Review report, Georgia Agricultural Exposition Authority, a component unit of the state of Georgia, year ended June 30, 1997

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REVIEW REPORT GEORGIA AGRICULTURAL EXPOSITION AUTHORITY
A COMPONENT UNIT OF THE STATE OF GEORGIA
YEAR ENDED JUNE 30, 1997
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

GEORGIA AGRICULTURAL EXPOSITION AUTHORITY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

EXHIBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET (STATUTORY BASIS)

ALL FUND TYPES AND ACCOUNT GROUPS

2

B STATEMENT OF CHANGES IN FUND BALANCES

(STATUTORY BASIS)

GOVERNMENTAL FUND TYPE

3

C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

BUDGET FUND

4

D STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

COMPARED TO BUDGET

BUDGET FUND

6

E NOTES TO THE FINANCIAL STATEMENTS

7

SUPPLEMENTARY INFORMATION

SCHEDULES

1 SCHEDULE OF APPROVED BUDGET

18

2 CASH AND CASH EQUIVALENTS

19

3 SCHEDULE OF OTHER OPERATING EXPENSES

20

SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
October 20, 1997

Honorable Zell Miller, Governor Members ofthe General Assembly of Georgia Members of the Georgia Agricultural Exposition Authority
and Honorable Michael A. Froehlich, Executive Director
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have reviewed the accompanying fmancial statements (Exhibits A through E) of the Georgia Agricultural Exposition Authority as of and for the year ended June 30, 1997, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. As described in Note 1, these financial statements were prepared on a prescribed basis of accounting that demonstrates compliance with the budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. All information included in these financial statements is the representation of the management of the Georgia Agricultural Exposition Authority.
A review consists principally of inquiries of agency personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the basis of accounting described in Note 1.
Our review was made for the purpose of expressing limited assurance that there were no material modifications that should be made to the fmancial statements in order for them to be in conformity with the basis of accounting described in Note 1. The accompanying supplementary information (Schedules 1 through

97ARL-4

3) is presented only for supplementary analysis purposes. Such information has been subjected to the inquiries and analytical procedures applied in the review ofthe financial statements and we are not aware of any material modifications that should be made thereto.
Respectfully submitted,
~~
Claude 1. Vickers State Auditor
CLV:dt 97ARL-4

FINANCIAL STATEMENTS - 1-

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement.
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GEORGIA AGRICULTURAL EXPOSITION AUTHORITY STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS)
GOVERNMENTAL FUND TYPE YEAR ENDED JUNE 30. 1997

EXHIBIT"B"

FUND BALANCES - JULY 1 Unreserved Designated, Undesignated
ADDITIONS Excess of Funds Available over Expenditures Exhibit "C" Prior Year's Checks Voided
DEDUCTIONS Adjustments to Prior Year's Accounts Receivable Fund Balance Carried Over from Prior Year as Funds Available
FUND BALANCES - JUNE 30 (To Exhibit "A")

BUDGET FUND YEAR ENDED JUNE 30,1997 JUNE 30,1996

$

298,251.68 $

298,251.68

376,593.05

489,791.64

$

674,844.73 $

788,043.32

$

607,284.30 $

672,490.01

2,176.01

2,752.72

$

609.460.31 $

675,242.73

$

290.00 $

398.00

674,844.73

788,043.32

$

675,134.73 $

788,441.32

$

609,170.31 $

674,844.73

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement. - 3-

GEORGIA AGRICULTURAL EXPOSITION AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30, 1997

EXHIBIT"C"

FUNDS AVAILABLE
REVENUES
OTHER REVENUES RETAINED Concert Ticket Sales Contract Georgia Department of Natural Resources Donations Event Services Provided Fair Admissions Interest Income Rental Income - Facilities Sales Commissions Vendor's Compensation for Sales Tax Other Income
Total Revenues
CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance Unreserved Designated Undesignated
Total Carry-Over from Prior Year

