GA ABOO 
.Rl 
r4-s 
' llff3-91f 
STATE OF GEORGIA DEPARTMENT OF AUDITS 
254 WASHINGTON STREET ATLANTA. GEORGIA 30334 
 
 AUDIT REPORT STATE OF GEORGIA DEPARTMENT OF INSURANCE YEAR ENDED JUNE 30, 1994 
 
 DEPARTMENT OF INSURANCE - TABLE OF CONTENTS - 
 
SECTION I 
 
FINANCIAL 
 
INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION 
 
EXHIBITS 
 
FINANCIAL STATEMENTS 
 
A COMBINED BALANCE SHEET (STATUTORY BASIS) 
 
ALL FUND TYPES AND ACCOUNT GROUPS 
 
2 
 
B COMBINED STATEMENT OF CHANGES IN FUND BALANCES 
 
(STATUTORY BASIS) 
 
GOVERNMENTAL FUND TYPES 
 
5 
 
C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES 
 
BUDGET FUND 
 
6 
 
D STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES 
 
COMPARED TO BUDGET 
 
BUDGETFUND 
 
8 
 
E STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS 
 
STATE REVENUE COLLECTIONS FUND 
 
9 
 
F NOTES TO THE FINANCIAL STATEMENTS 
 
10 
 
SUPPLEMENTARY INFORMATION 
 
G COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES 
 
FIDUCIARY FUND TYPE-AGENCY FUNDS 
 
22 
 
SCHEDULES 
 
1 SCHEDULE OF APPROVED BUDGET 
 
23 
 
2 CASH AND CASH EQUIVALENTS 
 
24 
 
3 INVESTMENTS 
 
25 
 
4 SCHEDULE OF FEDERAL REVENUES 
 
26 
 
5 SCHEDULE OF OTHER OPERATING EXPENSES 
 
27 
 
SECTIONil FINDINGS AND IMPROPER OR QUESTIONED COSTS SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS 
 
 SECTION I FINANCIAL 
 
 CLAUDE L. VICKERS STATE AUDITOR (404) 656-2174 
TAX RATIO (404) 656-0494 
 
:!1.eparhn.eut of ~uh-its 
254 WASHINGTON STREET, S. W. ROOM 214 
J\tlmtht, <ieorght 30334-8400 
December 12, 1994 
 
FINANCIAL AUDITS (404) 656-2180 
PROGRAM AUDITS (404) 656-2006 
 
Honorable Zell Miller, Governor Members of the General Assembly of Georgia Honorable John W. Oxendine, Commissioner Department ofInsurance 
INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION 
Ladies and Gentlemen: 
We have audited the accompanying financial statements (Exhibits A through F) ofthe Department of Insurance as of and for the year ended June 30, 1994. These financial statements are the responsibility of the Department's management. Our responsibility is to express an opinion on these financial statements based on our audit. 
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial 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. 
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. 
As more fully discussed in Section Il, Findings and Improper or Questioned Costs, material discrepancies were noted in the equipment inventory records of the Department. Equipment inventory comprises the General Fixed Assets Account Group. We were unable to determine the effects these discrepancies may have on the financial statements. 
In our opinion, except for the effects on the financial statements of the adjustments to the equipment inventory records that may be necessary as described in the preceding paragraph, the financial statements referred to above present fairly, in all material respects, the financial position (statutory basis) of the Department of Insurance as of June 30, 1994, and the results ofits operations (statutory basis) for the year then ended, on the basis of accounting described in Note 1. 
94ARL-2 
 
 Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplementary information (Exhibit G and Schedules 1 through 5) is presented for purposes of additional analysis and is not a required part of the financial statements of the Department of Insurance. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly presented in all material respects in relation to the financial statements taken as a whole. 
~z~ 
 
CLV:jy 94ARL-2 
 
Claude L. Vickers State Auditor 
 
 FINANCIAL STATEMENTS - 1- 
 
 DEPARTMENT OF INSURANCE COMBINED BALANCE SHEET (STATUTORY BASIS) 
ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30, 1994 
 
ASSETS Cash and Cash Equivalents 
(See Schedule) Investments 
(See Schedule) Accounts Receivable 
State Appropriation Federal Financial Assistance Other 
Prepaid Items Fixed Assets 
Equipment Amount to be Provided for Payment of 
Accrued Compensated Absences 
Total Assets 
LIABILITIES AND FUND EQUITY Liabilities 
Cash Overdraft Accounts Payable Payroll Withholdings Funds Held for Others Compensated Absences 
Total Liabilities Fund Equity 
Investment in General Fixed Assets Fund Balances 
Reserved State Revenue Collections Fund 
Unreserved Designated Surplus Deficit Total Fund Equity 
Total Liabilities and Fund Equity 
 
GOVERNMENTAL FUND TYPES 
 
STATE 
 
REVENUE 
 
BUDGET 
 
COLLECTIONS 
 
$ 549,382.93 $_ _ _-:.0.:..:.0=0 
 
$ 24,779.42 71,987.50 0.00 
$ 96,766.92 
$ 21,329.17 
 
$ 667.479.02 $_.....,...........,0...0.-=o 
 
$ $ 119,513.97 
1,390.00 
 
262.00 
 
$ 120,903.97 $_ _--=2_6__2__.o_=-0 
 
$ 
 
0.00 
 
$ 546,575.05 
 
-262.00 
 
$ S46.S7s.os $___-...2.=6_2__._o_'"""o 
 
$ 667,479.02 $=====0...0.=0 
 
The notes to the financial statements are an integral part of this statement. - 2- 
 
 EXHIBIT "A" 
 
