Okefenokee Regional Library, Waycross, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2007

OKEFENOKEE REGIONAL LIBRARY
WAYCROSS# GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30# 2007
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

OKEFENOKEE 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

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

NOTES TO THE BASIC FINANCIAL STATEMENTS

9

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

19

SUPPLEMENTARY INFORMATION

SCHEDULES OF REVENUE

2

STATE

20

3

FEDERAL

21

4

LOCAL

22

5 SCHEDULE OF SALARIES AND TRAVEL

23

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

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
October 6, 2008

Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe Board of Regents of the University System of Georgia
and Director and Members ofthe Okefenokee 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, the major fund and the aggregate remaining fund information (Exhibits A through G) of the Okefenokee Regional Library as of and for the year ended June 30, 2007, which collectively comprise the Library's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Okefenokee 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe Library's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 the major fund and the aggregate remaining fund information of the Okefenokee Regional Library, as of June 30, 2007, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States ofAmerica.
2007ARL-41

The Okefenokee 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 19 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 Okefenokee Regional Library's basic financial statements. The accompanying supplementary information which consist ofSchedules 2 through 5, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe basic financial statements, and in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
~~n,~~~ State Auditor
RWH:as 2007ARL-41

OKEFENOKEE REGIONAL LIBRARY

OKEFENOKEE REGIONAL LIBRARY STATEMENT OF NET ASSETS JUNE 30, 2007
ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net
Other Capital Assets
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 Funds Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

106,744.53

136,316.95

22,839.39

1,839,258.10 -1,263,287.03

$ ====8=41=8=7=1=9.=4

$

855.15

26,322.73

$

27,177.88

$

575,971.07

8,943.02 229,779.97

$

814,694.06

$ =====84=1 =87=1=.9=4

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

OKEFENOKEE REGIONAL LIBRARY STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2007

GOVERNMENTAL ACTIVITIES
Current Services Public Services Technical Services Support Services Maintenance and Operations Information Technology
Total Governmental Activities
General Revenues Allotments from Participating Governments Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$

677,908.29 $

80,665.79

189,045.07

110,416.62

38,226.31

$ 1,096,262.08 $

28,531.77 28,531.77

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

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

383,606.02 $

77,040.20

168,977.05

842.73

$

630,466.00 $

47,956.88 $
47 956.88 $ $ $ $

-217,813.62 -3,625.59
-20,068.02 -110,416.62
-37 383.58
-389,307.43
385,028.80 7,780.95
72 912.89
465 722.64
76,415.21
738,278.85

$ ======8=14=6=9=4=.0=6

-3-

OKEFENOKEE REGIONAL LIBRARY BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2007

EXHIBIT"C"

ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net
Other
Total Assets
LIABILITIES AND FUND BALANCES LIABILITIES
Accounts Payable Deposits and Deferred Revenue
Total Liabilities FUND BALANCES
Reserved for: Permanent Funds
Unreserved Undesignated Reported in: General Fund Capital Projects Fund Permanent Funds Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

NON-MAJOR FUNDS

TOTAL

$ 105,880.87 $ 123,233.44
22,839.39

863.66 $ 13,083.51

106,744.53 136,316.95
22,839.39

$ 251,953.70 $

13 947.17 $ ===2=6=5=,9=00=.8=7=

$

855.15

12,483.69

$ 13,338.84

$

855.15

12,483.69

$

13 338.84

$

8,943.02 $

$ 238,614.86 $ 238,614.86 $

120.00 4,884.15
13 947.17 $

8,943.02
238,614.86 120.00
4 884.15
252,562.03

$ 251,953.70 $

13 947.17 $ ====2=65=,90=0=.87=

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

OKEFENOKEE REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2007

EXHIBIT"D"

Total Fund Balances - Governmental Funds (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:
Library Collections Accumulated Depreciation
Total Capital Assets
Some of the Library's Fines and Fees Revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.
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
Net Assets of Governmental Activities (Exhibit "A")

$ 252,562.03

$ 1,839,258.10 -1,263,287.03

575,971.07

12,483.69

-26,322.73 $ 814,694.06

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

OKEFENOKEE REGIONAL LIBRARY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2007

EXHIBIT"E"

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

GENERAL FUND

NON-MAJOR FUNDS

TOTAL

$ 385,028.80 604,836.96 25,629.04 28,531.77 7,200.23 $ 60.429.20
$ 1,111,656.00 $

$ 580.72

385,028.80 604,836.96
25,629.04 28,531.77
7,780.95 60.429.20

580.72 $ 1,112,236.72

$ 687,587.53 $ 80,665.79 184,977.95 110,416.62 38,226.31

$ 1,101,874.20 $

$

9,781.80 $

228,833.06

0.00 $

687,587.53 80,665.79 184,977.95 110,416.62 38,226.31

0.00 $ 1,101,874.20

580.72 $

10,362.52

13,366.45

242,199.51

$ 238,614.86 $ 13,947.17 $ ==2=5=2=,5=62=.0=3=

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

OKEFENOKEE REGIONAL LIBRARY RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2007

