Review report, North Georgia Mountains Authority, a component unit of the state of Georgia, year ended June 30, 1994

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

REVIEW REPORT NORTII GEORGIA MOUNTAINS AUTHORITY
A COMPONENT UNIT OF TI-IE STATE OF GEORGIA
YEAR ENDED JUNE 30, 1994

NORTH GEORGIA MOUNTAINS AUTHORITY - TABLE OF CONTENTS -

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

EXIIlBITS

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

3

C STATEMENT OF FUNDS_ AVAILABLE AND EXPENDITURES

BUDGET FUND

4

D STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS

DEBT SERVICE FUND

s

E NOTES TO THE FINANCIAL STATEMENTS

6

SUPPLEMENTARY INFORMATION

F STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

FIDUCIARY FUND TYPE - AGENCY FUND

16

SCHEDULES

1 CASH AND CASH EQUIVALENTS

17

2 DEBT SERVICE REQUIREMENTS TO MATURITY

18

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

~eparfmettf .of J\uhits
254 WASHINGTON STREET, S. W. ROOM 214
~t!anht, ~enr_gia 30334-8400
December 16, 1994

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

Honorable Zell Miller, Governor Members ofthe General Assembly of Georgia Members ofthe North Georgia Mountains Authority
and Honorable Joe D. Tanner, Commissioner Department ofNatural Resources
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 North Georgia Mountains Authority as ofand for the year ended June 30, 1994, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. As described in Note 1, these financial statements were prepared on a prescribed basis of accounting that demonstrates compliance with the budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. All information included in these financial statements is the representation ofthe management of the North Georgia Mountains 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 (Exhibit F and Schedules 1 and 2) is presented only for supplementary analysis purposes. Such information has been subjected to the

94ARL-4

inquiries and analytical procedures applied in the review of the financial statements and we are not aware of any material modifications that should be made thereto.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
CLV:cm 94ARL-4

FINANCIAL STATEMENTS - 1-

NORTH GEORGIA MOUNTAINS AUTHORITY COMBINED BALANCE SHEET (STATUTORY BASIS)
ALL FUND TYPES AND ACCOUNT GROUPS
JUNE 30, 1994

EXHIBIT "A"

GOVERNMENTAL FUND TYPES

BUDGET

DEBT SERVICE

FIDUCIARY FUND TYPE
AGENCY

ACCOUNT GROUP -------------
GENERAL LONG-TERM
DEBT

TOTALS (Menorandum Only) ---------------------------JUNE 30, 1994 JUNE 30, 1993

ASSETS

Cash and Cash Equivalents (See Schedule)

$2,826,232.48$ 1,311.63$

Accounts Receivable

Other

0.00

Amount Available in Debt Service Fund

Amount to be Provided for Retirenent of General Long-Tenn Debt

17.96

$ 2,827,562.07 $ 70,397.44

$ 1,311.63

0.00 1,311.63

1,462.25 1,514.39

308,688.37 308,688.37 348,485.61

Total Assets

$2,826,232.48$ 1,311.63 $ 17.96 $ 310,000.00$ 3,137,562.07 $ 421,859.69
========= ======== ======== ============ =~--======== =============

LIABILITIES AND FUND EQUITY

Liabilities Contract Payable Funds Held For Others Bonds Payable

$1,264,000.00

$1,264,000.00$

0.00

$ 17.96

17.96

17.96

$ 310,000.00 310,000.00 350,000.00

Total Liabilities

$1,264,000.00

$ 17.96 $ 310,000.00$ 1,574,017.96$ 350,017.96

Fund Equity Fund Balances Reserved Debt Service Fund Mountain Park Project Special Project Unreserved Undesignated
Total Fund Equity

$ 1,311.63

$

0.00

1,207.66

1,561,024.82
------------ ----------
$1,562,232.48$ 1,311.63
------------ ----------

$ 1,311.63 $ 1,514.39

0.00

1,462.25

1,207.66

1,207.66

1,561,024.82

67,657.43

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

$ 1,563,544.11 $ 71,841.73
------------- -------------

Total Liabilities and Fund Equity

$2,826,232.48 $ 1,311.63 $ 17.96 $ 310,000.00$ 3,137,562.07 $ 421,859.69
=========== ========~= ========= ============ =====s=~=== ============

See Independent Accountant's Combined Report on Review of Financial Statements and Supplenentary Infonnation.
The notes to the financial statenents are an integral part of this statenent.
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NORTH GEORGIA MOUNTAINS AUTHORITY COMBINED STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS}
GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30. 1994

