Audit report, Chatham-Effingham-Liberty Regional Library, a component unit of Chatham County, Georgia, year ended June 30, 1998

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AUDIT REPORT CHATHAM-EFFINGHAM-LmERTY REGIONAL LmRARY
A COMPONENT UNIT OF CHATHAM COUNTY, GEORGIA
YEAR ENDED JUNE 30, 1998
"---------------------_../
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

CHATHAM-EFFINGHAM-LffiERTY REGIONAL LffiRARY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

AND EXPENDABLE TRUST FUND

4

C

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL AND SPECIAL REVENUE FUNDS

7

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

8

ADDmONAL FINANCIAL INFORMATION

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

18

SCHEDULE OF REVENUE

2

STATE

19

3

FEDERAL

20

4

LOCAL

21

5 SCHEDULE OF TRAVEL

22

SECTION II FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
July 20, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofTechnical and Adult Education
and Director and Members of the Chatham-Effingham-Liberty Regional Library Board
lNPEPENDENT AUDITOR'S COMBlNED REPORT ON GENERAL PURPOSE
FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying general purpose financial statements of the Chatham-Effingham-Liberty Regional Library, a component unit of Chatham County, Georgia, as ofand for the year ended June 30, 1998, as listed in the table of contents. These general purpose financial statements are the responsibility of the Chatham-Effingham-Liberty Regional Library's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in the notes to the general purpose financial statements, the Library's financial statements have been prepared using a certain accounting practice and policy which, in our opinion, varies in some respects from generally accepted accounting principles. This variance is described as follows:
* The general purpose financial statements of the Library did not contain a General Fixed Assets
Account Group to account for property, equipment and inexhaustible collections and books owned by the Library which should be included to conform to generally accepted accounting principles.
The aggregate effects on the general purpose financial statements ofthis omission have not been determined, but are believed to be material.
98ARL-42A

In our opinion, except for the effects on the general purpose financial statements of the matter referred to in
the third paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe Chatham-Effingham-Liberty Regional Library as of June 30, 1998, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles.
The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally ofinquiries ofmanagement regarding the methods ofmeasurement and presentation ofthe supplementary information. However we did not audit
the information and do not express an opinion on it. In addition, we do not provide assurance that Chatham-
Effingham-Liberty Regional Library is or will become year 2000 compliant, that the Library's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Chatham-EffinghamLiberty Regional Library does business are or will become year 2000 compliant.
Our audit was performed for the purpose of forming an opinion on the general purpose financial statements ofthe Chatham-Effingham-Liberty Regional Library taken as a whole. The accompanying financial schedules (Schedules 2 through 5), as listed in the table of contents, are presented for purposes of additional analysis and are not a required part ofthe general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe general purpose financial statements and in our opinion, except for the effects of the matter discussed in the third paragraph, such information is fairly presented in all material respects in relation to the general purpose 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,

RWH:jb 98ARL-42A

Russell W. Hinton State Auditor

CHATHAM-EFFINGHAM-LffiERTY REGIONAL LffiRARY

CHATHAM-EFFINGHAM-LIBERTY REGIONAL LIBRARY COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30,1998

ASSETS Cash and Cash Equivalents Investments Accounts Receivable Amount to be Provided in Future Years
For Payment of Compensated Absences
Total Assets

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

$

383,017.52 $

3,000.00 $

17,945.45

349,674.44

3,839,713.50

278,512.70

15,727.69

$ 1,011,204.66 $

3,000.00 $ 3,873,386.64

LIABILITIES AND FUND EQUITY
LIABILITIES
Accounts Payable Contracts Payable Retainages Payable Compensated Absences
Total Liabilities
FUND EQUITY
Fund Balances Reserved For Continuation of Federal Programs For State Capital Outlay Projects Unreserved Undesignated
Total Fund Equity
Total Liabilities and Fund Equity

