AUDIT REPORT STATESBORO REGIONAL LIBRARY STATESBORO, GEORGIA YEAR ENDED JUNE 30, 1998 STATESBORO REGIONAL LIBRARY - TABLE OF CONfENIS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION EXHIBITS GENERAL PURPOSE FINANCIAL STATEMENTS COMBINED STATEMENTS - OVERVIEW A COMBINED BALANCE SHEET ALL FUND TYPES 2 B COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUND 4 C COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND AcruAL GENERAL AND SPECIAL REVENUE FUNDS 7 D NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS 8 ADDmONAL FINANCIAL INFORMATION COMBINING STATEMENTS CAPITAL PROJECTS FUND E COMBINING BALANCE SHEET 16 F COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 17 SCHEDULES 1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION 18 SCHEDULE OF REVENUE 2 STATE 19 3 FEDERAL 20 4 LOCAL 21 5 SCHEDULE OF SALARIES AND IRAVEL 22 SECTIONn FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL RUSSELL W. HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND A'CCOUNTS 254 Washington Street, S.w.. Suite 214 Atlanta, Georgia 30334-8400 August 13, 1999 Honorable Roy E. Barnes, Governor Members ofthe General Assembly Members ofthe State Board ofTechnical and Adult Education and Director and Members ofthe Statesboro Regional Library Board INDEPENDENT AUDITOR'S COMBINED REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Ladies and Gentlemen: We have audited the accompanying general pmpose financial statements ofthe Statesboro Regional Library, as of and for the year ended June 30, 1998, as listed in the table of contents. These general purpose financial statements are the responsibility ofthe Statesboro Regional Library's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose 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 opinion. As described in the notes to the general pmpose financial statements, the Library's financial statements have been prepared using a certain accounting practice and policy which, in our opinion, varies in some respects from generally accepted accounting principles. This variance is described as follows: * The general purpose financial statements of the Library did not contain a General Fixed Assets Account Group to account for property, equipment and inexhaustible collections and books owned by the Library which should be included to conform to generally accepted accounting principles. The aggregate effects on the general purpose financial statements of this variance or omission have not been determined, but are believed to be material. 98ARL-42A In our opinion, except for the effects on the general purpose financial statements of the matters referred to in the third paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the Statesboro Regional Library as of June 30, 1998, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles. The year 2000 supplementary information on Schedule "1" is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe supplementary information. However we did not audit the information and do not express an opinion on it fu addition, we do not provide assurance that Statesboro Regional Library is or will become year 2000 compliant, that the Library's year 2000 remediation efforts will be successful in whole or in part, or that parties with which Statesboro Regional Library does business are or will become year 2000 compliant. Our audit was performed for the purpose of forming an opinion on the general purpose financial statements ofthe Statesboro Regional Library taken as a whole. The accompanying combining statements (Exhibits E and F) and the financial schedules (Schedules 2 through 5), as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and in our opinion is fairly presented in all material respects in relation to the general purpose 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, t.U.~ Russell W. Hinton State Auditor RWH:jb 98ARL-42A STATESBORO REGIONAL LmRARY STATESBORO REGIONAL LIBRARY COMBINED BALANCE SHEET ALL FUND TYPES JUNE 30, 1998 ASSETS Cash and Cash Equivalents Investments Accounts Receivable Total Assets LIABILITIES AND FUND EQUITY LIABILITIES Accounts Payable Expired Grant Balances Payable Contracts Payable Retainages Payable Total Liabilities FUND EQUITY Fund Balances Reserved For Continuation of Federal Program For State Capital Outlay Projects Unreserved Undesignated Total Fund Equity Total Liabilities and Fund EqUity GOVERNMENTAL FUND SPECIAL GENERAL REVENUE FUND FUND $ 244,353.27 $ 92,90 105,152.15 29,635,93 $ 379,141.35 $ 9.29..0.. $ 40,045.32 289.08 $ 40,334.40 $ $ 338,806.95 $ 338,806,95 $ $ 379,141.35 $ 92.90 0.00 92.90 ....;9.2;;,;.9.;.0 The notes to the general purpose financial statements are an integral part of this statement. -2- EXHIBIT "A" TYPES CAPITAL PROJECTS