Document Pickenscountyga_doc_e7bf47f7d7

PICKENS COUNTY, GEORGIA ANNUAL FINANCIAL REPORT (WITH INDEPENDENT AUDITORS' REPORT) Year Ended December 31, 2017 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA ANNUAL FINANCIAL REPORT For The Fiscal Year Ended December 31, 2017 TABLE OF CONTENTS Page FINANCIAL SECTION Independent Auditors' Report i-iii Management's Discussion and Analysis iv-xi BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS Statement of Net Position 1 FUND FINANCIAL STATEMENTS Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances Statement of Activities 2 Balance Sheet - Governmental Funds 3 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 4 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental 5 of Governmental Funds to the Statement of Activities 6 Statement of Net Position - Proprietary Funds 7 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds 8 Statement of Cash Flows - Proprietary Funds 9 Statement of Assets and Liabilities - Fiduciary Funds 10 COMPONENT UNITS Combining Statement of Net Position 11 Combining Statement of Activities 12 NOTES TO FINANCIAL STATEMENTS 13 - 49 REQUIRED SUPPLEMENTARY INFORMATION Schedule of the Net Pension Liability - ACCG Defined Benefit Plan 50 Schedule of Contributions - ACCG Defined Benefit Plan 51 Schedule of Notes to Required Supplementary Information - ACCG Defined Benefit Plan 52 Schedule of Other Post Employment Benefits Funding Progress 53 Budgetary Comparison Schedule - General Fund 54 - 55 COMBINING STATEMENTS AND SCHEDULES NONMAJOR GOVERNMENTAL FUNDS Combining Balance Sheet 56 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 57 ---PAGE BREAK--- Supplemental Budgetary Comparison Schedule -Law Library Special Revenue Fund 58 -Sheriff's Law Enforcement Special Revenue Fund 59 -Emergency Telephone System Special Revenue Fund 60 -Drug Task Force Special Revenue Fund 61 -Hotel/Motel Tax Special Revenue Fund 62 -Restricted Programs Special Revenue Funds 63 -Community Development Block Grant Capital Projects Fund 64 FIDUCIARY FUNDS Combining Statement of Assets and Liabilities - All Agency Funds 65 Combining Statement of Changes in Assets and Liabilities - All Agency Funds 66 SUPPLEMENTAL INFORMATION Schedule of Projects Constructed with Special Purpose Local Option Sales Tax 67-68 Schedule of State Contractual Assistance 69 COMPLIANCE AND INTERNAL CONTROL REPORTS Schedule of Expenditures of Federal Awards 70 Independent Auditors' 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 71-72 Independent Auditors' Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance 73-75 Auditors' Schedule of Findings and Questioned Costs 76-80 ---PAGE BREAK--- iii INDEPENDENT AUDITORS' REPORT June 25, 2018 Board of Commissioners PICKENS COUNTY, GEORGIA Jasper, Georgia Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of PICKENS COUNTY, GEORGIA, as of and for the year ended December 31, 2017, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the PICKENS COUNTY HEALTH DEPARTMENT, a component unit of the County, as of and for the year then ended December 31, 2017, which represent 0.12%, 0.04%, and 0.80%, respectively, of the assets, net position, and revenues of the aggregate discretely presented component units. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the PICKENS COUNTY HEALTH DEPARTMENT, is based solely 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 perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers ---PAGE BREAK--- internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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 PICKENS COUNTY, GEORGIA, as of December 31, 2017, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, Schedule of the Net Pension Liability - ACCG Defined Benefit Plan, Schedule of Contributions - ACCG Defined Benefit Plan, Schedule of Notes to Required Supplementary Information - ACCG Defined Benefit Plan, Schedule of Other Post Employment Benefits Funding Progress, and Budgetary Comparison Schedule - General Fund listed in the table of contents be presented to supplement the basic financial statements. Such information, 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 and the other auditors have applied certain limited procedures to the required supplementary information 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 information and comparing the information 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 information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. iii ii ---PAGE BREAK--- Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise PICKENS COUNTY, GEORGIA’s basic financial statements. The combining and individual nonmajor fund financial statements, supplemental budgetary comparison schedules, Schedule of Projects Constructed with Special Sales Tax Proceeds which is presented for purposes of additional analysis as required by Official Code of Georgia 48-8­ 121, and the Schedule of State Contractual Services, and are not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements, supplemental budgetary comparison schedules, Schedule of Projects Constructed with Special Sales Tax Proceeds, Schedule of State Contractual Services, and the Schedule of Expenditures of Federal Awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America by us and other auditors. In our opinion, based on our audit, the procedures performed as described above, and the report of the other auditors, the combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 25, 2018 on our consideration of PICKENS COUNTY, GEORGIA's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of PICKENS COUNTY, GEORGIA's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering PICKENS COUNTY, GEORGIA’s internal control over financial reporting and compliance. iii ---PAGE BREAK--- MANAGEMENT’S DISCUSSION AND ANALYSIS As management of Pickens County, Georgia (the "County"), we provide this narrative overview and analysis of the financial activities of the County for the year ended December 31, 2017. The County's financial performance is discussed and analyzed within the context of the accompanying financial statements and disclosures following this section. FINANCIAL HIGHLIGHTS The County's assets exceeded its liabilities by $51,776,826 (net position) for the year reported. This represents a decrease of $(1,172,629) from the previous year. Total net position is comprised of the following: 1. Net investment in capital assets equaled $49,599,280. 2. Net position of $4,675,134 are restricted for debt service, capital outlay, or by other constraints imposed by law or regulations. 3. At the end of 2017, unrestricted net position balance decreased by $(2,780,069) from $282,481 to $(2,497,588). The County's governmental funds reported total ending fund balance of $12,765,058. This compares to the prior year ending fund balance of $10,633,244 showing an increase of $2,131,814 during the current year. At the end of 2017, unassigned fund balance for the County's governmental funds was $8,013,069. OVERVIEW OF THE FINANCIAL STATEMENTS The Management's Discussion and Analysis introduces the County's basic financial statements. The basic financial statements consist of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The basic financial statements present two different views of the County through the use of government – wide statements and fund financial statements. This report contains other supplemental information that will enhance the reader's understanding of the financial condition of the County. Government-wide Financial Statements The government-wide financial statements are designed to provide the reader with a broad overview of the County's finances and are more comparable to the financial statements of private- sector businesses. The government-wide statements provide both short and long-term information about the County's financial status as a whole. Government-wide statements report the County's net position and how it has changed. Net position is the difference between the County's total assets and total liabilities. Changes in net position indicate the improvement (an increase) or deterioration (a decrease) in the County's financial condition. The first of these government-wide statements is the Statement of Net Position. This statement presents information that includes all of the County's assets and liabilities, with the difference reported as total net position. iv ---PAGE BREAK--- The second government-wide statement is the Statement of Activities which indicates how the County's net position changed during the current fiscal year. This report is designed to show the financial reliance of the County's activities and functions on revenues provided by County taxpayers. The government-wide statements are divided into governmental activities, business-type activities, and component units. Governmental activities include most of the County's basic services such as general administration, public safety, public works, court systems, culture and recreation, health and welfare, and housing and development. Property taxes, sales taxes, and state and federal grants finance most of these activities. Business type activities are those that the County charges customers to provide. These include water services and the Pickens County Airport. Component Units for the County include the Development Authority and the Pickens County Department of Public Health. Fund Financial Statements Pickens County, like all other governmental entities in Georgia, uses fund accounting to ensure compliance with finance-related laws and regulations. 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. All of the funds of the County can be classified as governmental funds, proprietary funds, or fiduciary funds. Governmental funds are used to account for those functions reported as governmental activities in the government-wide financial statements. These funds focus on how assets can readily be converted into cash and the amount of funds left at year-end that will be available for spending in the next fiscal year. As a result, the governmental fund financial statements give the reader a detailed short-term view that helps determine if there are financial resources available to finance the County's programs. Most of the County's basic services are accounted for in governmental funds. Proprietary funds are used to report the functions presented as business-type activities in the government-wide financial statements. Pickens County uses enterprise funds to account for the Water Department and the Airport. Fiduciary Funds are used to account for resources held for the benefit of parties outside the Government. Pickens County's fiduciary funds are considered agency funds. Notes to the Financial Statements provide additional information that is essential to a full understanding of the data presented in both the government-wide and fund financial statements. The notes to the financial statements begin on page 13 of this report. v ---PAGE BREAK--- GOVERNMENT-WIDE FINANCIAL ANALYSIS The table below presents the County's condensed Statement of Net Position. Comparison analysis is made from the year ended December 31, 2017 to the year ended December 31, 2016 as required by GASB Statement No. 34. Comparative Schedule of Net Position December 31 Governmental Activities Business-type Activities Total Primary Government 2017 2016 2017 2016 2017 2016 Capital assets (net of depreciation) $ 43,061,010 $ 43,835,892 $ 18,243,550 $ 18,610,371 $ 61,304,560 $ 62,446,263 Current and other assets 14,676,436 12,394,186 (2,835,172) (2,516,390) 11,841,264 9,877,796 Total Assets 57,737,446 56,230,078 15,408,378 16,093,981 73,145,824 72,324,059 Total deferred outflows of resources 1,000,001 - - - 1,000,001 - Long-term liabilities 10,962,290 3,060,636 10,233,171 - 21,195,461 3,060,636 Other liabilities 940,039 5,185,707 179,439 11,128,261 1,119,478 16,313,968 Total liabilities 11,902,329 8,246,343 10,412,610 11,128,261 22,314,939 19,374,604 Total deferred inflows of resources 54,060 - - - 54,060 - Net Position: Net investment in capital assets 41,582,225 41,895,236 8,017,055 7,711,102 49,599,280 49,606,338 Restricted 4,675,134 3,060,636 - - 4,675,134 3,060,636 Unrestricted 523,699 3,027,863 (3,021,287) (2,745,382) (2,497,588) 282,481 Total net position $ 46,781,058 $ 47,983,735 $ 4,995,768 $ 4,965,720 $ 51,776,826 $ 52,949,455 Over time, net position serves as a useful indicator of a government's financial position. The County's combined net position (government and business-type activities) totaled $51,776,826 at December 31, 2017 compared to $52,949,455 at December 31, 2016. The total decrease was $(1,172,629). The largest portion of net position, $49,599,280 reflects the County's investment in capital assets (land, buildings, machinery and equipment) less accumulated depreciation and any related debt still outstanding that was issued to acquire those assets. The County uses these capital assets to provide services to citizens; therefore, these assets are not available for future spending. Although the County's investments in capital assets are reported net of outstanding debt, the resources needed to repay the debt must be provided by other sources as the capital assets cannot be liquidated to pay the liabilities. The County has $4,675,134 of restricted net position that is subject to external restrictions, constitutional provisions, or enabling legislation on how they can be used. The remaining portion of net position represents $(2,497,588) of unrestricted net position. The table below presents the County's condensed Statement of Activities for the year ended December 31, 2017 with comparative amounts for the year ended December 31, 2016. vi ---PAGE BREAK--- Comparative Schedule of Changes in Net Position December 31 Governmental Activities Business-type Activities Total Primary Government 2017 2016 2017 2016 2017 2016 REVENUES Program revenues Charges for services $ 5,953,786 $ 5,782,752 $ 2,710,643 $ 2,581,815 $ 8,664,429 $ 8,364,567 Operating grants and contributions 4,518,129 3,760,012 - - 4,518,129 3,760,012 Capital grants and contributions 359,286 165,347 157,770 531,386 517,056 696,733 Subtotal for program revenues 10,831,201 9,708,111 2,868,413 3,113,201 13,699,614 12,821,312 General revenues Property taxes 12,102,775 12,102,447 - - 12,102,775 12,102,447 Sales taxes 7,694,259 7,065,668 - - 7,694,259 7,065,668 Insurance premium tax 1,496,738 1,397,559 - - 1,496,738 1,397,559 Franchise tax - 133,447 - - - 133,447 Other taxes 384,426 234,882 - - 384,426 234,882 Interest and investment earnings 10,452 25,909 3 7 10,455 25,916 Other revenue 538,990 363,124 - - 538,990 363,124 Grants and contributions not restricted to a specific program - 21,936 - - - 21,936 Gain on sale of capital assets 14,697 24,372 - - 14,697 24,372 Subtotal for general revenues 22,242,337 21,369,344 3 7 22,242,340 21,369,351 Total revenues 33,073,538 31,077,455 2,868,416 3,113,208 35,941,954 34,190,663 EXPENSES Program expenses General government 4,393,388 3,936,931 - - 4,393,388 3,936,931 Judicial 6,425,440 5,103,493 - - 6,425,440 5,103,493 Public safety 14,598,060 12,656,456 - - 14,598,060 12,656,456 Public works 6,311,425 6,116,049 - - 6,311,425 6,116,049 Health & welfare 913,171 608,533 - - 913,171 608,533 Recreation & culture 1,113,634 1,020,431 - - 1,113,634 1,020,431 Housing and development 755,788 664,209 - - 755,788 664,209 Interest and paying agent fees 87,911 104,003 - - 87,911 104,003 Water - - 2,401,115 2,206,324 2,401,115 2,206,324 Airport - - 580,662 496,946 580,662 520,816 Total expenses 34,598,817 30,210,105 2,981,777 2,703,270 37,580,594 32,913,375 Change in net position before transfers (1,525,279) 867,350 (113,361) 409,938 (1,638,640) 1,277,288 Transfers (143,409) - 143,409 - - - Change in net position (1,668,688) 867,350 30,048 409,938 (1,638,640) 1,277,288 Net position, beginning of year 47,983,735 47,116,385 4,965,720 4,555,781 52,949,455 52,406,369 Change in accounting principle - - - - - (2,152,478) Prior period adjustment 466,011 - - - 466,011 (458,524) Net position, beginning as restated 48,449,746 47,116,385 4,965,720 4,555,781 53,415,466 49,795,367 Net position, end of year $ 46,781,058 $ 47,983,735 $ 4,995,768 $ 4,965,720 $ 51,776,826 $ 52,949,455 Governmental Activities Revenues such as property taxes, insurance premium tax and other taxes, continue as the main source of revenue for governmental activities which totaled $22,242,337 in 2017 compared to $21,369,344 in 2016. This change is an increase of 4.09%. Governmental Activities Expenses