Audit report, Northwest Georgia Regional Library, (Formerly Dalton Regional Library) Dalton, Georgia, year ended June 30, 1996

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AUDIT REPORT NORTHWEST GEORGIA REGIONAL LffiRARY (FORMERLY DALTON REGIONAL LffiRARY)
DALTON. GEORGIA YEAR ENDED JUNE 30. 1996

STATE OF GEORGIA DEPARTMENT OF AUDITS
254 WASHINGTON STREET
ATLANTA. GEORGIA 30334

NORTHWEST GEORGIA REGIONAL LIBRARY 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

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

3

C

STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES BUDGET AND ACTUAL

GENERAL AND SPECIAL REVENUE FUNDS

5

D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

6

ADDITIONAL FINANCIAL INFORMATION

COMBINING STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

14

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

15

SCHEDULES

1 CASH AND CASH EQUIVALENTS

16

2 INVESTMENTS

17

3 ACCOUNTS RECEIVABLE

18

SCHEDULE OF REVENUE

4

STATE

19

5

FEDERAL

20

6

OTHER

21

SCHEDULE OF EXPENDITURES BY OBJECT

7

ALL GOVERNMENTAL FUND TYPES

22

8

LOTTERY PROGRAM

23

9 MEMBERSHIP OF LIBRARY BOARD

24

10 SCHEDULE OF SALARIES AND TRAVEL

25

NORTHWEST GEORGIA REGIONAL LffiRARY - TABLE OF CONTENTS - .
SECTION II FINDINGS AND IMPROPER OR QUESTIONED COSTS SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS

SECTION I FINANCIAL

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
January 31, 1997

Honorable Zell Miller, Governor Members ofthe General Assembly Members ofthe State Board ofEducation
and Director and Members ofthe Northwest Georgia Regional Library Board
INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the general purpose financial statements (Exhibits A through D) ofthe Northwest Georgia Regional Library, as ofand for the year ended June 30, 1996, as listed in the table of contents. These financial statements are the responsibility ofthe Library's management. Our responsibility is to express an opinion on these 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 ofmaterial 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 certain accounting practices and policies which, in our opinion, vary in some respects from generally accepted accounting principles. These variances are 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 Library did not report the deferred compensation plan assets and liabilities within the general
purpose financial statements. To conform to generally accepted accounting principles, these amounts should be included in the general purpose financial statements.
96ARL-42

The aggregate effects on the general purpose financial statements of these variances or omissions have not been determined, but are believed to be material.
.,.
In our opinion, except for the effects on the general purpose financial statements of the matters referred to in the third paragraph, the general purpose financial statements present fairly, in all material respects, the financial position ofthe Northwest Georgia Regional Library as ofJune 30, 1996, and the results ofits operations for the year then ended, in conformity with generally accepted accounting principles.
Our audit was conducted for the purpose offorming an opinion on the general purpose financial statements ofthe Northwest Georgia Regional Library taken as a whole. The combining statements (Exhibits E and F) and the financial schedules (Schedules 1 through 10), 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 ofthe Northwest Georgia Regional Library. 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 matters 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 ofthis 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.
~sz::~

CLV:cm 96ARL-42

Claude L. Vickers State Auditor

NORTHWEST GEORGIA REGIONAL LffiRARY - 1-

NORTHWEST GEORGIA REGIONAL LIBRARY COMBINED BALANCE SHEET ALL FUND TYPES JUNE 30,1996

EXHIBIT "A"

ASSETS Cash and Cash Equivalents Investments Accounts Receivable

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTALS (Memorandum Only) JUNE 30,1996 JUNE 30,1995

