Document Morgancountyga_doc_a3d5216846

Comprehensive Annual Financial Report Morgan County, Georgia Year Ended June 30,2012 Prepared by the Morgan County Finance Department ---PAGE BREAK--- COMPREHENSIVE ANNUAL FINANCIAL REPORT MORGAN COUNTY, GEORGIA For The Fiscal Year July 1, 2011 - June 30, 2012 Prepared by Morgan County Finance Department Lori l. Sayer, CPA Finance Director ---PAGE BREAK--- MORGAN COUNTY, GEORGIA ANNUAL FINANCIAL REPORT For The Fiscal Year Ended J une 30, 2012 INTRODUCTORY SECTION Letter of Transmittal TABLE OF CONTENTS Officials of MORGAN COUNTY, GEORGIA Organizational Chart FINANCIAL SECTION Independent Auditors' Repon Management's Discussion and Analysis BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS Statement ofNel Assets Statement of Activities FUND FINANCIAL STATEMENTS Balance Sheet - Governmental Funds Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Net Assets - Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds Statement of Cash Flows - Proprietary Funds Statement of Net Assets - Fiduciary Funds Statement of Changes in Net Assets - Fiduciary Funds COMI'ONENT UNITS Combining Statement of Net Assets Combining Statement of Activities NOTES TO FfNANCIAL STATEMENTS REQUIRED SUPPLEMENTARY INFORMATION Schedule of Pension Funding Progress Budgetary Comparison Schedule - General Fund COMBINING STATEMENTS AND SCHEDULES NONMAJOR GOVERNMENTAL FUNDS Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Supplemental Budgetary Comparison Schedule -Emergency Telephone System Special Revenue Fund -Restricted Programs Special Revenue Fund Page i-iii i, , vi-vii viii-xvi 1 2 3 4 5 6 7 8 9 10 11 12 13 14 - 45 46 47 - 48 49 50 51 52 ---PAGE BREAK--- -Hotel I Motel Tax Special Revenue Fund -Law Library Special Revenue Fund -Sheriffs Law Enforcement Special Revenue Fund FIDUCIARY FUNDS Combining Statement of Assets and Liabilities - AI! Agency Funds Combining Statement of Changes in Assets and Liabilities - All Agency Funds SUPPLEMENTAL INFORMA nON Schedule of Projects Constructed with Special Purpose Local Option Sales Tax STATISTICAL SECTION FlNANCIAL TRENDS Net Assets by Component Changes in Net Assets Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Five Year General Fund History General Governmental Tax Revenues by Source REVENUE CAPACITY Assessed Value and Estimated Actual Value of Taxable Property Property Tax Rates (Direct and Overlapping Governments) Principal Property Taxpayers Property Tax Levies and Collections DEST CAPACITY Ratios of Outstanding Debt by Type Other Long-tenn Liabilities Direct and Overlapping Governmental Activities Debt Legal Debt Margin Infonnation DEMOGRAPHIC AND ECONOMIC lNFORMATION Demographic and Economic Statistics Principal Employers OPERATING INFORMATION Full-Time Equivalent County Government Employees by Function Operating Indicators by Function Capital Assct Statistics by Function COMPLIANCE AND INTERNAL CONTROL REPORTS Schedule of Expenditures and Federal Awards Report on Internal Control Over Financial Reporting and on Compliance and Olher Matters Based on an Audit of Financial Statements Perfonned in Accordance with Governmenl Auditing Standards Independent Auditors' Report on Compliance with Requirements that Could have a Direct and material Effect on Each Major Program and on Internal Control over Compliance in Accordance with OMS Circular A-133 Auditors' Schedule of Findings and Questioned Cost) TABLE 1 2 3 4 4A 5 6 7 8 9 10 lOA 12 13 15 16 17 18 19 53 54 55 56 57 58-60 61 62-64 65 66 67 68 69 70 71 72 73 74 75-76 77 78 79 80 81 82 83 84-85 86-87 88-90 ---PAGE BREAK--- , " Introductory Section Letter of Transmittal Officials of Morgan County, Georgia Organizational Chart :r • ~:r:l:l 1 I ,I II ---PAGE BREAK--- Morgan County Board of Commissioners po Box 168 December 28, 2012 Chairman Members of the Board of Commissioners Morgan County, Georgia Madison, GA 30650 State law requires that all general-purpose local governments publish within six months of the close of each fiscal year a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a finn of licensed certified public accountants. Pursuant to the requirements, we hereby issue the comprehensive annual financial report of Morgan County, Georgia for the fiscal year ended June 30, 2012. We believe that the data as presented is accurate in all material aspects. We encourage readers to consider the presented information in conjunction with the information provided in management's discussion and analysis, the financial statements, and the notes to the financial statements. This report demonstrates how the County receives, spends, and accounts for financial resources and illustrates the key indicators of its financial strength. Responsibility for the accuracy of the data and the completeness and fairness of the presentation rests with the County. Profile o/the Government Morgan County is located 58 miles southeast of the city limits of the City of Atlanta and encompasses 349.7 square miles. The most recent population estimates (2011) from the U.S. Census Bureau have the County's population at 17,961. The County was formed from sections of Baldwin County in 1807. Georgia's 32nd county is named for Revolutionary War General Daniel Morgan who defeated the British at Cowpens. It is the home of Hard Labor Creek State Park, Georgia's largest state park. The City of Madison has been the county seat since its incorporation in 1809. Madison has a large designated historic district, which encompasses most of the town. Morgan County is also home to the City of Rutledge, founded in 1845, the City of Bostwick, and the City of Buckhead, founded in 1891. Additional demographic information is provided in the Statistical Section of this report. The County operates under a Commission-Manager Form of Government. Under this system of local government, the Commissioners are policy makers who establish a vision for the County, and who hire the Manager to carry out policy. The Board of Commissioners consists of five (district-elected) members, who serve on a part-time basis and are elected to staggered terms of four years. The Manager is responsible for directing day-to-day operations and coordinating the work of department heads and other employees. Morgan County provides a full range of services, including law enforcement; corrections; the construction and maintenance of buildings, parks, streets and highways; parks and recreation activities; 911 emergency communications, voter registration and elections, county systems, tax assessment and collection, building inspections, planning and zoning, solid waste collection and recycling, and general administrative and support activities. ---PAGE BREAK--- Economic condition and outlook In these uncertain economic times, the County has not been immune to the economic realities but continues to maintain a strong financial position. Although many economic factors are largely outside of local government control, the Board of Commissioners, County Manager and departments have displayed impressive financial stewardship over the years. This philosophy entails reviewing the needs of the County relative to a standard that services and associated costs should not be appropriated unless they are justified as strategic goals of the organization that serve to accomplish our guiding principles. At the State level, revenue short falls are requiring significant budget reductions and negatively impact local government funding as the state reduces programs to live within its means. Challenges facing local government are expected to mount as the demands for services grow while revenue sources struggle to achieve last year's levels and costs continue to climb. Property values - Total taxable assessed property values decreased by 17.4 percent for the 201 1 property tax year. Communities across Georgia and throughout the nation are experiencing declines in new home construction, increases in the number of filings for foreclosures and increased in commercial vacancy rates. The recession has changed the way governments operate at the local level. Short-tenn solutions of leaving vacant positions unfilled, deferring capital projects, and implementing targeted cuts in expenditures will not resolve the issue entirely. These steps implemented during the recession now represent a new way of doing business that will continue beyond this fiscal crisis. internal controls County management is responsible for establishing and maintaining an internal accounting control system. This system is designed to ensure that County assets are protected from loss, theft, or misuse, and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in confonnity with generally accepted accounting principles, Internal accounting controls are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: 1) the cost of an accounting control should not exceed the benefits likely to be derived, and 2) the evaluation of costs and benefits requires estimates and judgment by management. Budget controls The annual budget serves as the foundation for the County's financial plan and assists in control of the financial stability and health of the government. As required by the statues of the State of Georgia, the County adopts annually a balanced budget. The legal level of control (i.e. the spending level at which expenditures may not legal exceed appropriations) is at the department level within a given fund. Reallocation of appropriations between line-items is acceptable within a given department. Additional details regarding budgetary controls may be found in Note 3 of the notes to the financial statements. Cash management For the FY 2012, the County's funds are deposited into interest-bearing accounts. The County's investment program is managed in accordance with all applicable laws. Investment objectives include the safeguarding of public funds through minimization of market and security risk. For FY20I3, the County's funds were moved into non-interest bearing accounts. In the current economic environment, placing County funds in non-interest bearing accounts with no processing fees is a more financially beneficial decision than placing funds in the available interest bearing accounts with extremely low interest rates. independent audit The financial statements included in this report are prepared in compliance with governmental financial reporting standards issued by the Governmental Accounting Standards Board; guidelines issued by the Government Finance Officers Association of the United States and Canada, and generally accepted accounting principles applicable to governmental entities. State of Georgia statutes require an annual audit by an ii ---PAGE BREAK--- independent Certified Public Accountant. The accounting finn of Bates Carter & Co., LLP report on the County's basic financial statements is included in the financial section of this CAFR. Acknowledgements The preparation and production of this document would not be possible without the cooperation of all County departments. Their willingness to work together has enabled the County to exceed expectations in financial reporting by producing a quality report that is readable, infonnative, and beneficial to citizens. We also extend our appreciation and gratitude to our independent auditors, Bates Carter & Co., LLP, for the professional guidance and assistance in producing a technically sound document. Finally, we thank the Board of Commissioners for their support and direction in conducting the financial affairs of the County in a responsible manner. Respectfully submitted, Michael Lamar, County Manager iii ---PAGE BREAK--- County Manager Michael Lamar Chief Magistrate Judge Clerk of Superior Court Coroner Probate Court Judge Sheriff Tax Commissioner Board of Commissioners Commissioner District J Donald B. Harris Commissioner District 2 Andy Ainslie, Vice Chair Commissioner District 3 Mack B. Bohlen, Sr. Commissioner District 4 Ellen Warren, Chair Commissioner District 5 Vacant County Clerk Jane Laseter Elected Officials Superior Court Judges William A. Prior, Jr., Chief Judge John Lee Parrott Hulane E. George Hugh V. Wingfield, III James L. Cline, Jr. iv County Attorney Christian Henry Connie Holt Jody M. Moss Adam Carter Michael F. Bracewell Robert S. Markley Becky Astin ---PAGE BREAK--- Morgan County Organizational Chart I Morgan County Citizens I I Judicial System I I Board of Commissioners I I Other Elected Officials I I I Probate Judge I I County County Clerk! I I Sheriff I I Coroner J Magistrate I Attorney I I HR J~dge County Manager - - < I I Superior Court I I T Clerk I j I Commissioner I I I I I Board of , I Planning and t I Roads and I Board of Assessors Development BridJ(cs Elections I Public I I Sanitation I Buildin I I [Animal controll [senior center'l Transit I 1 I GIS I I Special I Pro"ccts I Finance I I "re I Department I Recreation I I E911 I I EMA I v ---PAGE BREAK--- Financial Section • ) ' ---PAGE BREAK--- ~ BatesCarter r , dill~ r>'jtl'f 1 li!m~. Board of Commissioners MORGAN COUNTY, GEORGIA Madison, Georgia INDEPENDENT AUDITORS' REPORT December 28, 2012 770,t>3:!,9131 nt 170.536.!:I':l3 525 CNoitu"l sr""",n NE PO. DAAWI'.P 2396 G,to"'ES\I<.L.E, GeoRG"" 30503 WNWIlI:flCiCAl>'tt;Pr."