by function as reflected in the table above show that during 2017, the County expended 42% for Public Safety, 19% for Judicial, 18% for Public Works, 13% for General Government, 3% for Culture and Recreation, 2% for Housing and Development, 3% for Health and Welfare, and 1% for Interest on Long-term debt. As a comparative, during fiscal year 2016, the County expended 42% for Public Safety, 17% for Judicial, 20% for Public Works, 13% for General Government, 3% for Culture and Recreation, 2% for Housing and Development, 2% for Health and Welfare, and 1% for Interest on Long-term debt. vii ---PAGE BREAK--- Business-type activities increased the County's net position by $30,048. *Due to rounding, charts may not always equal 100% viii ---PAGE BREAK--- FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS The County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds: The focus of the County's governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. This information is useful in assessing the Government's financing requirements. Specifically, unassigned fund balance can be a useful measure of a government's net resources available for spending at the end of the fiscal year. The major governmental funds are the General Fund and SPLOST. The General Fund is the chief operating fund of the County. It is used to account for all governmental financial resources not restricted by state or federal laws, local ordinances, or other imposed requirements. The County's total governmental funds reported ending fund balance of $8,703,790. This compares to the prior year ending fund balance of $7,697,608 showing an increase of $1,006,182 during the current year. At the end of fiscal year 2017, unassigned fund balance for the County's governmental funds was $8,013,069. The County's other major governmental fund is the SPLOST fund. The fund balance of the SPLOST fund increased by $1,393,462 during the current fiscal year. Collections for 2014 SPLOST began on July 1, 2014. Based on the approved 2014 SPLOST referendum, the majority of the 2014 SPLOST revenues are allocated for capital road projects and public safety. The SPLOST fund has an ending fund balance of $3,641,894 which is restricted for capital projects as outlined in the 2014 SPLOST referendum. In 2017, governmental revenues increased $2,217,724 from 2016. This increase is primarily due to activity in the General Fund related to an increase in revenues from taxes, licenses and permits and charges for services. There was an 8.9% increase in revenues in the SPLOST fund. ix ---PAGE BREAK--- Proprietary funds. The County's proprietary fund statements provide the same type of information presented in the government-wide statements but in more detail. CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets. The County's capital assets for governmental and business-type activities as of December 31, 2017 total $61,304,560 (net of accumulated depreciation). These assets include land, land improvements, infrastructure, buildings, machinery and equipment, furniture and fixtures, vehicles and construction in progress. Pickens County's Capital Assets (Net of depreciation) Governmental Activities Business-type Activities Total Primary Government 2017 2016 2017 2016 2017 2016 Land and improvements $ 4,713,950 $ 4,718,417 $ 2,121,519 $ 2,555,674 $ 6,835,469 $ 7,274,091 Construction in progress - 9,606 6,091,502 5,998,802 6,091,502 6,008,408 Buildings 29,925,985 30,728,570 246,713 (101,220) 30,172,698 30,627,350 Machinery & equipment 2,314,850 2,473,576 575,699 440,912 2,890,549 2,914,488 Furniture & fixtures - - - - - ­ Vehicles 1,463,404 1,206,425 114,258 110,533 1,577,662 1,316,958 Infrastructure 4,642,821 4,699,298 9,093,859 9,605,670 13,736,680 14,304,968 Total Assets $ 43,061,010 $ 43,835,892 $ 18,243,550 $ 18,610,371 $ 61,304,560 $ 62,446,263 Detailed information on the County's capital assets can be found in Note 6 of the basic financial statements. Long-term Debt. During 2017, the long-term debt of Pickens County's governmental activities increased $3,642,876. The inception of capital leases for the purchase of vehicles and equipment totaled $450,000 during 2017. The notes payable category decreased due to the continual repayment of debt. The net pension liability increased $4,761,700 due to the implementaion of GASB 68, and the net OPEB obligation increased by $57,524 during 2017. Long-term debt decreased in business-type activities in the amount of $(672,026). Pickens County's Outstanding Debt Bonds Payable, Capital Leases, Notes Payable, Claims, and Other Debts Governmental Activities Business-type Activities Total Primary Government 2017 2016 2017 2016 2017 2016 Bonds payable $ - $ - $ 10,187,637 $ 10,818,273 $ 10,187,637 $ 10,818,273 Contracts payable - - - 80,995 - 80,995 Capital leases 1,024,185 1,080,564 38,858 - 1,063,043 1,080,564 Notes payable 454,600 860,092 - - 454,600 860,092 Landfill closure/postclosure 365,500 244,733 - - 365,500 244,733 Compensated absences 245,727 214,950 6,676 5,929 252,403 220,879 Net pension obligation 7,113,681 3,218,002 - - 7,113,681 3,218,002 Net OPEB obligation 1,758,597 1,701,073 - - 1,758,597 1,701,073 Totals $ 10,962,290 $ 7,319,414 $ 10,233,171 $ 10,905,197 $ 21,195,461 $ 18,224,611 Additional information regarding Pickens County’s long-term debt can be found in Note 7 on pages 31 through 35 of this report. ECONOMIC FACTORS AND THE 2018 BUDGET  The 2017 millage rate decreased from 7.95 to 7.88 per $1,000 of valuation. The 2017 millage rate was a decrease of 0.8%, however the 2017 tax digest reflected an increase in overall valuation. The 2017 total County taxes levied increased $82,217 as compared to 2016. x ---PAGE BREAK---  The 2017 final budget shown in this report was increased by $170,622 to $25,535,521 to recognize an increase in tax revenues and charges for services.  The 2018 budget was approved and adopted by the Board of Commissioners on December 21, 2017. The 2018 operating budget increased from $25,535,521 to $26,037,865, an increase of $502,344. The majority of the revenue increase is in tax revenues, title ad valorem tax, license and permit fees and charges for services. The majority of expenditure increase is in contingencies, purchased services and salaries and benefits.  budgetary reports are provided to all department heads, elected officials and the Board of Commissioners. Pickens County management continues to monitor revenue collection rates and control budgetary spending in an effort to provide services at or above current levels without further burdening the county taxpayers. REQUESTS FOR INFORMATION This report is designed to provide the reader a general overview of the County's finances and demonstrate Management's commitment to public accountability. Questions concerning any of the information found in this report or requests for additional information should be directed to Faye Harvey, Finance Director for Pickens County Board of Commissioners, 1266 East Church Street, Suite 175, Jasper, Georgia 30143. xi ---PAGE BREAK--- PICKENS COUNTY, GEORGIA STATEMENT OF NET POSITION December 31, 2017 PRIMARY GOVERNMENT ASSETS GOVERNMENTAL ACTIVITIES BUSINESS-TYPE ACTIVITIES TOTAL COMPONENT UNITS Cash $ 8,276,962 $ 600 $ 8,277,562 $ 714,754 Investments 22,521 - 22,521 - Capital lease receivable - - - 168,000 Receivables (net of allowance for uncollectibles) 3,025,504 266,304 3,291,808 39,735 Internal balances 3,179,057 (3,179,057) - - Inventories 39,326 69,229 108,555 4,252 Prepaid items 37,529 - 37,529 - Restricted assets: Cash 95,537 - 95,537 - Customer deposits - 7,752 7,752 - Capital lease receivable - - - 2,688,000 Capital assets: Capital assets not being depreciated 4,271,996 7,782,096 12,054,092 - Capital assets being depreciated 63,209,962 19,599,158 82,809,120 118,864 Less: accumulated depreciation (24,420,948) (9,137,704) (33,558,652) (68,894) Capital assets, net of depreciation 43,061,010 18,243,550 61,304,560 49,970 TOTAL ASSETS 57,737,446 15,408,378 73,145,824 3,664,711 DEFERRED OUTFLOWS OF RESOURCES Pension expense 1,000,001 - 1,000,001 102,662 TOTAL DEFERRED OUTFLOWS OF RESOURCE 1,000,001 - 1,000,001 102,662 TOTAL ASSETS & DEFERRED OUTFLOWS 58,737,447 15,408,378 74,145,825 3,767,373 LIABILITIES Accounts payable 803,452 142,266 945,718 50,699 Accrued interest payable - 13,248 13,248 - Other accrued items 136,587 19,675 156,262 - Unearned revenue - 4,250 4,250 - Noncurrent liabilities: Due within one year Compensated absences payable 172,009 4,673 176,682 6,267 Accrued landfill closure / postclosure 20,000 - 20,000 - Notes payable 419,057 - 419,057 - Capital leases payable 474,127 31,226 505,353 - Revenue bonds payable - 495,000 495,000 68,870 Due in more than one year Compensated absences payable 73,718 2,003 75,721 6,266 Net pension liability 7,113,681 - 7,113,681 412,161 Net OPEB obligation 1,758,597 - 1,758,597 - Accrued landfill closure / postclosure 345,500 - 345,500 - Notes payable 35,543 - 35,543 - Capital leases payable 550,058 7,632 557,690 - Revenue bonds payable - 9,692,637 9,692,637 1,726,255 TOTAL LIABILITIES 11,902,329 10,412,610 22,314,939 2,270,518 DEFERRED INFLOWS OF RESOURCE Pension expense 54,060 - 54,060 1,011,879 TOTAL DEFERRED INFLOWS OF RESOURCES 54,060 - 54,060 1,011,879 TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 11,956,389 10,412,610 22,368,999 3,282,397 NET POSITION Net investment in capital assets 41,582,225 8,017,055 49,599,280 49,970 Restricted for: Capital outlay projects 4,160,223 - 4,160,223 - Judicial programs 281,725 - 281,725 - Public safety programs 198,692 - 198,692 - Health and welfare programs - - - 19,109 Housing and development programs 34,494 - 34,494 - Unrestricted 523,699 (3,021,287) (2,497,588) 415,897 TOTAL NET POSITION $ 46,781,058 $ 4,995,768 $ 51,776,826 $ 484,976 The accompanying notes are an integral part of this statement. 1 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA STATEMENT OF ACTIVITIES For the Year Ended December 31, 2017 ....NET (EXPENSE) AND CHANGES IN NET POSITION.... ..........PRIMARY GOVERNMENT.............. OPERATING CAPITAL CHARGES FOR GRANTS AND GRANTS AND GOVERNMENTAL BUSINESS-TYPE COMPONENT FUNCTIONS/PROGRAMS PRIMARY GOVERNMENT EXPENSES SERVICES CONTRIBUTIONS CONTRIBUTIONS ACTIVITIES ACTIVITIES TOTAL UNITS GOVERNMENTAL ACTIVITIES General government Judicial Public safety Public works Public health and welfare Recreation and culture Housing and development Interest $ 4,393,388 6,425,440 14,598,060 6,311,425 913,171 1,113,634 755,788 87,911 $ 896,509 1,411,195 2,797,779 424,710 17,918 159,836 245,839 - $ 317,348 3,566,863 449,557 - 184,361 - - - $ - 72,559 550 199,726 86,451 - - - $ (3,179,531) (1,374,823) (11,350,174) (5,686,989) (624,441) (953,798) (509,949) (87,911) $ - - - - - - - - $ (3,179,531) (1,374,823) (11,350,174) (5,686,989) (624,441) (953,798) (509,949) (87,911) $ - - - - - - - - Total Governmental Activities BUSINESS-TYPE ACTIVITIES 34,598,817 5,953,786 4,518,129 359,286 (23,767,616) - (23,767,616) - Water Airport Total Business-Type Activities 2,401,116 580,662 2,981,778 2,405,685 304,959 2,710,644 - - - - 157,770 157,770 - - - 4,569 (117,933) (113,364) 4,569 (117,933) (113,364) - - - TOTAL PRIMARY GOVERNMENT $ 37,580,595 $ 8,664,430 $ 4,518,129 $ 517,056 (23,767,616) (113,364) (23,880,980) - COMPONENT UNITS Health Department Development Authority TOTAL COMPONENT UNITS $ 588,876 53,865 $ 642,741 $ $ 287,993 173,000 460,993 $ $ 395,696 - 395,696 $ $ - - - - - - - - - - - - 94,813 119,135 213,948 GENERAL REVENUES Property taxes Sales taxes Insurance premium taxes Real estate recording taxes Other taxes Total taxes Unrestricted investment earnings Gain on sale of capital assets TRANSFERS TOTAL GENERAL REVENUES AND TRANSFERS 12,102,775 7,694,259 1,496,738 384,426 538,990 22,217,188 10,452 14,697 (143,409) 22,098,928 - - - - - - 3 - 143,409 143,412 12,102,775 7,694,259 1,496,738 384,426 538,990 22,217,188 10,455 14,697 - 22,242,340 - - - - - - - - 1,118 1,118 CHANGES IN NET POSITION NET POSITION, Beginning PRIOR PERIOD ADJUSTMENT NET POSITION, Ending $ (1,668,688) 47,983,735 466,011 46,781,058 $ 30,048 4,965,720 - 4,995,768 $ (1,638,640) 52,949,455 466,011 51,776,826 $ 215,066 269,910 - 484,976 The accompanying notes are an integral part of this statement. 2 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2017 ASSETS Cash Investments Receivables (net of allowance for uncollectibles) Interfund receivables Prepaid items Inventories Restricted assets: Cash TOTAL ASSETS GENERAL $ 4,457,228 - 2,264,755 3,580,462 37,529 39,326 95,537 10,474,837 SPLOST $ 3,371,377 - 440,730 - - - - 3,812,107 OTHER NONMAJOR GOVERNMENTAL FUNDS $ 448,357 22,521 320,019 262,494 - - - 1,053,391 TOTAL GOVERNMENTAL FUNDS $ 8,276,962 22,521 3,025,504 3,842,956 37,529 39,326 95,537 15,340,335 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 10,474,837 $ 3,812,107 $ 1,053,391 $ 15,340,335 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities Accounts payable Other accrued items Interfund payables TOTAL LIABILITIES DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes TOTAL DEFERRED INFLOWS OF RESOURCES $ 588,109 64,908 146,689 799,706 971,341 971,341 $ 3,399 - 166,814 170,213 - - $ 211,941 71,680 350,396 634,017 - - $ 803,449 136,588 663,899 1,603,936 971,341 971,341 TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 1,771,047 170,213 634,017 2,575,277 FUND BALANCES Nonspendable: Prepaid expenditure Inventories Restricted: Capital outlay projects Judicial programs Public safety programs Housing and development programs Unassigned TOTAL FUND BALANCES TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES 37,529 39,326 518,329 95,537 - - 8,013,069 8,703,790 $ 10,474,837 - - 3,641,894 - - - - 3,641,894 $ 3,812,107 - - - 186,188 198,692 34,494 - 419,374 $ 1,053,391 37,529 39,326 4,160,223 281,725 198,692 34,494 8,013,069 12,765,058 $ 15,340,335 The accompanying notes are an integral part of this statement. 3 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION December 31, 2017 Total Fund Balances for Governmental Funds (page 3) $ 12,765,058 Total net position reported for governmental activities in the statement of net position is different because: Capital assets used in the governmental activities are not financial resources and therefore are not reported in the funds. 43,061,010 Revenues in the statement of activities that do not provide current financial resources are reported as unavailable revenues in the funds. Property Taxes 971,341 971,341 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 liability Net deferred inflows (outflows) - pension expense Compensated absences Capital leases Net OPEB obligation Notes payable Accrued landfill closure/postclosure (7,113,681) 945,941 (245,727) (1,024,185) (1,758,597) (454,600) (365,500) (10,016,349) Total net position of governmental activities (page 1) $ 46,781,058 The accompanying notes are an integral part of this statement. 4 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended December 31, 2017 OTHER NONMAJOR TOTAL GOVERNMENTAL GENERAL SPLOST GOVERNMENTAL FUNDS FUNDS REVENUES Taxes $ 17,490,889 $ 4,526,031 $ 62,938 $ 22,079,858 Licenses and permits 413,660 - - 413,660 Intergovernmental 2,450,588 - 2,390,185 4,840,773 Fines and forfeitures 303,313 - 588,233 891,546 Charges for services 3,611,856 - 934,477 4,546,333 Contributions and donations 7,549 - 15,217 22,766 Investment income 9,079 13,875 1,376 24,330 Miscellaneous 86,650 - 15,596 102,246 TOTAL REVENUES 24,373,584 4,539,906 4,008,022 32,921,512 EXPENDITURES Current Expenditures General government 3,232,962 - - 3,232,962 Judicial 3,170,477 - 1,962,311 5,132,788 Public safety 10,868,719 29,293 1,268,512 12,166,524 Public works 2,244,079 1,991,594 - 4,235,673 Public health and welfare 321,127 - 560,350 881,477 Recreation and culture 924,294 - - 924,294 Housing and development 543,648 - 8,915 552,563 Intergovernmental - 1,017,048 567,336 1,584,384 Capital outlay 874,918 399,484 46,646 1,321,048 Debt service Principal 684,095 154,576 73,200 911,871 Interest 78,540 4,457 4,913 87,910 TOTAL EXPENDITURES 22,942,859 3,596,452 4,492,183 31,031,494 EXCESS (DEFICIENCY) OF REVENUES OVER(UNDER) EXPENDITURES 1,430,725 943,454 (484,161) 1,890,018 OTHER FINANCING SOURCES (USES) Sale of county property 14,690 8 - 14,698 Capital lease proceeds - 450,000 - 450,000 Transfers in 572 - 614,048 614,620 Transfers out (757,457) - (572) (758,029) TOTAL OTHER FINANCING SOURCES (USES) (742,195) 450,008 613,476 321,289 NET CHANGE IN FUND BALANCES 688,530 1,393,462 129,315 2,211,307 FUND BALANCES, Beginning of year 7,697,608 2,248,432 687,204 10,633,244 PRIOR PERIOD ADJUSTMENT 317,652 - (397,145) (79,493) FUND BALANCES, Beginning, as restated 8,015,260 2,248,432 290,059 10,553,751 FUND BALANCES, End of year $ 8,703,790 $ 3,641,894 $ 419,374 $ 12,765,058 The accompanying notes are an integral part of this statement. 