TOTALS YEAR ENDED JUNE 30,1997 JUNE 30,1996

$ 339,056.17 $
2,319,260.00 5,000.00
79,060.23 1,374,784.77
29,718.29 1,145,922.43
273,677.21 782.42
57,857.16
$ 5,625,118.68 $

510,166.05
2,281,543.00 .5,000.00 44,245.24
1,136,868.50 40,385.37
1,175,050;15 302,999.18 768.38 39,454.30
5,536,480.17

$ 298,251.68 $
376,593.05
$ 674,844.73 $

298,251.68 489,791.64
788,043.32

Total Funds Available

$ 6,299,963.41 $ 6,324,523.49

EXPENDITURES
PERSONAL SERVICES
Salaries and Wages Employer's Contributions for:
F.I.C.A. Retirement Health Insurance Personal Liability Insurance Unemployment Compensation Insurance Workers' Compensation Insurance
REGULAR OPERATING EXPENSES
Motor Vehicle Expenses Supplies and Materials Repairs and Maintenance Utilities Rents (Other than Real Estate)

$ 1,990,781.72 $
106,696.61 193,521.05 166,637.41
10,066.00 6,956.00
110,591.00
$ 2,585,249.79 $

1,891,005.94
97,219.04 174,550.25 149,836,29
21,672.00 9,681.00
121,041.00
2,465,005.52

$

44,473.62 $

523,534.10

116;959.21

376,485.90

63,472.06

36,239.84 404,965.29 115,334.34 434,199.47
80,820.21

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement. -4-

GEORGIA AGRICULTURAL EXPOSITION AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30, 1997

EXHIBIT"C"

EXPENDITURES REGULAR OPERATING EXPENSES
Insurance and Bonding Other Operating Expenses (See Schedule) Publications and Printing
TRAVEL EQUIPMENT
Equipment Purchases Rental of Equipment
COMPUTER CHARGES Software Equipment Equipment Purchases Per Diem, Fees and Contracts Contracts
TELECOMMUNICATIONS PER DIEM, FEES AND CONTRACTS
Per Diem and Fees Contracts
CAPITAL OUTLAY Per Diem, Fees and Contracts Contracts
Total Expenditures Excess of Funds Available over Expenditures

TOTALS YEAR ENDED JUNE 30,1997 JUNE 30,1996

$

48,035,74 $

943,742,15

96,433,40

$ 2,213,136,18 $

$

19,065,96 $

38,nO,72 898,352,09 110,048.11
2,118,730.07
12,391.68

$ 112,131.21 $ 0.00
$ 112,131.21 $

68,500.31 3,058.08
71,558.39

$

1,907.97 $

25,170.89

15,900.89

$

42,979.75 $

$

70,630.70 $

768.40 10,570.53 7,363.15 18,702.08 71,665,65

$

80,380,35 $

569,105.17

$ 649,485.52 $

75,953,00 568,027,09
643,980.09

$

0.00 $ 250,000.00

$ 5,692,679.11 $ 607,284.30

5,652,033.48 672,490,01

$ 6.299.963.41 $ 6,324.523.49

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement.
-5-

GEORGIA AGRICULTURAL EXPOSITION AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
YEAR ENDED JUNE 30. 1997

EXHIBIT"D"

EXPENDITURES Personal Services Regular Operating Expenses Travel Equipment Computer Charges Telecommunications Per Diem, Fees and Contracts
Excess of Funds Available over Expenditures

$ 5,705,964.00 $ 6,299,963.41 $ _ _,.;;.59;;.;3;.:;,9:;.;;9,.;;.9';..;,4~1

$ 2,590,673.00 $ 2,585,249.79 $

2,200,717.00

2,213,136.18

19,066.00

19,065.96

118,246.00

112,131.21

57,145.00

42,979.75

70,631.00

70,630.70

649,486.00

649,485.52

5,423.21 -12,419.18
0.04 6,114.79 14,165.25
0.30 0.48

$ 5,705,964.00 $ 5,692,679.11 $ _ _---:..;13;.:,;,2:.;;84;..;,.;,;;,8~9

$ 607,284.30 $ ===6=0=71:,2=84,;,;,=30=

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information,
The notes to the financial statements are an integral part of this statement. -6-