." We have audited the accompanying financial statements of the govenunental activities, the business-type activities, tbe aggregate discretely presented component units, each major fund, and the aggTegate remaining fund information of MORGAN COUNTY, GEORGIA, as of, and for the year ended June 30, 20 12. which collectively comprise the County's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Board of Commissioners of MORGAN COUNTY, GEORGIA. OUf responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Morgan County Health Department and Morgan County Hospital Authority, component units of the County, as of and for the year then ended June 30, 20 12, which statements reflect total assets of $43 1 ,694 and $6,698,000, as of June 30, 2012, and total revenues of $560,089 and $14,196,000, respectively, for the ended. Those financial statements were audited by other auditors whose report has been furnished to us and our opinion on the basic financial statements, insofar as it relates to the amounts included for the Morgan County Health Department and Morgan County Hospital Authority, is based on the report of the other auditors. 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 perfonn the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our opinions. In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects. the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of MORGAN COUNTY, GEORGIA, as of June 30, 2012, and the respective changes in financial position, and where applicable, cash flows, thereof, for the year then ended in conformity with accOlmting principles generally accepted in the United States of America. VI ---PAGE BREAK--- In accordance with Government Auditing Standards, we have also issued a report dated December 28, 2012, on OUf consideration of MORGAN COUNTY, GEORGINs internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulation, contracts, grants, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit perfonned in accordance with Government Auditing Standards, and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, Schedule of Pension Funding Progress, Budgetary Comparison Schedule - General Fund be presented to supplement the basic financial statements. Such infonnation, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary infonnation in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the infonnation and comparing the infonnation for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the infonnation because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of fonning opinions on the financial statements that collectively compromise MORGAN COUNTY, GEORGIA's financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements, and statistical section, are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A~133, Audits of States, Local Governments, and Non~Profit Organizations, and is also not a required part of the financial statements. The accompanying schedule of projects constructed with Special Sales Tax Proceeds is presented for purposes of additional analysis as required by Official CUUt; of Georgia 48- 8-12. The combining and individual nonmajor fund financial statements, supplemental budgetary comparison schedules, the schedule of expenditures of federal awards, and schedule of projects constructed with Special Sales Tax Proceeds are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The infonnation has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such infonnation directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the infonnation is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do no! ex;ress an opinion or provide any assurance on them. g~1 ~t LLI V1I ---PAGE BREAK--- MANAGEMENT'S DISCUSSION AND ANALYSIS The discussion and analysis of Morgan County' s financial performance provides an overview of the County's financial activities for the fiscal year ended June 30, 2012. Please read I-Ill III conjunction with the County's financial statements, which begin on page 1. As a result of the enactment of GASB 34, the County is required to present a discussion and analysis of its financial condition and performance for the year ended June 3D, 2012. FINANCIAL HIGHLIGHTS • The County' s assets exceeded its liabilities at June 30, 20 12 by $62,244,318 (Net Assets). Of this amount, $6,419,778 is considered unrestricted and can be used to meet the County's ongoing obligations. • The County's total net assets decreased by $3,632,323 (Change in Net Assets). This is discussed in further detail in the Government-Wide Financial Analysis. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to Morgan County's basic financial statements. Morgan County's basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary infonnation in addition to the basic financial statements themselves. Government-wide Financial Statements. The government-wide financial statements, presented on pages 1 and 2, provide a broad overview of Morgan County' s finances in a manner similar to that of private-sector businesses. The statements include the following: The Statement of Net Assets presents the County's assets and liabilities, with the difference between the two reported as net assets. Over time, the change in net assets is an indicator of the improvement (an increase) or deterioration (a decrease) in the County' s financial condition. • The Statement of Activities presents the revenues and expenses of the County. The difference between these is the change in net assets for the year. Both of the government-wide financial statements identify the various functions of Morgan County that are principally supported by taxes and intergovernmental revenues from other functions that are intended to recover all or a significant portion of their costs through user fees and charges. The governmental activities of Morgan County, Georgia include general government, public safety, court systems, health and welfare, recreation and culture, public works, and housing and development. The business-type activity of Morgan County, Georgia is the Solid Waste operation. viii ---PAGE BREAK--- The government-wide financial statements include not only Morgan County, Georgia itself (known as the primary government), but also a legally separate Health Department and Hospital Authority for which Morgan County, Georgia is financially accountable. Financial information for these component units is reported separately from financial information presented for the primary government itself. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the County can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the County's near term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Capital Projects Fund (which was closed during the year), and SPLOST, all of which are considered to be major funds. Data from the othcr governmental funds arc combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements on pages 49 and 50 of this report. The County adopts an annual appropriated budget for its General Fund and Special Revenue Funds. Project length budgets are adopted for the Capital Projects Funds. A Budgetary Comparison Schedule has been provided for the General Fund and Special Revenue Funds to demonstrate compliance with this budget. The basic governmental funds financial statements can be found on pages 3 and 5 of this report. Proprietary funds. The County maintains one proprietary fund. Enterprise (proprietary) funds are used to report the same functions presented as business-type activities in the government- wide financial statements. The County uses an enterprise fund to account for the Solid Waste operation. ix ---PAGE BREAK--- Proprietary fund statements provide the same type of information as the government-wide financial statements, only in more detail. The basic proprietary fund financial statements can be found on pages 7-9 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 10 and 11 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 14-45 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the County's pension plans on pages 46 and a schedule of budgetary comparisons for the general fund on pages 47 and 48. Combining and individual fund statements and schedules can be found on pages 49-55 of this report, and Schedules of Projects Constructed with Special Purpose Local Option Sales Tax can be found on page 58-60. GOVERNMENT-WIDE FINANCIAL ANALYSIS During FY 2012, Morgan County, on an entity-wide basis, had a decrease in net assets of $3,632,323 which is the result of adding the $3,499,265 decrease in governmental activities and the decrease in net assets for business type activities of$133,058. The change in governmental activities is discussed below, and the change in business type activities is discussed under the heading Proprietary Funds. The County had total Net Assets of $62,244,318, of which $54,816,164, net of debt and accumulated depreciation, was invested in capital assets. The table below shows the split of net assets between governmental and business-type activities. Capital assets (nel of deprecialion) Currenl and cAAer assets Total Assets I..ong.lenn liabilities Other ~abilities Total liabilities Net assets: Invested in capital asscu, net of relaled debt RestriCled Unrestricted TOlal net asseu Morgan County, Georgia's Net Assets June 30 Govtt mtDtal Activiries BU$inesa-typt Activities 2012 2011 2012 2011 $ 69,848,304 $ 12,498.51 7 $ 388,750 $ 423,[PHONE REDACTED] 11573292 29728 139913 19,595,891 84,071 ,809 418,47& 563,391 16,335,246 17,642,456 382,505 383,810 1,016.;127 685 110 35973 46523 11,351 ,573 18,328,226 41 8,478 430,333 54,421,414 56,11 2,122 388,750 423,478 1,008,376 1,988,[PHONE REDACTED] 7,642,501 (388,750) (2'X1,420) $ 62244318 $ 65,143583 $ $ 133,058 X Tot. 1 Prim. ry Govtl'llmt \ 2012 2011 $ 70,237,054 $ 12,921,995 9,777,315 11,713 205 80014,369 84,635,200 16,717,751 18,026,266 1 ,05~ JOO 732293 11170051 187S8,5S9 54,816,164 56,535,600 1,008,376 1,988,%0 6 419,178 7,352,081 $ 62,244)1 8 $ 651876,641 ---PAGE BREAK--- Total government-wide revenue for Fiscal Year 2012 was $17,702,803. Of this amount, $17,411,307 was in governmental activities and $291,496 in business-type activities. The chart below shows the distribution of total primary government revenues. Morgan County, Georgia's Changes in Net Assets Year Ended June 30 REVENUES Program revenues Charges for Services Operating Grants and Contributions Capital Grants and Contributions Subtotal for Program Rennuu General rel'eDUeS