5 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2017 Net change in fund 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 and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Capital outlays Depreciation expense Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes Revenues reported in the funds that relate to prior years are not reported as revenue in the statement of activities. Property taxes 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 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 Accrued landfill closure/postclosure, current year Accrued landfill closure/postclosure, prior year 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 OPEB obligation is not available during the current period and therefore is not reported in the funds. End of year Beginning of year Changes in the ACCG pension plan actuarial assumptions are reported in deferred outflows. End of year Beginning of year Changes in the ACCG pension plan actuarial assumptions are reported in deferred inflows. End of year Beginning of year Net pension liability is not available during the current period and therefore is not reported in the funds. End of year Beginning of year Rounding Changes in net position of governmental activities (page 2) The accompanying notes are an integral part of this statement. 6 $ 2,211,307 1,321,048 (2,095,930) (774,882) 971,341 971,341 (834,011) (834,011) (450,000) 911,871 (365,500) 244,733 341,104 (245,727) 214,950 (30,777) (1,758,597) 1,701,073 (57,524) 1,000,001 (612,135) 387,866 (54,060) 66,632 12,572 (7,113,681) 3,218,002 (3,895,679) $ (1,668,688) ---PAGE BREAK--- PICKENS COUNTY, GEORGIA STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2017 BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS WATER AIRPORT ASSETS FUND AUTHORITY TOTAL Current Assets Cash $ 600 $ - $ 600 Receivables (net of allowance for uncollectibles) 262,603 3,701 266,304 Interfund receivables 111,230 - 111,230 Inventories 27,401 41,828 69,229 Restricted assets: Customer deposits 7,752 - 7,752 TOTAL CURRENT ASSETS 409,586 45,529 455,115 Noncurrent Assets Capital assets Capital assets not being depreciated 383,684 7,398,412 7,782,096 Capital assets being depreciated 17,853,460 1,745,698 19,599,158 Less: accumulated depreciation (8,100,037) (1,037,667) (9,137,704) TOTAL CAPITAL ASSETS (NET OF ACCUMULATED DEPRECIATION) 10,137,107 8,106,443 18,243,550 TOTAL NONCURRENT ASSETS 10,137,107 8,106,443 18,243,550 TOTAL ASSETS 10,546,693 8,151,972 18,698,665 LIABILITIES Current Liabilities Accounts payable 128,818 13,448 142,266 Other accrued items 16,384 3,291 19,675 Interfund payables 2,494,313 795,974 3,290,287 Unearned revenue - 4,250 4,250 Compensated absences payable 4,673 - 4,673 Capital lease payable 31,226 - 31,226 Revenue bonds payable 495,000 - 495,000 Accrued interest payable 13,248 - 13,248 TOTAL CURRENT LIABILITIES 3,183,662 816,963 4,000,625 Noncurrent Liabilities Compensated absences payable 2,003 - 2,003 Capital lease payable 7,632 - 7,632 Revenue bonds payable 6,270,000 3,422,637 9,692,637 TOTAL NONCURRENT LIABILITIES 6,279,635 3,422,637 9,702,272 TOTAL LIABILITIES 9,463,297 4,239,600 13,702,897 NET POSITION Net investment in capital assets 3,333,249 4,683,806 8,017,055 Unrestricted (2,249,853) (771,434) (3,021,287) TOTAL NET POSITION $ 1,083,396 $ 3,912,372 $ 4,995,768 The accompanying notes are an integral part of this statement. 7 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2017 BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS WATER AIRPORT OPERATING REVENUES FUND AUTHORITY TOTAL Charges for sales and services: Pledged as security for revenue bonds: Water sales $ 2,257,784 $ - $ 2,257,784 Water connection fees 140,748 - 140,748 Other 7,154 118 7,272 Charges for services-other - 304,841 304,841 Total Operating Revenues 2,405,686 304,959 2,710,645 OPERATING EXPENSES Salaries and benefits 584,924 87,181 672,105 Other services and charges 1,020,709 214,348 1,235,057 Depreciation 627,626 100,757 728,383 Professional fees - 3,025 3,025 Repairs and maintenance - 31,942 31,942 Total Operating Expenses 2,233,259 437,253 2,670,512 OPERATING INCOME (LOSS) 172,427 (132,294) 40,133 NONOPERATING REVENUES (EXPENSES) Investment earnings 3 - 3 Interest expense (167,858) (143,409) (311,267) Total Nonoperating Revenues (Expenses) (167,855) (143,409) (311,264) INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS 4,572 (275,703) (271,131) Capital grants - 157,770 157,770 Transfer in - 143,409 143,409 CHANGE IN NET POSITION 4,572 25,476 30,048 TOTAL NET POSITION, Beginning of year 1,078,824 3,886,896 4,965,720 TOTAL NET POSITION, End of year $ 1,083,396 $ 3,912,372 $ 4,995,768 The accompanying notes are an integral part of this statement. 8 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2017 BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customer Payments to suppliers Payments to employees WATER FUND $ 2,293,026 (752,742) (584,632) A $ AIRPORT UTHORITY 302,661 (133,679) (86,415) TOTAL $2,595,687 (886,421) (671,047) Net cash provided by (used in) operating activities 955,652 82,567 1,038,219 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets Proceeds from capital grants Transfers in Principal payments on debt Interest paid (268,863) - - (525,137) (168,804) (92,700) 157,769 143,409 (147,636) (143,409) (361,563) 157,769 143,409 (672,773) (312,213) Net cash provided (used) by capital and related financing activities (962,804) (82,567) 1,045,371) CASH FLOWS FROM INVESTING ACTIVITIES Investment earnings 3 - 3 Net cash provided (used) by investing activities 3 - 3 Net increase (decrease) in cash and cash equivalents (7,149) - (7,149) CASH, Beginning of year 7,749 - 7,749 CASH, End of year $ 600 $ - $ 600 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 Inventory Customer deposits Increase (decrease) in: Accounts payable Compensated absences Other accrued items Deferred revenue Interfund payables $ 172,427 627,626 (29,683) - (7,752) 34,227 747 (455) (75,225) 233,740 $ (132,294) 100,757 (2,048) (28,456) - (1,742) - 766 (250) 145,834 $ 40,133 728,383 (31,731) (28,456) (7,752) 32,485 747 311 (75,475) 379,574 Net cash provided by (used in) operating activities $ 955,652 $ 82,567 $1,038,219 The accompanying notes are an integral part of this statement. 9 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA STATEMENT OF ASSETS AND LIABILITIES FIDUCIARY FUNDS December 31, 2017 AGENCY FUNDS ASSETS Cash $ 2,434,388 TOTAL ASSETS $ 2,434,388 LIABILITIES Amount held in trust $ 2,434,388 TOTAL LIABILITIES $ 2,434,388 The accompanying notes are an integral part of this statement. 10 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA COMPONENT UNITS COMBINING STATEMENT OF NET POSITION December 31, 2017 HEALTH DEVELOPMENT DEPARTMENT AUTHORITY TOTAL ASSETS Cash $ 352,177 $ 362,577 $ 714,754 Capital lease receivable - 168,000 168,000 Receivables (net of allowance for uncollectibles) 39,735 - 39,735 Inventories 4,252 - 4,252 Non-current assets: Capital lease receivable - 2,688,000 2,688,000 Capital assets: Capital assets being depreciated 118,864 - 118,864 Less: accumulated depreciation (68,894) - (68,894) Capital assets, net of depreciation 49,970 - 49,970 TOTAL ASSETS 446,134 3,218,577 3,664,711 DEFERRED OUTFLOWS OF RESOURCES Pension expense 102,662 - 102,662 TOTAL DEFERRED OUTFLOWS OF RESOURCES 102,662 - 102,662 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 548,796 3,218,577 3,767,373 LIABILITIES Accounts payable 50,699 - 50,699 Noncurrent liabilities: Due within one year Compensated absences payable 6,267 - 6,267 Revenue bonds payable - 68,870 68,870 Due in more than one year Compensated absences payable 6,266 - 6,266 Net pension liability 412,161 - 412,161 Revenue bonds payable - 1,726,255 1,726,255 TOTAL LIABILITIES 475,393 1,795,125 2,270,518 DEFERRED INFLOWS OF RESOURCES Deferred credit for refunding 53,612 958,267 1,011,879 TOTAL DEFERRED INFLOWS OF RESOURCES 53,612 958,267 1,011,879 TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 529,005 2,753,392 3,282,397 NET POSITION Net investment in capital assets 49,970 - 49,970 Restricted for: Public health and welfare 19,109 - 19,109 Unrestricted (49,288) 465,185 415,897 TOTAL NET POSITION $ 19,791 $ 465,185 $ 484,976 The accompanying notes are an integral part of this statement. 11 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA COMPONENT UNITS COMBINING STATEMENT OF ACTIVITIES For the Year Ended December 31, 2017 ....NET (EXPENSE) AND CHANG POSITION.... ES IN NET FUNCTIONS/PROGRAMS COMPONENT UNITS GOVERNMENTAL ACTIVITIES Health Department Development Authority TOTAL COMPONENT UNITS EXPENSES $ 588,876 53,865 $ 642,741 CHARGES FOR SERVICES $ 287,993 173,000 $ 460,993 OPERATING GRANTS AND CONTRIBUTIONS $ 395,696 - $ 395,696 CAPITAL GRANTS AND CONTRIBUTIONS $ ­ - $ ­ HEALTH DEPARTMEN T $ 94,813 - 94,813 DEVELOPMENT AUTHORITY $ ­ 119,135 119,135 TOTAL $ 94,813 119,135 213,948 GENERAL REVENUES Unrestricted investment earnings TOTAL GENERAL REVENUES A CHANGES IN NET POSITION NET POSITION, Beginning NET POSITION, Ending ND TRANSFERS - - 94,813 (75,022) $ 19,791 1,118 1,118 120,253 344,932 $ 465,185 1,118 1,118 215,066 269,910 $ 484,976 The accompanying notes are an integral part of this statement. 12 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of PICKENS COUNTY, GEORGIA 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 County's accounting policies are described below. REPORTING ENTITY The County is a political subdivision of the State of Georgia, located about 60 miles north of Atlanta. The County is governed by three elected Commissioners. 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 County and its component units, entities for which the County is considered to be financially accountable and for which a financial benefit or burden relationship is present. Each discretely presented component unit is reported in a separate column in the combined financial statements to emphasize it is legally separate from the County. Brief descriptions of discretely presented component units follow: PICKENS COUNTY DEPARTMENT OF PUBLIC HEALTH: The Health Department consists of a seven member board including a County Commissioner, and two members as appointed by the County Board of Commissioners. The County has the authority to modify and approve the Health Department's budget and the ability to approve environmental health services. The Health Department has a June 30 year-end and is presented as a governmental fund type component unit. The Health Department's financial statements can be obtained by writing to the Pickens County Health Department, 60 Health Way, Jasper, Georgia 30143. INDUSTRIAL DEVELOPMENT AUTHORITY OF PICKENS COUNTY: The Industrial Development Authority is governed by a seven member board, with a voting majority being appointed by the County. The Authority is responsible for promoting industrial and commercial development within Pickens County. Although the County does not have the authority to approve or modify the budget of the Authority, the County does provide financial support. The Authority is reported as a proprietary fund type component unit. Separate financial statements are not prepared for the Authority. 13 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements the statement of net position and the statement of activities) 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 intergovernmental revenues, are reported separately from business-type activities, which 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 government-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. 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 funds 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 similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 14 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 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 County considers property taxes as available if they are collected by the end of the current fiscal year. Other revenues susceptible to accrual are considered available if they are collected within 60 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, 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 County. The County reports the following major governmental funds: The General Fund is the County’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, passed by the 2014 Special Purpose Local Option Sales Tax referendum, which is reserved for construction of various capital projects. The County reports the following major proprietary funds: The Water Fund accounts for the development, operation, and maintenance of the utility system that provides water services in Pickens County. The Airport Fund accounts for the development, operation, and maintenance of the County airport and its facilities. Additionally, the County reports the following fund types: Special revenue funds are used to account for the proceeds of specific revenue sources that are legally or donor restricted to expenditures for specified purposes. Capital projects funds account for acquisition and construction of the County’s capital assets. 15 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 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 hold for others in an agency capacity. 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 which 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 Water enterprise fund are charges to customers for sales and services. Operating expenses for the Water 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 County’s policy to use restricted resources first, then unrestricted resources as they are needed. ASSETS, LIABILITIES AND NET POSITION OR EQUITY Deposits and Investments The County’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 at 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. 16 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Receivables and Payables Activity between funds that are representative of lending/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 2017 taxes were levied October 4, 2017, and were due December 4, 2017. Interest and penalties are assessed on taxes not paid by this date. The taxes are subject to lien 90 days after the due date. 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. Inventories and Prepaid Items Inventories, consisting of expendable supplies, not held for resale are valued at cost using the first-in/first-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. The costs of governmental fund-type prepaids are recorded as expenditures when consumed rather than when purchased. Bond Premiums and Discounts Premiums and discounts are deferred and amortized over the lives of the bonds and loans on a straight-line basis, which approximates the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. 17 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Restricted Assets Certain proceeds of the County’s capital leases or debt issues are classified as restricted assets on the balance sheet because they are maintained in separate bank accounts and their use is limited by applicable lease or debt agreements. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (i.e. roads, bridges, sidewalks, culverts, and similar items) are reported in the applicable governmental 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 of three years or an aquisition of land at any cost. 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 not 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 Furniture and Fixtures Years 25-50 10-25 3-15 5-20 Assets Vehicles Infrastructure Land Land improvements Years 2-15 10-30 N/A 12-15 Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. The County has one item that qualifies for reporting in this category. The deferred charge in pension expense represents contributions made into the defined benefit pension plan after the measurement date. These contributions will be recognized as pension expense in the next fiscal year. 18 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The County has one type of item that qualifies for reporting in this category, unavailable revenue. Unavailable revenue, arises under the modified accrual basis of accounting and accordingly is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from one source: property taxes. Compensated Absences It is the County’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 government-wide and proprietary financial statements. The liability of the proprietary funds is recorded as an expense and a liability of those funds as the benefits accrue to the employees. In governmental fund types, a liability is recorded only if the liability has matured and is expected to be liquidated with expendable and available financial resources. Long-term Obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities or proprietary fund type statement of net position. Fund Equity/Net Position Fund equity at the governmental fund financial reporting level is classified as "fund balance." Fund equity for all other reporting is classified as "net position." 