GEORGIA AGRICULTURAL EXPOSITION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT"E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The Georgia Agricultural Exposition Authority is located in Perry, Georgia and was created in 1985 by the General Assembly ofGeorgia to develop a facility where the agricultural community can exhibit and promote products in livestock to the public and agribusiness representatives. The Authority consists of nine (9) members appointed by the Governor and confinned by the Senate for staggered four-year terms. The Authority is assigned to the Department ofNatural Resources for administrative purposes only. The Georgia Agricultural Exposition Authority is considered a component unit of the State of Georgia and is included within the State of Georgia reporting entity for ftnancial reporting purposes because of the signiftcance of its legal, operational and ftnancial relationships with the State of Georgia. These reporting entity relationships are deftned in Section 2100 of the Governmental Accounting Standards Board Codiftcation of Governmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING The Georgia Agricultural Exposition Authority uses a fund and account groups to report on its ftnancial position and the results of its operations determined in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia. A fund is an independent ftscal and accounting .entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with ftnance-related legal and contractual provisions. The minimum number of funds are maintained consistent with legal and managerial requirements. Account groups are a reporting device used to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. The fund and account groups presented in the accompanying ftnancial statements are as follows:
GOVERNMENTAL FUND TYPE
BUDGET FUND - The fund used to account for activities and functions as set forth in the Amended Appropriations Act of 1996-1997. This presentation differs from generally accepted accounting principles in that such principles provide that the Budget Fund of the Authority be accounted for as a Proprietary Fund Type - Enterprise Fund. An Enterprise Fund is used to account for operations that are ftnanced and operated in a manner similar to private business enterprises, where the intent is that costs of providing goods or services to the general public on a continuing basis are ftnanced or recovered primarily through user charges or that periodic measurement of revenues earned and expenses incurred are appropriate for capital maintenance, public policy, accountability and other ,purposes.
ACCOUNT GROUPS
GENERAL FIXED ASSETS - The account group used to account for ftxed assets used in governmental fund type operations. Fixed assets purchased are recorded at cost or at estimated historical cost if historical cost is not practically determinable. Donated ftxed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on general ftxed assets. This methodology ofaccounting for general ftxed assets differs from generally accepted accounting
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GEORGIA AGRICULTURAL EXPOSmON AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT"E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
ACCOUNT GROUPS
GENERAL FIXED ASSETS principles in that the Budget Fund ofthe Authority should be accounted for as a Proprietary Fund Type Enterprise Fund. Fixed assets utilized in the operations of proprietary fund types should be recorded as assets of such funds, rather than in the General Fixed Assets Account Group. The depreciation of such fixed assets should be recorded as an expense of proprietary fund types in order to more effectively determine the total cost of providing goods and services.
The costs of normal maintenance and repairs that do not add to the value of assets or materially extend assets' lives are not included in the General Fixed Assets Account Group. Material improvements adding to the value or useful life of assets are included in the General Fixed Assets Account Group.
GENERAL LONG-TERM DEBT - The account group used to report the noncurrent portions of certain governmental long-term liabilities, such as claims, judgments and compensated absences, which will be paid from future resources. This presentation differs from generally accepted accounting principles in that the Budget Fund of the Authority should be reflected as a Proprietary Fund Type - Enterprise Fund. The liabilities and related expenses for the items listed above should be recorded as a part of the proprietary fund type in order to more effectively determine the total cost of providing goods and services.
BASIS OF ACCOUNTING MEASUREMENT FOCUS
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Governmental funds should be accounted for using the flow ofcurrent financial resources measurement focus. With this measurement focus, operating statements present increases and decreases in net current assets and unreserved fund balance is a measure of available spendable resources.
Proprietary fund types, on the other hand, should be accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities are included on the balance sheet. Operating statements of these funds present increases, (i.e., revenues) and decreases, (i.e., expenses) in net total assets. This measurement focus emphasizes the determination of net income. In accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, the Budget Fund, which should be reflected as a Proprietary Fund Type - Enterprise Fund in accordance with generally accepted accounting principles, utilizes the current financial resources measurement focus.
GOVERNMENTAL FUND TYPE BUDGET FUND
Except as disclosed in the following paragraphs, units of government of the State of Georgia record their Budget Fund revenues and expenditures in accordance with the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they
- 8 -.

