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AUDIT REPORT NORTHWEST GEORGIA REGIONAL LffiRARY
DALTON, GEORGIA YEAR ENDED JUNE 30, 1998
'-~------------------~./
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

NORTHWEST GEORGIA REGIONAL LffiRARY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

GENERAL PURPOSE FINANCIAL STATEMENTS

COMBINED STATEMENTS - OVERVIEW

A

COMBINED BALANCE SHEET

ALL FUND TYPES AND ACCOUNT GROUP

2

B

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

ALL GOVERNMENTAL FUND TYPES

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

ADDmONAL FINANCIAL INFORMATION

INDIVIDUAL FUND STATEMENT

E

FIDUCIARY FUND TYPE

STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUND

16

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

17

SCHEDULE OF REVENUE

2

STATE

18

3

FEDERAL

19

4

LOCAL

20

5 SCHEDULE OF SALARIES AND TRAVEL

21

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

SECTION I FINANCIAL

RUSSELL W. HINTON
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
August 9, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofTechnical and Adult Education
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 accompanying general purpose financial statements ofthe Northwest Georgia Regional Library, as of and for the year ended June 30, 1998, 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 ofthis variance or omission have not been

determined, but are believed to be material.

.

98ARL-42A

In our opinion, except for the effects on the general purpose financial statements of the matter referred to in the third paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe Northwest Georgia Regional Library as ofJune 30, 1998, and the results ofits operations for the year then ended, in conformity with generally accepted accounting principles.
The year 2000 supplementary infonnation on Schedule "1" is not a required part of the basic financial statements but is supplementary infonnation required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries ofmanagement regarding the methods ofmeasurement and presentation ofthe supplementary infonnation. However we did not audit the infonnation and do not express an opinion on it. In addition, we do not provide assurance that Northwest Georgia Regional Library is or will become year 2000 compliant, that the Library's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Northwest Georgia Regional Library does business are or will become year 2000 compliant.
Our audit was perfonned for the purpose of forming an opinion on the general purpose financial statements ofthe Northwest Georgia Regional Library taken as a whole. The accompanying individual fund statement (Exhibit E) and the financial schedules (Schedules 2 through 5), as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the general purpose financial statements. Such infonnation has been subjected to the auditing procedures applied in the audit ofthe general purpose financial statements and in our opinion, except for the effects of the matter discussed in the third paragraph, such infonnation 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 pennanent record in the office of the State Auditor and made available to the press ofthe State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,
r"~iJ~~ Russell W. Hinton State Auditor
RWH:jb 98ARL-42A

NORlHWEST GEORGIA REGIONAL LffiRARY

NORTHWEST GEORGIA REGIONAL LIBRARY COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUP JUNE 30,1998

ASSETS
Cash and Cash Equivalents
Investments
Investments Held by Trustee
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

$ 180,589.00 $

936.63 $ 642,085.63

38,919.28

Total Assets

$ 219,508.28 $

936.63 $ 642,085.63

Total Liabilities and Fund Equity

$ 219,508.28 $

936.63 $ 642,085.63

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

EXHIBIT "A"

FIDUCIARY FUND TYPE AGENCY FUND

$

70,681.58

ACCOUNT GROUP GENERAL
LONG-TERM DEBT

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

$

823,611.26 $

25,521.18

38,919.28

34,828.81

70,681.58

61.732.48

$

10.849.72

10.849.72

18.085.47

21,452.37

21,452.37

24,411.39

$

70.681.58 $

32,302.09 $

965,514.21 $=======1=64:::,==:57=9=.3=3

$

70,681.58

$

$

70,681.58 $

$
10,849.72 21,452.37 32,302.09 $

$ 1.17 111,015.43 70,455.11 70,681.58 10,849.72 21,452.37
284,455.38 $

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

$

--=0.:..:.0.;;..0

$

--=-0:.::,.0.;;..0

$

70.681.58 $

$

936.63 $

460,615.09

219.507.11

$

681,058.83 $

20,000.00 4,948.91
11.870.75
36"""".'.8.1..;...;;.9""".6.-.6

32,302.09 $

965,514.21 $ =======1=64:::,==:57=9=.3=3

-3-

NORTHWEST GEORGIA REGIONAL LIBRARY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES
YEAR ENDED JUNE 30 1998

EXHIBIT"B"

FUND BALANCE JUNE 30

$

219,507,11 $

936,63 $ 460,615,09 $

681,058.83 $

3;;;;6.,8;;,;1.9...,6.6..

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 30.1998

EXHIBIT"C"

GENERAL FUND

BUDGET

ACTUAL

REVENUES

State Funds Federal Funds Local Funds Other Funds

$ 606,524.00 $ 871,025.90

219,230.00

402,994.43 64,794.83

Total Revenues

$ 825,754.00 $ 1,338,815.16

EXPENDITURES

Current Program Services Technical Services Circulation Administration Maintenance and Operations
Debt Service

$ 392,203.27 $ 641,599.19

40,047.00

49,210.76

136,868.00

114,246.56

241,203.00

244,563.11

67,725.00

72,987.75

8,571.43

Total Expenditures

$ 878,046.27 $ 1,131,178.80

Excess of Revenues over (under) Expenditures

$ -52,292.27 $ 207,636.36

OTHER FINANCING SOURCES

Other Sources

51,720.00

Excess of Revenues and Other Financing Sources

over (under) Expenditures

$

-572.27 $ 207,636.36

FUND BALANCE JULY 1. 1997

1,8n.66

11,870.75

Adjustments

-406.64

SPECIAL REVENUE FUND

BUDGET

ACTUAL

$

0.00 $

8,600.00

$

0.00 $

8,600.00

$

20,000.00 $

24,100.00

3,563.37

$

20,000.00 $

27,663.37

$ -20,000.00 $ -19,063.37

$ -20,000.00 $ -19,063.37

20,000.00

20,000.00

FUND BALANCE JUNE 30, 1998

$

898.75 $ 219,507.11

$

0.00 $ _ _.....9..3._6.-.6.-3

The notes to the general purpose financial statements are an integral part of this statement.
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NORTHWEST GEORGIA REGIONAL LffiRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
The Northwest Georgia Regional Library (Library) operates pursuant to Official Code of Georgia Annotated Sections 20-5-40 through 20-5-59 to provide public library services with costs shared by participating local governmental agencies and grants from the State of Georgia. With the exception of the departure from generally accepted accounting principles disclosed in these notes, the financial statements 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 Regional Library Board consists ofnine 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 Regional Library Board is without authority to determine the amount of its funding, except by submission ofbudget requests to local governmental units from which the Library receives support and to the State of Georgia for State and Federal funding. Membership in the Library and participation in library services is at the discretion of each participating governmental agency. The Regional 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 Northwest Georgia Regional Library is therefore 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 financial management by segregating transactions related to certain governmental functions or activities.
A fund is a separate accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect expendable available financial resources.
General Fixed Assets, which includes the Library's inexhaustible collections and books, are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the Library. To conform to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost of assets acquired by governmental fund types.
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:

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NORTHWEST GEORGIA REGIONAL LffiRARY

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

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 ofspecific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. The primary type of special revenue fund consists of proceeds received from State and Federal sources to accomplish specific objectives and are required to be accounted for separately.
CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction ofmajor capital facilities.
FIDUCIARY FUND TYPE - the 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 compensated absences and capital lease obligations not appropriately accounted for and recorded in other fund types.
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. 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 ofresults of operations.
Governmental funds are accounted for using the modified accrual basis of accounting under which:
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NORTHWEST GEORGIA REGIONAL LmRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1998

Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
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.
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 ofthe budget at any level. The budget for all governmental funds is prepared by fun~ 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 m~es 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 Investments made by the Library in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Donated investments are stated at fair market value. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Participating interest-earning contracts and money market investments with a maturity at purchase greater than one year and equity investments are reported at fair value. The
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NORTHWEST GEORGIA REGIONAL LIBRARY

EXIllBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Official Code of Georgia Annotated Section 36-83-4 authorizes the Library to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions of the State of Georgia.
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 estimat~d. 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 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.
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NORTHWEST GEORGIA REGIONAL LffiRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 3D. 1998

Note 1: SUMMARy OF SIGNIfICANT ACCOUNTING POLICIES

MEMORANDUM ONLY - TOTAL COLUMNS

Total columns on the general pUlpose 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

made comparable to a consolidation. Interfund eliminations have not been

in the aggregation of this data.

Note 2: DEPOSITS AND INVESTMENTS

COLLATERALIZATION OF DEPOSITS Official Code ofGeorgia 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 ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.

Acceptable security for deposits consists of anyone of or any combination of the followiIig:

(l) 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 ofindebtedness or other direct obligations of the United States or ofthe State of Georgia,

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

(5) Bonds of any public authority created by the laws ofthe 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 ofdevelopment 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

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NORTHWEST GEORGIA REGIONAL LIBRARY

EXHIBIT "0"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 2: DEPOSITS AND INVESTMENTS

Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS At June 30, 1998, the bank balances were $1,132,469.46. The amounts of the total bank balances are classified into three categories of credit risk:

Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the Library or by the Library's agent in the Library's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the Library's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Library's name.)

The Library's deposits are classified by risk category at June 30, 1998, as follows:

Risk CategOIy

Bank Balance

1

$ 200,000.00

2

258,672.00

3

673.797.46

Total

$ 1.132.469.46

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.

At June 30,1998, the carrying value ofthe Library's total investments was $107,371.37. The investments are classified as to risk categories as follows:

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NORTHWEST GEORGIA REGIONAL LIBRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 3: RISK MANAGEMENT

The Library is exposed to various risks ofloss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; natural disaster; and tinemployment 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 ofthat loss can be reasonably estimated. The Library has not experienced any unemployment compensation claims during the last two years.

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 acco-qnting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception.

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NORTHWEST GEORGIA REGIONAL LmRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30, 1998

Note 4: GENERAL LONG-TERM DEBT

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

Capital Leases

Compensated Absences

Total

Balance July 1, 1997

$ 18,085.47 $ 24,411.39 $ 42,496,86

Deductions Leave Earned and Utilized (Net) Payments
Balance June 30, 1998

7,235.75

2,959.02

2,959.02 7,235.75

$ 10,849.72 $ 21.452.37 $ 32.302.09

At June 30, 1998, payments due, by fiscal year which includes principal and interest for these items, are as follows:

Fiscal Year Ended June 30

Capital Leases

1999 2000

$ 8,401.68 3,195.02

Total Principal and Interest

$ 11,596.70

Deduct: Imputed Interest

746.98

Net Present Value ofFuture Minimum Lease Payments

$ 10,849.72

Note 5: SIGNIFICANT COMMITMENTS

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

Project

Unearned Executed Contracts

Funding Available From State

GSFIC 7552-96S-SB-004

$ 1.470,272.85 $ 2,000,000.00

The amounts described in this note are not reflected 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. 1998

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.
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 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 ofthe 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.
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 ofinvestment options, determined by the Library.
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 ofpay, 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
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NORTHWEST GEORGIA REGIONAL LmRARY

EXHIBIT "D"

NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS

JUNE 30. 1998

Note 9: RETIREMENT PLANS

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% 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

1998 1997 1996

100% 100% 100%

$ 52,543.06 $ 46,436.17 $ 42,741.44

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NORTHWEST GEORGIA REGIONAL LIBRARY STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUND YEAR ENDED JUNE 30,1998

EXHIBIT"E"

LIABILITIES Funds Held for Others

$

61,732.48 $

8,949.10 $

0.00 $

70.,,6.8.1..,=5.8..

See notes to the general purpose financial statements.

-16-

NORTHWEST GEORGIA REGIONAL LIBRARY

SCHEDULE "1"

SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

- YEAR 2000 DISCLOSURES

YEAR ENDED JUNE 30. 1998

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

See notes to the general purpose financial statements. - 17 -

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30.1998

SCHEDULE "2"

AGENCY/FUNDING
GRANTS Technical and Adult Education, Georgia Department of Public Libraries Salaries Travel Library Materials Regular Governor's Reading Incentive Program Maintenance and Operations

GOVERNMENTAL FUND TYPE GENERAL FUND

$

393,173.90

9,530.00

118,555.00 236,812.00 112,955.00

$

871,025.90

See notes to the general purpose financial statements. -18 -

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF FEDERAL REVENUE YEAR ENDED JUNE 30.1998

SCHEDULE "3"

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

GOVERNMENTAL FUND TYPE SPECIAL REVENUE FUND
$=======8,=60=0:=.0==0

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

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF LOCAL REVENUE YEAR ENDED JUNE 30, 1998

SCHEDULE "4"

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

LOCAL SOURCES

Boards of Education

City of Dalton

$

1,200,00

$

Murray County

1,200,00'