Property Taxes Sales Taxes Other Taxes Unrestricted Investment Earnings Grants and Contributions nol restricted to a specific program Gain on sale of capital assets Subtotal for General Revenues Total Rennun EXPENSES Program expenses General Government Judicial Public Safety Public Works Health & Welfare Recreation & Culture Housing and Development Interest and Paying Agent Fees Solid Waste Total expenses Change in Net ASIIeU before Transferll Transfers Change in Net ASIIets Net Assets, beginning of year Net As.sets, end of year GO\'ernmenlal Activities 2012 2011 S 2,384,127 S 774,145 83,273 3,241.545 6,845,343 6,243,915 778,346 6.412 258,768 36,978 14,169,762 17.411,307 3,550,225 1,181,395 6,388,700 4,981,927 1,374,205 1,635,981 569,188 728,723 20,410.344 (2,999,037) (500.228) Q,499,265) 65 743.583 $ 62,244,318 $ 2,704,654 S 1,498,111 182,113 4384,878 7,609,634 6,059,666 742,145 28.191 228,308 5,065 14.673,009 19,057,887 3,387,849 1,189,888 6,433,955 4,010,735 1,655,.525 1,000,26.5 568,418 764,021 19,1)10.656 47,23 1 (530,175) (582,944) 66.326.527 65,743.583 S DuslneSll-lype Acliviliu 2012 2011 291,399 291,399 97 97 291.496 924.782 924,782 (633,286) 500228 (133,058) 133,058 , , 327,2.58 327.258 348 348 327·606 (659,771) 630.175 (29.596) 162.654 133.058 Total Primary Gonrnment 2012 2011 $ 2,615,526 774,145 83,273 3,532,944 6,845,343 6,243,915 178,346 6,509 258,768 36,918 14,169,859 17.702,803 3,550,225 1,181,395 6.388,700 4,981,927 1,374,205 1,635,981 569,188 728,723 924.782 21.335.126 (3,632,323) (3.632.323) 65.816.641 $ 62244.318 3,031,912 1,498,111 182,113 4712.136 7,609,634 6,059,666 742,145 28,539 228,308 5065 14,673.357 19.385,493 3,387,849 1,189,888 6,433,955 4,010,735 1,655,.52.5 1,000,265 568,418 764,021 987.377 19.998,033 (612,540) (612.540) 66.489,181 S 65.876,641 General Revenues such as Property Taxes and Local Option Sales Tax supplement the Governmental Activities, General Government required $2,770,628, Judicial required $573,005, Public Safety required $5,375,501, Public Works required $4,980,373, Health and Welfare required $981,379, Recreation required $1,360,583, Housing and Development $398,607 of General Revenues. xi ---PAGE BREAK--- Revenues Source Government·Wide Activities Sates Tax • Other Inyestment Capital Grants 0% *Due to rounding, charts may not always equal 100% Operating Grants m Charges lor Services , property Tax Government-wide expenses were $21,335,126 for 2012, of which $20,410,344 were for governmental activities and $924,782 for business-type activities. The chart below shows further detail of total primary government expenses. Expenses by Function AClivities Solid Waste 4'"1. Interest Housing & Oevelopmer'lt Public Worics , Recreation 8"1. C ' I PubliC Safety Health & Welfare Court System xii ---PAGE BREAK--- FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. The focus of Ihe County's governmental funds is to provide information on near-term inflows and outflows of spendable resources. Such information is useful in evaluating a government's near-term financing requirements. The primary governmental funds are the General Fund, the Capital Projects Fund, and SPLOST. As the county completed the year, its governmental funds (as presented in the balance sheet on page 3) reported a combined fund balance of $6,757,808, which is $(2,004,090) less than last year's total. The decrease in the SPLOST fund balance was $(898,510), which was the expenditure of tax proceeds collected in the prior year. The fund balance in the General Fund increased $1,023,505. Local Option Sales taxes collected were about $158,460 above projected budget and Property tax collections exceeded budgeted amount by $40,895. In 2012, Governmental revenues were up $(1,236,05 1) from fiscal year 2011. Property taxes were down $(844,330) due to slight increase in the digest. Intergovernmental revenue was up $(255,891) due to fewer grants for Public Safety. Investment income was down $22,732 due to lower interest rates and cash balances. The total amount of sales tax revenue for fiscal year 2012 was $6,243,915 which is a 3.0% increase from FY 20 II due to the slight economic recovery. Morgan County currently shares two different taxes on all sales within the county. The Local Option Sales Tax (LOST) is a direct offset to the property taxes and is renewed every ten years by agreement with the City of Madison, the City of Bostwick, the City of Buckhead and the City of Rutledge. The latest agreement renewed in FY 2003 distributes the funds 73% to the County, 22% to the City of Madison, 4% to the City of Rutledge, .60% to the City of Bostwick, and .40% to the City of Buckhead. A SPLOST referendum passed in a November 2006 election was effective April I, 2007 with an expiration date of March 31, 2013 or at the end of the quarter where the raising of $26,000,000 is reached, whichever occurs first. Distribution of SPLOST V funds are based on a percentage distribution as agreed upon by the following municipalities: City of Madison receives 6.94%, City of Rutledge receives .61 City of Bostwick receives .23% and the City of Buckhead .14%. The County's SPLOST V projects include a new public safety/detention center, road and bridge improvements, library facility improvements, water system equipment and improvements, purchase of sanitation equipment and improvement of solid waste facility and the purchase of the a county administrative building. The City of Madison has designated projects for road and bridge improvements, a public works building, renovation to City Hall and park improvements. The City of Rutledge has designated funds for water and sewer improvements. The City of Bostwick will improve roads and bridges, city hall improvements and water system improvements and equipment. The City of Buckhead will improve the fire station and roads and bridges. xiii ---PAGE BREAK--- Revenues by Source Fund Level · Fines & Forfeitures 3% 0% Other Charges for Services 10% Intergovernmental l-icense & Permits 80% Taxes Expenditures in the governmental funds were $19,168, 134, down $2,107,999 from FY 2011. Expenditures for the General Fund of $13.850,797 were up $3 10,385. The General fund transferred $452,262 and $187,850 to Solid Waste and E9 11 funds, respectively, to subsidize operations this year. The County expenditures in SPLOST funds of $4,461,300 were $2,025,863 more than prior year due to the tinring of expenditures. Of the expenditures, $482,639 of this was for capital outlay on planned projects and $1,844,762 was for debt service payments on the jail bonds. The remaining 133,899 is spread over multiple departments, primarily for the purpose of infrastructure repaving which is expensed. 111 FY 2012, Morgan County' s Fund balance of all governmental funds was 19% of revenues. At year end, the Fund Balance in the General Fund was 43% of general fund revenues. Proprietary funds. The County's proprietary funds provide the same type of infonnation found in the government-wide financial stalements, but in more detail. Beginning in FY 2003, Morgan County has reported the Solid Waste fund as a proprietary fund. This change has alJowed users of the financial statements to analyze the County's Solid Waste Department as a business-like activity and focus attention on the cost of providing services, In FY 2012, Morgan County's Solid Waste Facility reported a loss of $133,058, Operating revenues decreased by $(35,859) from FY 2011. Of the total decrease in operating revenue, recycling and transfer fees decreased $35,831. The Solid Waste Fund on its own doesn'l generate sufficient revenues to fund operations; it relies on a subsidy from the General Fund, The General Fund decreased the transfer in from $630, 175 in 201 1 to $500,228 in 2012. Expenses decreased $62,594 from fiscal year 2011, which was due to an decrease in landfill closureJpostclosure cost of $45,721 offset by higher costs for other services, xiv ---PAGE BREAK--- CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets. Morgan County's Government-wide investment in capital assets at June 30, 2012 was $54,8 16,164. net of accumulated depreciation and related debt. This investment, which includes land, buildings, roads, bridges, machinery and equipment, park facilities, and vehicles. is discussed in Note 6. Government-wide additions in FY 2012 were $0.79 million. Major capital asset activities in FY 2012 were: In Governmental Activities: • Right of way was purchased to begin bridge replacement in the amount of $30,600. • Four new trucks for Sheriff s Department were purchased at a cost of $129,720 and one new fire truck at a cost of $98,416 which was paid with 95% grants funds and 5% County match. • Various other machinery and equipment - 1D Backhoe Loader $73,325, HUS Lawnmower $8560, K9 EOD trained dog $12,500, dog kennel, outdoor walk-in-bunker and other miscellaneous items totaling $37,162. Long·term debt. At June 30, 2012, Morgan County governmental activities had outstanding debt of $16,156,074. Of this amount $88,121 is from notes payable, $218,469 is from various capital leases, $15,680,233 is from contracts payable, $91,052 is from the net pension obligation, and $257,372 is from compensated absences payable. See note 7 for more details. Payments of $335,581 were made on capital leases. Payments of $1,148,785 were made on contracts payable. GENERAL FUND BUDGETARY HIGHLIGHTS Differences between the original budget, the final budget and actual results for the General Fund are shown on pages 47 and 48. The reasons for major changes to the original budget are as follows: Each year, Morgan County adopts the General Fund budget in June based on a preliminary digest. The millage rate is set in September when the digest is finalized by the Georgia Department of Revenue. The final, amended budget was up $644,528. The budget increase is a result of the County being awarded several grants which were approved after the fiscal year 2012 budget was adopted. The Assistance to Firefighters Grant in the amount of $1 15,000 was awarded for the purchase of a new firetruck. There was also $65,000 GEFA Grant which had been budgeted in prior year however the work was not completed and revenue was not recognized until FY 2012. The County was also awarded a COPS grant which was approved after the adoption of the final budget in the amount of $35,990. Charges for services revenues related to participant recreation increased This increase was used to offset related expenditures due to increase number of participants. ---PAGE BREAK--- LOST revenues were also higher than anticipated so a mid-year budget adjustment was made to compensate for additional expenditures approved by the Board of Commissioners. Contingency funds were budgeted in the Financial Administration Department. These funds were used to cover additional expenditures in other depa.."'1ments as needed. ECONOMIC FACTORS AND THE 2013 BUDGET The County continues to face challenges during these economic times with declining revenues and controlling costs to meet the expectations for and use of services provided to citizens. Expenditures were only higher than 2011 which still allowed the County to end fiscal year 2012 with a moderate fund balance. The economic outlook for 2013 is stable considering the County has maintained a careful and conservative approach in the past which has resulted in a healthy fund balance which will help suppiement FY 20 i3 budget. The fiscai year 20 i3 annuai budget for the generai fund is $14,191,607; this is an increase of2.1% from the adopted 2012 budget. Most of the County's revenue sources for fiscal year 2013 will remain relatively unchanged with the exception of slight increases in sales tax and license and permits. Property tax values decreased just over 11 % from prior year. The 2013 budget was adopted assuming a millage rate of 8.99. Although this is the same rate at last year most taxpayers will most likely see a decrease for the County portion in their property tax bills due to the declining trend in assessed property values. The County actively searches for funding sources and has been successful in obtaining various grants in the area of public safety and energy efficiency and conservation. Through the energy efficiency and conservation block grant the County anticipates reducing future energy costs. With this grant being shared with the City of Madison and the Board of Education, benefits are expected to reach county wide. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of Morgan County's finances for all those interested. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Morgan County Commissioners Office, PO Box 168, Madison, Georgia 30650. xvi ---PAGE BREAK--- MORGAN COUNTY, GEORGIA STATEMENT OF NET ASSETS June 30, 2012 PRIMARY GOVERNMENT GOVERNMENTAL BUSINESS-TYPE ASSETS ACTIVITIES ACTIVITIES TOTAL Cash $ 6,541,360 $ 65,507 6,606,867 Receivables (net of allowance for uncollectib1es) 1,184,420 44,645 1,229,065 Internal bala..'1ces 80,424 (80,424) Due from component units 575 575 Inventories 57,267 57,267 Prepaid items 360,980 360,980 Investment in joint venture 1,366,000 1,366,000 Restricted assets: Cash 189 189 Non-current assets: Receivables Deferred charges 156,372 156,372 Capital assets: Capital assets not being depreciated 9,782,075 284,864 10,066,939 Capital assets being depreciated 98,649,144 1,049,433 99,698,577 Less: accumulated depreciation (38582915) (945547) (39528462) Capital assets, net of depreciation 69848304 388750 70237054 TOTAL ASSETS 79595891 418478 80014369 LIABILITIES Accounts payable 769,546 31,361 800,907 Other accrued items 197,685 4,612 202,297 Due to other governments 49,095 49,095 Noncurrent liabilities: Due within one year Compensated absences payable 180,160 180,160 Accrued landfill closure / postclosure 24,041 24,041 Notes payable 43,248 43,248 Capital leases payable 105,801 105,801 Revenue bonds payable Contracts payable 1,309,029 1,309,029 Due in more than one year Compensated absences payable 77,212 18,290 95,502 Net pension obligation 91,052 91,052 Accrued landfill closure / postclosure 340,174 340,174 Notes payable 44,873 44,873 Capital leases payable 112,668 112,668 Revenue bonds payable Contracts payable 14371 204 14371204 TOTAL LIABILITIES 17351573 418478 17770051 NET ASSETS L'1Ves!ed in capital assets, net of related debt 54,427,414 388,750 54,816,164 Restricted for: Debt service Capital outlay projects 741,297 741,297 Judicial programs 6,588 6,588 Public safety programs 239,696 239,696 Health and welfare programs 20,795 20,795 Unrestricted 6808528 (388750) 6419778 TOTAL NET ASSETS $ 62244318 $ 62244318 The accompanying notes are an integral part of this statement. 1 COMPONENT UNITS $ 1,183,915 2,292,227 291,000 260,000 336,000 39,000 31,000 105,000 8,875,010 (6283458) 2696552 7129694 439,270 975,000 7,868 415,000 80,000 25,857 879,000 475,[PHONE REDACTED] 878,552 188,000 ]33,000 2633 147 $ 3832699 ---PAGE BREAK--- FUNCTIONSIPROGRAMS EXPENSES PRIMARY GOVERNMENT GOVERl'-iMENIAL ACTIVITIES General government 3,550,225 Judicial 1,181,395 Public safety 6,388,700 Public works 4,981,927 Public health and welfare 1,374,205 Recreation and culture 1,635,981 Housing and development 569,188 Interest 728723 Total Governmental Activities 20410344 BUSINESS-TYPE ACTIVITIES Solid waste/recycling 924782 Total Business-Type Activities 924782 TOTAL PRIMARY GOVERNMENT 21 335 126 COMPONENT UNITS Health Department $ 554,131 Hospital Authority 13 644 000 TOTAL COMPONENT UNITS 14198131 $ GENERAL REVENUES Property taxes Sales taxes Insurance premium taxes Real estate recording taxes Other taxes Total taxes Unrestricted investment earnings Grants and contributions not restricted to a specific program Gain on sale of capital assets TRANSFERS TOTAL GENEF_AL REVENUES AND TRANSFERS CHANGES IN NET ASSETS NET ASSETS, Beginning NET ASSETS, Ending MORGAN COUNTY, GEORGIA STATEMENT OF ACTIVITIES For the Year Ended June 30, 2012 NET (EXPENSE) AND CHANGES IN NET ASSETS PROGRAM REVENUES PRIMARy GOVERNMENT OPERATING CAPITAL CHARGES FOR GRANTS AND GRANTS AND GOVERNMENTAL BUSINESS-TYPE SERVICES CONTRIBUTIONS CONTRIBUTIONS ACTIVITIES 778,590 1,007 (2,770,628) $ 600,536 7,854 (573,005) 538,653 392,827 81,719 (5,375,501) 1,554 (4,980,373) 37,069 355,757 (981,379) 258,698 16,700 (1,360,583) 170,581 (398,607) (728723) 2384 127 774 145 83273 (17 168799) 291399 291399 2675526 774 145 83273 (17 168799) 140,534 418,876 12576000 1589000 20000 12716534 2007876 20000 6,845,343 6.243.915 525,844 103,839 148663 13,867,604 6,412 258,768 36,978 (500,228) 13.669534 (3,499,265) 65743583 62244318 $ The accompanying notes are an integral part of this statement. 2 ACTIVITIES (633383) (633383) (633383) 97 500,228 500.325 (133,058) 133058 TOTAL (2,770,628) (573,005) (5,375,501) (4,980,373) (981,379) (1,360,583) (398,607) (728723) (17 168799) (633383) (633 383) (17802182) 6,845,343 6,243,915 525,844 103,839 148663 13,867,604 6,509 258,768 36,978 14.169859 (3,632,323) 65876641 62244318 COMPONENT UNITS 5,279 541 000 546279 11,679 11.679 557,[PHONE REDACTED] 3832699 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2012 OTHER NONMAJOR TOTAL GOVERNMENTAL GOVERNMENTAL ASSETS GENERAL SPLOST FUNDS FUNDS Cash $ 5,245,273 $ 920,100 $ 375,987 $ 6,541,360 Receivables (net of allowance for uncollectibles) 816,405 312,439 55,576 1,184,420 Interfund receivables 292,208 292,208 Due from component units 575 575 Prepaid items 356,860 4,119 360,979 Inventories 57,267 57,267 Restricted assets: Cash 189 189 TOTAL ASSETS $ 6,768,013 $ 1,232728 $ 436,257 $ 8,436,998 LIABILITIES AND FUND BALANCES Liabilities Accounts payable $ 376,157 $ 387,864 $ 5,525 $ 769,546 Other accrued items 191,345 6,341 197,686 Due to other governments 49,095 49,095 Interfund payables 54,471 157,313 211,784 Deferred revenue 451.079 451079 TOTAL LIABILITIES 1,018581 491,430 169,179 1,679190 FUND BALANCES ~ • - Prepaid expenditure 356,860 4,119 360,979 Inventories 57,267 57,267 Restricted: Capitai ouday projects 741,298 741,298 Judicial programs 6,588 6,588 Public safety programs 235,576 235,576 Health and welfare programs 20,795 20,795 Assigned: General government programs 1,915,,412 1,915,412 Unassigned: 3,419,lli 3,419,893 TOTi~·.L B,A.LANCES 5,749 . .ill 7111 ?QR 267078 6757808 , • ~ TOTAL LIABILITIES AND FUND BALANCES $ 6,768.Q1l $ 1,232,728 $ 436,257 $ 8,436,998 The accompanying notes are an integml part of this statement. 3 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTWITffiS June 30, 2012 Total Fund Balances for Governmental Funds (page 3) Total net assets reported for governmental activities in the statement of net assets is different because: Capital assets used in the governmental activities are not fmancial resources and therefore are not reported in the funds. Some assets are not available in the current period and therefore are not reported in the funds. Investment in joint venture Deferred charge for issuance cost Revenues in the statement of activities that do not provide current fmanciai resources are reported as deferred revenues in the funds. Property Taxes Fines Some liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. Rounding Net pension obligation Compensated absences Capital leases Notes payable Contracts payable Total net assets of governmental activities (page 1) The accompanying notes are an integral part of this statement. 4 1,366,000 156.372 351,078 100,001 (91,052) (257,372) (218,469) (88,121) 05,680.233) $ $ 6,757,808 69,848,304 1,522,372 451,079 (16,335,247) 2 62.244.318 ---PAGE BREAK--- REVENUES Taxes Licenses and pennits Intergovernmental Fines and forfeitures Charges for services Contributions and donations Invesbnent income Miscellaneous TOTAL REVENUES EXPENDITURES Current Expenditures General government Judicial Public safety Public works Public health and welfare Recreation and culture Housing and development Intergovernmental Capital outlay Debt service Principal Interest TOTAL EXPENDlruRES EXCESS (DEFICIENCy) OF REVENUES OVER(UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Sale of county property Note payable proceeds Transfers in Transfers out MORGAN COUNTY, GEORGIA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNl[)S GENERAL $ 10,366,209 136,096 882,093 365,491 1,412,371 37,085 6,045 16462 13 221 852 3,192,082 1,158,985 4,740,545 1,435,250 1,347,178 985,169 507,487 250,572 205,470 28059 13 ibO 797 (628945) 36,978 129,721 78,853 (640112) For the Year Ended! June 30, 2012 OTHER NONMAJOR TOTAL GOVERNMENTAL GOVERNMENTAL SPLOST 3,609,202 $ 1,554 3610 756 3,626 1,244,727 600,000 285,546 482,639 1,085,000 759761 446130Q (850 54!) FUNDS FUNDS 42,795 $ 14,018,206 136,096 184,371 1,066,464 137,078 502,569 288,647 1,701,018 H,081 48,166 366 7,965 627 17089 664965 17497573 3,192,082 24,366 1,183,351 698,797 5,442,968 2,679,977 1,347,178 1,585,169 26,442 533,929 285,546 61,056 794,267 36,386 1,326,856 ~ 796811 85603i 19168134 (191072) (1 670561) 36,978 129,721 187,850 266,703 ....ill.ill) (766931) TOTAL OrriER FINANCING SOURCES ruSES) (394560) (4796.2) (4796&'1 11\0 t\(V'7 iVO 771 (333529) NET CHANGE IN FUND BALANCES FUND BALANCES, Beginning of year FUND BALANCES, End of year $ (1,023,505) 6772 [PHONE REDACTED] (898,510) 1 639 80~ 74129,l!, (82,075) (2,004,090) [PHONE REDACTED] 898 267078 6757808 The accompanying notes are an integral part of this statement. 5 ---PAGE BREAK--- MORGAN COUNTY, G-EORGIA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended June 30, 2012 Net change in fnnd balances (page 5) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives al1d reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Capital outlays Depreciation expense In the statement of activities, only the gain/loss on the sale of various capital assets is reported, whereas in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balance by the net book value of the capital assets sold. Net book value of capital assets sold Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes Fines investment in joint venture Revenues reported in the funds that relate to prior years are not reported as revenue in the statement of activities. Property taxes Investment in joint venture Fines Under the modified accrual basis of accounting used in the governmental funds, expenditures are not recognized for transactions that are not normally paid with expendable available financial resources. In the statement of activities, however, which is presented on the accrual basis, expenses and liabilities are reported regardless of when financial resources are available. In addition, interest on long-term debt is not recognized under the modified accrual basis of accounting until due, rather than as it accrues. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, where as these amounts are deferred and amortized in the statement of activities. This adjustment combines the net change of two balances. Proceeds from borrowing including premiums and discounts Principal payments on long-term debt Amortization of bond premium, discounts and issuance cost Some expenses 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. Compensated absences, current year Compensated absences, prior year Net pension obligation is not available during the current period and therefore is not reported in the funds. Rounding End of year Beginning of year Changes in net assets of governmental activities (page 2) The accompanying notes are an integral part of this statement. 