FIDUCIARY 
FUND TYPE AGENCY 
 
ACCOUNT GROUPS 
 
GENERAL 
 
GENERAL 
 
FIXED 
 
LONG-TERM 
 
ASSETS 
 
DEBT 
 
TOTALS (Memorandum Only) 
JUNE 30, 1994 JUNE 30, 1993 
 
$ 2,923,609.98 
 
$ 3,472,992.91 $ 26,548,711.93 
 
$192.517.009.69 
 
$192.517.009.69 $192.105,268.22 
 
$ 
 
24,779.42 $ 
 
8,760.85 
 
71,987.50 
 
0.00 
 
0.00 
 
149,757.07 
 
$ 96,766.92 $ 158,517.92 
 
$ 
 
21,329.17 $ 
 
19,760.00 
 
$ 1,043,428.57 
 
$ 1,043,428.57 $ 943,756.27 
 
$ 878,424.50 $ 878,424.50 $ 714,665.22 
 
$195,440.619.67 $1,043,428.57 $ 878,424.50 $198.029,951.76 $220,490.679.56 
 
$195,440,619.67 $195.440,619.67 
 
$ 
 
262.00 $ 
 
0.00 
 
119,513.97 
 
192,789.03 
 
1,390.00 
 
765.00 
 
$_......8._7_8__,4__2__4.50 
 
195,440,619.67 878,424.50 
 
194,214,546.39 714,665.22 
 
$_......8._7_8__,4__2__4.50 $196,440,210.14 $195,122.765.64 
 
$1,043,428.57 
 
$ 1,043,428.57 $ 943,756.27 
 
0.00 22,918,239.84 
 
$ 1,043,428.57 
 
546,575.05 1,505,917.81 
 
-262.00 
 
0.00 
 
$ 1,589,741.62 $ 25,367,913.92 
 
$195,440,619.67 $1,043,428.57 $ 878,424.50 $198,029,951.76 $220,490,679.56 
 
- 3- 
 
  DEPARTMENT OF INSURANCE COMBINED STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS) 
GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30. 1994 
 
EXHIBIT "B" 
 
BUDGET 
 
STATE REVENUE COLLECTIONS 
 
TOTALS (Memorandum Only) 
YEAR ENDED JUNE 30, 1994 JUNE 30, 1993 
 
FUND BALANCES - JULY 1 
 
Reserved Unreserved 
Designated Surplus 
 
$ 22,918,239.84 $ 22,918,239.84 $ 69,736.34 
 
$1,505,917.81 
 
0.00 1,505,917.81 
 
277,797.29 
 
$1,505,917.81 $ 22,918,239.84 $ 24,424,157.65 $ 347,533.63 
 
ADDITIONS 
 
Adjustments to Prior Year's Accounts Payable 
Cash Receipts for the Year Exhibit "E" 
Excess of Funds Available over Expenditures Exhibit "C" 
Reimbursement of Prior Year's Expenditures 
 
$ 11,460.11 
 
$ 
 
11,460.11 $ 
 
12,443.35 
 
$181,294,386.48 181,294,386.48 207,651,297.24 
 
680,884.01 3,988.00 
 
680,884.01 3,988.00 
 
1,546,439.72 0.00 
 
$ 696,332.12 $181,294,386.48 $181,990,718.60 $209,210,180.31 
 
DEDUCTIONS 
 
Unreserved Fund Balance (Surplus) Returned to Office of Treasury and Fiscal Services Year Ended June 30, 1992 Year Ended June 30, 1993 
Adjustments to Prior Year's Accounts Receivable(*) 
Cash Disbursements for the Year Exhibit "E" 
Reserved Fund Balance Carried Over from Prior Year as Funds Available 
Unidentified Difference 
 
$ 
 
0.00 
 
1,505,917.81 
 
$ 
 
0.00 $ 277,797.29 
 
1,505,917.81 
 
0.00 
 
149,757.07 
 
149,757.07 
 
20,554.24 
 
$204,212,888.32 204,212,888.32 184,721,179.22 
 
0.00 
 
0.00 
 
81,614.52 
 
0.00 
------------- 
 
-------------- 
 
0.00 
-------------- 
 
32,411.02 
-------------- 
 
$1,655,674.88 $204,212,888.32 $205,868,563.20 $185,133,556.29 
 
FUND BALANCES - JUNE 30 
 
(To Exhibit "A") 
 
$ 546,575.05$ 
 
-262.00 $ 546,313.05$ 24,424,157.65 
 
============= ============== ============== ============== 
 
(*) See Section II, Findings and Improper or Questioned Costs. 
 
The notes to the financial statements are an integral part of this statement. - 5- 
 
 DEPARTMENT OF INSURANCE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES 
BUDGET FUND YEAR ENDED JUNE 30. 1994 
 
EXHIBIT "C" Page 1 
 
FUNDS AVAILABLE 
REVENUES 
STATE APPROPRIATION General Appropriation Amended Appropriation 
Total State Appropriation 
FEDERAL REVENUES (See Schedule) 
OTHER REVENUES RETAINED Contract Georgia Department of Human Resources Fire Safety Inspections of Health Care Facilities Reimbursements For Per Diem Expenditures Various Receiverships For Salaries Sales Photocopies Rulemaking Mailing List 
Total Other Revenues Retained 
Total Revenues 
CARRY-OVER FROM PRIOR YEAR 
Transfer from Reserved Fund Balance Federal Financial Assistance 
 
TOTALS YEAR ENDED JUNE 30. 1994 JUNE 30. 1993 
 
$14,263,632.00 $14,655,877.00 
____o___.__o~o -512.121.00 
$14,263,632.00 $14,143,756.00 $1,260,290.61 $1,051,146.92 
 
$ 29,434.52$ 45,328.24 
 
241,494.81 526.10 
 
409,496.25 0.00 
 
20,263.16 19,400.00 
 
0.00 96,300.00 
 
$ 311,118.59 $ 551,124.49 
 
$15,835,041.20 $15,746,027.41 
 
0.00 
 
81.614.52 
 
Total Funds Available 
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 Assessments by Merit System Drug Testing 
 
$15,835,041.20 $15,827,641.93 
 
$ 8,798,245.36 $ 8,072,577.59 
 
632,467.66 1,383,122.86 1,085,785.41 
39,360.00 17,325.00 116,573.00 26,610.70 
276.50 
 
583,877.54 1,277,622.00 1,001,090.15 
26,560.00 3,828.00 104,217.00 26,160.54 
197.50 
 