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (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 donated. In Governmental Funds, these assets, as well as, the associated revenue are not recognized, but in the Statement of Activities, the contribution of donated Capital Assets is recognized as a capital contribution.
Fines and Fees Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the governmental funds.
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:
Increase in Compensated Absences

$ 10,362.52

$ 115,111.87 -105,432.63

9,679.24

47,956.88 12,483.69

-4,067.12

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

$ =====76=,4=1=5=.2=1

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

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OKEFENOKEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "G"

Note 1: DESCRIPTION OF LIBRARY AND REPORTING ENTITY
REPORTING ENTITY
The Okefenokee 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 fifteen members which are also trustees of the member library which appointed them. The Library Board membership consists ofthree members appointed from the Alma/Bacon County Library Board, three members appointed from the Appling County Library Board, three members appointed from the Clinch County Library Board, three members appointed from the Pierce County Library Board and three members appointed from the Waycross/Ware 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. The Okefenokee Regional Library is therefore determined to be a joint venture.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Library's basic financial statements are collectively comprised of the Library-wide financial statements, fund financial statements and notes to the basic financial statements ofthe Okefenokee 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 of the Library's programs, such as office and maintenance personnel and accounting) are not allocated to programs.

-9-

OKEFENOKEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

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 fund:
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.
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.

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OKEFENOKEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

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 deposjts and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code ofGeorgia Annotated Section 45-8-14 authorizes 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.
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OKEFENOKEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Library does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.

RECEIVABLES

Receivables consist ofamounts due from grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed, fines and fees from patrons 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 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 of the assets is not capitalized. Depreciation is computed using the straight-line method. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the Library.

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

Capitalization Policy

Estimated Useful Life

Library Collections

All

10 years

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

NET ASSETS

The Library's net assets in the Library-wide Statements are classified as follows:

Invested in capital assets, net of related debt - This represents the Library's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.

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OKEFENOKEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Restricted net assets - These represent resources for which the Library is legally or contractually obligated to spend resources for permanent funds in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the general operations of the Library, and may be used at the discretion of the Library to meet current expenses for those purposes.
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 of money 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 11 Opercent 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.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and

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OKEFENOKEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

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, 2007, the bank balances were $333,165.74. The amounts of the total uninsured bank balances are classified into three categories of custodial credit risk:

Category 1 - Uncollateralized Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the Library's name.

The Library's deposits are classified by custodial credit risk category at June 30, 2007, as follows:

Custodial Credit Risk Category

Bank Balance

1

$

0.00

2

23,233.44

3

86,075.99

Total

$ 109,309.43

Note 4: CAPITAL ASSETS

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

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OKEFENOKEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "G"

Note 4: CAPITAL ASSETS

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

Balances Jul:t 1, 2006

Increases

Decreases

Balances June 30, 2007

$ 1,677,008.45 $ 163,068.75 $

1.158.673.50

105.432.63

$ 518,33i 25 $ 51636.12 $

819.10 $ 1,839,258.10
819.10 1,263,287.03
Q.QQ $ 515,211.()1

Current year depreciation expense by function is as follows:

Public Services

$ 105,432.63

Note 5: RESTRICTED ASSETS

Corpus ofthe Buna T. Fain Memorial Fund, George Upfold Gates Student Award Trust Fund, and Waycross-Ware County Library Memorial Trust Fund are restricted assets in the Statement ofNet Assets because their use is limited by applicable contractual agreements. Restricted assets at June 30, 2007, were as follows:

Permanent Fund

Restricted Investments Corpus

$====="8~,9='43==.0==2

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 and acts of God.

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.

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OKEFENOKEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "G"

Note 6: RISK MANAGEMENT

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

Position Covered

Amount

All Employees

$ 30,000.00

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. Typically, the General Fund is the fund used to liquidate this long-term debt. The Library uses the vesting method to compute compensated absences.

The changes in Long-Term Debt during the fiscal year ended June 30, 2007, were as follows:

Governmental Funds
Compensated Absences ( 1)

Balance July 1, 2006

$ 22,255.61

Additions Annual Leave Earned

35,955.65

Deductions Annual Leave Utilized

31,888.53

Balance June 30, 2007

$ 26,322.73

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

Note 8: SIGNIFICANT CONTINGENT LIABILITIES

Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The Library believes that such disallowances, if any, will be immaterial to its overall financial position.

