COASTAL PLAIN REGIONAL LIBRARY TIFTON, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS Russell W. Hinton State Auditor COASTAL PLAIN 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 4 D RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS 5 E STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 6 F RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES 7 G NOTES TO THE BASIC FINANCIAL STATEMENTS 9 SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND 19 COASTAL PLAIN REGIONAL LIBRARY - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION SCHEDULES OF REVENUE 2 STATE 20 3 FEDERAL 21 4 LOCAL 22 5 SCHEDULE OF SALARIES AND TRAVEL 23 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 October 20, 2008 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 Coastal Plain 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) of the Coastal Plain Regional Library as of and for the year ended June 30, 2007, which collectively comprise the Library's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Coastal Plain 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe Library's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position ofthe governmental activities and each major fund ofthe Coastal Plain Regional Library, as of June 30, 2007, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. 2007ARL-41 Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through vi and page 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 Coastal Plain Regional Library's basic financial statements. The accompanying supplementary information which consist ofSchedules 2 through 5, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe basic financial statements, and in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. Respectfully submitted, ~n,~~,~~ State Auditor RWH:gp 2007ARL-41 COASTAL PLAIN REGIONAL LIBRARY COASTAL PLAIN REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 This document is management's discussion and analysis of the Coastal Plain Regional Library financial activities for the year ended June 30, 2007. OVERVIEW OF FINANCIAL STATEMENTS Coastal Plain Regional Library's statements are presented in three parts: government-wide financial statements, fund financial statements, and notes to the financial statements. GOVERNMENT-WIDE STATEMENTS Government-wide financial statements include the Statement ofNet Assets and the Statement of Activities. Government-wide statements provide information about the activities of the government as a whole and provide a long-term view of the government's finances. These statements are presented using the accrual basis of accounting. The accrual basis of accounting reports results of activities based on the occurrence of an economic event, regardless of the timing of revenue collections or payment of expenses. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., compensated absences). The Statement of Net Assets presents the total assets and liabilities of the Library with the difference reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the economic condition of the Library is improving or deteriorating. The Statement ofActivities presents information showing how the Library's net assets changed during the most recent fiscal year. The Statement of Activities presents governmental activity expenses in the following categories: Public Services (costs of providing branch services including library materials), Technical Services (costs of selecting and preparing library materials for public use), Support Services (administrative costs of providing library services), Maintenance and Operations (costs incurred for the maintenance of grounds and facilities), and Information Technology (costs associated with providing access to electronic materials and services). Program revenues include Charges for Services (fees charged to customers), Capital Grants and Contributions (local government), and Operating Grants and Contributions (State of Georgia and Federal grants used for library operations). General revenues include allotments from participating libraries, investment revenue, and miscellaneous revenue from donations. Please see Exhibits "A" and "B" to review the government-wide financial statements. FUND FINANCIAL STATEMENTS A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Coastal Plain Regional Library, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. COASTAL PLAIN REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 The Library uses only governmental funds: the general fund and a capital project fund. Governmental funds are accounted