Ohoopee Regional Library, Vidalia, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2004

OHOOPEE REGIONAL LIBRARY
VIDALIA, 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

OHOOPEE 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

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 BALANCES

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 BALANCES - 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

OHOOPEE 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
July 1, 2005

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 Ohoopee 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 Ohoopee 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 of contents. These financial statements are the responsibility of the Ohoopee 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 of America. 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.
As discussed in Note 2 to the financial statements, management has not properly recorded current year depreciation expense nor accumulated depreciation on buildings and improvements in accordance with generally accepted accounting principles. The effect on the financial statements for the Ohoopee Regional Library is not reasonably determinable.

2004ARL-41X

In addition, in our opinion, except for the effects of not properly recording depreciation cost in the governmental activities as described in the third paragraph, the financial statements referred to above present fairly, in all material respects, the respective financial position ofthe governmental activities and each major fund of the Ohoopee Regional Library, as of June 30, 2004, and the changes in financial position thereoffor the year then ended in conformity with accounting principles generally accepted in the United States of America.
The Ohoopee 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 described in Note 2, the Ohoopee 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 Ohoopee 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,
~
State Auditor
RWH:as 2004ARL-41X

OHOOPEE REGIONAL LIBRARY

OHOOPEE REGIONAL LIBRARY STATEMENT OF NET ASSETS
JUNE 30. 2004
ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net
Local Capital Assets
Land Special Collections Buildings and Improvements 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 Restricted for
Permanent Fund Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

178,116

9,337

975

85,000 653,609 1,032,918
22,581 1,475,252 -1409379

$ ======2;,.,;,0=4=8=,4=09=

$

6,401

20230

$

26631

$

1,859,981

1,760 160 037

$

2,021,778

$ ======2;;,i;,o;,.4=8=,4=09=

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

OHOOPEE 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

$

289,981 $

66,764

162,112

33 035

Total Governmental Activities

$=====5=51=,8=9=2= $

General Revenues Allotments from Participating Governments Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous

17,879 $ 17 879 $

279,435 $ 36 534

7,333 -66,764 -162,112
3499

315 969 $ _ _ _ _-2=.1:..::8"-',0:...:.44.:....

$

181,252

21,071 2,197
46326

Total General Revenues Change in Net Assets

$ ------=2=50=84.:.,:6:....

$

32,802

Net Assets - Beginning of Year (Restated)

1 988 976

Net Assets - End of Year

$ =====2..0..2..1...,7.7..8....

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

OHOOPEE REGIONAL LIBRARY BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30. 2004

EXHIBIT"C"

ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net
Local
Total Assets
LIABILITIES AND FUND BALANCES LIABILITIES
Accounts Payable FUND BALANCES
Reserved for: Permanent Fund
Unreserved Undesignated Reported in: General Fund Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

PERMANENT FUND

TOTAL

$

176,832 $

8,202

975

1,284 $ 1,135

178,116 9,337
975

$

186,009 $

2 419 $ ====1~8=8~42~8~

$

6 401

$

6401

$

$

179,608

$

179 608 $

1,760 $
659 2 419 $

1,760
180 267 182 027

$

186,009 $

2 419 $ ====1=8=8=42=8=

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

OHOOPEE REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30. 2004

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:
Land Special Collections Buildings and Improvements 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:
Compensated Absences

$

182.027

$

85,000

653,609

1,032,918

22,581

1,475,252

-1,409,379

1,859,981

-20,230

Net Assets of Governmental Activities (Exhibit "A")

$ =====2,=02=1=7'=78=

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

OHOOPEE REGIONAL LIBRARY STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
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
Total Expenditures
Net Change in Fund Balance
Fund Balance - Beginning
Fund Balance - Ending

GENERAL FUND

PERMANENT FUND

TOTAL

$

181,252

311,508

4,461

17,879

2,166 $

46,326

$

563,592 $

$ 31 31 $

181,252 311,508
4,461 17,879
2,197 46,326
563,623

$

257,760 $

66,764

162,112

33,035

$

519,671 $

$

43,921 $

135,687

0 $
0 $ 31 $ 2,388

257,760 66,764
162,112 33 035
519 671
43,952
138,075

$

179,608 $

2 419 $ ===1=8=-2,=02=7=

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

OHOOPEE 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

$ 19,423 -49,959

Donated Capital Assets are not reported in Governmental Funds. However, in the Statement of Activities, the donated value is shown as Grants and Contributions not Restricted to Specific Programs.