GEORGIA AGRICULTURAL EXPOSITION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1997

EXHIBIT"E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPE BUDGET FUND
are "measurable and available"). "Measurable" means the amount of the transaction can be detennined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. Revenues that are accrued include primarily amounts earned under operating agreements with other parties. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on generallong-tenn debt which is recognized when due, and certain compensated absences, claims and judgements which are recognized when the obligations are expected to be liquidated with expendable available financial resources. The Budget Fund, which should be reflected as a Proprietary Fund Type Enterprise Fund in accordance with generally accepted accounting principles, should be maintained on the accrual basis of accounting.
Contractual obligations for goods and services which have not been received at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but is not consistent with generally accepted accounting principles, which do not provide for the recording of encumbrances within the Proprietary Fund Type - Enterprise Fund.
Prior period adjustments and certain other items are reported as additions to and deductions from fund balances of the Budget Fund in the accompanying fmancial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but differs from generally accepted accounting principles for proprietary fund types in that immaterial adjustments should be reported as current period revenues and expenses.
In accordance with policies of the State of Georgia, the cost of annual and sick leave is recorded when paid rather than when earned. The cost of annual leave earned but not yet paid at the end of the fiscal year is reflected in the General Long-Tenn Debt Account Group, in that such liability is not expected to be fmanced from expendable available financial resources. This practice differs from generally accepted accounting principles for proprietary fund types in that the total accrued liability for compensated absences at the end of the fiscal year should be reflected as a fund liability of the proprietary fund type involved.
BUDGET A budget is submitted by the Authority and approved by the Legislature and the Governor. The budget is adopted on a basis consistent with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia and is compiled in the same manner as all State departments. Expenditures are classified by budget unit object classes as provided in Act No. 1037 of Georgia Laws 1996 (as approved April 25, 1996) and amended by Act No. 11 of Georgia Laws 1997 (as approved March 11,1997). This budget is considered to be an appropriated budget and is referred to in these notes as the Amended Appropriations Act of 1996-1997. There is no legal prohibition regarding overexpenditure of the aggregate budget.
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GEORGIA AGRICULTURAL EXPOSmON AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT"E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

Cash and Cash Equivalents include currency on hand and demand deposits with banks and other financial

institutions.

'

ACCOUNTS RECEIVABLE Accounts receivable (Other) arising from operations are reported at gross value. Based on management's evaluation that amounts uncollectible are not material, no provision has been made for such amounts.

INVENTORIES No inventories of supplies are reported in these financial statements. Expendable supplies are recorded as expenditures at the time of purchase.

FUND EQUITY Designations ofunreserved fund balance represent tentative managerial plans or intent for financial resource utilization in a future period.

COMPENSATED ABSENCES Compensated absences represent obligations of the Authority relating to employee's rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulating annual and compensatory leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion of this obligation as this amount will not be liquidated with expendable available fmancial resources.

MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the Combined Balance Sheet (Statutory Basis) are captioned "Memorandum Only" because they do not represent consolidated fmancial information and are presented only to facilitate fmancial analysis. The columns do not present information that reflects fmancial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.

COMPARATIVE DATA Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding ofthe changes in the Authority's financial position and operations. Comparative totals have not been included on statements where their inclusion would not provide enhanced understanding of the Authority's financial. position and operations or would cause the statements to be unduly complex and difficult to understand.

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds of the State of Georgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as

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GEORGIA AGRICULTURAL EXPOSITION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,1997

EXHIBIT"E"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES collateral anyone or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:

(1) 'Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia.

(2) Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia.

(3) Bonds of any public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.

(4) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.

(5) Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

(6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.

As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies ofthe State of Georgia the option of exempting demand deposits from the collateral requirements.