for using the modified accrual basis of accounting. Under this basis of accounting, revenue is posted when amounts are both measurable and available to fund current operations. Expenditures are posted when amounts will be disbursed in the near future (typically within sixty days). Because the focus of the fund financial statements is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds (in the fund financial statements) with similar information presented for governmental activities (in the government-wide financial statements). By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. The fund balance of $84,462.84 reported in Exhibit "C" for the Balance Sheet: Governmental Funds is reconciled to the total ending net assets of $408,248.00 reported in Exhibit "A": in the Statement ofNet Assets. The difference in these is due to the following: capital assets are not financial resources and are not reported in the funds and compensated absences are not due and payable in the current period and therefore are not reported in the funds. See Exhibit "D", Reconciliation of the Governmental Funds Balance Sheet to the State ofNet Assets for specific amounts. In addition, the net change in fund balance of $-26,461.88 reported in Exhibit "E" of the Statement ofRevenues, Expenditures and Changes in Fund Balances is reconciled to the change in net assets of $-437.79 reported in Exhibit "B" in the Statement ofActivities. The difference in the change reported in the fund and the government-wide statements results from the following: the fund financial statements report capital outlays as expenditures at the time of purchase, while the government-wide statement allocates the cost of capital assets over time through depreciation expense, and compensated absences expenses that do not require the use of current financial resources are not recognized in the fund financial statements but are recognized in the government-wide statements. See Exhibit "F", Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities, for the actual amounts explained above. NOTES TO THE BASIC FINANCIAL STATEMENTS The Notes to the Basic Financial Statements presented in Exhibit "G" provide additional information that is essential to the full understanding of data provided in the government-wide and fund financial statements. ADDITIONAL INFORMATION Following the Notes to the Basic Financial Statements section is the Schedule of Revenues, Expenditures and Changes in Fund Balances, Budget and Actual, Schedule "l ". This schedule is required supplementary information to the basic financial statements. The format used is similar to the Statement of Revenues, Expenditures and Changes in Fund Balances. This schedule shows the original budget adopted at the beginning of the fiscal year and the final adjusted 11 COASTAL PLAIN REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 budget. Budget amendments were posted during the year to reflect increases in grant awards and receipt of miscellaneous revenues. Actual revenues and expenditures are also presented. Schedules of State, Federal, and Local Revenue are presented in Schedules "2" through "4". These schedules provide details of the State, Federal, and local revenues included on the Statement ofRevenues, Expenditures and Changes in Fund Balances in Exhibit "E". Schedule "5" is a Schedule ofSalaries and Travel for regional employees. FINANCIAL ANALYSIS Government-wide (accrual basis) The Library's overall financial position and operations at the government-wide level for the past two years is summarized as follows: Table 1 Net Assets Governmental Activities Fiscal Fiscal Net Year 2007 Year 2006 Change Assets Current Assets Capital Assets, Net $108,759.04 $113,379.20 $ -4,620.16 339,591.97 311,271.00 28,320.97 Total Assets $448,351.01 $424,650.20 $23,700.81 Liabilities Current and Other Liabilities Long-Term Liabilities $ 24,296.20 $ 2,454.48 $21,841.72 15,806.81 13,509.93 2,296.88 Total Liabilities $ 40,103.01 $ 15,964.41 $24,138.60 Net Assets Invested in Capital Assets Unrestricted $339,591.97 $311,271.00 $28,320.97 68,656.03 97,414.79 -28,758.76 Total Net Assets $408,248.00 $408,685.79 $ -437.79 111 COASTAL PLAIN REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 Revenues Program Revenues: Charges for Services Operating Grants Capital Grants Total Program Revenues General Revenues: Local Funds Other General Revenues Total General Revenues Total Revenues Program Expenses Public Services Technical Services Support Services Maintenance and Operations Information Technology Total Expenses Change in Net