EXHIBIT "B"

BUDGET

DEBT SERVICE

TOTALS (Memorandum Only)
YEAR ENDED
JUNE 30, 1994 JUNE 30, 1993

FUND BALANCES - JULY 1

Reserved Unreserved
Undesignated
ADDITIONS

$ 2,669.91 $ 1,514.39 $ 4,184.30 $ 2,800.43

67,657.43

67,657.43

65,168.96

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

$ 70,327.34 $ 1,514.39 $ 71,841.73 $ 67,969.39
------------- ------------- ------------- -------------

Cash Receipts for the Year

Exhibit "0"

$

Excess of Funds Available over Expenditures

Exhibit "C"

$1,562,232.48

55,125.00 $ 55,125.00 $ 1,562,232.48

52,034.12 70,327.34

$1,562,232.48$ 55,125.00$ 1,617,357.48$ 122,361.46

DEDUCTIONS

Cash Disbursements for the Year Exhibit "0"
Fund Balance Carried Over from Prior Year as Funds Available Reserved Unreserved
FUND BALANCES - JUNE 30

$ 55,327.76 $ 55,327.76 $ 52,112.50

$ 2,669.91

2,669.91

1,207.66

67,657.43

67,657.43

65,168.96

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

$ 70,327.34 $ 55,327.76 $ 125,655.10 $ 118,489.12
------------- ------------- ------------- -------------

(To Exhibit "A")

$1,562,232.48$

1,311.63 $1,563,544.11 $ 71,841.73

============= ============= ============= =============

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement.
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NORTH GEORGIA MOUNTAINS AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30. 1994

EXHIBIT "C"

FUNDS AVAILABLE REVENUES
OTHER REVENUES RETAINED Gross Revenue from Unicoi State Park (Georgia Recreation Experiment Station) Contract - Georgia De~artment of Natural Resources 6.0. Bond Proceeds for Mountain Park Project Lease Rental Georgia Department of Natural Resources Interest Earned
TRANSFER To Debt Service Fund Total Revenues
CARRY-OVER FROM PRIOR YEAR Transfer from Fund Balance Reserved Unreserved Total Carry-Over from Prior Year
Total Funds Available
EXPENDITURES PER DIEM, FEES AND CONTRACTS
Contracts CAP IT AL OUTLAY
Per Diem, Fees and Contracts Contracts Total Expenditures
Excess of Funds Available over Expenditures

TOTALS YEAR ENDED JUNE 30, 1994 JUNE 30, 1993

$3,286,613.87$

0.00

9,093,619.13 1,247,519.69

55,125.00 68,040.59

51,987.50 2,488.47

$12,503,398.59 $1,301,995.66

-55,125.00 -51,987.50

$12,448,273.59$ 1,250,008.16

$ 2,669.91 $ 1,207.66
-----6-7-,6--5-7-.4--3 -----6-5-,1--6-8-.9--6

$-----7-0-,3--2-7-.3--4

$ 66,376.62
-------------

$=1=2=,5==1=8=,6==0=0=.9=3= $=1=,=3=1z6=,=3=8=4==.7=8=

$1,806,127.00$

0.00

9,150,241.45 1,246,057.44

$10,956,368.45$ 1,246,057.44

1,562,232.48

70,327.34

$=1=2=,5==1=8=,6==0=0=.9==3 $=1=,=3=1=6=,=3=8=4==.7=8=

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement.
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NORTH GEORGIA MOUNTAINS AUTHORITY STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS
DEBT SERVICE FUND YEAR ENDED JUNE 30. 1994

EXHIBIT "D"

REVENUES
TRANSFER From Budget Fund
CASH AND CASH EQUIVALENTS - JULY 1, 1993

CASH RECEIPTS

$ 55,125.00 1,514.39

$ 56,639.39

DISBURSEMENTS
EXPENSE
Interest on Bonds Paying Agent's Fees
DEBT RETIREMENT
Bonds Redeemed Nos. 101-108
Total Disbursements CASH AND CASH EQUIVALENTS - JUNE 30, 1994

$ 14,875.00 452.76 $ 15,327.76
40,000.00 $ 55,327.76
1,311.63

$ 56,639.39
=============

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement.
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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXIIlBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The North Georgia Mountains Authority, is an instrumentality ofthe State ofGeorgia and a public corporation and consists of fifteen (15) members. These members are the same individuals that comprise the Board of Natural Resources. The Authority is assigned to the Department of Natural Resources for administrative purposes only. The North Georgia Mountains Authority 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 ofits legal, operational and financial relationships with the State of Georgia.
FUND ACCOUNTING The North Georgia Mountains Authority uses funds and an account group to report on its financial position and the results ofits operations determined in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set ofaccounts. An account group, on the other hand, is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources. Funds and the account group presented in the accompanying financial statements are as follows:
GOVERNMENTAL FUND TYPES
BUDGET FUND - The fund used to account for activities and functions ofthe North Georgia Mountains 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 of revenues 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 debt principal, interest and related costs.
FIDUCIARY FUND TYPE
AGENCY FUND - The fund used to account for assets held for use by other funds, governments, or individuals.