$

5,569.37 $

5,569.37 $

3,514.70

$

32,412.26

32,412.26

30,305.42

7,615.89

7,615.89

22,337.59

Total Assets

$

40,028.15 $

5,569.37 $

45,597.52 $

56,157,71

LIABILITIES AND FUND EQUITY

LIABILITIES

Cash Overdraft

$

Accounts Payable

Salaries Payable

Expired Grant Balances Payable

Total Uabilities

$

FUND EQUITY

Fund Balances

Reserved

For Continuation of Federal Program

Unreserved

Undesignated

$

Total Fund Equity

$

38,109.26 70.46
344.20 0.78
38,524.70
$ 1,503.45 1,503,45 $

$

38,109.26 $

1,983.01

70.46

3,432.38

344.20

0.78

14,402.88

$

38,524,70 $

19,818.27

5,569.37 $ 0.00
5,569.37 $

5,569.37 1,503.45 $ 7,072.82 $

36,339,44 36,339.44

Total Uabilities and Fund Equity

$

40,028.15 $

5,569.37 $

45,597.52 $

56,157.71

The notes to the general purpose financial statements are an integral part of this statement.
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NORTHWEST GEORGIA REGIONAL LIBRARY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES
YEAR ENDED JUNE 30, 1996

EXHIBIT -8"

GENERAL FUND

SPECIAL REVENUE
FUND

TOTALS (Memorandum Only)
YEAR ENDED
JUNE 30,1996 JUNE 30,1995

REVENUES

State Funds Federal Funds Other Funds

$ 557,236.23 $ 527.38
230,941.94

10,000.00 $ 22,576.99

567,236.23 $ 23,104.37
230,941.94

618,396.58 17,744,54
209,773,63

Total Revenues

$ 788,705.55 $

32,576.99 $

821,282.54 $

845,914.75

EXPENDITURES

Current Program Services Technical Services Circulation Administration Maintenance and Operations

$ 302,736.81 $ 56,561.69 49,153.30 324,648.35 90,441.39

27,007.62 $

329,744.43 $ 56,561,69 49,153.30 324,648.35 90,441.39

443,463.83 51,827.86 77,006.12 190,130.07 95,006.11

Total Expenditures

$ 823,541.54 $

27,007.62 $

850,549.16 $

857,433.99

Excess of Revenues over (under) Expenditures

$

-34,835.99 $

5,569.37 $

-29,266.62 $

-11,519.24

OTHER FINANCING SOURCES (USES)

Operating Transfers In Operating Transfers Out

$

0.88

-0.88

Total Other Financing Sources (Uses)

$

0.00

Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses $

-34,835.99 $

5,569.37 $

-29,266.62 $

-11,519.24

FUND BALANCE JULY 1

36,339.44

0.00

36,339.44

47,858.68

FUND BALANCE JUNE 30

$

1,503.45 $

5,569.37 $

7,072.82 $

36-.,.3..3.9..4...4.

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

THIS PAGE LEFT BLANK

NORTHWEST GEORGIA REGIONAL LIBRARY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 1996

EXHIBIT"C"

GENERAL FUND

BUDGET

ACTUAL

REVENUES

State Funds Federal Funds Other Funds

$ 536,425,00 $ 211,894,00

557,236.23 527.38
230,941.94

Total Revenues

$ 748,319,00 $ 788,705.55

EXPENDITURES

Current Program Services Technical Services Circulation Administration Maintenance and Operations

$ 287,785.00 $ 50,390.00 47,678.00
296,432,00 97,196,00

302,736.81 56,561.69 49,153.30
324,648.35 90,441.39

Total Expenditures

$ 779,481,00 $ 823,541,54

Excess of Revenues over (under) Expenditures $ -31,162.00 $ -34,835.99

FUND BALANCE JULY 1, 1995

40,199.52

36,339,44

SPECIAL REVENUE FUND

BUDGET

ACTUAL

$ 10,000.00 $ 10,000.00

22,576.99

22,576.99

$ 32,576.99 $ 32,576.99

$ 32,659.56 $ 27,007.62

$ 32,659.56 $ 27,007.62

$

-82.57 $

5,569.37

0,88

0,00

FUND BALANCE JUNE 30, 1996

$

9,037.52 $

1,.50.-.3.,4..5..

