Review report, state of Georgia, State Board of Pardons and Paroles, year ended June 30, 1996

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

REVIEW REPORT STATE OF GEORGIA STATE BOARD OF PARDONS AND PAROLES YEAR ENDED JUNE 30, 19%

STATE BOARD OF PARDONS AND PAROLES TABLE OF CONTENTS

Page

INDEPENDENT ACCOUNTANTS 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 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

STATE REVENUE COLLECTIONS FUND

9

F NOTES TO THE FINANCIAL STATEMENTS

10

SUPPLEMENTARY INFORMATION

G STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

FIDUCIARY FUND TYPE AGENCY FUND

24

SCHEDULES

1 SCHEDULE OF APPROVED BUDGET

25

2 CASH AND CASH EQUIVALENTS

26

3 SCHEDULE OF FEDERAL REVENUES

27

4 SCHEDULE OF OTHER OPERATING EXPENSES

28

5 RECONCILIATION OF SALARIES AND TRAVEL

29

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

DEPARTMENT OF AUDITS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
November 26, 1996

Honorable Zell Miller, Governor Members of the General Assembly of Georgia
and Members of the State Board ofPardons and Paroles
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 F) of the State Board of Pardons and Paroles as ofand 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 ofthe management of the State Board ofPardons and Paroles.
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 G and Schedules 1 through 5) is presented only for supplementary analysis purposes. Such information has been subjected to the

96ARL-4

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

FINANCIAL STATEMENTS - 1-

STATE BOARD OF PARDONS AND PAROlES COMBINED BALANCE SHEET CSTAMQRY BASIS)
ALL FUNp TYPES AND ACCOUNT GROUPS JUNE 30, 1996

cash and cash EqulvaJenta
(see SChedule)
Accounta ReceiYabIe State ApproprIation Fedenil financial Aui8tance Other
FIX8dAueta Equipment
Amount to be Provided for Payment of Accrued Compensated Abeences Il'llItaliment Purcha8elCapital Lease Commitmenbl

GOVERNMENTAL FUND TYPES

STATE

REVENUE

BUDGET

COLLECTIONS

FIDUCIARY FUND TYPE
AGENCY

$

380,552,15 $

$ 1,114,749.93 115,356.17 31,875,40
$ 1,261,981.50

0,00 $

249,751,84

TotaIAueta

$ 1,642,533,65 $

L1ABILmES ANp FUNP EaUIlY
Liabilities Accounts Payable Payroll Wdhholdlngs Funds Held for Others Compensated Abeences Il'llItaliment Purchases/Capital Leases
Total Liabilities
Fund Equity Investment in General FIXed Asseta Fund Balances Reserved Fair Labor Standards Act Settlement Fedenil Forfeited Property State Revenue Collections Fund Unclaimed Property Unreserved Designated Surplus
Total Fund Equity

$ 1,378,761.50 201,458,11
$ 1.580,219.61

$

0.00

1,820.22

$

1,027.91

59.465.91

$

62,314.04 $

Total liabilities and Fund Equity

$ 1,642.533,65 $

see Independent Accountanrs Combined Report on Review of Financial Statements
and Supplementary Information.
The notes to the financial statements are an integral part of this statement.
-2-

0.00 $ _ _...2..49-.;,,7.5.1..;,;;8.4.

$

249,751.84

$ _ _--=2;..:;49::;,.l"7;.:5;.;.1:.:;.84.:.

0.00 0.00 0,00 $ _ _.....2..49-.;,.7.5.1..;,;;8.4..