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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "E"

NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
ACCOUNT GROUP
GENERAL LONG-TERM DEBT - The account group used to report the noncurrent portions of certain governmental long-tenn liabilities, such as claims, judgments, compensated absences and bond debt payable 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 ofthe Enterprise Fund in order to more effectively determine the total cost of providing goods and services to the general public on a continuing basis.
BASIS OF ACCOUNTING MEASUREMENT FOCUS
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Governmental funds should be accounted for using the current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements ofthese funds present increases (i.e., revenues) and decreases (i.e., expenditures) in net current assets. 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. In accordance with accounting practices prescribed or permitted by the State of Georgia, the Budget Fund utilizes the current financial resources measurement focus.
GOVERNMENTAL FUND TYPES BUDGET FUND
Except as disclosed in the following paragraphs, units of government of the State of Georgia record their Budget Fund revenues and expenditures in accordance with the modified accrual basis of accounting. Under the modified accrual basis ofaccounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Revenues that are accrued include primarily certain amounts earned under operating agreements with other parties. Further, the modified accrual basis of accounting calls for expenditures, other than accrued interest of general long-term debt, to be recorded when the related fund liability is incurred. 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.

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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXIIlBIT "E"

NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPES BUDGETFUND
Contractual obligations for services which have not been performed and for goods which have not been delivered at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. 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 ofthe 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.
DEBT SERVICE FUND The Debt Service Fund is maintained on the Cash Receipts and Disbursements basis of accounting as prescribed or pennitted by statutes and regulations ofthe State ofGeorgia. This basis of accounting is defined as that method of accounting in which certain revenue and the related assets are recognized when received rather than when earned, and certain expenses are recognized when paid rather than when the obligation is incurred. The Debt Service Fund should be reflected on the modified accrual basis of accounting as prescribed by generally accepted accounting principles.
FIDUCIARY FUND TYPE AGENCYFUND
The Agency Fund is custodial in nature in that assets are equally offset by liabilities to other funds, governmental units, or individuals. The modified accrual basis of accounting is utilized for recognizing assets and liabilities.
BUDGET A budget for the financial operations of the North Georgia Mountains Authority was not prepared by the Authority, therefore, the financial operations represent nonbudgeted financial activities.
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include demand deposits with a bank, 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 and funds on deposit with the Department ofNatural Resources.

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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "E"

NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES No inventories ofsupplies are reported in the current financial statements. Expendable supplies are recorded as expenditures at the time ofpurchase.
RESERVED FUND BALANCE Reserves represent those portions of fund equity not appropriable for expenditure or legally segregated for a specific future use. The following is a brief description of the reserves reflected in the accompanying financial statements:
DEBT SERVICE FUND Funds to be used for retirement ofgeneral long-term debt principal, interest and related costs.
SPECIAL PROJECT Funds reserved for this project represent the accumulation of resources for the Tallulah Gorge Project.
GENERAL FIXED ASSETS Accounting practices prescribed or permitted by statutes and regulations ofthe State ofGeorgia do not require the value of land deeded to the Authority by the State of Georgia and the cost of buildings thereon to be recorded in the financial statements. This method of accounting for these fixed assets is not consistent with generally accepted accounting principles, which provide for the recording offixed assets in either a General Fixed Assets Account Group or as assets of the fund ifused in the operations of a Proprietary Fund Type Enterprise Fund.
MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the Combined Statements (Statutory Basis) are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results ofoperations or changes in :financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. _Interfund eliminations have not been made in the aggregation of this data.
COMPARATIVE DATA Comparative total data for the prior year have been presented in the accompanying financial statements in order to provide an understanding of changes in the Authority's financial position and operations. However, comparative data have not been presented in all statements because their inclusion would make certain statements unduly complex and difficult to understand.

