORY
Secretary Clerical Clerical Clerical Clerical Children's Assistant Reference Librarian Technical Services Assistant Clerical Clerical Director Clerical Clerical Clerical Clerical Custodian Clerical Clerical Technical Services Librarian Affiliate Coordinator Librarian Reference Assistant Bookmobile Assistant Adult Services Librarian Clerical Affiliate Manager Clerical Clerical Clerical Circulation Assistant Library Assistant Clerical Library Assistant Clerical Clerical Bookkeeper Affiliate Manager Circulation Assistant Children's Librarian Talking Book Librarian Clerical Children's Librarian Affiliate Manager Clerical Bookmobile Assistant Clerical Assistant Director Circulation Assistant Library Assistant Clerical Clerical Regional Reference Librarian Clerical Affiliate Manager Clerical

Totals per Report See notes to the basic financial statements.

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SALARIES

TRAVEL

$

19,643 $

1,495

4,884

14,173

14,624

14,855

57,858

16,958

4,254

4,293

71,146

1,313

16,958

14,855

14,855

13,600

886

8,932

51,472

59,575

16,958

14,855

56,190

6,266

380

9,620

973

13,234

18,619

14,139

14,855

7,293

389

352

32,783

5,134

2,476

41,274

54,571

16,959

14,471

20,268

997

17,822

13,071

61,830

42,189

4,560

208

10,570

56,190

9,800

26,841

16,958

21 16 3,814
190 388
80
216 80 41

$

1,029,724 $===4=,8=4=6

SECTION II FINDINGS AND QUESTIONED COSTS

THREE RIVERS REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2004
CURRENT YEAR
CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS GENERAL LEDGER Inadequate Internal Control Procedures Reportable Condition Finding Control Number: FS-6632-04-01
An examination ofthe internal accounting control procedures ofthe Library disclosed weaknesses as discussed below:
Cash and Cash Equivalents The cash receipting and deposit preparation were not separate from the record keeping function. Bank reconciliations were not consistently performed in a timely manner.
Revenues/Receivables/Receipts Receipts were not recorded in the general ledger in a timely manner. The recording of accounts receivable and receipts were not separate from the deposit preparation and the record keeping.
General Ledger The Library did not close the books for fiscal year 2004 until June, 2005. The Library did not input the budget in the financial system.
These deficiencies were a result ofmanagement's decision to limit the number ofadministrative staff made responsible for the accounting functions and their failure to ensure established controls were functioning as designed. Management should implement additional procedures to ensure that the key accounting functions are segregated and that appropriate accounting controls are utilized.

SECTION III MANAGEMENT'S RESPONSES

THREE RIVERS REGIONAL LIBRARY SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2004
Finding Control Number: FS-6632-04-01
Cash and Cash Equivalents
Cash receipting and deposit preparation are now being kept separate from the record keeping function because we have hired a second bookkeeper.
It is now possible for us to perform bank reconciliations in a timely manner, because our Library uses an accounting system (SAMSON) that is fully functioning and reliable.
General Ledger
It will now be possible for us to close the books for fiscal year 2005 in a timely manner because the SAMSON system is fully functioning and reliable.
It will now be possible for us to input the budget into the financial system in a timely manner because the SAMSON system is now fully functioning and reliable.
Revenues/Receivables/Receipts
It is now possible for us to record receipts in the general ledger in a timely manner because the SAMSON system is now fully functioning and reliable.
The recording ofaccounts receivable and receipts are now separated from deposit preparation and record keeping because we now have two bookkeepers on staff. One does accounts receivable and receipts, and the other individual does deposit preparation and record keeping.
Contact Person: Joseph N. Shinnick, Director Phone: (912) 267-1212 Fax Number: (912) 267-9597 E-mail Address: jshinnick@trrl.org