ACCOUNT GROUPS

GENERAL

GENERAL

FIXED

LONG-TERM

ASSETS

DEBT

TOTALS

(Memorandum Only)

JUNE 30. 1996

JUNE 30. 1995

$

630.303.99 $

488.392.19

$

3.475.545.75

$

1,114.749.93 $

115,356.17

31,875.40

888.170.70 62,279.64 0.00

$

1,261,981.50 $

950.450.34

$

3.475,545.75 $

3.319.982.08

$

2,883,409.70 $

2,883,409.70 $

2,640,137.67

24,207.09

24,207.09

79.936.95

$

2,907,616.79 $

2.907,616.79 $

2,720.074.62

$

3.475.545.75 $

2,907,616.79 $

8.275.448.03 $ .........7....4...7..8...=8.9..9.....2..=3

$

1,378,761.50 $

321,043.19

201,458.11

291,338.02

249,751.84

205.761.36

$

2,883,409.70

2,883,409.70

2,640,137.67

24.207.09

24,207.09

79,936.95

$

2,907.616.79 $

4.737,588.24 $

3.538,217.19

$

3,475.545.75

$

3,475,545.75 $

3,319,982.08

0.00 1,820.22
0.00 1,027.91

547,763.00 0.00 0.00
809.22

$

3,475.545.75

59,465.91

n.127.74

$

3,537,859.79 $

3.940.682.04

$

3.475.545.75 $

2.907,616.79 $

8,275,448.03 $

7,478,899.23

-3-

STATE BOARD OF PARDONS AND PAROLES COMBINED STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS)
GOVERNMENTAL FUND TYPES
YEAR ENDED JUNE 30, 1996

EXHIBIT"B"

The notes to the financial statements are an integral part of this statement. -5-

STATE BOARD OF PARDONS AND PAROLES STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUNp
YEAR ENDED JUNE 30,1996

EXHIBIT "C

FUNDS AVAILABLE
REVENUES
STATE APPROPRIATION General Appropriation Amended Appropriation Budget Adjustments
Less: Lapsed Funds
Total state Appropriation
FEDERAL REVENUES (see SChedUle)
OTHER REVENUES RETAINED Contracts OffICe of the Governor Strategic Plan for security-1996 Olympic Games Department of Public safety Olympic Torch Run Federal Forfeited Property Reimbursement for Telecommunications Insurance Recoveries Interest Earned Unclaimed Property
Total Other Revenues Retained
Total Revenues
CARRYOVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance Fair Labor Standards Act settJement

TOTALS
VEARENOEO JUNE 30,1996 JUNE 30,1995

$ 41,369,832,00 $ 37,933,656.00

-375,000.00

924,000.00

41,148,00

0,00

$ 41,035,980,00 $ 38,857,656.00

-176,000.00

0.00

$ 40,859,980,00 $ 38,857,656,00

$

327,880.55 $

416,093.81

$

103,014,66 $

0.00

23,024.97 12,283,86
2,856.89 7,289.78
56.07 218,69

0.00 0,00
0,00 18,269.72
0,00 0,00

$

148,744.92 $ _ _.:.:18::c,269=.~72~

$ 41,336,605.47 $ 39,292,019.53

547,763.00

0,00

Total Funds Available

$ 41,884,368.47 $ 39,292,019,53

EXPENDITURES
PERSONAL SERVICES
salaries and Wages Employer's Contributions for:
F.I.C.A, Retirement Health Insurance Personal Liability Insurance Unemployment Compensation Insurance Workers' Compensation Insurance Assessments by Merit System Drug Testing

REGULAR OPERATING EXPENSES

Motor Vehicle Expenses

SUpplies and Materials

Repairs and Maintenance

utilities

Rents (other than Real Estate)

Insurance and Bonding

(see Claims and Indemnities
other Operating Expenses

SChedule)

see Independent Accountanfs Combined Report on Review of Financial Statements
and SUpplementary Information,
The notes to the financial statements are an integral part of this statement,
-6-

$ 24,018,361,19 $ 22,730,065,84

1,727,735,15
3,651,143.04
2,921,108.61 301,366,00 11,381,00 136,976,00
143,547,98 9,993.50

1,630,443,38 3,520,572.14 2,825,652,23
262,171.00 11,591.00
181,080.00 135,696,98
7,860.50