$12,099,766.49 $11.096.130.32 
 
- 6- 
 
 DEPARTMENT OF INSURANCE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES 
BUDGET FUND YEAR ENDED JUNE 30, 1994 
 
EXHIBIT "C" Page 2 
 
EXPENDITURES 
REGULAR OPERATING EXPENSES 
Motor Vehicle Expenses Supplies and Materials Repairs and Maintenance Rents (Other than Real Estate) Insurance and Bonding Other Operating Expenses (See Schedule) Duplicating and Rapid Copy Publications and Printing 
TRAVEL 
MOTOR VEHICLE PURCHASES 
EQUIPMENT 
Equipment Purchases 
COMPUTER CHARGES 
Other Costs Supplies and Materials Repairs and Maintenance Other Operating Expenses (See Schedule) 
Software Equipment 
Equipment Purchases Per Diem, Fees and Contracts 
Contracts Computer Billings, DOAS 
REAL ESTATE RENTALS 
TELECOMMUNICATIONS 
PER DIEM, FEES AND CONTRACTS 
Per Diem and Fees 
Total Expenditures 
Excess of Funds Available over Expenditures 
 
TOTALS YEAR ENDED JUNE 30, 1994 JUNE 30, 1993 
 
$ 112,785.22 $ 103,665.83 
 
391,717.98 
 
442,167.20 
 
58,126.05 
 
17,213.94 
 
5,053.50 
 
6,077.23 
 
11,747.47 
 
15,023.00 
 
104,425.21 
 
73,726.20 
 
27,254.47 
 
36,822.77 
 
40,068.54 
 
43,315.74 
 
$ 751,178.44 $ 738,011.91 
 
$ 377,557.90$ 359,934.15 
 
$ 72,000.00$ 40.500.00 
 
$ 88,181.74 $ 124,121.58 
 
$ 
 
1,437.39 $ 
 
4,033.23 
 
6,750.00 
 
0.00 
 
30.00 
 
0.00 
 
16,529.85 
 
41,844.69 
 
151,103.04 
 
224,964.29 
 
0.00 240,187.29 
 
58,100.00 349,197.69 
 
$ 416,037.57 $ 678,139.90 
 
$ 585,551.25$ 518,988.20 
 
$ 281,301.11 $ 226,514.47 
 
$ 482,582.69 $ 498,861.68 $15,154,157.19 $14,281,202.21 
680,884.01 1,546,439.72 
 
$15,835,041.20 $15,827,641.93 
 
The notes to the financial statements are an integral part of this statement. - 7- 
 
 DEPARTMENT OF INSURANCE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES 
COMPARED TO BUDGET BUDGET FUND 
YEAR ENDED JUNE 30. 1994 
 
EXHIBIT "0" 
 
FUNDS AVAILABLE REVENUES 
State Appropriation Federal Revenues Other Revenues Retained 
EXPENDITURES Personal Services Regular Operating Expenses Travel Motor Vehicle Purchases Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts 
Excess of Funds Available over Expenditures 
 
BUDGET 
 
lli.!1& 
 
VARIANCE FAVORABLE (UNFAVORABLE) 
 
$14,263,632.00 $14,263,632.00$ 
 
1,210,834.00 1,260,290.61 
 
333,756.00 
 
311,118.59 
 
0.00 49,456.61 -22.637.41 
 
$15.808.222.00 $15.835.041.20 $ 26,819.20 
 
$12,681,688.00 $12,099,766.49 $ 
 
751,512.00 
 
751,178.44 
 
430,454.00 
 
377,557.90 
 
72,000.00 
 
72,000.00 
 
88,820.00 
 
88,181.74 
 
417,010.00 
 
416,037.57 
 
594,262.00 
 
585,551.25 
 
286,025.00 
 
281,301.11 
 
486,451.00 
 
482,582.69 
 
581,921.51 333.56 
52,896.10 0.00 
638.26 972.43 8,710.75 4,723.89 3,868.31 
 
$15.808.222.00 $15,154,157.19 $ 654,064.81 
 
$ 680,884.01 $ 680,884.01 
 
The notes to the financial statemen~s are an integral part of this statement. 
- 8- 
 
 DEPARTMENT OF INSURANCE STATEMENT OF cAsA RECEIPIS AND DISBURSEMENTS 
STATE REVENUE coLLECfioNs FOND VEAR ENDED JONE 30 1 1994 
 
EXHIBIT "E" 
 
CASH RECEIPTS 
 
STATE REVENUE COLLECTIONS 
 
Business Licenses and Regulatory Fees Insurance Agents' Licenses and Examination Fees 
 
$ 10,220,118.70 
 
Insurance Regulatory Licenses and Fees Insurance Company Filing Fees Insurance Company Licenses Pre-Need Funeral Licenses and Service Fees Miscellaneous Business Licenses and Regulatory Fees 
 
$ 1,535,593.00 1,121,499.24 20,095.00 696,662.00 
 
3,373,849.24 
 
Industrial Loan Company Licenses and Reg1:1latory Fees Licenses lnvesti~ation Fees Re-examination Fees 
 
$ 510,000.00 19,351.68 7 297.27 
 
536,648.95 
 
Safety Fire Prevention Licenses and Fees Carnival and Show Fees Certificate of Competency Fees Certificate of Occupancy Fees Construction Permit Fees Explosive Storage Fees Liquid Petroleum and Gas Fees Mobile Home Dealers' Licenses 
 
$ 
 
3,500.00 
 
59,650.00 
 
37,700.00 
 
146,731.21 
 
39,309.78 
 
17,900.00 
 
122,555.00 
 
427,345.99 
 
Taxes and Other Industrial Loan Company Taxes Industrial Loan Company Tax Penalties 
 
$ 2,137,463.95 12,680.33 $ 2,150,144.28 
 
Insurance Premium Taxes Less: Distribution to Counties and Cities 
 
$ 353,271,628.51 -190.404.126.19 $162,867,502.32 
 
Insurance Premium Tax Interest Insurance Premium Tax Penalties 
 
176,516.41 476 772.49 163.520.791.22 165,670,935.50 
 
Sales and Miscellaneous Administrative Fines Sales of Manuals and Miscellaneous Service Charges for Disc Copies Service Charges for Photostatic Copies 
 
-$ 1,037,981.18 6,096.43 467.00 
---...::9~4~3..c.4=9 
 
1,045,488.10 
 
Settlement Recovery 
 
20,000.00 
 
Total Cash Receipts 
 
$181,294,386.48 
 
CASH AND CASH EQUIVALENTS - JULY 1, 1993 
 
22,918,239.84 
 
$204.212.626.32 
 
TRANSFERS To Office of Treasury and Fiscal Services 
CASH AND CASH EQUIVALENTS - JUNE 30. 1994 
 
