Review report, state of Georgia, Governor's Commission on Health Care Reform, year ended June 30, 1994

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STATE OF GEORGIA DEPARTMENT OF AUDITS
254 WASHINGTON STREET ATLANTA, GEORGIA 30334

REVIEW REPORT STATE OF GEORGIA GOVERNOR'S COMMISSION ON HEALTH CARE REFORM YEAR ENDED JUNE 30, 1994

GOVERNOR'S COMMISSION ON HEALTH CARE REFORM - TABLE OF CONTENTS -

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

EXHIBITS

FINANCIAL STATEMENTS

A BALANCE SHEET (STATUTORY BASIS)

ALL FUND TYPES

2

B STATEMENT OF CHANGES IN FUND BALANCE

(STATUTORY BASIS)

GOVERNMENTAL FUND TYPE

3

C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

BUDGET FUND

4

D NOTES TO THE FINANCIAL STATEMENTS

6

SUPPLEMENTARY INFORMATION

SCHEDULES

1 CASH AND CASH EQUIVALENTS

12

2 SCHEDULE OF OTHER OPERATING EXPENSES

13

3 SCHEDULE OF TRAVEL

14

CLAUDE L VICKERS STATE AUDITOR (404) 656-2174
TAX RATIO (404) 656-0494

~epnrtment of /\uhits
254 WASHINGTON STREET. SW ROOM 214
~tlmtbt, ~eorgia 30334-8400
November 8, 1994

FINANCIAL AUDITS (404) 656-2180
PROGRAM AUDITS (404) 656-2006

Honorable Zell Miller, Governor Members of the General Assembly of Georgia Members of the Governor's Commission on Health Care Reform
and Honorable Marjorie P. Smith, Director Governor's Commission on Health Care Reform
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have reviewed the accompanying financial statements (Exhibits A through D) of the Governor's Commission on Health Care Reform as of and for the year ended June 30, 1994, 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 Governor's Commission on Health Care Reform.
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.
As discussed in Note 4, the executive order creating the Governor's Commission on Health Care Reform provides that the Commission be abolished as ofDecember 1, 1994. This condition indicates substantial doubt about the Commission's ability to continue as a going concern. The accompanying financial statements do not include any adjustments to the financial statements that might be necessary should the Commission be unable to continue as a going concern.

94ARL-4X

Our review was made for the pwpose of expressing limited assurance that there were no material modifications that should be made to the financial statements in order for them to be in conformity with the basis of accounting described in Note 1. The accompanying supplementary information (Schedules I through 3) is presented only for supplementary analysis purposes. Such information has been subjected to the inquiries and analytical procedures applied in the review of the financial statements and we are not aware of any material modifications that should be made thereto.
Respectfully submitted,
~/~
Claude L. Vickers State Auditor
CLV:gp 94ARL-4X

FINANCIAL STATEMENTS - 1-

GOVERNOR'S COMMISSION ON HEALTH CARE REFORM BALANCE SHEET (STATUTORY BASIS) All FUND TYPES JUNE 30 1 1994

EXHIBIT "A"

ASSETS Cash and Cash Equivalents
(See Schedule) Accounts Receivable
Federal Financial Assistance Other
Total Assets
FUND EQUITY Fund Balances
Reserved Federal Financial Assistance Joseph B. Whitehead Foundation Other Funds
Total Fund Equity

GOVERNMENTAL FUND TYPE BUDGET FUND
JUNE 30, 1994 JUNE 30, 1993

$ 130,418.26 $

0.00

------------- -------------

$ 267,510.86 $ 300,000.00

267,510.86

300,000.00

------------- -------------

$ 535,021.72 $ 600,000.00
------------- -------------

$ 665,439.98 $ 600,000.00

$ 267,510.86$ 300,000.00

130,418.26

0.00

267,510.86 300,000.00

$ 665,439.98$ 600,000.00
============= =============

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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GOVERNOR'S COMMISSION ON HEALTH CARE REFORM STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS)
GOVERNMENTAL FUND TYPE YEAR ENDED JUNE 30, 1994

EXHIBIT "B"

FUND BALANCE - JULY 1
---------------------
Reserved
ADDITIONS
---------
Excess of Funds Available over Expenditures Exhibit "C"
DEDUCTIONS
----------
Reserved Fund Balance Carried Over from Prior Year as Funds Available
FUND BALANCE - JUNE 30 ----------------------
(To Exhibit "A")

BUDGET FUND YEAR ENDED
JUNE 30, 1994 JUNE 30, 1993

$ 600,000.00 $

0.00

------------- -------------

$ 665,439.98 $ 600,000.00
------------- -------------

$ 600,000.00 $

0.00

------------- -------------

$ 665,439.98 $ 600,000.00
============= =============

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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GOVERNOR'S COMMISSION ON HEALTH CARE REFORM STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND
YEAR ENDED JUNE 30. 1994

