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AUDITED FINANCIAL STATEMENTS - SUPPLEMENTARY INFORMATION AND REPORTS� � PINELLAS PUBLIC LIB RARY COOPERATIVE Mary A. Brown Library Administrator 1330 Cleveland Street Clearwater, Florida 33755-5103 (727)441-8408 FAX (727) 441-8938 RECEIVED APR 2 0 2004 OFFICIAL RECORDS AND LEGISLATIVE SRVCS DEPT To: John F. Szabo, Director Clearwater Public Library System From: Mary A. Brown, Administrator Pinellas Public Library Cooperativ Date: April 14, 2004 Attached is a copy of the audited financial statements of the PPLC for the fiscal year ended September 30, 2003. Attachment PINELLAS PUBLIC LIBRARY COOPERATIVE, INC. Audited Financial Statements, Supplementary Information, and Reports For the Year Ended September 30, 2003 TABLE OF CONTENTS Title Independent Auditor's Report on Basic Financial Statements and Supplementary Information Financial Statements: Statement of Financial Position Statement of Activity Statement of Cash Flows Notes to Financial Statements Supplementary Financial Information: Schedule of Expenditures of Federal Awards and State Financial Assistance Schedule of Findings and Questioned Costs — State Financial Assistance Projects Independent Auditor's Report on Compliance and on Internal Control over Financial Reporting Based on Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor's Report on Compliance and Internal Control Over Compliance Applicable to Each Major State Financial Assistance Project Management Letter Management Letter Response i Page 1 2 3 4 5-11 12 13 14 15 - 16 17 - 18 19-20 � , � 1 ' � BARTON & COMPANY, P.A. ::. CERTIFIED �.�� PUBLIC �� `� ACCOUNTANTS 5100 78th Ave. N., Suite 1, Pinellas Park, FL 33781 Phone: (727) 344-1040 Fax: (727) 546-8019 www bartoncpas.com Independent Auditor's Report on Basic Financial Statements and Supplementary Financial Information Board of Directors Pinellas Public Library Cooperative, Inc. We have audited the accompanying statement of financial position of Pinellas Public Library Cooperative, ', Inc. (a nonprofit organization), as of September 30, 2003 and 2002, and the related statements of activity and cash flows for the years then ended. These financial statements are the responsibility of the ' Organization's management. Our responsibility is to express an opinion on these financial statements based on our audit. ' � ' � ' ' � �� ' 1 1 � 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Pinellas Public Library Cooperative, Inc. as of September 30, 2003 and 2002, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated December 17, 2003 on our consideration of Pinellas Public Library Cooperative, Inc.'s internal control over financial reporting and our test of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Azcditing Standards and should be read in conjunction with this report in considering the results of the audit. Our audit was for the purpose of forming an opinion on the basic financial statements of Pinellas Public Library Cooperative, Inc., taken as a whole. The accompanying supplementary financial information listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects, in relation to the basic financial statements taken as a whole. s� � ��/9 • arton & Company, .A. Pinellas Park, Flonda December 17, 2003 1 PINELLAS PUBLIC LIBRARY COOPERATIVE, INC. STATEMENT OF FINANCIAL POSITION SEPTEMBER 30, 2003 and 2002 ASSETS Current Assets: Cash and cash equivalents Accounts receivable Due from the Friends of East Lake Community Library - Current Prepaid subscriptions Other prepaid expenses Total current assets Due from the Friends of East Lake Community Library Property, furniture and equipment, net of accumulated depreciation of $444,445 and $381,081, respectively TOTAL ASSETS 2003 $ 3,098,120 95 15,000 13,054 23,690 3,149,959 15,000 1,635,705 $ 4,800,664 LIABILITIES AND NET ASSETS Current Liabilities: Accounts payable and accrued liabilities Support due to member libraries Total current liabilities Long-term Liabilities TOTAL LIABILITIES Net Assets Unrestricted Temporarily restricted Permanently restricted TOTAL NET ASSETS TOTAL LIABILITIES AND NET ASSETS $ 73,059 870,569 943,628 0 943,628 2,941,106 915,930 0 3,857,036 $ 4,800,664 See accompanying notes to financial statements. 