Audit report, Sheriffs' Retirement Fund of Georgia, year ended June 30, 2011

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Fiscal Year Ended June 30,204 I

SHERIFFS' RETIREMENT FUND OF GEORGIA
- - TABLE OF CONTENTS
SECTION I - FINANCIAL
independent Auditor's Report
Basic Financial Statements Statement of Fiduciary Net Assets Statement of Changes in Fiduciary Net Assets Notes to the Financial Statements
Required Supplementary Information Schedule of Funding Progress Schedule of Contributions from the Employer and Other Contributing Entities
SECTION I1 - REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTA UDIllllNGSTANDARDS

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SECTION I - FINANCIAL

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DEPARTMEONF TAUDITSAND ACCOUNTS 270 Washington St. S.W. Suite 1-156 Atlanta, Georgia 30334
RUSSELWL. HINTON
STATE AUDITOR (404) 656-2174
INDEPENDENT AUDITOR'S REPORT
Honorable Nathan Deal, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the Sheriffs' Retirement Fund of Georgia
and
Mr. James Cody, Secretary - Treasurer
Ladies and Gentlemen:
We have audited the accompanying basic financial statements of the Sheriffs' Retirement Fund of Georgia, a component unit of the State of Georgia, as of and for the year ended June 30,201 1, as listed in the table of contents. These financial statements are the responsibility of the Sheriffs' Retirement Fund of Georgia's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are fiee 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 of the Sheriffs' Retirement Fund of Georgia'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 opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the fiduciary net assets of the Sheriffs' Retirement Fund of Georgia, as of June 30, 2011, and the changes in fiduciary net assets for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated January 23, 2012 on our consideration of the Sheriffs' Retirement Fund of Georgia's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide

an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

The Schedule of Funding Progress and Schedule of Contributions from the Employer and Other Contributing Entities information on pages 12 through 13 are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted primarily of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.

The Sheriffs' Retirement Fund of Georgia has not presented the Management's Discussion and Analysis that the Governmental Accounting Standards Board has determined is necessary to supplement, although not required to be part of, the basic financial statements.

Respectfully submitted,

I

@

January 23,2012 RWH:kns

~ussC11W. Hinton, CPA, CGFM State Auditor

BASIC FINANCIAL STATEMENTS

SHERIFFS' RETIREMENT FUND OF GEORIGA STATEMENT OF FIDUCIARY NET ASSETS JUNE 30,2011
Assets Cash and Cash Equivalents Receivables
Interest and Dividends Investments
Pooled Investments Mutual Funds Municipal, U. S. and Foreign
Government Obligations Corporate Bonds/Notes/Debentures Stocks Total Assets Liabilities Accounts Payable and Other Accruals Compensated Absences Payable Total Liabilities Net Assets Held in Trust for Pension Benefits
The notes to the financial statements are an integral part of this statement.
4

SHERIFFS' RETIREMENT FUND OF GEORIGA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FOR THE YEAR ENDED JUNE 30,2011
Additions: Contributions Plan Members Other Contributions Fines and Bond Forfeitures Interest and Other Investment Income Dividends and Interest Net Appreciation (Depreciation) in Investments Reported at Fair Value Less: Investment Expense Net Investment Income Other Miscellaneous
Total Additions Deductions:
General and Administrative Expenses Benefits Total Deductions Change in Net Assets Held in Trust for Pension Benefits Net Assets, July 1
Net Assets, June 30
The notes to the financial statements are an integral part of this statement.
5

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2011

A. PLAN DESCRIPTION

ORGANIZATION AND PLAN DESCRIPTION The Sheriffs' Retirement Fund of Georgia is a cost-sharing multiple-employer defined benefit pension plan established in 1963 by the General Assembly of Georgia for the purpose of paying retirement benefits to the sheriffs of the State of Georgia. The Board of Commissioners of the Retirement Fund is comprised of six members and consists of the state treasurer, one former sheriff who is a retired beneficiary of the Retirement Fund, and four persons holding office as sheriffs within the State of Georgia, each of whom are active members of the Retirement Fund and have held office as a sheriff for at least four years. The Sheriffs' Retirement Fund of Georgia is included within the State of Georgia's basic financial statements as a part of the primary government.

Any qualified and commissioned sheriff of the superior court of any county within the State of Georgia who makes payment of the required contributions is eligible for membership. The Retirement Fund is funded through a combination of member contributions paid by the affected sheriffs and designated portions of fines and forfeitures for criminal and quasi-criminal cases involving the violation of State of Georgia statutes, including traffic laws.