EXHIBIT "C" Page 1

FUNDS AVAILABLE
REVENUES
FEDERAL REVENUES OTHER REVENUES RETAINED
Contract Department of Medical Assistance
Donations Joseph B. Whitehead Foundation
Governor's Emergency Fund Department of Medical Assistance
Total Other Revenues Retained
Total Revenues
CARRY-OVER FROM PRIOR YEAR
Transfers from Reserved Fund Balance Federal Financial Assistance Other Funds
Total Carry-Over From Prior Year
Total Funds Available

TOTALS YEAR ENDED JUNE 30, 1994 JUNE 30, 1993

$

0.00 $ 300,000.00

------------- -------------

$

0.00 $ 300,000.00

150,000.00

0.00

50,000.00

0.00

------------- -------------

$----2-0-0-,-0-0-0-.-0-0 $----3-0-0-,-0-0-0-.-0-0

$ ----2-0-0-,-0-0-0-.0--0

$ 600,000.00
-------------

$ 300,000.00 $

0.00

300,000.00

0.00

------------- -------------

$ ----6-0-0-,-0-0-0-.-0-0

$

0.00

-------------

$ 800,000.00$ 600,000.00

EXPEND I TURES

REGULAR OPERATING EXPENSES

Supplies and Materials Repairs and Maintenance
Rents (Other than Real Estate) Other Operating Expenses (See Schedule) Duplicating and Rapid Copy Publications and Printihg

$

4,146.64 $

0.00

3,052.28

0.00

16,514.47

0.00

6,410.29

0.00

1,584.60

0.00

3,054.57

0.00

------------- -------------

$

34,762.85
-------------

$

0.00

-------------

TRAVEL

$

3,367.24

-------------

$----------0-.-0-0

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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GOVERNOR'S COMMISSION ON HEALTH CARE REFORM
STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND
YEAR ENDED JUNE 30, 1994

EXHIBIT "C" Page 2

EXPENDITURES EQUIPMENT
Equipment Purchases REAL ESTATE RENTALS PER DIEM, FEES AND CONTRACTS
Per Diem and Fees Contracts
Total Expenditures Excess of Funds Available over Expenditures

TOTALS YEAR ENDED JUNE 30, 1994 JUNE 30, 1993

$

534.00 $

0.00

$ 13,783.04 $

0.00

$ 27,199.71 $

0.00

54,913.18

0.00

------------- -------------

$ 82,112.89
-------------

$----------0-.0--0

$ 134,560.02 $

0.00

665,439.98

600,000.00

------------- -------------

$ 800,000.00 $ 600,000.00
------------- -------------

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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GOVERNOR'S COMMISSION ON HEALTH CARE REFORM NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The Governor's Commission on Health Care Reform was created by executive order ofthe Governor of the State of Georgia. The Commission is attached to the Department of Medical Assistance for administrative purposes only. Administrative services are provided to the Commission by the Department of Medical Assistance. The Commission consists of twenty-two (22) members as follows: twenty (20) members appointed by the Governor; one (1) member appointed by the Lieutenant Governor; and one (I) member appointed by the Speaker of the House of Representatives.
The Commission is established to develop and coordinate a plan to respond to the adoption of a national health care reform program. The Commission may also make and enter into contracts, solicit expert opinion, hold public hearings and establish committees as may be necessary to enable the Commission to carry out its function. The Commission was created January 11, 1993, and is scheduled to be abolished December 1, 1994.
The Governor's Commission on Health Care Reform is included within the State of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational and financial relationships with the State of Georgia. These reporting entity relationships are defined in Section 2100 of the Governmental Accounting Standards Board Codification ofGovernmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING The Governor's Commission on Health Care Reform uses a fund to report on its financial position and the results ofits operations determined in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. The fund presented in the accompanying financial statements is as follows:
GOVERNMENTAL FUND TYPE
BUDGET FUND - The fund used to account for all activities of the Governor's Cominission on Health Care Reform. The Budget Fund is similar in nature to a General Fund as identified in generally accepted accounting principles in that the Budget Fund is used to account for all activities except those required to be accounted for in some other fund.
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 current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements ofthese funds present increases (i.e., revenues) and decreases (i.e., expenditures) in net current assets.
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GOVERNOR'S COMMISSION ON HEALTH CARE REFORM NOTES TO THE.FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPE BUDGETFUND
Except as disclosed in the following paragraph, 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 become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Revenues that are accrued include primarily State appropriations, Federal grants and entitlements, and certain amounts earned under operating agreements with other parties. Further, the modified accrual basis of accounting calls for expenditures, other than accrued interest of general long-term debt, to be recorded when the related fund liability is incurred.
Prior period adjustments and certain other items are reported as additions to and deductions from fund balances ofthe Budget Fund in the accompanying financial 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 in that immaterial adjustments should be reported as current period revenues and expenditures.
BUDGET A budget for the financial operations ofthe Governor's Commission on Health Care Reform was not prepared by the Commission, therefore, the financial operations represent nonbudgeted financial activities.
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of funds on deposit with the Department of Medical Assistance.
INVENTORIES No inventories of supplies are reported in the current financial statements. Expendable supplies are recorded as expenditures at the time of purchase.
RESERVED FUND BALANCE Reserves represent those portions of fund equity not appropriable for expenditure or legally segregated for a specific future use. The following is a brief description of the reserves reflected in the accompanying financial statements:
FEDERAL FINANCIAL ASSISTANCE The residual portion ofFederal financial assistance revenues not yet expended or encumbered. This amount is restricted for expenditure in future years. This accounting treatment differs from generally accepted accounting principles in that the unearned portion of Federal financial assistance should be reflected as deferred revenue.