$

51,040.88

$

51,040.88

$

282,548.70

326,334.30

$

608,883.00

$
$ 960,163.78 $ 960,163.78 $

3,000.00
$
0.00
3,000.00 $

3,264,503.64 0.00
3,264,503.64

$ 1,011,204.66 $

3,000.00 $

3,873,386.64

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

EXHIBIT "A"

FIDUCIARY FUND TYPE EXPENDABLE TRUST FUND

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

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

$

3,377.06

$

407,340.03 $

179,866.03

4,189,387.94

4,821,242.98

294,240.39

313,179.87

c

$

414,274.03

414,274.03

399,399.29

$

3,377.06 $====4=14=,=27=4=.0=3 $ 5,305,242.39 $ 5,713,688.17

$

51,040.88

282,548.70 $

262,245.60

326,334.30

29,138.40

$

414,274.03

414,274.03

399,399.29

$

414,274.03 $ 1,074,197.91 $

690,783.29

$ 3,377.06 ---~=...:...;..=.;;..

$

. . .;3:;"t;,3:;.;7. .:. 7.:.: ;.0.=. .6

$

3,000.00

3,264,503.64 $ 4,624,141.41

963,540.84

398,763.47

$ 4,231,044.48 $ 5,022,904.88

$

3,377.06 $====4==:1=4,=27=4=.0:=3 $ 5,305,242.39 $ 5,713,688.17

-3-

CHATHAM-EFFINGHAM-L1BERTY REGIONAL LIBRARY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUND YEAR ENDED JUNE 30,1998

REVENUES
State Funds Federal Funds Local Funds Other Funds
Total Revenues
EXPENDITURES
Current Program Services Technical Services Circulation Administration Maintenance and Operations
Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING USES
Operating Transfers Out
Excess of Revenues over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1

GENERAL FUND

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

REVENUE

PROJECTS

FUND

FUND

$ 1,263,824.12 2,514.75 $
442,007.30 .264,374.83
$ 1,972,721.00 $

$ 1,508,616.00 7,100.00
229,347.45
7,100.00 $ 1,737,963.45

$ 295,594.62 $ 54,417.05 39,418.70 220,721.63 38,804.94
$ 648,956.94 $
$ 1,323,764.06 $

4,100.00
$ 3,097,601.22 4,100.00 $ 3,097,601.22 3,000.00 $ -1,359,637.77

-759,136.72

$ 564,627,34 $ 395,536.44

3,000,00 $ -1,359,637.77 0.00 4,624,141.41

FUND BALANCE JUNE 30

$ 960,163.78 $

3,000.00 $ 3,264,503.64

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

EXHIBIT "B"

TOTAL

FIDUCIARY FUND TYPE EXPENDABLE TRUST FUND

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

$ 2,772,440.12 9,614.75
442,007.30 493,722.28 $
$ 3,717,784.45 $

$ 150.03

2,772,440.12 $ 9,614.75
442,007.30 493,872.31

1,146,067.42 52,675.00 324,289.00
5,094,162.54

150.03 $ 3,717,934.48 $ 6,617,193.96

$ 299,694.62 $ 54,417.05 39,418.70
220,721.63 38,804.94
3,097,601.22
$ 3,750,658.16 $
$ -32,873.71 $

0.00 $

299,694.62 $ 54,417.05 39,418.70
220,721.63 38,804.94
3,097,601.22

216,179.04 50,856.82
245,478.48 324,900.66
29,656.75 532,748.52

0.00 $ 3,750,658.16 $ 1,399,820.27

150.03 $

-32,723.68 $ 5,217,373.69

-759,136.72
$ -792,010.43 $ 5,019,677.85

-759,136.72

-561,313.07

150.03 $ -791,860.40 $ 4,656,060.62

3,227.03

5,022,904.88

366,844.26

$ 4,227,667.42 $

3,377.06 $ 4,231,044.48 $ 5,022,904.88

-5-

CHATHAM-EFFINGHAM-L1BERTY REGIONAL LIBRARY

EXHIBIT "C"

COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL

GENERAL AND SPECIAL REVENUE FUNDS

YEAR ENDED JUNE 30.1998

REVENUES
State Funds Federal Funds Local Funds Other Funds
Total Revenues
EXPENDITURES
Current Program Services Technical Services Circulation Administration Maintenance and Operations
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING (USES)
Other Uses
Excess of Revenues over (under) Expenditures and Other Financing Uses
FUND BALANCE JULY 1. 1997

GENERAL FUND

BUDGET

ACTUAL

$ 868,982.00 $ 1,263,824.12

1,593.75

2,514.75

554,357.00 442,007.30

31,155.00 264,374.83

$ 1,456,087.75 $ 1,972,721.00

$ 366,473.36 $ 295,594.62

23,100.00

54,417.05

437,898.00

39,418.70

637,124.00 220,721.63

36,650.00

38,804.94

$ 1,501,245.36 $ 648,956.94

$ -45,157.61 $ 1,323,764.06

-759,136.72
$ -45,157.61 $ 564,627.34 397,229.17 395,536.44

SPECIAL REVENUE FUND

BUDGET

ACTUAL

$ 4,100.00 $ 7,100.00 $ 4,100.00 $ 7,'100.00

$ 4,100.00 $ 4,100.00

$ 4,100.00 $ 4,100.00

$

0.00 $ 3,000.00

$

0.00 $ 3,000.00

0.00

0.00

FUND BALANCE JUNE 30. 1998

$ 352,071.56 $ 960,163.78

$

0.00 $ 3,000.00

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

CHATHAM-EFFINGHAM-LIBERTY REGIONAL LIBRARY EXHIBIT "D"
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REPORTING ENTITY

The Chatham-Effingham-Liberty 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. With the exception of the departure from generally accepted accounting principles disclosed in these notes, the financial statements of the Library have been prepared in conformity with generally accepted accounting principles as applied to governmental units and unless otherwise disclosed in these notes, the financial statements present all fund types and account groups of the Library.

The Library Board consists of 14 members; 12 members appointed by Chatham County Board of Commissioners, 1 member appointed by Effingham County Library Board and I member appointed by Liberty 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 of Georgia for State and Federal funding. Membership in the Library and participation in library services is at the discretion of each participating governmental agency. The Library Board has the power to designate management, the power to retain unreserved fund balances of local and other funds for continued operations and is the lowest level ofoversight responsibility for the Library's operations.

The Chatham County Board of Commissioners appoints a majority of the Library's Board members and provides a substantial majority of funding for the operations of the Library, consequently, the Library is deemed to have a financial benefit/burden relationship with Chatham County, Georgia as defined by the GOvernmental Accounting Standards Board. Accordingly, the Chatham-Effingham-Liberty Regional Library is considered to be a component unit of Chatham County, Georgia for financial reporting purposes.

FUND ACCOUNTING

The Library uses funds and an account group 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. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.

General Fixed Assets, which includes the Library's inexhaustible collections and books, are recorded as

expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not

presently maintained by the Library. To conform to generally accepted accounting principles, a General Fixed

Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund

types.

.

-8-

CHATHAM-EFFINGHAM-LffiERTY REGIONAL LffiRARY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30. 1998
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The general purpose financial statements account for all State, Federal, Local and Other funds under control ofthe Library, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:
GOVERNMENTAL FUND TYPES - used to account for all or most of the Library's general activities. Governmental Fund Types include:
GENERAL FUND - the fund used to account for all financial resources of the Library except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a Library.
SPECIAL REVENUE FUND - the fund used to account for the proceeds ofspecific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. The primary type of special revenue fund consists of proceeds received from State and Federal sources to accomplish specific objectives and are required to be accounted for separately.
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction ofmajor capital facilities.
FIDUCIARY FUND TYPE - the trust fund used to account for assets held by a government unit in a trustee capacity for individuals, private organizations, other government units and/or other funds. This fund includes:
EXPENDABLE TRUST FUND The Hortense Orcutt Memorial Association Fund - the fund used to account for the purchase of children's books for inclusion in the Hortense Orcutt collection.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - used to account for material compensated absences.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental and expendable trust funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities are generally included on the balance sheet. Operating statements ofthese funds present increases (Le., revenues and other financing sources) and decreases (Le., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
-9-