6 794,267 (3444481) 351,078 100,[PHONE REDACTED] (501,680) (1,302,834) (135 814) (129,721) 1,326,856 68088 (257,372) 269936 (91,052) 91548 $ (2,004,090) (2,650,214) 1,817,079 (1,940,328) 1,265,223 12,564 496 4 $ (3499265) ---PAGE BREAK--- MORG,A.N COUNTY, GEORGIA. ASSETS Current Assets Cash Receivables (net of allowance for uncollectibles) TOTAL CURRENT ASSETS Noncurrent Assets Capital assets Capital assets not being depreciated Capital assets being depreciated Less: accumulated depreciation ST A TEMENT OF NET ASSETS PROPRIETARY FUNDS June 30, 2012 $ TOT AL CAPITAL ASSETS (NET OF ACCUMULATED DEPRECIATION) TOTAL NONCURRENT ASSETS TOT..1..L ASSETS LIABILITIES Current Liabilities Accounts payable Other accrued items Interfund pay abIes Accrued landfill cJosureJpostclosure TOTAL CURRENT LIABILITIES Noncurrent Liabilities Compensated absences payable Accrued landfill cJosureJpostclosure TOT AL NONCURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS Invested in capital assets Unrestricted TOTAL NET ASSETS $ BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS SOLID WASTE DISPOSAL FACILITY 65,507 44,645 110,\52 284,864 1,049,433 (945.547) 388,750 388,750 498,902 31,361 4,612 80,424 24,041 140,438 18,290 340174 358464 498902 388,750 (388,750) The accompanying notes are an integral part of this statement. 7 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the Year Ended June 30, 2012 OPERATING REVENUES Charges for services-other Total Operating Revenues OPERATING EXPENSES Salaries and benefits Other services and charges Landfill closure/postclosure costs Depreciation Waste disposal fees Repairs and maintenance Total Operating Expenses OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES) Investment earnings Total Nonoperating Revenues (Expenses) INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS Transfer in CHANGE IN NET ASSETS TOTAL NET ASSETS, Beginning of year TOTAL NET ASSETS, End of year BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS SOLID WASTE DISPOSAL FACILITY $ ~2~9~1,~39~9 291 399 297,888 96,740 25,139 34,728 442,653 27634 924782 (633,383) 97 97 (633,286) 500,228 (133,058) 133,058 The accompanying notes are an integral part of this statement. 8 ---PAGE BREAK--- CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customer Payments to suppliers Payments to employees Net cash provided by (used in) operating activities MORGAN COUNTY, GEORGIA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended June 30, 2012 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers in Net Cash provided (used) by non-capital financing activities CASH FLOWS FROM INVESTING ACTIVITIES Investment earnings Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents CASH, Beginning of year CASH, End of year RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Depreciation (Increase) decrease in: Accounts receivable Increase (decrease) in: Accounts payable Compensated absences Accrued landfill costs Other accrued items Interfund payabJes Net cash provided by (used in) operating activities $ $ $ BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS SOLID WASTE DISPOSAL FACILITY 269,479 (610,140) (289,876) (630537) 500,228 500,228 97 97 (130,212) 195,719 65,507 (633,383) 34,728 (21,920) (15,162) 3,400 (4,705) 4,612 1,893 The accompanying notes are an integral part of this statement. 9 ---PAGE BREAK--- ASSETS Cash Investments: 0 \.......UUUUUU Mutual funds, equities MORGAN COUNTY, GEORGIA STATEMENT OF NET ASSETS FIDUCIARY FUNDS June 30, 2012 BRASWELL FUND PRIV ATE PURPOSE TRUST FUND $ 7,530 ,1 AQ'") 184,607 $ Mutual funds, debt securities 38,068 TOTAL ASSETS LIABILITIES Accrued liabilities Funds held in trust TOTAL LIABILITIES NET ASSETS Restricted for orphan care TOTAL NET ASSETS 281 297 295 295 281 002 $ 281002 $ The accompanying notes are an integral part of this statement. 10 AGENCY FUNDS 356,066 356,066 356,066 356066 ---PAGE BREAK--- ADDITIONS Investment earnings Interest earned Dividend income Net change in fair value of investments Total investment earnings Interest and investment expense Net investment earnings TOTAL ADDITIONS DEDUCTIONS Tuition Administrative expenses TOTAL DEDUCTIONS CHANGE IN NET ASSETS NET ASSETS, Beginning of year NET ASSETS, End of year MORGAN COUNTY, GEORGIA STATEMENT OF CHANGES IN NET ASSETS FIDUCIARY FUNDS For the Year Ended June 30, 2012 BRASWELL FUND PRIV ATE PURPOSE TRUST FUND $ 6 10,122 1481) (1,353) (3 268) (4,621) ( 4 621) 8,800 7,792 16,592 (21,213) 302,215 The accompanying notes are an integral part of this statement. 11 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA COMPONENT UNITS COMBINING STATEMENT OF NET ASSETS June 30, 2012 HEALTH HOSPITAL ASSETS DEPARTMENT AUTHORITY Cash $ 386,915 $ 797,000 Receivables (net of allowance for uncollectibles) 28,227 2,264,000 Inventories 291,000 Prepaid items 260,000 R.estricted assets: Cash 336,000 Non-current assets: Receivables 39,000 Deferred charges 31,000 Capital assets: Capital assets not being depreciated 105,000 Capital assets being depreciated 59,010 8,816,000 Less: accumulated depreciation (42,458) (6,241,000) Capital assets, net of depreciation Ih "hQIi Iilili J.v, TOTAL ASSETS 431.694 6.698.000 LIABILITIES Accounts payable 19,270 420,000 Other accrued items 975,000 Noncurrent liabilities: Due within one year Compensated absences payable 7,868 Capital leases payable 415,000 Revenue bonds payable 80,000 Due in more than one year Compensated absences payable 25,857 Capital leases payable 879,000 Revenue bonds payable 475,000 TOTAL LIABILITIES 52,[PHONE REDACTED] NET ASSETS Invested in capital assets, net of related debt 16,552 862,000 Restricted for: Debt service 188,000 Public health and welfare 133,000 Unrestricted 362 147 2,271000 TOTAL NET ASSETS $ 378699 $ 3,454,000 The accompanying notes are an integral part of this statement. 12 TOTAL $ 1,183,915 2,292,227 291,000 260,000 336,000 39,000 31,000 105,000 8,875,010 (6283,458) "hOh 7.129.694 439,270 975,000 7,868 415,000 80,000 25,857 879,000 475,000 3,196,995 878,552 188,000 133,000 2,633,147 $ 3,832,699 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA COMPONENT UNITS COMBINING STATEMENT OF ACTIVITIES For the Year Ended June 310, 2012 ".PROGRAM REVENUES . NET (EXPENSE) AND CHANGES IN NET ASSETS OPERA TING CAPITAL CHARGES FOR SERVICES GRANTS AND GRANTS AND HEALTH HOSPITAL FUNCTIONSIPROGRAMS EXPENSES CONTRIBUTIONS CONTRIBUTIONS DEPARTMENT AUTHOlRITY COMPONENT UNITS GOVERNMENTAL ACTIVITIES Health Department Hospital Authority TOTAL COMPONENT UNITS GENERAL REVENUES Unrestricted investment earnings $ 554,131 $ 140,534 $ 13,644,000 12576000 $14,198,131 $ 12716534 $ TOTAL GENERAL REVENUES AND TRANSFERS CHANGES IN NET ASSETS NET ASSETS, Beginning NET ASSETS, Ending 418,876 $ 1,589,000 2,007,876 20,000 20,QQQ $ $ The accompanying notes are an integral part of this statement. 13 5,279 $ - 541,000 5,27(~ 541,000 67(~ 111,000 672 111000 5,958 552,000 372,741 2902,000 378,69(~ $ 3454000 TOTAL $ 5,279 541000 546,279 11679 11,679 557,[PHONE REDACTED] $ 3,832699 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of ~Y10RGi\}'J COLT}.JTY, GEORGIi\' have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the government's accounting policies are described below. REPORTING ENTITY The government is a political subdivision of the State of Georgia governed by an elected five- member commission. In addition, there are four Constitutional Officers; the Tax Commissioner, Probate Court Judge, Sheriff, and Clerk of Superior Court. The Constitutional Officers are elected county wide. The Board of County Commissioners budgets and approves all funding used by the separate Constitutional Officers. As required by generally accepted accounting principles, these financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Each discretely presented component unit is reported in a separate column in the combined financial statements to emphasize it is legally separate from the government. Each discretely presented component unit has a June 30 year-end. Brief descriptions of discretely presented component units follow: MORGAN COUNTY HOSPITAL AUTHORITY: The hospital authority owns and operates a twenty bed acute care facility and a twenty-one bed hospital-based skilled nursing unit. The County appoints all the members of the seven-member board that governs the hospital authority. The hospital authority is fiscally dependent on the County since the County provides a subsidy which allows the Authority to remain solvent and the County guarantees the Authority'S debt. During 2012, the County transferred $600,000 to the hospital authority. The hospital authority is presented as a proprietary fund type. MORGAN COUNTY HEALTH DEPARTMENT: The health department is charged with determining the health needs and resources of its jurisdiction, developing programs, activities, and facilities responsive to those needs, and enforcing all laws related to health matters unless they fall under the jurisdiction of other agencies. The health department is governed by the Morgan County Board of Health (Board). The Board includes seven members representing government, health professions, and the needy. The County appoints the voting majority of the board. Additionally, the health department is fiscally dependent on the County since it must have its budget approved by the County. During 2012, the County transferred $180,339 to the health department. The health department is presented as a governmental fund type. 14 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 Complete financial statements for each of the individual component units may be obtained at the entity's administrative offices. ~v1organ Count'j Health Department 259 North Second Street Madison, Georgia 30650-1317 1'.1organ County Hospital Authority 1077 South Main Street Madison, Georgia 30650-2073 GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergoveITuTJ.ental revenues, are reported separately from business=t'jpe activities, vvhich rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the govem..ment-wide financial statements. Major individual governmental funds are reported as separate columns in the fund financial statements. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION Measurement focus refers to what is being measured; basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. 15 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statement (fiduciary fimds use the economic resources measurement focus to indicate that agency funds have no measurement focus.) Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and simiiar items are recognized as revenue as soon as all eligibiiity requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the goveIT~Jnent considers property taxes as available if they are collected by the end of the current fiscal year. Fines are considered available ifthey are collected within 60 days of the end of the current fiscal period for which they are levied. Other revenues susceptible to accrual are considered available if they are collected within 90 days of the end of the current fiscal period for which they are imposed. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, sales tax, franchise taxes, fines, charges for services, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the government. The government reports the following major governmental funds: The General Fund is the government's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The SPLOST Capital Projects Fund accounts for funds received from a local 1% sales tax reserved for construction of various capital projects. The government reports the following major proprietary funds: The Solid Waste Enterprise Fund accounts for the activities of the County's solid waste disposal and recycling programs. Additionally, the government reports the following fund types: Fiduciary funds account for assets held by the government in a trustee capacity or as an agent on behalf of others. 