Review report, Georgia Music Hall of Fame Authority, a component unit of the state of Georgia, year ended June 30, 1996

GA
R"bOO
t R\
J\l\D~
~ C\qS -GiG.
REVIEW REPORT GEORGIA MUSIC HALL OF FAME AUTHORITY
A COMPONENT UNIT OF THE STATE OF GEORGIA
YEAR ENDED JUNE 30, 1996

GEORGIA MUSIC HALL OF FAME AUTHORITY - TABLE OF CONTENTS -

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

EXHIBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET (STATUTORY BASIS)

ALL FUND TYPES AND ACCOUNT GROUPS

2

B STATEMENT OF CHANGES IN FUND BALANCES

(STATUTORY BASIS)

GOVERNMENTAL FUND TYPE

3

C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

BUDGET FUND

4

D STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

COMPARED TO BUDGET

BUDGET FUND

6

E NOTES TO THE FINANCIAL STATEMENTS

7

SUPPLEMENTARY INFORMATION

SCHEDULES

1 SCHEDULE OF APPROVED BUDGET

20

2 CASH AND CASH EQUIVALENTS

21

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

DEPARTMENT OF AUDITS
254 Washington Street, S.w', Suite 214 Atlanta, Georgia 30334-8400
October 30, 1996

Honorable Zell Miller, Governor Members of the General Assembly of Georgia Members of the Board ofDirectors ofthe Georgia Music Hall ofFame Authority
and Honorable Robert Blount, Executive Director
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have reviewed the accompanying financial statements (Exhibits A through E) of the Georgia Music Hall ofFame Authority as of and for the year ended June 30, 1996, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. As described in Note 1, these financial statements were prepared on a prescribed basis of accounting that demonstrates compliance with the budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. All information included in these financial statements is the representation of the management of the Georgia Music Hall of Fame Authority.
A review consists principally of inquiries of agency personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware ofany material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the basis of accounting described in Note 1.
Our review was made for the purpose ofexpressing limited assurance that there were no material modifications that should be made to the financial statements in order for them to be in conformity with the basis of accounting described in Note 1. The accompanying supplementary information (Schedules 1 and 2) is presented only for supplementaIy analysis purposes. Such information has been subjected to the inquiries and

96ARL-4

analytical procedures applied in the review of the financial statements and we are not aware of any material modifications that should be made thereto.
Respectfully submitted,
~
Claude L. Vickers State Auditor
CLV:cm 96ARL-4

FUNANCLALSTATE~TS
- 1-

GEORGIA MUSIC HALL OF FAME AUTHORITY COMBINED BALANCE SHEET (STATUTORY BASIS)
ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30. 1996

EXHIBIT "A"

~ cash and cash Equivalents
(see Schedule)
Accounts Receivable Other
FIXed Assets EqUipment
Amount to be Provided for Payment of Accrued Compensated Absences
Total Assets

GOVERNMENTAL FUND TYPE BUDGET

ACCOUNT GROUPS

GENERAL

GENERAL

FIXED

LONG-TERM

ASSETS

DEBT

TOTALS (Memorandum Only) JUNE 30, 1996 JUNE 30, 1995

$

215,119.36

$ 215,119.36 $

0.00

385,329.73

385,329.73

168,857.70

$ 15,128.59

15,128.59

12,330.59

$ 15,338.79

15,338.79

6,882.74

$

600,449.09 $ 15,128.59 $ 15,338.79 $ 630,916.47 $

188,071.03

L1ABILmES AND FUND EaUITY

Liabilities

cash Overdraft

$

Accounts Payable

Contracts Payable

Compensated Absences

Total Liabilities

$

Fund Equity

Investment in General Fixed Assets

Fund Balances

Unreserved

Undesignated

$

Total Fund Equity

$

0.00 7,662.60 13,200.00
20,862.60

$
$ 15,338.79 $ 15,338.79 $

0.00 $ 7,662.60 13,200.00 15,338.79
36,201.39 $

$ 15,128.59

$

15,128.59 $

579,586.49 579,586.49 $

15,128.59

579,586.49 $ 594,715.08 $

38,902.20 8,525.65 0.00 6,882.74
54,310.59
12,330.59
121,429.85 133,760.44

Total Liabilities and Fund Equity

$

600,449.09 $ 15,128.59 $ 15,338.79 $ 630,916.47 $

188,071.03

See Independent Accountant's Combined Report on Review of Financial Statements and SUpplementary Information. The notes to the financial statements are an integral part of this statement.
-2-