DISBURSEMENTS 
 
$204,212,888.32 -262.00 
 
$204.212.626.32 
 
The notes to the financial statements are an integral part of this statement. 
- 9- 
 
 DEPARTMENT OF INSURANCE NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 1994 
 
EXHIBIT "F" 
 
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
REPORTING ENTITY The Department ofInsurance, an organizational unit ofthe State of Georgia, is part ofthe executive branch of the government of the State of Georgia. The Department has primary oversight responsibilities for the insurance industry in the State ofGeorgia. The Department also provides fire safety regulation and instruction and supervises industrial loan companies operating within the State of Georgia. The Department ofInsurance is under the control and management ofthe Commissioner ofInsurance, who is elected by the qualified voters. 
The Department ofInsurance does not have authority to determine the amount of funding it will receive from the State of Georgia for any given fiscal year. Such authority is vested in the General Assembly of Georgia. The Department also does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, the Department ofInsurance 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 ofthe Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards. 
FUND ACCOUNTING The Department ofInsurance uses funds and account groups 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 ofGeorgia. 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. An account group, on the other hand, is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources. Funds and account groups presented in the accompanying financial statements are as follows: 
GOVERNMENTAL FUND TYPES 
BUDGET FUND - The fund used to account for activities and functions as set forth in the Amended Appropriations Act of 1993-1994. 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. 
STATE REVENUE COLLECTIONS FUND - The fund used to account for the collection of specific revenues ofthe State ofGeorgia as provided by statute or administrative action and the subsequent transfer of such funds to the Office of Treasury and Fiscal Services. This presentation differs from generally accepted accounting principles in that such activity should be included in the General Fund of the governmental organization. 
FIDUCIARY FUND TYPE 
AGENCY FUNDS - The funds used to account for assets held for use by other funds, governments, or individuals. 
- IO - 
 
 DEPARTMENT OF INSURANCE NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 1994 
 
EXHIBIT "F" 
 
NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
FUND ACCOUNTING 
ACCOUNT GROUPS 
GENERAL FIXED ASSETS - The account group used to account for fixed assets used in governmental fund type operations. Fixed assets purchased are recorded at historical cost. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on general fixed assets. 
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. 
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. 
GOVERNMENTAL FUND TYPES 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 ofaccounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount ofthe 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 ofaccounting calls for expenditures, other than accrued interest of general long-term debt, to be recorded when the related fund liability is incurred. 
Contractual obligations for services which have not been performed and for goods which have not been delivered at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based in part on the unexecuted portion of contracts for goods and services. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State ofGeorgia, but is not consistent with generally accepted accounting principles, which provide for the recording of encumbrances as a reservation of fund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles. 
- 11 - 
 
 DEPARTMENT OF INSURANCE NOTES TO THE FINANCIAL STATE1\1ENTS 
JUNE 30, 1994 
 
EXIllBIT "F" 
 
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPES BUDGET FUND 
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. 
STATE REVENUE COLLECTIONS FUND The State Revenue Collections Fund is maintained on the Cash Receipts and Disbursements basis of accounting as prescribed or permitted by statutes and regulations of the State of Georgia. This basis of accounting is defined as that method of accounting in which certain revenue and the related assets are recognized when received rather than when earned, and certain expenses are recognized when paid rather than when the obligation is incurred. The State Revenue Collections Fund, which should be included in the General Fund in accordance with generally accepted accounting principles, should be maintained on the modified accrual basis of accounting. 
FIDUCIARY FUND TYPE AGENCY FUNDS 
The Agency Funds are custodial in nature in that assets are equally offset by liabilities to other funds, governmental units, or individuals. The modified accrual basis of accounting is utilized for recognizing assets and liabilities. 
BUDGET Appropriation allotments to the Department of Insurance are on the basis of a budget submitted by the Department and approved by the Legislature and the Governor. The budget is compiled in the same manner as all State departments and expenditures are classified by budget unit object classes as provided in Act No. 608 ofGeorgia Laws 1993 (as approved April 28, 1993) and amended by Act No. 622 of Georgia Laws 1994 (as approved February 8, 1994), which is an appropriated budget and is referred to in these notes as the Amended Appropriations Act of 1993-1994. 
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include demand deposits with banks and other financial institutions and short-term, highly liquid investments with maturity dates within three months of the date acquired. 
INVESTMENTS Investments are defined as those financial instruments with terms of three months or more from the date of purchase and certain other securities held for the production of revenue. Investments are stated at cost. 
 
- 12 - 
 
 DEPARTMENT OF INSURANCE NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 1994 
 
EXHIBIT "F" 
 
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
INVENTORIES No inventories ofsupplies are reported in the current financial statements. Expendable supplies are recorded as expenditures at the time of purchase. 
COMPENSATED ABSENCES Compensated absences represent obligations of the Department relating to employee's rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulating annual 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 financial resources. Funds are provided in the appropriation offunds each year to the Department to cover the cost of annual leave paid to terminated employees. 
The liability for compensated absences at year end is reported in the General Long-Term Debt Account Group for governmental funds. 
MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the Combined Statements (Statutory Basis) are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results ofoperations or changes in financial 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 the accompanying financial statements in order to provide an understanding ofchanges in the Department 's financial position and operations. However, comparative data have not been presented in all statements because their inclusion would make certain statements unduly complex and difficult to understand. 
The amounts reflected on the Combined Balance Sheet (Statutory Basis) at June 30, 1994, for the asset caption "Fixed Assets - Equipment" and the fund equity caption "Investments in General Fixed Assets" includes a correction ofa prior period error (See Note 3). The amounts reflected for the asset and fund equity captions referred to above at June 30, 1993, have been restated to reflect this correction. 
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS 
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: 
 
- 13 - 
 
 DEPARTMENT OF INSURANCE NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 1994 
 
EXHIBIT "F" 
 
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS 
 
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (I) Bonds, bills, notes, certificates ofindebtedness or other direct obligations of the United States or of the State of Georgia. 
 
(2) Bonds, bills, notes, certificates ofindebtedness or other obligations ofthe counties or municipalities 
 
ofthe State of Georgia. 
 
 
 
(3) Bonds ofany public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use ofthe 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. 
 
(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. These bank balances are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk. 
 
Category 1 - Amounts covered by depository insurance or collateralized with securities (at market value) held by the Department or by its agent in the Department's name. 
 
