6-A
A~oo
.RI R'tb D21946-9'[
AUDIT REPORT NORTHWEST GEORGIA REGIONAL LIBRARY
DALTON, GEORGIA YEAR ENDED JUNE 30, 1997
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

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 AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

4

C

COMBINED 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 AND INDIVIDUAL FUND STATEMENTS

SPECIAL REVENUE FUND

E

COMBINING BALANCE SHEET

16

F

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

17

FIDUCIARY FUND TYPE

G

STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUND

18

SCHEDULES

SCHEDULE OF REVENUE

1

STATE

19

2

FEDERAL

20

3 SCHEDULE OF EXPENDITURES

LOTTERY PROGRAM

21

4 SCHEDULE OF SALARIES AND TRAVEL

22

NORTHWEST GEORGIA REGIONAL LffiRARY - TABLE OF CONTENTS -
SECTIONn FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

CLAUDE L. VICKERS
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
May 14,1998

Honorable Zell Miller, Governor Members of the General Assembly Members of the State Board of Education
and Director and Members of the 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 accompanying general-purpose financial statements of the Northwest Georgia Regional Library, as of and for the year ended June 30, 1997, as listed in the table of contents. These general-purpose financial statements are the responsibility of the Northwest Georgia Regional Library's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general-purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in the notes to the general-purpose financial statements, the Library's financial statements have been prepared using a certain accounting practice and policy which, in our opinion, varies in some respects from generally accepted accounting principles. This variance is described as follows:
* The general-purpose financial statements of the Library did not contain a General Fixed Assets
Account Group to account for property, equipment and inexhaustible collections and books owned by the Library which should be included to conform to generally accepted accounting principles.
The aggregate effects on the general-purpose financial statements of this variance or omission have not been determined, but are believed to be material.

97ARL-43

In our opinion, except for the effects on the general-purpose financial statements of the matter referred to in the third paragraph, the general-purpose financial statements referred to above present fairly, in all material respects, the fmancial position ofthe Northwest Georgia Regional Library as of June 30, 1997, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles.
As discussed in Note 7 to the general-purpose financial statements, for fiscal year 1997, the Library recorded the assets and liabilities of its deferred compensation plan in the general-purpose financial statements. This change is in accordance with generally accepted accounting principles.
Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements of the Northwest Georgia Regional Library taken as a whole. The accompanying combining and individual fund statements (Exhibits E through G) and the financial schedules (Schedules 1 through 4), as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the generalpurpose financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe general-purpose fmancial statements and in our opinion, is fairly presented in all material respects in relation to the general-purpose financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,

CLV:ds 97ARL-43

Claude L. Vickers State Auditor

NORTHWEST GEORGIA REGIONAL LIDRARY

NORTHWEST GEORGIA REGIONAL LIBRARY COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 1997

ASSETS
Cash and Cash Equivalents
Investments
Investments Held by Trustee
Accounts Receivable
Amount to be Provided in Future Years For Payment of: Capital Lease Agreements Compensated Absences

GOVERNMENTAL FUND TYPES

SPECIAL

CAPITAL

GENERAL

REVENUE

PROJECTS

FUND

FUND

FUND

$ 20,572.27 $

4,948.91

$ 34,828.81

Total Assets

$ 34,828.81 $ 20,572.27 $ ==4=,9=4=8=:.9==1

Total Liabilities and Fund Equity

$ 34,828.81 $ 20,572.27 $ ==4~,9;;,,;4~8;,;;.9,,;,,1

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

EXHIBIT"A"

FIDUCIARY FUND TYPE AGENCY FUND

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

TOTALS (Memorandum Only) JUNE 30,1997 JUNE 30,1996

$

25,521.18 $

5,569.37

34,828.81.

32,412.26

$

61,732.48

61,732.48

74,869.94

7,615.89

$

18,085.47

18,085.47

24,411.39

24,411.39

12,482.21

$ ======61:1:,7=3=2=:.4=8 $ ====4.:.;2...,4.=:9=6=.8=6 $ 164,579.33 $ 132,949.67

$

61,732.48

$

$

61,732.48 $

$
18,085.47 24,411.39 42,496.86 $

22,958.06 $
572.27 61,732.48 18,085.47 24,411.39
127,759.67 $

38,109.26 70.46
344.20 0.78
74,869.94
12,482.21
125,876.85

$

20,000.00 $

4,948.91

5,569.37

11,870.75

1,503.45

$

36,819.66 $ _ _.:..J.7,=07.=2.:.:::.8=.2

$ ======61~,7=3=2=.4=8 $ ====4.:.;2...,4.=:9=6.=86=$ 164,579.33 $ 132,949.67

-3-

NORTHWEST GEORGIA REGIONAL LIBRARY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30,1997