GEORGIA MUSIC HALL OF FAME AUTHORITY STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS)
GOVERNMENTAL FUND TYPE YEAR ENDED JUNE 30, 1996

EXHIBIT"B"

FUND BALANCES - JULY 1
Unreserved Undesignated
ADDITIONS
Excess of Funds Available over Expenditures Exhibit "C"
DEDUCTIONS
Unreserved Fund Balance Carried Over from Prior Year as Funds Available
FUND BALANCES - JUNE 30 (To Exhibit "Aj

BUDGET FUND YEAR ENDED JUNE 30,1996 JUNE 30,1995

$

121,429.85 $

104,470.30

$

579,586.49 $

121,429.85

$

121,429.85 $

104,470.30

$

579,586.49 $

121,429.85

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

GEORGIA MUSIC HALL OF FAME AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30,1996

EXHIBIT"C"

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

GEORGIA MUSIC HALL OF FAME AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 3D, 1996

EXHIBIT"C"

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

GEORGIA MUSIC HALL OF FAME AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
YEAR ENDED JUNE 30,1996

EXHIBIT"D"

FUNDS AVAILABLE REVENUES
other Revenues Retained CARRy-oVER FROM PRIOR YEAR
Transfer from Unreserved Fund Balance
EXPENDITURES Personal Services Regular Operating Expenses Travel Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem. Fees and Contracts Cost of Goods Sold
Excess of Funds Available over Expenditures

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

$ 1,267,559,00 $ 1.154.965,72 $

-112,593,28

0,00

121.429.85

121.429.85

$ 1.267.559.00 $ 1.276.395.57 $

8....:,..8_36_._57_

$

566.462.00 $

318.093.27 $

418,605.00

189.384.76

26.000.00

18.482.13

45.442.00

0.00

67.800.00

7.944.10

14.400.00

0.00

20,850.00

12.447.85

8.000.00

144,173.92

100.000.00

6.283.05

248.368.73 229,220.24
7.517,87 45.442.00 59,855,90 14.400.00
8,402.15 -136.173.92
93.716.95

$ 1.267.559.00 $

696,809.08 $ _ _---.,;;5..;..70....:..7..;..4;.;.9;.;..92..;..

$

579.586.49 $ _ _......5..7.9_..5..8...6...4...9.

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

GEORGIA MUSIC HALL OF FAME AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The Georgia Music Hall of Fame Authority is an instrumentality of the State of Georgia and a public corporation. The Executive Board ofthe Authority consists of nine (9) members appointed by the Governor. The management ofthe business and affairs of the Authority is vested in the Executive Board. The authority is duly authorized by law to construct, operate and manage a facility to house the Georgia Music Hall ofFame. The Authority may also make and enter into contracts, leases and all other instruments necessary and convenient with respect to the use and operation ofthe projected facility and to issue bonds and receive loans, gifts or grants from the United States government or any agency or instrumentality thereof
The Georgia Music Hall ofFame, Incorporated (Corporation), a component unit of the Authority, assists the Authority in fulfilling its statutory responsibilities to operate and maintain the Georgia Music Hall ofFame. The Corporation, incorporated on August 19, 1994, is governed by a board of directors initially consisting of two members of the Authority and the Authority's executive director. The Authority sets policy for and approves budgets ofthe Corporation.
The corporation's financial statements have been blended with the Authority's financial statements. The blended component unit (the corporation), although legally separate, is in substance a part of the Authority'S operations.
The Georgia Music Hall ofFame Authority (and its blended component unit) is considered a component unit of the State of Georgia and 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 Qf the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING The Georgia Music Hall ofFame Authority uses a fund 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 ofthe 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 deinonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds are maintained consistent with legal and managerial requirements. Account groups are a reporting device used to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. The fund and account groups presented in the accompanying financial statements are as follows:
GOVERNMENTAL FUND TYPE
BUDGET FUND - The fund used to account for activities and functions as set forth in the operating budget approved by the Georgia Music Hall of Fame 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
-7-

