AUDIT REPORT JEKYLL ISLAND STATE PARK 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 JEKYLL ISLAND STATE PARK AUTHORITY - 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 BUDGET FUND 8 E STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS DEBT SERVICE FUND 9 F NOTES TO THE FINANCIAL STATEMENTS 10 SUPPLEMENTARY INFORMATION G STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FIDUCIARY FUND TYPE - AGENCY FUNDS 26 SCHEDULES 1 SCHEDULE OF APPROVED BUDGET 27 2 CASH AND CASH EQUIVALENTS 28 3 SCHEDULE OF FEDERAL REVENUES 29 4 SCHEDULE OF OTHER REVENUES RETAINED 30 5 SCHEDULE OF OTHER OPERATING EXPENSES 32 6 RECONCILIATION OF SALARIES AND TRAVEL 33 SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS JEKYLL ISLAND STATE PARK AUTHORITY - TABLE OF CONTENTS - SECTIONlli 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 3, 1997 Honorable Zell Miller, Governor Members ofthe General Assembly of Georgia Members of the Jekyll Island State Park Authority and Honorable William A. Donohue, Executive Director Jekyll Island State Park Authority INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Ladies and Gentlemen: We have audited the accompanying fmancial statements (Exhibits A through F) ofthe Jekyll Island State Park Authority as of and for the year ended June 30, 1997. These financial statements are the responsibility of the Authority'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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 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. In our opinion, the fmancial statements referred to above present fairly, in all material respects, the financial position (statutory basis) of the Jekyll Island State Park Authority as of June 30, 1997, and the results of its operations (statutory basis) for the year then ended, on the basis of accounting described in Note 1. 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 6) is presented for purposes of additional analysis and is not a required part of the financial statements of the Jekyll Island State Park 97ARL-l Authority. 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. Respectfully submitted, ~~ Claude L. Vickers State Auditor CLV:cm 97ARL-I FINANCIAL STATEMENTS - 1- JEKYLL ISLAND STATE PARK AUTHORITY COMBINED BALANCE SHEET (STATUTORY BASIS) ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30,1997 Cash and Cash Equivalents (See Schedule) Investments Accounts Receivable Prepaid Items Inventories Fixed Assets Equipment Amount Available in Debt Service Fund Amount to be Provided for Payment of Accrued Compensated Absences Advances through Department of Natural Resources General Obligation Bonds State Appropriations Bonds Payable GOVERNMENTAL FUND TYPES DEBT BUDGET SERVICE FIDUCIARY FUND TYPE AGENCY $ 3,642,822.81 $ $ 0.00 $ 1,299,880,73 $ 7,511.00 $ 166,956,40 34,727,73 $ 1,422.00 Total Assets LIABILITIES AND FUND EQUITY Liabilities Accounts Payable Contracts Payable Deferred Revenue Convention Center Advance Sales Fire Protection Fees Golf Advance Sales Museum Advance Sales Miscellaneous Payroll Withholdings Salaries Payable Funds Held for Others Bonds Payable Compensated Absences Payable Repayment of Advances through the Department of Natural Resources Total Liabilities Fund Equity Investment in General Fixed Assets Fund Balances Reserved Debt Service Unreserved Undesignated Total Fund Equity Total Liabilities and Fund Equity The notes to the financial statements are an integral part of this statement. -2- $ 5,117,170,94 $ 34,727.73 $ 1,422,00 $ 401,134,54 0.00 14,270,25 240,468.89 33,764,80 8,725,00 83,532.64 51,432.61 79,573.39 $ 1,422.00 $ 912,902.12 $ 1,422.00 $ $ 4,204,268,82 $ 4,204,268.82 $ 34,727,73 34,727,73 $ 5,117,170,94 $ 34,727,73 $ 1,422,00 EXHIBIT "A" ACCOUNT GROUPS GENERAL GENERAL FIXED LONG-TERM ASSETS DEBT TOTALS (Memorandum Only) JUNE 30,1997 JUNE 30,1996 $ 3,678,972,54 $ 3,701,478,57 $ 0,00 $ 248,867,19 $ 1,299,880,73 $ 856,164,54 $ 7,511,00 $ 6,870,00 $ 166,956.40 $ 116,712.41 $ 3,045,692.41 $ $ 34,727.73 $ 3,045,692.41 $ 34,727.73 $ 2,920,341,34 33,951,50 $ 390,470,30 $ 13,284,568.00 161,250,00 95,272,27 $ 13,931,560,57 $ 390,470,30 $ 439,852,55 13,284,568.00 161,250,00 95,272,27 14,119,761,00 215,000.00 111,048,50 13,931,560,57 $ 14,885,662,05 $ 3,045,692.41 $ 13,966,288,30 $ 22,165,301,38 $ 22,770,047,60 $ $ 130,000,00 390,470,30 13,445,818.00 $ 13,966,288.30 $ 401,134.54 $ 0,00 435,468.54 63,503,58 14,270,25 240,468.89 33,764,80 8,725.00 83,532,64 51,432,61 79,573.39 1,422,00 130,000.00 390,470,30 33,512,06 225,016.83 10,820.47 3,260.00 13,634,00 -202.01 52,263,99 131,095,68 145,000,00 439,852,55 13,445,818.00 14,334,761,00 14,880,612.42 $ 15,887,986.69 $ 3,045,692.41 $ 3,045,692.41 $ 2,920,341,34 $ 3,045,692.41 34,727.73 33,951.50 4,204,268,82 3,927,768.07 $ 7,284,688.96 $ 6,882,060.91 $ 3,045,692.41 $ 13,966,288.30 $ 22,165,301.38 $ 22,770,047.60 -3- THIS PAGE LEFT BLAHK JEKYLL ISLAND STATE PARK AUTHORITY COMBINED STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS) GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30,1997 EXHIBIT"B" The notes to the financial statements are an integral part of this statement. - 5- JEKYLL ISLAND STATE PARK AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND YEAR ENDED JUNE 30. 