OCONEE REGIONAL LIBRARY
DUBLIN, 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

OCONEE 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 FUNDS

3

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

4

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

5

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

6

G

NOTES TO THE BASIC FINANCIAL STATEMENTS

7

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

17

SUPPLEMENTARY INFORMATION

SCHEDULES OF REVENUE

2

STATE

18

3

FEDERAL

19

4

LOCAL

20

5 SCHEDULE OF SALARIES AND TRAVEL

21

OCONEE REGIONAL LIBRARY - TABLE OF CONTENTS -
SECTION II FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS
SECTION III 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
May 10, 2007

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the Board of Regents of the University System of Georgia
and Director and Members of the 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) ofthe Oconee Regional Library as ofand 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 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 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 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.
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 Oconee Regional Library's basic financial statements. The accompanying supplementary information which consist of Schedules 2 and 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,
=~1:e~in~-~ State Auditor
RWH:as 2006ARL-41

OCONEE REGIONAL LIBRARY

OCONEE 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 Within One Year Due in More Than One Year
Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for Permanent Funds Unrestricted Total Net Assets
Total Liabilities and Net Assets

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

242,042

364,570

387,026 3,362,023 -2,773,247

$ ===1=,5=8=2,=4=14=

$

320

9,070 51 588

$

60,978

$

959,279

16,508 545,649

$

1,521,436

$ ====:==,;1=,5=8=2,.4.1.=4=

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

OCONEE 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 Interest on Short-Term and Long-Term Debt

$ 832,414 $ 5,105
287,606 133,095 109,349
1 921

49,568 $

475,568 $ 102,935

-307,278 -5,105
-287,606 -30,160
-109,349 -1 921

Total Governmental Activities

$ 1,369,490 $

49 568 $

578 503 $ _ _ _ _-7;...4'-'-1"-',4..;..19;;_

General Revenues Allotments from Participating Governments Investment Earnings Miscellaneous

$

699,409

8,369

171 430

Total General Revenues

$ _ _ _....:8=:.!7..=.9,::2,::;08::....

Change in Net Assets

$

137,789

Net Assets - Beginning of Year

1383647

Net Assets - End of Year

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

OCONEE REGIONAL LIBRARY BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2006

EXHIBIT"C"

ASSETS Cash and Cash Equivalents Investments
Total Assets
LIABILITIES AND SUND BALANCES LIABILITIES
Accounts Payable FUND BALANCES
Reserved for: Permanent Funds
Unreserved Designated for Self-Insurance Designated Roche Funds for Books and Materials Undesignated Reported in: General Fund Permanent Funds Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

PERMANENT FUND

TOTAL

$

242,042

341,501 $

$ 23,069

242,042 364,570

$

583,543 $

23,069 $===6=0=6=,6=12_,

$

320

$

320

$

$

20,372

131,143

431,708

$

583,223 $

$

583,543 $

16,508 $
6 561 23,069 $

16,508
20,372 131,143
431,708 6,561
606,292

23,069 $==-===606ii,i,,li,6=12..,

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

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

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
Net Assets of Governmental Activities (Exhibit "A")

$

606,292

$

387,026

3,362,023

-2,773,247

975,802

$

-20,253

-40 405

-60 658

$ ====1.,,,,5=21==,4=3=6

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

OCONEE REGIONAL LIBRARY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS 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
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

TOTAL

$

699,409

571,903

6,600

49,568

7,109 $

171 430

$ 1,506,019 $

$ 1,260 1260 $

699,409 571,903
6,600 49,568 8,369 171,430
1,507,279

$

768,069 $

5,105

287,191

143,177

115,642

14,249 1 921

$ 1,335,354 $

$

170,665 $

7417

$

178,082 $

405,141

$

583,223 $

0 $
0 $ 1,260 $

768,069 5,105
287,191 143,177 115,642
14,249 1 921
1,335,354
171,925

1,260 $ 21,809

7417 179,342 426,950

23,069 $====60=6=,2=02=

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

OCONEE REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 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

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

$
155,245 -213,712

179,342
-58,467 -7,417 14,249 10,082

Change in Net Assets of Governmental Activities (Exhibit "8")

$ ===13=7=,7=8=9

The notes to the basic financial statements are an integral part of this statement. -6-

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

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 ofthe 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 ofActivities 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.