CATEGORIZATION OF DEPOSITS

For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include

demand deposits and/or interest bearing accounts. The bank balances as of June 30, 1997, are categorized

below in order to provide information about the extent to which such deposits are exposed to custodial credit

~k

.

Category 1 - Amounts covered by depository insurance or collateralized with securities (at market value) held by the Authority or by its agent in the Authority's name.

Category 2 - Amounts collateralized with securities (at market value) held by the pledging financial institution's trust department or agent in the Authority's name.

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GEORGIA AGRICULTURAL EXPOSITION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXIDBIT"E"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS

CATEGORIZATION OF DEPOSITS Category 3 - Amounts collateralized with securities (at market value) held by the pledging financial institution or by its trust department or agent, but not in the Authority's name, and amounts uncollateralized.

Cash Deposits

Carrying Amount

Bank Balances

Risk Categories 2

$ 62673290 $ 75228606 $ 101 194 II $ 65109195 $,

3 0 o~o

NOTE 3: CHANGES IN GENERAL FIXED ASSETS

The following is a summary of changes of equipment in the General Fixed Assets Account Group during the fiscal year:

Balance July 1, 1996

$ 1,596,869.17

Additions Deductions

403,259.11 70,910.61

Balance June 30, 1997

$ 1.929.217.67

NOTE 4: GENERAL LONG-TERM DEBT

CHANGES IN GENERAL LONG-TERM DEBT During the year ended June 30, 1997, the following changes occurred in the compensated absences liability reported in the General Long-Term Debt Account Group:

Balance July 1, 1996

$ 114,124.07

Additions Annual Leave Earned and Utilized (Net) Salaries Salary Related Fringe Benefits

14,482.00 1,107.88

Balance June 30, 1997

$ 129,713.95

NOTE 5: RISK MANAGEMENT

Public Entity Risk Pool

The State Personnel Board, Merit System of Personnel Administration administers for the State of Georgia a program ofhealth benefits for the employees of units of government of the State of Georgia, units of county

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GEORGIA AGRICULTURAL EXPOSITION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT"E"

NOTE 5: RISK MANAGEMENT
Public Entity Risk Pool
government and local education agencies located within the State of Georgia. This plan is funded by participants covered in the plan, by employers' contributions paid by the various units of government participating in the plan, and appropriations made by the General Assembly of Georgia. The State Personnel
Board, Merit System ofPersonnel Administration has contracted with Blue Cross Blue Shield of Georgia to
process claims in accordance with the State Employees' Health Benefit Plan as established by the State Personnel Board.
Other Risk Management
The Department ofAdministrative Services (DOAS) has the responsibility for the State of Georgia ofmaking and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Authority is a component unit ofthe State of Georgia, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
NOTE 6: DEFERRED COMPENSATION PLAN
The State of Georgia offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. The plan, available to employees ofthe State of Georgia and county health departments, permits such employees to defer a portion of their salary until future years. Participation in the plan is optional. Participants choose the option or options in which they wish to participate. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property or rights of the State of Georgia subject only to the claims of the State's general creditors. Participant's rights under the pla.n are equal to those of a general creditor of the State of Georgia in an amount equal to the fair market value of the deferred account of each participant. Financial information relative to the plan will be presented in the State of Georgia Comprehensive Annual Financial Report for the year ended June 30, 1997.
A change in the Internal Revenue Code Section 457, effective August 20, 1996, requires that by January 1, 1999 all existing eligible deferred compensation plans must be held in trust for the exclusive benefit of participants and their beneficiaries. The State of Georgia's plan will be converted effective July 1, 1998.