EXHIBIT"B"

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

NORTHWEST GEORGIA REGIONAL LIBRARY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30,1997

EXHIBIT "C"

REVENUES
State Funds Federal Funds Other Funds
Total Revenues
EXPENDITURES
Current Program Services Technical Services Circulation Administration Maintenance and Operations
Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Other Sources
Excess of Revenues and Other Financing Sources over (under) Expenditures
FUND BALANCE JULY 1, 1996
Adjustments

GENERAL FUND

BUDGET

ACTUAL

$ 527,493,78 $ 570,682.74 237,250,00 286,536,00
$ 764,743.78 $ 857,218.74

$ 513,874,78 $ 4,201,00 59,121,00
112,346.00 75,201.00

419,041.17 75,420,76 51,424.50
246,844.73 70,699.73 6,658.30

$ 764,743.78 $ 870,089.19

$

0.00 $ -12,870.45

23,237.75

$

0,00 $

-14,946.26

414.66

10,367.30 1,503.45

FUND BALANCE JUNE 30,1997

$ -14,531.60 $ 11,870,75

SPECIAL REVENUE FUND

BUDGET

ACTUAL

$ 10,827,73

$ 20,000,00

20,000.00

$ 20,000,00 $ 30,827,73

$ 20,000.00 $ 16,397,10

$ 20,000,00 $ 16,397.10

$

0.00 $ 14,430,63

$

0.00 $ 14,430.63

5,569.37

5,569.37

$ 5,569,37 $ 20,000.00

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

NORTHWEST GEORGIA REGIONAL LIBRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1997

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Northwest Georgia 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 departure from generally accepted accounting principles disclosed in these notes, the fmancial statements of the Library have been prepared in conformity with generally accepted accounting principles as applied to governmental units and unless otherwise disclosed in these notes, the financial statements present all fund types and account groups of the Library.
The Library Board consists of nine members; four members appointed by Whitfield County Library Board, two members appointed by Catoosa County Library Board, two members appointed by Gordon County Library Board and one member appointed by Murray County Library Board. The 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 funding. Membership in the Library and participation in library services is at the discretion of each participating governmental agency. The Library Board has the power to designate management, the power to retain unreserved fund balances of local funds for continued operations and is the lowest level of oversight responsibility for the Library's operations. Based upon the above criteria, the Northwest Georgia Regional Library is determined to be a jointly governed organization.
FUND ACCOUNTING
The Library uses funds and an account group to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid fmancial management by segregating transactions related to certain governmental functions or activities.
A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
General Fixed Assets, which includes the Library's inexhaustible collections and books, are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the Library. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
The general purpose financial statements account for all State, Federal and Other funds under control of the Library, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds and the account group presented in this report are as follows:

-6-

NORTHWEST GEORGIA REGIONAL LIBRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1997

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 (other than for major capital projects) that are legally restricted to expenditures for specified purposes. The primary type of special revenue fund consists of proceeds received from State and Federal sources to accomplish specific objectives and are required to be accounted for separately.
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities.
FIDUCIARY FUND TYPE - the agency fund used to account for assets held by a government unit in a trustee capacity or as an agent for individuals, private organizations, other government units and/or other funds. This fund includes:
AGENCY FUND - the fund used to account for assets held for other funds, governments, or individuals.
ACCOUNT GROUP
GENERAL LONG-TERM DEBT ACCOUNT GROUP - used to account for material compensated absences and material capital lease obligations not appropriately accounted for and recorded in other fund types.
BASIS OF ACCOUNTING
The accounting and fmancial 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 (i.e., 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. Other liabilities, which are not expected to be financed from available spendable resources, are reported in the General Long-Term Debt Account Group.
Agency funds are purely custodial in nature and do not involve measurement of results of operations.
-7-

NORTHWEST GEORGIA REGIONAL LIBRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1997

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 of the 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.
Agency funds are accounted for using the modified accrual basis of accounting in recognizing assets and liabilities.
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 of the 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 of this tentative budget by the Board, copies are sent to all local funding agencies. After funding approval is received from all local funding agencies, the Board makes revisions as necessary and adopts the budget. The budget is then submitted to the Department of Technical and Adult Education as a part ofthe Library's annual application for State aid. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year end.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financial institutions. Georgia Laws authorize the Library to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Donated investments are stated at fair market value as of the date donated.