Assets Beginning Net Assets Ending Net Assets Table 2 Change in Net Assets Governmental Activities Fiscal Fiscal Net Year 2007 Year 2006 Change $ 1,165.12 647,988.90 36,500.00 $685,654.02 $ 3,292.82 595,501.09 $598,793.91 $ -2,127.70 52,487.81 36,500.00 $ 86,860.11 $102,975.00 27,527.69 $130,502.69 $816,156.71 $104,438.74 7,289.93 $111,728.67 $710,522.58 $ -1,463.74 20,237.76 $ 18,774.02 $105,634.13 $109,364.74 113,319.05 503,528.65 58,784.75 31,597.31 $ 86,007.99 1,798.91 503,027.49 66,235.99 3,116.41 $ 23,356.75 111,520.14 501.16 -7,451.24 28,480.90 $816,594.50 $660,186.79 $156,407.71 $ -437.79 $ 50,335.79 $ -50,773.58 408,685.79 358,350.00 50,335.79 $408,248.00 $408,685.12 $ -431.12 At June 30, 2007, the assets of Coastal Plain Regional Library exceeded its liabilities by $408,248.00. The most significant portion of net assets is the Library's investment in capital assets totaling $339,591.97. The Library uses the assets (buildings and improvements, equipment, and library collections) to provide services to Library customers, so they are not available to fund current operations. The remaining amount available to fund future Library operations is $68,656.03. The current assets decreased $4,620.16 as a result of the Library receiving additional State funds in June 2006 that had to be expensed but not disbursed until fiscal year 2007. In addition, an advance on a grant for asbestos removal was received at the end of fiscal year 2006, but was not disbursed until 2007. Net capital assets increased by net of $28,320.97. Asset purchases of $48,484.14 exceeded additions to accumulated depreciation by $28,320.97. IV COASTAL PLAIN REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 Current liabilities increased due to deferral of grant revenue. Long-Tenn Liabilities include only the compensated absences accrual. The net effect of additions and deletions resulted in an increase of $2,296.88. Operating grants increased as a result of the State funding an additional position, as well as an increase in the materials grant. Capital grants in fiscal year 2007 resulted from State funds for a building renovation project. Other revenues increased as a result of the Gates Foundation Grant. Public Services expenditures increased due to the additional purchase of materials as a result of the increased materials grant. Technical Services increased since salaries and benefits for this functional area were charged here for the first time. Maintenance and Operations expenditures decreased due to prior year replacement of roof shingles, painting, and replacement of an HVAC unit. Information Technology expenditures increased as a result of purchasing replacement computers. Fund Level (modified accrual basis) The Library's overall financial position and operations at the fund level for the past two years is summarized as follows: Table 3 Governmental Activities Total Assets Total Liabilities Total Fund Balance Total Revenues Total Expenditures Fiscal Year2007 Fiscal Year2006 Net Change $108,759.04 $113,379.20 $ -4,620.16 24.296.20 2.454.48 21.841.72 $ 84.462.84 $110.924.72 $ -26.461.88 $816.156.71 $710.522.58 $105.634.13 $842.618.59 $645.571.22 $197.047.37 Total assets decreased $4,620.16 due to disbursement in fiscal year 2007 of one-time grant funds received in 2006. Total liabilities increased due to recording deferred revenue for grant funds received but not expended. V COASTAL PLAIN REGIONAL LIBRARY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 Revenues increased due to receipt of additional grant funds for salaries, benefits, and materials. Expenditures increased as a result of increased materials purchases, purchase of a vehicle, and replacement of computers. GENERAL FUND BUDGETARY VARIANCES The original budget for the Library's operations is presented on Schedule "1" in the Schedule of Revenues, Expenditures and Changes in Fund Balances, Budget and Actual. The budget was amended during the year to reflect additions to Federal and State grant funding. Variances from the actual to budget include state grant revenues and expenses budgeted for an additional position that was not filled for two months. CAPITAL ASSET AND LONG-TERM DEBT ACTIVITY The Library's capital assets consist of buildings and improvements, equipment, and the library collection. The net increase in capital assets before depreciation is $44,852.14. The increase results from the purchase of additional library materials and a vehicle. See Note 4: Capital Assets for details of activity. Long-Term Liabilities increased by a net of $2,296.88. This liability