16 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 Private-purpose trust funds account for assets held by the government under the terms of a formal trust agreement and are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting. The Braswell Fund, a testamentary trust fund, is the private-purpose trust fund. The fund is restricted to the use of educating orphaned children who reside in the County. Agency funds are custodial in nature and do not represent results of operations or have a measurement focus. Agency funds are accounted for using the accrual basis of accounting. These funds are used to account for assets that the Tax Commissioner, Clerk of Court, Probate Court, Magistrate Court, and Sheriff holds for others III an agency capacity. Private-sector standards of accounting and fina.l1cial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private- sector guidance for their business-type activities and enterprise funds, subject to the same limitation. The government has elected not to follow subsequent private-sector guidance. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are interfund services provided and used are not eliminated in the process of consolidation. Elimination of these charges would distort the direct costs and program revenues for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues for the Solid Waste enterprise fund are charges to customers for sales and services. Operating expenses for the Solid Waste enterprise fund include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. 17 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 ASSETS, LIABILITIES AND NET ASSETS OR EQUITY 1. Deposits and Investments The government's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments are recorded as fair value based on quoted market prices as of the balance sheet date. Increases or decreases in fair value during the year are recognized as part of investment income. 2. Receivables and Payables Activity between funds that are representative of iending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "interfund receivables/payables" the current portion of interfund loans) or "advances to/from other funds" the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances." Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable, available financial resources. All trade and property tax receivables are shown net of an allowance of uncollectibles. Property taxes attach as an enforceable lien on property as of January 1. The 2011 taxes were levied October 20, 2011, and were due 60 days after issuance. Interest and penalties are assessed on taxes not paid by this date. The taxes are subject to lien after March 20,2012. The County's property taxes were levied on the assessed values of all real and personal property including mobile homes and motor vehicles located in the County. 3. Inventories and Prepaid Items Inventories, consisting of expendable supplies, not held for resale are valued at cost using the first-inlfirst-out (FIFO) method. The costs of governmental fund-type inventories are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 18 ---PAGE BREAK--- 4. Capital Assets MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 Capital assets, which include property, plant, equipment, and infrastructure assets (i.e. roads, bridges, sideVv~alks, culverts, and similar items), are reported in the applicable goven1 111ental activities column in the government-wide financial statements. Capital assets are defined by the County as assets with an initial, individual cost of $5,000 and an estimated useful life in excess or mree years. Roads, bridges and culverts are defined by the County as projects with an individual cost of $5,000 or more. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Roads, bridges and culverts acquired prior to July 1, 1980 have been reported. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized. Property, plant and equipment are depreciated using the straight-line method over the following estimated useful lives: Assets Buildings Building improvements Machinery and Equipment Vehicles Infrastructure Land improvements 5. Compensated Absences Years 40 10-25 5-10 5 10-50 10-20 It is the government's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. In accordance with the provisions of Statement of Governmental Accounting Standards No. 16, "Accounting for Compensated Absences," no liability is reported for unpaid accumulated sick leave because the benefits are paid only upon illness of an employee, and the amount of such payments cannot be reasonably estimated. All vacation pay is accrued when incurred in the govenunent-wide and proprietary financial statements. Vacation pay that is expected to be liquidated with expendable available financial resources is reported as expenditure and a fund liability of the governmental fund that will pay it. Upon retirement, unused vacation and sick leave will be included in years of service for benefit calculation purposes. At the end of each calendar year unused vacation time above 240 hours and unused sick time above 480 hours is rolled over to credit the years of service for retirement purposes. 6. Long-term Obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-tenn obligations are reported as liabilities in the applicable governmental activities, or proprietary fund type statement of net assets. 19 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 7. Fund Equity/Net Assets Fund equity at the governmental fund financial reporting level is classified as "fund balance." Fund equity for all other reporting is classified as "net assets. " Fund balance - Generally, fund balance represents the difference between the current assets and current liabilities. In the fund financial statements, governmental funds report fund balance classifications that comprise a hierarchy based primarily on the extent to which the County is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Fund balances are classified as follows: • Nonspendable - Fund balances are reported as nonspendable when the amounts cannot be spent because they are either not in spendable form items that are not expected to be converted to cash like inventories and prepaid items) or legally or contractually required to be maintained intact. • Restricted - Fund balances are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the County or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. • Committed - Fund balances are reported as committed when they can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Commissioners through the adoption of a resolution prior to the end of the fiscal year. In order to modify or rescind the commitment, the Board of Commissioners must adopt another resolution. • Assigned - Fund balances are reported as assigned when amounts are constrained by the County's intent to be used for specific purposes, but are neither restricted nor committed. Through resolution, the Board of Commissioners has authorized the County's finance director to assign fund balances. • Unassigned - Fund balances are reported as unassigned as the residual amount when the balances do not meet any of the above criterion. The County reports positive unassigned fund balance only in the general fund. Negative unassigned fund balances may be reported in all other governmental funds. Net Assets - Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any debt used for the acquisition, construction, or improvement of those assets. In determining the outstanding balance of any borrowing, proceeds of that debt which has not been spent is deducted. Accounts payable for costs related to acquisition, construction, or improvement of those capital assets is considered debt for this calculation. Net assets are reported as restricted as described in the fund balance section above. All other net assets are reported as unrestricted. 20 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 When both restricted and umestricted resources are available for use, it is the government's policy to use restricted resources first, then committed, assigned, and unassigned (or umestricted) resources as they are needed. 8. Invested in Capital Assets, Net of Related Debt The Hinvested in capital assets, net of related debf; reported on the government-wide statement of net assets as of June 30, 2012 are as follows: Invested in capital assets, net of related debt: Cost of capital assets Less accumulated deprecIatlOn Book value Less capital related debt Invested in capital assets, net of related debt 9. Management Estimates Governmental Activities $ 108,431,219 Lev",\ 69,848,304 (15,420,890) $ 54,427,414 B usiness-type Activities $ 1,334,297 A ~ ~ A ! 388,750 $ 388,750 The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - FUND BALANCE/NET ASSETS The government-wide statement of net assets reports $1,008,376 ofrestricted net assets, of which none is restricted by enabling legislation. Additional details related to fund balances at the governmental fund level are presented below: Restricted: SPLOSTFund Capital outlay projects - For funds received from the imposition of the Special $ Purpose Local Option Sales Tax (SPLOST) restricted by the voter approved referendum. Nonmajor Restricted Progams Funds Judicial Programs - Lavv Library - Used to aCColli~t for surcharges on fines and forfeitures vvhich are for the operation of the County Law Library and other expenditures as restricted by the OCGA-36-15. 21 741,298 6,588 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 Public Safety Programs - Emergency E911 Telephone Services Fund - For fund to operate the E911 center as restricted by the OCGA-46-5. Restricted Progams Fund - To account for funds received from surcharges on fines and forfeitures restricted for operation of the county jail, and drug abuse, treatment and education programs. Sheriffs Law Enforcement - to account for funds from seizures to be used for law enforcement activities. Subtotal - Restricted for Public Safety Programs Health and Welfare Programs - Restriced Progams Fund - To account for funds received from surcharges on fines and forfeitures restricted for youth enrichment activities. Total Restricted Fund Balance Assigned: General Fund Appropriated as a resource in next year's budget NOTE 3 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY BUDGETARY INFORMATION 48,847 83,341 103.388 235,576 20,795 $ 1,004257 $ 1,915.412 Annual appropriated budgets are adopted on a basis consistent with generally accepted accounting principles. Annual appropriated budgets are adopted for the general fund and all special revenue funds. Project-length budgets are adopted for capital projects funds. All annual appropriations lapse at fiscal year end. All agencies of the government submit requests for appropriation to the County's manager so that a budget may be prepared. The budget is prepared by fund, function and activity and line item, and includes information on the past year, current year estimates and requested appropriations for the next fiscal year. The proposed budget is presented to the government's Board of Commissioners for review. The government's Board of Commissioners holds public hearings and may add to, subtract from, or change appropriations, but may not change the form of the budget. Any changes in the budget must be within the revenues and reserves estimated as available by the County's manager or the revenue estimates must be changed by an affirmative vote of a majority of the government's Board of Commissioners. The Counry manager may amend the line item budget within a depai1:ment's appropnatiOn. However, expenditures may not legally exceed budgeted appropriations at the department level. The legal level of budgetary control is at the department level within individual funds. 