1997 EXHIBIT"C" FUNDS AVAILABLE REVENUES FEDERAL REVENUES (See Schedule) OTHER REVENUES RETAINED (See Schedule) Total Revenues CARRY-OVER FROM PRIOR YEAR Transfer from Unreserved Fund Balance TOTALS YEAR ENDED JUNE 30, 1997 JUNE 30, 1996 $ 500.00 $ 13,389,173.10 $ 13,389,673.10 $ 1,064.70 19,321,504.46 19,322,569.16 3,927,768.07 3,649,192.43 Total Funds Available $ 17,317,441.17 $=~2=2=,9=71=,7=6=1=.5==9 EXPENDITURES PERSONAL SERVICES Salaries and Wages $ Employer's Contributions for: F.I.CA Retirement Health Insurance Unemployment Compensation Insurance $ REGULAR OPERATING EXPENSES Motor Vehicle Expenses $ Supplies and Materials Repairs and Maintenance Utilities Insurance and Bonding Other Operating Expenses (See Schedule) Extraordinary Expenditures Publications and Printing Equipment Purchases $ TRAVEL $ The notes to the financial statements are an integral part of this statement. -6- 5,370,434.22 $ 304,769.97 647,973.33 475,517.42 13,490.00 6,812,184.94 $ 113,710.72 $ 1,031,928.21 678,726.35 693,514.55 469,897.81 689,031.84 0.00 40,407.26 11,943.12 3,729,159.86 $ 38,872.10 $ 5,001,475.62 291,381.84 626,012.29 468,262.09 5,210.00 6,392,341.84 100,883.08 1,036,995.83 849,516.87 725,280.15 547,447.52 721,987.73 8,225.00 40,591.38 26,134.14 4,057,061.70 30,852.50 JEKYLL ISLAND STATE PARK AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND YEAR ENDED JUNE 3D, 1997 EXHIBIT"C" $ 17,317,441.17 $ 22,971,761.59 The notes to the financial statements are an integral part of this statement. - 7- JEKYLL ISLAND STATE PARK AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND YEAR ENDED JUNE 30.1997 EXHIBIT"D" FUNDS AVAILABLE REVENUES Federal Revenues Other Revenues Retained CARRY-OVER FROM PRIOR YEAR Transfer from Unreserved Fund Balance EXPENDITURES Personal Services Regular Operating Expenses Travel Equipment Telecommunications Per Diem, Fees and Contracts Capital Outlay Debt Service Excess of Funds Available over Expenditures BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) $ 0.00 $ 500.00 $ 12,438,704.00 13,389,173.10 $ 12,438,704.00 $ 13,389,673.10 $ 500.00 950,469.10 950,969.10 0.00 3,927,768.07 3,927,768.07 $ 12,438,704.00 $ 17,317,441.17 $ _ _..:.4':.:;.8.;.;78;.:.,7;.;3;.;.7;.:;.1.;.-7 $ 7,043,510.00 $ 6,812,184.94 $ 3,718,765.00 3,729,159.86 77,372.00 38,872.10 282,739.00 468,119.53 72,984.00 81,116.60 354,390.00 252,058.40 0.00 842,717.92 888,944.00 888,943.00 231,325.06 -10,394.86 38,499.90 -185,380.53 -8,132.60 102,331.60 -842,717.92 1.00 $ 12,438,704.00 $ 13,113,172.35 $ -. ; ,6,;. .74,;.:.,4. ;.; 6;. :; ,8;"; .3. ; ., .5 $ 4,204,268.82 $. ===4:=,2=04,;,0;,2=6:=8=.82= The notes to the financial statements are an integral part of this statement. -8- JEKYLL ISLAND STATE PARK AUTHORITY STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS DEBT SERVICE FUND YEAR ENDED JUNE 30, 1997 EXHIBIT"E" CASH RECEIPTS REVENUES COLLECTED Transfers from Budget Fund as Required by Trust Indentures Interest Received Total Cash Receipts CASH AND CASH EQUIVALENTS - JULY 1, 1996 DISBURSEMENTS EXPENDITURES PAID Interest on Bonds Paying Agent Fees Total Expenditures Paid OTHER FINANCING USES Bonds Retired Matured Total Disbursements CASH AND CASH EQUIVALENTS - JUNE 30. 1997 $ 20,152,50 1,552.37 $ 21,704.87 33,951.50 $ 55,656.37 $ 5,915.00 13.64 $ 5,928.64 15,000.00 $ 20,928.64 34,727.73 $ 55,656.37 The notes to the financial statements are an integral part of this statement. - 9- JEKYLL ISLAND STATE PARK AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997 EXHIBIT"F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The Jekyll Island State Park Authority, is an instrumentality ofthe State of Georgia and a public corporation which is assigned to the Department of Natural Resources for administrative purposes only. The Authority consists on nine (9) members as follows: The Commissioner ofthe Department of Natural Resources or his or her designee and eight additional members appointed by the Governor. The management of the business and affairs ofthe Authority is vested in the Authority. The Authority is considered a component unit of the State of Georgia reporting entity for fmancial 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 of Governmental Accounting and Financial Reporting Standards. FUND ACCOUNTING The Jekyll Island State Park Authority use~ funds and account groups to report on its financial position and the results of its operations determined in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia. A fund is an independent fiscal 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 fmance-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. 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 operating budget approved by the Jekyll Island State Park Authority. 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 financed 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 financed or recovered primarily through user charges or that periodic measurement ofrevenues earned and expenses incurred are appropriate for capital maintenance, public policy, accountability and other purposes. DEBT SERVICE FUND - The fund used to account for the accumulation of resources for, and the payment of, general long-term principal and interest associated with 1972 Series bonds. This presentation differs from generally accepted accounting principles in that such principles provide that the Debt Service Fund of the Authority be accounted for within the Proprietary Fund Type - Enterprise Fund. - 10- JEKYLL ISLAND STATE PARK AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997 EXHIBIT "F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FUND ACCOUNTING FIDUCIARY FUND TYPE AGENCY FUNDS - The funds used to account for assets held for use by other funds, governments, or individuals. 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 cost or at estimated historical cost if historical cost is not practically determinable. 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. This methodology of accounting for general fixed assets differs from generally accepted accounting principles in that the Budget Fund of the 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 ofproprietary 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 account for the unretired balance of a bond issue created pursuant to Georgia Laws and the outstanding balance of appropriations and bond proceeds advanced to the Authority. In addition, 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 fmancial reporting treatment applied to a fund is determined by its measurement focus. Governmental funds should be accounted for using the flow ofcurrent fmancial 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. - 11 - JEKYLL ISLAND STATE PARK AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997 EXHffiIT"F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING MEASUREMENT FOCUS 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 detennination of net income. In accordance with generally accepted accounting principles, the Budget Fund and Debt Service Fund should be reflected as a Proprietary Fund Type - Enterprise Fund. In accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, the Budget Fund utilizes the current fmancial resources measurement focus and the Debt Service Fund utilizes the cash receipts and disbursements basis of accounting. 