2 2002 $ 3,233,742 4,056 15,000 65,933 32,758 3,351,489 30,000 1,693,395 $ 5,074,884 $ 146,680 1,153,489 1,300,169 C 1,300,169 2,918,424 856,291 0 3,774,715 $ 5,074,884 PINELLAS PUBLIC LIBRARY COOPERATIVE, INC. STATEMENT OF ACTIVITY YEARS ENDED SEPTEMBER 30, 2003 and 2002 UNRESTRICTED NET ASSETS Support and Revenues Grants and agreements Contributions Interest Income Other income Total Unrestricted Support and Revenues Net Assets Released From Restrictions Satisfaction of usage restrictions 2003 $ 6,305,708 8,223 15,442 250 6,329,623 Total Unrestricted Support, Revenues and Reclassifications Expenses Program services Management and general Support to local libraries Total Expenses Increase (Decrease) in Unrestricted Net Assets TEMPORARILY RESTRICTED NET ASSETS Grants and agreements Net Assets Released From Restrictions Satisfaction of usage restrictions Increase (Decrease) in Temporarily Restricted Net Asset PERMANENTLY RESTRICTED NET ASSETS Increase (Decrease) in Net Assets NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR 184,723 6,514,346 1,173,958 390,240 4,927,466 6,491,664 22,682 244,362 (184,723) s 59,639 0 82,321 3,774,715 $ 3,857,036 See accompanying notes to financial statements. 3 2002 $ 6,280,134 14,282 46,533 992 6,341,941 330,491 6,672,432 1,428,107 392,131 5,033,607 6,853,845 (181,413) 233,521 (330,491) (96,970) 0 (278,383) 4,053,098 $ 3,774,715 PINELLAS PUBLIC LIBRARY COOPERATIVE, INC. STATEMENT OF CASA FLOWS YEARS ENDED SEPTEMBER 30, 2003 and 2002 CASA FLOWS FROM OPERATING ACTIVITIES Increase (Decrease) in net assets Adjustments to reconcile net assets to net cash provided by operating activities: Depreciation (Increase) decrease in operating assets Accounts receivable Prepaid expenses Increase (decrease) in liabilities Accounts payable Deferred revenue Net changes in due to member libraries Net cash used by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of furniture and equipment Net cash used by investing activities CASH FLOWS FROM FINANCING ACTIVITIES Net cash used by financing activities NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND EQUIVALENTS, BEGINNING OF YEAR CASH AND EQUIVALENTS, END OF YEAR SUPPLEMENTAL DATA: Interest paid 2003 2002 $ 82,321 $ (278,383) 63,365 18,961 61,947 (73,621) 0 (282,920) (129,947) (5,675) (5,675) 0 0 (135,622) 3,233,742 $ 3,098,120 77,512 15,000 128,175 31,849 (5,145) (95,736) (126,728) (15,862) (15,862) 0 0 (142,590) 3,376,332 $ 3,233,742 $ 0 $ 0 See accompanying notes to financial statements. 4 ' ' ' ' NOTE 1 - PINELLAS PUBLIC LIBRARY COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2003 and 2002 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES , ORGAI�TIZATION: The Pinellas Public Library Cooperative, Inc. (Cooperative) is a Florida nonprofit corporation chartered December 15, 1989. The Cooperative was established to extend library services to the unincorporated areas of Pinellas County ' and the municipalities that do not have such services, to improve library services to residents of municipalities and library tax districts, and to provide for the establishment of and participation in a cooperative public library service for ' participating units in and for Pinellas County, Florida. ' The Cooperative is exempt from federal income tax as an organization described in Section 501(c)(3) of the Internal Revenue Code. Therefore, no provision for income taxes has been made in these financial statements. ' ' The financial statements of Pinellas Public Library Cooperative, Inc. have been prepared on the accrual basis. The sig�ificant accounting policies followed are described below to enhance the usefulness of the financial statements to the reader. CASH EQUNALENTS: For purposes of the statement of cash flows, the ' Cooperative considers highly liquid investments purchased with a maturity of three months or less to be cash equivalents. , 1 � ' ' i 1 1 PLANT ASSETS AND DEPRECIATION: Plant assets are recorded at cost. Depreciation of equipment is provided over the estimated useful lives of the respective assets on a straight-line basis. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. ALLOCATION OF SUPPORTING SERVICE EXPENSES: The Cooperative's policy is to allocate the indirect expenses of administrative overhead (supporting services) to certain programs based on estimated costs related to each program. Certain other programs do not receive an allocation of supporting service expenses because administrative employees of the Cooperative are infrequently associated with these programs. 