-7-

OCONEE 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. All remaining governmental funds are aggregated and reported as nonmajor 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 for compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of acquisitions under capital leases are reported as other financing sources.
-8-

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

EXHIBIT"G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
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 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 ofretum 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 ofGeorgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions of the State of Georgia.
-9-

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

EXHIBIT"G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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 ofsecurities 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. At June 30, $9,653 of deposits were not secured by surety bond, insurance or collateral as specified above. The Library is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the Library's deposits.

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,

- 10-

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

EXHIBIT"G"

Note 3: DEPOSITS

(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 of the bonds for this purpose,

(6) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws ofthe 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 $677,473. The amounts of the total bank balances are classified into four categories of custodial credit risk:

Category 1 - Cash that is insured (e.g., Federal Deposit 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 - Cash collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Library's name.
Category 4 - Uncollateralized.

The Library's deposits are classified by custodial credit risk category at June 30, 2006, as follows:

Custodial Credit Risk Category

Bank Balance

1

$ 332,979

2

344,494

3

0

4

0

Total

$======6-77'="=.4===7==3

- 11 -

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

EXHIBIT"G"

Note 4: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

Capital Assets Being Depreciated Equipment Library Collections
Less Accumulated Depreciation for: Equipment Library Collections
Governmental Activity Capital Assets - Net

Balances July 1, 2005

Increases

Balances Decreases June 30, 2006

$ 380,733 $ 3,330,578

6,293 148,952 $

$ 387,026

117,507

3,362,023

234,018 2,443,024
$ 1,034,262 $

31,336 182,376
-58,461 $

117,507

265,354 2,507,893

Q $ 215,802

Capital assets being acquired under capital leases as of June 30, 2006, are as follows:

Governmental Funds

Equipment Less: Accumulated Depreciation

$

35,443

19,271

Current year depreciation expense by function is as follows:
Public Services Support Services

$==-16-,1==7~2
$ 213,297 415

$=====2==13.,,.,.7==1==2
Note 5: RESTRICTED ASSETS
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, 2006, were as follows:

Permanent Fund

Restricted Investments Science Books

$

23,069

- 12 -

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

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-Selflnsured 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 Safety National Casualty Corporation to provide coverage for potential losses by the Fund in excess of $600,000 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.

- 13 -

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

EXHIBIT"G"

Note 7: 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:

Governmental Funds

Capital

Compensated

Leases

Absences ( 1)

Total

Balance July I, 2005

$

27,085 $

50,487 $

77,572

Additions Capital Leases Annual Leave Earned

7,417

33,514

7,417 33,514

Deductions Annual Leave Utilized Debt Retired

14,249

43,596

43,596 14,249

Balance June 30, 2006

$

20,253 $

40,405 $

60.658

Portion of Long-Term Debt

Due within One Year

$

9 070 $

0 $

9 070

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

At June 30, 2006, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30

Ca12ital Leases

Princi12al

Interest

2007 2008 2009 2010

$

9,070 $

1,282

7,314

590

2,807

192

1,062

25

Total Principal and Interest

$

20,253 $

2.089

- 14 -

OCONEE 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%

$ 62,205 $ 62,129 $ 57,786

Note 9: AFFILIATED LIBRARIES DISCLOSURE

The Johnson County Library, Laurens County Library, Treutlen County Library and Washington County Library are legally separate, tax exempt organizations who participate in shared activities with the Oconee Regional Library. These affiliated libraries do not meet the criteria for reporting as either a component unit or related entity of the Oconee Regional Library.

- 15 -

(This page left intentionally blank)

OCONEE 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
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

$

699,350 $

699,350 $

699,409

585,204

585,204

571,903

6,600

33,090

33,090

49,568

4,500

4,500

7,109

3650

3650

171 430

$

1,325,794 $

1,325,794 $

1,506,019

$

866,316 $

866,316 $

768,069

5,040

5,040

5,105

258,774

253,324

287,191

92,750

98,200

143,177

105,683

105,683

115,642

16170

$

1,328,563 $

1,328,563 $

1,335,354

$

-2 769 $

-2 769 $

170,665

$

9,625 $

9,625 $

7,417

-6856

-6856

$

2 769 $

2769 $

7417

$

0 $

0 $

178,082

0

0

405 141

Fund Balance - Ending

$=======0$=======0$=====58=3-,2=23=

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.

-17-

OCONEE 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 Talking Book Centers

SCHEDULE "2"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

341,275

33,360

102,935

94 333

$ ===5=7=1='9=03=

See notes to the basic financial statements.