$ 32,921,612,47 $ 31,305,133.07

$

320,322,08 $

225,711,91

668,108,92

3n,981.62

238,981,75

439,366,94

213,735,87

213,441,41

24,005,40

23,230,39

49,786.00

30,414,00

129,22

0,00

82,723.36

86,866,22

STATE BOARD OF PARDONS AND PAROLES
STATEMENT OF FUNDS AVAILABLE AND EXPENPITURES BUDGET FUND
YEAR ENDED JUNE 30. 1996

EXHIBIT-C

EXPENDITURES REGULAR OpERATING EXPENSES
Duplicating and Rapid Copy Publications and Printi
Equipment Purchasesng
TRAVEL MOTOR VEHICLE PURCHASES EQUiPMENT
EqUipment Purchases LeaselPurchase of EqUipment Rental of EqUipment
COMPUTER CHARGES Software EqUipment Equipment Purchases Per Diem, Fees and Contracts Per Diem and Fees Contracts Computer BilKngs, DOAS
REAL ESTATE RENTALS TELECOMMUNICATIONS PER DIEM. FEES AND CONTRACTS
Per Diem and Fees Contracts
QI!:1ER
COUNTY JAIL SUBSIDY other .Costs Grants to Counties, Cities and Civil Divisions
HEALTH SERVICES PURCHASES Per Diem, Fees and Contracts Contracts
Total other Total Expenditures Excess of Funds Available over Expenditures

TOTALS
yEAR ENDED JUNE 30,1996 JUNE 30,1995

$

7,908.00 $

7,668.93

50,482.64

65,183.17

286,346.50

155,362.11

$ 1,942,529.74 $ 1,625,226.70

$

563.458.30 $

622,007.78

$

370,169.04 $

283,793.00

$

25,524.78 $

12,055.39

62,884.02

59,859.60

59,675.41

1,323.73

$

148,084.21 $

73,238.72

$

32,757.89 $

431,188.50

6,530.00
83,600.00 n,On.9O

$-~6~31=,1= 54.29 $ $-2~,68~2,8= 56~ .07 $ $ _---:!9~2~2:,1=6.8:..2.7. $

14,626.42
88,995.73
0.00 61,921.00 201,579.58
367,122.73
2,6n,918.32
843,648.27

$

106,364.59 $

868,973.90

$-~9=75=,3= 38..49 $

109,785.40 138,739.96
248,525.36

$

649,980.00 $

649,890.00

$

24,010.03 $

4,999.50

$

673,990.03 $

654,889.50

$ 41,831,360.91 $ 38,701,503.45

53,007.56

590,516.08

$ 41,884,368.47 $ 39,292,019.53

see Independent Accountanfs Combined Report on Review of Financial Statements
and Supplementary Information.
The notes to the financial statements are an integral part of this statement.
-7-

STATE BOARp OF PARDONS AND PAROLES STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
YEAR ENDED JUNE 30. 1996

EXHIBIT -0"

$ 42,035,685.00 $ 41,884,368.47 $ _ _---.;-1;.;;.5.;.:.1,3~1;.;;.6.;.;;.53~

EXPENDITURES
Personal Services Regular Operating Expenses Travel Motor Vehicle Purchases Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts County Jail Subsidy Health Services Purchases

$ 33,221,736.00 $ 32,921,612.47 $

1,907,265.00

1,942,529.74

587,000.00

563,458.30

364,974.00

370,169.04

146,000.00

148,084.21

619,140.00

631,154.29

2,634,111.00

2,682,856.07

904,564.00

922,168.27

975,895.00

975,338.49

650,000.00

649,980.00

25,000.00

24,010.03

300,123.53 -35,264.74 23,541.70 -5,195.04 -2,084.21 -12,014.29 -48,745.07 -17,604.27
556.51 .20.00 989.97

$ 42,035,685.00 $ 41,831,360.91 $ _ _---"204;.;;..;.:.,32.;.;;;.;,4;.;;..09~

Excess of Funds Available over Expenditures

$

53,007.56 $

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. -8-

53Oi/"OO;;;;;;.;.7~.56;.