FUND FIDUCIARY FUND TYPE EXPENDABLE TRUST FUND TOTALS (Memorandum Only) JUNE 30,1998 JUNE 30,1997 $ 239,385.26 $ 483,831.43 $ 1,087,286.51 15,000.00 $ 7,442.20 127,594.35 642.91 29,635.93 6,390.86 $ 254,385.26 $ 7,442.20 $ 641,061.71 $ 1,094,320.28' $ 454.08 $ 454.08 $ 40,499.40 $ 28,650.32 289.08 625.64 68,802.00 31,505.00 $ 40,788.48 $ 129,582.96 $ 236,975.10 16,956.08 $ $ 253,931.18 $ $ 254,385.26 $ $ ..;.7~,44.:.:2::.;:.2;.;;.0 7,442.20 $ 92.90 $ 236,975.10 363,205.23 600,273.23 $ 15,421.00 623,732.65 325,583.67 964,737.32 7,442.20 $ 641,061.71 $ 1,094,320.28 -3- STATESBORO REGIONAL LIBRARY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUND YEAR ENDED JUNE 30, 1998 REVENUES State Funds Federal Funds Local Funds Other Funds Total Revenues EXPENDITURES Current Program Services Technical Services Circulation Administration Maintenance and Operations Capital Outlay Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Operating Transfers In Operating Transfers Out Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses FUND BALANCE JULY 1 GENERAL FUND GOVERNMENTAL FUND TYPES SPECIAL CAPITAL REVENUE PROJECTS FUND FUND $ 607,137,24 $ 697,766.59 146,876.75 $ 1,451,780.58 $ $ 19,100,00 19,100,00 $ 593,412.00 16,788.66 610,200.66 $ 607,114.17 $ 120,314.96 187,438,55 336,389.82 152,276.59 18,333.33 $ 1,421 ,867.42 $ $ 29,913.16 $ 28,521.00 5,907.10 $ 34,428.10 $ -15,328.10 $ 996,049.10 996,049.10 -385,848.44 $ 29,913.16 $ -15,328.10 $ -385,848,44 308,893.79 15,421.00 639,779.62 FUND BALANCE JUNE 30 $ 338,806.95 $ 92.90 $ 253,931.18 The notes to the general purpose financial statements are an integral part of this statement. -4- EXHIBIT "B" TOTAL FIDUCIARY FUND TYPE EXPENDABLE TRUST FUND TOTALS (Memorandum Only) YEAR ENDED JUNE 30,1998 JUNE 30,1997 $ 1,200,549.24 19,100.00 697,766.59 163,665.41 $ $ 2,081,081.24 $ $ 6,799.29 1,200,549.24 $ 19,100.00 697,766.59 170,464.70 867,385.05 22,000.00 1,025,117.08 6,799.29 $ 2,087,880.53 $ 1,914,502.13 $ 635,635.17 $ 120,314.96 187,438.55 342,296.92 152,276.59 1,014,382.43 $ 2,452,344.62 $ $ -371,263.38 $ 0.00 $ 635,635.17 $ 120,314.96 187,438.55 342,296.92 152,276.59 1,014,382.43 460,669.08 106,466.87 216,472.78 281,897.06 127,413.39 1,370,351.89 0.00 $ 2,452,344.62 $ 2,563,271.07 6,799.29 $ -364,464.09 $ -648,768.94 $ -371,263.38 $ 964,094.41 $ 2,100.00 -2,100.00 $ 0.00 6,799.29 $ -364,464.09 $ -648,768.94 642.91 964,737.32 1,612,863.35 $ 592,831.03 $ 7,442.20 $ 600,273.23 $ 964,094.41 -5- STATESBORO REGIONAL LIBRARY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL GENERAL AND SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 1998 EXHIBITC" GENERAL FUND BUDGET ACTUAL REVENUES State Funds Federal Funds Local Funds Other Funds $ 478,407,31 $ 607,137,24 716,647,00 697,766.59 146,876.75 . Total Revenues $ 1,195,054.31 $ 1,451,780.58 EXPENDITURES Current Program Services Technical Services Circulation Administration Maintenance and Operations Facilities Acquisition and Construction $ 460,155,22 $ 607,114,17 120,654,38 120,314,96 176,198,09 187,438,55 295,138,48 336,389,82 142,908,14 152,276.59 18,333,33 Total Expenditures $ 1,195,054.31 $ 1,421 ,867.42 Excess of Revenues over (under) Expenditures $ 0,00 $ 29,913.16 OTHER FINANCING SOURCES (USES) Other Sources Other Uses $ 182,200,00 -182,200,00 Total Other Financing Sources (Uses) $ 0,00 Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses $ 0,00 $ 29,913.16 FUND BALANCE JULY 1, 1997 308,893,79 308,893.79 SPECIAL REVENUE FUND BUDGET ACTUAL $ 13,100.00 $ 19,100.00 $ 13,100,00 $ 19,100,00 $ 13,100.00 $ 28,521.00 5,907,10 $ 13,100.00 $ 34,428,10 $ 0,00 $ -15,328.10 $ 0,00 $ -15,328,10 15,421.00 15,421,00 FUND BALANCE JUNE 30,1998 $ 308,893,79 $ 338,806,95 $ 15,421,00 $ 9.2.,-.9.0. The notes to the general purpose financial statements are an integral part of this statement. -7- STATESBORO REGIONAL LmRARY EXHIBIT "0" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30.1998 Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The Statesboro Regional Library (Library) operates pursuant to Official Code ofGeorgia 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. With the exception of the departure from generally accepted accounting principles disclosed in these notes, the financial statements ofthe Library have been prepared in conformity with generally accepted accounting principles as applied to governmental units and unless otherwise disclosed in these notes, the financial statements present all fund types and account groups of the Library. The Library Board consists often members; two members appointed from Bryan County Library Board, two members appointed from Bulloch County Library Board, two members appointed from Candler County Library Board, two members appointed