Category 2 - Amounts collateralized with securities (at market value) held by the financial institution's trust department or agent in the Department's name. 
 
Category 3 - Amounts collateralized with securities (at market value) held by the financial institution or by its trust department or agent, but not in the Department's name, and amounts uncollateralized. . 
 
- 14 - 
 
 DEPARTMENT OF INSURANCE NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 1994 
 
EXIIlBIT "F" 
 
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS 
 
CATEGORIZATION OF DEPOSITS 
 
Canying Amount 
 
Bank Balance 
 
Risk Categories 
 
2 
 
3 
 
Cash Deposits 
 
S 7 190 272 30 S 7 985 094 61 S 443 922 24 S 6.750 72253 S 790 449 84 
 
CATEGORIZATION OF INVESTMENTS For purposes ofanalysis ofcustodial credit risk, investments consist ofU. S. Government securities, Canadian Bonds, and Securities on Hand. Investments are stated at cost, and are summarized and classified as to custodial credit risk within the categories described below: 
 
Category 1 - Insured or registered, or securities held by the Department or its agent in the Department's name. 
 
Category 2 - Uninsured or unregistered, with securities held by the counterparty's trust department or agent in the Department's name. 
 
Category 3 - Uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent but not in the Department's name. 
 
Type ofInvestment 
 
Risk Categories 
 
2 
 
3 
 
Canying Amount 
 
Marbt Value 
 
U. S. Government Securities Canadian Bonds Unclassified Securities on Hand 
 
S 240,000.00 S 10,000.00 
188,549,468.30 
 
0.00 S 
 
0.00 S 240,000.00 S 243,790.00 10,000.00 Not Available 
188,549,468.30 Not Available 
 
Total 
 
S 188 799 468 30 S 
 
ooo s=~o=oo s 18879946830 
 
Securities on Hand, as reflected on Schedule "3", represent securities held pursuant to statutes which require licensed insurance companies to establish deposits with the Department of Insurance prior to issuance of a certificate ofauthority to transact insurance by the Commissioner of Insurance. The purchase and redemption ofthe securities are the responsibility ofthe licensed insurance companies. The purchase and redemption of such securities are allowed as long as the required levels of deposits are maintained. 
NOTE 3: CHANGES IN GENERAL FIXED ASSETS 
In accordance with the statutory definition of moveable personal property as defined in Official Code of Georgia Annotated Section 50-16-161, only those items with an acquisition cost ofSl,000.00 or greater are reflected in the General Fixed Assets Account Group. 
 
- 15 - 
 
 DEPARTMENT OF INSURANCE NOTES TO THE FINANCIAL STATE:MENTS 
JUNE 30, 1994 
 
EXIIlBIT "F" 
 
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, 1993 Adjustment for Prior Year Misstatement Balance July 1, 1993 (Restated) Additions Deductions 
 
$ 989,806.24 -46, 049.97 
$ 943,756.27 191,142.68 91,470.38 
 
Balance June 30, 1994 
 
S ltQ43,428.57 
 
NOTE 4: GENERAL LONG-TERM DEBT 
 
CHANGES IN GENERAL LONG-TERM DEBT During the year ended June 30, 1994, the following changes occurred in the compensated absences liability reported in the General Long-Term Debt Account Group: 
 
Balance July 1, 1993 
Additions Annual Leave Earned and Utilized (Net) Salaries Salary Related Fringe Benefits(*) 
Balance June 30, 1994 
 
$ 714,665.22 
101,335.24 62,424.04 $ 878,424.50 
 
(*) Includes related fringe benefits applicable to compensated absences at July 1, 1993. 
 
NOTE 5: OTHER FINANCIAL NOTES 
 
DEFICIT FUND BALANCE The State Revenue Collections Fund has a deficit fund balance of $262.00 at June 30, 1994. This resulted from the Department of Insurance remitting funds to Office of Treasury and Fiscal Services in excess of collections. 
 
NOTE 6: DEFERRED COMPENSATION PLAN 
 
The State ofGeorgia 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 oftheir salary until future years. 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 
 
- 16- 
 
 DEPARTMENT OF INSURANCE NOTES TO THE FINANCIAL STATE:MENTS 
JUNE 30, 1994 
 
EXIIlBIT "F" 
 
NOTE 6: DEFERRED COMPENSATION PLAN 
or rights ofthe State ofGeorgia subject only to the claims of the State's general creditors. Participant's rights under the plan are equal to those of a general creditor of the State of Georgia in an amount equal to the fair market value ofthe deferred account ofeach participant. Financial information relative to the plan is presented in the financial report of the State Personnel Board - Merit System ofPersonnel Administration for the year ended June 30, 1994. 
NOTE 7: RETIRE:MENT PLANS 
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA The Department ofInsurance participates in the Employees' Retirement System of Georgia, a single-employer, defined benefit pension plan. The Employees' Retirement System of Georgia was established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia. The Retirement System is funded through a combination of employee and employer contributions. Employees are required to contribute a graduated percentage of annual compensation. Employer contributions are for a specified percentage ofactive member payroll determined annually by an actuarial valuation. During the year ended June 30, 1994, the Department contributed $1,383,122.86 to the Employees' Retirement System ofGeorgia. Participation in the Retirement System is not segregated by employee groups of individual governmental units and the Department has no further liability under the retirement system other than future employer contributions as established for each fiscal year. Information relative to the plan description, funding status and historical trends is presented in the financial report ofthe Employees' Retirement System of Georgia for the year ended June 30, 1994. 
GEORGIA DEFINED CONTRIBUTION PLAN The State ofGeorgia also provides retirement coverage for temporary, seasonal, and part-time employees who are not eligible for membership in the Employees' Retirement System of Georgia referred to above through a single-employer defined contribution plan. The Georgia Defined Contribution Plan was established by the General Assembly of Georgia and is administered by the Board of Trustees of the Employees' Retirement System of Georgia. Covered employees are required to contribute 7.5% of their gross salary, with no matching contribution by the employer. A member who terminates employment may apply for a refund of contributions and interest. Benefits are based solely on the amount contributed by the employee plus investment earnings. Upon discretion ofthe Board ofTrustees, members who leave employment with less than $3,500.00 credited to their account may be required to make a lump-sum withdrawal. Members are eligible to retire at the age of65 with the option ofreceiving a periodic payment based on mortality tables and interest accumulation as adopted by the Board of Trustees of the Employees' Retirement System of Georgia. Information relative to the plan description and funding status is presented in the financial report of the Employees' Retirement System of Georgia for the year ended June 30, 1994. 
 