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. 19 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 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. Commited - 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 Position - Net position represents the difference between assets and liabilities. Net investment in capital assets 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 position is reported as restricted as described in the fund balance section above. All other net position is reported as unrestricted. When both restricted and unrestricted resources are available for use, it is the County’s policy to use restricted resources first, then committed, assigned, and unassigned (or unrestricted) resources as they are needed. 20 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Net Investment in Capital Assets The "Net investment in capital assets" reported on the government-wide statement of net position as of December 31, 2017 are as follows: Governmental Business-type Net invesment in capital assets Activities Activities Cost of capital assets $ 67,481,958 $ 27,381,254 Less accumulated depreciation (24,420,948) (9,137,704) Book value 43,061,010 18,243,550 Less capital related debt (1,478,785) (10,226,495) Net investment in capital assets $ 41,582,225 $ 8,017,055 Management Estimates 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 POSITION The government-wide statement of net position reports no restricted net position, and no net position is restricted by enabling legislation. Additional details related to fund balances at the governmental fund level are presented below: Restricted: General Fund Judicial Programs - For unspent funds related to court related programs ­ juvenile court fund, drug abuse fund, crime victims assistance fund, etc. $ 95,537 Capital outlay projects - For unspent funds from LMIG grant, capital leases and 518,329 other debt SPLOST Fund Capital outlay projects - For funds received from the imposition of the Special Purpose Local Option Sales Tax (SPLOST) restricted by the voter approved referendum. 3,641,894 21 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Nonmajor Restricted Progams Funds Judicial Programs ­ Law Library - Used to account for surcharges on fines and forfeitures which are for the operation of the County Law Library and other expenditures as restricted by the OCGA-36-15. 43,425 Restricted Programs - Used to account for multiple court administered state reimbursement grants adult drug court, mental health court, family drug court, etc.), and CDBG pass through grant funds from Department of Community Affairs. 142,763 Subtotal - Restricted for Judicial Programs 186,188 Public Safety Programs ­ Emergency E911 Telephone Services Fund - For fund to operate the E911 center as restricted by the OCGA-46-5. 67,826 Drug Task Force - To account for funds received to operate multi- jurisdictional drug enforcement agency that actively pursues all levels of illegal drug activity. 64,270 Sheriff's Special Revenue - to account for funds from seizures to be used for law enforcement activities. 66,596 Subtotal - Restricted for Public Safety Programs 198,692 Housing and Development Programs ­ Hotel/Motel Tax Fund - To account for funds received to promote tourism, conventions, and trade shows. 34,494 Total Restricted Fund Balance $ 4,675,134 NOTE 3 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY BUDGETARY INFORMATION The County Commission adopts an annual budget for all governmental fund types, prior to December 31, except for the Capital Projects Funds. The Capital Projects Funds are budgeted by the Board of Commissioners when capital budgets are approved. The operating budget includes proposed expenditures and the means of financing them. The budget is legally enacted at a public meeting. Prior to October of each year, each department submits a proposed budget to the Board of Commissioners for review. Public hearings are held to discuss the proposed budget and to obtain input from the citizens of the County in December. These hearings are publicized in the local paper at least one week before the first hearing, and the budget document is made available for public inspection during this week. 22 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 The level of legal budgetary control (the level at which expenditures may not exceed appropriations) is the department level. Any changes in total departmental expenditures/expenses, personnel benefits, or capital purchases must be approved by the Board of Commissioners or Budget Officer. Budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) at the legal level of budgetary control, which is the department, sub-department, or project level. Expenditures may not exceed the appropriations within a fund. Budgets, as reported in the financial statements, are as originally passed by ordinance and subsequently amended. During the year, several supplementary appropriations are made as needed. The results are increases and decreases to the appropriations within the funds. All annual appropriations lapse at year end. NOTE 4 - DEPOSITS AND INVESTMENTS PRIMARY GOVERNMENT Custodial Credit Risk - Deposits Custodial credit risk for deposits is the risk 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 December 31, 2017, all deposits of the County were insured or collateralized. 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. State statutes require collateral pledged in the amount of 110% of deposits. 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. State statutes require collateral pledged in the amount of 110% of deposits under the single bank pooled method or at least 100% of amounts greater than 20% of the daily pool balnce held by any one covered depository under the multibank pooled method. The County utilized both methods to secure its deposits of public funds. 23 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 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. The 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. Credit Risk State statutes authorize the County 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 other states and of its agencies and instrumentalities; certificates of deposits of banks 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. The County does not have an investment policy that would further limit these investment choices. As of December 31, 2017, the Law Library (a Non-Major Governmental Fund) had the following investments: Investment Type Certificate of Deposit Fair Value $ 22,521 Maturity less than 1 year Concentration of Credit Risk The County places no limit on the amount it may invest in any one issuer. Foreign Currency Risk The County has no investments denominated in a foreign currency. 24 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 NOTE 5 - RECEIVABLES Receivables as of year-end for the County’s individual major funds and nonmajor governmental funds in the aggregate including the applicable allowances for uncollectible accounts are as follows: Nonmajor General Governmental Fund SPLOST Funds Receivables: Property Taxes $ 1,246,741 $ - $ - Accounts 1,240,892 - 250,497 Intergovernmental 276,040 440,730 69,522 Total Gross Receivables 2,763,673 440,730 320,019 Less: Allowance for Uncollectibles (498,918) - - Total Net Receivables $ 2,264,755 $ 440,730 $ 320,019 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: Unavailable Unearned Total Delinquent property taxes receivable (General Fund) $ 971,341 $ - $ 971,341 Total unearned revenue for governmental funds $ 971,341 $ - $ 971,341 Property taxes receivable at December 31, 2017, consist of the following: Digest General Year Fund 2017 $ 888,237 2016 187,708 2015 28,953 2014 19,820 2013 18,445 2012 19,398 2011 26,767 2010 57,413 Total $ 1,246,741 25 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Receivables as of year-end for the County's enterprise funds, including the applicable allowances for uncollectible accounts are as follows: Water Airport Fund Authority Total Receivables: Accounts $ 264,132 $ 3,701 $ 267,833 Total Gross Receivables 264,132 3,701 267,833 Less: Allowance for Uncollectibles (1,529) - (1,529) Total Net Receivables $ 262,603 $ 3,701 $ 266,304 Receivables as of year-end for the County's component units, including the applicable allowances for uncollectible accounts are as follows: Health Department Receivables: Accounts $ 39,290 Intergovernmental 445 Total Gross Receivables 39,735 Less: Allowance for Uncollectibles ­ Total Net Receivables $ 39,735 26 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 The lease receivable in the County's component units consisted of the following at December 31, 2017: Lease receivable made to a local business - North Georgia Financial Holdings, LLC - through the Development Authority of Pickens County. Payments receivable in installments of $10,500 during fiscal year 2014, $12,000 during fiscal year 2015, and $14,000 for all years thereafter, including imputed interest at 5.985%. This lease is secured by the County and matures on December 1, 2034. $ 2,856,000 Less: Current portion (168,000) Long-term portion $ 2,688,000 At December 31, 2017, scheduled maturities of the lease receivable were the following: 2018 $ 168,000 2019 168,000 2020 168,000 2021 168,000 2022 168,000 2023 - 2027 840,000 2028 - 2032 840,000 2033 - 2034 336,000 Total maturities of lease receivable 2,856,000 Less interest (1,066,375) Total net book value of lease receivable $ 1,789,625 27 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 NOTE 6 - CAPITAL ASSETS PRIMARY GOVERNMENT Capital asset activity for the year ended December 31, 2017, was as follows: Governmental Activities: Beginning Balance Additions Retirements Transfers Ending Balance Non-Depreciable Assets: Land and improvements Construction in progress Total non-depreciable capital assets $ 4,244,996 9,606 4,254,602 $ 27,000 - 27,000 $ - - - $ - (9,606) (9,606) $ 4,271,996 - 4,271,996 Depreciable Assets: Land improvements Buildings and improvements Machinery and equipment Vehicles Infrastructure Total depreciable capital assets 1,013,402 37,429,670 7,321,333 8,106,013 8,188,489 62,058,907 - - 341,524 585,152 367,372 1,294,048 - - - (152,599) - (152,599) - - - - 9,606 9,606 1,013,402 37,429,670 7,662,857 8,548,172 8,555,861 63,209,962 Less Accumulated Depreciation for: Land improvements Buildings and improvements Machinery and equipment Vehicles Infrastructure Total accumulated depreciation 539,981 6,701,100 4,847,757 6,899,588 3,489,191 22,477,617 31,467 802,585 500,250 337,779 423,849 2,095,930 - - - (152,599) - (152,599) - - - - - - 571,448 7,503,685 5,348,007 7,084,768 3,913,040 24,420,948 Total depreciable capital assets, net 39,581,290 (801,882) - 9,606 38,789,014 Governmental activities capital assets, net $ 43,835,892 $ (774,882) $ - $ - $ 43,061,010 Additions to governmental activities capital assets for the fiscal year ending December 31, 2017, consist of the following: Capital Outlay $ 1,321,048 Total $ 1,321,048 Non-depreciable capital assets additions $ 27,000 Depreciable capital assets additions 1,294,048 Total $ 1,321,048 28 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities: General Government $ 549,255 Judicial 650,867 Public Safety 2,404 Public Works 677,583 Public Health and Welfare 31,694 Recreation and Culture 107,217 Housing and Development 76,910 Total depreciation expense-governmental activities $ 2,095,930 BUSINESS TYPE ACTIVITIES Capital asset activity for the year ended December 31, 2017, was as follows: Beginning Ending Balance Additions Retirements Transfers Balance Business-type Activities: Non-Depreciable Assets: Land and improvements $ 1,690,594 $ - $ - $ - $ 1,690,594 Construction in progress 5,998,802 92,700 - - 6,091,502 Total non-depreciable capital assets 7,689,396 92,700 - - 7,782,096 Depreciable Assets: Land improvements 865,080 - - - 865,080 Infrastructure 16,400,684 35,148 - - 16,435,832 Buildings and improvements 641,509 - - - 641,509 Machinery and Furniture 1,072,627 202,753 - - 1,275,380 Vehicles 350,396 30,961 - - 381,357 Total depreciable capital assets 19,330,296 268,862 - - 19,599,158 Less Accumulated Depreciation for: Land improvements 374,175 59,981 - - 434,155 6,795,014 546,959 - - 7,341,973 Buildings & Improvements 368,554 26,242 - - 394,796 Machinery & Furniture 631,715 67,965 - - 699,681 Vehicles 239,863 27,236 - - 267,099 Total accumulated depreciation 8,409,321 728,383 - - 9,137,704 Total depreciable capital assets, net 10,920,975 (459,521) - - 10,461,454 Business-type activities capital assets, net $18,610,371 $ (366,821) $ - $ - $18,243,550 29 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Depreciation expense was charged to functions/programs of the business-type activities as follows: Business-type Activities: Water $ 627,626 Airport 100,757 Total depreciation expense-business type activities $ 728,383 The business-type activity funds have authorized construction projects. The remaining costs are split between the portion of the contracts that have been entered into for which the work had not been done prior to December 31, 2017, 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: Contracts Authorized Project Authorization Expended To Date in Progress Not Obligated Sources Business Type Activities: North T-Hanger Airport Improvements Airport Layout Plans $ 1,378,436 5,923,726 78,594 $ 92,700 5,923,727 75,075 $ - - - $ 1,285,736 - 3,519 Airport Authority Loan FAA Grant/ DA Bonds FAA Grant/State Grant Total Business Type Activities $ 7,380,756 $ 6,091,502 $ - $ 1,289,255 30 ---PAGE BREAK--- DISCRETELY PRESENTED COMPONENT UNITS Activity for the Health Department for the year ended December 31, 2017, was as follows: Beginning Ending Balance Additions Retirements Balance Governmental Activities: Depreciable Assets: Site Improvements $ 11,725 $ 49,970 $ - $ 61,695 Machinery and Equipment 26,128 - - 26,128 Furniture & Fixtures 11,030 - - 11,030 Vehicles 20,011 - - 20,011 Total depreciable capital assets 68,894 49,970 - 118,864 Less Accumulated Depreciation for: Site Improvements 11,725 - - 11,725 Machinery and Equipment 26,128 - - 26,128 Furniture and Fixtures 11,030 - - 11,030 Vehicles 20,011 - - 20,011 Total accumulated depreciation 68,894 - - 68,894 Capital Assets, net $ - $ 49,970 $ - $ 49,970 NOTE 7 - LONG TERM DEBT Long-term liability activity for the year ended December 31, 2017, was as follows: Beginning Ending Due Within Due After Balance Additions Reductions Balance One Year One Year Governmental Activities: Notes Payable $ 860,092 $ - $ (405,492) $ 454,600 $ 419,057 $ 35,543 Capital leases 1,080,564 450,000 (506,379) 1,024,185 474,127 550,058 Net OPEB obligation 1,701,073 65,796 (8,272) 1,758,597 - 1,758,597 Net pension liability 3,218,002 4,761,700 (866,021) 7,113,681 - 7,113,681 Landfill postclosure 244,733 120,767 - 365,500 20,000 345,500 Compensated absences 214,950 181,242 (150,465) 245,727 172,009 73,718 Governmental activities long-term liabilities $ 7,319,414 $ 5,579,505 $ (1,936,629) $ 10,962,290 $ 1,085,193 $ 9,877,097 Business-type Activities: Bonds payable $ 10,818,273 $ - $ (630,636) $ 10,187,637 $ 495,000 $ 9,692,637 Capital Leases 80,995 - (42,137) 38,858 31,226 7,632 Compensated absences 5,928 4,898 (4,150) 6,676 4,673 2,003 Business-type activities long-term liabilities $ 10,905,196 $ 4,898 $ (676,923) $ 10,233,171 $ 530,899 $ 9,702,272 GOVERNMENTAL ACTIVITIES Notes Payable The County has entered into an agreement with a financial institution to finance the purchase of buildings and equipment in regards to the Community Center in the original amount of $3,000,000 with an outstanding balance of $454,600. This note has annual payments ranging from $392,093 to $427,738, with an interest rate of 3.25% and matures in 2019. 