GEORGIA MUSIC HALL OF FAME AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
GOVERNMENTAL FUND TYPE
BUDGET FUND 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 of revenues earned and expenses incurred are appropriate for capital maintenance, public policy, accountability and other purposes.
ACCOUNT GROUPS
GENERAL FIXED ASSETS - The account group used to account for 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 methQdology ofaccounting for general fixed assets differs from generally accepted accounting principles in that the Budget Fund ofthe Authority should be accounted for as a Proprietary Fund Type Internal Service Fund (Enterprise Fund). Fixed assets utilized in the operations of proprietary fund types should be recorded as assets of such funds, rather than in the General Fixed Assets Account Group. The depreciation of such fixed assets should be recorded as an expense of proprietary fund types in order to more effectively determine the total cost ofproviding goods and services.
The cost ofnormal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not included in the General Fixed Assets Account Group. Material improvements adding to the value or useful life ofthe assets are included in the General Fixed Assets Account Group.
GENERAL LONG-TERM DEBT - The account group used to report the noncurrent portions of certain governmental long-term liabilities, such as claims, judgments and compensated absences, which will be paid from future resources. This presentation differs from generally accepted accounting principles in that the Budget Fund of the Authority should be reflected as a Proprietary Fund Type - Internal Service Fund (Enterprise Fund). The liabilities and related expenses for the items listed above should be recorded as a part ofthe proprietary fund type in order to more effectively determine the total cost of providing goods and services.
BASIS OF ACCOUNTING MEASUREMENT FOCUS
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Governmental funds should be accounted for using the flow of current financial resources measurement focus. With this measurement focus, operating statements present increases and decreases in net current assets and unreserved fund balance is a measure of available spendable resources.
-8-

GEORGIA MUSIC HALL OF FAME AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996

EXHIBIT"E"

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 determination of net income. In accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, the Budget Fund, which should be reflected as a Proprietary Fund Type - Enterprise Fund in accordance with generally accepted accounting principles, utilizes the current financial resources measurement focus.
GOVERNMENTAL FUND TYPE BUDGETFUND
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 of the 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 primarily 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 ofaccounting.
Contractual obligations for services which have not been performed are recognized as accounts receivables in the accompanying financial statements. This accounting practice is in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia, but is not consistent with generally accepted accounting principles.
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 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 for proprietary fund types in that immaterial adjustments should be reported as current period revenues and expenses.
-9-

GEORGIA MUSIC HALL OF FAME AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPE 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-Term Debt Account Group, in that such liability is not expected to be financed from expendable available financial resources. This practice differs from generally accepted accounting principles for proprietary fund types in that the total accrued liability for compensated absences at the end of the fiscal year should be reflected as a fund liability ofthe proprietary fund type involved.
BUDGET A budget for the financial operations ofthe Georgia Music Hall ofFame Authority is approved by the Board ofDirectors 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 funds on deposit with the Department of Community Affairs, 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 also may withdraw cash at any time without prior notice or penalty.
INVESTMENTS The Georgia Music Hall of Fame Authority participates in an investment pool managed by the State of Georgia's Office ofTreasury 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.
ACCOUNTSRECEIVAnLE(OTHER) In fiscal year 1996, funds were appropriated to the Department of Community Affairs for expenses of the Georgia Music Hall ofFame Authority. The Authority recorded an accounts receivable from the Department ofCommunity Affairs based on a contractual arrangement. The accounts receivable balance of$385,329.73 represents funds due to the Authority and the unexecuted portion of this contract with the Department of Community Affairs.
INVENTORIES No inventories of supplies are reported in these financial statements. Expendable supplies are recorded as expenditures at the time of purchase.

- 10-

GEORGIA MUSIC HALL OF FAME AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996

EXIllBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 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 Balance Sheet (Statutory Basis) are captioned "Memorandum Only" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects 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 ofthis data.
COMPARATIVE DATA Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding ofthe changes in the Authority's financial position and operations. Comparative totals have not been included on statements where their inclusion would not provide enhanced understanding of the Authority's financial position and operations or would cause the statements to be unduly complex and difficult to understand. Also, certain amounts presented in the prior year data have been reclassified in order to 'be consistent with the current year's presentation.
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds ofthe State ofGeorgia 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 ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
(1) Bonds, bills, certificates ofindebtedness, notes, or other direct obligations of the United States or of the State of Georgia.
(2) Bonds, bills, certificates ofindebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia.
(3) Bonds ofany public authority created by the laws of the 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.
- 11 -

GEORGIA MUSIC HALL OF FAME AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 3D. 1996

EXHIBIT "E"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (5) Bonds, bills, certificates ofindebtedness, 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 ofaccounts provided by the Federal Deposit Insurance Corporation.

As authorized in the Official Code of Georgia Annotated Section 45-8-11, the Georgia Music Hall ofFame Authority has the authority to exempt 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 ofJune 30, 1996, 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.