STATE BOARD OF PARDONS AND PAROLES STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS
STATE REVENUE COLLECTIONS FUND YEAR ENDEP JUNE 30,1996
CASH RECEIPTS STATE REVENUE COLLECTIONS
Parole Supervision Fees CASH AND CASH EQUIVALENTS - JULY 1. 1995
DISBURSEMENTS TRANSFERS
To Office of Treasury and Fiscal Services CASH AND CASH EQUIVALENTS - JUNE 30.1996

EXHIBIT "E"
$ 749,342.27 0.00
$ 749,342.27
$ 749,342,27 0.00
$ 749,342.27

See Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement. -9-

STATE BOARD 'OF PARDONS AND PAROLES NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXlllBIT "F"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The State Board ofPardons and Paroles, an organizational unit ofthe State of Georgia, is part ofthe executive branch ofthe government ofthe State ofGeorgia. The Board consists offive (5) members appointed by the Governor, subject to confirmation by the Senate. The State Board of Pardons and Paroles is the agency empowered to grant, deny, condition, and revoke executive clemency to individuals convicted of violating Georgia's criminal laws; to manage the number of inmates incarcerated in State penal institutes; and to supervise offenders who have been paroled or conditionally released from prison until the completion oftheir sentence.
The State Board of Pardons and Paroles does not have authority to determine the amount offunding it will receive from the State of Georgia for any given fiscal year. Such authority is vested in the General Assembly ofGeorgia. The Board also does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, the State Board ofPardons and Paroles is included within the State of Georgia reporting entity for financial reporting purposes because ofthe significance ofits legal, operational and financial relationships with the State ofGeorgia. 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 State Board ofPardons and Paroles uses funds and account groups to report on its financial position and the results ofits operations determined in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State ofGeorgia. 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 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 ofthe 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 Amended Appropriations Act of 1995-1996. The Budget Fund is similar in nature to a General Fund as defined in generally accepted accounting principles in that the Budget Fund is used to account for all activities except those required to be accounted for in some other fund.
STATE REVENUE COLLECTIONS FUND - The fund used to account for the collection of specific revenues ofthe State ofGeorgia as provided by statute or administrative action and the subsequenttransfer of such funds to the Office of Treasury and Fiscal Services. This presentation differs from generally accepted accounting principles in that such activity should be included in the General Fund of the governmental organization.
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STATE BOARD OF PARDONS AND PAROLES NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT "F"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
FIDUCIARY FUND TYPE
AGENCY FUND - The fund 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.
The cost ofnormal maintenance and repairs that do not add to the value ofthe 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 of the 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.
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 ofavailable spendable resources. In accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, the Budget Fund remits its unreserved fund balance (surplus) to the Office ofTreasury and Fiscal Services in the subsequent fiscal year.
GOVERNMENTAL FUND TYPES 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 ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities ofthe current period. Revenues that are accrued include primarily State appropriations, Federal grants and entitlements, and certain amounts earned under operating agreements with other parties. Expenditures are recorded when the
- 11 -

STATE BOARD OF PARDONS AND PAROLES
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXIflBIT "F"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPES BUDGET FUND
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.
Contractual obligations for goods and services which have not been received at the end ofthe fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion ofcontracts for goods and serviCes. The recognition ofencumbrances 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 provide for the recording of encumbrances as a reservation offund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles.
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 in that immaterial adjustments should be reported as current period revenues and expenditures.
STATE REVENUE COLLECTIONS FUND The State Revenue Collections Fund is maintained on the Cash Receipts and Disbursements basis of accounting as prescribed or permitted by statutes and regulations of the State of Georgia. This basis of accounting is defined as that method of accounting in which certain revenue and the related assets are recognized when received rather than when earned, and certain expenses are recognized when paid rather than when the obligation is incurred. The State Revenue Collections Fund, which should be included in the General Fund in accordance with generally accepted accounting principles, should be maintained on the modified accrual basis of accounting.
FIDUCIARY FUND TYPE AGENCY FUND
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 Appropriation allotments to the State Board ofPardons and Paroles are on the basis ofa budget submitted by the Board and approved by the Legislature and the Governor. The budget is adopted on a basis consistent with accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia and is compiled in the same manner as all State departments. Expenditures are classified by budget unit object classes
- 12-

