OCONEE REGIONAL LIBRARY DUBLIN, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS Russell W. Hinton State Auditor OCONEE REGIONAL LIBRARY - TABLE OF CONTENTS - 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 3 B STATEMENT OF ACTIVITIES 4 FUND FINANCIAL STATEMENTS C BALANCE SHEET GOVERNMENTAL FUNDS 5 D RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS 6 E STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS 7 F RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES 9 G NOTES TO THE BASIC FINANCIAL STATEMENTS 10 SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND 21 SUPPLEMENTARY INFORMATION SCHEDULES OF REVENUE 2 STATE 22 3 FEDERAL 23 4 LOCAL 24 5 SCHEDULE OF SALARIES AND TRAVEL 25 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 June 9, 2005 Honorable Sonny Perdue, Governor Members ofthe General Assembly Members of the Board of Regents of the University System of Georgia and Director and Members ofthe Oconee Regional Library Board INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Ladies and Gentlemen: We have audited the accompanying financial statements of the governmental activities and each major fund (Exhibits A through G) of the Oconee Regional Library as of and for the year ended June 30, 2004, which collectively comprise the Library's basic financial statements as listed in the table ofcontents. These financial statements are the responsibility ofthe Oconee 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 of the governmental activities and each major fund of the Oconee Regional Library, as ofJune 30, 2004, and the respective changes in financial position thereoffor the year then ended in conformity with accounting principles generally accepted in the United States of America. 2004ARL-41 The Oconee 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. As discussed in Note 2 to the basic financial statements, during fiscal year 2004, the Library completed a comprehensive inventory of its capital assets for inclusion in the basic financial statements. This change is in accordance with generally accepted accounting principles. As described in Note 2, the Oconee Regional Library has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2004. The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 21 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 Oconee Regional Library's basic financial statements. The accompanying supplementary information which consist of Schedules 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 ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code of Georgia Annotated section 506-24. Respectfully submitted, RWH:gp 2004ARL-41 __.__.,~~~~ State Auditor OCONEE REGIONAL LIBRARY OCONEE REGIONAL LIBRARY STATEMENT OF NET ASSETS JUNE 30, 2004 ASSETS Cash and Cash Equivalents Investments Capital Assets Equipment Library Collections Less: Accumulated Depreciation Total Assets LIABILITIES Long-Term Liabilities Due Within One Year Due in More Than One Year Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for Permanent Fund Unrestricted Total Net Assets Total Liabilities and Net Assets EXHIBIT"A" GOVERNMENTAL ACTIVITIES $ 168,437 227,558 370,897 3,329,532 -2.611.552 $ =====1:::!:::,4=8=4=,8=72= $ 12,399 62,156 $ 74555 $ 1,061,591 15,878 332,848 $ 1410317 $ ======1:::!::,4=8=4!::,8=72= The notes to the basic financial statements are an integral part of this statement. -3- OCONEE REGIONAL LIBRARY STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30 2004 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 Interest on Short-Term and Long-Term Debt Total Governmental Activities $ 741,771 $ 69,531 271,873 119,752 108,607 1 886 $ 1,313,420 $ 45,315 $ 45 315 $ 516,819 $ 43,669 -179,637 -69,531 -271,873 -76,083 -108,607 -1 886 560 488 $ _ _ ____;-7..c.0.;_.,7,.;;._6.:..,:17_ General Revenues Allotments from Participating Governments Investment Earnings Miscellaneous $ 674,117 12,728 5566 Total General Revenues Change in Net Assets Net Assets - Beginning of Year (Restated) $ -----=6ec92=-:..41.:..;1c.... $ -15,206 1,425,523 Net Assets - End of Year $ ===.,,;1,i,;4~10;;;i,;;,31,;,,;7= The notes to the basic financial statements are an integral part of this statement. -4- OCONEE REGIONAL LIBRARY BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2004 EXHIBIT C 11 11 ASSETS Cash and Cash Equivalents Investments Total Assets FUND BALANCES Reserved for: Permanent Fund Unreserved Designated for Self-Insurance Undesignated Reported in: General Fund Permanent Fund Total Fund Balances GENERAL FUND PERMANENT FUND TOTAL $ 168,437 $ 168,437 205,749 $ _ _--=2:....:..1,=.80=9'- 227,558 $ 374,186 $ 21,809 $===3=9=5,1,,;;,99=5= $ $ 19,493 354,693 15,878 $ 5 931 15,878 19,493 354,693 5 931 $ 374,186 $ 21,809 $ ===3=9=5,1,,;;,99=5= The notes to the basic financial statements are an integral part of this statement. -5- OCONEE REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30. 