Pine Mountain Regional Library, Manchester, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2007

PINE MOUNTAIN REGIONAL LIBRARY
MANCHESTER, 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

PINE MOUNTAIN 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

1 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

PINE MOUNTAIN 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
February 10, 2009

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 Pine Mountain 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 Pine Mountain 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 Pine Mountain 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.
As discussed in Note 2 to the basic financial statements, management improperly valued certain capital assets. Accounting principals generally accepted in the United States ofAmerica require that capital assets be 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. The
2007ARL-41X

amount by which this departure would affect the assets, net assets, and expenses ofthe governmental activities was not reasonably determined.
In our opinion, except for the effects of not properly valuating certain capital assets in the governmental activities as described in the preceding paragraph, the financial statements referred to above present fairly, in all material respects, the financial position ofthe governmental activities of the Pine Mountain Regional Library, as of June 30, 2007, and the changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In addition, in our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position ofthe major funds ofthe Pine Mountain Regional Library, as ofJune 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 of America.
The Pine Mountain 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 Pine Mountain 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,
~-~--k
Ru sell W. Hinton, CPA, CGFM State Auditor
RWH:gp 2007ARL-41X

PINE MOUNTAIN REGIONAL LIBRARY

PINE MOUNTAIN REGIONAL LIBRARY STATEMENT OF NET ASSETS
JUNE 30, 2007
ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net
Local Other Less: Allowance for Doubtful Accounts Capital Assets Equipment Library Collections Less: Accumulated Depreciation
Total Assets
LIABILITIES Long-Term Liabilities
Due in More Than One Year NET ASSETS
Invested in Capital Assets, Net of Related Debt Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

131,209

10,088

6,412 8,539 -4,269

267,462 2,143,788 -678 557

$ ======1,=88=4=,6=72=

$ _ _ _ _2_6~3_2_1

$

1,732,693

125 658

$ _ _ _.:.,1,-=-85a.;:8;.i.;,3:;.;5~1

$ ===1=,8=8=4=,6=72=

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

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

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

$ 360,930 $ 98,470 170,973 88,446 96,005

26,535 $

394,045 $ 102,990

59,650 -98,470 -170,973 14,544 -96 005

Total Governmental Activities

$====8=1=4=8=24= $

General Revenues Allotments from Participating Governments Investment Earnings Miscellaneous

26,535 $

497035 $ _ _ _ _--=-29;;_1;....:,2;;..;;5-'-4

$

379,742

1,195

44 703

Total General Revenues

$ ---~42~5~6_4~0

Change in Net Assets

$

134,386

Net Assets - Beginning of Year

1,723,965

Net Assets - End of Year

$ ====1..,85..,8..,3.,.5...,1

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

PINE MOUNTAIN REGIONAL LIBRARY BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2007

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Local Government Other Less: Allowance for Doubtful Accounts

GENERAL FUND

CAPITAL PROJECTS
FUND

PERMANENT FUND

TOTAL

$

130,206 $

10,088

6,412 8,539 -4 269

1,003 $

0 $

131,209

10,088

6,412 8,539 -4269

Total Assets

$

150 976 $

1 003 $ =====o= $ ======15=1=9=7=9

LIABILITIES AND FUND BALANCES

LIABILITIES

Deposits and Deferred Revenue

$

FUND BALANCES

Unreserved

Undesignated Reported in:

General Fund

$

Capital Projects Fund

Total Fund Balances

$

1 906
149,070 $
149 070 $

$ 1 003
1 003 $

$

1 906

0 $

149,070

1 003

0 $

150 073

Total Liabilities and Fund Balances

$

150,976 $

1 003 $ =====o= $ ====15=1=9=7=9

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

PINE MOUNTAIN 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:

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.

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.

$
267,462 2,143,788
-678,557

150,073
1,732,693 -26,321 1 906

Net Assets of Governmental Activities (Exhibit "A")

$ =====1,=85=8=,3=5=1

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

PINE MOUNTAIN 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
OTHER FINANCING SOURCES {USES}
Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balance
Fund Balance - Beginning

GENERAL FUND

CAPITAL PROJECTS
FUND

PERMANENT FUND

TOTAL

$

379,742

465,983

31,052

24,629

1,185 $

44 703

$

947 294 $

$

379,742

465,983

31,052

24,629

3 $

7

1,195

44 703

3 $

7 $

947,304

$

533,986 $

98,470

170,973

88,446

96 005

$

987,880 $

0 $

0 $

533,986

98,470

170,973

88,446

96 005

0 $

0 $

987,880

$

3,369 $

-1 000

$

2 369 $

$

-38,217 $

187 287

1,000 $
1 000 $ 1,003 $
0

$ -3,369
-3,369 $ -3,362 $ 3,362

4,369 -4 369
0 -40,576
190,649

Fund Balance - Ending

$

149 070 $

1 003 $ =======o $ ===1=5=0,=01=3=

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

PINE MOUNTAIN 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 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

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.