represents the long-term portion of compensated absences. See Note 6: Long-Term Debt for activity. OTHER POTENTIALLY SIGNIFICANT MATTERS There were no potentially significant matters to disclose. REQUESTS FOR ADDITIONAL INFORMATION This financial report is designed to provide a general overview of Coastal Plain Regional Library's finances for our citizens, taxpayers, and governmental entities to which we are accountable. If you have any additional questions about this report, please contact the Library Director at (229) 386-3400. Vl COASTAL PLAIN REGIONAL LIBRARY STATEMENT OF NET ASSETS JUNE 30, 2007 ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net State Federal Local Capital Assets Buildings Equipment Library Collections Less: Accumulated Depreciation Total Assets LIABILITIES Accounts Payable Deposits and Deferred Revenues Long-Term Liabilities Due in More Than One Year Total Liabilities NET ASSETS Invested in Capital Assets Unrestricted Total Net Assets Total Liabilities and Net Assets EXHIBIT"A" GOVERNMENTAL ACTIVITIES $ 67,803.78 35,432.87 63.72 2,400.00 3,058.67 337,460.00 166,239.00 133,337.14 -297,444.17 $ ===4=4.8.,...,35=1=.0=1 $ 8,578.51 15,717.69 15,806.81 $ 40,103.01 $ 339,591.97 68,656.03 $ 408,248.00 $ =======44=8:!:,3=5=1.=0=1 The notes to the basic financial statements are an integral part of this statement. -1- COASTAL PLAIN REGIONAL LIBRARY STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2007 GOVERNMENTAL ACTIVITIES Current Services Public Services Technical Services Support Services Maintenance and Operations Information Technology Total Governmental Activities General Revenues Allotments from Participating Governments Investment Earnings Miscellaneous Total General Revenues Change in Net Assets Net Assets - Beginning of Year Net Assets - End of Year EXPENSES CHARGES FOR SERVICES $ 109,364.74 $ 113,319.05 503,528.65 58,784.75 31,597.31 $ 816,594.50 $ 1,165.12 1,165.12 The notes to the basic financial statements are an integral part of this statement. -2- EXHIBIT"B" PROGRAM REVENUES OPERATING CAPITAL GRANTS AND GRANTS AND CONTRIBUTIONS CONTRIBUTIONS NET (EXPENSES) REVENUES AND CHANGES IN NET ASSETS $ 79,175.56 $ 59,297.78 359,383.19 147,229.13 2,903.24 $ 647,988.90 $ 12,068.54 $ 14,250.72 10,180.74 36,500.00 $ $ $ $ -16,955.52 -54,021.27 -129,894.74 98,625.12 -28 694.07 -130,940.48 102,975.00 1,135.13 26,392.56 130,502.69 -437.79 408,685.79 $ =======4.0.8.=,2=4=8=.o=o -3- COASTAL PLAIN REGIONAL LIBRARY BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2007 EXHIBIT"C" ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Local State Federal Total Assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable Deposits and Deferred Revenue Total Liabilities FUND BALANCES Unreserved Undesignated Reported in: General Fund Capital Projects Fund Total Fund Balances Total Liabilities and Fund Balances GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND TOTAL $ 67,358.05 $ 35,432.87 3,058.67 63.72 2.400.00 445.73 $ 67,803.78 35,432.87 3,058.67 63.72 2.400.00 $ 108,313.31 $ 445.73 $ ===1=0=8=7'=59=.0=4= $ 8,578.51 15,717.69 $ 24,296.20 $ 8,578.51 15 717.69 $ 24,296.20 $ 84,017.11 $ $ 84 017.11 $ $ 445.73 445.73 $ 84,017.11 445.73 84 462.84 $ 108,313.31 $ 445.73 $ =====10=8=7'..,59...,.,...04.,.. The notes to the basic financial statements are an integral part of this statement. -4- COASTAL PLAIN REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30, 2007 EXHIBIT"D" Total Fund Balances - Governmental Funds (Exhibit "C") $ 84,462.84 Amounts reported for Governmental Activities in the Statement of Net Assets are different because: Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of: Buildings Equipment Library Collections Accumulated Depreciation Total Capital Assets $ 337,460.00 166,239.00 133,337.14 -297,444.17 339,591.97 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 -15,806.81 Net Assets of Governmental Activities (Exhibit "A") $ 408,248.00 The notes to the basic financial statements are an integral part of this statement. -5 - COASTAL PLAIN REGIONAL LIBRARY EXHIBIT "E" STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2007 REVENUES Local Funds State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current Public Services Technical Services Support Services Maintenance and Operations Information Technology Facilities Acquisition and Construction Total Expenditures Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND TOTAL $ 102,975.00 623,553.72 $ 24,435.18 1,165.12 1,135.13 26,392.56 $ 779,656.71 $ $ 36,500.00 36,500.00 $ 102,975.00 660,053.72 24,435.18 1,165.12 1,135.13 26,392.56 816,156.71 $ 104,118.75 113,319.05 496,397.99 36,131.22 31,597.31 $ $ 781,564.32 $ $ -1,907.61 $ 85,924.72 $ 61,054.27 61,054.27 $ -24,554.27 $ 25,000.00 104,118.75 113,319.05 496,397.99 36,131.22 31,597.31 61,054.27 842,618.59 -26,461.88 110,924.72 $ 84,017.11 $ 445. 