Kinchafoonee Regional Library, Dawson, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2006

KINCHAFOONEE REGIONAL LIBRARY
DAWSON, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

KINCHAFOONEE REGIONAL LIBRARY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUND

3

D

RECONCILIATION OF THE GOVERNMENTAL FUND BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

4

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCE

GOVERNMENTAL FUND

5

F

RECONCILIATION OF THE GOVERNMENTAL FUND STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCE TO THE STATEMENT OF ACTIVITIES

7

G

NOTES TO THE BASIC FINANCIAL STATEMENTS

8

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERALFUND

17

SUPPLEMENTARY INFORMATION

SCHEDULES OF REVENUE

2

STATE

18

3

FEDERAL

19

4

LOCAL

20

5 SCHEDULE OF SALARIES AND TRAVEL

21

KINCHAFOONEE REGIONAL LIBRARY - TABLE OF CONTENTS -
SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION III FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS
SECTION IV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
August 7, 2007

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members of the Board of Regents ofthe University System of Georgia
and Director and Members of the Kinchafoonee Regional Library Board
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities and the major fund (Exhibits A through G) of the Kinchafoonee Regional Library as of and for the year ended June 30, 2006, which collectively comprise the Library's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Kinchafoonee Regional Library's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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 opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position ofthe governmental activities and the major fund ofthe Kinchafoonee Regional Library, as of June 30, 2006, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