$

-81,69 $ _.....;,51,;,,56;;,;;9~.3~7

The notes to the general purpose financial statements are an integral part of this statement -5-

NORTHWEST GEORGIA REGIONAL LmRARY

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1996

Note 1: SUMl\1ARY OF SIGNIFICANT ACCOUNTING POLICIES
The Northwest Georgia Regional Library, (formerly Dalton Regional 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 departures from generally accepted accounting principles disclosed in these notes, the financial statements ofthe 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 ofthe Library. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles.
The more significant ofthe Library's accounting policies are described below.
REPORTING ENTITY
In evaluating how to define the governmental unit for financial reporting purposes, management has considered the criteria set forth in GASB Codification of Governmental Accounting and Financial Reporting Standards, Section 2100, "Defining the Financial Reporting Entity". Based upon the application of the above criteria, the Northwest Georgia Regional Library is determined to be a jointly governed organization.
The Library Board consists ofnine members; four members appointed by Whitfield County Library Board, two members appointed by the Catoosa County Library Board, two members appointed by the Gordon County Library Board and one member appointed by the Murray County Library Board. The Board is without authority to aetermine 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 funding. Membership in the Library and participation in library services is at the discretion of each participating governmental agency. The Board has the power to designate management, the power to retain unreserved fund balances oflocal funds for continued operations and is the lowest level ofoversight responsibility for the Library's operations.
The Northwest Georgia Regional Library is located in Dalton, Georgia, and serves Catoosa, Gordon, Murray and Whitfield Counties.
FUND ACCOUNTING
The Library uses funds to report on its financial position and the results ofits 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.
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
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NORTHWEST GEORGIA REGIONAL LffiRARY

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1996

Note I: SUM:MARY OF SIGNIFICANT ACCOUNTING POLICIES
Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
The general purpose financial statements account for all State, Federal 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 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 of specific revenue sources 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.
BASIS OF ACCOUNTING
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental 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 of these funds present increases (Le., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources.
Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
Revenues are recognized when susceptible to accrual (i.e., 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.

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NORTHWEST GEORGIA REGIONAL LffiRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1996

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUDGET
The Northwest Georgia 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 ofbudget 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 Georgia Department of Education, Division ofPublic Library Services as a'part ofthe Library's annual application for State aid. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year end.
CASH AND CASH EQUIVALENTS
COl\1POSITION OF DEPOSITS Cash and cash equivalents consist of deposits (including certificates of deposit) 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
COMPOSITION OF INVESTMENTS Donated investments are stated at fair market value as ofthe date donated.
RECEIVABLES
Receivables consist of reimbursements due 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 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
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NORTHWEST GEORGIA REGIONAL LffiRARY

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1996

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
recorded in the individual funds for the current portion of this obligation as this amount is deemed immaterial to the general purpose financial statements.
Additionally, the dollar value of accumulated compensated absences at June 30, which will be payable from future resources has not been recorded in the General Long-Term Debt Account Group as this liability is also deemed to be immaterial to the fair presentation ofthese financial statements.
INTERFUND TRANSACTIONS
The Library has the following type 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.
MEMORANDUM ONLY - TOTAL COLUMNS
Total columns on the general purpose 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 ofthis data.
Note 2: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate of the 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 of the 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 in demand deposit checking accounts.
Acceptable security for deposits consists of anyone of or 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 ofthe United States or of the State of Georgia,
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NORTHWEST GEORGIA REGIONAL LffiRARY

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1996

Note 2: DEPOSITS AND INVESTMENTS

(4) Bonds, bills, notes, certificates ofindebtedness or other obligations ofthe counties or municipalities ofthe State of Georgia,

(5) Bonds ofany public authority created by the laws ofthe State ofGeorgia, 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 ofthe State of Georgia, and

(7) Bonds, bills, notes, certificates ofindebtedness, or other obligations ofa 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, 1996, the bank balances were $35,861.04. The bank balances were entirely covered by Federal depository insurance.