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 are "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 pay liabilities of the current period. Revenues that are accrued include certain amounts earned under operating agreements with other parties. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term 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. - 12- JEKYLL ISLAND STATE PARK AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30,1997 EXHIBIT"F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPES BUDGET FUND 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 financed from expendable available fmancial 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 ofthe proprietary fund type involved. DEBT SERVICE FUND The Debt Service Fund is maintained on the Cash Receipts and Disbursements basis of accounting as prescribed or permitted by statutes and regulations ofthe State of Georgia. This basis of accounting is defmed 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. To confonn to generally accepted accounting principles, the Debt Service Fund should be reflected within the Proprietary Fund Type - Enterprise Fund and maintained on the accrual basis of accounting. FIDUCIARY FUND TYPE AGENCY FUNDS Agency Funds are custodial in nature and do not measure results of operations or have a measurement focus. The modified accrual basis of accounting is utilized for recognizing assets and liabilities. BUDGET A budget for the financial operations of the Jekyll Island State Park Authority is approved by the Authority at a selected meeting. The budget is not subject to review or approval by the Legislature of the State of Georgia and therefore, is a nonappropriated budget. Budgets are prepared to provide a basis for funding operations and there is no legal prohibition regarding overexpenditure of the aggregate budget. CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include currency on hand, demand deposits with banks and other financial institutions, and cash management pools that have the general characteristics of demand deposit accounts in that the Authority may deposit additional cash at any time and al,so may withdraw cash at any time without prior notice or penalty. Cash and Cash Equivalents also include short-tenn, highly liquid investments with maturities ofthree months or less from the date of acquisition. INVESTMENTS The Jekyll Island State Park Authority participates in an investment pool managed by the State of Georgia's Office of Treasury and Fiscal Services (OTFS) referred to as the "Georgia Fund 1". The Authority does not have any risk exposure related to investments in derivatives or similar investments in Georgia Fund 1 as the investment policy of OTFS does not provide for investments in derivatives or similar investments through the Georgia Fund 1. - 13 - JEKYLL ISLAND STATE PARK AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997 EXHIBIT "F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ACCOUNTS RECEIVABLE Accounts receivable arising from operations are reported at gross value. Based on management's evaluation that amounts uncollectible are not material, rio provision has been made for such amounts. INVENTORIES Inventories of supplies are valued at cost on the Combined Balance Sheet (Statutory Basis) using the firstin/first-out (FIFO) method. The consumption method is used to account for the use of inventories. Under the consumption method, the costs of inventories are recorded as expenditures when the inventories are consumed rather than when purchased. Inventories of goods for resale are recorded as assets at the time of purchase. The Authority uses the first-in, first-out method in costing-out inventories based on sales. GENERAL FIXED ASSETS Accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia do not require the cost ofland and buildings to be recorded in the fmancial statements. This method of accounting for these fixed assets is not consistent with generally accepted accounting principles, which provide for the recording of fixed assets as assets ofthe fund when used in the operations of a Proprietary Fund Type - Enterprise Fund, which the governmental fund types of the Authority should be reflected as. 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 financial resources. MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the Combined Statements (Statutory Basis) are captioned "Memorandum Only" because they do not represent consolidated fmancial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position, results of operations 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 selected sections of the accompanying financial statements in orderto 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. - 14- JEKYLL ISLAND STATE PARK. AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1997 EXHIBIT "F" 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 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 risk. 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. - 15 - JEKYLL ISLAND STATE PARK AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997 EXHIBIT "F" NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS 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 3 $-1320.34740 $ 341 36734 $ 23614973 $ 105 217.61 $,=====:!O!fo,lO~O CATEGORIZATION OF INVESTMENTS For purposes of analysis ofcustodial credit risk, investments consist of repurchase agreements. 