-8-

NORTHWEST GEORGIA REGIONAL LIBRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1997

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS HELD BY TRUSTEE
Investments held by trustee consist of contributions from employees who have elected to participate in the Library's deferred compensation plan. See Note 7 - Deferred Compensation Plan
COMPENSATED ABSENCES
Compensated absences represent obligations of the Library relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion of this obligation as this amount is deemed immaterial to the general purpose financial statements.
INTERFUND TRANSACTIONS
The Library has the following type of interfund transactions:
Reimbursements of expenditures 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 confonnity with generally accepted accounting principles, nor is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Certain reclassifications have been made to the comparative data to confonn to the current year classifications.
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 of insurance, or by collateral. The aggregate of the 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 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 of the following:
- 9-

NORTHWEST GEORGIA REGIONAL LIBRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1997

Note 2: DEPOSITS AND INVESTMENTS
(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
(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 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, 1997, the bank balances were $98,801.78. The bank balances were entirely covered by Federal depository insurance.
CATEGORIzATION OF INVESTMENTS Investments are classified as to risk by the three categories described below:
Category 1 - Insured or registered, or securities held by the Library or the Library's agent in the Library's name.
Category 2 - Uninsured or unregistered, with securities held by the counterparty's trust department or agent in the Library's name.
Category 3 - Uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent but not in the Library's name.
Funds invested in an investment pool managed by another government are not required to be categorized unless the investing entity owns specific, identifiable investment securities in the pool.

- 10-

NORTHWEST GEORGIA REGIONAL LIBRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1997

Note 2: DEPOSITS AND INVESTMENTS

At June 30, 1997, the carrying amount ofthe Library's total investments was $96,561.29 and the market value of these investments excluding investments in the amount of $61,732.48 in the Deferred Compensation Plan was $89,576.23. The investments were classified as to risk categories as follows:

Type ofInvestment

Common Stock

$

Unclassified

Deferred Compensation Plan Pooled Investments

Total Investments

Risk Categories

2

3

Carrying Amount

3482881 $

o00 $=====l!O~O~O $ 34,828.81 $

Market Value
89,576.23

61.732.48 $ 96.561.29 $


89.576.23

Undeterminable

Note 3: RISK MANAGEMENT

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

The Library has obtained commercial insurance for risk of loss associated with torts, assets, errors or omissions and job related illness 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 of the 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.

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 of that loss can be reasonably estimated.

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

1996 1997

Beginning of Year Liability

Claims and Changes in Estimates

$

0.00 $

1,704.00 $

$

0.00 $

0.00 $

- 11 -

Claims Paid

End ofYear Liability

1,704.00 $

0.00

0.00 $

0.00

NORTHWEST GEORGIA REGIONAL LIBRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1997

Note 3: RISK MANAGEMENT

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

Position Covered

Amount

Director

$1,000,000.00

Note 4: GENERAL LONG-TERM DEBT

CAPITAL LEASES The Northwest Georgia Regional Library has entered into various lease agreements as lessee for office equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception.

The changes in General Long-Term Debt during the fiscal year ended June 30, 1997, were as follows:

Balance July I, 1996
Retroactive Restatement of Prior Year Balances
Balance July 1, 1996 - Restated
Additions Leave Earned and Utilized (Net) Purchases
Deductions Payments
Balance June 30, 1997

Capital Leases

Compensated Absences

Total

$

0.00 $

0.00 $

0.00

12.482.21

12.482.21

$

0.00 $ 12,482.21 $ 12,482.21

23,237.75

11,929.18

11,929.18 23,237.75

5.152.28

5,152.28

$ 18,085.47 $ 24.411.39 $ 42.496.86

At June 30, 1997, payments due by fiscal year which includes principal and interest for these items, are as follows:

- 12-

NORTHWEST GEORGIA REGIONAL LIBRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1997

Note 4: GENERAL LONG-TERM DEBT

Fiscal Year . Ended June 30

Capital Leases

1998 1999 2000

$ 8,571.43 8,401.68 3,195.02

Total Principal and Interest

$ 20,168.13

Deduct: Imputed Interest

2,082.66

Net Present Value of Future Minimum Lease Payments

$ 18,085.47

Note 5: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the Library as of June 30, 1997, together with funding available:

Project

Unearned Executed Contracts

Funding Available From State

GSFIC 7552-96S-SB-004

$ 62,228.90 $ 2,000,000.00

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

Note 6: 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 7: 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.