from Emanuel County Library Board and two members appointed from Evans County Library Board. The Library Board is without authority to determine the 'amount of its funding, except by submission ofbudget requests to local governmental units from which the Library receives support and to the State ofGeorgia for State and Federal funding. Membership in the Library and participation in library services is at the discretion ofeach participating governmental agency. The Library Board has the power to designate management, the power to retain unreserved fund balances of local and other funds for continued operations and is the lowest level of oversight responsibility for the Library's operations. The Statesboro Regional Library is therefore determined to be a joint venture. FUND ACCOUNTING The Library uses funds to report on its financial position and the results ofits 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 ofaccounts. General Fixed Assets, which includes the Library's inexhaustible collections and books, are recorded as expenditures in the various funds at the time of purchase. A General Fixed Assets Account Group is not presently maintained by the Library. To confonn to generally accepted accounting principles, a General Fixed Assets Account Group should be maintained for reporting the cost ofassets acquired by governmental fund types. The general purpose financial statements account for all State, Federal, Local and Other funds under control ofthe Library, in compliance with generally accepted accounting principles applicable to governmental units, unless otherwise disclosed in these notes. Funds presented in this report are as follows: GOVERNMENTAL FUND TYPES - used to account for all or most of the Library's general activities. Governmental Fund Types include: -8- STATESBORO REGIONAL LmRARY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS ruNE 30.1998 Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES GENERAL FUND - the fund used to account for all financial resources of the Library except those required to be accounted for in another fund. These transactions relate to resources obtained and used for services provided by a Library. SPECIAL REVENUE FUND - the fund used to account for the proceeds ofspecific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. The primary type of special revenue fund consists of proceeds received from State and Federal sources to accomplish specific objectives and are required to be accounted for separately. CAPITAL PROJECTS FUND - the fund used to account for financial resources to be used for the acquisition or construction of major capital facilities. FIDUCIARY FUND TYPE - the trust fund used to account for assets held by a government unit in a trustee capacity or as an agent for individuals. This fund includes: .- EXPENDABLE TRUST FUND - the fund used to account for financial resources to be used for the Deferred Compensation Plan for the employees of the Library. BASIS OF ACCOUNTING The accounting and financial reporting treatment applied to a fund is detennined by its measurement focus. All governmental and expendable trust funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities are generally included on the balance sheet. Operating statements ofthese funds present increases (Le., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Their reported fund balance is considered a measure of available spendable resources. Liabilities which are expected to be financed from available spendable resources are reported as liabilities in the governmental funds. Governmental and expendable trust funds are accounted for using the modified accrual basis of accounting under which: Revenues are recognized when susceptible to accrual (Le., when they become both measurable and available). "Measurable" means the amount ofthe transaction can be determlned and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities ofthe current period. Those revenues considered susceptible to accrual are intergovernmental grants and investment income. Expenditures are generally recognized when the related fund liability is incurred. -9- STATESBORO REGIONAL LffiRARY EXHIBIT "0" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUDGET The Statesboro Regional Library's budget is a complete financial plan for the Library's fiscal year and is based upon estimates of expenditures together with probable funding sources. There is no statutory prohibition regarding overexpenditure ofthe budget at any level. The budget for all governmental funds is prepared by fund, function and object. The legal level of budget control was established by the Library at the aggregate level. The budget for governmental funds was prepared in accordance with generally accepted accounting principles. The budget process begins when the Library's administration prepares a tentative aggregated budget for the Board's approval. After approval of this tentative budget by the Board, copies are sent to all local funding agencies. After funding approval is received from all local funding agencies, the Boardmakes revisions as necessary and adopts the budget. The budget is then submitted to the Department of Technical and Adult Education as a part ofthe Library's annual application for State aid. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year end. CASH AND CASH EQUIVALENTS COMPOSmON OF DEPOSITS Cash and cash equivalents consist of deposits in authorized financial institutions. Georgia Laws authorize the Library to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured State chartered building and loan associations. INVESTMENTS COMPOSmON 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. 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, -10 - STATESBORO REGIONAL LIBRARY EXHIBIT "0" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30.1998 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government fuvestment 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. RECEIYABLES Receivables consist of grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed, allotted funds from participating local governments, and other receivables disclosed from infonnation available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the general purpose financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. COMPENSATED ABSENCES Compensated absences represent obligations of the Library relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion of this obligation as this amount is deemed immaterial to the general purpose financial statements. Additionally, the dollar value ofaccumulated compensated absences at June 30, which will be payable from future resources has not been recorded in the General Long-Term Debt Account Group as this liability is also deemed to be immaterial to the fair presentation of these financial statements. INTERFUND TRANSACTIONS The Library has the following types of interfund transactions: Reimbursements of expenditures initially made from a fund that are properly applicable to another fund are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed. - 11 - STATESBORO REGIONAL LmRARY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS JUNE 30. 1998 Note 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in confonnity with generally accepted accounting principles, nor is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Certain reclassifications have been made to the comparative data to conform to the current year classifications. Note 2: DEPOSITS AND INVESTMENTS COLLAIERALIZATION 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 of the face value of such surety bond and the market value ofsecurities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount of deposit insurance. OCGA Section 45-8-11 provides an officer holding public funds may, in his discretion, waive the requirement for security in the case of operating funds placed in demand deposit checking accounts. Acceptable security for deposits consists of anyone ofor any combination ofthe following: (1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (3) Bonds, bills, notes, certificates ofindebtedness 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 ofany public authority created by the laws ofthe State ofGeorgia, providing that the statute that created the authority authorized the use of the bonds for this purpose, (6) fudustrial revenue bonds and bonds ofdevelopment authorities created by the laws of the State of Georgia, and (7) Bonds, bills, notes, certificates ofindebtedness, or other obligations ofa subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal - 12- STATESBORO REGIONAL LffiRARY EXHIBIT "D" NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS ruNE 30.1998 Note 2: DEPOSITS AND INVESTMENTS 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, 1998, the bank balances were $685,447.50. The amounts ofthe 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, 1998, as follows: Risk CatcwnY Bank Balance 1 $ 568,672.34 2 84,552.53 3 32.222.63 Total $ 685.447.50 CATEGORIZATION OF INVESTMENTS At June 30, 1998, the fair value of the Library's total investments was $7,442.20 and this entire amount is categorized as Unclassified - Deferred Compensation Plan pooled investments. Note 3: 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 ~d natural disaster. The Library has obtained commercial insurance for risk of loss associated with torts, assets, errors or omissions 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 natural