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GEORGIA AGRICULTURAL EXPOSmON AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1997

EXHIBIT"E"

NOTE7: RETIREMENTPLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description The Georgia Agricultural Exposition Authority participates in the Employees' Retirement System of Georgia ("ERS"), a single-employer, dermed benefit plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia.
The benefit structure of ERS is dermed by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive nonnal retirement benefits after completion of 10 years of creditable service and attainment of age 65. If 10 years of service is completed and age 60 is reached, the member may retire with a reduced benefit. Additionally, there are certain provisions allowing for retirement after 30 years of service regardless of age.
Retirement benefits paid to members are based upon a fonnula which considers the monthly average ofthe member's highest eight consecutive calendar quarters of salary, the number ofyears of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The nonnal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
The ERS issues a financial report each fiscal year which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees ofthe State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The Authority's payroll for the year ended June 30, 1997, for employees covered by ERS was $1,237,346.88. The Authority's total payroll for all employees was $1,990,781.72.
Under the old plan, member contributions consist of 4% of annual compensation up to $4,200.00 and 6% of annual compensation in excess of $4,200.00. Of these member contributions, the employee pays the first 1.25% and the employer pays the remainder on behalf of the employee. Under the new plan, member contributions consist solely of 1.25% of annual compensation paid by employee. The Authority also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation. For the year ended June 30, 1997, the ERS employer contribution rate for the Authority amounted

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GEORGIA AGRICULTURAL EXPOSITION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1997

EXHIBIT "E"

NOTE 7: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Funding Policy to 15.39% of covered payroll and included the amounts contributed on behalf of the employee under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.
Total contributions to the plan made during fiscal year 1997 amounted to $205,893.10, ofwhich $190,427.68 was made by the Authority and $15,465.42 was made by employees. These contributions met the requirements of the plan.
Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 1997, financial report which may be obtained through ERS.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description The Georgia Agricultural Exposition Authority participates in the Georgia Defined Contribution Plan ("GDCP") which is a single-employer defmed contribution plan established by the Georgia General Assembly for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and parttime and are not members of a public retirement or pension system. GDCP is administered by the Employees' Retirement System Board of Trustees.
Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board. If a member has less than $ 3,500 credit to his/her account, the Board has the option ofrequiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.
The Employees' Retirement System of Georgia (ERS) issues a. financial report each fiscal year which may
be obtained through ERS.
Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board. Upon termination of employment, the amount ofthe member's account is refundable upon request by the member. The Authority's payroll for the year ended June 30, 1997, for employees covered by GDCP was $655,638.23. The Authority's total payroll for all employees was $1,990,781.72.
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GEORGIA AGRICULTURAL EXPOSITION AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30,1997

EXInBIT"E"

NOTE 7: RETIREMENTPLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Contributions and Vesting Total contributions made by employees during fiscal year 1997 amounted to $49,174.01 which represents 7.5% of covered payroll. These contributions met the requirements ofthe plan.
NOTE 8: LEAVEPOUCrnS
Employees earn ten hours ofsick leave each month with a maximum accumulation of ninety days. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment.
Employees earn annual leave ranging from ten to fourteen hours each month depending upon the employees' length of continuous State service with a maximum accumulation of forty five days. Employees are paid for unused accumulated annual leave upon retirement or termination ofemployment. See Note 1 - Compensated Absences.
Certain employees who retire with one hundred and twenty days or more of forfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement System of Georgia.
NOTE 9: NONMONETARY TRANSACTIONS
The Georgia State Financing and Investment Commission (GSFIC), aunit of State government, is responsible for the issuance of state debt and for the investment and accounting for proceeds derived from the issuance of state debt. In addition, GSFIC is authorized to acquire and construct projects for the benefit of units of State government or to contract with units of State government for the construction or acquisition of capital outlay projects. During the fiscal year ended June 30, 1997, the Georgia State Financing and Investment Commission paid $3,472,401.66 to various vendors for approved projects for the benefit of the Georgia Agricultural Exposition Authority.
NOTE 10: CONTINGENCrnS
Litigation, claims and assessments filed against the Georgia Agricultural Exposition Authority, if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1997.