22 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 During the year, the Board of Commissioners authorized amendments to include appropriations for some activities that were not originally budgeted and to reclassify certain character and functional expenditures. NOTE 4 - DEPOSITS AND INVESTMENTS The County's investments are held in a private purpose trust fund known as the Braswell Fiduciary Fund and held as cash equivalents in the SPLOST fund. Investments are carried at fair value. Unrealized gain is recognized as income. Primary Government Custodial credit risk - deposits. Custodial credit risk for deposits is the risk that, that in the event of a bank failure, the government's deposits may not be returned. The County's policies permit it to exceed the FDIC insured limit in making deposits in commercial banks and savings and loans institutions if the funds are otherwise adequately secured. As of June 30, 2012, all deposits of the County were insured or collateralized. State statutes require collateral pledged in the amount of 110% of deposits. Depositories may secure deposits of public funds using the dedicated method or the pooled method as described below. Under the dedicated method, a depository shall secure the deposits of each of its public depositors separately. • Under the pooled method, a depository shall secure deposits of public bodies which have deposits with it through a pool of collateral established by the depository with a custodian for the benefit of public bodies having deposits with such depository as set forth in code Section 45-8- 13.1. The County utilized both methods to secure its deposits of public funds. Custodial credit risk - investments. For an investment, this is the risk that, in the event of the failure of the counterparty, the government will not be able to recover the value of its investments or coilaterai securities that are in the possession of an outside party. Interest rate risk. Interest rate risk is the risk that changes in interest rates may adversely affect an investment's fair value. Since the price of a bond fluctuates with market interest rates, the risk that an investor faces is that the price of a bond held in a portfolio will decline if market interest rates rise. Morgan County does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. 23 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 Credit Risk. State statutes authorize the government to invest in obligations of the U.S. Treasury and of its agencies and instrumentalities; bonds or certificates of indebtedness of this state or of othCi states and of its agencies and instrumentalities; certificates of deposits of bartks insured by FDIC; the State of Georgia Local Government Investment Pool; repurchase agreements; bonds, debentures, notes or other evidence of indebtedness of any solvent corporation of the United States government. Morgan County does not have an investment policy that would further limit these investment choices. Concentration of credit risk. Morgan County places no limit on the amount it may invest in any one issuer. Fiduciary Fund Custodial credit risk - investments. For an investment, this is the risk that, in the event of the faiiure of the counterparty, the government win not be abie to recover the vaiue of its investments or collateral securities that are in the possession of an outside party. Interest rate risk. The Braswell Fiduciary Fund does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk. The Braswell fund is authorized to invest in securities in accordance with the will that established the fund. The Braswell Fiduciary Fund has no investment policy that would further limit its investment choices. At June 30, 2012, the ratings of its investments are shown above. Concentration of credit risk. The Braswell Fiduciary Fund places no limit on the amount it may invest in anyone issuer. As of June 30, 2012, the Braswell Fiduciary Fund held 6% of the total investments in common stocks of both the Atlanta Gas Company and the Southern Company. As of June 30, 2012, the Braswell Fiduciary Fund had the following investments: Investment Type Common Stocks Mutual Funds Subtotal Equity Securities Mutual Fund Debt Securities Total Investments Fair Value $ 51,092 184,607 235,699 38,068 $ 273,767 Rating nla nla BB Rating Agency nla nla Morningstar Weighted Average Maturity (Years) nla nla 9.66 The goal of the Braswell Fiduciary Fund in investing is to obtain a reasonable return on investments with a minimum exposure to potential loss of capital due to market fluctuations. 24 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 NOTE 5 - RECEIVABLES Receivables as of year-end for the County's individual major funds, nOInnaJor govennnental funds in the aggregate, and enter prise fund including the applicable allovvances for uncollectible accounts, are as follows: Nonmajor General Governmental Enterprise Fund Fund SPLOST Funds Solid Waste Receivables: Property Taxes $ 351,078 $ $ $ Fines 4,991,077 Accounts 26,504 49,469 44,645 Intergovernmental 324,846 312,439 6,107 Total Gross Receivables 5,693,505 312,439 55,576 44,645 Less: Allowance for Uncollectibles (4,877,100) Total Net Receivables $ 816,405 $ 312,439 $ 55,576 $ 44,645 Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows: Deli.l"t)quent property taxes receivable (Genera! Fund) Probation Fines (General Fund) Total deferred/unearned revenue for governmental funds 25 UNA V AILABLE $ 351,078 100,001 $ 451,079 UNEARNED $ TOTAL $ 351,078 100,001 $ 451,079 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 Property taxes receivable at June 30, 2012, consist of the following: T r!DC''T' r!D1\.TDD AT LlJ.\JLIJ J. UL1"(L.l~L YEAR FUND 2012(1) $ 5,562 2011 251,507 2010 45,189 2009 13,299 2008 10,626 2007 8,850 2006 3,820 2005 4,437 2004 839 2003 1,042 2002 2,217 2001 1,240 2000 697 1999 896 1998 298 1997 290 1996 218 1995 51 Total $ 351,078 2012 only consists of taxes due on mobile homes. Taxes on real and personal property are not levied until after fiscal year end. Therefore, they are not included. Receivables as of year-end for the County's component units, including the applicable allowances for uncollectible accounts, are as follows: Receivables: Accounts Intergovernmental T otai Gross Receivabies Less: Allowance for Uncollectibles Total Net Receivables Health Department $ 12,016 16211 28,227 $ 28227 26 Hospital Authority $ 4,185,000 84,000 4,269,000 (2,005,000) $ 2264,000 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 NOTE 6 - CAPITAL ASSETS Capital asset activity for the year ended June 30; 2012 was as follows: Governmental Activities: Non-Depreciable Assets: Land and improvements Construction in progress Total non-depreciable capital assets Depreciable Assets: Land improvements Buildings and improvements Machinery and equipment Vehicles Infrastructure Total depreciable capital assets Less Accumulated Depreciation for: Land improvements Buildings and improvements Machinery and equipment Vehicles Infrastructure Total accumulated depreciation Total depreciable capital assets, net Governmental activities capital assets, net $ Beginning Balance 9,734,[PHONE REDACTED] 515,820 34,190,067 3,757,134 5,010,132 54429685 97902838 276,478 5,052,313 2,514,020 3,829,307 23466316 35 138434 62764404 72498517 30,600 17361 47961 131,547 261,777 352982 746306 24,128 861,347 337,572 295,883 I 925551 3444481 (2698 175) $ (2650214) Retirements Ending Transfers Balance $ 9,764,714 17361 9782075 515,820 34,190.067 3,888,681 5,271,909 54782667 98649 144 300,606 5,913,660 2,851,592 4,125,190 25391 867 38582915 60066229 $ $ 69848304 Additions to governmental activities capital assets for fiscal year ending June 30, 2012 consist of the following: Capital Outlay $ 794,267 Total $ 794267 Non-depreciable capital assets additions $ 47,961 Depreciable capital assets additions 746,306 Total $ 794,267 27 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 Beginning Ending Balance Additions Retirements Transfers Balance Business-type Activities: Non-Depreciable Assets: Land and improvements $ 284,864 $ $ $ $ 284,864 Depreciable Assets: Land improvements 67,973 67,973 Buildings and improvements 119,724 119,724 Machinery and equipment 519,502 519,502 Vehicles 342,234 342,234 Total depreciable capital assets 1,049,433 1,049,433 Less Accumulated Depreciation for: Land improvements 34,922 4,024 38,946 Buildings 79,316 2,993 82,309 Equipment 467,454 14,604 482,058 Vehicles 329,127 13,107 342234 Total accumulated depreciation 910,819 34,728 945,547 Total depreciable capital assets, net 138,614 (34,728) 103,886 Business-type activities capital assets, net $ 423,478 $ (34,728) $ $ $ 388,750 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities: General Government Public Safety Public Works Public Health and Welfare Recreation and Culture Housing and Development Rounding Total depreciation expense-governmental activities Business-type Activities: Solid Waste $ $ 366,116 944,994 2,015,531 30,690 54,149 32,999 2 3,444,481 7~2~8 The County has authorized construction projects. The remammg costs are split between the portion of the contracts that have been entered into for which the work had not been done prior to June 30, 2012 and the remainder of the authorized project expenditure for which contracts have not been entered into as of year end. The source of financing for the remaining project cost is noted below: 28 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 Contracts in Authorized Project Authorization Expended To Date Progress Not Obligated Sources Governmental Activities: Infrastructure Total $ 3.012.692 $ $ 3.012.692 $ 17.361 _ 17,361 $ 2.995.331 SPLOST/GRANTS $ 2.995.331 Health Department Discretely Presented Component Unit Activity for the Health Department for the year ended June 30, 2012, was as follows: Beginn.ing Ending Balance Additions Retirements Balance Governmental Activities: Depreciable Assets: Machinery and equipment $ 46,253 $ 12,757 $ $ 59,010 Less Accumulated Depreciation (39,352) (3,106) (42,458) Capital Assets, net $ 6,901 $ 9,651 $ $ 16,552 Hospital Authority Discretely Presented Component Unit Activity for the Hospital Authority for the year ended June 30, 2012, was as follows: Beginning Ending Balance Additions Retirements Balance Governmental Activities: Non-Depreciable Assets: Land $ 105,000 $ $ $ 105,000 Construction in progress 885,000 (885,000) Total Non-Depreciable Assets 990.000 (885,000) 105,000 Depreciable Assets: Land improvements 61,000 61,000 Buildings and improvements 3,555,000 3,555,000 Equipment 4,113,000 202,000 885,000 5,200,000 Total Depreciable assets 7,729,000 202,000 885,000 8,816,000 Less Accumulated Depreciation for: Land improvements (61,000) (61,000) Buildings and improvements (2,635,000) (102,000) (2,737,000) Equipment (2,828,000) (615,000) (3,443,000) rT"_ _1 1_ ~ A A 1 1 Utal Ut:prt:~laLlUIl 1 ..J,..J~'t,VVv) 1/1/,VVV) lu,~'tl,VVVI Total depreciable capital assets, net 2205,000 (515,000) 885,000 2,575,000 Capital Assets, net $ 3,195,000 $ (515,000) $ $ 2,680,000 29 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 NOTE 7 - LONG TERM DEBT T .L _ _ T r"_11 lur LIlt: yt:ar t:nUt:UJUIlt: L.UIL. wa:s a:s lUllUW:S: Beginning Ending Due Within Due After Balance Additions Reductions Balance One Year One Year Governmental Activities: Notes Payable $ $ 129,721 $ (41,600) $ 88,121 $ 43,248 $ 44,873 Capital leases 354,940 (136,471) 218,469 105,801 112,668 Contracts payable 16,304,577 (1,148,785) 15,155,792 1,218,965 13,936,827 Plus: Original issue Premiums 621455 (97014) 524441 90064 434377 Subtotal Contracts Payable 16926032 (1245799) 15680233 1309029 14371204 Net pension obligation 91,548 692,007 (692,503) 91,052 91,052 Compensated absences 269936 250977 (263 541) 257372 180 160 77 212 Governmental activities long-term liabilities $ 17642456 $ 1072 705 $ (2379914) $ 16335247 $ 1 638238 $ 14697009 Business-type Activities: Compensated absences $ 14,890 $ 8,451 $ (5,051) $ 18,290 $ $ Landfill c1osure/postclosure 368920 (9616) 4911 364215 24041 Business-type activities long-term liabilities $ 383810 $ (1165) $ (140) $ 382505 $ 24041 $ Notes