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

$ 16490437 $ 16490437 $

Risk Categories

2

3

6423.35 $==:=l0!!.!.lQQ~ $ 15848102

Certain deposits ofthe Georgia Music Hall ofFame Authority reflected on Schedule "2" ofthis report are a part ofthe demand deposits maintained by the Department of Community Affairs. The amounts ofthe bank balances for these deposits are classified by custodial credit risk categories in the review report of the Department of Community Affairs.

- 12-

GEORGIA MUSIC HALL OF FAME AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996

EXIllBIT "E"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS Investments are stated at cost. The carrying amount of the investment balance as of June 30, 1996, shown below is maintained in an investment pool by the Office of Treasury and Fiscal Services and is not subject to risk categorization.

Type ofInvestment

Carrying Amount

Market Value

State Investment Pool

$ 174,518.53 $ 174,518.53

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 of $1,000.00 or greater are reflected in the General Fixed Assets Account Group.

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

Balance July 1, 1995

$ 12,330.59

Additions

2,798.00

Balance June 30, 1996

$ 15,128.59

NOTE 4: GENERAL LONG-TERM DEBT

CHANGES IN GENERAL LONG-TERM DEBT During the year ended June 30, 1996, the following changes occurred in the compensated absences liability reported in the General Long-Term Debt Account Group:

Balance July 1, 1995

$ 6,882.74

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

7,855.13 600.92

Balance June 30, 1996

$ 15.338.79

- 13 -

GEORGIA MUSIC HALL OF FAME AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996

EXHIBIT "E"

NOTE 5: RISK MANAGEMENT
Public Entity Risk Pool
The State Personnel Board, Merit System ofPersonnel Administration administers for the State of Georgia a program ofhea1th benefits for the employees ofunits of government of the State of Georgia, units of county government and local education agencies located within the State of Georgia. This plan is funded by participants covered in the plan, by employers' contributions paid by the various units of government participating in the plan, and appropriations made by the General Assembly of Georgia. The State Personnel Board, Merit System ofPersonnel Administration has contracted with Blue Cross Blue Shield of Georgia to process claims in accordance with the State Employees' Health Benefit Plan as established by the State Personnel Board.
Other Risk Management
The Department ofAdministrative Services (DOAS) has the responsibility for the State of Georgia 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 ofcommercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Authority is part of the State ofGeorgia 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 6: DEFERRED COMPENSATION PLAN
The State of Georgia offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. The plan, available to employees of the State of Georgia and county health departments,
permits such employees to defer a portion oftheir salary until future years. Participation in the plan is optional.
Participants choose the option or options in which they wish to participate. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property or rights of the State of Georgia subject only to the claims ofthe 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, 1996.

- 14 -

GEORGIA MUSIC HALL OF FAME AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996

EXIllBIT "E"

NOTE 7: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description The Georgia Music Hall of Fame 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 ofthe State of Georgia. The Authority's payroll for the year ended June 30, 1996, for employees covered by ERS was $233,991.75. The Authority's total payroll for all employees was $234,061.23.
Benefits The benefit structure of ERS 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 ofage 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 ofthe member's highest eight consecutive calendar quarters of salary, the number ofyears of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The 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.
Funding Status and Progress Funding status and progress information is presented in the ERS June 30, 1996, financial report which may be obtained through ERS.
C~ntributions Required and Contributions Made As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members ofother state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute.
Under the old plan, member contributions consist of employee contributions paid by the employee of 1.25% ofcompensation and 4.75% ofcompensation paid by the Authority on behalf ofthe employee. Under the new plan, member contributions consist solely of 1.25% of compensation paid by employee. The Authority also is required to contribute at a specified percentage of active member payroll determined annually by actuarial
- 15 -

GEORGIA MUSIC HALL OF FAME AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT "E"