$
202,186 -27,325

-40,576
174,861 -1,805 1 906

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

$ ===13=4=,3=8=6

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

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

EXHIBIT "G"

Note 1: DESCRIPTION OF LIBRARY AND REPORTING ENTITY
REPORTING ENTITY
The Pine Mountain 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 six members; three members appointed by Meriwether County Library Board, two members appointed by Upson County Library Board and one member appointed by Taylor 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 Pine Mountain 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 Pine Mountain 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.
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.
-7-

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

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fund Financial Statements: The fund financial statements provide information about the Library's funds. Eliminations have been made to minimize the double counting of internal activities. The emphasis of fund financial statements is on major governmental funds.
The Library reports the following major governmental 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.
Capital Projects Fund accounts for financial resources including grants from Federal and State sources to be used for the acquisition, construction or renovation of major capital facilities.
Permanent Fund - Hightower Memorial Library Fund is the fund used to account for an endowment of which funds are to be used for maintenance and repair of the Hightower Memorial Library building and property.
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.

-8-

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

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The management ofthe Pine Mountain Regional Library inappropriately valued library collections with each volume valued at $1.00 instead of the historical cost or estimated historical cost in accordance with generally accepted accounting principles.
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. Official Code of Georgia 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 of deposit) 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 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,
-9 -

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

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(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, 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 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, except for library collections, 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. To conform to generally accepted accounting principles, library collections should be 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 ofnormal 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

Equipment Library Collections

$

5,000 5 to 10 years

$ 100,000

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:

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

EXHIBIT "G"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
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 ofthe 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 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.
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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PINE MOUNTAIN 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 $196,235. 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

2

71,834

3

0

Total Note 4: CAPITAL ASSETS

$=====71-,8=3=4

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

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

Balances July 1. 2006

Increases

Balances Decreases June 30. 2007

$ 267,462 1,969,737 $

202,186 $

$ 267,462

28,135

2,143,788

225,401 453.966
$ 1,552,832 $

10,777 16.548
114,861 $

28.135

236,178 442.379

Q $ 1,232,623

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

EXHIBIT "G"

Note 4: CAPITAL ASSETS

Current year depreciation expense by function is as follows:

Public Services Note 5: INTERFUND TRANSFERS

$=====27=,.3;;';2=5

Interfund transfers for the year ended June 30, 2007, consisted of the following:

Transfer to

Transfers From

General

Permanent

Fund

Fund

General Fund Capital Projects

$
$_ _ _1~00_0

3,369

Total

$

1 000 $====3==3==6==9

Transfers are used to move funding from the General Fund to the Capital Projects Fund as required match or supplemental funding source for capital construction projects and to transfer funds from the Permanent Fund to the General Fund for the maintenance and repair of the Hightower Memorial Library buildings and property.

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, errors or omissions and job related illness or injuries to employees. However, the errors or omissions policy excludes coverage for sexual harassment and discrimination. The Library has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Library's insurance coverage in any of the past three years.

The Library has elected to self-insure for all losses related to acts of God. The Library has not experienced any losses related to this risk in the past three years.

The Library is self-insured with regard to unemployment compensation claims. The Library accounts for claims within the same fund that the employee's salary and benefits were paid. Claims are accounted for with expenses/expenditure and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. The Library has not experienced any unemployment compensation claims during the last two years.

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PINE MOUNTAIN 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

$

50,000

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. 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:

Balance July 1, 2006

Governmental Funds
Compensated Absences (I)

$

24,516

Additions Annual Leave Earned

1,805

Balance June 30, 2007

$==2=6,==32===1

(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.

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

EXHIBIT "G"

Note 8: RETIREMENT PLANS

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%

$

41,233

$

40,060

$

38,125

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PINE MOUNTAIN 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
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

$

420,470 $

420,470 $

379,742

424,611

424,611

465,983

29,848

29,848

31,052

19,000

19,000

24,629

1,000

1,000

1,185

39 500

39 500

44 703

$

934 429 $

934 429 $

947 294

$

524,072 $

524,072 $

533,986

74,703

74,703

98,470

191,671

191,671

170,973

88,297

88,297

88,446

85 334

85 334

96,005

$

964077 $

964077 $

987,880

$

3,369

-1 000

$

2 369

$

-29,648 $

-29,648 $

-38,217

0

0

187 287

Fund Balance - Ending

$

-29 648 $

-29 648 $ ====14=9'"=0=7=0

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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PINE MOUNTAIN 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

$

311,299

51,694

102 990

$ ====4=6=5=,9=8=3

See notes to the basic financial statements.

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

SCHEDULE "3"
GOVERNMENTAL FUND TYPE GENERAL FUND
$ =======3=1=0=52=

See notes to the basic financial statements.

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PINE MOUNTAIN REGIONAL LIBRARY SCHEDULE OF LOCAL REVENUE YEAR ENDED JUNE 30, 2007
LOCAL SOURCES County Boards of Education Meriwether County Talbot County Taylor County Thomaston-Upson County City Governments Butler Geneva Greenville Junction City Manchester Reynolds County Governments Boards of Commissioners Meriwether Talbot Taylor Upson

SCHEDULE "4"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

13,819

5,794

7,592

16,038

19,500 636
16,000 618
37,288 14,000

62,385 12,800 21,652 151 620

$ =======37=9=7=4=2

See notes to the basic financial statements.