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GOVERNOR'S COMMISSION ON HEALTH CARE REFORM NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXIIlBIT D 11 11

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RESERVED FUND BALANCE JOSEPH B. WHITEHEAD FOUNDATION Funds received for this program represent amounts donated by the Joseph B. Whitehead Foundation for operating support for the Governor's Commission on Health Care Reform. This amount is restricted for expenditure in future years.
OTHER FUNDS The amount contributed by the Department of Medical Assistance from the Indigent Care Trust Fund for Federal matching funds. This amount is restricted for expenditure in future years.
COMPARATIVE DATA Comparative total data for the prior year have been presented in the accompanying financial statements in order to provide an understanding of changes in the Commission's financial position and operations.
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 collateral any one or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
(1) Bonds, bills, notes, certificates of indebtedness or other direct obligations ofthe United States or of the State of Georgia.
(2) Bonds, bills, notes, certificates ofindebtedness or other obligations of the counties or municipalities of the State of Georgia.
(3) Bonds of any public authority created by the laws of the 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, and 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.

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GOVERNOR'S COMMISSION ON HEALTH CARE REFORM NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (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 Deposits of the Governor's Commission on Health Care Reform shown on Schedule "I" of this report are a part ofthe demand deposits maintained by the Department of Medical Assistance. The amounts of the bank balances for these deposits are classified by custodial credit risk categories in the audit report of the Department of Medical Assistance.
NOTE 3: OTHER FINANCIAL NOTES
EMPLOYEES ON LOAN FROM DEPARTMENT OF MEDICAL ASSISTANCE Certain employees have been temporarily assigned to the Governor's Commission on Health Care Reform by the Department ofMedical Assistance. All salaries and associated benefits for these individuals were paid by the Department for fiscal year ended June 30, 1994.
NOTE 4: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the Commission expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against the Governor's Commission on Health Care Reform, if any, are generally considered to be actions against the State of Georgia. Pursuant to the Official Code of Georgia Annotated, the Department of Administrative Services maintains a program of purchased insurance and selfinsurance which provides coverage for such litigation, claims and assessments. 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, 1994.
In accordance with the Governor's Executive Order dated January 11, 1993, the Governor's Commission on Health Care Reform is to be abolished on December 1, 1994. This raises substantial doubt about the Commission's ability to continue as a going concern.
NOTE 5: BONDING INFORMATION
The Financial records of the Commission are maintained by employees of the Department of Medical Assistance. These employees are bonded under a Public Employees Blanket Bond written by Employers
-9 -

GOVERNOR'S COMMISSION ON HEALTH CARE REFORM NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "D"

NOTE 5: BONDING INFORMATION
Insurance ofWausau, their Bond No. 1450-00-110723, on which the premium was paid to October 1, 1994. Under this agreement the Public Employee Dishonesty Coverage insures the Department ofMedical Assistance to a maximum of$1,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees.
The Faithful Performance of Duty Coverage insures the Department to a maximum of$100,000.00 against loss sustained from failure of its employees to perform faithfully their duties or to account properly for all monies and property received by virtue of their position or employment.
All employees of the Department of Medical Assistance are also bonded under a Commercial Crime Policy written by the United States Fire Insurance Company, their Policy No. 626 011675 2, on which the premium was paid to October 1, 1994. Under this additional public employee dishonesty coverage, the policy insures the Department to a maximum of $4,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees.

- 10 -

SUPPLEMENTARY INFORMATION - 11 -

GOVERNOR'S COMMISSION ON HEALTH CARE REFORM CASH AND CASH EQUIVALENTS JUNE 30, 1994
NONINTEREST BEARING ACCOUNTS Funds on Deposit with Department of Medical Assistance

SCHEDULE "l"
$ 130,418.26
=============

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 12 -

GOVERNOR'S COMMISSION ON HEALTH CARE REFORM SCHEDULE OF OTHER OPERATING EXPENSES YEAR ENDED JUNE 30, 1994
REGULAR OPERATING EXPENSES
Freight, Express and Storage Legal Advertising Registration Fees Subscriptions and Dues

SCHEDULE "2"

$

2,755.43

569.96

638.00

2,446.90

$ 6,410.29

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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GOVERNOR'S COMMISSION ON HEALTH CARE REFORM SCHEDULE OF TRAVEL
YEAR ENDED JUNE 30, 1994

NAME
Cucchi , Smith,

Sean Marjorie p.

POSITION
--------
Administrator Director

TIME MONTHS
12* 12*

(*) On Loan from Department of Medical Assistance

SCHEDULE "3"

TRAVEL

$

1,947.56

1,419.68

-------------

$

3,367.24

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 14 -