73 $ ==8=4,=4=62=.8=4= The notes to the basic financial statements are an integral part of this statement. -6 - COASTAL PLAIN REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2007 EXHIBIT"F" Total Net Change in Fund Balances - Governmental Funds (Exhibit "E") Amounts reported for Governmental Activities in the Statement of Activities are different because: Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are: Capital Outlay Depreciation Expense Excess of 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 $ -26,461.88 $ 48,484.14 -20, 163.17 28,320.97 -2,296.88 Change in Net Assets of Governmental Activities (Exhibit "B") $ ===-4=-3=7.=79.,. The notes to the basic financial statements are an integral part of this statement. -7- (This page left intentionally blank) COASTAL PLAIN REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "G" Note 1: DESCRIPTION OF LIBRARY AND REPORTING ENTITY REPORTING ENTITY The Coastal Plain 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 eight members which are also trustees of the member library which appointed them. The Library Board membership consists ofone member appointed from the Cook County Library Board, one member appointed from the Carrie Dorsey Perry Memorial Library Board, one member appointed from the Irwin County Library Board, one member appointed from the Victoria Evans Memorial Library Board and four members appointed from the Tifton-Tift 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 of Georgia for State and Federal flow through funding. Membership in the Library and participation in library services is at the discretion of each participating governmental agency. The Library Board has the power to designate management, the power to retain unreserved fund balances oflocal and other funds for continued operations and is the lowest level of oversight responsibility for the Library's operations. The Coastal Plain 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 Coastal Plain 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 of the Library's programs, such as office and maintenance personnel and accounting) are not allocated to programs. -9- COASTAL PLAIN REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the Library's funds. Eliminations have been made to minimize the double counting of internal activities. The emphasis of fund financial statements is on major governmental funds. The Library reports the following major governmental funds: General Fund is the Library's primary operating fund. It accounts for all financial resources of the Library, except those resources required to be accounted for in another fund. Capital Projects Fund accounts for financial resources including grants from 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, 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. - 10 - COASTAL PLAIN REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Library funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the Library's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the Library to deposit its funds in one or more solvent banks or insured Federal savings and loan associations. INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the Library in nonparticipating interest-earning contracts (such as certificates 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 Annotated Section 36-83-4 authorizes the Library to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia. - 11 - COASTAL PLAIN REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Library does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks. 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 of the assets is not capitalized. Depreciation is computed using the straight-line method. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the Library. Capitalization thresholds and estimated useful lives of capital assets reported in the Library-wide statements are as follows: Capitalization Policy Estimated Useful Life Land Land Improvements Buildings and Improvements Equipment Library Collections All NIA $ 5,000.00 10 to 25 years $ 50,000.00 Up to 60 years $ 5,000.00 4 to 25 years All 20 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. NET ASSETS The Library's net assets in the Library-wide Statements are classified as follows: - 12 - COASTAL PLAIN REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT"G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Invested in capital assets - This represents the Library's total investment in capital assets. Unrestricted net assets - Unrestricted net assets represent resources derived from grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the general operations ofthe Library, and may be used at the discretion of the Library to meet current expenses for those purposes. Note 3: DEPOSITS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. At June 30, $38,621.09 ofdeposits 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, (3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, (4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, (5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose, (6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and - 13 - COASTAL PLAIN REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT"G" Note 3: DEPOSITS (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, 2007, the bank balances were $174,869.83. The amounts of the total uninsured bank balances are classified into three categories of custodial credit risk: Category 1 - Uncollateralized Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the Library's name. The Library's deposits are classified by custodial credit risk category at June 30, 2007, as follows: Custodial Credit Risk Category Bank Balance 1 $ 38,621.09 2 0.00 3 0.00 Total $ 38,621.09 Note 4: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year: Governmental Activities Capital Assets Being Depreciated Buildings and Improvements Equipment Library Collections Less Accumulated Depreciation for: Buildings and Improvements Equipment Library Collections Governmental Activity Capital Assets - Net Balances July 1, 2006 Increases Decreases Balances June 30, 2007 $ 337,460.00 139,363.00 $ 115,361.00 26,876.00 21,608.14 $ $ 337,460.00 166,239.00 3,632.00 133,337.14 106,862.00 103,372.00 70,679.00 5,624.00 7,872.32 6,666.85 $ 311.271.00 $ 28,320.97 $ 3,632.00 112,486.00 111,244.32 73,713.85 0.00 $ 339.591.97 - 14 - COASTAL PLAIN REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "G" Note 4: CAPITAL ASSETS Current year depreciation expense by function is as follows: Public Services Support Services Maintenance and Operations $ 6,666.85 7,872.32 5,624.00 $ 20,163.17 Note 5: 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 participates in the Association County Commissioners of Georgia-Interlocal Risk Management Agency, a self-insured pool organized on July 1, 1982, to provide a source ofcoverage for their property, automobile, general liability, public officials' liability, statutory bond, boiler and machinery, and other specialized coverages. The Library pays an annual premium to the Agency for its general insurance coverage. Excess insurance is purchased to protect against catastrophic losses. The Library participates in the Association County Commissioners ofGeorgia-Selflnsured Workers' Compensation Fund, a public entity risk pool organized on July 1, 1982, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The Library pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with Safety National Casualty Corporation to provide coverage for potential losses by the Fund in excess of$1,000,000.00 loss per occurrence, up to $2,000,000.00. The Library has purchased a surety bond to provide additional insurance coverage as follows: Position Covered Amount All Employees $ 50,000.00 Note 6: LONG-TERM DEBT 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. Typically, the General Fund is the fund used to liquidate this long-term debt. The Library uses the vesting method to compute compensated absences. - 15 - COASTAL PLAIN REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "G" Note 6: LONG-TERM DEBT The changes in Long-Term Debt during the fiscal year ended June 30, 2007, were as follows: Balance July 1, 2006 Governmental Funds Compensated Absences {1) $ 13,509.93 Additions Annual Leave Earned 29,633.47 Deductions Annual Leave Utilized 27,336.59 Balance June 30, 2007 $ 15,806.81 (1) The portion of Compensated Absences due within one year has been determined to be immaterial to the basic financial statements. Note 7: SIGNIFICANT 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 costs which are disallowed under grant terms. The Library believes that such disallowances, if any, will be immaterial to its overall financial position. Note 8: 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 - 16 - COASTAL PLAIN REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "G" Note 8: RETIREMENT PLANS independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 2007 2006 2005 100% 100% 100% $ 33,327.29 $ 31,534.00 $ 32,950.00 Note 9: AFFILIATED LIBRARIES DISCLOSURE The Carrie Dorsey Perry Memorial Library, Cook County Library, Irwin County Library, Tifton-Tift County Library and Victoria Evans Memorial Library are legally separate, tax exempt organizations who participate in shared activities with the Coastal Plain Regional Library. These affiliated libraries do not meet the criteria for reporting as either a component unit or related entity of the Coastal Plain Regional Library. - 17 - (This page left intentionally blank) COASTAL PLAIN REGIONAL LIBRARY GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2007 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 FINAL ACTUAL AMOUNTS $ 102,975.00 $ 102,975.00 $ 102,975.00 560,275.16 631,300.11 623,553.72 24,435.18 24,435.18 1,165.00 1,175.00 1,165.12 1,200.00 1,200.00 1,135.13 26,282.31 26,392.56 $ 665,615.16 $ 787,367.60 $ 779,656.71 $ 83,758.18 $ 101,352.73 $ 104,118.75 2,000.00 113,533.72 113,319.05 555,051.64 509,288.21 496,397.99 25,625.14 35,829.24 36,131.22 23,250.00 30,457.31 31,597.31 $ 689,684.96 $ 790,461.21 $ 781,564.32 $ -24,069.80 $ -3,093.61 $ -1,907.61 43,065.10 43,065.10 85,924.72 Fund Balance - Ending $ 18,995.30 $ 39,971.49 $ ===84=,0=1=7=.1==1 Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. - 19 - COASTAL PLAIN REGIONAL LIBRARY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2007 SCHEDULE "2" AGENCY/FUNDING GRANTS Board of Regents of the University System of Georgia Office of Public Library Services Salaries Library Materials Maintenance and Operations Georgia State Financing and Investment Commission Reimbursement on Construction Projects GOVERNMENTAL FUND TYPES DISTRICT- WIDE CAPITAL GENERAL PROJECTS FUND FUND TOTAL $ 406,968.88 69,355.71 147,229.13 $ 406,968.88 69,355.71 147,229.13 ______ $ 36,500.00 36,500.00 $ 623,553.72 $ 36,500.00 $ 660,053.72 See notes to the basic financial statements. - 20- COASTAL PLAIN REGIONAL LIBRARY SCHEDULE OF FEDERAL REVENUE YEAR ENDED JUNE 30, 2007 AGENCY/FUNDING GRANTS Museum and Library Services, Institute of Through Board of Regents of the University System of Georgia Library Services and Technology Act General Technology State Vacation Reading Program SCHEDULE "3" GOVERNMENTAL FUND TYPE GENERAL FUND $ 22,035.18 2,400.00 $ ===2=4==,4=3=5=.1=8 See notes to the basic financial statements. - 21 - COASTAL PLAIN REGIONAL LIBRARY SCHEDULE OF LOCAL REVENUE YEAR ENDED JUNE 30, 2007 LOCAL SOURCES Affiliate Libraries Carrie Dorsey Perry Memorial Cook County Irwin County Tifton-Tift County Victoria Evans Memorial Boards of Education Cook County Tift County SCHEDULE "4" GOVERNMENTAL FUND TYPE GENERAL FUND $ 19,755.00 17,794.00 10,296.00 41,115.00 10,605.00 2,210.00 1,200.00 $ ======1=02=,9=7=5=.0=0 See notes to the basic financial statements. - 22- NAME Blackmarr, Amy Frizzell, Gary F. Griffis, Kathy E. Johnson, Max C. McMillian, Annis M. Newberry, Joan W. Paulk, Sara Routsong, Scott E. Smith, Ruth Zeiger, Carrie Totals per Report COASTAL PLAIN REGIONAL LIBRARY SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2007 SCHEDULE "5" TITLE CATEGORY Cataloger Associate Director Assistant Director Cataloger Technical Services Clerk Special Services Librarian Assistant Director Children Services Librarian Senior Accounts Clerk Director SALARIES TRAVEL $ 6,057.40 8,584.87 $ 224.28 66,729.00 763.54 56,640.32 179.74 26,000.04 59,268.32 220.84 62,970.42 14.68 9,551.82 28,265.78 72,362.28 2,347.03 $ 396,430.25 $ ===3:!.7=5=0=.1=1 See notes to the basic financial statements. -23- SECTION II FINDINGS AND QUESTIONED COSTS COASTAL PLAIN REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007 COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES The auditor is required to communicate to management and those charged with governance control deficiencies identified during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness. A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Coastal Plain Regional Library's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Coastal Plain Regional Library's financial statements that is more than inconsequential will not be prevented or detected by the Coastal Plain Regional Library's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Coastal Plain Regional Library's internal control. Any identified deficiencies in internal controls that we did not consider to be significant deficiencies and/or