- 17 - 
 
 DEPARTMENT OF INSURANCE NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 1994 
 
EXIIlBIT "F" 
 
NOTE 8: LEAVE POLICIES 
Employees earn ten hours of sick 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 of employment. 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 credi! in the Employees' Retirement System of Georgia. 
NOTE 9: 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 Department expects such amounts, if any, to be immaterial to its overall financial position. 
Litigation, claims and assessments filed against the Department oflnsurance, if any, are generally considered to be actions against the State of Georgia. Pursuant to the Official Code of Georgia Annotated, the Department ofAdministrative Services maintains a program of purchased insurance and self- insurance which provides coverage for such litigation, claims and assessments. Accordingly, significant litigation, claims and assessments pending against the State ofGeorgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1994. 
NOTE 10: BONDING INFORMATION 
The Commissioner and all employees of the Department of Insurance are bonded under a Public Employees Blanket Bond written by Employers Insurance of Wausau, 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 to a maximum of$1,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees. The Faithful Performance ofDuty Coverage insures the Department to a maximum of $100,000.00 against loss sustained from failure ofits employees to perform faithfully their duties or to account properly for all monies and property received by virtue oftheir position or employment. 
 
 DEPARTMENT OF INSURANCE NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 1994 
 
EXHIBIT "F" 
 
NOTE IO: BONDING INFORMATION 
All employees ofthe Department of Insurance are also bonded under a Commercial Crime Policy written by the United States Fire Insurance Company, their Policy No. 626011675 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. 
 
- 19 - 
 
 20 
 
 SUPPLEMENTARY INFORMATION - 21 - 
 
 DEPARTMENT OF INSURANCE COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES 
FIDUCIARY FUND TYPE - AGENCY FUNDS YEAR ENDED JUNE 30, 1994 
 
EXHIBIT "G" 
 
FUND 
Receiverships Revenue Collections 
Escrow Account Securities on Hand (1) 
 
ASSETS/ 
 
ASSETS/ 
 
LIABILITIES 
 
LIABILITIES 
 
JULY 1, 1993 ADDITIONS 
 
DELETIONS JUNE 30, 1994 
 
-------------- ------------- ------------- ------------- 
 
$ 7,697,903.09 $ 749,758.21 $ 1,587,459.93 $ 6,860,201.37 
 
28,175.00 
 
39,650.00 
 
36,875.00 
 
30,950.00 
 
186,488,468.30 11,746,000.00 9,685,000.00 188,549,468.30 
-------------- ------------- ------------- -------------- 
 
$194,214,546.39 $12,535,408.21 $11,309,334.93 $195,440,619.67 
============== ============= ============= ============== 
 
(1) These inve~tments represent securities held pursuant to statutes which require licensed insurance companies to establish deposits with the Department of Insurance prior to issuance of a certificate of authority to transact insurance business in the State of Georgia by the Commissioner of Insurance. The purchase and redemption of the securities are the responsibility of the licensed insurance companies. The purchase and redemption of such securities are allowed as long as the required levels of deposits are maintained. 
 
See notes to the financial statements. 
 
- 22 - 
 
 DEPARTMENT OF INSURANCE SCHEDULE OF APPROVED BUDGET 
YEAR ENDED JUNE 30. 1994 
 
SCHEDULE "1" 
 
FUNDS AVAILABLE 
--------------- 
REVENUES 
-------- 
State Appropriation Federal Revenues Other Revenues Retained 
EXPENDITURES 
Personal Services Regular Operating Expenses Travel Motor Vehicle Purchases Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts 
 
ORIGINAL 
 
AMENDED 
 
BUDGET 
 
APPROPRIATION APPROPRIATION ADJUSTMENTS 
 
TOTAL 
 
------------- ------------- ----------- 
 
$14,263,632.00 $ 
 
0.00 
 
$14,263,632.00 
 
991,375.00 
 
$ 219,459.00 1,210,834.00 
 
0.00 
 
333,756.00 333,756.00 
 
------------- ------------- ------------- ------------- 
 
$15,255,007.00 $ 
 
0.00 $ 553,215.00 $15,808,222.00 
 
$12,464,264.00 706,912.00 394,214.00 72,000.00 70,820.00$ 409,010.00 611,762.00 286,025.00 240,000.00 
 
$ 
17,500.00 -17,500.00 
 
217,424.00 $12,681,688.00 
 
44,600.00 
 
751,512.00 
 
36,240.00 430,454.00 
 
72,000.00 
 
500.00 
 
88,820.00 
 
8,000.00 417,010.00 
 
594,262.00 
 
286,025.00 
 
246,451.00 486,451.00 
 
$15,255,007.00 $ 
 
0.00 $ 553,215.00 $15,808,222.00 
 
============= ============= ============= ============= 
 
See notes to the financial statements. 
 
- 23 - 
 
 DEPARTMENT OF INSURANCE CASH AND CASH EQUIVALENTS 
JUNE 30 1 1994 
 
SCHEDULE "2" 
 
NONINTEREST BEARING ACCOUNTS 
Bank South, N. A., Atlanta, Georgia 
NationsBank of Georgia, N. A., Atlanta, Georgia 
Trust Company Bank, Atlanta, Georgia 
Wachovia Bank of Georgia, Atlanta, Georgia 
INTEREST BEARING ACCOUNTS 
Wachovia Bank of Georgia, Atlanta, Georgia 
Wachovia Bank of Georgia, Atlanta, Georgia 
Certificates of Deposit No. 5571275 Purchase Date: June 3. 1994 Maturity Date: July 5, 1994 No. 5606417 Purchase Date: June 3, 1994 Maturity Date: July 5, 1994 No. 5630318 Purchase Date: June 3, 1994 Maturity Date: July 5, 1994 No. 5745329 Purchase Date: June 14, 1994 Maturity Date: July 18, 1994 No. 5745350 Purchase Date: March 31, 1994 Maturity Date: June 30, 1994 No. 6026549 Purchase Date: May 17, 1994 Maturity Date: August 15, 1994 No. 6033614 Purchase Date: May 25, 1994 Maturity Date: August 23, 1994 No. 6033619 Purchase Date: June 14, 1994 Maturity Date: July 18, 1994 No. 6033623 Purchase Date: April 19, 1994 Maturity Date: July 18, 1994 No. 6033680 Purchase Date: June 20, 1994 Maturity Date: July 22, 1994 No. 6033692 Purchase Date: June 23, 1994 Maturity Date: July 25, 1994 No. 6033694 Purchase Date: June 23, 1994 Maturity Date: July 25, 1994 
 
$ 537,205.82 5,757.25 6,419.86 
30,688.00$ 580,070.93 
$ 793,862.05 
40,609.68 260,776.14 132,503.25 143,232.69 138,594.43 420,805.00 32,154.08 272,782.25 367,908.52 43,713.78 132,697.40 113,020.71 2,892,659.98 
------------- ------------- 
 
$ 3,472,730.91 
 
See notes to the financial statements. 
 