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OKEFENOKEE REGIONAL LIBRARY NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2007

EXHIBIT "G"

Note 9: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all librarians and clerical personnel employed by regional and county libraries are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit 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 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2007 2006 2005

100% 100% 100%

$ 50,281.58 $ 48,778.00 $ 49,076.00

Note 10: AFFILIATED LIBRARIES DISCLOSURE

The Alma/Bacon County Library, Appling County Library, Clinch County Library, Pierce County Library and Waycross/Ware County Library are legally separate, tax exempt organizations who participate in shared activities with the Okefenokee Regional Library. These affiliated libraries do not meet the criteria for reporting as either a component unit or related entity of the Okefenokee Regional Library.

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OKEFENOKEE REGIONAL LIBRARY GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2007

SCHEDULE "1"

REVENUES
Local Funds State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Public Services Technical Services Support Services Maintenance and Operations Information Technology
Total Expenditures
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

$

404,884.99 $

404,884.99 $

385,028.80

592,647.43

592,647.43

604,836.96

25,629.04

16,020.00

16,020.00

28,531.77

7,200.23

60,429.20

$ 1,013,552.42 $ 1,013,552.42 $ 1,111,656.00

$

871,616.45 $

871,616.45 $

687,587.53

80,665.79

66,149.47

66,149.47

184,977.95

86,460.00

86,460.00

110,416.62

14,553.00

14,553.00

38,226.31

$ 1,038,778.92 $ 1,038,778.92 $ 1,101,874.20

$

-25,226.50 $

-25,226.50 $

9 781.80

$

18,500.00 $

18,500.00

-18 500.00

-18 500.00

$

0.00 $

0.00

$

-25,226.50 $

-25,226.50 $

9,781.80

228,833.00

228,833.00

228,833.06

Fund Balance - Ending

$

203,606.50 $

203,606.50 $ ===2=38=,6=1=4=.8=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.

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OKEFENOKEE REGIONAL LIBRARY SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2007
AGENCY/FUNDING GRANTS Board of Regents of the University System of Georgia Office of Public Library Services Salaries Library Materials Maintenance and Operations

SCHEDULE "2"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

369,651.71

68,778.29

166,406.96

$ ===60=4=,8=3=6=.9=6

See notes to the basic financial statements.

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OKEFENOKEE REGIONAL LIBRARY SCHEDULE OF FEDERAL REVENUE
YEAR ENDED JUNE 30, 2007
AGENCY/FUNDING GRANTS Museum and Library Services, Institute of Through Board of Regents of the University System of Georgia Library Services and Technology Act Family Literacy Program State Vacation Reading Program

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

21,629.04

4 000.00

$ ===2~5;i;,6=2=9=.0=4

See notes to the basic financial statements.

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OKEFENOKEE REGIONAL LIBRARY SCHEDULE OF LOCAL REVENUE YEAR ENDED JUNE 30, 2007
LOCAL SOURCES Boards of Education Appling Bacon Clinch Pierce Ware City Governments Alma Blackshear Homerville County Governments Boards of Commissioners Appling Bacon Clinch Pierce Ware

SCHEDULE "4"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

7,675.00

11,933.00

10,500.00

7,500.00

10,000.00

11,783.04 9,350.00 9,650.00

37,671.00 5,736.72 9,650.00
16,000.08 237,579.96

$ ===38=5=,0=2=8=.8=0

See notes to the basic financial statements.

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NAME
Ahl, Harriet Allen, Birta Anderson, Theressa Britton, James Bunkley, Anita Clark, Annie Jane Coleman, Alice Durance, Deidre Craft, Latasha Evans, David Farmer, Willia D. Galentine-Steis, Midge Harris, Christine W. Joyner, Tammy King, Karen Knight, Karen Lightfoot, Linda Kay Luttermoser, Babara Miles, Shirely Moore, Rosanne Neal, Janice Osborne, Annette Pittman, Doris F. Smith, Katherine Sullivan, Linda Thatcher, Sandra E. Thomas, Mary W. Ward, Lena Watson, Particia Welch, Jane West, Bertha White, Betty 0. Whitley, Heather Williams, Elizabeth D.
Accruals June 30, 2006 June 30, 2007
Totals per Report

OKEFENOKEE REGIONAL LIBRARY SCHEDULE OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2007

SCHEDULE "5"

TITLE CATEGORY
Circulation Clerk Circulation Clerk Branch Manager Reference Services Librarian Branch Manager Circulation Clerk Circulation Clerk Circulation Clerk Maintenance Circulation Clerk Circulation Clerk Director Circulation Clerk Circulation Clerk Substitute Circulation Clerk Extension/Technical Services Librarian Circulation Clerk Circulation Clerk Extension Services Librarian Children's Services Librarian Branch Manager Assistant Payroll Clerk Circulation Clerk Circulation Clerk Payroll/Technical Services Clerk Office Manager Circulation Clerk Maintenance Branch Manager Circulation Clerk Circulation Clerk Circulation Clerk Circulation Clerk