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 Authority or its agent in the Authority's name. Category 2 - Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the Authority's name. Category 3 - Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but not in the Authority's name. The carrying amounts ofinvestment balances as ofJune 30, 1997, are categorized below. These amounts also include amounts maintained in an investment pool by the Office of Treasury and Fiscal Services which are not subject to risk categorization. Type oflnvestment Repurchase Agreements State Investment Pool Risk Categories 2 3 Carrying Amount Market Value $ 1.756 748 00 $ o00 $====:d0,0~0 $ 1,756,748.00 $ 1,756,748.00 3,223,951.94 3,223,951.94 $ 4,980 699 94 $ 4 980,699 94 NOTE 3: OPERATING LEASES The Jekyll Island State Park Authority has entered into certain agreements to lease real property and equipment which are classified as operating leases. Future minimum commitments for operating leases as of June 30, 1997, are listed below. Amounts are included only for multi-year leases and for cancellable leases for which an option to renew for the subsequent fiscal year has been exercised. - 16- JEKYLL ISLAND STATE PARK AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997 EXHIBIT "F" NOTE 3: OPERATING LEASES Fiscal Year Ending June 30 1998 1999 2000 2001 2002 $ 237,682.80 237,682.80 237,682.80 237,682.80 235,843.20 Total Future Minimum Commitments $1.186,574.40 Expenditures for rental of equipment under operating leases for the year ended June 30, 1997, totaled $194,072.40. NOTE 4: 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 $ 2,920,341.34 Additions Deductions 220,774.36 95,423.29 Balance June 30, 1997 $ 3,045,692.41 NOTE 5: GENERAL LONG-TERM DEBT BONDS PAYABLE The changes in bonds payable during the fiscal year ended June 30, 1997, are as follows: Semi-Annual Annual Debt Interest Retirement Series Payment Dates Date Balance Balance July 1, 1996 Retirements June 30, 1997 1972 Jan 1 - Jull Jull $145,000.00 $ 15,000.00 $ 130,000.00 - 17 - JEKYLL ISLAND STATE PARK AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997 EXHIBIT"F" NOTE 5: GENERAL LONG-TERM DEBT BONDS PAYABLE Annual debt service requirements to maturity for bonds are as follows: Fiscal Year Ending June 30 Principal Interest 1998 $ 130,000.00 $ 2,762.50 $ 132,762.50 ADVANCES THROUGH THE DEPARTMENT OF NATURAL RESOURCES REPAYMENT OF STATE APPROPRIATIONS The budget of the Department of Natural Resources, as provided for in Section 33 of the Supplemental Appropriations Act of 1978-1979 as approved February 28, 1979, provided for payments to Jekyll Island State Park Authority in the amounts of$I,140,000.00 for operations and $150,000.00 for capital outlay. A special proviso of Section 33 stated as follows: "Provided further, it is the intent of this General Assembly that the above appropriation related to Payments to Jekyll Island State Park Authority, said Authority shall repay the State $1,000,000.00 in principal over a period of no more than 20 years, said payments to begin in Fiscal 1981." At June 30, 1997, the unpaid balance of appropriations was $161,250.00. REPAYMENT OF GENERAL OBLIGATION BONDS During the fiscal year ended June 30, 1987, the General Assembly of Georgia authorized the issuance of not more than $4,600,000.00 in General Obligation Debt for the purpose of financing specific capital outlay projects for the Jekyll Island State Park Authority. Under the terms of the funding agreement, the Jekyll Island State Park Authority was to repay the principal of $4,600,000.00 and interest of $616,884.00 over a twenty year period in equal annual installments of $260,844.00 beginning on June 15, 1990. Repayment of these proceeds is to be made by the Authority to the State of Georgia through the Department of Natural Resources. At June 30, 1997, the unpaid balance of bond proceeds for this project was $3,130,128.00. During the fiscal year ended June 30, 1994, the General Assembly of Georgia authorized the issuance of an additional $7,500,000.00 in General Obligation Debt for the cost of construction of a nine hole golf course, improvements to existing course and renovation of the convention center. Under terms of the funding agreement, the Jekyll Island State Park Authority is to repay the principal of $7,500,000.00 and interest of $4,574,752.00 over a twenty year period in annual installments beginning June 15, 1994. Repayment ofthese proceeds is to be made by the Authority to the State of Georgia through the Department ofNatural Resources. At June 30, 1997, the unpaid balance of bond proceeds for this project was $10,154,440.00. The aggregate future annual payments due to the Georgia Department of Natural Resources for the above projects as of June 30, 1997, including principal and interest are as follows: - 18 - JEKYLL ISLAND STATE PARK AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30,1997 EXHIBIT "F" NOTE 5: GENERAL LONG-TERM DEBT ADVANCES THROUGH THE DEPARTMENT OF NATURAL RESOURCES Fiscal Year Ending June 30 1998 1999 2000 2001 2002 Thereafter $ 890,073.00 891,069.00 892,085.00 840,190.00 842,120.00 9,090,281.00 $13.445,818,00 CHANGES IN GENERAL LONG-TERM DEBT A summary of changes in General Long-Term Debt for the year ended June 30, 1997, follows: Bonds Payable Compensated Absences Advances Through the Department o f Natural Ftesources Total Balance July 1, 1996 $ 145,000.00 $ 439,852.55 $14,334,761.00 $14,919,613.55 Deductions Annual Leave Earned and Utilized (Net) Salaries Salaries Ftelated Fringe Benefits Ftepayment of State Appropriations Ftepayment of General Obligation Bond Proceeds and Interest Ftetirement of Bonds Payable 15,000.00 45,872.97 3,509.28 53,750.00 835,193.00 45,872.97 3,509,28 53,750.00 835,193.00 15,000.00 Balance June 30, 1997 $ 130,000.00 $ 390.470.30 $13.445,818.00 $13,966.288.30 - 19- JEKYLL ISLAND STATE PARK AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997 EXHIBIT "F" NOTE 6: TRANSACTIONS WITH THE STATE OF GEORGIA LEASES JEKYLL ISLAND Under provisions of the Official Code of Georgia Section 12-3-241, the State of Georgia granted a lease to the Jekyll Island State Park Authority for "Jekyll Island" for a tenn of99 years beginning February 13, 1950. Included in the lease is all improvements, pennanent or temporary, and all personal property or property of the State located on Jekyll Island. Rental is $1.00 annually. AUTHORITY LEASE RENTALS Under tenns of an