5 C� i , PINELLAS PUBLIC LIBRARY COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2003 and 2002 ' NOTE 1- ORGANIZATION AND SUMMARY OF SIGNIFICANT cont'd. ACCOUNTING POLICIES , REVENiJE RECOGr1ITION: All contributions and support are considered to be available for unrestricted use unless specifically restricted by the donor. Amounts received that are designated for future periods or restricted by the donor for specific , purposes are reported as temporarily restricted or permanently restricted support that increases those net asset classes. ' ' ' NOTE 2 - � ' , CJ , , ' 1 L 1 PROMISES TO GNE: Uneonditional promises to give support to local member libraries that are expected to be paid in future periods are recorded as an expense and a liability at the time the promises to give are made. DUE FROM TI�E FRIENDS OF EAST LAKE COMMUNITY LIBRARY On November 17, 1999, the Cooperative provided the Friends of East Lake Community Library $100,000 in the form of an unsecured, interest free advance. The balance of the note receivable is $30,000 and $45,000 as of September 30, 2003 and 2002, respectively. The fair value of the East Lake Community Library receivable approximates its carrying value at September 30, 2003 and 2002. Maturities of this advance are as follows: September 30, 2004 $ 15,000 2005 15,000 Total � 000 0 NOTE 3 - PINELLAS PUBLIC LIBRARY COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2003 and 2002 PLANT ASSETS AND DEPRECIATION Plant assets are stated at cost. A summary follows: 2003 Land $ 106,250 Building and Improvements 1,561,391 Furniture 87,411 Equipment 324,020 Signs 1,078 2,080,150 Less Accumulated Depreciation 2002 $ 106,250 1,561,391 87,411 318,346 1,078 2,074,476 ( 444,445) ( 381,081) 1•6� 1•6� Depreciation expense was $63,365 for the year ending September 30, 2003 and $77,512 for the year ended September 30, 2002. NOTE 4 - COMPENSATED ABSENCES It is the policy of the Cooperative to accrue and compensate employees for unused vacation and sick time upon termination. Accounts payable and accrued liabilities includes $31,247 and $24,664 for compensated absences at September 30, 2003 and 2002, respectively. NOTE 5 - PENSION PLAN The Cooperative established a noncontributory, trusteed, defined contribution money purchase pension plan in 1994. The plan calls for a contribution of 12% of compensation for each eligible employee. Employees become eligible at the end of one year of employment. This plan provides for full and immediate vesting of retirement and survivor benefits. Total pension costs under this plan for the year ending September 30, 2003 and 2002 were $51,730 and $47,202, respectively. 7 1 ' ' ' ' ' 1 ' ' ' ' PINELLAS PUBLIC LIBRARY COOPERATIYE, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2003 and 2002 NOTE 6- SUPPORT DUE TO MEMBER LIBRARIES A summary of due to member libraries at September 30 is as follows: Clearwater Dunedin East Lake Gulf Beaches Gulfport Largo Oldsmar Palm Harbor Pinellas Park Safety Harbor Seminole St. Pete Beach St. Petersburg Tarpon Springs 2003 $ 1 l 1,697 357,933 21,157 52,253 15,684 88,794 41,770 39,779 37,901 9,323 16,498 19,001 45,163 13,616 $ 870,569 NOTE 7- LIBRARY INTERLOCAL AGREEMENT 2002 $ 283,866 320,914 0 55,292 37,748 137,528 50,510 44,137 55,269 17,746 18,899 27,407 49,590 54,583 $ 1,153,489 On January 10, 1989, Pinellas County through its Board of County Commissioners, as amended on September 10, 2001, entered into an agreement with municipalities with libraries, library tax districts with libraries, municipalities without public libraries, and the county representing the unincorporated area without public libraries for the establishment of and participation in a cooperative library service for Pinellas County. The purpose and intent of this agreement is to establish and operate the Cooperative to extend library services to the unincorporated areas of the County and to municipalities that do not have such services, and to improve library services to residents of municipalities that have libraries. The Cooperative receives and disburses funds from county and local sources and from governmental units without libraries participating in the Cooperative. These amounts are included as part of the grants and agreements as revenues. 