- 13 -

NORTHWEST GEORGIA REGIONAL LIBRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1997

Note 7: DEFERRED COMPENSATION PLAN
All amounts of compensation 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 of benefits under the plan), subject only to the claims of the Library's general creditors. Participants' rights under the plan are equal to those of general creditors of the Library in an amount equal to the fair market value of the deferred account for each participant.
It is the opinion of the Library that the Library has no liability for losses under the plan but does have the duty of due 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 of general creditors in the future.
For fiscal year 1997, the Library began recording the assets and liabilities oftheir deferred compensation plan in the general purpose fmancial statements to conform to generally accepted accounting principles. The assets and liabilities are recorded as an agency fund. This is a change in accounting principle.
Investments are managed by the plan's trustee, Variable Annuity and Life Insurance Company. Under this plan, participants select from an investment option, or combination of investment options, determined by the Library.
On August 20, 1996, Federal laws governing Internal Revenue Code Section 457 plans were changed to require all assets and income of the plan to be held in trust for the exclusive benefit of the participants and their beneficiaries. The Library is required to comply with this requirement by January 1, 1999.
Note 8: ACCUMULATED EMPLOYEES' LEAVE
Employees of the 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 of pay, for all accumulated leave upon retirement or termination of employment. See Note 1 - Compensated Absences
Note 9: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
TRS PLAN DESCRIPTION Substantially all librarians and clerical personnel employed by regional and county libraries are covered by the Teachers Retirement System 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.

- 14-

NORTHWEST GEORGIA REGIONAL LIBRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1997

Note 9: RETIREMENT PLANS

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

Fiscal Year

Percentage Contributed

Required Contribution

1997 1996 1995

100% 100% 100%

$ 46,436.17 $ 42,741.44 $ 39,749.95

- 15 -

ASSETS Cash and Cash Equivalents

NORTHWEST GEORGIA REGIONAL LIBRARY COMBINING BALANCE SHEET SPECIAL REVENUE FUND JUNE 30,1997

EXHIBIT"E"

LOTIERY PROGRAM

FEDERAL PROGRAM

TOTALS JUNE 30,1997 JUNE 30, 1996

$

572.27 $ 20,000.00 $

20,572.27 $ ==~5',;;;56=9=.3~7

Total Liabilities and Fund Equity

$

572.27 $ 20,000,00 $

20,572.27 $==~5',;;;56=9=.3~7

See notes to the general purpose financial statements.

-16 -

NORTHWEST GEORGIA REGIONAL LIBRARY

EXHIBIT "F"

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

SPECIAL REVENUE FUND

YEAR ENDED JUNE 30,1997

REVENUES
State Funds Federal Funds
Total Revenues EXPENDITURES
Current Program Services
Excess of Revenues over (under) Expenditures FUND BALANCE JULY 1

LOTIERY PROGRAM

FEDERAL PROGRAM

TOTALS YEAR ENDED JUNE 30,1997 JUNE 30, 1996

$ 10,827,73

$

$ 20,000.00

$ 10,827.73 $ 20,000.00 $

10,827,73 $ 20,000.00
30,827,73 $

10,000.00 22,576.99
32,576.99

$ 10,827.73 $

5,569,37 $

$

0,00 $ 14,430.63 $

0.00

5,569,37

16,397.10 $ 14,430.63 $ 5,569,37

27,007.62 5,569,37 0,00

FUND BALANCE JUNE 30

$ =======O='O~O $ 20,000,00 $

20,000.00 $ ===5.,.5.=6;;,;9,~37=

See notes to the general purpose financial statements.

-17 -

NORTHWEST GEORGIA REGIONAL LIBRARY STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUND YEAR ENDED JUNE 30,1997

EXHIBIT"G"

DEFERRED COMPENSATION PLAN
ASSETS Investments Held by Trustee

BALANCE JULY 1,1996

ADDITIONS

DEDUCTIONS

BALANCE JUNE 30,1997

$

74,869.94 $

8,951.01 $

22,088.47 $

61,732.48

LIABILITIES Deferred Compensation Plan

$ = =...7...4..=,8=69=.9=4.... $ ======8=,9=51....0=1.... $

22,088.47 $ ==~6~1,o,;,,7,;;;;32=.4=8=

See notes to the general purpose financial statements.

-18-

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 1997

SCHEDULE "1"

AGENCY/FUNDING
GRANTS Technical and Adult Education, Georgia Department of Public Libraries Salaries and Travel Library Materials Maintenance and Operation Lottery Program Assistive Technology

GOVERNMENTAL FUND TYPES

SPECIAL

GENERAL

REVENUE

FUND

FUND

TOTAL

$ 342,750.74 116,766.00 111,166.00
-----$

$ 342,750.74 116,766.00 111,166.00

10,827.73

10,827.73

$ 570,682.74 $

10,827.73 $ 581,510.47

See notes to the general purpose financial statements.