agreement with the State of Georgia (State) and the Department of Natural Resources (DNR), the Jekyll Island State Park Authority (nSpA) issued bonds titled Series 1972 to construct facilities and make improvements at various parks under control ofthe State and DNR. The State and DNR agreed to make yearly payments to nspA in amounts sufficient to make annual payments for principal and interest of the bonds. The duration of the lease was defined as the period of time until the related bonds have been paid or provision duly made to retire the bonds. Tenns of the lease provide for nSPA, at DNR's request, to execute and deliver to the State of Georgia a quitclaim deed for all leased properties after the State, through DNR, has paid all sums due and owing under the tenns of the lease. Accounting practices prescribed or pennitted by statutes and regulations of the State of Georgia allows the lease to be accounted for as an operating lease by nspA. This method of accounting for the lease is not consistent with generally accepted accounting principles, which provide for the accounting of a lease of this nature as a direct fmancing lease for nSPA. Revenue derived from the lease during fiscal year 1997 amounted to $20,152.50. Future minimum rentals, including bond interest, on the lease are as follows: Fiscal Year Ending June 30 1998 $ 132.762.50 Cash and cash equivalents in the amount of $34,727.73 is available in the Debt Service Fund to reduce the future minimum rentals. NOTE 7: 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 ofunits of government ofthe State of Georgia, units ofcounty 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 - 20- JEKYLL ISLAND STATE PARK AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997 EXHIBIT "F" NOTE 7: RISK MANAGEMENT Public Entity Risk Pool Board, Merit System of Personnel 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 of making 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 Jekyll Island State Park Authority is part of the State of Georgia reporting entity, 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 8: 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 of the 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 ofthe State of Georgia subj ect 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 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. - 21 - JEKYLL ISLAND STATE PARK AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997 EXHIBIT "F" NOTE 9: RETIREMENT PLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Plan Description The Jekyll Island State Park Authority participates in the Employees' Retirement System of Georgia ("ERS"), a single-employer, defined 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 defmed 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 normal 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 formula which considers the monthly average of the member's highest eight consecutive calendar quarters of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal 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 $3,723,604.80. The Authority's total payroll for all employees was $5,370,434.22. 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 - 22- JEKYLL ISLAND STATE PARK AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997 EXHIBIT"F" NOTE 9: RETffiEMENTPLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Funding Policy to 15.65% 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 $629,206.49, ofwhich $582,661.09 was made by the Authority and $46,545.40 was made by employees. These contributions met the requirements ofthe 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. TEMPORARY EMPLOYEES' RETIREMENT PROGRAM During the fiscal year ended June 30, 1997, the Authority replaced the Temporary Employee Retirement Program (TERP), for its temporary status employees, with the Georgia Defined Contribution Plan. All assets in the TERP were distributed to affected employees in an amount equal to the fair market value of their account. GEORGIA DEFINED CONTRIBUTION PLAN Plan Description The Jekyll Island State Park Authority participates in the Georgia Defmed 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 part-time 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 adopt~d by the Board. If a member has less than $ 3,500 credit to hislher 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 hislher 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. - 23 - JEKYLL ISLAND STATE PARK AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997 EXHIBIT "F" NOTE 9: RETIREMENT PLANS GEORGIA DEFINED CONTRIBUTION PLAN 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 ofemployment, 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 GnCp was $683,542.51. The Authority's total payroll for all employees was $5,370,434.22. Total contributions made by employees during fiscal year 1997 amounted to $51,267.91 which represents 7.50% of covered payroll. These contributions met the requirements of the plan. NOTE 10: 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 credit in the Employees' Retirement System of Georgia. NOTE 11: 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 ofexpenditures which may be disallowed by the grantor cannot be determined at this time although the Authority expects such amounts, if any, to be immaterial to its overall financial position. Litigation, claims and assessments filed against the Jekyll Island State Park 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. - 24- SUPPLEMENTARY INFORMATION - 25 - JEKYLL ISLAND STATE PARK AUTHORITY STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FIDUCIARY FUND TYPE - AGENCY FUNDS YEAR ENDED JUNE 30,1997 EXHIBIT"G" FUND Employee Functions Fund Temporary Employees' Retirement Program ASSETS! LIABILITIES JULY 1,1996 ADDITIONS DELETIONS ASSETS! LIABILITIES JUNE 30, 1997 $ 0,00 $ 8,788,57 $ 7,366,57 $ 1,422.00 131,095,68 56,713.41 187,809,09 0,00 $ 131,095,68 $ 65,501,98 $ 195,175.66 $ ==.......;.\1,.4..2.