31 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 The annual requirements to amortize notes payable outstanding as of December 31, 2017, are as follows: December 31, Principal Interest Total 2018 $ 419,057 $ 8,680 $ 427,737 2019 35,543 99 35,642 Total $ 454,600 $ 8,779 $ 463,379 Capital Leases The County has entered into an agreement for the lease of certain equipment. The terms of the agreements meet the criteria of a capital lease as defined by Accounting Standards Codification 840 Leases, which defines a capital lease generally as one which transfers benefits and risk of ownership to the lessee. This year, $308,789 was included in depreciation expense. The balance of these leases at December 31, 2017 is $1,024,185 for governmental activities. The County leases certain equipment under non-cancelable capital leases. The leases relate to equipment and vehicles for EMS, fire, and road. 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: Governmental Activities Machinery and equipment $ 458,856 Vehicles 1,714,266 Less: Accumulated Depreciation (859,670) Total $ 1,313,452 The future minimum lease obligations and the net present value of these minimum lease payments as of December 31, 2017, were as follows: Governmental Year Ending December 31, Activities 2018 $ 492,195 2019 332,971 2020 228,117 Total minimum lease payments 1,053,283 Less: amount representing interest (1.93% - 4.84%) (29,098) Present value of minimum lease payments $ 1,024,185 32 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 BUSINESS-TYPE ACTIVITIES Bonds Payable During 2015, the County issued $8,090,000 of revenue bonds (2015 Refunding Series) for a full refunding of the Authority’s Series 1995A, 1995B, and 2005 revenue bonds, which had been issued for the aquisition and construction of waterline infrastructure. The refunding was undertaken to reduce total future debt service payments. The refunding resulted in an economic gain of $3,599,055. Bond payments are due in semi-annual installments ranging from $184,944 to $324,772, with interest at 2.35%. As of December 31, 2017, the oustanding balance is $6,765,000. This bonds mature in 2029. The County entered into an agreement with the Development Authority to issue bonds to finance the construction of an airport taxiway in the amount of $3,966,969. During 2014, the agreement was modified due to additional project costs. As of December 31, 2017, the bonds had an outstanding balance of $3,422,637, with an interest rate of 3.25%. The bonds mature in 2019. The annual requirements to amortize bonds payable outstanding as of December 31, 2017, are as follows: December 31, 2018 2019 2020 2021 2022 2023-2027 2028-2029 Total Principal $ 495,000 549,765 793,143 819,550 846,607 4,665,968 2,017,604 $ 10,187,637 Interest $ 318,663 293,335 286,947 261,320 234,726 739,108 71,549 $ 2,205,648 Total $ 813,663 843,100 1,080,090 1,080,870 1,081,333 5,405,076 2,089,153 $ 12,393,285 Capital Leases The County has entered into an agreement for the lease of certain equipment. The terms of the agreements meet the criteria of a capital lease as defined by Accounting Standards Codification 840 Leases, which defines a capital lease generally as one which transfers benefits and risk of ownership to the lessee. This year, $24,845 was included in depreciation expense. The balance of these leases at December 31, 2017 is $38,858 for business-type activities. 33 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 The County leases certain equipment under non-cancelable capital leases. The leases relate to equipment for water operations. 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: Business-type Activities Machinery and equipment $ 211,948 Less: Accumulated Depreciation (79,340) Total $ 132,608 The future minimum lease obligations and the net present value of these minimum lease payments as of December 31, 2017, were as follows: Governmental Year Ending December 31, Activities 2018 $ 31,262 2019 7,677 2020 ­ Total minimum lease payments 38,939 Less: amount representing interest (1.93% - 4.84%) (81) Present value of minimum lease payments $ 38,858 DISCRETELY PRESENTED COMPONENT UNITS Long-term debt activity for the Health Department for the year ended December 31, 2017, was as follows: Beginning Governmental Activities Balance Compensated absences $ 7,860 Net Pension Liability 374,124 Total long-term Liabilities $ 381,984 Additions $ 8,603 65,129 $ 73,732 R $ $ eductions (3,930) (27,092) (31,022) Ending Balance $ 12,533 412,161 $ 424,694 Due Within One Year $ 6,267 - $ 6,267 Due After One Year $ 6,266 412,161 $ 418,427 Long-term debt activity for the Industrial Development Authority for the year ended December 31, 2017, was as follows: Beginning Ending Due Within Due After Business-type Activities Balance Additions Reductions Balance One Year One Year Bonds payable $1,860,897 $ - $ (65,772) $ 1,795,125 $ 68,870 $ 1,726,255 Total long-term liabilities $1,860,897 $ - $ (65,772) $ 1,795,125 $ 68,870 $ 1,726,255 34 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 During 2015, the Development Authority issued $1,960,000 of revenue bonds (2015 Series) for a full refunding of the loan agreement with Restaurant Interiors to finance the purchase of an industrial building in the original amount of $1,249,206. The refunding was undertaken to reduce total future debt service payments. Bond payments are due in installments with annual principal amounts ranging from $60,447 to $143,831 with a variable interest rate. The interest rate at December 31, 2017 is 3.20%. As of December 31, 2017, the oustanding balance is $1,795,125. This bond will mature in May 2035. The annual requirements to amortize long-term debt as of December 31, 2017, are as follows: Year Ending December 31, Principal Interest Total 2018 $ 68,871 $ 43,981 $ 112,852 2019 72,116 42,293 114,409 2020 75,299 40,526 115,825 2021 79,062 38,682 117,744 2022 82,787 36,745 119,532 2023-2027 476,061 151,332 627,393 2028-2032 599,293 90,942 690,235 2033-2035 341,636 14,856 356,492 Total $ 1,795,125 $ 459,357 $ 2,254,482 NOTE 8 - INTERFUND BALANCES AND ACTIVITY The composition of interfund balances as of December 31, 2017, is as follows: Due To Due From General Fund SPLOST Other Nonmajor Governmental Funds Water Fund Airport Authority Total Due from Other Funds General Fund Nonmajor Governmental Funds Water Fund Total Due to Other Funds $ - 35,459 111,230 $ 146,689 $ 166,814 - - $ 166,814 $ 123,361 227,035 - $ 350,396 $ 2,494,313 - - $ 2,494,313 $795,974 - - $795,974 $ 3,580,462 262,494 111,230 $ 3,954,186 These balances resulted from 1) the time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur, 2) the time lag between the dates that transactions are recorded in the accounting system, 3) the time lag between the dates that payments between funds are made, 4) short-term loans, and 5) to fund capital projects. 35 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Interfund transfers as of the year ended December 31, 2017, are as follows: Transfers Out Transfers in Other General Fund Nonmajor Governmental Funds Airport Authority Total Transfers Out General Fund Nonmajor Governmental Funds Total - Transfers in $ - 572 $ 572 $ 614,048 - $ 614,048 $ 143,409 - $ 143,409 $ 757,457 572 $ 758,029 Transfers are used to 1) supplement operating budgets, 2) help fund construction projects and debt service, 3) reimburse unrestricted revenue, 4) reimburse pension costs, and 5) move the County's matching portion on federal and state grants. NOTE 9 - RETIREMENT PLANS DEFINED BENEFIT PENSION PLAN Plan Description The County contributes to the Association of County Commissioners of Georgia (ACCG) Defined Benefit Plan (the "Plan"), which is a defined benefit pension plan. The Plan provides retirement, disability, and death benefits to plan participants and beneficiaries. The Plan, through execution of an adoption agreement, is affiliated with the Association County Commissioners of Georgia Defined Benefit Plan (the ACCG Plan), an agent multiple-employer pension plan administered by GEBCorp. The ACCG, in its role as the Plan Sponsor, has the sole authority to amend the provisions of the ACCG Plan, as provided in Section 19.03 of the ACCG Plan document. The County has the authority to amend the adoption agreement, which defines the specific benefit provisions of the Plan, as provided in Section 19.02 of the ACCG Plan Document. The Plan issues a publicly available financial report that includes financial statements and required supplementary information for the Plan. That report may be obtained by writing to Pension Service Company, 1100 Circle 75 Parkway, Suite 320, Atlanta, Georgia 30339. 36 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 All full-time employees are eligible to participate in the Plan after completing three years of service. Benefits vest after five years of service. Participants become eligible to retire with unreduced benefits at age 65 with three years of plan participation. Upon eligibility to retire, participants are entitled to an annual benefit in the amount of 2% of annual average compensation plus $36 for each year of service payable as a life annuity. Compensation is averaged over a five year period prior to retirement or termination. The Plan also provides benefits in the event of death or disability. These benefit provisions were established by an adoption agreement executed by the County Commission. Participant counts as of December 31, 2016, (the most recent actuarial valuation date) and covered compensation (base on covered earnings for the preceding year) are shown below: Retirees, beneficiaries and disabled participants receiving benefits 52 Terminated plan participants entitled to but not yet receiving benefits 102 Active employees participating in the Plan 172 Total number of Plan participants 326 Covered compensation for active participants $ 6,732,730 Contributions as a percentage of covered payroll 12.86% Contributions The County is required to contribute at an actuarially determined rate. The contribution amount is determined using actuarial methods and assumptions approved by the ACCG Plan trustees and must satisfy the minimum contribution requirement contained in the State of Georgia Statutes. Section 47-20 of the Georgia Code sets forth the funding standards for state and local governmental pension plans. Net Pension Liability The County's net pension liability was measured as of December 31, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The total pension liability as of the December 31, 2016 valuation was determined by an actuarial valuation using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 3.50% Salary Increases 4.00% - 6.50%, average, including inflation Investment rate of return 7.25%, net of pension plan investment expense, including inflation 37 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Mortality rates were based on the RP-2000 Combined Mortality Table for Males and Females. The actuarial assumptions used in the 2016 valuation were based on the results of an actuarial experience study for the period January 1, 1988 - December 31, 2014. The long-term expected rate of return on pension plan investments was determined using a log- normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of pension plan investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Long-term Target expected real Asset Class Allocation rate of return* Fixed income 30.00% 3.07% Domestic large equities 30.00 1.97 Domestic mid equities 5.00 0.86 Domestic small equities 5.00 0.30 REIT 5.00 0.52 International 15.00 0.47 Multi cap 5.00 0.51 Global allocation 5.00 0.58 TOTAL 100.00% * Rates shown are net of the 3.50% assumed rate of inflation The discount rate used to measure the total pension liability was 7.25%. There was a decrease of 0.25% in the discount rate since the prior measurement period date. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 38 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Change in the Net Pension Liability Pension Fiduciary Net Net Pension Liability Position Liability Balances at December 31, 2015 $ 8,636,607 $ 5,418,605 $ 3,218,002 Changes for the year: Plan Change 3,698,277 - 3,698,277 Service cost 485,085 - 485,085 Interest 634,742 - 634,742 Difference between expected and actual experience 148,184 - 148,184 Assumption Change 471,061 - 471,061 Contribution-employer - 866,021 (866,021) Contribution-employee - 329,750 (329,750) Net investment income - 429,014 (429,014) Benefit payments (346,769) (346,769) - Administrative expense - (38,193) 38,193 Other charges - (44,922) 44,922 Net changes 5,090,580 1,194,901 3,895,679 Balances at December 31, 2016 $ 13,727,187 $ 6,613,506 $ 7,113,681 For the year ended December 31, 2017, the County recognized pension expense of $4,390,299. The required contribution for the year ended December 31, 2017 was $726,960. The following presents the County's net pension liability calculated using the discount rate of 7.25%, as well as what the County's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.25%) or 1-percentage­ point higher (8.25%) than the current rate: 1 % Decrease Current Discount 1% Increase (6.25%) Rate (7.25%) (8.25%) County's net pension liability $ 9,240,259 $ 7,113,681 $ 5,355,998 39 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended December 31, 2017, the County recognized pension expense of $4,390,299. At December 31, 2017, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ 124,663 $ (54,060) Changes of assumptions 609,313 - Net difference between projected and actual earnings on pension plan investments 266,025 - TOTAL $ 1,000,001 $ (54,060) Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended June 30, 2018 $ (227,243) 2019 (227,243) 2020 (215,633) 2021 (136,948) 2022 (109,386) Thereafter (29,487) DEFINED CONTRIBUTION PLAN Plan Description The County contributes to the Association of County Commissioners of Georgia (ACCG) Defined Contribution Plan for Pickens County Employees (Plan a public employee retirement system that acts as a common investment and administrative agent for participating counties in Georgia. Plan A was established by the County in January 2016 pursuant to Section 401(a) of the Internal Revenue Code of 1986 as a Money-Purchase Plan and Trust. At the inception of Plan A, the Defined Contribution Plan excepted all employees with an employment commencement date prior to January 1, 2016. Plan A issues a stand alone report. It may be obtained from: Pension Services Company, 1100 Circle 75 Parkway, Suite 300, Atlanta, Georgia 30339. All full-time County employees are eligible to participate in the Plan A the first day of the first pay 40 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 period beginning on or the date the participant first meets the eligibility requirements. Benefits vest after five years of service. The County contributes 50% on amounts participants contribute to the 457(b) Eligible Deferred Compensation Plan. The maximum matching contribution shall be no more than 2.5% of compensation. A participant becomes eligible to retire at the normal retirement age of 65. Any participant leaving the plan before vesting “forfeits” the County’s matching contribution to Plan A. Funding Policy Contributions totaling $79,924 ($18,319 employer and $53,605 employee) were made in accordance with the Plan A guidelines and the designations by County Employees. DEFERRED COMPENSATION PLAN The County offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457(b). The plan, available to all County employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Because the assets are held in trust for the employees, they are not assets of the County and are not reported in these financial statements. OTHER POST-EMPLOYMENT BENEFITS Plan Description The Pickens County Retiree Insurance Program (the "OPEB Plan") is a single-employer defined benefit post-employment health care plan. Participant counts as of January 1, 2016, the most recent valuation date, are shown below. The Board of Commissioners have the authority under which the obligations of the plan members and the employer are established or may be amended. The OPEB Plan does not issue a stand-alone financial report. Eligible retirees must be a minimum of age 55 with 15 or more years of consecutive full-time service, and must have been hired before January 1, 2002, in order to receive benefits. The County’s covered payroll for employees participating in the OPEB Plan as of January 1, 2016 was $1,761,075. Actuarial valuations are performed every two years. 