0 LJ ' ' ' PINELLAS PUBLIC LIBRARY COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2003 and 2002 NOTE 8- STATE AID AGREEMENT The Cooperative entered into an agreement with the state of Florida to receive state taid in the amount of $1,638,056 to be received in two payments. This amount is included as unrestricted revenue. ' NOTE 9- TEMPORARILY RESTRICTED NET ASSETS ' Temporarily restricted net assets are available for capital improvements for additions to existing libraries, for building new libraries, or for purchase of special improvements. Net assets of $184,723 and $330,491 were released from donor , restrictions during the year ended September 30, 2003 and 2002, respectively, by incurring expenses satisfying the restrictions for use in capital improvements. ' 1 ' ' ' � , ' 1 , ' NOTE 10 - SUPPORT TO LOCAL LIBRARIES Support to the participating libraries is made in proportion to each library's operating costs. Support for fiscal year ended September 30, 2003 is based on the proportion of each individual participating library expense to total library expenses for the fiscal year ended September 30, 2001. The support to and on behalf of participating libraries is detailed as follows: Clearwater Public Library Dunedin Public Library East Lake Library Gulf Beaches Public Library Gulfport Public Library Largo Public Library Oldsmar Public Library Palm Harbor Public Library Pinellas Park Public Library Safety Harbor Public Library Seminole Public Library St. Pete Beach Public Library St. Petersburg Public Library Tarpon Springs Public Library 0 Year Ended September 30 2003 2002 E� S 12,383 406,990 184,577 191,389 189,853 594,581 189,555 249,352 446,642 201,573 224,611 192,272 750,441 293.247 $ 4 2 4 $ 814,384 444,356 166,379 197,206 197,471 633,677 195,882 331,296 352,337 205,417 225,017 198,531 778,098 293,556 $ � ' 1 ' � � 1 � 1 � � � 1 � ' ' I ' I � I ' PINELLAS PUBLIC LIBRARY COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2003 and 2002 NOTE 11- COMMITMENTS OPER.ATING LEASES The Cooperative has various operating leases. Lease expense was $37,044 for the year ended September 30, 2003 and $27,882 for the yeaz ended September 30, 2002. Future minimum rental commitments under all operating leases are as follows: September 30, 2004 $ 16,417 2005 13,640 2006 7,687 �• ,Z4_4 NOTE 12 - CONTINGENCIES The Cooperative receives a substantial amount of support from the State of Florida in the form of state aid and from Pinellas County. A significant reduction in the level of this support, if this were to occur, may have an effect on the Cooperative's activities. NOTE 13 - CONCENTRATION OF CREDIT RISK At various times during the fiscal year, the Cooperative's cash in bank balances exceeded the Federal insured limits. The Cooperative has an agreement with its bank to sweep excess funds each night into repurchase agreements invested in and collateralized by U.S. govemment securities. At September 30, 2003 the Cooperative's bank cash balances totaled $3,229,766. 10 PINELLAS PUBLIC LIBRARY COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2003 and 2002 NOTE 14 - FUNCTIONAL EXPENSES Expenses categorized by functional classification for the year ended September 30, 2003 are summarized below: Books & publications Communications Courier service Depreciation Dues & subscriptions Grant expenditures Insurance LegaUaccounting Office expense Payroll Taxes & W/C Pension contribution Postage/shipping Printing/binding Promotional Rent Repairs and maintenance Salaries Supplies Support to libraries TraveUconferences Utilities Total Program Services $ 3,730 6,085 18,177 47,524 331,498 213,199 49,134 9,865 3,255 32,561 31,290 129 44,854 4,829 24,437 19,297 298,022 7,649 0 13,131 15,292 $ 1,173,958 11 Mgmt & General $ 2,708 6,005 0 15,841 1,818 0 29,397 23,472 36,687 5,418 20,440 8,176 1,552 2,826 0 24,674 181,701 8,329 0 6,475 14,721 $ 390,240 Support to Local Libr. $ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4,927,466 0 0 $ 4,927,466 PINELLAS PUBLIC LIBRARY COOPERATIVE, INC. SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE For the Fiscal Year Ended September 30, 