SALARIES

$

1,818.03

216.00

17,414.80 $

60,762.66

16,157.83

6,142.38

9,166.23

6,812.10

507.50

2,134.50

2,495.40

67,684.74

6,672.98

9,151.29

621.00

11,786.54

60,473.42

72.00

6,861.02

62,584.74

42,849.42

16,103.12

9,636.00

17,499.71

16,310.03

24,918.40

27,885.94

7,886.92

11,950.85

16,591.85

6,327.22

16,362.70

8,597.88

12,873.86

$ 585,329.06 $

TRAVEL
65.86 194.34
54.29
742.90
883.67 306.62 426.29 4,442.30
3,633.46 157.57 11.13
10,918.43 -326.19 19.40

$ 585,329.06 $===10=6=1=1=.6=4

See notes to the basic financial statements.

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

OKEFENOKEE REGIONAL LIBRARY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-7942-05-01 FS-7942-06-01 FS-7942-06-02

Further Action Not Warranted Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-7942-06-02

We concur with the capital assets findings for fiscal year 2006. The Library System is in the process of establishing monthly procedures for entering fair market value on all additions and deletions to the collection. These measures should begin resolving the issue of zero value entries in the EVERGREEN system.

SECTION III FINDINGS AND QUESTIONED COSTS

OKEFENOKEE REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES

The auditor is required to communicate to management and those charged with governance control deficiencies identified during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness.

A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Okefenokee Regional Library's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Okefenokee Regional Library's financial statements that is more than inconsequential will not be prevented or detected by the Okefenokee Regional Library's internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Okefenokee Regional Library's internal control.

Any identified deficiencies in internal controls that we did not consider to be significant deficiencies and/or material weaknesses have been communicated to management and those charged with governance within a separate management letter dated October 6, 2008. Internal control deficiencies identified during the course ofthis engagement that were considered to be significant deficiencies and/or material weaknesses are presented below:

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Significant Deficiency Finding Control Number: FS-7942-07-01

Condition:

The Library failed to adequately maintain its capital asset records.

Criteria:

The Library's management is responsible for designing, implementing and monitoring internal controls to ensure that capital assets are properly recorded, maintained, and documented in accordance with generally accepted accounting principles.

Questioned Cost: NIA

Information:

A review of the Library's Capital Assets policies and procedures along with related Capital Asset's records disclosed the following deficiencies: (1) the Library had donated collections of$21,757.02 without sufficient supporting documentation, and (2) ofthe 10,202 volumes added during the year under review, 60 were added with a zero value.

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OKEFENOKEE REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Significant Deficiency Finding Control Number: FS-7942-07-01

Cause:

The Library's management failed to implement satisfactory controls to record and maintain its' capital asset records.

Effect:

Without satisfactory accounting controls and procedures in place, the Library could place itself in a position where potential misappropriation of assets could occur. In addition, the lack of controls could impact the reporting of its' financial position and results of operations.

Recommendation:

The Library should implement appropriate controls to ensure that capital asset activity and records are properly maintained, accurate and sufficiently documented.

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-7942-07-02

Condition:

The Library did not have adequate controls in place over the financial statement reporting process.

Criteria:

Management is responsible for having adequate controls over the financial reporting process, which not only includes proper recording oftransactions to the general ledger, but extends to accurate preparation and presentation ofthe financial statements, including note disclosures.

Questioned Cost: NIA

Information:

The Governmental Accounting Standards Board (GASB) Statement 34 reporting model requires the presentation of both fund level and entity-wide level statements in the Library's financial statements. The auditors had to prepare the appropriate fund level and entity-wide level financial statements from the Library's general ledger.

Cause:

The Library did not implement an adequate system of internal control over the financial statement reporting process.

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OKEFENOKEE REGIONAL LIBRARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2007

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-7942-07-02

Effect:

The Library did not have adequate controls in place to ensure that the financial statements were properly prepared in accordance with generally accepted accounting principles.

Recommendation:

The Library should develop and implement internal controls over the financial statement reporting process to ensure that activity is properly recorded in the general ledger; to verify that financial statements (including note disclosures) properly reflect activity reported in the general ledger; and to include a monitoring process to evaluate the accuracy of the financials presented for audit.

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SECTION IV MANAGEMENT'S RESPONSES

OKEFENOKEE REGIONAL LIBRARY SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2007
Okefenokee Regional Library's responses to the findings described below were not audited and accordingly, we express no opinion on it.
Finding Control Number: FS-7942-07-01
We concur with this finding. The Library will implement a system for valuing donated capital assets at fair market value. Accurate records that are properly maintained and documented will be established.
Finding Control Number: FS-7942-07-02
We concur with this finding. The Library will seek outside professional expertise in evaluating the external financial reporting process.
Contact Person: Lace Keaton, Director Phone: (912) 287-4982 Fax: (912) 287-4981 E-mail: lkeaton@okrls.org