2004 EXHIBIT"D" Total Fund Balance - 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 Long-Term Liabilities are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of: Capital Leases Compensated Absences Total Long-Term Liabilities $ 395,995 $ 370.897 3.329.532 -2,611,552 1.088.877 $ -27,286 -47,269 -74 555 Net Assets of Governmental Activities (Exhibit "A") $ =====1=4=1=0=3=17= The notes to the basic financial statements are an integral part of this statement. -6- OCONEE REGIONAL LIBRARY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2004 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 Debt Services Principal Interest Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES Capital Leases Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending GENERAL FUND PERMANENT FUND TOTALS $ 674,117 558,288 2,200 45,315 12,226 $ 5,566 $ 1,297,712 $ $ 502 674,117 558,288 2,200 45,315 12,728 5566 502 $ 1,298,214 $ 682,780 $ 69,531 271,458 140,151 108,607 11,390 1,886 $ 1,285,803 $ $ 11,909 $ 0 $ 682,780 69,531 271,458 140,151 108,607 11,390 1886 0 $ 1,285,803 502 $ 12,411 19,318 $ 31,227 $ 342,959 502 $ 21307 19,318 31,729 364,266 $ 374,186 $ 21,809 $=~39;;,;;;5.,;,9~95~ The notes to the basic financial statements are an integral part of this statement. -7- OCONEE REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2004 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 Some of the Capital Assets acquired this year were financed with capital leases. In Governmental Funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Assets, the lease obligation is reported as a Long-Term Liability. Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of: Capital Lease Payments 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 $ 31,729 $ 171,398 -211,486 -40,088 -19,318 11,390 1 081 Change in Net Assets of Governmental Activities (Exhibit 118") $ -15,206 The notes to the basic financial statements are an integral part of this statement. -9- OCONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"G" Note 1: DESCRIPTION OF LIBRARY AND REPORTING ENTITY REPORTING ENTITY The Oconee Regional Library (Library) operates pursuant to Official Code of Georgia Annotated Sections 20-5-40 through 20-5-59 to provide public library services with costs shared by participating local governmental agencies and grants from the State of Georgia. The Library Board is comprised of 11 members which are also trustees ofthe member library which appointed them. The Library Board membership consists of4 members appointed from the Laurens County Library Board, 2 members appointed from the Johnson County Library Board, 2 members appointed from the Treutlen County Library Board and 3 members appointed from the Washington County Library Board. The Library Board is without authority to determine the amount of its funding, except by submission of budget requests to local governmental units from which the Library receives support and to the State of Georgia for State and Federal flow through funding. Membership in the Library and participation in library services is at the discretion of each participating governmental agency. The Library Board has the power to designate management, the power to retain unreserved fund balances oflocal and other funds for continued operations and is the lowest level ofoversight responsibility for the Library's operations. The Oconee 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 of the Oconee Regional Library. Library-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities of the overall Library, except for fiduciary activities. 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. - 10 - OCONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 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. Separate statements for each category (governmental and permanent) are presented. The emphasis offund financial statements is on major governmental funds. The Library reports the following major governmental funds: General Fund is the Library's primary operating fund. It accounts for all financial resources of the Library, except those resources required to be accounted for in another fund. Permanent Fund is used to account for the Wilson Memorial Endowment. The corpus is to be invested and preserved intact with the resultant income to be evenly split between an addition to principal and the purchase of science books. 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 compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset - 11 - OCONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30. 