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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXIIlBIT "E"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds of the State of Georgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
(I) Bonds, bills, notes, certificates of indebtedness or other direct obligations ofthe United States or ofthe State of Georgia.
(2) Bonds, bills, notes, certificates ofindebtedness or other obligations ofthe counties or municipalities ofthe State of Georgia.
(3) Bonds ofany public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose.
(4) Industrial revenue bonds and bonds of development authorities created by the laws ofthe State of Georgia.
(5) Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
(6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has
adopted policies which allow agencies ofthe State of Georgia the option of exempting demand deposits from the collateral requirements.
CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. These bank balances are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk.
Category I - 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 financial institution's trust department or agent in the Authority's name.
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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXIIlBIT "E"

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 financial institution or by its trust department or agent, but not in the Authority's name, and amounts uncollateralized.

Carrying Amount

Bank Balance

Risk Categories

2

3

Cash Deposits

$ 131163 S I 311 63 S 1 3JI 63 s==,,..ooo= s ==""ooo=

Certain deposits ofthe North Georgia Mountains Authority are disclosed by custodial credit risk categories in the review report of the Department of Natural Resources, to which the Authority is assigned for administrative purposes.

CATEGORIZATION OF INVESTMENTS Investments are stated at cost. The carrying amount shown below is maintained in an investment pool by the Office of Treasury and Fiscal Services.

Type ofInvestment State Investment Pool

Carrying Amount

Market Value

S 3,457,977.13 S 3,457,977.13

NOTE 3: GENERAL LONG-TERM DEBT

CHANGES IN GENERAL LONG-TERM DEBT During the year ended June 30, 1994, the following changes occurred in the bonds payable liability reported in the General Long-Term Debt Account Group:

Balance July 1, 1993 Less: Bonds Redeemed Balance June 30, 1994

$ 350,000.00 40,000.00
S 310,000.00

The total general long-term debt outstanding at June 30, 1994, excluding interest, was $310,000.00, and a schedule of this obligation by fiscal year is reflected on Schedule "2" of this report.

NOTE 4: TRANSACTIONS WITH DEPARTMENT OF NATURAL RESOURCES

RELATED PARTIES The Department of Natural Resources and the North Georgia Mountains Authority are considered to be related parties due to certain common management personnel. The Board ofNatural Resources also serves as the North Georgia Mountains Authority.

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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "E"

NOTE 4: TRANSACTIONS WITH DEPARTMENT OF NATURAL RESOURCES

LEASED FACILITIES GEORGIA RECREATION EXPERIMENT STATION
Under terms ofan agreement with the Department ofNatural Resources (DNR), the North Georgia Mountains Authority (NGMA) leased to DNR all facilities constructed with proceeds ofNGMA Revenue Bonds - Series 1971. The lease term was defined as the time period of time until the related bonds have been paid or provision duly made to retire the bonds. Terms ofthe lease provide for NGMA, at DNR's request, to execute and deliver to the State ofGeorgia a quitclaim deed for all leased properties after DNR has paid all sums due and owing under the terms of the lease. Accounting practices prescribed or permitted by statutes and regulations ofthe State ofGeorgia allows the lease to be accounted for as an operating lease by NGMA. 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 financing lease for NGMA. Revenue derived from this lease during fiscal year 1994 amounted to $55,125.00. Future minimum rentals, including bond interest, on this lease are as follows:

Fiscal Year Ending June 30

1995 1996 1997 1998 1999 2000 and Subsequent

$ 53,175.00 51,475.00 54,775.00 52,862.50 50,950.00
101,162.50

$ 364 400,00

MOUNTAIN PARK PROJECT The Department ofNatural Resources (DNR) has custody of approximately five hundred acres owned by the State of Georgia in Towns County, Georgia to develop a State park called Mountain Park. Under terms of an agreement with DNR, the North Georgia Mountains Authority (NGMA) agreed to exclusively occupy, develop and use Mountain Park. Proceeds from the sale of general obligation bonds ofthe State of Georgia have been made available to NGMA to design, construct and equip the Park. The agreement further provides that NGMA will lease the facilities from DNR and all improvements to the Mountain Park premises funded with State funds or proceeds ofgeneral obligation debt of the State shall remain the property ofthe State of Georgia. Terms ofthe lease, as revised, call for NGMA to pay to DNR and amount equal to the debt service required to be paid by the State in connection with general obligation bonds issued for this project. Additionally, in any fiscal year in which revenues available to NGMA are not sufficient for such purpose, the deficiency shall cany forward into the next year, and payments shall be made annually until debt service is fully recouped. The lease is accounted for as an operating lease by NGMA. Lease payments for fiscal year 1994 amounted to $492,127.00. Future minimum lease payments, including bond interest, on this lease are as
follows:

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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXlflBIT "E"