41 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Funding Policy Eligible retirees and former employees are offered the same health coverage as active employees. Retirees contribute an average of $533 per month towards the actuarially calculated rates. The County contributes the remainder of the rates. The OPEB Plan is funded on a pay-as­ you-go basis. Annual OPEB Cost The County's annual other post-employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution (ARC) by the employer, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize and unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The Georgia Constitution enables the governing authority of the County, the Board of Commissioners, to establish and amend, from time to time, the contribution rates for the employer and its plan members. The County's contributions to the OPEB Plan for the years ended December 31, 2017, 2016, and 2015 were $8,272, and respectively, and were less than the required contribution for each year. Schedule I included in the required supplementary information presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations. The data for the most current valuation report are as follows: Actuarial Date of January 1, Actuarial Value of Assets Actuarial Accrued Liability (AAL) ­ Projected Unit Credit Unfunded AAL (UAAL) (b-a) Funded Ratio (a/b) Covered Payroll UAAL as a Percent of Covered Payroll 2016 $ - $885,748 $ 885,748 $ 1,761,075 50.3 % 42 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 The annual required contribution and percentage contributed for the current year and prior years are as follows: Fiscal Year December 31, Annual OPEB Cost (AOC) Actual County Contribution Percentage of APC Contributed Net Pension Obligation 2017 2016 2015 $ 65,796 $ 103,738 $ 108,193 $ 8,272 $ - $ - 12.6 % - % - % $ 1,758,597 $ 1,701,073 $ 1,597,335 Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future, and actuarially determined amounts are subject to continual revisions as results are compared to past expectations and new estimates are made about the future. The Plan is updated every other year to agree to the actuarial report released biennially. Calculations are based on the substantive plan in effect as of December 31, 2017. The assumptions used in the January 1, 2016 actuarial valuations are as follows: Valuation date January 1, 2016 Actuarial Cost method Projected Unit Credit Asset Valuation method Market Value Amortization method Level Dollar (Open) Remaining amortization period 30 years (This represents the estimated amortization period for all unfunded liabilities combined into one amortization base.) Actuarial assumptions: Assumed rate of return on assets 4.00% per annum Medical Cost Rate 7.75% per annum Ultimate Cost Rate 5.00% per annum Year of Ultimate Trend Rate 2022 Inflation 3.00% 43 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 The County’s annual pension cost and net pension obligation for the OPEB Plan for the current year were determined as follows: Annual required contribution $ 92,343 Interest on net OPEB obligation 68,043 Amortization of net OPEB obligation (94,590) Annual OPEB cost 65,796 Contribution made (8,272) Increase (decrease) in Net OPEB Obligation 57,524 Net OPEB obligation, beginning of Plan year 1,701,073 Net OPEB obligation, end of Plan year $ 1,758,597 NOTE 10 - CONTINGENT LIABILITIES AND COMMITMENTS The County's encumbrances outstanding at the end of the fiscal year that will be honored in the next fiscal year are not significant for any of the major funds nor for the nonmajor funds in total. Amounts received or receivable for grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the government expects such amounts, if any, to be immaterial. The County is a defendant in several lawsuits. Management intends to contest these open cases vigorously. The County's legal counsel has stated that the outcome of these lawsuits is not presently determinable. NOTE 11 - RISK MANAGEMENT The County is exposed to various risks of losses related to torts, thefts of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The following are ways the County handles these risks: 44 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 WORKERS’ COMPENSATION The County participates in the Association County Commissioners of Georgia (ACCG) Group Self Insurance Workers' Compensation Fund (GSIWCF), a self-insured pool cooperative arrangement among its members to finance workers' compensation coverage. The fund is owned by its members and is managed by a seven member Board of Trustees who are representatives from participating counties. The ACCG-GSIWCF operates under the authority of O.C.G.A. 34­ 9-150 et seq. and the Georgia Insurance Commissioner's Office. The members of ACCG-Group Self Insurance Workers' Compensation Fund are assessable if the losses that ACCG must pay exceed the assets of the pool. At December 31, 2017, there was no need for such an assessment. Therefore, no liability has been recorded in these financial statements. OTHER The County participates in the Association County Commissioners of Georgia Interlocal Risk Management Agency (IRMA), a risk sharing arrangement among Georgia County Governments. The fund exists by authority of O.C.G.A. 36-85-1 et seq. Premium liabilities are based on the estimated ultimate cost of settling the claims, including effects of inflation and other society and economic factors. The IRMA Limits of Liability shall not be charged with the first $2,500 of any loss. IRMA pays losses up to $100,000 per individual claim or $5,000,000 for all claims. However, excess losses, if any, are covered by reinsurance and would be paid by the reinsurer. The members of IRMA are assessable if the losses that IRMA must pay exceed the assets of the pool. As of December 31, 2017, there was no need for such an assessment. Therefore, no liability has been recorded in these financial statements. As part of these risk pools (IRMA & GSIWCF), the County is obligated to pay all contributions and assessments to cooperate with the pools’ agents and attorneys, to follow loss reduction procedures established by the funds and to report as as possible, in accordance with any coverage descriptions issued, all incidents that could require the funds to pay any type of loss. The County is also to allow all the pools’ agents and attorneys to represent the County in investigations, settlement discussions, and all levels of litigation arising out of any claim made against the County. The funds are to defend and protect the members of the funds against liability or loss as prescribed in the member government contract and in accordance with the worker’s compensation law of Georgia. The funds are to pay all cost taxed against members in any legal proceeding defended by the members, all interest accruing after entry of judgment, and all expenses incurred for investigation, negotiation or defense. 45 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 The County also purchases combined automobile, crime, liability, and property insurance coverage from OneBeacon Government Risks. The following is a summary of coverage at December 31, 2017: Property Losses $ 2,193,307 aggregate Comprehensive General Liability $ 1,000,000 per occurrence $ 3,000,000 aggregate Automobile Liability $ 2,000,000 per occurrence Law Enforcement Liability $ 1,000,000 per occurrence $ 3,000,000 aggregate Excess Liability $ 1,000,000 per occurrence Crime Coverage (theft/fraud) $ 200,000 aggregate The County has no outstanding claims in excess of coverage for which a liability should be recorded as of December 31, 2017. Settled claims in the past three years have not exceeded the coverage. NOTE 12 - JOINT VENTURE On January 4, 1995, Pickens County entered into an agreement with Bartow County, Georgia, establishing a Joint Development Authority. The County Commissioner of Pickens County and the County Commissioner of Bartow County signed an agreement whereby the Joint Development Authority of Bartow County and Pickens County was established for the promotion of business development in each county as well as expanding industry, trade and employment opportunities for the citizens of Bartow and Pickens Counties. The Board of Directors of the Joint Development Authority consists of seven members. Three members of the Board are appointed by Bartow County and four members are appointed by Pickens County. As of December 31, 2017, the Joint Development Authority owned no assets and had no liablities. Also, there have been no financial transactions conducted by the Joint Development Authority in 2017. As a result, no balance sheet or income statement is presented in the audited financial statements of Pickens County at December 31, 2017. 46 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 NOTE 13 - NORTHWEST GEORGIA REGIONAL COMMISSION Under Georgia Law, the County, in conjunction with other cities and counties in the northwest Georgia area, is a member of the Northwest Georgia Regional Commission and is required to pay annual dues thereto. During the year ended December 31, 2017, the County paid $25,322 in such dues. Membership in the is required by the Official Code of Georgia Annotated (OCGA) Section 50-8-34, which provides for the organizational structure of the Regional Commission in Georgia. The Board membership includes the chief elected official in each county and municipality of the area. The County Board members and municipal board members from the same county elect one member of the Board who is a resident (but not an elected or appointed official or employee of the County or municipality) to serve as the nonpublic Board member from a County. The Georgia Planning Act of 1989 (O.C.G.A. 50-8-34) defines regional commissions as “public agencies and instrumentalities of their members.” Georgia laws also provide that the member governments are liable for any debts or obligations of a regional commission beyond its resources. (O.C.G.A. 50-8-39.1) Separate financial statements for the can be obtained from P.O. Box 1798, Rome, Georgia 30162. NOTE 14 - NORTHWEST GEORGIA REGIONAL WATER RESOURCES PARTNERSHIP The County is a member of the Northwest Georgia Regional Water Resources Partnership. This organization is made up of water withdrawal permit holders, local governments, and other advocacy entities with an interest in water issues. The purpose of the Partnership is a regional organization of water related interest in Northwest Georgia for monitoring and contributing to the development of federal, state, and local policy; educating the citizens on water related issues; funding and managing regional water-related activities; and coordinating the activities for federal, state, and local entities. The County paid annual dues in the amount of $680 for the year ended December 31, 2017. Seperate financial statements can be obtained from Northwest Georgia Regional Water Resources Partnership, P.O. Box 1793, Rome, Georgia 30162. 47 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 NOTE 15 - LANDFILL CLOSURE AND POSTCLOSURE CARE COST State and federal laws and regulations require the County to place a final cover on a landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for thirty years after closure. The County recognizes a portion of the closure and postclosure care costs in each operating period even though actual payouts will not occur until the landfill is closed. The amount recognized each year is based on the landfill capacity used as of the balance sheet date. As of December 31, 2017, the County has recorded a liability for its solid waste landfill of $365,500, which represents the estimated closure and postclosure costs based on 100% of landfill capacity used to date. All estimated liability for these costs has been recognized since the landfill is no longer used. These amounts are based on what it would cost to perform all closure and postclosure care in 2017. Actual cost may be higher due to inflation, changes in technology, or changes in regulations. The County is also required to demonstrate financial assurance that the closure and postclosure care cost can be paid in the future. The County is in compliance at December 31, 2017, based on requirements issued by the EPA. NOTE 16 - SIGNIFICANT ESTIMATES As discussed in Note 1, estimates are used in the preparation of these financial statements. Three of the estimates qualify as significant estimates in that it is reasonably possible that the estimates will change in the near term due to one or more future confirming events and this change will have a material effect on the financial statements. These estimates are as follows: The liability for landfill closure and postclosure care cost is based on estimates provided by the County’s engineering consultants and reduced each year by expenses related to the closure and postclosure of the landfill. These estimates are based on what it would cost to perform closure and postclosure care currently. Actual costs may change due to higher inflation, changes in technology, or changes in regulations. The estimate for accumulated depreciation on capital assets. This estimate is based on the original or estimated cost of the assets, depreciated over the estimated useful lives using the straight line method and composite method. 48 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS December 31, 2017 The estimate for allowance for doubtful accounts relating to Pickens County EMS accounts receivable qualifies as a significant estimate. The estimate is calculated based on the previous year's collection percentage of accounts greater than one year old. NOTE 17 - HOTEL/MOTEL TAX During the year ended December 31, 2017, the County had receipts of $62,938 and spent $50,180 to promote tourism, conventions, and trade shows. The total expenditures represent 80% of the tax receipts to be expended for these purposes under OCGA 48-13-51. The County has complied with the requirements of this law. NOTE 18 - PRIOR PERIOD ADJUSTMENTS As of January 1, 2017, the County restated its financial statements for the year ended December 31, 2016. The restatement was a result of the following: Governmental Funds General Fund To remove interfund activity from previous years. Net increase in General Fund Balance Restricted Program Fund (Non Major) To remove interfund activity from previous years. Net decrease in Non Major Fund balance Net decrease in Governmental Fund balance $ (317,652) (317,652) 397,145 397,145 79,493 Governmental Activities To restate the 2016 ending balance of the deferred outflows and inflows related to pension expense. Net increase in Governmental Activities net position (545,503) (545,503) Net increase in entity wide net position $ (466,010) 49 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF THE NET PENSION LIABILITY ­ ACCG DEFINED BENEFIT PLAN For the Year Ended December 31, 2017 “Unaudited" For the Year Ended December 31, 2017 2016 2015 Net pension liability $ 7,113,681 $ 3,218,002 $ 2,670,675 Covered-employee payroll $ 6,732,730 $ 6,261,763 $ 6,455,121 Net pension liability as a percentage of its covered-employee payroll 105.66% 51.39% 41.37% Plan fiduciary net position as a percentage of the total pension liability 48.20% 62.70% 66.00% NOTE: Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available. 50 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS ­ ACCG DEFINED BENEFIT PLAN For the Year Ended December 31, 2017 “Unaudited" For the Year Ended December 31, 2017 2016 2015 2014 2013 2012 2011 2010 Contractually required contribution $ 726,960 $ 556,622 $ 565,792 $ 547,417 $ 519,277 $ 481,354 $ 479,261 $ 396,496 Contributions in relation to the contractually required contribution 866,021 576,852 604,422 551,249 519,277 481,354 447,823 164,546 Contribution deficiency (excess) $ (139,061) $ (20,230) $ (38,630) $ (3,832) $ - $ - $ 31,438 $ 231,950 County's covered-employee payroll $6,732,730 $6,261,763 $6,455,121 $7,234,670 $7,126,832 $6,713,647 $6,852,406 $ 5,521,511 Contributions as a percentage of covered-employee payroll 12.86% 9.21% 9.36% 7.62% 7.29% 7.17% 6.54% 2.98% NOTE: Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available, data from 7 previous years presented. 