CHATHAM-EFFINGHAM-LffiERTY REGIONAL LffiRARY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 3D. 1998
Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Other liabilities, which are not'expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
Governmental and expendable trust funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (Le., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are intergovernmental, grants and investment income.
Expenditures are generally recognized when the related fund liability is incurred.
BUDGET
The Chatham-Effingham-Liberty Regional Library's budget is a complete financial plan for the Library's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Library at the aggregate level. The budget for governmental funds was prepared in accordance with generally accepted accounting principles.
The budget process begins when the Library's administration prepares a tentative aggregated budget for the Board's approval. After approval ofthis tentative budget by the Board, copies are sent to all local funding agencies. After funding approval is received from all local funding agencies, the Board makes revisions as necessary and adopts the budget. The budget is then submitted to the Department of Technical and Adult Education as a part ofthe Library's annual application for State aid. The Board may increase or decrease the budget at0any time during the year. All unexpended budget authority lapses at fiscal year end.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financial institutions. Georgia Laws authorize the Library to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.
INVESTMENTS
COMPOSmON OF INVESTMENTS Investments made by the Library in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Both participating interest-earning contracts and money
-10-

CHATHAM-EFFINGHAM-LffiERTY REGIONAL LffiRARY EXHffiIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30. 1998
Note 1: SUMMARy OF SIGNIFICANT ACCOUNtING POLICIES
market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Library to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions of the State of Georgia.
RECEIVABLES
Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed, allotted funds from participating local governments, and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
COMPENSATED ABSENCES
Compensated absences represent obligations of the Library relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion of this obligation as this amount is deemed immaterial to the general purpose financial statements.
-11-

CHATHAM-EFFINGHAM-LffiERTY REGIONAL LffiRARY EXHffiIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30. 1998
Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
INTERFUND TRANSACTIONS
The Library has the following types ofinterfund transactions:
Reimbursements ofexpenditures initially made from a fund that are properly applicable to another fund are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed.
Operating transfers are recorded for all interfund transactions other than reimbursements.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general pwpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles, nor is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Certain reclassifications have been made to the comparative data to conform to the current year classifications.
Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code ofGeorgia Annotated (OCGA) Section45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed indemand deposit checking accounts.
Acceptable security for deposits consists ofanyone ofor any combination ofthe following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or ofthe State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities ofthe State of Georgia,
- 12-

CHATHAM-EFFINGHAM-LIBERTY REGIONAL LIBRARY EXHIBIT "D"
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30, 1998

Note 2: DEPOSITS AND INVESTMENTS

(5) Bonds ofany public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use ofthe 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 ofindebtedness, 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS At June 30, 1998, the bank balances were $807,560.91. The amounts ofthe 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, 1998, as follows:

Risk Categmy
1 2 3
Total

Bank Balance
$ 196,136.92 463,908.36 147,515.63
$ = 807,560.91.

CATEGORIZATION OF INVESTMENTS At June 30, 1998, the carrying value ofthe Library's total investments was $4,189,387.94 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the Library did not own any specific identifiable securities in the pool. The investment policy ofthe State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description of the Primary Liquidity Portfolio is as follows:

-13 -

CHATHAM-EFFINGHAM-LIDERTY REGIONAL LIDRARY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30. 1998
Note 2: DEPOSITS AND INVESTMENTS
The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. However, Georgia Fund 1 operates in a manner consistent with Rule 2a-7 ofthe fuvestment Company Act of 1940 and is considered to be a 2a-7 like pool. The pool is not registered with the SEC as an investment company. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and determines participant's shares sold and redeemed based on $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost which approximates fair value. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist offunds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.
Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity ofGeorgia Fund 1 may not exceed 60 days. Fund 6 maintains a duration ofapproximately one year. The weighted average maturity for Georgia Fund 1 on June 30, 1998 was 29 days. The average investment duration for Fund 6 on June 30, 1998 was .96 years.
Note 3: RISK MANAGEMENT
The Library is exposed to various risks ofloss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; natural disaster; and unemployment compensation..
As discussed in Note 1, the Chatham-Effingham-Liberty Regional Library has been determined to be a component unit ofChatham County, Georgia. The Chatham County Board of Commissioners has obtained commercial insurance for risk of loss associated with assets and natural disasters for Chatham County Libraries participating in the Chatham-Effingham-Liberty Regional Library. The Effingham County Board of Commissioners has obtained commercial insurance for risk of loss associated with torts, assets errors or omissions and natural disaster for Effingham County Libraries participating in the Chatham EffinghamLiberty Regional Library. The Liberty County Board ofCommissioners has obtained commercial insurance for risk ofloss associated with assets for Liberty County Libraries participating in the Chatham-EffinghamLiberty Regional Library.
The Regional Library has obtained commercial insurance for the Effingham and Liberty County Libraries for risk of loss associated with job related illness or injuries to employees.
-14 -

CHATHAM-EFFINGHAM-LIBERTY REGIONAL LIBRARY EXHIBIT "D"
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 3D. 1998

Note 3: RISK MANAGEMENT

The Regional Library has elected to self-insure participating Liberty County Libraries for all losses relating to errors or omissions, which includes, among other risks, risks for sexual harassment and discrimination. In addition, the Regional Library has elected to self-insure Liberty County Libraries for all losses relating to torts and natural disaster.

The Chatham County Board of Commissioners has elected to self-insure the participating Chatham County Libraries for all losses relating to torts, errors or omissions, which includes, among other risks, risks for sexual harassment and discrimination, and job related illness or injuries to employees. An excess coverage insurance policy was obtained to cover individual workers' compensation claims in excess of $300,000.00 loss per occurrence, up to the statutory limit.

The Chatham County Board of Commissioners has elected to self-insure all employees with regard to unemployment compensation claims.

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

Position Covered

Amount

All Employees

$ 1,000,000.00

Note 4: GENERAL LONG-TERM DEBT

The changes in General Long-Tenn Debt during the fiscal year ended June 30, 1998, were as follows:

Compensated Absences

Balance July 1, 1997

$ 399,399.29

Additions Leave Earned and Utilized (Net)

14.874.74

Balance June 30,1998

$ 41 4.274.03

Note 5: OTHER FINANCIAL supPORT

In lieu of and/or in addition to direct financial support, during the year ended June 30, 1998, the following entities incurred operating expenditures for the Library's benefit:

- 15-

CHATHAM-EFFINGHAM-LIBERTY REGIONAL LIBRARY EXHlBIT "D"
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30. 1998

Note 5: OTHER FINANCIAL SUPPORT

Total

For Salary and Employer Contributions Chatham County Board of Commissioners
For Other Operating Expenditures Chatham County Board of Commissioners City ofPort Wentworth Effingham County Board ofEducation Liberty County Board of Commissioners

$ 3,324,050.45
402,819.04 379.50
24,808.44 9.114.70

$ 3.761.172.13

Note 6: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the Library as of June 30, 1998, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

GSFIC 6252-965-SB-Ol

$ 3.431.683.16 $ 200.000.00

The amounts described in this note are not reflected in the general purpose financial statements.

Note 7: CONTINGENT LIABILITIES

Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any expenditures which are disallowed under grant terms. The Library believes that such disallowances, if any, will be immaterial to its overall financial position.