2006ARL-41

The Kinchafoonee Regional Library has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not to be part of, the basic financial statements.
The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 17 is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Kinchafoonee Regional Library's basic financial statements. The accompanying supplementary information which consist ofSchedules 2 through 5, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe basic financial statements, and in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
~~~~ Russell W. Hinton, CPA, CGFM State Auditor
RWH:gp 2006ARL-41

KINCHAFOONEE REGIONAL LIBRARY

KINCHAFOONEE REGIONAL LIBRARY STATEMENT OF NET ASSETS JUNE 30, 2006
ASSETS Cash and Cash Equivalents Investments Capital Assets
Equipment Library Collections Less: Accumulated Depreciation
Total Assets
LIABILITIES Accounts Payable Long-Term Liabilities
Due in More Than One Year Total Liabilities NET ASSETS
Invested in Capital Assets, Net of Related Debt Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

151,130

44,024

136,534 795,432 -696 452

$ ====4=3==!0=66=8=

$

15,039

23 509

$

38 548

$

235,514

156 606

$

392 120

$ ====4=3=0!=6=68=

The notes to the basic financial statements are an integral part of this statement. -1-

KINCHAFOONEE REGIONAL LIBRARY STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2006

EXHIBIT"B"

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

GOVERNMENTAL ACTIVITIES

Current Services Public Services Technical Services Support Services Maintenance and Operations Information Technology
Total Governmental Activities

$ 508,002 $
83,723 91,953 50,378
9411
743467 $

24,041 $ 24 041 $

368,754 $ 80,188

-115,207 -83,723 -91,953 29,810 -9 411

448 942 $ _ _ _ _-2_7~0,~4_64_

General Revenues Allotments from Participating Governments Investment Earnings Miscellaneous
Special Items Loss on Donation of Building Loss on Donation of Land

$

239,402

2,877

19,242

-154,894 -20 000

Total General Revenues and Special Items

$ _ _ _ _~86~62=7_

Change in Net Assets

$

-183,857

Net Assets - Beginning of Year (Restated)

575 977

Net Assets - End of Year

$ ====3.,.9,..2.,.12..0. =

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

KINCHAFOONEE REGIONAL LIBRARY BALANCE SHEET
GOVERNMENTAL FUND JUNE 30, 2006
ASSETS Cash and Cash Equivalents Investments
Total Assets
LIABILITIES AND FUND BALANCES LIABILITIES
Accounts Payable FUND BALANCES
Unreserved Designated for Affiliated Libraries Undesignated Reported in: General Fund Total Fund Balances
Total Liabilities and Fund Balances

EXHIBIT"C"

GENERAL FUND

$

151,130

44 024

$ ==1=9=5'=15=4=

$

15,039

$

29,646

150,469

$

180,115

$ ==1=9=5=1,=54...

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

KINCHAFOONEE REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUND BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2006

EXHIBIT"D"

Total Fund Balances - Governmental Fund (Exhibit "C")

$

Amounts reported for Governmental Activities in the Statement of Net Assets are different because:

Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:

Equipment Library Collections Accumulated Depreciation
Total Capital Assets

$

136,534

795,432

-696,452

Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:

Compensated Absences

180,115
235,514 -23,509

Net Assets of Governmental Activities (Exhibit "A")

$ ===39=2=1,=20=

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

KINCHAFOONEE REGIONAL LIBRARY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
GOVERNMENTAL FUND YEAR ENDED JUNE 30, 2006

EXHIBIT"E"

REVENUES
Local Funds State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Public Services Technical Services Support Services Maintenance and Operations Information Technology
Total Expenditures
Net Change in Fund Balance
Fund Balance - Beginning
Fund Balance - Ending

GENERAL FUND

$

239,402

441,067

7,875

24,041

2,877

19,242

$

734 504

$

507,102

83,723

91,953

50,378

9 411

$

742 567

$

-8,063

188 178

$ ==1=8=0=1=15...

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

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KINCHAFOONEE REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUND STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES JUNE 30, 2006

EXHIBIT"F"

Total Net Change in Fund Balance - Governmental Fund {Exhibit "E"}
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Depreciation Expense over Capital Outlay
In the Statement of Activities, the loss on the donation of the land and building is reported; whereas, the Governmental Funds did not recognize any activity from the donation since there was no monetary exchange involved. Thus, the change in net assets differs from the changes in fund balance by the cost of the land and the carrying value of the building involved.
Loss on Donation of Building Loss on Donation of Land
Total Loss on Donation of Assets
Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of:
Decrease in Compensated Absences

$

-8,063

$

51,252

-57 324

-6,072

$

-154,894

-20,000

-174,894

5172

Change in Net Assets of Governmental Activities (Exhibit "B"}

$ ==-=18.,.3..,8.,.5=7

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

KINCHAFOONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "G"

Note 1: DESCRIPTION OF LIBRARY AND REPORTING ENTITY
REPORTING ENTITY
The Kinchafoonee Regional Library (Library) operates pursuant to Official Code of Georgia Annotated Sections 20-5-40 through 20-5-59 to provide public library services with costs shared by participating local governmental agencies and grants from the State of Georgia.