Compensated Absences increases 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.

43,952
-30,536 21,071 -1 685

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

$ ===3=2=,8=02=

The notes to the basic financial statements are an integral part of this statement. -9-

OHOOPEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "G"

Note 1: DESCRIPTION OF LIBRARY AND REPORTING ENTITY
REPORTING ENTITY
The Ohoopee 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 consists of 13 members; 8 members appointed by Toombs County Library Board, 3 members appointed by Tattnall County Library Board and 2 members appointed by Montgomery 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 of oversight responsibility for the Library's operations.
While the Toombs County Library Board appoints a majority of the Ohoopee Regional Library's Board, the Toombs County Library Board is neither able to impose its will upon the Library nor is there a financial benefit/burden relationship between the two boards as defined by Governmental Accounting Standards Board. The Ohoopee Regional Library is therefore considered to be a related organization of the Toombs County Library Board.
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 Ohoopee 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.
- 10 -

OHOOPEE 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 of goods 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) 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 - Ohoopee Regional Library Book Fund is the fund used to account for an endowment ofwhich the corpus is to be invested and preserved intact with the resultant income to be used exclusively for the purchase of library books.
BASIS OF ACCOUNTING
The basis of accounting 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.
- 11 -

OHOOPEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

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.

CHANGES IN ACCOUNTING PRINCIPLES

The Ohoopee 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 Capital Projects Fund

$ 135,687 2,388

Governmental Funds July 1, 2003 Capital Assets
Balance July 1, 2003 Adjustments to Prior Year Balance Accumulated Depreciation Compensated Absences Balance July 1, 2003 Adjustments to Prior Year Balance

$ 138,075

$ 996,449 2,249,519

3,245,968 -1,376,522

$

-19,963

1 418

-18,545

Net Assets Beginning (See Exhibit "B")

$ 1,988.976

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 -

OHOOPEE 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.
RECEIVABLES
Receivables consist ofamounts due from grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
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

- 13 -

OHOOPEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

computed using the straight-line method except for building and improvements for which depreciation is computed based on estimated appraisal values. Building and improvements depreciated value was calculated at fifteen percent as of fiscal year 2003, and this appraised value will be retained for a five year period until fiscal year 2007. Building and improvements will be depreciated twenty percent for fiscal year 2008, plus any major repairs and the value be retained at that time for another five years. This method ofdepreciation for buildings and improvements is not in accordance with generally accepted accounting principles.

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

Capitalization Policy

Estimated Useful Life

Land Special Collections - Ladson Genealogical Buildings and Improvements Equipment Library Collection

$

5,000

NIA

$

5,000

NIA

$

5,000

55 years

$

5,000

15 years

$

5,000

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 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. If a 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 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,

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OHOOPEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT"G"

Note 3: DEPOSITS

(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, 2004, the bank balances were $222,718. 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

$ 108,274

2

99,081

3

15,363

Total

$====22==2='=,7==1==8

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OHOOPEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT"G"

Note 4: CAPITAL ASSETS

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

Balances July 1, 2003 (Restated)

Increases

Decreases

Balances June 30, 2004

Governmental Activities Capital Assets, Not Being Depreciated:
Land Special Collections

$

85,000

653,609

$

85,000

653,609

Total Capital Assets Not Being Depreciated $ 738,609

$ 738,609

Capital Assets Being Depreciated Buildings and Improvements Equipment Library Collections

$ 1,032,918 22,581
1,451,860 $

40,494 $

$ 17,102

1,032,918 22,581
1,475,252

Less Accumulated Depreciation for: Buildings and Improvements Equipment Library Collections

150,437 13,549
1,212,536

1,505 48454

17,102

150,437 15,054
1,243,888

Total Capital Assets, Being Depreciated, Net $ 1,130,837 $

-9 465 $

0 $ 1,121,372

Governmental Activity Capital Assets - Net $ 1,869.446 $

-9 465 $

0 $ 1,859.981

Current year depreciation expense by function is as follows:

Public Services

$,==dc49~9~5~9

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, are reported as restricted assets in the Statement of Net Assets because their use is limited by applicable contractual agreements. Restricted assets at June 30, 2004, were as follows:

Permanent Fund

Restricted Cash and Cash Equivalents: Ohoopee Regional Library Book Fund
Restricted Investments Ohoopee Regional Library Book Fund

$

995

$

765

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OHOOPEE 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 ofloss associated with torts, assets 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. In addition, the Library has elected to self-insure for errors or omissions, which includes, among other risks, risks for sexual harassment and discrimination. The Library has not experienced any losses related to these risks 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.

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

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:

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OHOOPEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT"G"

Note 7: LONG-TERM DEBT

Governmental Funds
Compensated Absences (1)

Balance July 1, 2003

$

19,963

Retroactive Restatement of Prior Year Balances

-1 418

Balance July 1, 2003 Restated

$

18,545

Additions Annual Leave Earned

21,984

Deductions Annual Leave Utilized

20,299

Balance June 30, 2004

$===20-,2=3=0

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

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:

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OHOOPEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2004

EXHIBIT"G"

Note 8: RETIREMENT PLANS
Fiscal Year 2004 2003 2002

Percentage Contributed
100% 100% 100%

Required Contribution

$

27,591

$

26,838

$

24,677

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OHOOPEE REGIONAL LIBRARY

SCHEDULE "1"

GENERAL FUND

SCHEDULE OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL

YEAR ENDED JUNE 30. 2004

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
Total Expenditures
Net Change in Fund Balance
Fund Balance - Beginning
Fund Balance - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

ACTUAL AMOUNTS

$

124,600 $

124,600 $

181,252

310.323

310,323

311,508

4,461

12,550

12,550

17,879

1,525

1,525

2,166

2400

2 400

46326

$

451 398 $

451 398 $

563,592

$

208,554 $

208,554 $

257,760

66,764

66,764

66,764

165,407

165,407

162,112

26906

26 906

33 035

$

467 631 $

467 631 $

519 671

$

-16,233 $

-16,233 $

43,921

138 354

138 354

135 687

$

122 121 $

122121 $ =====1=79=,6=08=

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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OHOOPEE 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 Materials Maintenance and Operations

SCHEDULE "2"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

261,449

500

13,025

36,534

$ ====3=1==1,=50=8=

See notes to the basic financial statements.

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OHOOPEE REGIONAL LIBRARY SCHEDULE OF FEDERAL REVENUE
YEAR ENDED JUNE 30. 2004
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
$ =====4,=4=61=

See notes to the basic financial statements.

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OHOOPEE REGIONAL LIBRARY SCHEDULE OF LOCAL REVENUE
YEAR ENDED JUNE 30. 2004
LOCAL SOURCES City Governments Lyons Vidalia County Government Board of Commissioners Toombs Public Libraries Glennville City Public Library Montgomery County Public Library Tattnall County Public Library

SCHEDULE "4"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

4.000

67,000

46,500
28,522 12,563 22 667

$ ====1=8=152=52=

See notes to the basic financial statements.