2003 STATE FINANCIAL ASSISTANCE State Aid to Libraries Grant State Aid to Libraries Grant State Aid to Libraries Grant Total State Aid to Libraries Grant Support Due Support Due CFDA/ Contractl Program or To Member To Member CFSA Grant Award Program Libraries Libraries Grant Period Endin� Number Number Amount Expenditures at 9/30/02 at 9/30/03 September 30, 2002 45.030 02-ST-52 S 1,714,664 $ 718,402 $ 1,153,489 $ 435,087 September 30, 2003 45.030 03-ST-51 $ 1,638,056 1,202,574 0 435,482 $ 1,920,976 $ 1,153,489 5 870,569 Amount Paid the Amount Due the State of Florida State of Elorfda for Unexpended for Unexpended Amounts Amounts Other State Funded Grants Literacy & Communiry Empowertnent St. Petersburg Public Library September 30, 2003 45.025 03-FLL-09 $ 24,772 $ 24,772 $ 0 $ 0 Total State Financial Ass(stance $ 1,945,748 FEDERAL AWARDS PASSED THROUGft THE STATE OP FLORIDA None Note: The above schedule of expenditures of federal awards and state tinancial sssistance is prepared on the accrual basis of accounting. All of the above grants provided by the State of Florida, Department of S[ate, Division of Library and Information Services. 12 PINELLAS PUBLIC LIBRARY COOPERATIVE, ING. SCHEDULE OF FINDINGS AND QUESTIONED COSTS — STATE FINANCIAL ASSISTANCE PROJECTS For the year ended September 30, 2003 A. SUMMARY OF AUDITOR'S RESULTS 1. The auditor's report expresses and unqualified opinion on the financial statements of Pinellas Public Library Cooperative, Inc. 2. No reportable conditions were disclosed during the audit of the financial statements of Pinellas Public Library Cooperative, Inc. 3. No instances of noncompliance material to the financial statements of Pinellas Public Library Cooperative, Inc. were disclosed during the audit. 4. No reportable conditions were disclosed during the audit of the major state financial assistance proj ect. 5. The auditor's report on compliance for the major state financial assistance project for Pinellas Public Library Cooperative, Inc., expresses an unqualified opinion. 6. There were no audit �ndings relative to the major state financial assistance project for Pinellas Public Library Cooperative, Inc. as reported in Part C and D of this schedule. 7. The program/projects tested as major programs/projects included the following: State Proiect State of Florida Department of State Statc Aid to Libraries Grant State CFSA No. 45.030 8. The threshold for distinguishing Type A and Type B programs/projects was $300,000 for major federal awards programs and $100,000 for major state financial assistance projects. 9. Pinellas Public Library Cooperative, Inc. was determined to be a low-risk audit. B. FINDINGS — FINANCIAL STATEMENTS None C. FINDINGS AND QUESTIONED COSTS — MAJOR STATE FINANCIAL ASSISTANCE PROJECT None D. OTHER ISSiJES 1. No Summary Schedule of Prior Audit Findings is required because there were no prior audit findings related to State financial assistance projects. 2. No Corrective Action Plan is required because there were no findings required to be reported under the Florida 5ingle Audit Act. 13 ' ' ' ' ' �/ �� ;��A �� . � �� BARTON & COMPANY, P.A. CERTIFIED PUBLIC ACCOUNTANTS 5100 78th Ave. N., Suite 1, Pinellas Park, FL 33781 Phone: (727) 344-1040 Fax: (727) 54b-8019 www bartoncpas.com INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT A UDITING STANDARDS Board of Directors of Pinellas Public Library Cooperative, Inc. We have audited the financial statements of Pinellas Public Library Cooperative, Inc. as of and for the year ' ended September 30, 2003, and have issued our report thereon dated December 17, 2003. We conducted our audit in accordance with United States generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United , States. Compliance - As part of obtaining reasonable assurance about whether Pinellas Public Library Cooperative, ' Inc.'s financial statements are fr�e of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, 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 that are required to be reported under Government Auditing Standards. However, we noted certain immaterial instances of noncompliance, which we ' have reported to management of Pinellas Public Library Cooperative, Inc. in a separate letter dated December 17, 2003. � InCernal Control Over Financial ReportinQ - In planning and performing our audit, we considered Pinellas Public Library Cooperative, Inc.'s internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance , on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the , internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters , involving the internal control over financial reporting and its operation that we consider to be material weaknesses. However, we noted other matters involving the internal control over financial reporting, which �ve have reported to management of Pinellas Public Library Cooperative, Inc. in a separate letter dated December ' 17, 2003. ' This report is intended for the information of the Board of Directors, management, and city, state and federal awarding agencies. However, this report is a matter of public record and its distribution is not limited. � �i •iT. ' Barton & Compa , P. . Pinellas Park, Flor ' December 17, 2003 ' 14 ' , 1 1 1 � BARTON & COMPANY, P.A. ::. CERTIFIED �.,�� PUBLIC ■ 1 � � � h Cr� ACCOUNTANTS 5100 78th Ave. N., Suite 1, Pinellas Park, FL 33781 Phone: (727) 344-1040 Fax: (727) 54b-8019 www bartoncpas.com INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND INTERNAL CONTROL OVER COMPLIANCE APPLICABLE TO EACH MAJOR STATE FINANCIAL ASSISTANCE PROJECT Board of Directors of Pinellas Public Library Cooperative, Inc. , Compliance , ' We have audited the compliance of Pinellas Public Library Cooperative, Inc. with the types of compliance requirements described in the Executive Office of the Governor's State Projects Compliance Supplement, that are applicable to each of its major state financial assistance projects for the year ended September 30, 2003. Pinellas Public Library Cooperative, Inc.'s major state financial assistance projects are identified in the summary of auditors' results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major state financial assistance projects is the responsibility of Pinellas Public Library Cooperative, Inc.'s management. Our responsibility is to express an opinion on Pinellas Public Library Cooperative, Inc.'s compliance based on our audit. We conducted our audit in accordance with United States generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Chapter 10.650, Rules of the Auditor General. Those standards and Chapter 10.650, Rules of the Auditor General, require that we plan and perform the audit to obtain reasonable assurance about whether non-compliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal awards program or state financial assistance project occurred. Any audit includes examining on a test basis, evidence about Pinellas Public Library Cooperative, Inc.'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. Our audit does not provide a legal determination on Pinellas Public Library Cooperative, Inc.'s compliance with those requirements. In our opinion, Pinellas Public Library Cooperative, Inc. complied, in all material respects, with the requirements referred to above that are applicable to each of its major state financial assistance projects for the year ended September 30, 2003. 15 ' ' , Internal Control Over Compliance , The management of Pinellas Public Library Cooperative, Inc. is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to state iinancial assistance projects. In planning and performing our audit, we considered Pinellas ' Public Library Cooperative, Inc.'s intemal control over compliance with requirements that could have a direct and material effect on state financial assistance projects 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 Chapter 10.650, Rules of the Auditor General. Our consideration of the internal control over compliance would not necessarily disclose all matters in the rinternal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that non-compliance with applicable requirements of laws, regulations, contracts, and grants that would be ' material in relation to a major state financial assistance program being audited may occur and not be detected wit h in a time ly period by employees in the normal course of performin g their assi gned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material ' weaknesses. This report is intended solely for the information and use of the Board of Directors, management, and specific rlegislative