Note 8: ACCUMULATED EMPLOYEES' LEAVB

The Library's :full-time and part-time regular employees earn sick leave according to their regular work week schedule ranging from 5 to 15 hours per month with no maximum accumulation. Unused sick leave is paid to employees having at least three years ofservice for one-halfoftotal hours accumulation up to a maximum of240 hours, at the current rate ofpay, upon retirement or termination of employment.

- 16-

CHATHAM-EFFINGHAM-LffiERTY REGIONAL LffiRARY EXHIBIT "D"
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
JUNE 30. 1998

Note 8: ACCUMULATED EMPLOYEES' LEAVB

The Library's regular employees working at least twenty hours per week earn vacation leave according to their length of service ranging from 4 to 24 hours per month with a maximum accumulation of 480 hours. All unused vacation leave is paid to employees, at the current rate of pay upon retirement or termination of employment.

The Library's non-professional employees can accrue compensatory time and are paid for all unused time, at the current rate ofpay upon retirement or termination ofemployment. See Note 1 - Compensated Absences

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 ofGeorgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department ofAudits and Accounts.

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Library who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. The Library makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 11.81% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

1998 1997 1996

100% 100% 100%

$ 246,886.96 $ 241,698.42 $ 238,913.73

-17 -

CHATHAM-EFFINGHAM-LlBERTY REGIONAL LillRARY SCHEDULE "1" SCHEDULE OF REQUIRED SupPLEMENTARY INFORMATION
YEAR 2000 DISCLOSURES
YEAR ENDED JUNE 30. 1998
At June 30, 1998, the Chatham-Effingham-Liberty Regional Library had no outstanding contractual commitments for the purpose of making computer systems and other electronic equipment year 2000 compliant. The year 2000 issue is the result of shortcomings in many electronic data processing systems and other equipment that make operations beyond year 1999 troublesome. The year 2000 issue is of primary concern for the Library's financial accounting system. The following stages have been identified as necessary to implement a year 2000 compliant systems.
Awareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 Issue.
Assessment Stage - The actual process ofidentifying all ofits systems and individual components of the systems to check for compliance.
Remediation Stage - When changes are made to systems and equipment.
Validation/TestiTIg Stage - The process of ensuring that the changes made to systems and equipment will produce a year 2000 compliant system.
It will be necessary for the Library to progress through all four of these stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected. As ofJune 30, 1998, the financial accounting system was determined to be at the Awareness Stage.
The LibraIy's financial accounting software (GENESIS) and hardware (Wang VS) is owned by the State (Georgia Department ofEducation). These systems have been determined to be critical to the Library's ability to successfully conduct operations. As ofJune 30, 1998, the State had not contracted for the remediation of either the Wang VS operating system or the GENESIS accounting software. In the subsequent period, the Georgia Department of Education remediated the Wang VS operating system and the updated operating system was installed at all GENESIS sites as ofDecember 9, 1998. The Georgia Department of Education has remediated the GENESIS software and conducted tests at nine pilot sites. The remediated GENESIS software has been provided to alllibraries currently utilizing the GENESIS accounting software.
See notes to the general purpose financial statements. - 18-

CHATHAM-EFFINGHAM-L1BERTY REGIONAL LIBRARY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 1998

SCHEDULE "2"

AGENCY/FUNDING

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

GRANTS Financing and Investment Commission, Georgia State Reimbursement on Construction Projects

$

1,508,616.00 $ 1,508,616.00

Technical and Adult Education, Georgia Department of

Public Libraries

Salaries and Travel

$

Library Materials

Regular

Govemor's Reading Incentive Program

Maintenance and Operation

Talking Book Centers

440,511.12
189,726.00 390,973.00 185,126.00
57,488.00

440,511.12
189,726.00 390,973.00 185,126.00
57,488.00

$ 1,263,824.12 $

1,508,616.00 $ 2,772,440.12

See notes to the general purpose financial statements.