CATEGORIZATION OF INVESTMENTS At June 30, 1996, the carrying amount of the Library's total investments was $32,412.26 and this entire amount consisted of Common Stock which was registered in the Library's name. The market value ofthese investments was $65,318.63.

Note 3: RISK MANAGEMENT

The Library is exposed to various risks ofloss related to torts; theft of, damage to, and destruction ofassets; errors or omissions; job related illness or injuries to employees; natural disaster; and unemployment compensation.

The Library has obtained commercial insurance for risk of loss associated with torts, assets, errors or omissions and job related illnesses or injuries to employees. However, the 'error or omissions policy excludes coverage for sexual harassment and discrimination. The Library has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Library's insurance coverage in any ofthe past three years.

The Library has elected to self-insure for all losses related to natural disaster. The Library has not experienced

any losses related to this risk in the past three years.

..

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NORTHWEST GEORGIA REGIONAL LmRARY

EXInBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1996

Note 3: RISK MANAGEMENT

The Library is self-insured with regard to unemployment compensation claims. The Library accounts for claims within the General Fund with expenditure and liability being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated.

Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

1995 1996

$

0.00 $

524.00 $

524.00 $

0.00

$

0.00 $

1.704.00 $

1.704.00 $

0.00

Note 4: 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 5: DEFERRED COMPENSATION PLAN

The Library offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all Library employees, permits them to defer a portion oftheir salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency.

All amounts ofcompensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights ofthe Library (without being restricted to the provisions ofbenefits under the plan), subject only to the claims ofthe Library's general creditors. Participants' rights under the plan are equal to those ofgeneral creditors ofthe Library in an amount equal to the fair market value ofthe deferred account for each participant.

It is the opinion ofthe Library that the Library has no liability for losses under the plan but does have the duty ofdue care that would be required of an ordinary prudent investor. The Library believes it is unlikely that it will use the assets to satisfy the claims ofgeneral creditors in the future.

The Library has designated an independent plan administrator to operate and maintain the plan. The assets and liabilities of the plan are not reflected in these financial statements. To conform to generally accepted accounting principles, these amounts should be recorded in the general purpose financial statements.

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NORTHWEST GEORGIA REGIONAL LmRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1996

Note 6: ACCUMULATED EMPLOYEES' LEAVB

Employees ofthe Library earn leave at a rate determined by the length of employment with the Library up to 20 days per year. No more than 10 days may be carried over to the next calendar year. Employees will be paid, at their current rate ofpay, for all accumulated leave upon retirement or termination of employment. See Note 1 - Compensated Absences

Note 7: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION All full-time 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 public employee retirement system (PERS).

TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. A member is eligible for service retirement after 30 years of service, regardless ofage, or after 10 years ofservice and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service and attainment of age 55, at a reduced benefit. Retirement benefits paid to members are equal to 2% ofthe average ofthe member's two consecutive highest paid years of service multiplied by the number ofyears of creditable service up to 40 years. The normal retirement pension is payable monthly for life. Options are available for distribution ofthe member's monthly pension at a reduced rate to a designated beneficiary on the member's death.

Retirement benefits also include disability and death benefits. A disabled member or surviving spouse is entitled to receive annually an amount equal to the member's service retirement benefit or disability retirement, whichever is greater. The death benefit is the amount that would be payable to the member's beneficiary had the member retired on the date of death on either a service retirement allowance or a disability retirement allowance, whichever is larger. The benefit is based on the member's creditable service (minimum of 10 years of service) and compensation up to the time of disability or death.

Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting of employee contributions occurs, but the member's contributions are refunded with interest.

The Library's payroll for employees covered by TRS for the year ended June 30, 1996, was $376,938.49; total payroll was $405,553.41.

TRS CONTRmUTIONS REQUIRED AND MADE

...