material weaknesses have been communicated to management and those charged with governance within a separate management letter dated October 20, 2008. Internal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below: CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER Inadequate Internal Controls Material Weakness Finding Control Number: FS-7372-07-01 Condition: The accounting procedures of the Coastal Plain Regional Library were insufficient to provide for adequate controls over Cash and Cash Equivalents, Expenditures/Liabilities/Disbursements, Employee Compensation, and General Ledger. Criteria: The Regional Library's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures. Such internal controls would limit any one individual's access to both physical assets and the related accounting records. - 1- COASTAL PLAIN REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007 CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER Inadequate Internal Controls Material Weakness Finding Control Number: PS-7372-07-01 Questioned Cost: NIA Information: Cash and Cash Equivalents The bank reconciliation function was not separated from the record keeping and voucher payment functions and the bank reconciliation was not approved or reviewed. Expenditures/Liabilities/Disbursements Weaknesses in internal controls relating to expenditures were noted as follows: (1) Procedures were not in place to ensure that purchase orders were completed and approved in accordance with Library policy. A review of eighty-four expenditure vouchers revealed that sixty-six vouchers contained no purchase order and no indication of administrative approval prior to payment, and (2) Procedures were not in place to ensure that the Director's approval was obtained prior to payment. Employee Compensation Someone independent of the employee compensation process does not review the monthly payroll checks. General Ledger Someone independent ofthe general ledger posting function does not review journal entries. Cause: The deficiencies noted above occurred because of management's failure to implement adequate controls to ensure that (1) bank reconciliations are properly approved and separated from the record keeping function; (2) expenditures are properly processed and approved; (3) all amounts paid to Library employees are adequately documented and properly approved; and (4) journal entries are adequately documented and approved before posting to the general ledger. -2- COASTAL PLAIN REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007 CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS EMPLOYEE COMPENSATION GENERAL LEDGER Inadequate Internal Controls Material Weakness Finding Control Number: FS-7372-07-01 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 of controls could impact reporting of its financial position and results of operation. Recommendation: The Library should review the accounting procedures in place and design and implement procedures relative to the above control categories to strengthen the internal controls over the accounting functions. -3- SECTION III MANAGEMENT'S RESPONSES COASTAL PLAIN REGIONAL LIBRARY SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDED JUNE 30, 2007 Coastal Plain Regional Library's responses to the findings described below were not audited and accordingly, we express no opinion on it. Finding Control Number: FS-7372-07-0 I We concur with this finding. While a very limited staff makes it difficult for the Library to segregate duties appropriately, action was taken to correct these findings immediately after the exit conference of June 26, 2008. The bank reconciliation function is now separated from the record keeping and voucher payment functions and is reviewed by the Bookkeeper and approved by the Director. Numbered purchase order forms are now in place and must be completed and approved in accordance with Library policy. All purchase orders have administrative approval. The Director now reviews the monthly payroll checks and all journal entries on a timely basis. Journal entries are now documented and approved before posting and all amounts paid to Library employees are documented and approved by management. Although we have taken immediate steps to implement controls as suggested in this audit, documentation offinancial policies and procedures is expected to take longer. Management has implemented a plan to have policies and procedures in place within the next six months. Contact person: Carrie Zeiger, Director Phone: (229) 386-3440 Fax: (229) 386-7007 e-mail: czeiger@cprl.org