-19-

CHATHAM-EFFINGHAM-L1BERTY REGIONAL LIBRARY SCHEDULE OF FEDERAL REVENUE YEAR ENDED JUNE 30. 1998

SCHEDULE "3"

AGENCY/FUNDING

GOVERNMENTAL

FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

GRANT Education, U. S. Department of Through Georgia Department of Technical and Adult Education Library Services and Construction Act Title I - Public Library Services Title III - Interlibrary Cooperation and Resource Sharing

$
$_---.;.;2.:..,5_1_4._75"'-

7,100.00 $

TOTAL
7,100.00 '2,514.75

$ 2,514.75 $

7,100.00 $===9=,6=1=4=.7=5

See notes to the general purpose financial statements. -20 -

CHATHAM-EFFINGHAM-LIBERTY REGIONAL LIBRARY SCHEDULE OF LOCAL REVENUE YEAR ENDED JUNE 30,1998

SCHEDULE "4"

LOCAL SOURCES Boards of Education Effingham County Liberty County City Governments Hinesville Midway Riceboro County Government Board of Commissioners Liberty

GOVERNMENTAL FUND TYPE GENERAL FUND

$

235,665.00

71,819.00

64,979.00 3,420.00 3,420.00

62,704.30

$ ====44;.,;,2;;:,,0;;;,;;0~7=.3~0

See notes to the general purpose financial statements. - 21 -

CHATHAM-EFFINGHAM-L1BERTY REGIONAL LIBRARY SCHEDULE OF TRAVEL
YEAR ENDED JUNE 30,1998

NAME
Adams, Arkwright, Bronson, Churchill, Clayton, Coleman, Darby, Dickerson, Duzansky, Estes, Etter, Gant, Gloyd, Helmly, Johnson, Johnson, Langford, Lanier-Ehrler, Levy, McCutchen, Meadows, Minor, Morgan, Nichols, Parker, Pinckney, Robertson, Robbins, Robbins, Shinnick, Shuman Stewart, Stokes, Stokes, Strong, Tate, Towns, Wilham, Wixom,

Shirley Teresa Diane Sara
Walter A.
Constance Betty Lon R. Ann Sharon Constance Shirley Patricia B. BrendaA. Rudolph WilliamW. Janet C. Wanda Marie Barbara S. Heather Agnes T. Vicki Diane JudyW. Gary Albertha Kathleen Catherine L. Eileen Kay John JoAnn H.
Jutta A.
Barry Linda Judith T. Pettina S. Lula Diane Sharon E.

TITLE CATEGORY
Library Assistant Library Assistant Librarian Librarian Librarian Librarian Community Relations Coordinator Director Library Assistant Librarian Library Associate Clerical Assistant Librarian Library Assistant Custodian/Messenger Assistant Library Director Librarian Librarian Library Assistant Librarian Librarian Library Marketing & Dev Director Library Assistant Librarian Library Associate Library Assistant Librarian Librarian Library Associate Librarian Accounting Technician Library Assistant Librarian Librarian Librarian Library Assistant Library Assistant Librarian Librarian

Totals per Report See notes to the general purpose financial statements.
- 22-

SCHEDULE "5"

TRAVEL

$

115.00

79.00

544.93

30.75

79.00

913.50

51.25

4,363.62

111.03

131.00

95.03

13.75

203.95

9.80

52.25

2,389.28

1,396.73

120.50

69.00

125.92

69.00

632.20

115.00

1,260.07

79.00

79.00

79.00

207.00

20.45

24.75

89.75

19.50

143.11

1,085.06

9.80

157.50

79.00

178.00

69.00

$ ===15~.2=9=1=.4=8

SECTIONll FINDINGS AND QUESTIONED COSTS

CHATHAM-EFFINGHAM-LIBERTY REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED ruNE 30. 1998
CURRENT YEAR
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number: 6252-93-01
The Library did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the' financial statements ofthe Library being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Library to establish accounting controls and procedures to provide for the maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of land, buildings, equipment and inexhaustible collections and books owned by the Library and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group.