NOTE 4: TRANSACTIONS WITH DEPARTMENT OF NATURAL RESOURCES

LEASED FACILITIES
MOUNTAIN PARK PROJECT

Fiscal Year Ending June 30

1995 1996 1997 1998 1999 2000 and Subsequent

$ 1,415,629.61 1,422,256.45 1,424,501.09 1,426,635.03 1,429,219.00
22,613,400.39

$29,731,641.57

ADDffiONALAGREEMENTS
As part of the above lease agreement for the Mountain Park Project, NGMA was designated as recipient of all income and receipts of the Mountain Park Project and of the Georgia Recreation Experiment Station (Unicoi State Park) subject to DNR billing NGMA for the costs incurred by DNR to operate the Experiment Station. Commencing with fiscal year 1999 the agreement designates DNR as recipient of all income and receipts for the Georgia Recreation Experiment Station.

NOTE 5: CONTINGENCIES

Litigation, claims and assessments filed against the North Georgia Mountains Authority, if any, are generally considered to be actions against the State of Georgia. Pursuant to the Official Code of Georgia Annotated, the Department of Administrative Services maintains a program of purchased insurance and self- insurance which provides coverage for such litigation, claims and assessments. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1994.

NOTE 6: BONDING INFORMATION

Accounting records and related information of the Authority are maintained by employees ofthe Department of Natural Resources. These employees are bonded under a Public Employees Blanket Bond written by Employers Insurance of Wausau, their Bond No. 1450-00-110723, on which the premium was paid to October 1, 1994. Under this agreement the Public Employee Dishonesty Coverage insures the Department ofNatural Resources to a maximum ofSl,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees. The Faithful Performance ofDuty Coverage insures the Department to a maximum of $100,000.00 against loss sustained from failure ofits employees to perform faithfully their duties or to account properly for all monies and property received by virtue of their position or employment.

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NORTH GEORGIA MOUNTAINS AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXIIlBIT "E"

NOTE 6: BONDING INFORMATION
All employees of the Department ofNatural Resources are also bonded under a Commercial Crime Policy written by the United States Fire Insurance Company, their Policy No. 626 011675 2, on which the premium was paid to October 1, 1994. Under this additional public employee dishonesty coverage, the policy insures the Department to a maximum of$4,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees.

- 14 -

SUPPLEMENTARY INFORMATION - 15 -

FUND Children's Fund

NORTH GEORGIA MOUNTAINS AUTHORITY STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUND YEAR ENDED JUNE 30, 1994

EXHIBIT "F"

ASSETS/ LIABILITIES JULY 1, 1993

ADDITIONS

DELETIONS

ASSETS/ LIABILITIES JUNE 30, 1994

$

17.96 $

0.00 $

0.00 $

17.96

============= -----=---=--= -=-----==-=== ==========s==

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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NORTH GEORGIA MOUNTAINS AUTHORITY CASH AND CASH EQUIVALENTS JUNE 30 1 1994

SCHEDULE "l"

NONINTEREST BEARING ACCOUNTS
Funds on Deposit with Department of Natural Resources
INTEREST BEARING ACCOUNTS
First National Bank of Gainesville, Gainesville, Georgia
Trust Account No. 81-0672-01-4 #1 Money Market Fund
Funds on Deposit with Office of Treasury and Fiscal Services
State Investment Pool

$ -631,726.69

$

1,311.63

3,457,977.13 3,459,288.76

$ 2,827,562.07
=====a:========

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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NORTH GEORGIA MOUNTAINS AUTHORITY DEBT SERVICE REQUIREMENTS TO MATURITY
JUNE 30, 1994

SCHEDULE "2"

PAYMENTS DUE IN FISCAL YEAR ENDING JUNE 30
1995 1996 1997 199B 1999 2000 2001
OTHER INFORMATION
Semi-Annual Interest Payment Dates Annual Debt Retirement Date

TOTAL DEBT SERVICE
-------

NORTH GEORGIA MOUNTAINS AUTHORITY

REVENUE BONDS

1971 ISSUE

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

-IN-T-E-R--E-S-T

PRINCIPAL
---------

$ 53,175.00 $

13,175.00 $

40,000.00

51,475.00

11,475.00

40,000.00

54,775.00

9,775.00

45,000.00

52,862.50

7,862.50

45,000.00

50,950.00

5,950.00

45,000.00

49,037.50

4,037.50

45,000.00

52,125.00

2,125.00

50,000.00

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

$ 364,400.00$

54,400.00$

310,000.00

May 1 - Nov 1 May 1

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