=2=,0==0 See notes to the financial statements. - 26- JEKYLL ISLAND STATE PARK AUTHORITY SCHEDULE OF APPROVED BUDGET YEAR ENDED JUNE 30, 1997 SCHEDULE "1" FUNDS AVAILABLE REVENUES Other Revenues Retained EXPENDITURES Personal Services Regular Operating Expenses Travel Equipment Telecommunications Per Diem, Fees and Contracts Debt Service ORIGINAL BUDGET BUDGET ADJUSTMENTS TOTAL $ 13,061,623.00 $ -622,919.00 $ 12,438,704.00 $ 7,315,908.00 $ -272,398.00 $ 7,043,510.00 3,968,357.00 -249,592.00 3,718,765.00 83,810.00 -6,438.00 77,372.00 349,620.00 -66,881.00 282,739.00 73,284.00 -300.00 72,984.00 381,700.00 -27,310.00 354,390.00 888,944.00 888,944.00 $ 13,061,623.00 $ -622,919.00 $ 12,438,704.00 See notes to the financial statements. - 27- JEKYLL ISLAND STATE PARK AUTHORITY CASH AND CASH EQUIVALENTS . JUNE 30. 1997 SCHEDULE "2" NONINTEREST BEARING ACCOUNTS Barnett Bank, Brunswick, Georgia SunTrust Bank of Southeast Georgia, N. A., Brunswick, Georgia INTEREST BEARING ACCOUNTS Bank of New York, Jacksonville, Florida Barnett Bank, Jacksonville, Florida Repurchase Agreement Purchase Date: June 30,1997, Maturity Date: July 1,1997 First Federal Savings Bank of Brunswick, Brunswick, Georgia Funds on Deposit with Office of Treasury and Fiscal Services State Investment Pool OTHER Cash on Hand $ -1,350,820.62 -5,676.51 $ -1,356,497.13 $ 34,727.73 1,756,748.00 1,422.00 3,223,951.94 5,016,849.67 18,620.00 $ 3,678,972.54 See notes to the financial statements. - 28- JEKYLL ISLAND STATE PARK AUTHORITY SCHEDULE OF FEDERAL REVENUES YEAR ENDED JUNE 30.1997 PROGRAM National Endowment for the Humanities National Foundation on the Arts and the Humanities Promotion of the Humanities Through Georgia Humanities Council CFDA NUMBER 45.129 SCHEDULE "3" AMOUNT $===50",==0=.0=0 See notes to the financial statements. - 29- JEKYLL ISLAND STATE PARK AUTHORITY SCHEDULE OF OTHER REVENUES RETAINED YEAR ENDED JUNE 30,1997 SCHEDULE "4" State of Georgia Through Department of Natural Resources Authority Lease Rentals Less: Transfers to Debt Service Fund as Required by Trust Indentures Contract Georgia Department of Industry, Trade and Tourism HotellMotel Tax Rental Income Building Rentals Business Leases Bicycle Rentals Cable Service Rentals Convention Center Rentals Equipment Rentals Golf Cart Rentals Lot Rentals Picnic Areas Site Rentals Sales and Services Alcoholic Beverage Sales Less: Purchases for Resale Ambulance Services Annual Decal Sales Concession Sales Less: Purchases for Resale Day Camp Fire Protection Fees Food Sales Less: Purchases for Resale Fuel Sales Less: Purchases for Resale Golf Miscellaneous Parking Fees Plants Special Events Storage Tennis Tours Water Park Water, Sanitation and Sewage $ 20,152,50 -20,152.50 $ 0.00 1,000.00 1,231,885.69 $ 61,066.10 1,866,149.65 67,036.54 19,384.63 322,369.77 1,475.94 1,054,737,93 209,330.00 5,575.00 409,199.34 4,016,324.90 $ 301,827.59 -100,376.73 $ 201,450.86 $ 289,962.64 -174,622.20 26,761.99 110,375.00 115,340.44 $ 2,105,770.42 -738,849.68 18,237.00 224,940.38 1,366,920.74 $ 6,004.13 -2,577.94 3,426.19 1,968,285.80 15,640.36 1,035,233.00 13,548.54 9,881.24 1,575.00 18,770.47 285,028.09 1,075,564.82 866,338.75 7,357,318.67 See notes to the financial statements. - 30- JEKYLL ISLAND STATE PARK AUTHORITY SCHEDULE OF OTHER REVENUES RETAINED YEAR ENDED JUNE 30.1997 SCHEDULE "4" Other Advertising Applied Penalties Bank Card Processing Fees Beach Music Festival Building Permits Bureau Dues Commissions Country Music Festival Coupon Income Donations Education Program Food Service Gratuities Interest on Investments Liquor, Stamps and Licenses Tournaments Vendor's Compensation on Sales Tax Collections Water Analysis $ 91,083.09 40,165.32 -49,787.52 94,191.16 160.00 1,916.00 17,082.48 123,345.33 35,466.67 413.12 15,938.22 103,720.36 211,347.63 73,661.15 7,824.86 8,368.97 7,747.00 $ _---'-7=82=,64~3.'"""84_ $ 13.389.173.10 See notes to the financial statements. - 31 - JEKYLL ISLAND STATE PARK AUTHORITY SCHEDULE OF OTHER OPERATING EXPENSES YEAR ENDED JUNE 30, 1997 REGULAR OPERATING EXPENSES Bank Service Charges Cash Over/Short Dues and Registration Fees Employee Incentives Sales Promotion and Public Relations Expense SCHEDULE "5" $ 6,303.92 466,87 29,585,54 9,995.99 642,679.52 $ 689,031.84 See notes to the financial statements. - 32- JEKYLL ISLAND STATE PARK AUTHORITY RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDED JUNE 30,1997 SCHEDULE "6" Totals per Annual Supplement Accruals June 30, 1996 June 30, 1997 Unlocated Variance SALARIES $ 5,341,973.08 $ TRAVEL 36,482.75 -52,263.99 79,573.39 1,151.74 2,389.35 Totals per Report $ 5,370,434.22 $ = =.3..8.=,8=7=2=,1.0... See notes to the financial statements. - 33- SECTIONll AUDlTEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS JEKYLL ISLAND STATE PARK 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 910-96-01 910-96-02 910-96-03 910-96-04 910-96-05 910-96-06 910-96-07 910-96-08 910-96-09 Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Unresolved - See Responses Partially Resolved - See Corrective Action/Responses Further Action Not Warranted - See Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses CORRECTIVE ACTIONIRESPONSES GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number 910-96-01 The Authority has implemented procedures to ensure that equipment inventory records include dates acquired and identifying numbers. Further, the Authority is taking steps to ensure that all additions and deletions to equipment records are adequately documented in the accounting office. ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties Finding Control Number 910-06-02 All accounting procedures are being reviewed to determine the best structure to achieve adequate segregation of duties. Outsourcing certain duties is being implemented to assist in obtaining the desired controls. CASH AND CASH EQUIVALENTS Accounting/Intemal Control Deficiencies Finding Control Number 910-96-03 It is the Authority's policy to make deposits on a daily basis. The deposits will be monitored to ensure compliance. - 1- JEKYLL ISLAND STATE PARK 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 CORRECTIVE ACTIONIRESPONSES INVENTORIES Inconsistencies in Accounting for Resale Inventory Finding Control Number 910-96-04 Systems are now in place to facilitate recording the remaining inventory on the general ledger. GENERAL LEDGER Detailed Listing of Salaries Not Reconciled Finding Control Number 910-96-05 Reorganization of the payroll department will ensure more accurate reports. EXPENDITURESILIABILITIESIDISBURSEMENTS Voucher Sample Exceptions/Improper Expenditures Finding Control Number 910-96-06 Control procedures have been strengthened to ensure compliance with the Authority's policies. EXPENDITURESILIABILITIESIDISBURSEMENTS Failure to Maintain Temporary Employee Retirement Subsidiary Ledger Finding Control Number 910-96-07 Temporary Employee Retirement Program (TERP) was terminated and funds disbursed. EMPLOYEE COMPENSATION Accounting/Intemal Control Deficiencies Finding Control Number 910-96-08 The Authority is working toward outsourcing part ofthe payroll procedures, which will significantly improve current controls. Plans are being developed to delay payment of payroll one week from completion ofthe payroll period. This will eliminate the need to submit a time sheet before the end of the payroll period.. -2- JEKYLL ISLAND STATE PARK 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 CORRECTIVE ACTIONIRESPONSES REVENUES/RECEIVABLES/RECEIPTS Accounting/Internal Control Deficiencies Finding Control Number 910-96-09 Significant improvements have been made to this area. Equipment rentals at the Convention Center are now outsourced which will both improve the product and the documentation. Alcoholic beverage consumption sheets are now utilized by the Convention Center and variances are now monitored. In addition, the function of issuing cash receipts has been separated from all other accounting duties. These receipts are in duplicate and prenumbered. -3- SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS JEKYLL ISLAND STATE PARK AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1997 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number: FS-91O-97-01 For the year under review, our examination included a review of the internal accounting controls utilized by the Jekyll Island State Park Authority in maintaining their State Property System and also included testing the system for compliance with State laws and regulations. Our review revealed numerous equipment items were deleted from Convention Center inventory records without adequate documentation to support disposition of the equipment. The Authority is required to maintain equipment inventories in accordance with provisions of the State Property System Manual. The discrepancies identified above were caused by the Authority's failure to follow guidelines for maintaining equipment inventories. The Authority should establish the necessary procedures to ensure that equipment inventories are maintained in accordance with provisions of the State Property System Manual. ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties Finding Control Number: FS-910-97-02 For the year under review, an examination of the internal accounting control procedures of the Jekyll Island State Park Authority revealed that the Authority did not provide for an adequate separation of duties in the performance of certain accounting functions and related procedures in the following control categories: (l) Cash and Cash Equivalents (4) Employee Compensation (2) Revenue/Receivables/Receipts (5) Inventories (3) Expenditures/Liabilities/Disbursements (6) General Ledger The Authority should review the accounting procedures in place, design procedures which would enhance segregation of duties relative to the above control categories and implement those procedures to strengthen the internal control over the accounting functions. CASH AND CASH EQUIVALENTS Accounting/Internal Control Deficiencies Finding Control Number: FS-910-97-03 For the year under review, the accounting procedures and internal controls of the Jekyll Island State Park Authority did not ensure that timely deposits of receipts were made to the bank. This deficiency occurred because management did not ensure cash receipts were deposited on a daily basis. -I- JEKYLL ISLAND STATE PARK AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1997 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUIVALENTS Accounting/Internal Control Deficiencies Finding Control Number: FS-910-97-03 The Authority should develop policies and procedures for bank accounts to ensure that deposits are made in a timely manner. INVENTORIES Inconsistencies in Accounting for Resale Inventory Finding Control Number: FS-910-97-04 For the year under review, the Authority purchased concessions and souvenirs for resale which were not included in the Authority's inventory system. This deficiency occurred because management did not ensure inventories maintained at all locations were recorded on the general ledger. The Authority should determine and document the materiality ofall resale inventories and ensure that material inventories are accounted for on the general ledger. GENERAL LEDGER Detailed Listing of Salaries Not Reconciled Finding Control Number: FS-910-97-05 For the year under review, the listing of salary payments made to employees as reported to the Georgia Department of Audits did not reconcile with the amounts recorded as salaries in the general ledger as presented for examination. A comparison ofthe amounts submitted to the Department to the general ledger disclosed a difference of $7,422.69. An analysis of this difference resulted in corrections being made to the listing submitted to the Department in the amount of $8,574.43. The remaining difference of$I,151.74 is reflected as an unlocated variance on the "Reconciliation of Salaries and Travel" schedule of this report. The Authority should ensure that the quarterly reports submitted to the Georgia Department ofAudits are balanced to the general ledger. EXPENDITURESILIABILITIESIDISBURSEMENTS Voucher Sample and Account Analysis Exceptions/Improper Expenditures Finding Control Number: FS-91O-97-06 An examination of all vouchers classified as employee incentive expenditures together with an