The Library Board is comprised often members which are also trustees ofthe member library which appointed them. The Library Board membership consists of two members appointed from the Calhoun County Library Board, two members appointed from the Clay County Library Board, two members appointed from the Randolph County Library Board, three members appointed from the Terrell County Library Board and one member appointed from the Webster County Library Board. The Library Board is without authority to determine the amount ofits funding, except by submission of budget requests to local governmental units from which the Library receives support and to the State of Georgia for State and Federal flow through funding. Membership in the Library and participation in library services is at the discretion of each participating governmental agency. The Library Board has the power to designate management, the power to retain unreserved fund balances oflocal and other funds for continued operations and is the lowest level of oversight responsibility for the Library's operations. The Kinchafoonee Regional Library is therefore determined to be a joint venture.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Library's basic financial statements are collectively comprised of the Library-wide financial statements, fund financial statements and notes to the basic financial statements ofthe Kinchafoonee Regional Library.
Library-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities of the overall Library. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through intergovernmental revenues and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the Library's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the Library related to the administration and support ofthe Library's programs, such as office and maintenance personnel and accounting) are not allocated to programs.

-8-

KINCHAFOONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the Library's funds. Eliminations have been made to minimize the double counting of internal activities. The emphasis of fund financial statements is on major governmental funds.
The Library reports the following major governmental fund:
General Fund is the Library's primary operating fund. It accounts for all financial resources of the Library.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The Library-wide- governmental financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the Library gives (or receives) value without directly receiving (or giving) equal value in exchange, include grants and donations. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The Library uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The Library considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Interest is considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds.
The Library funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both

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KINCHAFOONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
restricted and unrestricted net assets available to finance the program. It is the Library's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
RESTATEMENT OF PRIOR YEAR NET ASSETS
For fiscal year 2006, the Kinchafoonee Regional Library restated various capital assets due to a change in the capitalization policy and errors and omissions. The Library decreased equipment and library collections, net of accumulated depreciation, by $8,678 and $330,910, respectively. The result is a decrease in Net Assets at July 1, 2005, of $339,588. This change is in accordance with generally accepted accounting principles.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the Library to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the Library in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Library to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
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KINCHAFOONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(6) The Local Government Investment Pool administered by the State ofGeorgia, Office of Treasury and Fiscal Services,

(7) Repurchase agreements, and

(8) Obligations of other political subdivisions ofthe State of Georgia.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time ofpurchase. On the Library-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives ofthe assets is not capitalized. Depreciation is computed using the straight-line method.

Capitalization thresholds and estimated useful lives of capital assets reported in the Library-wide statements are as follows:

Capitalization Policy

Estimated Useful Life

Land Buildings Equipment Library Collections

$

10,000

$

10,000

$

10,000

All

NIA 40 years 10 years 10 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.

Note 3: 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 ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance.

- 11 -

KINCHAFOONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "G"

Note 3: DEPOSITS AND INVESTMENTS
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS At June 30, 2006, the bank balances were $248,458. The bank balances were entirely covered by Federal depository insurance.
CATEGORIZATION OF INVESTMENTS At June 30, 2006, the fair value ofthe Library's total investments was $2,400 and this entire amount consisted ofcommon stock which was insured or registered, or securities held by the Library or the Library's agent in the Library's name.
Note 4: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:

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KINCHAFOONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "G"

Note 4: CAPITAL ASSETS

Balances July 1, 2005 (Restated)

Increases

Decreases

Balances June 30. 2006

Governmental Activities

Capital Assets, Not Being Depreciated:

Land

$

20,000 $

0 $

20.000 $

0

Capital Assets Being Depreciated Buildings Equipment Library Collections

$ 261,461 136,534 752,446 $

$ 51,252

261,461 $ 8,266

0 136,534 795,432

Less Accumulated Depreciation for: Buildings Equipment Library Collections

106,567 113,356 534.038

9,785 47 539

106,567 8,266

0 123,141 573,311