Employees of the Library who are covered by TRS are required by State statute to pay 5% of their gross

earnings to TRS. The Library makes monthly employer contributions to TRS at rates adopted by the TRS

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NORTHWEST GEORGIA REGIONAL LmRARY

EXHIBIT liD"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1996

Nme7: RETIREMENT PLANS

Board ofTrustees in accordance with State statute and as advised by their independent actuary. At June 30, 1996, the TR.S Library employer contribution rate was 11.81%. The interest rate assumption (rate of return on investments) was 7.50%.

Total contributions made during fiscal year 1996 amounted to $61,588.47, of which $42,741.44 was made by the Library and $18,847.03 was made by employees. These contributions represented 11.81% (Library) and 5% (employees) of covered payroll.

TRS FUNDING STATUS AND PROGRESS The amount of the total pension benefit obligation is based on a standardized measurement established by Statement NO.5 ofthe Governmental Accounting Standards Board (GASB) that, with some exceptions, must be used by a PERS. The standardized measurement is the actuarial present value of credited projected benefits. This valuation method reflects the present value of estimated pension benefits that will be paid in future years as a result of employee services performed to date, and is adjusted for the effects of projected salary increases. A standardized measure of the pension benefit obligation was adopted by the GASB to enable readers of PERS financial statements to assess that PERS funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among other PERS and among other employers.

Total unfunded pension benefit obligation ofTRS as of June 30, 1995, was as follows:

Total pension benefit obligation

$ 17,442,607,000.00

Net assets available for benefits, at cost

15,857,066,000.00

Unfunded pension benefit obligation

$ 1.585.541.000.00

The measurement ofthe total pension benefit obligation is based on an actuarial valuation as of June 30, 1995. Net assets available to pay pension benefitswere valued as of the same date. TRS does not make separate measurements of assets and pension benefit obligation for individual employers.

Total contributions from all employers to TRS for fiscal year ended June 30, 1996, were $607,275,000.00. The Library's contribution for the year ended June 30, 1996, of $42,741.44 was actuarially determined and represented .0070% of total contributions made by all participating employers.

Ten year historical trend information is presented in the 1996 TRS Component Unit Financial Report. This information is useful in assessing TRS's accumulation of sufficient assets to pay pension benefits as they become due.

Note 8: SURETY BONDS '

The Library Director, Mr. Joe B. Forsee, and all employees of the Library are covered under a blanket bond in the amount of$20,000.00 with the Ohio Casualty Insurance Company, Hamilton, Ohio, their Bond No. 3061-628, on which premium was paid through February 16, 1997.
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NORTHWEST GEORGIA REGIONAL LIBRARY COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30, 1996

ASSETS Cash and Cash Equivalents Accounts Receivable
Total Assets

LOTIERY PROGRAM

LIBRARY SERVICES AND
CONSTRUCTION ACT TITLE I PUBLIC LIBRARY
SERVICES

TOTALS JUNE 30.1996 JUNE 30.1995

$

0.00 $

5,569.37 $

5,569.37

_ _ _ _ _ $ _ _"",1.:.;.983;..;;.;,;,0.;.,1

$

0,00 $

5.569,37 $

5,569,37 $ _ _.,;,j1.9..8.3..,0._1

LIABILITIES AND FUND EQUITY

LIABILITIES

Cash Overdraft

FUND EQUITY

Fund Balances

Reserved

For Continuation of Federal Program

Unreserved

Undesignatecl

$

Total Fund Equity

$

Total Liabilities and Fund Equity

$

$ ....;;;0.;,;;00;;..
0.00 $
0.00 $

$ _ _"",,1,:.;;.983=.0..;.,1

5,569.37 $ 0.00
5;;.:;.569~,;.;;.3..;..7 $

5,569.37 0,00 $
5,569.37 $

..;;O,;.;;'OO~ ..;;O,;.;;'OO~

5.,5.69;;,;,;;;.3.7.. $

5,569.37 $ _ _.;,:1.,;,;983;,;,;,;;.0,;",1

See notes to the general purpose financial statements.