STATE BOARD OF PARDONS AND PAROLES NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1996

EXIllBIT "F"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUDGET as provided in Act No. 476 ofGeorgia Laws 1995 (as approved April 21, 1995) and amended by Act No. 513 of Georgia Laws 1996 (as approved February 16, 1996). This budget is considered to be an appropriated budget and is referred to in these notes as the Amended Appropriations Act of 1995-1996.
Overexpenditure ofa budget unit object class, except for the "common object classes", included in the Board's final amended budget is in violation of Section 54 of the 1995-1996 Amended Appropriations Act. Expenditures of no more than 102% ofthe stated amount for each common object class are authorized by Section 54. However, the total expenditure for the group ofcommon object classes may not exceed the sum of the stated amounts for the separate object classes of the group. The common object classes include Personal Services~ Regular Operating Expenses, Travel, Motor Vehicle Purchases, Equipment, Computer Charges, Real Estate Rentals, Telecommunications and Postage.
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist ofdemand deposits with banks and other financial institutions.
INVENTORIES No inventories of supplies are reported in these financial statements. Expendable supplies are recorded as expenditures at the time of purchase.
RESERVED FUND BALANCE Reserves represent" those portions of fund equity not appropriable for expenditure or legally segregated for a specific future use. The following is a brief description of the reserves reflected in the accompanying financial statements:
FEDERAL FORFEITED PROPERTY Represents the Board's share of funds obtained from the Drug Enforcement Agency's property seizures. Amounts must be used for law enforcement purposes and cannot be commingled with any other funds. This amount is restricted for expenditure in future years.
UNCLAIMED PROPERTY Represents funds resulting from cancellation of accounts payable checks and payroll checks. Amounts are required to be held for five years before remittance to the Department ofRevenue.
UNRESERVED FUND BALANCE In accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, the Budget Fund's unreserved fund balance is remitted to the Office of Treasury and Fiscal Services in the subsequent fiscal year as surplus. This amount of unexpended general appropriations is designated for reappropriation by the State in subsequent years.

- 13 -

STATE BOARD OF PARDONS AND PAROLES NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1996

EXlllBIT "F"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

COMPENSATED ABSENCES Compensated absences represent obligations of the Board 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 ofthis obligation as this amount will not be liquidated with expendable available financial resources. Funds are provided in the appropriation offunds each year to the Board to cover the cost ofannual leave paid to terminated employees.

The liability for compensated absences at year end is reported in the General Long-Term Debt Account Group for governmental funds.

MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the Combined Statements (Statutory Basis) are captioned "Memorandum Only" 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, 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 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 Board's financial position and operations. Comparative totals have not been included on statements where their inclusion would not provide enhanced understanding ofthe Board'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

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 ofa surety bond, the depository may pledge as collateral anyone or more ofthe following securities as enumerated in the Official Code ofGeorgia Annotated Section 50-17-59:

(1) Bonds, bills, certificates ofindebtedness, notes, or other direct obligations ofthe United States or

ofthe State of Georgia.

.

(2) Bonds, bills, certificates ofindebtedness, notes, 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.

- 14 -

STATE BOARD OF PARDONS AND PAROLES NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1996

EXHIBIT "F"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (4) Industrial revenue bonds and bonds ofdevelopment 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, 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 ofGeorgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies ofthe State of Georgia the option ofexempting 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, 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 Board or by its agent in the Board's name.

Category 2 - Amounts collateralized with securities (at market value) held by the pledging financial institution's trust department or agent in the Board'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 Board's name, and amounts uncollateralized.