- 19-

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF FEDERAL REVENUE YEAR ENDED JUNE 30.1997
AGENCY/FUNDING GRANT Education, U. S. Department of Through Georgia Department of Technical and Adult Education Library Services and Construction Act Title I - Public Library Services

SCHEDULE "2"
GOVERNMENTAL FUND TYPE SPECIAL REVENUE FUND
$ ===,;;,20;,;,'O;,;;0;,;,0;,;,'00~

See notes to the general purpose financial statements.

- 20-

EXPENDITURES
Program Services Supplies Equipment

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF EXPENDITURES LOTTERY PROGRAM YEAR ENDED JUNE 30,1997

SCHEDULE "3"

ASSISTIVE TECHNOLOGY

$

1,926.11

8,901.62

$

10,827.73

See notes to the general purpose financial statements.

- 21 -

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 1997

SCHEDULE "4"

PERSONNEL

Bomar, Cody, Dunn, Flood, Forsee, Giberson, Harmon, Hoole, Jones, Lankford, Lewis, Linker, Litton, Macon, Maddox, Martin, McMahon, Pendergrass, Powell, Prieto, Rader, Roberts, Scott, Swanson, Teague, Williams, Willis,

Melinda Gail Sara Elizabeth Melanie Jennings Nancy Joan Joe B. Barbara L. Julia K. Martha D. Charlie, Jr. Mary A. Erik M. Rita S. Linda Marie Deborah P. Jessie Tower Amanda Connie Diana Amy Colleen Mirtha Richard P. Dana E. Barbara J. Linda M. Barbara Kimberly Renee Michelie

Total Cash Basis

Accruals June 30, 1996

POSITION
Clerk Circulation Librarian Clerk Clerk Director Children's Librarian Children's Librarian Librarian Custodian Clerk Librarian Assistant Director Librarian Librarian Clerk Clerk Clerk Clerk Clerk Clerk Clerk Clerk Clerk Secretary Clerk Bookkeeper Clerk

SALARIES

TRAVEL

$

5,222,50

36,250.60 $

1,275.00

16,470.00

57,882.00

30,327,00

2,813.50

3,720.00

16,962.40

4,596.40

25,909.00

46,782.00

45,582.00

44,982,00

1,025.00

92,50

16,080.00

411.25

10,340,70

60.00

1,615.00

13,110.00

7,890.44

15,637.58

200,00

19,110.00

1,100.00

1,028.75 34.79
4,948,20 813,94 29,00
874.00 1,235.45
109.08 214.58
43.50

$ 425,446.87 $

9,331.29

-344.20

$ 425,102.67 $ =====9,::=33==:1=.2==9

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

SECTION II FINDINGS AND QUESTIONED COSTS

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1997
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Inadequate Purchasing Procedures Finding Deleted Finding Control Number 7552-94-04
The audit reports for the years ended June 30, 1994, June 30, 1995 and June 30, 1996, noted that the Library had purchased certain radio equipment with a State Lottery Program grant as approved in the Library's 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. A review was requested ofthe Georgia Department of Education, Division of Library Services to determine if this radio equipment is capable of accomplishing the goals of the Library. As of the date of this audit, the Division of Library Services has not recommended a resolution regarding the disposition of the radio equipment.
Reference to this fmding will be deleted from future audit reports, however, the Library is not relieved of the responsibility for resolving this finding.
PRIOR YEARJCURRENT YEAR
GENERAL FIXED ASSETS Failure to Maintain General Fixed Assets Account Group Finding Control Number 7552-93-01
The audit report for the year ended June 30, 1996, noted that the management of the Northwest Georgia Regional Library had chosen not to maintain a system-wide General Fixed Assets 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 fmancial 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 Assets Account Group. These subsidiary records should include an inventory ofland, 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.
CASH AND CASH EQUIVALENTS EXPENDITURESILIABILITIESIDISBURSEMENTS Inadequate Separation of Duties Finding Control Number 7552-94-01
The audit report for the year ended June 30, 1996, noted that the Library did not provide for adequate separation of employees duties in the performance of accounting functions and related procedures. For the year under review, an examination of the internal accounting control procedures revealed that the Library did
- 1-

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1997
PRIOR YEAR/CURRENT YEAR CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIESIDISBURSEMENTS Inadequate Separation of Duties Finding Control Number 7552-94-01 not provide for adequate separation of duties in the performance of the following accounting functions and related procedures:
Bank reconciliation function was not separated from the check preparation and check distribution functions; and the check preparation function was not separated from recording ofcash disbursements on the accounting records. These conditions were a result of management's decision to limit the number of administrative staff made responsible for accounting functions. The Library should review the accounting procedures' in place, design procedures which would enhance segregation of duties relative to the above control categories and implement those procedures to strengthen the internal control over the accounting functions.
-2-