-14 -

NORTHWEST GEORGIA REGIONAL LIBRARY COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUND YEAR ENDED JUNE 30,1996

EXHIBIT-P

REVENUES
State Funds Federal Funds
Total Revenues EXPENDITURES
Current Program Services
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

LOTIERY PROGRAM

LIBRARY SERVICES AND
CONSTRUCTION ACT TITLE I PUBLIC LIBRARY
SERVICES

TOTALS YEAR ENDED JUNE 30,1996 JUNE 30, 1995

$

10,000.00

$

$

10,000.00 $

$ 22,576,99
22,576.99 $

10,000.00 $ 22,576,99
32,576.99 $

95,4n.07 17,423.01
112,900.08

$

10,000,00 $

$

0,00 $

$

0.00 $

0.00

17,007.62 $ 5,569,37 $

27,007,62 $ 5,569.37 $

114,049,69 -1,149.61

5,569,37 $ 0,00

-0,88

5,569.37 $ 0.00

-1,150,49 1,150.49

FUND BALANCE JUNE 30

$

..;O,;,;,00~$

$ ..;5:.;;,569,;,;,;,;;.3~7

5,569,37 $

..;O,;,;,OO~

See notes to the general purpose financial statements.

-15 -

NORTHWEST GEORGIA REGIONAL LIBRARY CASH AND CASH EQUIVALENTS
JUNE 30, 1996
NONINTEREST BEARING ACCOUNT Wachovia Bank of Georgia, Dalton, Georgia
INTEREST BEARING ACCOUNT Wachovia Bank of Georgia, Dalton, Georgia
Certificate of Deposit No. 6058478 (5.36%)
OTHER Petty Cash

SCHEDULE "1"
$ -34,694.89 1,890.00 265.00
$ -32,539.89

See notes to the general purpose financial statements.

- 16 -

NORTHWEST GEORGIA REGIONAL LIBRARY INVESTMENTS JUNE 30, 1996
STOCK Wachovia Corporation 1,492.9973 Shares of Common Stock (Market Value $65,318.63)

SCHEDULE "2" $ 32.412.26

See notes to the general purpose financial statements.

- 17 -

NORTHWEST GEORGIA REGIONAL LIBRARY ACCOUNTS RECEIVABLE JUNE 30, 1996

SCHEDULE "3"

Calhoun-Gordon County Ubrary Reimbursement for Supplies and Materials
Internal Revenue Service Refund of Tax Overpayment
Selective Insurance Refund of Premium

GOVERNMENTAL FUND TYPE GENERAL FUND

$

1,970.82

1,990.83

3,654.24

$ =============7.1,.:.61=5=,8=9

See notes, to the general purpose financial statements.

- 18 -

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF STATE REVENUe
YEAR ENDED JUNE 30, 1996

SCHEDULE -4-

AGENCY/FUNDING
GRANTS Education, Georgia Department of Public Ubraries Salaries and Travel Ubrary Materials Maintenance and Operations Lottery Program Technology Installation

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$ 330,612.23 116,112.00 110,512.00
-----$

$ 330,612.23 116,112.00 110,512.00

10,000.00

10,000,00

$ 557,236.23 $ 10,000.00 $ 567,236.23

See notes to the general purpose financial statements.
- 19 -

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF FEDERAL REVENUE YEAR ENDED JUNE 30, 1996

SCHEDULE "5"

AGENCY/FUNDING
SUB-GRANTS Education, U. S, Department of Through Georgia Department of Education Ubrary Services and Construction Act Title I - Public Ubrary Services Title III - Interlibrary Cooperation and Resources Sharing

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$ $ _ _....;5::.::2:.:..7.~38;;;..