-18-

OCONEE 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 Vacation Reading Program

SCHEDULE "3"
GOVERNMENTAL FUND TYPE GENERAL FUND
$====6=6=0==0=

See notes to the basic financial statements.

-19-

OCONEE REGIONAL LIBRARY SCHEDULE OF LOCAL REVENUE
YEAR ENDED JUNE 30, 2006
LOCAL SOURCES Boards of Education Johnson County Treutlen County City Governments Dublin Soperton Wrightsville County Governments Boards of Commissioners Johnson Laurens Treutlen

SCHEDULE "4"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

8,626

6,748

217,258 5,600 7,600

11,117 435,660
6 800

$ ====6=9=9=4=09=

See notes to the basic financial statements.

- 20 -

NAME
Baker, Brown, Chambless, Couey, Daughety, Dugas, Fortner, Gilbert, Hall, Hilliard, Kerr, Lawrence, Mason, Mathew, Moore, Moses, Mullis, Northrop, Page, Porter, Rooks, Sethna, Shoemaker, Snell, Sweat, Thomas, Thomas, Warren, Warren, Whatley-Willcox, White, Woodburn, Young, Jr.
Totals per Report

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

SCHEDULE "5"

Patsy Beverly Virginia Bradford Leard R. Wilfred Marolyn Anthony Lugine Patricia Glenda Ina VirgilB. Mattie Sally Jan Denise Jan Sheila Robin Julia Elizabeth Inman Amy Candace Elizabeth Faith L. Florine Mary Lu Robert April R. Joys. Christian Elizabeth Chris Michael D.

TITLE CATEGORY
Circulation Clerk Patron Accounts Manager Head of Reference Bookkeeper Director TBC Assistant Processing Circulation Clerk Custodian/Security Reference Branch Manager Reference Librarian Circulation/Children's Children's Assistant Circulation Clerk TBC Assistant Heritage Center Reference Assistant Circulation Clerk Genealogy Assistant Children's Librarian Circulation Desk Reference Librarian Circulation Clerk Special Services TBC Assistant Circulation Clerk TBC Manager Automation Assistant Librarian TBC Manager Assistant Director IS Assistant/Circulation Clerk

SALARIES

TRAVEL

$

12,703

25,137 $

129

53,357

90

40,914

141

85,881

1,243

8,534

15,276

831

30,900

62,878

94

12,237

45,005

223

27,324

113

19,627

17,816

12,239

1,990

4,600

5,430

528

29,910

835

14,211

5,535

5,180

4,324

3,440

21,427

533

17,656

291

30,226

4,595

7,900

74,057

119

19 821

137

$

721,489 $===3=,94=8=

See notes to the basic financial statements.

- 21 -

SECTION II FINDINGS AND QUESTIONED COSTS

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

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

CASH AND CASH EQUIVALENTS Uncollateralized Deposits Reportable Condition Nonmaterial Noncompliance Finding Control Number: FS-6872-06-01

Condition:

As of June 30, 2006, the Library failed to have its bank balances fully collateralized.

Criteria:

The Official Code of Georgia Section Annotated Section 45-8-12 states, in part, as follows:

"The collecting officer or officer holding public funds may not have on deposit at any one time in any depository for a time longer than ten days a sum of money 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 ofthe public funds being secured after the deduction of the amount of deposit insurance".

Questioned Cost: NIA

Information:

The Library's public funds held at Capital City Bank were under co11ateralized by $9,653.

Cause:

This noncompliance occurred because ofmanagement's failure to adequately monitor the collateralization of balances at individual banks.

Effect:

Failure to comply with Georgia Section Annotated Section 45-8-12.

Recommendation:

The Library should implement adequate procedures to monitor the collateralization ofbank balances to ensure compliance at all times with State Laws governing deposits and investments.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

SECTION III MANAGEMENT'S RESPONSES

OCONEE REGIONAL LIBRARY SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2006
Finding Control Number: FS-6872-06-01
We concur with this finding. During the post audit in May 2007, when this error was brought to light, the Library Director immediately began a review ofall bank deposits to ensure that they were all adequately collateralized. This will continue to be done on a quarterly basis.
Contact Person: Leard Daughety, Director Phone: (478) 272-5710 Fax Number: (478) 272-0524 E-mail Address: ldaughety@ocrl.org