Cash Deposits

Carrying Amount

Bank Balances

Risk Categories

2

3

$ 63030399 $1483383,02 $ 110513 55 $,====o~,oo~ $ 1372 869.47

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STATE BOARD OF PARDONS AND PAROLES NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT "F"

NOTE 3: OPERATING LEASES

The State Board of Pardons and Paroles has entered into certain agreements to lease real property and equipment which are classified as operating leases. These leases generally contain provisions that, at the expiration date of the original term of the lease, the State Board ofPardons and Paroles has the option of renewing the lease on a year-to-year basis. Future minimum commitments for operating leases as ofJune 30, 1996, 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.

Fiscal Year Ending June 30

1997

$ 1.935.444.12

Expenditures for rental of real property and equipment under operating leases for the year ended June 30, 1996, totaled $2,099,937.88.

NOTE 4: CAPITAL LEASE COMMITMENTS

The State Board ofPardons and Paroles acquires certain property and equipment through multi-year capital leases with varying terms and options. The majority of these agreements contain fiscal funding clauses in accordance with O.C.G.A. 50-5-64 which prohibits the creation of a debt to the State of Georgia for the payment ofany sums under such agreements beyond the fiscal year ofexecution ifappropriated funds are not available. Ifrenewal ofsuch agreements is reasonably assured, however, capital leases requiring appropriation by the General Assembly ofGeorgia are considered noncancellable for financial reporting purposes.

At June 30, 1996, future minimum commitments under capital leases for equipment are as follows:

Fiscal Year Ending June 30

1997 1998

$ 21,622.69 3,611.92

Total Future Minimum Commitments

$ 25,234.61

Less: Amounts Representing Interest

1.027.52

Present Value ofFuture Minimum Commitments

$ 24,20709

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STATE BOARD OF PARDONS AND PAROLES NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1996

EXHIBIT "F"

NOTE 5: 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

$ 3,319,982.08

Additions Deductions .

535,366.86 379,803.19

Balance June 30, 1996

$ 3.475.545.75

NOTE 6: GENERAL LONG-TERM DEBT

CHANGES IN GENERAL LONG-TERM DEBT A summary of changes in General Long-Term Debt for the year ended June 30, 1996, follows:

Compensated Capital Lease Absences Commitments

Total

Balance July 1, 1995

$ 2,640,137;67 $ 79,936.95 $ 2,720,074.62

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

225,984.24 17,287.79

9,401.06 65,130.92

225,984.24 17,287.79 9,401.06 65,130.92

Balance June 30, 1996

$ 2,883.409,70 $ 24,207.09 $ 2,907,616,79

NOTE 7: 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 ofthe 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

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STATE BOARD OF PARDONS AND PAROLES NOTES TO THE FINANCIAL STATEMENTS
JUNE 3D. 1996

EXHIBIT "F"

NOTE 7: RISK MANAGEMENT
Public Entity Risk Pool
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 ofGeorgia 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 (DQAS) has the responsibility for the State ofGeorgia 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 State Board ofPardons and Paroles is part ofthe 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 ofGeorgia offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. The plan, available to employees ofthe State ofGeorgia 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 of the State's general creditors. Participant's rights under the plan are equal to those of a general creditor ofthe 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.

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STATE BOARD OF PARDONS AND PAROLES
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT "F"

NOTE 9: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description The State Board of Pardons and Paroles 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 ofGeorgia. The Board's payroll for the year ended June 30, 1996, for employees covered by ERS was $22,986,515.58. The Board's total payroll for all employees was $24,018,361.19.
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 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 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.
Contributions Required and Contributions Made As established by State statute, all full-time employees ofthe 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% of compensation and 4.75% of compensation paid by the Board on behalfof the employee. Under the new plan, member contributions consist solely of 1.25% of compensation paid by employee. The Board also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation. For the year ended June 30, 1996, the ERS employer contribution rate for the Board amounted to
- 19-

STATE BOARD OF PARDONS AND PAROLES NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT"F"