22,576.99 $

22,576.99 527.38

$

527.38 $

22,576.99 $ 23,104.37

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

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF OTHER REVENUE
YEAR ENDED JUNE 30,1996

SCHEDULE "6"

LOCAL SOURCES Boards of Education Dalton, City of Murray County Whitfield County City Government Dalton County Governments Boards of Commissioners Catoosa Whitfield Public Libraries Calhoun - Gordon County Catoosa County
OTHER SOURCES Dividends Donations Fines and Fees Interest Earned Lost and Damaged Books Photocopy Sales other

GOVERNMENTAL FUND TYPE GENERAL FUND

$

1,200.00

1,200.00

100.00

64,999.92

4,000.00 91,691.63
6,000.00 1,642.25

2,106.84 4,326.51 6,049.93 1,883.52 1,185.90 3,943.24 40,612.20

$ ======2=30,;;,:,,=94=1,,;,;;,9=4

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

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF EXPENDITURES BY OBJECT
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30. 1996

SCHEDULE '7"

EXPENDITURES
Operating Costs Salaries Employee Benefits Travel of Employees Professional and Technical Services Property Services Supplies Ubrary Books and Materials Communications and Insurance Dues and Fees Other Expenditures
Nonoperating Costs Equipment

GENERAL FUND

SPECIAL REVENUE
FUND

TOTAL

$ 405,553.41 110,440.52 7,061.25 2,999.50 $ 63,891.85 14,945.31 120,130.92 38,055.98 3,343.78 57,119.02

$
2,641.72 1,592.91 12,492.97
280.02

405,553.41 110,440.52
7,061.25 5,641.22 63,891.85 16,538.22 132,623.89 38,055.98 3,343.78 57,399.04

10,000.00

10,000.00

Total Expenditures

$ 823,541.54 $

27,007.62 $ 850,549.16

See notes to the general purpose financial statements. - 22 -

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF EXPENDITURES BY OBJECT
LOTTERY PROGRAM YEAR ENDED JUNE 30. 1996
EXPENDITURES Nonoperating Costs Equipment

SCHEDULE -8-

TECHNOLOGY INSTALLATION

$

1=0=,0=00..,.0.==0

See notes to the general purpose financial statements. - 23 -

NORTHWEST GEORGIA REGIONAL LIBRARY MEMBERSHIP OF LIBRARY BOARD YEAR ENDED JUNE 30. 1996
BOARD MEMBER ADDRESS
Mr. Leslie Waycaster, Chairman (*) 101 North Hamilton Street Dalton, Georgia 30720
Mr. Richard Allmon (*) 638 Woodgate Road Ringgold, Georgia 30736
Ms. Joyce Brownlee (*) 135 Devonwood Drive Calhoun, Georgia 30701
Ms. Sylvia Brumbelow (*) 305 East Une Street Calhoun, Georgia 30701
Ms. Karen Daniel Route 6, East Sharon Circle Ringgold, Georgia 30736
Mr. William Fincher (*) 615 Green Road Chatsworth, Georgia 30705
Mr. Harvey Halman (*) 220 Westerly Drive Dalton, Georgia 30720
Ms. Nancy Kennedy (*) P. O. Box 182 Dalton, Georgia 30722
Mr. Jim Price (*) 227 BatUewood Drive Ft Oglethorpe, Georgia 30742
Ms. Beverly Whitfield (*) 1903 Villa Way Dalton, Georgia 30720
(*) Denotes Board Members Serving as of June 30, 1996

See notes to the general purpose financial statements.

- 24 -

SCHEDULE "9"

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30. 1996

SCHEDULE 10

PERSONNEL

Brewer, Cody, Cook, Duke, Dunn, Dunn, Flood, Forsee, Gonzales, Harmon, Hart, Hoole, Jones, Jr., Lankford, Unker, Utton, Macon, McMahon, Miller, Pearce, Powell, Rader, Roberts, Scott, Swanson, Willis,

Kimberly Sara Elizabeth MaryAnn Betty Jean Dorothy Melanie Nancy Joan JoeB. Joanne Julia K. Glenda Martha D. Charles Mary Rita Unda Deborah Connie Barbara Sheila Colleen Richard P. Dana Barbara J. Unda M. Michelle