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SUPPLEMENTARY INFORMATION - 17 -

GEORGIA AGRICULTURAL EXPOSITION AUTHORITY SCHEDULE OF APPROVED BUDGET YEAR ENDED JUNE 30,1997

SCHEDULE "1"

FUNDS AVAILABLE REVENUES
Other Revenues Retained

ORIGINAL

AMENDED

BUDGET

APPROPRIATION APPROPRIATION ADJUSTMENTS

TOTAL

$ 4.921.827.00 $

551.922.00 $

232.215.00 $ 5.705,964.00

EXPENDITURES
Personal Services RegUlar Operating Expenses Travel Motor Vehicle Purchases Equipment Computer Charges Telecommunications Per Diem, Fees and Contracts

$ 2.331.190.00 $ 1.774.578.00 21.059.00 12.000.00 85,000.00 15,000.00 38,000.00 645,000.00

283,622.00 $ 184,400.00
3,900.00 18.000.00
12.000.00 50,000.00

-24.139.00 $ 241.739.00
-5.893.00 -30.000.00 33.246.00 42,145.00 20,631.00 -45,514.00

2,590.673.00 2,200,717.00
19,066.00 0.00
118,246.00 57,145,00 70,631.00 649,486.00

$ 4,921,827.00 $

551.922.00 $

232,215.00 $ 5,705,964.00

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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GEORGIA AGRICULTURAL EXPOSITION AUTHORITY CASH AND CASH EQUIVALENTS JUNE 30, 1997
INTEREST BEARING ACCOUNTS Crossroads Bank of Georgia, Perry, Georgia
OTHER Cash on Hand

SCHEDULE "2"
$ 626,732.90 17,400,00
$ ===6:i::4:::i4::i::,=13=2=.9=O

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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GEORGIA AGRICULTURAL EXPOSITION AUTHORITY SCHEDULE OF OTHER OPERATING EXPENSES YEAR ENDED JUNE 30, 1997
REGULAR OPERATING EXPENSES
Advertising and Promotion Contest Awards Credit Card Fees Dues and Subscriptions Event Sanction Fees Exhibitor Insurance Payments Freight, Express and Storage Other Registration Fees and Training Sales Tax - Fair and Other Events

SCHEDULE "3"
$ 344,371.17 457,396.13 5,715.54 5,750.63 1,405.00 19,418.00 9,580.45 34,874.91 3,997.75 61,232.57
$ 943,742.15

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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SECTIONll AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA AGRICULTURAL EXPOSITION AUTHORITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1997

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

926-96-01 926-96-02

Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Plan Implemented

CORRECTIVE ACTIONIRESPONSES

ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties Finding Control Number 926-96-01

The Management ofthe Georgia Agricultural Exposition Authority recognizes the importance of the proper segregation of duties as they relate to various fmancial functions. Our on going objective is to maintain a system ofinternal accounting controls which would include organizational arrangements that would provide an appropriate division of responsibilities. This system would then provide reasonable assurances that transactions of the Authority are executed in accordance with management's general or specific authorizations, that the financial records fairly reflect, in reasonable detail, the transactions of the Authority, and that the Authority's assets are properly safeguarded. However, due to limitations in personnel, whereby all accounting functions are perfonned by only two individuals, obviates the Authority from attaining the optimum level of separation of responsibilities. Furthennore, the addition of staff solely to merit an enhanced level of organizational effectiveness, i.e., to allow an improvement in the separation of duties and responsibilities, would not be cost effective nor cost justified, especially during a time of government streamlining, downsizing and redirection. The Authority will continue to objectively evaluate internal control issues as they relate to the separation of duties, and strive to strengthen areas where deficiencies are found to exist.

SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA AGRICULTURAL EXPOSmON AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1997

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

ACCOUNTING CONTROLS (OVERALL) Inadequate Separation ofDuties Finding Control Number: FS-926-97-01

For the year under review, the internal accounting controls procedures ofthe Georgia Agricultural Exposition Authority did not provide for an adequate separation of duties in the perfonnance of certain accounting functions and related procedures in the following control categories:

(1) Cash and Cash Equivalents (2) Revenues/Receivables/Receipts (3) Expenditures/Liabilities/Disbursements

(4) Employee Compensation (5) General Ledger (6) General Fixed Assets/Property Management

The Authority should continue to review the accounting procedures in place. To the extent possible and practical, the Authority should design and implement procedures which would enhance segregation of duties relative to the above categories.