CURRENT MEMBERSHIP The following analysis compares the membership of the Sheriffs' Retirement Fund of Georgia at June 30, 201 1, to that of the prior year:

Retirees and Beneficiaries Currently Receiving Benefits
Terminated Members Entitled to, But Not Yet Receiving Benefits

June 30,201 1 June 30,2010

Total

193

202

Number of Active Members

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2011
A. PLAN DESCRIPTION
BENEFITS The Sheriffs' Retirement Fund of Georgia provides retirement as well as death benefits. Benefit provisions and vesting requirements are established by statute and may be amended only by the General Assembly of Georgia. A description of plan benefits and vesting requirements is as follows:
(A) RETIREMENT CONDITIONS: Normal retirement is at age 55 provided the member has at least four years of credited service as a sheriff after and including January 1, 1961. The credited service requirement is eight years for a sheriff who first or again becomes an active member on or after July 1, 1988. A member must have terminated his or her service as sheriff to receive benefits.
(B) RETIREMENT BENEFITS: The monthly benefit is a single life annuity payable in monthly payments for the life of the member. The maximum monthly payment at June 30, 201 1 is equal to $128.29 per month (plus 1/12 of this amount for each month of any partial year) for each full year of creditable service up to a maximum of $3,849 per month. The Board of Commissioners is authorized to provide for increases effective as of January 1 and July 1 of each year up to 1% percent of the maximum monthly retirement benefit then in effect.
(C) OPTIONAL BENEFITS: Members may elect, as an alternate to the benefit described above, to receive a 100 percent joint life annuity payable during the life of the member or the member's spouse or a contingency life annuity with a 50 percent monthly payment to the surviving spouse. The amount of the benefit for these options is an actuarially reduced portion of the single life annuity benefit described, above.
(D) DEATH BENEFITS (I) In the event of the death of a member before retirement, the total amount of his or her contributions into the funds shall be paid, without interest, to the surviving spouse, the named beneficiary or the member's estate.
(2) In the event of the death of a member after retirement, who has yet to receive an amount in benefits equal to the total amount the member paid in as contributions, the difference shall be paid, without interest, to the surviving spouse, the named beneficiary or the member's estate.
(3) Additionally, upon the death of the following, the sum of $15,000 shall be paid to the surviving spouse, the named beneficiary or the members estate:
(a) an inactive member who would otherwise qualify to be camed upon the active membership rolls except that he or she no longer holds office of sheriff;
(b) a member who is receiving retirement benefits;
(c) a member who is otherwise qualified to receive retirement benefits from this Retirement Fund except that he or she has not reached age 55 or has not filed an application or has not been approved for retirement benefits or
(d) any active member.

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2011
A. PLAN DESCRIPTION
(4) In addition to the death benefit discussed in item (D)(3), upon the death of an active member, the surviving spouse receives an additional benefit in the form of a 100 percent joint life annuity. In such event, the death benefit discussed in item (D)(l) will not be payable.
(E) TERMINATION: At any time before a member begins drawing retirement benefits, the member may request a refund of the total sum he or she has paid into the Retirement Fund as membership dues. No interest shall be paid upon amounts so withdrawn.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING The Retirement Fund's financial statements are prepared on the accrual basis of accounting, except for the collection of fines and forfeitures which are recognized when collected from the courts. Any accrual of these fines and forfeitures would be immaterial to the Retirement Fund's financial statements. Contributions fiom members are recognized as additions in the period in which the members provide services. Retirement benefit and refund payments are recognized as deductions when due and payable.
INVESTMENTS Investments are defined as those financial instruments with terms in excess of three months from the date of purchase and certain other securities held for the production of revenue. In addition, funds on deposit with the Retirement Fund's investment custodian for purposes of continual investment are reflected as investments regardless of the term of the instruments.
Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price.
C. CONTRIBUTIONS
FUNDING POLICY The minimum annual employer contribution requirements are set forth in the Official Code of Georgia Annotated (O.C.G.A.) Section 47-20-10 and are not actuarially determined. This statute further prohibits any action to grant a benefit increase until such time as the minimum annual contribution requirements meet or exceed legislative requirements. The actuarial valuation as of July 1, 2010, which reflected the proceeds of designated portions of fines and forfeitures as the employer contribution, indicated that the minimum employer contribution was met. Member contribution requirements are set forth in O.C.G.A. Section 47-16-43 and are not actuarially determined. Administrative expenses are paid from funds received by the Retirement Fund.
Contribution provisions are established by statute and may be amended only by the General Assembly of Georgia. A description of contribution requirement is as follows:
(A) MEMBERS CONTRIBUTIONS: Members must contribute $45.00 per month of credited service claimed on or after July 1,2000, with a maximum payment period of thirty years. Dues of $37.50 must be paid for every month of credited service from July 1, 1994 to June 30, 2000, $30.00 per month of credited service from July 1, 1990to June 30, 1994 and $25.00 per month of credited service claimed fiom January 1, 1961 to June 30, 1990. For credited service prior to January 1, 1961, deductions in the amount of $20.00 are made from monthly retirement benefits until all credited months prior to January 1, 1961 are paid, subject, to a twenty-five year maximum.