Total Cash Basis

Accruals June 30,1996

POSITION
Bookkeeper Extension Ubrarian Shelver Processing Clerk Clerk Clerk Clerk Director Clerk Ubrarian Clerk Ubrarian Custodian Shelver Ubrarian Ubrarian Ubrarian Clerk Clerk Clerk Clerk Clerk Clerk Shelver Clerk Clerk

SALARIES

TRAVEL

$

18,086.29 $

32,816.80

634.32

1,662.96

16,177.60

1,240.00

15,675.70

50,786.40

232.50

30,681.40

1,640.00

44,136.40

13,930.80

3,826.09

35,190.00

43,036.40

42,736.40

15,254.10

405.00

1,354.60

287.50

776.25

12,487.20

8,000.00

12,912.00

1,242.50

106.46 902.72
3,980.66 219.39 176.85
1,495.33 33.00 12.50
128.40 5.94

$

405,209.21 $

7,061.25

344.20

$

405,553.41 $===7=,0=6=1=:.2:=5

See notes to the general purpose financial statements. - 25-

SECTIONll FINDINGS AND IMPROPER OR QUESTIONED COSTS

NORTHWEST GEORGIA REGIONAL LffiRARY SCHEDULE OF FINDINGS AND IMPROPER OR OUESTIONED COSTS
YEAR ENDED JUNE 30. 1996

PRIOR YEAR

AUDIT FOLLOW-UPIRESOLUTION Inadequate Purchasing Procedures Audit Control Number 7552-94-04

The audit reports for the year ended June 30, 1994 and June 30, 1995, noted that the Northwest Georgia

Regional Library was awarded a State Lottery Program grant in the amount of $122,500.00 to purchase

computer and media equipment. As a prerequisite to the grant award, the Library developed a Technology

Plan for the library system. The Library agreed to pre-conditioned assurances in implementing the Technology

Plan which was subsequently approved by the Georgia Department ofEducation, Division ofLibrary Services.

Our report for the 1994 fiscal year noted that the Library had purchased certain radio equipment as approved

in the Technology Plan. However, the intent and purpose ofthis equipment was not specific in the Technology

Plan as to the implementation and benefit to the Library system. A review was requested of the Georgia

Department of Education, Division of Library Services to determine if this equipment is capable of

accomplishing the goals ofthe Library. As ofthe date ofthis audit, the Division ofLibrary Services has not

recommended a resolution regarding the disposition of the radio equipment. The Library should continue its

efforts to resolve this finding.

.

PRIOR YEAR/CURRENT YEAR

GENERAL FIXED ASSETS Failure to Maintain General Fixed Asset Account Group Audit Control Number 7552-93-01

The audit report for the year ended June 30, 1995, noted that the management of the Northwest Georgia Regional Library had chosen not to maintain a system-wide General Fixed Asset Account Group within the formal accounting records as required by generally accepted accounting principles. In the year under review, the Library did not establish a General Fixed Assets Account Group within the formal accounting records. This condition results in the general purpose financial statements of the 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 maintenance ofa General Fixed Asset Account Group. These subsidiary records 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.

- 1-

NORTHWEST GEORGIA REGIONAL LffiRARY SCHEDULE OF FINDINGS AND IMPROPER OR OUESTIONED COSTS
YEAR ENDED JUNE 30. 1996
PRIOR YEAR/CURRENT YEAR ACCOUNTING CONTROLS (OVERALL) Inadequate Separation ofDuties Audit Control Number 7552-94-01 The audit report for the year ended June 30, 1995, noted that the Library did not provide for adequate separation ofemployee duties in the perfonnance ofaccounting functions and related procedures. For the year under review, no improvement in adequate separation ofemployee duties was noted. This deficiency was a result of management's decision to limit the number ofadministrative staffmade responsible for accounting functions. Management should periodically review this decision to determine if employee duties can be reassigned to achieve a higher degree ofinternal control with existing staff.
Note: The Northwest Georgia Regional Library was provided an opportunity to include pertinent comments from the Library's management concerning these audit findings, conclusions and recommendations. The Library has elected not to provide comments for inclusion in this report.
-2-