2004 EXHIBIT"G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES acquisitions are reported as expenditures in governmental funds. Proceeds of acquisitions under capital leases are reported as other financing sources. The Library funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the Library's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. CHANGES IN ACCOUNTING PRINCIPLES The Oconee Regional Library has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2004. The provisions of GASB Statement No. 34 require the inclusion of a Statement ofNet Assets. The elements comprising Net Assets - Beginning include the following: General Fund July 1, 2003 Permanent Fund $ 342,959 21,307 Governmental Funds July 1, 2003 Capital Assets Accumulated Depreciation Capital Leases Payable Compensated Absences $ 364,266 3,604,165 -2,475,200 -19,358 -48,350 Net Assets Beginning (See Exhibit "B") $ 1,425.523 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 of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts - 12 - OCONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the Library to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia. 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: - 13 - OCONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"G" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Capitalization Policy Estimated Useful Life Equipment Library Collections $ 5,000 3 to 15 years All 10 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. Note 3: DEPOSITS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee ofinsurance, 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. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts. Acceptable security for deposits consists of any one of or any combination ofthe following: (1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (3) Bonds, bills, notes, certificates of indebtedness or other direct obligations 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 of the State of Georgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose, (6) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws ofthe State of Georgia, and - 14 - OCONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"G" Note 3: DEPOSITS (7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. CATEGORIZATION OF DEPOSITS At June 30, 2004, the bank balances were $478,074. 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, 2004, as follows: Risk Category Bank Balance 1 $ 201,750 2 276,324 3 0 Total Note 4: CAPITAL ASSETS $=====47==8-,0-7==4 The following is a summary of changes in the Capital Assets during the fiscal year: - 15 - OCONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30. 2004 EXHIBIT"G" Note 4: CAPITAL ASSETS Governmental Activities Capital Assets Being Depreciated Equipment Library Collections Balances July l, 2003 Increases Decreases Balances June 30. 2004 $ 357,368 $ 3,246,797 19,318 $ 152,080 5,789 $ 370,897 69,345 3,329,532 Less Accumulated Depreciation for: Equipment Library Collections Governmental Activity Capital Assets - Net 177,566 2,297,634 $ 1,128.965 $ 29,991 181,495 -40.088 $ 5,789 69,345 201,768 2,409,784 0 $ 1,088.877 Capital assets being acquired under capital leases as of June 30, 2004, are as follows: Governmental Funds Equipment Less: Accumulated Depreciation $ 42,642 17,376 Current year depreciation expense by function is as follows: $==~25~,2~6~6 Public Services Support Services $ 211,071 415 Note 5: RESTRICTED ASSETS $=~2==1-1,4~8~6 Endowments in which donors have stipulated as a condition ofthe gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose ofproducing present and future income, which may be expended. Restricted assets at June 30, 2004, were as follows: Permanent Funds Restricted Investments Science Books $ 21,809 - 16 - OCONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"G" Note 6: 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 of loss associated with torts, assets and errors or omissions. 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. In connection with this program, a self-insurance reserve has been established within the General Fund by the Library. 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. The Library participates in the Association County Commissioners ofGeorgia-SelfInsured Workers' Compensation Fund, a public entity risk pool organized on July 1, 1982 to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The Library pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with United States Fidelity and Guaranty Company to provide coverage for potential losses by the Fund in excess of $450,000 loss per occurrence, up to $2,000,000. The Library has purchased a surety bond to provide additional insurance coverage as follows: Position Covered Amount All Employees $ 100,000 Note 7: LONG-TERM DEBT CAPITAL LEASES The Oconee Regional Library has entered into various lease agreements as lessee for copiers and a printer. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value ofthe future minimum lease payments as ofthe date oftheir inception. - 17 - OCONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"G" Note 7: LONG-TERM DEBT COMPENSATED ABSENCES Compensated absences represent obligations ofthe Library relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. The Library uses the vesting method to compute compensated absences. The changes in Long-Term Debt during the fiscal year ended June 30, 2004, were as follows: Governmental Funds Capital Compensated Leases Absences (1) Total Balance July 1, 2003 $ 19,358 $ 48,350 $ 67,708 Additions Capital Leases Annual Leave Earned 19,318 37,335 19,318 37,335 Deductions Debt Retired Annual Leave Utilized 11,390 38,416 11,390 38,416 Balance June 30, 2004 $ 27,286 $ 47,269 $ 74,555 Portion of Long-Term Debt Due within One Year $ 12,399 $ 0 $ 12,399 (1) The portion of Compensated Absences due within one year has been determined to be immaterial to the basic financial statements. At June 30, 2004, payments due by fiscal year which includes principal and interest for these items are as follows: Fiscal Year Ended June 30 Capital Leases Principal Interest 2005 2006 2007 2008 $ 12,399 $ 9,356 2,923 2,608 1,771 809 327 106 Total Principal and Interest $ 27,286 $ 3,013 - 18 - OCONEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30. 2004 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 2004 2003 2002 100% 100% 100% $ 57,786 $ 66,369 $ 62,165 - 19 - OCONEE REGIONAL LIBRARY GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2004 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 Debt Service Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES} Other Sources Other Uses Total Other Financing Sources (Uses) Net Change in Fund Balance Fund Balance - Beginning NONAPPROPRIATED BUDGETS ORIGINAL FINAL ACTUAL AMOUNTS $ 673,874 $ 673,874 $ 674,117 541,101 541,101 558,288 2,200 19,975 19,975 45,315 4,500 4,500 12,226 3000 3 000 5566 $ 1,242,450 $ 1,242,450 $ 1,297,712 $ 689,043 $ 689,043 $ 682,780 71,482 71,482 69,531 280,243 280,243 271,458 100,227 100,227 140,151 104,225 104,225 108,607 13 276 $ 1,245,220 $ 1,245,220 $ 1,285,803 $ -2 770 $ -2770 $ 11 909 $ 9,626 $ 9,626 $ 19,318 -6856 -6 856 $ 2770 $ 2 770 $ 19 318 $ 0 $ 0 $ 31,227 0 0 342,959 Fund Balance - Ending $=======0$======0$=====3=7=4=18=6= 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. - 21 - OCONEE REGIONAL LIBRARY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2004 AGENCY /FUNDING GRANTS Board of Regents of the University System of Georgia Office of Public Library Services Salaries Travel Library Material Maintenance and Operations Talking Book Centers SCHEDULE "2" GOVERNMENTAL FUND TYPE GENERAL FUND $ 361,265 2,250 31,891 43,669 119213 $ ====5=5=8'=28=8= See notes to the basic financial statements. - 22- OCONEE REGIONAL LIBRARY SCHEDULE OF FEDERAL REVENUE YEAR ENDED JUNE 30, 2004 AGENCY/FUNDING GRANTS Museum and Library Services, Institute of Through Board of Regents of the University System of Georgia Library Services and Technology Act State Library Program Vacation Reading Program SCHEDULE "3" GOVERNMENTAL FUND TYPE GENERAL FUND $=====2,=20=0= See notes to the basic financial statements. -23- OCONEE REGIONAL LIBRARY SCHEDULE OF LOCAL REVENUE YEAR ENDED JUNE 30, 2004 LOCAL SOURCES Boards of Education Johnson County Treutlen County City Governments Dublin Soperton Wrightsville County Governments Boards of Commissioners Johnson Laurens Treutlen SCHEDULE 411 11 GOVERNMENTAL FUND TYPE GENERAL FUND $ 9,640 5,735 217,257 5,600 7,600 10,808 410,875 6602 $ ====6=7==14=1=17= See notes to the basic financial statements. - 24- OCONEE REGIONAL LIBRARY SCHEDULE OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2004 SCHEDULE "5" NAME Brown Cash Chambless Coleman Couey Daughety Dominy Dugas Fortner Hall Hilliard Kerr Lawrence Mason Mathew Moore Moses Mullis Northrop Page Sethna Shoemaker Stateson Sweat Thomas Warren Warren Whatley-Willcox Woodburn Beverly B. J. Virginia Donna Bradford Leard R Jordan Wilfred Marolyn Lugine Patricia Glenda Ina Virgil B Mattie Sally Jan Denise Jan Sheila Robin Julia Elizabeth Candace Elizabeth Lashunda Florine Gail April R Joy S. Christian Chris Totals per Report TITLE CATEGORY Patron Accounts Manager Circulation Clerk Head of Reference Processing Bookkeeper Director Circulation Clerk TBC Assistant Processing Custodian/Security Reference Branch Manager Reference Librarian Circulation/Children's Children's Assistant Circulation Clerk TBC Assistant Heritage Center Reference Assistant Circulation Clerk Circulation Desk Reference Librarian Circulation Desk Special Services Reference Librarian TBC Manager Automation Assistant Librarian Assistant Director SALARIES TRAVEL $ 23,144 18,814 11,966 $ 51,882 34,470 72,272 3,550 1,614 13,454 30,735 59,575 11,559 41,387 24,680 18,761 5,669 16,768 1,713 5,575 4,643 17,674 52,998 16,275 4,691 1,401 20,954 28,828 6,632 68,218 42 22 14 1,208 36 210 68 365 1,112 218 $ 669,902 $ ===3=2=9=5 See notes to the basic financial statements. - 25 -