NOTE 9: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Contributions Required and Contributions Made 15.04% ofcovered payroll and included the 4.75% contributed on behalfof the employee under the old plan referred to above. The employer contnbutions 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 the ERS 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 $3,745,104.77, of which $3,458,152.15 was made by the Board and $286,952.62 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 through ERS. This information gives an indication ofthe progress made in accumulating sufficient assets to pay benefits when due.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description The State Board of Pardons and Paroles participates 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 part-time and are not members of a public retirement or pension system. GDCP is administered by the Employees' Retirement System Board ofTrustees. The Board's payroll for the year ended June 30, 1996, for employees covered by GDCP was $137,357.11. The Board's total payroll for all employees was $24,018,361.19.
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 adopted by the Board. Ifa 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.
Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. 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.
- 20-

STATE BOARD OF PARDONS AND PAROLES
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1996

EXHIBIT "F"

NOTE 9: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Contributions and Vesting Total contributions made by employees during fiscal year 1996 amounted to $10,301.85 which represents 7.5% of covered payroll. These contributions met the requirements ofthe plan.
LOCAL RETIREMENT SYSTEMS
State ofGeorgia laws provide for county probation systems to become part ofthe statewide probation system when certain population levels are reached within the county jurisdictions they are operating. At the time these county probation Systems become part of the statewide probation system, employees ofthe county systems have the option ofbecoming employees of the State of Georgia. Individuals choosing to become employees ofthe State have certain options and restrictions available to them relative to remaining a member of the local retirement system in which their county probation system participates or becoming a member of the Employees'Retirement System ofGeorgia (ERS). State law further provides that employer contributions for continued membership in the local retirement system shall be computed at the same percentage rate applicable to all other state employees on the basis of the state salary paid to such employees electing to continue membership in the local retirement system (14.89%) and shall be paid by the State to the local retirement system. Employer contributions paid by the State that exceed the percentage rate of employer contributions applicable to all other employees of the local retirement system are applied to offset the percentage rate of employee contributions required of state employees remaining in the local retirement system. The total employer contribution paid by the State cannot exceed the total employer and employee contributions required under the local retirement system.
The State Board ofPardons and Paroles' payroll for the year ended June 30, 1996, for employees covered by local retirement systems was $162,777.50. The Board's total payroll for all employees was $24,018,361.19.
Total contributions to local retirement system plans made during fiscal year 1996 amounted to $20,145.40. This amount was contributed entirely by the Board and covered both employer and employee contributions required under local retirement system plans. This amount represented 12.37% of covered payroll.
Information relative to plan descriptions, benefits, funding status and progress, and trend information for applicable local retirement systems was not available.
NOTE 10: 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.

- 21 -

STATE BOARD OF PARDONS AND PAROLES NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXlDBIT "F"

NOTE 10: LEAVE POLICIES
Employees earn annual leave ranging from ten to fourteen hours each month depending upon the employees' length ofcontinuous State service with a maximum accumulation offorty 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 offorfeited 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 of expenditures which may be disallowed by the grantor cannot be determined at this time although the Board expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against the State Board ofPardons and Paroles, ifany, 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 ofGeorgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1996.
NOTE 12: BONDING INFORMATION
All employees ofthe State Board ofPardons and Paroles 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 Board 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 Board to a maximum of $1 ,000,000.00 against loss sustained from failure ofits employees to perform faithfully their duties or to account properly for all monies and property received by virtue oftheir position or employment.
All employees ofthe State Board ofPardons and Paroles are also bonded under Commercial Crime Policies written by the United States Fire Insurance Company, their Policy Nos. 6260122926 and 626 0122944, on which premiums were paid to October 1, 1996. Under these additional public employee dishonesty coverages, the policies insure the Board to a maximum of $9,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees and from failure ofits employees to perform faithfully.

- 22-

SUPPLEMENTARY INFORMAnON - 23-

Restitution Fund

STATE BOARD OF PARDONS AND PAROLES STATEMENT OF CHANGES IN ASSETS AND LIAB'LIT'ES
FIDUCIARY FUND TYPE - AGENCY FUND YEAR ENDED JUNE 30, 1996

EXHIBIT"G"

ASSETSI LIABILITIES JULY 1,1995

ADDITIONS

DELETIONS

ASSETSI LIABILITIES JUNE 30 1996

$ 205,761,36 $ 199,262,41 $ 155,271.93 $

2.49iiOo1.',;,,;75.1..8..4..