or regulatory bodies and is not intended to be and should not be used by anyone other than these specified parties. � � � � �� Barton & Company, . Pinellas Park, Florida 1 December 17, 2003 ' , ' � � � , 16 , ' ' 1 � _ �� A �� 1� �� BARTON & COMPANY, P.t�i. 5100 78th Ave. N., Suite 1, Pinellas Park, FL 33781 CERTIFIED Phone: (727) 344-1040 Fax: (727) 546-8019 www bartoncpas.com PUBLIC ACCOUNTANTS MANAGEMENT LETTER Board of Directors of Pinellas Public Library Cooperative, Inc. We have audited the financial statements of Pinellas Public Library Cooperative, Inc., as of and for the fiscal year ended September 30, 2003, and have issued our report thereon dated December 17, 2003. ' We conducted our audit in accordance with United States generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. We have issued our Independent Auditor's Report on Compliance and Internal Control � over Financial Reporting, Independent Auditor's Report on Compliance and Internal Control over Compliance Applicable to each Major State Financial Assistance Project, and Schedule of Findings and Questioned Costs. ' Disclosures in those reports and schedule, which are dated December 17, 2003, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter 10.650, Rules of the Auditor General. ' 1 , r--, � i � � J ' ' ' �J , �J The Rules of the Auditor General (Section 10.654(1)(d)) require disclosure in the management letter of the following matters if not already addressed in the auditor's reports on compliance and internal controls or schedule of findings and questioned costs: (1) violations of laws, rules, regulations, and contractual provisions that have occurred, or are likely to have occurred; (2) improper or illegal expenditures; (3) improper or inadequate accounting procedures (e.g., the omission of required disclosures from the financial statements); (4) failures to properly record financial transactions; and (5) other inaccuracies, shortages, defalcations, and instances of fraud discovered by, or that come to the attention of, the auditor. We are pleased to say that our audit disclosed no material matters required to be disclosed. However, we did note a few minor compliance and internal control deficiencies during our testing. We noted an invoice during our state menu fund testing where the Cooperative did not take the discount of $526.90. Although the amount is clearly immaterial to the financial statements as a whole, care should be taken when paying invoices that all applicable discounts are taken. Those responsible for approving invoices (including library directors) should determine that all applicable discounts are taken before approval is given. 2. During our search for unrecorded liabilities, we noted an invoice that was paid on October 23, 2003 for $76,115 (check #4995) to Info USA Marketing. On November 5, 2003 the Cooperative paid the same amount to the vendor (ck# 5005) using the vendor's "statemenY' as support. As general practice and good accounting control, the Cooperative should never make payments from vendor statements as there is the risk that payment has been made and not received by the vendor before issuing the statement. The Cooperative has informed the vendor which indicated they will issue a refund check. In any case, the Cooperative should institute a policy not to make payments on vendor "statements" or faxed or photocopied invoices, but only on original invoices so as to avoid double payment. 17 i� �� 1 ' � , r-, ' 3. The Cooperative calculated county funding for member libraries incorrectly for the fiscal year ended September 30, 2003. In determining the funding allocation between member libraries, the Cooperative used an incorrect amount as base funding in determining the "circulation pool." The circulation pool base amount for distribution should be 7% of the balance after deduction of 5% administrative cost and 5% reserve allocation from the total funds available. The Cooperative used 7% of total funds available before the deductions for administrative costs and reserve allocations. Also, the Cooperative did not add East Lake's local support dollars to the total local support number in determining total support. In addition there were minor rounding errors noted. The net effect of all the differences were immaterial for adjustment