51 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF NOTES TO REQUIRED SUPPLEMENTARY INFORMATION ­ ACCG DEFINED BENEFIT PLAN For the Year Ended December 31, 2017 “Unaudited" Method and Assumptions Used in Calculations of Actuarially Determined Contributions The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which donations are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for the year ended December 31, 2017 reported in that schedule: Valuation Date December 31, 2016 Actuarial Cost Method Entry Age Amortization Method Level percentage of payroll, open Remaining Amortization period 30 years Asset Valuation method Five-year smoothed market Inflation Rate 3.50% Salary Increases 4.0% - 6.50%, including inflation Investment rate of return 7.25%, net of pension plan investment expense, including inflation 52 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF OTHER POST EMPLOYMENT BENEFITS FUNDING PROGRESS For the Year Ended December 31, 2017 “Unaudited" Actuarial Valuation Date UAAL as a (1/1) Actuarial Funded Unfunded Annual Covered Percentage Value Actuarial Accrued Ratio AAL (UAAL) Payroll of Covered Payroll of Assets Liability (AAL) / - (prior year) / 2010 $ - $ 1,444,428 0.00 % $ 1,444,428 $ 9,242,485 15.63 % 2012 $ - $ 2,073,395 0.00 % $ 2,073,395 $ 8,530,847 24.30 % 2014 $ - $ 1,186,148 0.00 % $ 1,186,148 $ 1,877,477 63.18 % 2016 $ - $ 885,748 0.00 % $ 885,748 $ 1,761,075 50.30 % 2010 was the first year that this plan was effective. 53 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA BUDGETARY COMPARISON SCHEDULE GENERAL FUND For the Year Ended December 31, 2017 (Required Supplementary Information) VARIANCE WITH FINAL BUDGET BUDGET AMOUNTS POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) FUND BALANCE, Beginning of year $ 8,015,260 $ 8,015,260 $ 8,015,260 $ - RESOURCES (INFLOWS) Taxes 17,843,300 17,843,300 17,490,889 (352,411) Licenses and permits 335,000 414,000 413,660 (340) Intergovernmental 1,924,059 2,466,044 2,450,588 (15,456) Fines and forfeitures 397,000 397,000 303,313 (93,687) Charges for services 4,014,600 4,014,600 3,611,856 (402,744) Contributions and donations - - 7,549 7,549 Investment income 16,100 16,100 9,081 (7,019) Miscellaneous 39,500 75,562 86,650 11,088 Sale of county property - 3,715 14,690 10,975 Capital lease proceeds 200,000 200,000 - (200,000) Transfers in - - 572 572 Total Resources (Inflows) 24,769,559 25,430,321 24,388,848 (1,041,473) AMOUNTS AVAILABLE FOR APPROPRIATION 32,784,819 33,445,581 32,404,108 (1,041,473) CHARGES TO APPROPRIATIONS (OUTFLOWS) Current Expenditures General Government Board of commissioners 167,944 167,944 155,397 12,547 General administration 1,007,477 765,018 638,504 126,514 County clerk 143,738 143,738 131,324 12,414 Elections 206,801 206,801 186,674 20,127 Finance 370,207 370,207 362,051 8,156 Law 180,000 180,000 163,746 16,254 Human resources 90,346 90,346 86,242 4,104 Tax commissioner 551,320 551,320 535,335 15,985 Tax assessor 577,773 577,773 553,192 24,581 Buildings 376,101 492,101 491,458 643 Agencies 30,300 30,300 25,322 4,978 Board of equalization 7,675 7,675 5,914 1,761 Total General Government 3,709,682 3,583,223 3,335,159 248,064 Judicial Judicial Administration 343,718 213,718 175,712 38,006 Superior court 222,251 222,251 174,034 48,217 Clerk of Superior court 558,280 562,880 550,286 12,594 District attorney 500,411 522,911 522,899 12 Magistrate court 444,658 444,658 419,936 24,722 Probate court 447,193 456,193 398,891 57,302 Juvenile court 400,023 400,023 313,370 86,653 Public defender 664,999 664,999 615,350 49,649 Total Judicial 3,581,533 3,487,633 3,170,478 317,155 Public Safety Sheriff 3,611,631 3,636,770 3,636,406 364 Jail operation 2,512,415 2,743,915 2,743,419 496 Court services 102,663 102,663 95,142 7,521 Fire 4,620,623 4,627,684 4,004,546 623,138 Coroner/Medical Examiner 53,275 53,275 47,299 5,976 E-911/Communications center 651,830 651,830 573,767 78,063 School resource officers 267,020 287,520 287,265 255 Emergency Management Agency 167,646 167,646 165,217 2,429 Animal control 245,306 245,306 217,672 27,634 Total Public Safety 12,232,409 12,516,609 11,770,733 745,876 54 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA BUDGETARY COMPARISON SCHEDULE GENERAL FUND For the Year Ended December 31, 2017 (Required Supplementary Information) VARIANCE WITH FINAL BUDGET BUDGET AMOUNTS POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE) CONTINUED........ Public Works Roadways and walkways 2,176,143 2,559,564 2,380,233 179,331 Solid waste and recycling 543,091 543,091 471,667 71,424 Maintenance and shop 121,220 126,220 76,881 49,339 Total Public Works 2,840,454 3,228,875 2,928,781 300,094 Public Health and Welfare Health department 2,750 2,750 1,715 1,035 Public health and welfare 119,366 119,366 108,951 10,415 Senior citizens center 23,625 23,625 23,343 282 Community Center 427,738 463,738 426,508 37,230 Transportation services 221,718 273,718 273,569 149 Total Public Health and Welfare 795,197 883,197 834,086 49,111 Recreation and Culture Parks and recreation 630,146 630,146 623,778 6,368 Library 300,965 300,965 300,516 449 Total Recreation and Culture 931,111 931,111 924,294 6,817 Housing and development Extention office 62,175 62,275 62,245 30 Planning and zoning 403,079 392,682 352,801 39,881 County marshall 98,343 98,343 81,082 17,261 Economic development 56,273 56,273 56,268 5 Total Housing and Development 619,870 609,573 552,396 57,177 Transfers out 55,000 185,000 184,391 609 TOTAL CHARGES TO APPROPRIATIONS 24,765,256 25,425,221 23,700,318 1,724,903 CHANGE IN FUND BALANCE 4,303 5,100 688,530 683,430 FUND BALANCE, End of year $ 8,019,563 $ 8,020,360 $ 8,703,790 $ 683,430 NOTES TO THE BUDGETARY COMPARISON SCHEDULE 1. The budgetary basis of accounting used in this schedule is the same as GAAP. 55 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2017 SPECIAL REVENUE FUNDS TOTAL SHERIFF'S EMERGENCY DRUG HOTEL/ NONMAJOR LAW LAW TELEPHONE TASK MOTEL RESTRICTED GOVERNMENTAL ASSETS LIBRARY ENFORCEMENT SYSTEM FORCE TAX PROGRAMS FUNDS Cash $ 21,128 $ 76,169 $ - $ 55,976 $ 52,632 $ 242,452 $ 448,357 Investments 22,521 - - - - - 22,521 Receivables (net of allowance for uncollectibles) - - 74,508 21,099 4,382 220,030 320,019 Interfund receivables - - - 20,042 - 242,452 262,494 TOTAL ASSETS $ 43,649 $ 76,169 $ 74,508 $ 97,117 $ 57,014 $ 704,934 $ 1,053,391 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ - $ 9,573 $ - $ 269 $ 22,520 $ 179,579 $ 211,941 Other accrued items - - - 32,578 - 39,102 71,680 Interfund payables 224 - 6,682 - - 343,490 350,396 TOTAL LIABILITIES 224 9,573 6,682 32,847 22,520 562,171 634,017 FUND BALANCES Restricted: Judicial programs 43,425 - - - - 142,763 186,188 Public safety programs - 66,596 67,826 64,270 - - 198,692 Housing and development programs - - - - 34,494 - 34,494 TOTAL FUND BALANCES 43,425 66,596 67,826 64,270 34,494 142,763 419,374 TOTAL LIABILITIES AND FUND BALANCES $ 43,649 $ 76,169 $ 74,508 $ 97,117 $ 57,014 $ 704,934 $ 1,053,391 56 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2017 CAPITAL PROJECTS SPECIAL REVENUE FUNDS FUND TOTAL SHERIFF'S EMERGENCY DRUG HOTEL/ NONMAJOR LAW LAW TELEPHONE TASK MOTEL RESTRICTED GOVERNMENTAL LIBRARY ENFORCEMENT SYSTEM FORCE TAX PROGRAMS CDBG FUNDS REVENUES Taxes $ - $ - $ - $ - $ 62,938 $ - $ - $ 62,938 Intergovernmental - - - 221,018 - 1,861,064 308,103 2,390,185 Fines and forfeitures 15,386 21,147 - 10,055 - 541,645 - 588,233 Charges for services - 79,741 572,913 - - 281,823 - 934,477 Contributions and donations - 7,857 - - - 7,360 - 15,217 Investment income 210 173 - 69 152 772 - 1,376 Miscellaneous - - 42 12,804 - 2,750 - 15,596 TOTAL REVENUES 15,596 108,918 572,955 243,946 63,090 2,695,414 308,103 4,008,022 EXPENDITURES Current Expenditures Judicial 10,702 - - - - 1,951,609 - 1,962,311 Public safety - 65,273 1,067,908 135,331 - - - 1,268,512 Public health and welfare - - - - - 252,247 308,103 560,350 Housing and development - - - - 8,915 - - 8,915 Intergovernmental 6,080 - - 138,821 50,180 372,255 - 567,336 Capital outlay - 46,646 - - - - - 46,646 Principal - - 73,200 - - - - 73,200 Interest - - 4,913 - - - - 4,913 TOTAL EXPENDITURES 16,782 111,919 1,146,021 274,152 59,095 2,576,111 308,103 4,492,183 EXCESS (DEFICIENCY) OF REVENUES OVER(UNDER) EXPENDITURES (1,186) (3,001) (573,066) (30,206) 3,995 119,303 - (484,161) OTHER FINANCING SOURCES (USES) Transfers in - - 573,066 30,982 - 10,000 - 614,048 Transfers out - - - - - (572) - (572) TOTAL OTHER FINANCING SOURCES - - 573,066 30,982 - 9,428 - 613,476 (USES) NET CHANGE IN FUND BALANCES (1,186) (3,001) - 776 3,995 128,731 - 129,315 FUND BALANCES, Beginning of year 44,611 69,597 67,826 63,494 30,499 411,177 - 687,204 PRIOR PERIOD ADJUSTMENT - - - - - (397,145) - (397,145) FUND BALANCES, Beginning of year, restated 44,611 69,597 67,826 63,494 30,499 14,032 - 290,059 FUND BALANCES, End of year $ 43,425 $ 66,596 $ 67,826 $ 64,270 $ 34,494 $ 142,763 $ - $ 419,374 57 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA SUPPLEMENTAL BUDGETARY COMPARISON SCHEDULE LAW LIBRARY SPECIAL REVENUE FUND For the Year Ended December 31, 2017 VARIANCE WITH BUDGET AMOUNTS ORIGINAL FINAL ACTUAL FINAL BUDGET POSITIVE (NEGATIVE) FUND BALANCE, Beginning of year RESOURCES (INFLOWS) Fines and forfeitures Investment income Total Resources (Inflows) AMOUNTS AVAILABLE FOR APPROPRIATION $ 44,611 16,500 (500) 16,000 60,611 $ 44,611 16,500 500 17,000 61,611 $ 44,611 15,386 210 15,596 60,207 $ - (1,114) (290) (1,404) (1,404) CHARGES TO APPROPRIATIONS (OUTFLOWS) Current Expenditures Judicial TOTAL CHARGES TO APPROPRIATIONS 17,000 17,000 17,000 17,000 16,782 16,782 218 218 CHANGE IN FUND BALANCE (1,000) - (1,186) (1,186) FUND BALANCE, End of year $ 43,611 $ 44,611 $ 43,425 $ (1,186) NOTES TO THE BUDGETARY COMPARISON SCHEDULE 1. The budgetary basis of accounting used in this schedule is the same as GAAP. 58 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA SUPPLEMENTAL BUDGETARY COMPARISON SCHEDULE SHERIFF'S LAW ENFORCEMENT SPECIAL REVENUE FUND For the Year Ended December 31, 2017 VARIANCE WITH BUDGET AM ORIGINAL OUNTS FINAL ACTUAL FINAL BUDGET POSITIVE (NEGATIVE) FUND BALANCE, Beginning of year RESOURCES (INFLOWS) Fines and forfeitures Charges for services Contributions and donations Investment income Total Resources (Inflows) AMOUNTS AVAILABLE FOR APPROPRIATION $ 69,597 22,000 82,000 8,000 - 112,000 181,597 $ - 69,597 22,000 82,000 8,000 112,000 181,597 $ 69,597 21,147 79,741 7,857 173 108,918 178,515 $ - (853) (2,259) (143) 173 (3,082) (3,082) CHARGES TO APPROPRIATIONS (OUTFLOWS) Current Expenditures Public safety TOTAL CHARGES TO APPROPRIATIONS 112,000 112,000 112,000 112,000 111,919 111,919 81 81 CHANGE IN FUND BALANCE - - (3,001) (3,001) FUND BALANCE, End of year $ 69,597 $ 69,597 $ 66,596 $ (3,001) NOTES TO THE BUDGETARY COMPARISON SCHEDULE 1. The budgetary basis of accounting used in this schedule is the same as GAAP. 59 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA SUPPLEMENTAL BUDGETARY COMPARISON SCHEDULE EMERGENCY TELEPHONE SYSTEM SPECIAL REVENUE FUND For the Year Ended December 31, 2017 VARIANCE WITH BUDGET AM ORIGINAL OUNTS FINAL ACTUAL FINAL BUDGET POSITIVE (NEGATIVE) FUND BALANCE, Beginning of year RESOURCES (INFLOWS) Charges for services Miscellaneous Transfer in Total Resources (Inflows) AMOUNTS AVAILABLE FOR APPROPRIATION $ 67,826 595,300 - - 595,300 663,126 $ 67,826 595,300 - 551,000 1,146,300 1,214,126 $ 67,826 572,913 42 573,066 1,146,021 1,213,847 $ - (22,387) 42 22,066 (279) (279) CHARGES TO APPROPRIATIONS (OUTFLOWS) Current Expenditures Public safety TOTAL CHARGES TO APPROPRIATIONS 595,300 595,300 1,146,300 1,146,300 1,146,021 1,146,021 279 279 CHANGE IN FUND BALANCE - - - - FUND BALANCE, End of year $ 67,826 $ 67,826 $ 67,826 $ - NOTES TO THE BUDGETARY COMPARISON SCHEDULE 1. The budgetary basis of accounting used in this schedule is the same as GAAP. 60 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA SUPPLEMENTAL BUDGETARY COMPARISON SCHEDULE DRUG TASK FORCE SPECIAL REVENUE FUND For the Year Ended December 31, 2017 VARIANCE WITH BUDGET AMOUNTS ORIGINAL FINAL ACTUAL FINAL BUDGET POSITIVE (NEGATIVE) FUND BALANCE, Beginning of year $ 63,494 $ 63,494 RESOURCES (INFLOWS) Intergovernmental 222,000 222,000 Fines and forfeitures 10,000 10,000 Investment income - - Miscellaneous 13,000 13,000 Transfer in 30,000 30,000 Total Resources (Inflows) 275,000 275,000 AMOUNTS AVAILABLE FOR APPROPRIATION 338,494 338,494 $ 63,494 221,018 10,055 69 12,804 30,982 274,928 338,422 $ - (982) 55 69 (196) 982 (72) (72) CHARGES TO APPROPRIATIONS (OUTFLOWS) Current Expenditures Public safety 275,000 TOTAL CHARGES TO APPROPRIATIONS 275,000 275,000 275,000 274,152 274,152 848 848 CHANGE IN FUND BALANCE - - 776 776 FUND BALANCE, End of year $ 63,494 $ 63,494 $ 64,270 $ 776 NOTES TO THE BUDGETARY COMPARISON SCHEDULE 1. The budgetary basis of accounting used in this schedule is the same as GAAP. 61 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA SUPPLEMENTAL BUDGETARY COMPARISON SCHEDULE HOTEL/MOTEL TAX SPECIAL REVENUE FUND For the Year Ended December 31, 2017 BUDGET AMOUNTS ORIGINAL FINAL ACTUAL VARIANCE WITH FINAL BUDGET POSITIVE (NEGATIVE) FUND BALANCE, Beginning of year RESOURCES (INFLOWS) Taxes Investment income Total Resources (Inflows) AMOUNTS AVAILABLE FOR APPROPRIATION $ 30,499 60,000 - 60,000 90,499 $ 30,499 60,000 - 60,000 90,499 $ 30,499 62,938 152 63,090 93,589 $ - 2,938 152 3,090 3,090 CHARGES TO APPROPRIATIONS (OUTFLOWS) Current Expenditures Housing and development TOTAL CHARGES TO APPROPRIATIONS 60,000 60,000 60,000 60,000 59,095 59,095 905 905 CHANGE IN FUND BALANCE - - 3,995 3,995 FUND BALANCE, End of year $ 30,499 $ 30,499 $ 34,494 $ 3,995 NOTES TO THE BUDGETARY COMPARISON SCHEDULE 1. The budgetary basis of accounting used in this schedule is the same as GAAP. 62 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA SUPPLEMENTAL BUDGETARY COMPARISON SCHEDULE RESTRICTED PROGRAMS SPECIAL REVENUE FUNDS For the Year Ended December 31, 2017 VARIANCE WITH BUDGET AMOUNTS ORIGINAL FINAL ACTUAL FINAL BUDGET POSITIVE (NEGATIVE) FUND BALANCE, Beginning of year $ 411,177 $ 411,177 RESOURCES (INFLOWS) Intergovernmental 490,102 1,333,202 Fines and forfeitures 276,836 553,836 Charges for services 329,083 329,083 Contributions and donations - - Investment income - - Miscellaneous - - Transfer in - - Total Resources (Inflows) 1,096,021 2,216,121 AMOUNTS AVAILABLE FOR APPROPRIATION 1,507,198 2,627,298 $ 411,177 1,861,064 541,645 281,823 7,360 772 2,750 10,000 2,705,414 3,116,591 $ - 527,862 (12,191) (47,260) 7,360 772 2,750 10,000 489,293 489,293 CHARGES TO APPROPRIATIONS Current Expenditures Judicial Public health and welfare Intergovernmental Transfers out (OUTFLOWS) 1,096,021 - 12,000 - 1,963,021 252,500 373,000 600 1,951,609 252,247 372,255 572 11,412 253 745 28 TOTAL CHARGES TO APPROPRIATIONS 1,108,021 2,589,121 2,576,683 12,438 CHANGE IN FUND BALANCE PRIOR PERIOD ADJUSTMENT - (12,000) - (373,000) 128,731 (397,145) 501,731 (397,145) FUND BALANCE, End of year $ 399,177 $ 38,177 $ 142,763 $ 104,586 NOTES TO THE BUDGETARY COMPARISON SCHEDULE 1. The budgetary basis of accounting used in this schedule is the same as GAAP. 63 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA SUPPLEMENTAL BUDGETARY COMPARISON SCHEDULE COMMUNITY DEVELOPMENT BLOCK GRANT CAPITAL PROJECTS FUND For the Year Ended December 31, 2017 VARIANCE WITH BUDGET AMOUNTS ORIGINAL FINAL ACTUAL FINAL BUDGET POSITIVE (NEGATIVE) FUND BALANCE, Beginning of year $ RESOURCES (INFLOWS) Intergovernmental Total Resources (Inflows) AMOUNTS AVAILABLE FOR APPROPRIATION - $ 309,000 309,000 309,000 - 309,000 309,000 309,000 $ - 308,103 308,103 308,103 $ - (897) (897) (897) CHARGES TO APPROPRIATIONS (OUTFLOWS) Current Expenditures Public health and welfare TOTAL CHARGES TO APPROPRIATIONS 309,000 309,000 309,000 309,000 308,103 308,103 897 897 CHANGE IN FUND BALANCE - - - - FUND BALANCE, End of year $ - $ - $ - $ - NOTES TO THE BUDGETARY COMPARISON SCHEDULE 1. The budgetary basis of accounting used in this schedule is the same as GAAP. 64 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA COMBINING STATEMENT OF ASSETS AND LIABILITIES ALL AGENCY FUNDS December 31, 2017 ASSETS Cash TOTAL ASSETS LIABILITIES Amounts held in trust TOTAL LIABILITIES TAX COMMISSIONER $ 1,021,297 $ 1,021,297 $ 1,021,297 $ 1,021,297 CLERK OF SUPERIOR COURT $ 1,063,826 $ 1,063,826 $ 1,063,826 $ 1,063,826 PROBATE COURT $ 34,312 $ 34,312 $ 34,312 $ 34,312 MAGISTRATE COURT $ 249,233 $ 249,233 $ 249,233 $ 249,233 $ $ $ $ SHERIFF 65,720 65,720 65,720 65,720 $ $ $ $ TOTAL 2,434,388 2,434,388 2,434,388 2,434,388 65 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS For the Year Ended December 31, 2017 ASSETS Cash Balance, January 1, 2017 Additions Deductions Balance, December 31, 2017 TOTAL ASSETS LIABILITIES Due to County Balance, January 1, 2017 Additions Deductions Balance, December 31, 2017 Amounts held in