Payable The County issued an installment note in the amount of$129,721 with the Bank of Madison with principal and interest payable at 2.219% per annum in the amount of $45,203 and $45,869 due on November 1, 2012 and 2013, respectively. The County issued this note payable to finance the purchase vehicles for the Sheriffs Department. The amount outstanding as of June 30,2012 is $88,121. The annual requirements to amortize notes payable outstanding as of June 30, 2012 are as follows: Year ending, June 30, Principal Interest Total 2013 $ 43,248 $ 1,955 $ 45,203 2014 44,873 996 45,869 Total $ 88,121 $ 2,951 $ 91,072 Capital Leases The County leases certain land and facilities under non-cancelable capital leases. The leases relate to the DF ACSlHealth Department building and E911 equipment. Ownership of the related assets will be transferred to the County at the end of the lease terms. The assets acquired through capital leases are as follows: 30 18,290 340 174 358464 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 Buildings and improvements Machinery and equipment Less: Accumulated Depreciation Total Governmental Activities $ $ 885,714 199,110 (332,143) 752,681 The County entered into a capital lease agreement in 1997 with Wachovia Bank to finance the construction of a DF ACS building. The lease term is one year with fourteen one-year renewable lease terms. The County entered into a capital lease agreement in 2011 with AT&T to finance the acquisition of Vesta equipment for the E911 center. The lease term is 60 months. The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2012, \vere as follows: Year Ending June 30, 2013 2014 2015 2016 Total minimum lease payments Less: amount representing interest (6.45%) Present value of minimum lease payments Contracts payable $ $ Governmental Activities 114,402 45,376 45,376 30,250 235,404 (16,935) 218.469 During 2000, the County entered into an intergovernmental contract with the Development Authority of Walton County to acquire land for an industrial park and issue the "Development Authority of Walton County (Georgia) Industrial Park Revenue Bond Anticipation Note, Series 1998;; in order to finance the acquisition of iand for the Industrial Park Proj eet. The total amount of this issue is $7,500,000. Morgan County's share of the debt was 15%, or $1,125,000. During 2001, this revenue bond anticipation note was replaced by a revenue bond issued by the Joint Development Authority of Jasper County, Morgan County, Newton County, and Walton County in the amount of $9,000,000. Morgan County's share of the debt is 15%. The outstanding balance of this debt at June 30, 2012 is $5,200,000 with Morgan County's share being $780,000. 31 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 The bonds are variable rate demand bonds. A common feature of such bonds is that bondholders have the right to tender their bonds back for purchase each week for any reason. Should the Remarketing Agent be unable to find ne\v buyers for arlY tendered bonds, a barJ<: is obligated to purchase the bonds under a Liquidity Facility. Should that happen, the bonds become "Bank Bonds" with an interest rate equal to the greater of prime rate or Federal Funds rate plus 0.50% per annum. In addition, the fees for providing the Liquidity Facility would increase from 0.195% per annum to 0.440% per annum; also, the repayment of principal would be accelerated on a five year schedule commencing with the next principal payment. Just after June 30, 2008, the rating for the bond issuer for the Joint Development Authority of Jasper County, Morgan County, Newton County, and Walton County, (JDA) Series 2001 bonds was downgraded from a triple-A rating. As a result, the Remarketing Agent was unable to find new investors and the Bank purchased the bonds under the Liquidity Facility. This bank bond rate was 5.0% at June 30, 2008. On September 23, 2008 the interest rate was 6.0% with a total rate of 6.44% per annum. In an effort to reduce the interest rate back to the terms in effect at June 30, 2008, the JDA obtained a letter of credit from a bank in the amount of $6,474,667 ($6,400,000 principal and $74,667 interest component). This letter of credit has a stated expiration date of September 15, 2011. The variable interest rate as of June 30, 2012 is 0.35%. The annual requirements to amortize the JDA bond using terms in effect as of June 30, 2012, are as follows: Year ending, June 30, Principal Interest Total 2013 $ 75,000 $ 1,638 $ 76,638 2014 75,000 1,481 76,481 2015 75,000 1,323 76,323 2016 75,000 1,165 76,165 2017 90,000 1,008 91,008 2018-2022 390,000 2, III 392, III Total $ 780,000 $ 8,726 $ 788,726 During 2008, the County acquired a GEF A loan of $67,311 for the extension of water and wastewater to the Joint Industrial Development Authority Industrial Park property. Morgan County is required to pay 13.8% of the total loan. The total debt outstanding at June 30, 2012 is 4>.JV,17L.. 32 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 The annual requirements to amortize the GEFA loan using terms in effect as of June 30, 2012, are as follows: VP::lT pnriina - o June 30, Principal Interest Total 2013 $ 3,965 $ 2,293 $ 6,258 2014 4,152 2,106 6,258 2015 4,349 1,909 6,258 2016 4,554 1,704 6,258 2017 4,770 1,488 6,258 2018-2022 27,456 3,833 '11 '")110 -l ~,~U7 2022-2026 1,546 18 1,564 Total $ 50,792 $ 13,351 $ 64,143 During 2008, the County entered into an intergovernmental contract with the Morgan County Building Authority for $19,000,000 to acquire the land and make renovations to the Jail building and build an aquatic center. The County is to make annual payments. Interest rates vary from 4% to The outstanding balance of this debt at June 30,2012 is $14,325,000. The annual requirements to amortize Jail Bonds using terms in effect as of June 30, 2012, are as follows: Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 Total Compensated Absences $ $ Principal 1,140,000 $ 1,195,000 1,255,000 1,320,000 1,385,000 8,030,000 14325,000 $ Interest 703,012 $ 646,013 586,262 523,513 457,512 1,177,313 4,093,625 $ Total 1,843,012 1,841,013 1,841,262 1,843,513 1,842,512 9,207313 18,418,625 Typically, the general fund has been used to liquidate compensated absences except for items related to the solid waste enterprise fund. Health Department Discretely Presented Component Unit Long-term debt activity for the Health Department for the year ended June 30, 2012, was as follows: Beginning Ending Due Within Due After ~n.'tn n_"'nl A n r~ ;Ilt.£'I n~l~~na A r1r1~+~rt.rt. Reductions OO')ol,..,.rt. o r'\rt.n Van n~a Vnn_ 1111 .uaJaJ1"'\o.< ~UUH.IVJJ.~ .LJIUJUJl",\o.< '-.JJ1\,f 1 \,tal 110m Compensated absences $ 41,539 $ 31,965 $ (39,779) $ 33,725 $ 7,868 $ 25,857 33 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 Hospital Authority Discretely Presented Component Unit Long-term debt activity for the Hospital Authority for the year ended June 30, 2012 , was as follows: Beginning Ending Due Within Due After Business-type Activities Balance Additions Reductions Balance One Year One Year Bonds $ 635,000 $ $ (80,000) $ 555,000 $ 80,000 $ 475,000 Notes payable 422,000 (422,000) Capital leases 1,621 000 (327,000) 1294,000 415,000 879,000 Total long-term liabilities $2678,000 $ $ (829000) $ 1,849,000 $ 495,000 $ 1354,000 The terms and due dates of the Hospital A.uthority's long-term debt, including capital lease obligations, at June 30, 2012, are as follows: • 1997 Series Revenue Certificates, at varying rates of interest from 3.85% to 5.35%, principal maturing in varying annual amounts, due July 2017, secured by County commitment to provide revenues, through tax levy, sufficient to meet obligations under the bond contract and to pay all reasonable operating expenses of the Authority. The original proceeds of$I,385,000 were used to build a 21 bed skilled nursing unit. • 2001 Series Revenue Anticipation certificate No.1, at 7.75% interest rate, due August 2011, payable in installments of $3,000, collateralized by real estate and guaranteed by Morgan County Board of Commissioners. • 2001 Series Revenue Anticipation certificate No.2, at 5.00% interest rate, due August 2011, payable in installments of $32,000, collateralized by rea] estate and guaranteed by Morgan County Board of Commissioners. • Note payable for line-of-credit refinance at 3.229% interest rate, due July 5, 2012, payable in seven interest only installments then four installments of $15,000 with the remaining balance due at maturity, collateralized by real property. • Capital lease obligation, at varying rates of inputed interest from 3.48% to 5.37%, collateralized by leased equipment. 34 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30, 2012 The annual requirements to amortize long~term debt as of June 30,2012 are as follows: Pnrl1nH [PHONE REDACTED] FlO [PHONE REDACTED] ~25 c O<.,E STREI"T. NE P.o. 2396 G"'NUSv 30500 V.TescAR REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS December 28, 20 12 Board of Commissioners MORGAN COUNTY, GEORGIA Madison, Georgia We have audited the financial statements of the governmental activities, the business·type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund infonnation of MORGAN COUNTY, GEORGIA as of and for the year ended June 30, 2012, which collectively comprise the MORGAN COUNTY, GEORGIA's basic financial statements and have issued our report thereon dated December 28, 20 12.0ur report was modified to include a reference to other auditors. 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. Other auditors audited the financial statements of the Morgan County Health Department and Morgan County Hospital Authority. as described in our report on MORGAN COUNTY, GEORGIA's basic financial statements. This report does not include the results of the other auditor's testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Control Ovcr Financial Reporting Management of MORGAN COUNTY, GEORGIA, is responsible for establishi ng and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered MORGAN COUNTY, GEORGIA's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of MORGAN COUNTY, GEORGIA's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the MORGAN COUNTY, GEORG LA 's internal control over fmancial reponing. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the nonnal course of perfonning their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency. or a combination of deficiencies, in internal control such that there is a reasonable 84 ---PAGE BREAK--- 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 identify 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. However, we identified certain deficiencies in internal control over financial reporting, described in the accompanying schedule of findings and questioned costs as finding 2012-02 that we consider to be significant deficiencies in internal control over financial reporting. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Compliance and Other Matters As part of obtaining reasonable assurance about whether MORGAN COUNTY, GEORGIA's financial statements are free of material misstatement, we perfonned 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 detennination 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 one instance of noncompliance or other matters that is required to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings and questioned costs as finding 2012-0 I. MORGAN COUNTY, GEORGIA's response to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit MORGAN COUNTY, GEORGIA's response, and accordingly, we express no opinion on it. This report is intended solely for the information and use of management, the Board of Commissioners, others within the entity, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. 85 ---PAGE BREAK--- + BatesCarter pti 770_532..9 131 [PHONE REDACTED] 525 c..N"'-Cl ST