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

SCHEDULE "5"

NAME
Alford Bradshaw Brown Bulloch Callaway Cole Fineran Fogarty Frye Gee Hamler Harris Holmes Hortman Ingram James Jordan Kilby King-Walker Knight Louder Marshall Moncrief Parker Phipps Rakhshani Rasbury Rodriguez Smalley Terry-Little Thomas Thomas Tilley Townsend Trice Willis

Kenneth Lisa Shirley J. Peggy S. Dianne Gilson Kerrie D. Charlene E. Shirley D. Helen Renee Charles B. Angela D. Johnnie P. Brenda Gail Melinda C. Christine G. Charlotte J. Brenda Cynthia S. Latasha Renee Carol Dawn Shirley M. Yvonne Connie L.
Dorothy A
EmilyJ. Carla Diane Kaye. Wanda Y. Lorraine K. Sandee Arlene Bonita J. Caroline B. Terri M. Brigette S. Shamona L.

Totals per Report

TITLE CATEGORY
Custodian Branch Manager Circulation Clerk Administrative Assistant Circulation Clerk Assistant Branch Manager Circulation Clerk Branch Manager Circulation Clerk Director Technical Services Assistant Branch Manager Extension Clerk Circulation Clerk Assistant Branch Manager Circulation Clerk Circulation Clerk Extension Coordinator Circulation Clerk Circulation Clerk Assistant Branch Manager Custodian Branch Manager Circulation Clerk Page Administrative Assistant Circulation Clerk Custodian Library Technology Coordinator Circulation Clerk Branch Manager Technical Services Coordinator Circulation Clerk Youth Services Coordinator Circulation Clerk Branch Manager

SALARIES

TRAVEL

$

4,615

2,950

5,357

15,659 $

4,669

14,087

11,268

17,909

4,910

71,524

14,014

8,923

12,271

6,227

17,810

3,143

3,233

64,610

4,640

11,464

4,342

2,258

6,557

5,621

6,184

20,963

2,818

7,241

49,295

6,419

2,431

61,363

3,200

54,329

353

10 446

110
3,426
27 96
33 776
32
27 719
29
829 52
357 24

$

543103 $=======6=5=3=7

See notes to the basic financial statements.

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SECTION II FINDINGS AND QUESTIONED COSTS

PINE MOUNTAIN 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 Pine Mountain 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 ofthe Pine Mountain Regional Library's financial statements that is more than inconsequential will not be prevented or detected by the Pine Mountain 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 Pine Mountain 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 February 10, 2009. Internal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below:

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Material Weakness Finding Control Number: FS-6992-07-01

Condition: Criteria:

The Library failed to adequately maintain its capital asset records.
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: Information:

NIA
A review of the Library's capital assets records disclosed the following deficiencies: (1) the Library inappropriately valued library collections based on the number of volumes instead of historical cost or estimated historical cost, and (2) fully depreciated equipment still in use was inappropriately deleted from the capital assets records.

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

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Material Weakness Finding Control Number: FS-6992-07-01

Cause:

The Library's management failed to implement satisfactory controls to record and maintain its capital assets 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 the Library's financial position and results of operations.

Recommendation:

The Library should review its capital assets records and make appropriate adjustments to ensure that the capital assets records conform to the Library's approved capital assets policy and generally accepted accounting principles.

FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-6992-07-02

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 ofboth fund level and entity-wide level statements in the Library's financial statements. The auditor 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 on internal control over financial statement reporting process.

Effect:

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

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PINE MOUNTAIN 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-6992-07-02

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 III MANAGEMENT'S RESPONSES

PINE MOUNTAIN REGIONAL LIBRARY SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDED JUNE 30, 2007
Pine Mountain Regional Library's responses to the findings described below were not audited and accordingly, we express no opinion on them.
Finding Control Number: FS-6992-07-01
We concur with this finding, as explained by the field auditor for fiscal year 2007's audit. The fixed assets system used by the Library System in fiscal year 2007 did not provide enough detail to meet current Governmental Accounting Standards Board (GASB) Statement 34.
We will set in place a corrective system that meets GASB 34. The revised system will include actual costs of items at time ofpurchase and reasonably set value for items donated to the Library System.
The collective value ofthe collection will be set by value of items added, deleted or depreciated out over a prescribed period of time. Items depreciated out, but not discarded will be kept on the fixed asset records of the Library System.
Finding Control Number: FS-6992-07-02
We concur with this finding. We will in the coming year set down in narrative form each step required for correct financial reporting of the finances of the Library System.
The system outlined will show that each transaction is properly recorded and statements will be prepared according to accepted accounting rules.
Contact Person: Diane Rakhshani, Financial Associate Phone: (706) 846-2186 Ext. 101 Fax: (706) 846-8455 E-mail Address: rakhshad@pinemtnlibrary.org