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information,
- 24-

STATE BOARD OF PARDONS AND PAROLES SCHEDULE OF APPROVED BUDGET
YEAR ENDED JUNE 30, 1996

SCHEDULE "1"

FUNDS AVAILABLE
REVENUES
state Appropriation Federal Revenues Other Revenues Retained

ORIGINAL

AMENDED

BUDGET

APPROPRIATION APPROPRIATION ADJUSTMENTS

TOTAL

$ 41,369,832,00 $

-375,000.00 $

41,148.00 $ 430,907.00 568,798.00

41,035,980.00 430,907.00 568,798,00

$ 41,369,832,00 $

-375,000,00 $ 1,040,853.00 $ 42,035,685,00

EXPENDITURES
Personal Services Regular Operating Expenses Travel Motor Vehicle Purchases Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts County Jail Subsidy Health Services Purchases

$ 33,181,024.00 $ 1,560,147.00 587,000,00 78,000,00 271,000.00 313,200.00 2,634,111.00 951,700,00 1,118,650,00 650,000,00 25,000,00

-375,000,00 $

415,712,00 $ 347,118.00
286,974,00 -125,000,00 305,940,00
-47,136,00 -142,755,00

33,221,736,00 1,907,265,00 587,000.00 364,974.00 146,000,00 619,140,00 2,634,111,00 904,564.00 975,895,00 650,000.00 25,000,00

$ 41,369,832,00 $

-375,000,00 $ 1,040,853,00 $ 42,035,685,00

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 25-

STATE BOARD OF PARDONS AND PAROLES CASH AND CASH EQUIVALENTS JUNE 30, 1996
NONINTEREST BEARING ACCOUNTS
Wachovia Bank of Georgia, AUanta, Georgia
SouthTrust Bank of Georgia, N. A" AUanta, Georgia

SCHEDULE "2"
$ 617,604.77 12,699.22
$ 630,303.99

See accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information.
-26 -

STATE BOARp OF PARDONS AND PAROLES SCHEDULE OF FEDERAL REVENUES
YEAR ENDED JUNE 30, 1996

PROGRAM
Justice, U. S. Department of Drug Control and Systems Improvement Formula Grant Through Office of the Governor

CFDA NUMBER
16.579

SCHEDULE "3"
AMOUNT
$ 327,880.55

See accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information.
- 27-

STATE BOARD OF PARDONS AND PAROLES SCHEDULE OF OTHER OPERATING EXPENSES
YEAR ENDED JUNE 30,1996
REGULAR OPERATING EXPENSES
Bank Charges Clipping Services Court Reporter Services and Transcripts Credit Investigation Death Certificates Film Processing Freight, Express and Storage Handling Charges Legal Advertising Medical Examinations Notary Seal and 'Commission Prisoner Meals Registration Fees Sentencing Sheets Subscriptions and Dues

SCHEDULE -..-

$

12,00

780.00

2,467.33

756.35

228,00

913.52

718.70

156,00

354,90

63.00

192.67

"32.99

59,578.04

191.05

15,878.81

$ 82,723.36

See accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information,
-28 -

STATE BOARD OF PARDONS AND PAROLES RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30. 1996

SCHEDULE "5"

Totals per Annual Supplement

Accruals June 30,1996

Adjustments Amideo, Black, Crosby, James, Oswald, Riner, Whitworth,

WilliamF. Oscar Lee Bobby L. Chartes B. Barbara Lyle Nancy KennyR.

SALARIES $ 24,018,567.76 $

TRAVEL 557,230.67

4,352.63

-206.57

-74.00 387.00 447.50
48.00 312.50
754.00

Totals per Report

$ 24,018,361.19 $ =====56=:3::1:,4=5:=8=.3=0

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 29-