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2011

C. CONTRIBUTIONS

(B) COURT FINES AND FORFEITURES: For each criminal and quasi-criminal case involving the violation of State of Georgia statutes, including traffic laws, a sum based upon the scale set forth below is collected
by the presiding judge and remitted to the Retirement Fund:

For fines or bond forfeitures in excess of $5, in any court where a sheriff of a superior court acts as a sheriff

In addition, the following amounts are required to be collected by the applicable courts and remitted to the Retirement Fund:

For civil actions, cases or proceedings filed in superior courts

$1

For civil actions, cases or proceedings filed in state courts and magistrate courts where a sheriff of the superior courts acts as a sheriff in those courts

Actual contributions for the year ended June 30,201 1, were as follows:

Member Contributions Fines and Forfeitures

$

77,009

2.498.355

Total

$ 2,575,364

D. CONCENTRATION OF CREDlT RISK

At June 30, 201 1, more than 5 percent of the Retirement Fund's total investments were investments in securities of U. S. agencies not explicitly guaranteed by the U. S. government. These investments represented approximately 11.5 percent of the Retirement Fund's total investments.

E. FUNDED STATUS AND FUNDING PROGRESS

The funded status of the plan as of June 30,2010, the most recent actuarial valuation date, is as follows:

Actuarial value of Plan
assets
(a)

Acturial accrued liability
(AAL) -
entry age
(b)

Unfunded AAL (UAAL)
(funding excess)
(b-a)

Funding ratio (ah)

Annual covered payroll
(c)

(funding excess) as a percentage of
covered payroll
[(b-a)cl

SHERIFFS' R E T m M E N T FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2011

The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AAL for benefits.

Additional information as of the latest actuarial valuation follows:

Valuation Date

July 1,2010

Actuarial cost method

Entry age normal

Amortization method

Level dollar, open

Remaining amortization period

30 years

Asset valuation method

Five-year smoothed market value with 10% corridor

Actuarial assumptions: lnvestment rate of return (includes inflation) Projected salary increases Cost-of-living adjustments

6.50% N/ A N/A

REQUIRED SUPPLEMENTARY INFORMATION

SHERIFFS' RETIREMENT FUND OF GEORIGA SCHEDULE OF FUNDING PROGRESS
JUNE 30,2011

Actuarial Valuation
Date
July 1,2006
July 1,2008
July 1,2010

Actuarial Value of Assets
(a)

Actuarial Accrued Liability (AAL)
- Entry Age
Normal
(b)

$ 60,257,000 $ 60,667,000

69,553,000

67,081,000

66,897,000

72,755,000

Unhnded AAL/(Funding
Excess) (UAAL)
(b-a)

Funded Ratio
(ah)

Covered Payroll
(c)

UAAL as a Percentage of Covered
Payroll
((b-a)/c)

The actuarial value of assets at July 1,2010 is equal to 102.9% of the market value of assets.

Fiscal Year

SHERIFFS' RETIREMENT FUND OF GEORIGA SCHEDULE OF CONTRIBUTIONSFROM THE EMPLOYER AND
OTHER CONTRIBUTING ENTITIES JUNE 30,2011

Annual Required Contribution

Percentage Contributed

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SECTION 11 - m P O R T ON INTERNAL CONTROL OVER FlNANClAL REPORTING AND ON
COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FlNANClAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS

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DEPARTMEONFTAUDITASND ACCOUNTS 270 Washington St. S.W. Suite 1-156 Atlanta, Georgia 30334
RUSSELWL . HINTON
STATE AUDITOR (404) 656-2174
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITINGSTANDARDS
Honorable Nathan Deal, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the Sheriffs' Retirement Fund of Georgia
and Mr. James Cody, Secretary - Treasurer
We have audited the basic financial statements of the Sheriffs' Retirement Fund of Georgia, a component unit of the State of Georgia, as of and for the year ended June 30,2011, and have issued our report thereon dated January 23,2012. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
Management of the Sheriffs' Retirement Fund of Georgia is responsible for establishing and maintaining effective internal controls over financial reporting. In planning and performing our audit, we considered the Sheriffs' Retirement Fund of Georgia's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Sheriffs' Retirement Fund of Georgia's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Sheriffs' Retirement Fund of Georgia's internal control over financial reporting.
A deJciency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identifl all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Sheriffs' Retirement Fund of Georgia's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under GovernmentAuditing Standards.
This report is intended solely for the information and use of management, members of the Sheriffs' Retirement Fund of Georgia Board, and management of the State of Georgia, and is not intended to be, and should not be used by, anyone other than these specified parties.
Respectfully submitted,

January 23,2012 RWH:kns

ush hell W. Hinton, CPA, CGFM
State Auditor