in the financial statements. However, the Cooperative should inform the member libraries of these differences and adjust the 2004 funding for the differences noted. In addition, we noted that the Cooperative was initially making these calculations manually. The Cooperative has since computerized the process and asked us to review the calculations on an ongoing basis. We have already discussed the comments and suggestions above with Cooperative personnel, and we will be pleased to discuss them in further detail at your convenience, to perform any additional study of these matters, or to assist you in implementing the recommendations. This management letter is intended solely for the information of Pinellas Public Library Cooperative, Inc. and ' management, and the State of Florida Office of the Auditor General, and is not intended to be and should not be used by anyone other than these specified parties. , � � ��• Barton & Company, P A� ! Pinellas Park, Florida , December 17, 2003 � L 1 1 ! 1 1 � �8 ' ' � PINELLAS PUBLIC LIB RARY COOPERATIVE Februazy l7, 2004 ' Barton & Company, P.A. Certified Public Accountants 5100 78`h Avenue North � Suite 1 Pinellas Park, FL 33781 , ' ' L7 , � i .� � J , Attn: Sergio Gonzalez, CPA Dear Mr. Gonzalez: Mary A. Brown Library Administrator 1330 Cleveland Street Clearwater, Florida 337�5-5103 (727)441-8403 FAX (727) 441-8938 I have reviewed the Management Letter produced by Barton & Company in conjunction with the Audited Financial Statements for the year ended September 30, 2003. While I am pleased to note that the audit did not disclose any material matters that required disclosure I do wish to respond, as requested, to the compliance and control issues identified in the Management Letter. Issue 1 Discount Not Taken: The Cooperative Office processes requests for payments received from our member libraries. Requests must be accompanied by a purchase order and the invoice. The invoice number and amount aze recorded on the purchase order by the member library. Normal procedure requires that invoice amounts be checked against the purchase order for verification. In this case the total amount of the invoice was submitted by the member library for payment. We have contacted the rnember library and notified them of the error. We have also encouraged them to contact the vendor regazding possible reimbursement or credit being applied to the account. We will add a second verification step for purchase orders involving multiple invoices such as the invoice noted. Issue 2 ' Double Payment: The error in this case rMOSt likely occurred due to the azrival of the invoice and statement within short proximity of each other. It is our general policy to pay off of ' invoices as opposed to statements. It is important to note that a number of vendors do not use the term " invoice" even when generating the original billing, but choose to use the term "statement". Every effort will be made to eliminate this enor in the ' future. We have received reimbursement from the vendor and it has been applied to the appropriate account. ' I , 19 if �� I' I' I' ' ' CJ ' ' , �I � � ' 1 ' t Issue 3 Calculation Errors: At the request of the PPLC Administrator, Barton & Company reviewed the Interlocal Agreement in relationship to the disbursement of funds. T'he calculation errors that were discovered have been noted and corrected. In addition, Barton & Company provided important direction as to interpretation of the Interlocal Agreement. All members have received a copy of the adjusted FY 2004 schedule of funds for their records. The independent review of this process has been extremely valuable and will be incorporated as part of our standard operating procedures in the future. On behalf of the Pinellas Public Library Cooperative I wish to extend our appreciation for the care that went into the preparation of this year's audit. As you are awaze, we aze currently in the process of evaluating all of our procedures to eliminate future errors no matter how small. I wish to particularly thank Sergio Gonzalez for the assistance he has provided over the past year and throughout this audit. I look forward to continuing our professional relationship and working with Barton & Company on the future. Sincerely, � � Mary A. Brown Administrator �� 20