- 24 - 
 
 DEPARTMENT DF INSURANCE INVESTMENTS 
JUNE 30, 1994 
 
SCHEDULE "3" 
 
INVESTMENT TYPE 
Certificates of Deposit Wachovia Bank of Georgia, Atlanta, Georgia No. 5363939 No. 5363941 No. 5440654 No. 5512729 No. 5571287 No. 5571290 No. 5571335 No. 5571341 No. 5571342 No. 5571344 No. 5595387 No. 5595428 No. 5606437 No. 5630319 No. 5745317 No. 5745342 No. 5745349 No. 5745353 No. 6033613 No. 6033615 No. 6033677 No. 6033681 
Canadian Bonds No. CCR06146 No. CCR06147 
U. S. Treasury Bonds No. 951A No. 1380L No. 3337H No. 3338J No. 3339K No. 3340L No. 3341A No. 3342B No. 3780L 
Securities on Hand (List on File) (1) 
 
PURCHASE DATE 
 
MATURITY DATE 
 
AMOUNT 
 
March 14, 1994 March 14, 1994 August 6, 1993 March 14, 1994 April 7, 1994 April 12, 1994 June 8, 1994 
June 20, 1994 June 23, 1994 December 31, 1993 June 8, 1994 
April 5, 1994 June 1, 1994 
June 10, 1994 July 21, 1993 
March 17, 1994 June 30, 1994 April 12, 1994 February 24, 1994 
February 24, 1994 April 24, 1994 May 18, 1994 
 
March 15, 1995 $ 
March 15, 1995 August 8, 1994 March 13, 1995 October 7, 1994 July 12, 1994 December 8, 1994 December 20, 1994 December 23, 1994 
June 30, 1994 September 8, 1994 
October 5, 1994 September 1, 1994 
December 10, 1994 
July 21, 1994 
September 19, 1994 September 30, 1994 
July 12, 1994 August 23, 1994 
August 23, 1994 July 27, 1994 
August 18, 1994 
 
185,864.33 139,397.26 182,182.09 29,233.06 807,897.87 159,385.46 30,805.25 
45,463.09 139,738.60 
29,421.43 160,618.43 
57,342.43 129,415.99 
103,225.86 601,947.32 
30,197.44 207,562.63 
60,072.36 207,135.57 
33,248.55 235,032.40 142,353.97 
 
January 1, 1973 January 1, 2003 January 1, 1973 January 1, 2003 
 
5,000.00 5,000.00 
 
July 1, 1988 February 12, 1991 May 15, 1974 May 15, 1974 May 15, 1974 
May 15, 1974 May 15, 1974 
May 15, 1974 
July 1, 1988 
 
February 12, 2000 
August 15, 2000 February 15, 2000 February 15, 2000 February 15, 2000 February 15, 2000 
February 15, 2000 
February 15, 2000 
February 12, 2000 
 
10,000.00 
100,000.00 5,000.00 5,000.00 5,000.00 5,000.00 
5,000.00 
5,000.00 
100,000.00 
 
$ 3,967,541.39 188,549,468.30 
 
(1) These investments represent securities held pursuant to statutes which require 
licensed insurance companies to establish deposits with the Department 
of Insurance prior to issuance of a certificate of authority to transact insurance business in the State of Georgia by the Commissioner of Insurance. 
The purchase and redemption of the 
securities are the responsibility of the licensed insurance companies. The 
purchase and redemption of such securities are allowed as long as the required levels of deposit are maintained. 
 
See notes to the financial statements. 
 
- 25 - 
 
$192,517,009.69 
============== 
 
 DEPARTMENT OF INSURANCE SCHEDULE OF FEDERAL REVENUES 
YEAR ENDED JUNE 30 1 1994 
 
PROGRAM 
Health and Human Services, U. S. Department of Medicare - Hospital Insurance Through Georgia Department of Human Resources Medical Assistance Program Through Georgia Department of Human Resources 
Housing and Urban Development, U.S. Department of Manufactured Home Construction and Safety Standards Direct Through National Conference of States on Building Codes and Standards, Incorporated Through Various Mobile Home Manufacturers 
 
CFDA NUMBER 
93. 773 93.778 
14 .171 14.171 14.171 
 
SCHEDULE "4" 
AMOUNT 
$ 94,684.44 94,140.73 
388,116.50 3,087.19 
680,261.75 
$ 1,260,290.61 
============= 
 
See notes to the financial statements. 
 
- 26 - 
 
 DEPARTMENT OF INSURANCE SCHEDULE OF OTHER OPERATING EXPENSES 
YEAR ENDED JUNE 30. 1994 
REGULAR OPERATING EXPENSES Clipping Service Courier Service Evidence Purchased Financial Character Reference Freight, Express and Storage Legal Advertising and Court Costs Notary Public Fees Parking Registration and Seminar Fees Subscriptions and Dues Tolls Training Translation Expense Veterinary Fees Witness Expense 
COMPUTER CHARGES Computer Appraisal 
 
SCHEDULE "5" 
 
$ 
 
1,521.35 
 
4,133.50 
 
584.00 
 
396.50 
 
8,603.40 
 
10,904.49 
 
114. 50 
 
1,622.00 
 
36,389.00 
 
36,362.37 
 
148.00 
 
2,207.00 
 
1,354.95 
 
27.15 
 
57.00 
 
$ 104,425.21 
 
$ 
 
30.00 
 
See notes to the financial statements. 
 
- 27 - 
 
 SECTION II FINDINGS AND IMPROPER OR QUESTIONED COSTS 
 
 DEPARTMENT OF INSURANCE SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS 
YEAR ENDED JUNE 30, 1994 
 
STATUS OF PRIOR YEAR FINDINGS AND IMPROPER OR QUESTIONED COSTS 
 
The status ofthe findings disclosed in the audit report for the year ended June 30, 1993, is summarized below: 
 
Audit Control Number 
 
Status ofFinding 
 
408-93-01 408-93-02 408-93-03 408-93-04 408-93-05 408-93-06 408-93-07 
 
See Audit Control Number 408-94-01 See Audit Control Number 408-94-02 See Audit Control Number 408-94-03 See Audit Control Number 408-94-04 Corrective Action Implemented Corrective Action Implemented Corrective Action Implemented 
 
PRIOR YEAR/CURRENT YEAR 
 
ACCOUNTING CONTROLS (OVERALL) - Financial Statements ADMINISTRATIVE REQUIREMENTS - Federal Financial Assistance Inadequate Separation ofDuties Nonmajor Programs Audit Control Number 408-94-01 
 
The audit report for the year ended June 30, 1993, noted that internal accounting control procedures ofthe Department of Insurance did not provide for an adequate separation of duties in the performance of certain accounting functions and related procedures. For the year under review, a limited review of these procedures revealed that the Department made significant improvements, but still did not provide for an adequate separation of duties in the control category Cash and Cash Equivalents. 
 
The Department should review the accounting procedures in place, design procedures which would enhance segregation of duties relative to the above control category, and implement those procedures to strengthen the internal controls over the accounting function. 
 
Memorandum Only Federal Financial Assistance Programs Affected and CFDA Numbers: 
14. 171 Manufactured Home Construction and Safety Standards 93.773 Medicare - Hospital Insurance 93. 778 Medical Assistance Program 
 
 DEPARTMENT OF INSURANCE SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS 
YEAR ENDED JUNE 30, 1994 
PRIOR YEAR/CURRENT YEAR 
CASH AND CASH EQUIVALENTS Inadequate Bank Reconciliation Procedures Financial Statements Audit Control Number 408-94-02 
The audit report for the year ended June 30, 1993, reported that the Department's accounting procedures were insufficient to provide for adequate internal control over the bank reconciliation process. For the year ended June 30, 1994, some improvements were made, but monthly bank statements for the State Revenue Collections Lockbox Account were not reconciled to the general ledger. 
The Department ofInsurance should establish the necessary internal controls to ensure that all bank accounts are properly reconciled on a monthly basis and the general ledger reflects current financial information. 
INVESTMENTS Lack ofProcedures to Monitor Market Value of Securities Financial Statements (Agency Funds) Audit Control Number 408-94-03 
The audit report for the year ended June 30, 1993, noted deficiencies in the Department's procedures for fulfilling their fiduciary responsibility to monitor market values of deposits made by insurance companies transacting business in the State of Georgia. For the year under review, the Department made no procedural changes in this area. However, in the subsequent year the Department retained the services of a banking institution to fulfill its fiduciary responsibilities as stated in the Official Code of Georgia Annotated Section 33-12-7. 
REVENUE/RECEIVABLES/RECEIPTS Write-Off of Accounts Receivable Without Complete Documentation Financial Statements Audit. Control Number 408-94-04 
The audit report for the year ended June 30, 1993, noted that the Department oflnsurance failed to provide adequate supporting documentation for Other Accounts Receivable in the amount of$149,757.07. These 
receivables originated in fiscal year 1991. During the year under review, the Department made a determination that these receivables had been recorded in error and wrote-offthe $149,757.07 from the Department's general 
ledger. However, the documentation provided by the Department supporting the write-off of $110,053.87 ofthese receivables was found to be incomplete. 
The Department ofInsurance should establish controls to ensure that future accounts receivable are accurately recorded and fully documented as to source and purpose. 
 
 DEPARTMENT OF INSURANCE SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS 
YEAR ENDED JUNE 30, 1994 
CURRENT YEAR 
CASH AND CASH EQUIVALENTS Failure to Maintain Proper Accounting Control over Receivership Accounts Financial Statements (Agency Funds) Audit Control Number 408-94-05 
For the year under review, our examination of accounting procedures for the agency fund "Receiverships" maintained by the Department ofInsurance revealed that control totals were not maintained for the individual receivership accounts. This situation could result in individual accounts being excluded from the accounting records. In addition, math errors in individual receivership accounts were noted resulting in incorrect account balances and interest earned during the year. 
This situation occurred because the Department failed to maintain adequate accounting control and subsidiary records for the accounts ofthe Receiverships fund. 
The Department of Insurance should establish controls to ensure the proper accounting of individual receivership records and maintenance of control totals. 
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation ofProperty Management System Financial Statements Audit Control Number 408-94-06 
For the year under review, our examination included a review ofthe internal accounting controls utilized by the Department ofInsurance in maintaining their State Property System. This review consisted oftesting the system for compliance with State equipment laws and regulations. In addition, procedures were completed to verify the accuracy of the total equipment inventory valuation contained in the inventory records, which comprises the General Fixed Assets Account Group. 
A sample of equipment items was selected to test the accuracy of the inventory system's control attributes. Of the 66 equipment items selected for physical inspection, the following deficiencies were noted: 
(1) Twelve items were located in locations other than the location indicated in the property inventory system. 
(2) Four items could not be located. (3) One item did not have a decal number attached. Item was identified by another identifying number 
and description. 
 
 DEPAR'ThffiNT OF INSURANCE SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS 
YEAR ENDED JUNE 30, 1994 
CURRENT YEAR 
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation ofProperty Management System Financial Statements Audit Control Number 408-94-06 
In addition, the following conditions relating to inappropriate accounting practices were found to exist: 
(1) One equipment item was located which was not included in the equipment inventory records. (2) The Department was unable to produce adequate documentation of compliance with the 
requirement that a physical inventory be taken every two years. (3) Eleven equipment items were surplused but were not removed from the inventory listing. 
As a result of the discrepancies identified above, we were unable to determine the validity of the total equipment inventory valuation contained in the inventory records, which comprises the General Fixed Assets Account Group. 
The Department of Insurance should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with provisions of the State Property System Manual.