trust Balance, January 1, 2017 Additions Deductions Balance, December 31, 2017 Total Liabilities Balance, January 1, 2017 Additions Deductions Balance, December 31, 2017 TOTAL LIABILITIES TAX COMMISSIONER $ 878,160 40,749,383 (40,606,246) 1,021,297 $ 1,021,297 $ - 12,133,148 (12,133,148) - 878,160 28,616,235 (28,473,098) 1,021,297 878,160 40,749,383 (40,606,246) 1,021,297 $ 1,021,297 CLERK OF SUPERIOR COURT $ 1,151,069 1,530,061 (1,617,304) 1,063,826 $ 1,063,826 $ - 794,543 (794,543) - 1,151,069 735,518 (822,761) 1,063,826 1,151,069 1,530,061 (1,617,304) 1,063,826 $ 1,063,826 PROBATE COURT $ 46,077 398,234 (409,999) 34,312 $ 34,312 $ - 266,266 (266,266) - 46,077 131,968 (143,733) 34,312 46,077 398,234 (409,999) 34,312 $ 34,312 MAGISTRATE COURT $ 253,519 291,218 (295,504) 249,233 $ 249,233 $ - 58,351 (58,351) - 253,519 232,867 (237,153) 249,233 253,519 291,218 (295,504) 249,233 $ 249,233 SHERIFF $ 50,584 395,736 (380,600) 65,720 $ 65,720 $ - 614,399 (614,399) - 50,584 (218,663) 233,799 65,720 50,584 395,736 (380,600) 65,720 $ 65,720 $ $ $ $ TOTAL 2,379,409 43,364,632 (43,309,653) 2,434,388 2,434,388 - 13,866,707 (13,866,707) - 2,379,409 29,497,925 (29,442,946) 2,434,388 2,379,409 43,364,632 (43,309,653) 2,434,388 2,434,388 66 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA SCHEDULE OF PROJECTS CONSTRUCTED WITH SPECIAL PURPOSE LOCAL OPTION SALES TAX Year Ended December 31, 2017 ORIGINAL CURRENT EXPENDITURES PROJECT ESTIMATED COSTS ESTIMATED COSTS PRIOR YEARS CURRENT YEAR Special Local Option Sales Tax 2014 Projects Road Improvements $ 14,418,000 $ 14,418,000 $ 3,862,187 $ 1,991,594 Capital Improvements Public Safety Library Water and Sewer 5,987,000 2,000,000 800,000 5,987,000 2,000,000 800,000 1,115,037 100,000 - 587,810 - - Contractual Payments City of Jasper City of Nelson City of Talking Rock 6,000,000 729,000 66,000 6,000,000 729,000 66,000 1,564,353 190,069 17,208 898,056 109,114 9,878 Total 2014 Projects $ 30,000,000 $ 30,000,000 $ 6,848,854 $ 3,596,452 67 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA Reconciliation of Expenditures for SPLOST Year Ended December 31, 2017 Statement of Revenues, Expenditures and Changes in Fund Balance (page 5) Expenditures $ 3,596,452 Expenditures reported on Splost schedule $ 3,596,452 Schedule of Projects Constructed With Special Purpose Local Option Sales Tax (page 67) 2014 SPLOST $ 3,596,452 Total $ 3,596,452 68 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA SCHEDULE OF STATE CONTRACTUAL ASSISTANCE FOR THE YEAR ENDED DECEMBER 31, 2017 Current Year Amount Due from State Program Name Contract Number Received Expended (to) State Family Connections 93-181800114 $ 48,500 $ 48,500 $ 23,817 The above schedule has been prepared on the modified accrual basis of accounting. 69 ---PAGE BREAK--- PICKENS COUNTY, GEORGIA. SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For Year Ended December 31, 2017 FEDERAL GRANTOR/ FEDERAL GRANT/ PROGRAM PASS-THRU GRANTOR/ CFDA CONTRACT OR AWARD PROGRAM TITLE NUMBER NUMBER AMOUNT Expenditures U.S DEPARTMENT OF DEFENSE Procurement Technical Assistance for Business Firms 12.002 Mobile Command Unit $ 550 $ 550 Total U.S. Department of Defense 550 550 U.S DEPARTMENT OF JUSTICE Passed-through the Council of Juvenile Court Judges Prosecution Based VOCA Program - CJCC 16.575 C16-8-001 115,469 72,558 Prosecution Based VOCA Program - CJCC 16.575 C16-8-207 115,469 21,253 CASA 16.575 2015-VA-GX-0057 Subgrant #C15-8-295 56,454 56,454 CASA 16.575 2016-VA-GX-0023 Subgrant #C16-8-110 132,173 419,565 7,549 157,814 BJA Adult Drug Court Discretionary Grant 16.585 Q15-8-001 48,493 45,516 2015 Edward Byrne Memorial Justice Assistance 16.751 2016-DJ-BX-0104 159,055 159,055 Bulletproof Vest Partnership Program 16.607 2017 7,282 7,282 Total U.S. Department of Justice 634,395 369,667 U.S. DEPARTMENT OF TRANSPORTATION Passed through Georgia Department of Transportation Transit Operating Assistance Grant 20.509 GA-18-x031 (Capital Grant - Vehicles) 76,845 76,845 Transit Operating Assistance Grant 20.509 Project T005919 53,919 53,919 Transit Operating Assistance Grant 20.509 Project T006190 54,135 54,135 184,899 184,899 Airport Improvement Program 20.106 Division of Intermodal - Aviation Project 150,000 150,000 Total U.S. Department of Transportation 334,899 334,899 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Passed through Georgia Department of Human Services Promoting Safe and Stable Families Program 93.556 DHS Contract # 42700-040C-PSSF-17-081 74,657 55,920 Promoting Safe and Stable Families Program 93.556 DHS Contract # 42700-040C-PSSF-17-082 33,273 23,217 Promoting Safe and Stable Families Program 93.556 DHS Contract # 42700-040C-PPF-18-116 74,996 21,713 Promoting Safe and Stable Families Program 93.556 DHS Contract # 42700-040C-PPF-18-117 42,141 7,852 Promoting Safe and Stable Families Program 93.556 SoN # 9072 46,926 33,665 Promoting Safe and Stable Families Program 93.556 SoN # 10309 49,257 9,223 Total U.S. Department of Health and Human Services 321,250 151,590 FEDERAL EMERGENCY MANAGEMENT AGENCY Hazard Mitigation Grant Program 97.039 HMGP 4215-0010 185,738 185,738 185,738 185,738 Total Federal Emergency Management Agency 185,738 185,738 GRAND TOTALS $ 1,476,832 $ 1,042,444 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 1. This schedule is prepared on the modified accrual basis of accounting. 2. The County did not elect to use the 10% de minimis cost rate as covered in 2 CFR §200.414 Indirect (F&A) costs. 70 ---PAGE BREAK--- 681 INDEPENDENT AUDITORS' 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 June 25, 2018 Board of Commissioners Pickens County, Georgia Jasper, 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 information of PICKENS COUNTY, GEORGIA as of and for the year ended December 31, 2017, which collectively comprise the PICKENS COUNTY, GEORGIA’s basic financial statements and have issued our report thereon dated June 25, 2018. Our report includes a reference to other auditors who audited the financial statements of the Pickens County Health Department, as described in our report on PICKENS 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. Internal Control Over Financial Reporting Management of PICKENS COUNTY, GEORGIA, is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered PICKENS 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 PICKENS COUNTY, GEORGIA’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the PICKENS COUNTY, GEORGIA’s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. 71 ---PAGE BREAK--- 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 findings 2017-01, 2017-02, 2017-03, 2017-04, and 2017-05 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 PICKENS COUNTY, GEORGIA’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that is required to be reported under Government Auditing Standards. PICKENS COUNTY, GEORGIA’s responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit PICKENS COUNTY, GEORGIA’s responses, and accordingly, we express no opinion on them. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. 72 ---PAGE BREAK--- 1 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE June 25, 2018 Board of Commissioners PICKENS COUNTY, GEORGIA Jasper, Georgia Report on Compliance for Each Major Federal Program We have audited PICKENS COUNTY, GEORGIA's compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of PICKENS COUNTY, GEORGIA's major federal programs for the year ended December 31, 2017. PICKENS COUNTY, GEORGIA’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditors' Responsibility Our responsibility is to express an opinion on compliance for each of PICKENS COUNTY, GEORGIA’s major federal programs based on our audit of the types of compliance requirements referred to above. PICKENS COUNTY, GEORGIA's basic financial statements include the operations of legally separate component units, Pickens County Health Department. Any amounts of federal awards received by those component units are not included in the accompanying schedule of expenditures of federal awards. Our audit, described below, did not include the operations of Pickens County Health Department because the component unit engaged other auditors to perform any audit required in accordance with OMB Compliance Supplement. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform 73 ---PAGE BREAK--- Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about PICKENS COUNTY, GEORGIA’s compliance with those requirements and performing such other procedures, as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination on PICKENS COUNTY, GEORGIA’s compliance with those requirements. Opinion on Each Major Federal Program In our opinion, PICKENS COUNTY, GEORGIA complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2017. Report on Internal Control Over Compliance Management of PICKENS COUNTY, GEORGIA is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered PICKENS COUNTY, GEORGIA’s internal control over compliance with the requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of PICKENS COUNTY, GEORGIA’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. 74 ---PAGE BREAK--- Our consideration of internal control over compliance 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 compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. 75 ---PAGE BREAK--- I PICKENS COUNTY, GEORGIA AUDITORS' SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended December 31, 2017 SUMMARY OF AUDITORS’ RESULTS: 1. Report issued on Financial Statements – Unmodified opinion. 2. Compliance (financial statements) – Unmodified opinion. 3. Internal Control (financial statements) – Five significant deficiencies. 4. Compliance (major programs) – Unmodified opinion, no instances of noncompliance. 5. Internal control (major programs) – No material weaknesses. 6. Audit findings required to be reported in accordance with 2 CFR section 200.516(a) i) Significant deficiencies in internal controls over major programs – None reported ii) Material noncompliance related to major programs – None reported iii) Known questioned costs greater than $25,000 for major programs – None reported iv) Known questioned costs greater than $25,000 for a program not audited as major – None reported v) Circumstances if report on compliance is other than unqualified – N/A vi) Known fraud – N/A vii) Misrepresentation in schedule of prior audit findings – None reported 7. Major programs for the year – Hazard Mitigation Grant, CFDA 97.039; Airport Improvement Program, CFDA 20.106 8. Dollar threshold used to distinguish between Type A and Type B programs – $750,000. 9. Does the auditee qualify as a low risk auditee – Yes. 76 ---PAGE BREAK--- II AUDIT FINDINGS - GENERALLY ACCEPTED GOVERNMENTAL AUDITING STANDARDS Finding Number SIGNIFICANT DEFICIENCY MAGISTRATE COURT 2017-01 Statement of Condition: This is a reissue from the prior year. During testing, we noted funds held were not properly reconciled or accounted for at the end of the year. Criteria: Reporting should be in place to ensure funds held are accurate. Effect of Condition: The risk of not knowing for whom the funds belong. Cause of Condition: Unknown. Recommendation: We recommend that a report is implemented to record all funds held activity for the year and that it is reconciled at the year end to show the accurate liability for the year end. Response: After review of the 2016 audit finding, the Chief Judge implemented a change in the Standing Order for Financial Administration. The proof of deposit was removed from the front window clerks and taken in as a back-office process. This change has enabled the deposit to be proofed to the correct account and has reduced errors made in the deposit process. At the same time, a comprehensive lookback is underway to identify deposits made to incorrect accounts. This process is a long and tedious process that involves proofing the deposit process back to 2015. Simultaneous to these physical proof changes, we worked with our case management vendor to build reporting capability to that better reflects the detail necessary to ensure compliance. With these steps having been taken in mediation, we feel that the funds can and are being more accurately reconciled. 77 ---PAGE BREAK--- TAX COMMISSIONER 2017-02 Statement of Condition: During testing, we noted that the bank reconciliation for the General Fund Account was not reconciled for the fiscal year 2017. Criteria: An accurate bank reconciliation should be performed on a basis. Effect of Condition: The risk of misappropriation and fraud increases when cash is not timely and accruately reconciled on a basis. Cause of Condition: Unknown. Recommendation: We recommend the Tax Commissioner's QuickBooks file be updated to reflect current and appropriate bank reconcilations for fiscal year 2017 and going forward. Also, that an additional procedure of reviewing the bank reconcilation is implemented. Response: The duties for deposits and reconciliation are now being handled by our Accounting Technician with an updated version of Quick Books. This will reduce the potential for errors doing balancing sheets daily and through a system that our network supports and provides a formula to work from. With the change of delegation and using more up to date software that is more compatible with our existing set up and vendors we feel this will now meet the standard needed. 2017-03 Statement of Condition: During testing, we noted that checks were not issued sequentially. Criteria: To ensure reliable accounting records checks should be issued in a sequential order. Effect of Condition: The risk of misappropriation and fraud increases when chekcs are out of order Cause of Condition: Unknown. 78 ---PAGE BREAK--- Recommendation: We recommend the Tax Commissioner's office implement the control process of issuing checks in order and review the check register Response: Due to cross training and learning how to disburse and print checks through the ledger we had misprints and would void the check and pull from the next in line. There were times we flagged as the next check in line when truly it should have been processed as an E-Check. The check would then be marked VOID written across the front of the check and kept in a binder. Since then we have stated the importance of keeping in line to the best of our ability and keep a daily ledger instead of filing in a binder showing all checks in sequential order. This too will now be done through our new software. 2017-04 Statement of Condition: During testing, we noted that several checks did not have two signatures. Criteria: All check signing policies should be followed. Effect of Condition: The risk of misappropriation and fraud increases when policies are not followed. Cause of Condition: Unknown. Recommendation: We recommend that the Tax Commissioner's office follows the policy regarding two signors for each check issued and that Tax Commissioner reviews all checks being issued to make sure the policy is met. Response: The Tax Office already has the policy of two signatures on every check regardless the amount of the check. Due to human error we had several that were put transit minus a signature. We have since then re-reminded the office the importance of both signatures. Our Chief Deputy Tax Commissioner or Deputy Tax Commissioner are now the third set of eyes to proof both signatures are on each check before being put in transit. SOLID WASTE 2017-05 Statement of Condition: The Solid Waste department has not implemented internal controls to ensure that waste received was charged appropriately, receipted accurately, and cash remitted timely to the Finance Department for deposit. 79 ---PAGE BREAK--- Criteria: To ensure proper controls over cash, receipts should be issued. Effect of Condition: The risk of misappropriation and fraud increases with no internal controls. Cause of Condition: Unknown. Recommendation: The implementation of a ticketing system or other form of record-keeping such as an Excel spreadsheet or a daily log book (with pre-numbered receipt numbers) of transactions would enable the Department to record the receipts taken daily at the facilities. Response: The Public Works Director and Finance Department are working together to establish and implement internal controls to ensure that processes are followed for accurate receipting, reporting and remitting to Finance for deposit. III FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS There were no findings or questioned costs relating to Federal awards reported for the year ended December 31, 2017. 80