NOTE 7: RETffiEMENTPLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Contributions Required and Contri6utions Made
valuation. For the year ended June 30, 1996, the ERS employer contribution rate for the Authority amounted to 14.8901c ofcovered payroll and included the 4.75% contributed on behalfofthe employee under the old plan referred to above. The employer contributions are projected to liquidate the unfunded actuarial liability within 20 years based upon the actuarial valuation of June 30, 1995. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.
Actuarial assumptions used by theERS to compute actuarially determined contribution requirements are the same as those used to compute the pension benefit obligation.
Total contributions to the plan made during fiscal year 1996 amounted to $37,766.27, ofwhich $34,841.37 was made by the Authority and $2,924.90 was made by employees. These contributions met the requirements ofthe plan.
Trend Information
Historical trend information is presented in the ERS June 30, 1996, financial report which may be obtained throughERS. This information gives an indication ofthe progress made in accumulating sufficient assets to pay benefits when due.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description
The Georgia Music Hall ofFame Authority is eligible to participate in the Georgia Defined Contribution Plan ("GDCP") which is a single-employer defined contribution plan established by the Georgia General Assembly for the purpose ofproviding retirement coverage for State employees who are temporary, seasonal, and parttime and are not members ofa public retirement or pension system. GDCP is administered by the Employees' Retirement System Board ofTrustees. The Authority did not have any employees eligible to participate in the GDCP for the year ended June 30, 1996.
NOTE 8: LEAVB 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 ofcontinuous 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.
- 16-

GEORGIA MUSIC HALL OF FAME AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996

EXHIBIT "E"

NOTE 8: LEAVE POLICIES
Certain employees who retire with one hundred and twenty days or more of forfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement System of Georgia.
NOTE 9: NONMONETARY TRANSACTIONS
The Georgia State Financing and Investment Commission (GSFIC), a unit of State government, is responsible for the issuance of state debt and for the investment and accounting for proceeds derived from the issuance of state debt. In addition, GSFIC is authorized to acquire and construct projects for the benefit of units of State government or to contract with units of State government for the construction or acquisition of capital outlay projects. During the fiscal year ended June 30, 1996, the Georgia State Financing and Investment Commission paid $859,703.23 to the Department of Community Affairs. The Department of Community Affairs made payments to various vendors for approved projects for the benefit of Georgia Music Hall ofFame Authority.
NOTE 10: CONTINGENCIES
Litigation, claims and .assessments filed against the Georgia Music Hall ofFame Authority, if any, are generally considered to be actions against the State of Georgia. 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, 1996.
NOTE 11: BONDING INFORMATION
In performance oftheir duties on behalfof the Georgia Music Hall ofFame Authority, the Commissioner and all employees of the Department of Community Affairs and the Authority are bonded under a Public Employees Blanket Bond written by Employers Insurance ofWausau, their Bond No. 1450-02-110723, on which the premium was paid to October 1, 1996. Under this agreement the Public Employee Dishonesty Coverage insures the Department and Authority 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 and Authority to a maximum of $1,000,000.00 against loss sustained from failure of its employees to perform faithfully their duties or to account properly for all monies and property received by virtue of their position or employment.
All employees of the Department of Community Affairs and the Georgia Music Hall ofFame Authority are also bonded under Commercial Crime Policies written by the United States Fire Insurance Company, their Policy Nos. 6260122926 and 626 012294 4, on which premiums were paid to October 1, 1996. Under these additional public employee dishonesty coverages, the policies insure the Department and Authority to a maximum of $9,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees and from failure of its employees to perform faithfully.

- 17 -

B\o-~l
1J \~

SUPPLEMENTARY INFORMAnON
- 19-

GEORGIA MUSIC HALL OF FAME AUTHORITY SCHEDULE OF APPROVED BUDGET YEAR ENDED JUNE 30. 1996

SCHEDULE "1"

FUNDS AVAILABLE
REVENUES
Other Revenues Retained
EXPENDITURES
Personal Services Regular Operating Expenses Travel Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts Cost of Goods Sold

TOTAL

$ 1,267,559.00

$

566,462.00

418,605.00

26,000.00

45,442.00

67,800.00

14,400.00

20,850.00

8,000.00

100,000.00

$ 1,267,559.00

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 20-

GEORGIA MUSIC HALL OF FAME AUTHORITY CASH AND CASH EQUIVALENTS
JUNE 30, 1996

SCHEDULE "2"

NONINTEREST BEARING ACCOUNTS
SunTrust Bank of Middle Georgia, N. A., Macon, Georgia
Wachovia. Bank of Georgia, Macon, Georgia
Funds on Deposit with the Department of Community Affairs
INTEREST BEARING ACCOUNTS
Vanguard Financial Center Valley Forge, Pennsylvania
Vanguard Prime Portfolio Money Market Account
Funds on Deposit with Office of Treasury and Fiscal Services State Investment Pool

$

3,239.71

3,183.64 -124,303.54 $

-117,880.19

$ 158,481.02 174,518.53

332,999.55

$ 215,119.36

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 21 -