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OHOOPEE REGIONAL LIBRARY SCHEDULE OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30. 2004

SCHEDULE "5"

NAME
Bell, Brooks, Daughtry, Doyle, Ervin, Evans, Fennell, Garcia, Gres, Jin, Jones, Longtin, Moses, Moxley, Moxley, Nimmons, Peeler, Sandford, Smith, Thompson, Thompson, Tomlinson, Trull, Wilson,

Taneka M Carolyn M Amanda S AllisonW Barbara J Marvin L Debra Betty J Dusty Guojia WilliamM Jessica L Katherine L BettyW Clinton J Nancy J Dana L India K Mildred 0 Carolyn M SallyJ Jeff A Melba F Patty R

Accruals June 30, 2003 June 30, 2004

Totals per Report

TITLE CATEGORY
Branch Clerk Branch Clerk Substitute Branch Clerk Branch Clerk Substitute Branch Clerk Branch Clerk Branch Manager Custodian Director Technical Services Librarian Circulation Clerk Custodian Branch Clerk Administrative Assistant Branch Clerk Branch Clerk Assistant Director Branch Manager Branch Clerk Branch Manager Circulation Supervisor Public Services Librarian Bookmobile Coordinator Branch Manager

SALARIES

TRAVEL

$

3,799

1,295

522

2,632

745

718

8,848

2,900

63,308 $

519

53,971

67

3,488

128

182

19,500

143

4,865

4,993

51,472

567

14,959

121

2,142

5,147

13,832

45,886

394

13,520

53

13 535

$

332,387 $

1,864

-540 364

$

332,387 $=====1=6=8=8

See notes to the basic financial statements.

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SECTION II FINDINGS AND QUESTIONED COSTS

OHOOPEE REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2004
CURRENT YEAR
ACCOUNTING CONTROLS (OVERALL) Inadequate General Controls Reportable Condition Finding Control Number: FS-7932-04-01
An examination of the internal accounting control procedures revealed that the Library did not maintain adequate general controls over the Financial Accounting System. Access controls over the Financial Accounting System did not prevent unauthorized users from accessing critical accounting information.
Access controls, both manual and automated, are the basis for achieving security over the financial system. The deficiencies noted were a result of management's decision not to implement standard access controls thereby increasing the risk of unauthorized access to the financial system by individuals both internal and external to the Library. Management should ensure that the access controls over the accounting information system limit access to the financial system to only employees with a need for access for the performance of their job duties.
CAPITAL ASSETS Failure to Report Depreciation in Accordance with Generally Accepted Accounting Principles Reportable Condition Finding Control Number: FS-7932-04-02
The Ohoopee Regional Library reported accumulated depreciation and current year depreciation cost for Buildings and Improvements based on a method that is not in accordance with generally accepted accounting principles. Depreciation as reported by the Library for Buildings and Improvements is based on estimated appraisal values which is not an acceptable accounting alternative. This method of accounting results in the basic financial statements of the Library not being in accordance with generally accepted accounting principles. This deficiency was a result ofmanagement's disregard for generally accepted accounting principals. The Library should establish a depreciation method for Buildings and Improvements which is in accordance with generally accepted accounting principles.

SECTION III MANAGEMENT'S RESPONSES

OHOOPEE REGIONAL LIBRARY SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2004
Finding Control Number: FS-7932-04-01
We concur with this finding with reservation. The finding states that "access controls over the Financial Accounting System did not prevent unauthorized users from accessing critical accounting information." As was explained verbally and in writing concerning the event, at no time did any unauthorized person have access to any of the accounting information. Outside access was only to the connection, not to any of the servers or the information on the servers. The accounting information became corrupted because of the power drain, but was fully recovered. Funding has become available to install a hardware firewall, in addition to the software firewall installed after the event. The Board and staff will begin the process of purchasing and installing by October 1, 2005.
Contact Person: Dana Peeler, Assistant Director/IT Phone: (912) 537-9283 Fax Number: (912) 537-3735 E-mail Address: peelerd@ohoopeelibrary.org
Finding Control Number: FS-7932-04-02
We concur with this finding. The Library did have a depreciation schedule; however, it used a method recommended by a former Board member and real estate appraiser and was unaware that it was restricted to other methods. The Board will meet and determine other methods for depreciation.
Contact Person: Dusty Gres, Director Phone: (912) 537-9283 Fax Number: (912) 537-3735 E-mail Address: gresd@ohoopeelibrary.org