Total Capital Assets, Being Depreciated, Net $ Governmental Activity Capital Assets - Net $

396,480 $ 416.480 $

-6,072 $ -6.072 $

154,894 $ 174.894 $

235,514 235.514

Current year depreciation expense by function is as follows:

Public Services

$

57,324

Note 5: RISK MANAGEMENT

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

The Library has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions and job related illness or injuries to employees. 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 acts of God. 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 expenses/expenditures 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.

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KINCHAFOONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "G"

Note 5: RISK MANAGEMENT

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

Position Covered

Amount

Director Bookkeeper Treasurer/Chairperson Vice Chairperson

$

15,000

$

15,000

$

15,000

$

15,000

Note 6: LONG-TERM DEBT

COMPENSATED ABSENCES Compensated absences represent obligations of the Library relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. The Library uses the vesting method to compute compensated absences.

The changes in Long-Term Debt during the fiscal year ended June 30, 2006, were as follows:

Balance July 1, 2005

Governmental Funds
Compensated Absences ( 1)

$

28,681

Additions Annual Leave Earned

30,929

Deductions Annual Leave Utilized

36.101

Balance June 30, 2006

$====23'==".5==0==9

(1) The portion of Compensated Absences due within one year has been determined to be immaterial to the basic financial statements.

Note 7: SPECIAL ITEMS

In the fiscal year 2006, the Clay County Library's building and land were donated to the Clay County Board of Commissioners. The carrying value of the building of $154,894 and cost of the related land of$20,000 was properly removed from the Capital Assets records by the Library. A net loss of $154,894 for the building and $20,000 for the land from the donation is reported as a special item on the Statement ofActivities.

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KINCHAFOONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2006

EXHIBIT "G"

Note 8: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all librarians and clerical personnel employed by regional and county libraries are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe Library who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The Library makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2006 2005 2004

100% 100% 100%

$

37,282

$

36,471

$

35,133

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KINCHAFOONEE REGIONAL LIBRARY GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006

SCHEDULE "1"

REVENUES
Local Funds State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Public Services Technical Services Support Services Maintenance and Operations Information Technology
Total Expenditures
Net Change in Fund Balance
Fund Balance - Beginning

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

ACTUAL AMOUNTS

$

235,589 $

227,807 $

239,402

457,867

457,867

441,067

7,875

20,650

20,650

24,041

2,500

2,500

2,877

9225

14 225

19 242

$

725 831 $

723 049 $

734 504

$

601,316 $

600,912 $

507,102

700

700

83,723

85,579

85,501

91,953

41,220

40,920

50,378

8 516

8 516

9 411

$

737 331 $

736 549 $

742 567

$

-11,500 $

-13,500 $

-8,063

188 178

188 178

188 178

Fund Balance - Ending

$

176 678 $

174 678 $ ======1==8=0=11,..5=

Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements

See notes to the basic financial statements.

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KINCHAFOONEE REGIONAL LIBRARY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2006
AGENCY/FUNDING GRANTS Board of Regents of the University System of Georgia Office of Public Library Services Salaries Library Materials Maintenance and Operations

SCHEDULE "2"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

344,439

16,440

80 188

$ =====4=41=0=67=

See notes to the basic financial statements.

- 18 -

KINCHAFOONEE REGIONAL LIBRARY SCHEDULE OF FEDERAL REVENUE
YEAR ENDED JUNE 30, 2006
AGENCY/FUNDING GRANT Museum and Library Services, Institute of Through Board of Regents of the University System of Georgia Library Services and Technology Act State Library Program

SCHEDULE "3"
GOVERNMENTAL FUND TYPE GENERAL FUND
$ ======7=8=75=

See notes to the basic financial statements.

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KINCHAFOONEE REGIONAL LIBRARY SCHEDULE OF LOCAL REVENUE YEAR ENDED JUNE 30, 2006
LOCAL SOURCES Boards of Education Calhoun County Clay County Randolph County Terrell County Webster County City Governments Cuthbert Edison Fort Gaines Morgan Preston County Governments Boards of Commissioners Calhoun Clay Randolph Terrell Webster

SCHEDULE "4"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

7,200

4,780

4,079

28,500

4,800

23,576 7,000
14,400 800
1,800

26,000 28,800 24,725 57,981
4 961

$ ====2=3=9=,4=02=

See notes to the basic financial statements.

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KINCHAFOONEE REGIONAL LIBRARY SCHEDULE OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2006

SCHEDULE "5"

NAME
Bagby, Bishop, Black, Brazeal, Clarke, Copeland, Harvey, Holbrook, Kendrick, Medders, Messer, Morgan, Pike, Powell, Reeves, Reynolds, Sealy, Simmons, Speir, Turn, Wiley, Wills, Wood,

Pamela Pearlie A. Brandi Kathleen Lisa B. Joanne Claudia M. Sonji A.
Diane L.
Barbara Jo Mary D. Frances P. Linda Susan Shondreka Gladys Teresa Barbara F. Karin Dorothy Jean Olivia
Scharlotte L.
Christin M. Janice

Totals per Report

TITLE CATEGORY
State Librarian Library Assistant Library Aide Library Aide Library Manager State Librarian Bookkeeper Library Manager Library Manager Assistant Director Director Librarian Substitute Library Aide Substitute Library Manager Library Aide Library Aide Library Assistant State Librarian State Librarian Library Assistant Library Assistant