City Government

Dalton

193,896.73

County Governments

Boards of Commissioners

Catoosa

36,500,00 $

1,189,539,12

Whitfield

161,947,70

Local Libraries

Calhoun-Gordon County

6,000,00

Catoosa County

1,500.00

Murray County

750,00

TOTAL
1,200,00 1,200,00 193,896,73
1,226,039,12 161,947,70 6,000,00 1,500.00 750.00

$

402,994.43 $

1,189,539.12 $ =====1=,5=9=2,=53=3=.5=5

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

NORTHWEST GEORGIA REGIONAL LIBRARY SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 1998

SCHEDULE "5"

NAME

Bomar, Capps, Cody, Cox, Crocker, Flood, Forsee, Gallaty, Giberson, Green, Jones, Lance, Lankford, Lewis, Linker, Litton, Macon, Maddox, Maddox, Maddox, McMahon, McPhearson, Powell, Smith, Swanson, Toliver, Williams,

Melinda Denise Sara Elizabeth Julie Katherine J. Nancy JoeB. Conan Barbara L. Lori Beth Charlie, Jr. Dana E. Mary Erik RitaS. Linda Marie Deborah P. Brooks Jessie Taylor Connie Diana John L. Colleen CynthiaA. Linda M. Dana Kimberly Renee

TITLE CATEGORY

SALARIES

TRAVEL

Circulation Clerk

$

Circulation Clerk

Public Services Librarian

Circulation Clerk

Circulation Clerk

Technical Services Coordinator

Director

Maintenance Worker

Children's Librarian

Circulation Clerk

Maintenance/Custodian

Bookmobile Clerk

Circulation Clerk

Electronic Services Librarian

Assistant Director

Reference Librarian

Public Services Librarian

Circulation Clerk

Circulation Clerk

Maintenance Worker

Bookmobile Clerk

Audio-Visual Librarian

Technical Services Clerk

Technical Services Coordinator

Regional Secretary

Circulation Clerk

Bookkeeper

10,190.48 4,534,59 39,932.40 $
262.65 350.20 17,572.75 60,580.40
45.00 39,932.40
311.58 17,108.00 13,896,60
410.76 33,625.20 49,480.40 48,280.40 47,680.40 2,876.28
2,092.18 647.00
17,044.80 20,056.00
9,258.08 330.00
16,567,80 362,50
20,256.60

22.25 3,008.65
502.32
372.64 1,852,38
304.46
27.00
306.63

Totals per Report

$

473,685.45 $===6ii:!:,3:=9=:6=.3=3

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

SECTIONll FINDINGS AND QUESTIONED COSTS

I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I
I

NORTHWEST GEORGIA REGIONAL LffiRARY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED ruNE 30. 1998
PRIOR YEAR
AUDIT FOLLOW-UP/RESOLUTION Inadequate Separation ofDuties Finding Resolved Finding Control Number: 7552-94-01
The audit report for the year ended June 30, 1997, noted that the Library did not provide for adequate separation of employees duties in the perfOlmance of accounting functions and related procedures for all funds. For the year under review, the Library implemented controls which improved the separation of employee duties.
PRIOR YEAR/CURRENT nAR
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, 1997 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 financial statements of the Library being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be tak~ 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.
CURRENT YEAR
CASH AND CASH EQUNALENTS Uncollateralized Deposits Finding Control Number: 7552-98-01
The Northwest Georgia Regional Library System failed to have its bank balances fully collateralized as provided for by the Official Code of Georgia Annotated Section 45-8-12 which states, in part, as follows:
"The collecting officer or officer holding public funds may not have on deposit at any time in depository for a time longer than ten days a sum ofmoney belonging to the public body when such depository has not given bond to the public body as set forth in this code section...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 of the public funds being secured after the deduction ofthe amount of deposit insurance."
- 1-

NORTHWEST GEORGIA REGIONAL LmRARY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED ruNE 30. 1998
CURRENT YEAR CASH AND CASH EQUIVALENTS Uncollateralized Deposits Finding Control Number: 7552-98-01 This noncompliance occurred because ofmanagement's failure to adequately monitor the collateralization of balances at individual banks. The Library should implement procedures to monitor the collateralization of bank balances to ensure compliance at all times with State laws governing deposits and investments.
-2-