examination of 199 randomly selected expenditure vouchers was performed to test the validity and accuracy of the Authority's expenditure transactions. The vouchers examined revealed the following deficiencies: -2- JEKYLL ISLAND STATE PARK AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1997 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS EXPENDITURESILIABILITIESIDISBURSEMENTS Voucher Sample and Account Analysis Exceptions/Improper Expenditures Finding Control Number: FS-91 0-97-06 (1) Four vouchers were paid from a copy and/or fax copy rather than an original invoice. (2) Five vouchers did not contain an invoice. (3) Sixty vouchers lacked purchase orders. (4) Twelve vouchers lacked receiving reports. (5) Three vouchers lacked approval for payment. (6) The following expenditures were determined to be unallowable and in violation of Article III, Section VI, Paragraph VI of the Constitution of the State of Georgia which provides, in part, as follows: "...the General Assembly shall not grant or authorize extra compensation to any public officer, agent, or contractor after the service has been rendered or the contract entered into." EXPENDITURE CATEGORY/PURPOSE Supplies and Materials Coffee and Flowers Other Operating Expenses Employee Incentives Travel Improper Charges AMOUNT $ 370.18 5,410.15 47.95 $ 5,828.28 These conditions occurred because of management's failure to establish and implement controls over the disbursing function to ensure compliance with State laws and regulations. All expenditures should be supported by proper documentation including purchase orders, original invoices, receiving signatures and signatures for approval of payment. The Authority should implement procedures to ensure that expenditures are reviewed for accuracy, proper documentation, and compliance with state laws and regulations prior to payment and recording of such expenditures in the financial records. EMPLOYEE COMPENSATION Accounting/Internal Control Deficiencies Finding Control Number: FS-910-97-07 For the year under review, an analysis of the accounting procedures and internal controls of the Jekyll Island State Park Authority revealed certain employees were allowed to submit time sheets for days to be worked four to six days before the end of the pay period. This condition occurred because of management's policy to allow time sheets to be submitted before the end of the pay period. -3- JEKYLL ISLAND STATE PARK AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1997 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS EMPLOYEE COMPENSATION AccountinglInternal Control Deficiencies Finding Control Number: FS-910-97-07 The Authority should develop policies and procedures to ensure that the practice of allowing time sheets to be submitted before the end of the pay period is discontinued. REVENUES/RECEIVABLES/RECEIPTS AccountinglInternal Control Deficiencies Finding Control Number: FS-91O-97-08 For the year under review, the accounting and internal controls of Jekyll Island State Park Authority were found to be inadequate in the area of cash receipts. The following matters came to our attention as a result of our examination. The accounting department utilized offline computer generated spreadsheets to record the daily sales and receipting processes from the various receipting locations. The totals from these spreadsheets are posted to the general ledger on a monthly basis by journal entry. Two days in the month of June 1997 were selected to test the validity of activity reported on the daily sales transaction reports from six major receipting locations. The reports were then traced into the spreadsheets referred to above and to deposits made to the bank. This testing along with further review of the receipting process revealed the following deficiencies: (1) The Museum was unable to provide daily cash register tapes for individual cash transactions. (2) The Authority records, by journal entry, certain 100% meal discounts as "interdepartmental transfers and house charges" through revenues and expenditures. An analysis ofjournal entries for the fiscal year revealed the Authority recorded revenues and expenditures of $655.42 for employee meals including their guests, employee parties, and meals for various other individuals. (3) The Convention Center maintains files for each event which utilizes their facilities and/or services. Examination of files for two convention engagements disclosed alcoholic beverages used during functions were not inventoried before and after the operation of cash bars. Additionally, the Authority did not perform any analysis or calculations to determine the reasonableness of receipts from sales of alcoholic beverages. Numerous convention center engagements had exhibitors who required electrical and equipment rentals. Documentation for the billing of charges associated with electrical and equipment rentals was not available for review. Only deposit slips were in files to support these charges. Prenumbered receipts were not maintained in numerical sequence. -4- JEKYLL ISLAND STATE PARK AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1997 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS REVENUES/RECEIVABLES/RECEIPTS AccountinglInternal Control Deficiencies Finding Control Number: FS-910-97-08 (4) The accounting department does not consistently issue prenumbered receipts to revenue collecting locations. Receipts are written on a ledger sheet on a weekly basis. The ledger sheet had some supporting documentation, however, not all receipts on the sheet were supported. As a result of the aforementioned deficiencies, fraud or irregularities could have occurred without being detected. These deficiencies were the result of management's failure to implement and monitor accounting and internal control procedures relating to cash receipts. The Authority should review each locations' receipting procedures and develop accounting and internal control procedures which provide for accountability ofcash receipts to reduce the risk offraud or irregularities occurring and to ensure safeguarding of Authority assets. -5-