SALARIES

TRAVEL

$

29,359 $

238

18,015

1,263

230

13,896

62,278

173

23,338

352

5,326

41

16,640

31

62,878

62,994

931

30,600

286

2,211

4,476

1,876

19,344

251

8,852

231

14,625

31

48,456

531

17,571

3,512

3 183

$

451154 $ = = =2=,86=5

See notes to the basic financial statements.

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SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

KINCHAFOONEE REGIONAL LIBRARY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7352-04-01 FS-7352-05-01

Further Action Not Warranted Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number: FS-7352-05-01

Bank statements are opened by the Director. Interest payments are recorded on a revenue sheet. Statements and revenue sheets are delivered to the Bookkeeper. The Bookkeeper gives to the part-time assistant to post to the general ledger. Bank statements are reconciled monthly by the assistant. The packet containing the bank statement, deposit slips, reconciliation worksheet, and Fundware reports are reviewed by the Director. These documents are returned to the Bookkeeper for safe keeping.

SECTION III FINDINGS AND QUESTIONED COSTS

KINCHAFOONEE REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

CASH AND CASH EQUIVALENTS Inadequate Accounting Control Procedures Reportable Condition Finding Control Number: FS-7352-06-01

Condition:

This is a repeat finding (FS-7352-05-01 and FS-7352-04-01) from the years ended June 30, 2005, and June 30, 2004, respectively. The Kinchafoonee Regional Library did not provide for adequate internal control over the bank reconciliation process.

Criteria:

The Library's management is responsible for designing and maintaining internal controls that provide reasonable assurance that the monthly bank statements are analyzed and reconciled to the general ledger in a timely manner.

Questioned Cost: NIA

Information:

The monthly bank statements for the general operating account were not reconciled properly to the general ledger during the year under review, and have not been reconciled as of date of this report.

Cause:

This deficiency was a result ofmanagement's failure to establish procedures to analyze and reconcile cash balances on the general ledger with supporting records in a timely manner.

Effect:

Errors and/or irregularities may not be detected in a timely manner.

Recommendation: The Library should establish internal controls to ensure that bank statements are reconciled with the accounting records on a timely basis.

CAPITAL ASSETS Failure to Follow Library's Capitalization Policy Reportable Condition Finding Control Number: FS-7352-06-02

Condition:

The Kinchafoonee Regional Library failed to adhere to the Library's Capital Assets policy.

Criteria:

The Library's management is responsible for designing and maintaining internal controls that provide reasonable assurance that Capital Assets activity is properly maintained and reported in accordance with local Library capitalization policy and generally accepted accounting principles.

Questioned Cost: NIA

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KINCHAFOONEE REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2006

CAPITAL ASSETS Failure to Follow Library's Capitalization Policy Reportable Condition Finding Control Number: FS-7352-06-02

Information:

The Library adopted a new capitalization policy that changed the capitalization amount for assets from $5,000 to $10,000. However, the Capital Assets records were never adjusted for this change. The Capital Assets records presented for audit had $81,396 ofequipment under $10,000. An audit adjustment was necessary to correct the Capital Assets records.

Cause:

The Library failed to properly maintain its Capital Assets records in accordance with the Library's approved Capital Assets policy.

Effect:

The failure ofthe Library to maintain a complete and accurate Capital Assets listing can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles.

Recommendation:

The Library should implement procedures to ensure that the Capital Assets records conform to the Library's approved capital assets policy and generally accepted accounting principles.

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SECTION IV MANAGEMENT'S RESPONSES

KINCHAFOONEE REGIONAL LIBRARY SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-7352-06-01
We concur with this finding. The Director will open the monthly bank statements as they arrive in the mail. The Bookkeeper will attach the Bank Reconciliation Worksheets and give to the Administrative Assistant. The Administrative Assistant will analyze and reconcile the cash balances on the general ledger with supporting records. The Director will check the accuracy of the worksheets. These procedures will be performed soon as the Bookkeeper provides the necessary accounting records to perform the analysis and reconciliation. These worksheets are initialed and dated by the Director and Administrative Assistant and are housed in a fireproof cabinet. These steps will ensure that the bank statements are reconciled with the accounting records on a monthly basis.
Finding Control Number: FS-7352-06-02
We concur with this finding. The Library will maintain a list ofthe capitalization amount for assets of$10,000. The Capital Assets records will conform to the Library's approved Capital Assets policy and generally accepted account principles. The list will be maintained by the Bookkeeper with input from the Technical Services Director and Administrative Director. The Bookkeeping consultant will finalize the list with depreciation for publication.
Contact Person: Frances P. Messer, Director ofKinchafoonee Regional Library System Phone: (229) 995-6331 Fax Number: (229) 995-3383 E-mail Address: messerf@krlibrary.org: