Audit report, state of Georgia, Department of Revenue, year ended June 30, 1995

GA
A. ioo ,R. I R49..
l''!Ci4-95
STATE OF GEORGIA DEPARTMENT OF AUDITS
254 WASHINGTON STREET ATLANTA. GEORGIA 30334

AUDIT REPORT STATE OF GEORGIA DEPARTMENT OF REVENUE YEARENDEDJUNE30, 1995

DEPARTMENT OF REVENUE - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

EXHIBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET (STATUTORY BASIS)

ALL FUND TYPES AND ACCOUNT GROUPS

2

B COMBINED STATEMENT OF CHANGES IN FUND BALANCES

(STATUTORY BASIS)

GOVERNMENTAL FUND TYPES

5

C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

BUDGETFUND

6

D STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

COMPARED TO BUDGET

BUDGET FUND

9

E STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS

STATE REVENUE COLLECTIONS FUND

10

F NOTES TO THE FINANCIAL STATEMENTS

12

SUPPLEMENTARY INFORMATION

G COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES.

FIDUCIARY FUND TYPE -AGENCY FUNDS

28

SCHEDULES

I SCHEDULE OF APPROVED BUDGET

29

2 CASH AND CASH EQUIVALENTS

30

3 SCHEDULEOFFEDERALREVENUES

31

4 SCHEDULE OF OTHER OPERATING EXPENSES

32

5 SCHEDULE OF EXTRAORDINARY EXPENDITURES

33

6 ANALYSIS OF STATE REVENUE COLLECTIONS

34

SECTION II FINDINGS AND IMPROPER OR QUESTIONED COSTS SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS

SECTION I FINANCIAL

CLAUDE L. VICKERS
STATE AUDITOR (404) 856-217..

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
November 9, 1995

Honorable Zell Miller, Governor Members of the General Assembly ofGeorgia
and Honorable Marcus E. Collins, Sr., Commissioner Department ofRevenue
INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying financial statements (Exhibits A through F) ofthe Department ofRevenue as of and for the year ended June 30, 1995. These financial statements are the responsibility of the Department's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in Note 1, these financial statements were prepared on a prescribed basis of accounting that demonstrates compliance with the budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis ofaccounting other than generally accepted accounting principles.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position (statutory basis) ofthe Department ofRevenue as of June 30, 1995, and the results of its operations (statutory basis) for the year then ended, on the basis ofaccounting described in Note 1.
Our audit was made for the purpose offorming an opinion on the financial statements taken as a whole. The accompanying supplementary information (Exhibit G and Schedules 1 through 6) is presented for purposes ofadditional analysis and is not a required part ofthe financial statements of the Department ofRevenue. Such

95ARL-l

infonnation has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly presented in all material respects in relation to the financial statements taken as a whole.
Respectfully submitted,
~~~t~
Claude L. Vickers State Auditor
CLV:cm 95ARL-l

FINANCIAL STATEMENTS - I-

ASSETS
Cash and Cash Equivalen1s (See Schedule)
Accounts Receivable
s - Appropriation
Federal Financial Assistance Other
Prepaid Hems
lnventDries
Fixed Assets Equipment
Amount 10 be Provided for Payment of Accrued Compensated Absences
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Cash OWrdraft Accounts Payable Payroll Wllhholdings Funds Held for Others Compensated Absences
Total Liabilities
Fund Equity Investment in General Fixed Assets Fund Balances Reserved Inventories S - Revenue Collections Fund Unreserved Designated Surplus
Total Fund Eqoity
Total Liabilities and Fund Equity

GOVERNMENTAL FUND TYPES

STATE

REVENUE

BUDGET

COLLECTIONS

s 1,225,715.24 $

s 10,119,706.78
0.00 48,673.58

$ 10,168,380.36

$

89481.67

$

36.47e.os

605614.64

$ 11 520 0"...5.33 $

605614.64

0.00 11,1TT,838.12
2,561.04
$ 11,1eo,,.1s.16

$

3S 000.00

$

605,614.64

30C 616.17

$

339,616.17 $

605,614.64

$ 11,52':J,035.33 $

605614.64

The notes 10 lhe financial s1atements are an integral part of this s1atement -2-

EXHIBIT"A"

FIDUCIARY FUND TYPE
AGENCY

ACCOUNT GROUPS

GENERAL

GENERAL

FIXED

LONG-TERM

ASSETS

DEBT

TOTALS

!Memorandum On!l'.l

JUNE 30, 1995

JUNE 30, 1994

$ 9 744,351.08

$ 11,575,680.96 $ 18,119,980.79

$ 10,119,706.78 $ 0.00
48,673.58

$ 10 168,380.36 $

$

89,461.67 $

$

36,478.06 $

5,665,034.55 27,502.69 810,774.12
6,503 311.36
15,685.20
38,227.30

$ 8,527,609.11

$

8,527,609.11 $

7,825,049.24

$ 4,348,805.14 $

4,348,805.14 $

4,226,567.10

$ 9744351.08 $ 8527609.11 $ 4 348 805.14 $ 34 746 415.30 $ 36 728 820.99

$ 9,744,351.08 $ 9,744,351.08

$
$ 4,348,805.14 $ 4,348,805.14 $

0.00 $ 11,177,838.12
2,581.04 9,744,351.08 4,348,805.14
25,273,575.38 $

75,226.33 5,995,476.96
4,170.25 13,206,212.64 4,226,567.10
23,507,653.29

$ 8,527,609.11

$

8,527,609.11 $

7,825,04924

39,000.00 805,614.64

46,000.00 4,913,768.15

$ 8,527,609.11

300,616.17

436,350.32

$

9,472,839.92 $ 13,221,167.71

9 744 351.08 $ 8 527 609.11 $ 4 348,805.14 $ 34 746,415.30 $ 36,728,820.99

-3-

DEPARTMENT OF REVENUE COMBINED STATEMENT OF CHANGES IN FUND BALANCES /STATUTORY BASIS}
GOVERNMENTAL FUND TYPES VEAR ENDED JUNE 30 1995

EXHIBIT"B"

FUND BAI .wees JULV 1
RUnNISOIWd
Dosignatad Surplus
~
Adjustments to Prio, Yoafs Accounts Payable Call Raooipls for the Year
Elchibit"E" Excess d Funds Available O\l8t' Elcpendiluros
Elchlblt"C" Raimbursement d Priot Yeofs
Elcpendiluros
PEQUCTIONS
UnNISOIWd Fund Balanc:e (Surplus) Returned to Office olTIMSUry and Fosc:al Services Year Ended June 30, 1993 Year Ended June 30,, 199-4
Cash Disbursements for the Year Exhibit
RasaMld Fund Balanc:e Carried Ovarlrom Prior Year as Funds Available
FLJNQ BALANCES IUNF
(To Elchiblt "A")

BUDGET

STATE REVENUE COLLECTIONS

TOTALS

tMemorandum Q!!!l:l

YEAR ENDED

JUNE 30, 1895

JUNE 30, 1994

5,000.00 $

4,813,768.15 $

4,959,768.15 $

1,415,751.90

436,350.32 482,350.32

4,813,768.15 $

436.350.32 5,396,118.47

366,249.11 1,782,001.01

24,721A2

24,721.42

$ 9,179,383,393.95

9,179,383,383.95

314,894.75

314,894.75

0.00

0.00

339,616.17 $ 9,179.393,383.95 $ 9,179,733,010.12

30,612.11 8,510,988,539.70
447,59121 4,147.00
8,511,470,890.02

0.00 436.350.32

0.00 436,350.32

$ 9,183,701,547.I

9,183,701,547.I

i!XXJOO

1,000.00

12,350.32 $ 9,183,701,547.I $ 9,184,183,897.78

366,249.11 0.00
8,507,438,052.15 52,471.30
8.507.856,m.56

339,616.17 $

605,614.64 $

945,230.81 $

5,396,118.47

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

DEPARTMENT OF REVENUE STATEMENT OF FUNDS AVAIi ABLE AND EXPENDITURES
BUDGET FUND YEAR ENnED JUNE 30 1995

EXHIBIT"C"

FUNDS AVAILABLE
REVENUES
STATE APPROPRIATION General Appropriation Amended Appropriation
Total S-App,oprialion
FEDERAL REVENUES (See Schedule)
OTHER REVENUES RETAINED Indirect Services Funding Department of Administralhle SeNice& Unclaimed Property Receipts
Total Other Rewnues Retained
Total Rewnues
CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance Federal Financial - n e e lnventones
Total carry-Over from Prior Year
Total Funds Available
EXPENDITURES
PERSONAL SERVICES
Salaries and Wages Employer's Contributions for.
F.I.CA Retirement Health Insurance Personal Liabillty 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 Ulillties Rents (Other than Real Estate) Insurance and Bonding Other Operating Expenses (See Schedule) Ex!rao<dinary Expenditures (See Schedule) Duplicating and Rapid Copy Publications and Printing
TRAVEL
The notes to the financial statements are an integral part of this statement.
-6-

TOTALS
YEARENOEO JONE30 15 JONE30 1894

$ 86,628,745.00 $ 77,982,080.00

3711200.00

1799310.00

$ 90 339 945.00 $ 79 781 390.00

$ 103782.07 $

TT502.69

$ 3,845,000.00 $ 1289313.00
$ 5134 313.00 $
$ 95 578 040.07 $

3,845,000.00 766TT0.00
4611 TT0.00
84 420 162.69

$

0.00 $

471.30

46000.00

52000.00

$

46000.00 $

52471.30

$ 95 624 040.07 $ 844n633.99

41,336,941.16$
2,754,916.65 . 5,809,201.22 4,642,125.06
230,808.00 83,549.00
686,693.00 204,616.87
583.00
55 749 433.96 $

39,304,452.96
2,634,125.49 5,582,664.88 4,451,312.97
174,096.00 120,770.00 596,628.00 209,236.03
1006.00
53 074 292.33

139,281.35$ 422,119.62 532,955.78
15,243.10 21,681.70 64,034.50 771,865.24 22,000.00 71,679.59 26TT138.75
$--=4 6=87=99c9=.63 $
$ 1 262 340.53 $

139,803.81 424,620.06 629,166.61 18,817.01 15,820.05 61,979.02 618,046.62
0.00 90,285.25 2159741.11
4158 TT9.54
1267504.46

DEPARTMENT OF REVENUE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30 1995

EXHIBIT"C"

EXPENDITURES MOTOR VEHICLE PURCHASES EQUIPMENT
Equipment PurcM88S Rental af Equipment
COMPUTER CHARGES OtherCosts Supplies and Materials Repairs and Maintenance Other Operating Expenses (See Schedule) Software Equipment Equipment Purchases Per Diem, F - and Contracts Per Diem and F Contracts Computer BiUings, DOAS
REAL ESTATE RENTALS TELECOMMUNICATIONS PER DIEM FEES AND CONTRACTS
Per Diem and Fees Contracts
OTHER COUNTY TAX OFFICIALS/RETIREMENT AND FICA Personal Services Employer's Contribution for: Retirement Other Coots Grants to Counties, Ctties and CMI DMsions
MOTOR VEHICLE TAGS AND DECALS Per Diem, Fees and Contracts Contracts
POSTAGE Other Coots Supplies and Materials Total Other Total Expendttures
Excess af Funds Available over Expendttures
The notes to the financial statements are an integral part of this statement.
-7-

TOTALS
9~REFJOED JORE~ ~ggs JOJilE 30 l 994

$ 250913.37 $

38091.00

$ 632,262.43 $ 168430.25
$ 800692.68 $

723,640.49 158826.60
882467.09

$

177,483.05 $

182,114.66

313,968.80

359,468.82

48,742.70

10,188.04

434,860.58

250,185.43

1,637,295.89

544,847.58

61,590.00 1,823,665.75
9980228.01

122,550.34
783,541.10 9186885.96

$ 14477834.78 $ 11439781.93

$ 2 779 359.39 $ 2605436.20

$ 1 027 206.02 $

763333.40

$ 817,273.83 $ 170900.05
$ 988173.88 $

566,203.18 207100.00
773303.18

$ 2,671,475.00 $ 2,555,255.00

697,525.00

577045.00

3,369 000.00 $ 3132300.00

6 286 954.77 $ 2439595.24

$ 3 629 236.31 $ 3450658.41

$ 13285191.08 $ 9022553.65

$ 95,309,145.32 $ 84,025,042.78

314894.75

447591.21

$ 95 624 040.07 $ 84 472 633.99

o\----..\) av, IZ

PEPt'RIMENT OF REVENUE STATEMENT OF FUNDS AYAJLABLE ANP fXPENPITVBES
COMPflREp IO 6VQGET
BUQGETFUNP VEAR ENQEP JUNE 30 1995

EXHIBIT"[)"

FUNDS AVAILABLE
~ State Appropriation F-.IReven.Other Revenues Retained
CARR)'.~R ERQM eR!QB YEAR
Transfer from ReseM!d Fund Balance

BUDGET

ACTUAL

VARIANCEFAVORABLE !UNFAVORABLE!

$

90,339,945.00 $

90,339,945.00 $

152,000.00

103,782.07

5,134,313.00

5,134,313.00

$

95,626,258.00 $

95,578,0-W.07 $

0.00

46,000.00

0.00 -48,217.93
0.00 -48,217.93
46,000.00

$

95,626,258.00 $

95,624,0-W.07 $

-2,217.93

EXeENQITURES
Personal Services Regular Operating Expenses Travel Motor Vehicle PurchasN Equipment Computer Charges Real Eslale Rentals Telecommunications Per Diem, Fees and Contracts County Tax Officials/Retirement and FICA Motor Vehicle Tags and Decals Postage

$

55,303,453.00 $

55,749,433.96 $

4,617,282.00

4,687,999.63

1,397,887.00

1,262,340.53

246,000.00

250,913.37

814,069.00

800,692.68

14,993,879.00

14,477,834.78

2,832,804.00

2,779,359.39

1,114,537.00

1,027,206.02

1,014,216.00

988,173.88

3,369,000.00

3,369,000.00

6,288,955.00

6,288,954.77

3,636,176.00

3,629,238.31

-445,980.96 -70,717.63 135,546.47 -4,913.37 13,376.32 516,044.22 53,444.61 87,330.96 26,042.12 0.00 0.23 6,939.69

$

95,626,258.00 $

95,309,145.32 $

317,112.68

Excess of Funds Available over Expenditures

$

314,894.75 $

314,894.75

The notes to the financial statements are an integral part of this statement. -9-

QEPA8JMENT OF REVENUE STATEMENT OF CASH RECEIPTS ANP P!RLJRSliMENTS
STAIE RE\IENIJF C-Q IFCJJONS RJNQ YEAR ENDED JUNE 30 1995

EXHIBIT"E"

ro, STAJJ; RfYENYE ECJJONS ltt Schfdule\
--.Uc:onseTax Non Busl.-Uc:onse Tax
-Vehlclo Reglstndions Tags _ , COnler Reglstndions - Tags _ , Vohlclo Tille Reglstndions
Corporate Net Worth Tax -Tax Financial -..ions Busl.-Occupolion Tax Income Tax
Corpontions Individuals

CASH RliCEIPTS

$

3,l3,1.a.00

135,052,784.44 "'4,052,994.57 ~835578.06

225,741,357.07

21,809,883.98 73,807,281.74 11,303,488.76

638,860,2~.06 3 638.387 784.99

4,4n.258.001.os

Pn,perty Tax County Tax Digosl Accounts lnmlglble Recording
-Public U1llities Pn,perty Tax
Tues Based on Sales Sales and Use Tax Regular _,Fuel
Alcoholiceov.n,ges Boer Liquor Wmo
Cigars and Cigarelles _,Fuel
Fines and Forfeibnes Peace Officers nd Prosecutors Training Fund Unclaimed ~rty State ChHdren's Trust Fund Earnings General Government
Local Option Sales Tax Collec:tlon Cost Marta Sales Tax Collection Cost Motor Carriers' Fees Railroad Car Tax Collection Cost Real Estate Transfer Tax Oollec:tion Cost Special Purpcse Sales Tax Collection Cost Other Fees
Total Cash Receipts
CASH AND CASH FOUIVALENTS JULY 1 1994

$

33,298.on.33

429.376.68

422,35 990610.68

33,n7.-.01 991,033.03

3,542,542,947.83 141 985.870.31 $ 3,684,528,818.14

70,558,554.33 29,832,359.70 14.290 624.31

114,681,538.34 88,837,959.52
383 047 604.76
6,623,856.42 2,247,225.31 3,006,184.01
29,221.94 151,825.06 4,764,391.96 6~1450.33

4,271,095,920.76 2,580,326.92 15,004,266.92 1a,2n,697.68 1,209,575.00
23 284155.03 9,179,393,393.95
4913768.15

$ 9184 307162.10

The notes to the financial statements are an integral part of this statement -10-

QEPARTUfNT OF BMNYs STATEMENT OF CASH RECEIPTS ANP DISBURSEMENTS
STATE RMNUE 9QLLECTIQNS RJNP
YEAR ENDED JUNE 30 1995

EXHIBIT"E"

GO\lfflNMENTAL COST

F - Rained III Collecting Soun:e PrapertyTax County Tax Digest Accounts lnlangible Recording

Taus Based on Sales SalosandUseTax Regular -Fuel

Cigars Ind Ciga-

-

Fual

Assessing Property Tax County Tax Digest Accounts

Disbursornants d _ , Registration Plan Collections To 0lher States

Total Gowmmental Costs

~

To Office dTrNSUryand Ftseal Services L...: Relunds through Office d T...ury and F'oscal Se!vicas

Total Disbursements

CASH ANP CASH FQI JIVALENTS - JUNE; 30 1995

DlSBURSfMENTS

1,2-49,912.75 23624.87 $

1,273,537.62

35,75,213.54
3 390 626.69 $

38,865,80.23
2,661,239.86
2.835 798.81

4 362 878.70 $

5,836,416.32

552,386.6
17961.331.60 64,150,144.38

9,897,216,890.84
777665 87.76

9119.551 403.08
9,183,701,547.6
605.614.64

$ 9184 307162.10

The notes to the financial statements are an integral part of this statement. -11

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE30 1995

EXHIBIT"F"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The Department ofRevenue, an organizational unit of the State of Georgia, is part ofthe executive branch ofthe government ofthe State ofGeorgia. It is the chief tax collection agency for the State ofGeorgia. The principal taxes collected are those on sales, motor fuel, income, alcoholic beverages, cigars and cigarettes, property, motor vehicle licenses, and estates. The executive officer of the Department is the Revenue Commissioner, who is appointed by the Governor with the consent ofthe Senate of the General Assembly of Georgia. It is the Revenue Commissioner's duty to administer all Georgia tax laws and he is empowered to make all rules and regulations necessary for the enforcement of those laws.
The Department ofRevenue does not have authority to determine the amount offunding it will receive from the State ofGeorgia for any given fiscal year. Such authority is vested in the General Assembly of Georgia. The Department also does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, the Department ofRevenue 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 ofGeorgia These reporting entity relationships are defined in Section 2100 ofthe Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING The Department ofRevenue uses funds and account groups to report on its financial position and the results ofits operations determined in confonnity with accounting practices prescribed or pennitted 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 offunds are maintained consistent with legal and managerial requirements. Account groups are a reporting device used to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. Funds and account groups presented in the accompanying financial statements are as follows:
GOVERNMENTAL FUND TYPES
BUDGET FUND - The fund used to account for activities and functions as set forth in the Amended Appropriations Act of 1994-1995. The Budget Fund is similar in nature to a General Fund as identified in generally accepted accounting principles in that the Budget Fund is used to account for all activities except those required to be accounted for in some other fund.
STATE REVENUE COLLECTIONS FUND - The fund used to account for the collection of specific revenues ofthe State ofGeorgia as provided by statute or administrative action and the subsequent transfer of such funds to the Office of Treasury and Fiscal Services. This presentation differs from generally accepted accounting principles in that such activity should be included in the General Fund of the governmental organization.

- 12 -

DEPARTMENT OF REVENUE
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30 1995

EXHIBIT "F"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
FIDUCIARY FUND TYPE
AGENCY FUNDS - The funds used to account for assets held for use by other funds, governments, or individuals.
ACCOUNT GROUPS
GENERAL FIXED ASSETS - The account group used to account for fixed assets used in governmental fund type operations. Fixed assets purchased are recorded at cost or at estimated historical cost if historical cost is not practically determinable. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on general fixed assets.
The cost ofnormal maintenance and repairs that do not add to the value ofthe asset or materially extend assets' Jives 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 ofcertain governmental long-term liabilities, such as claims, judgments and compensated absences, which will be paid from future resources.
BASIS OF ACCOUNTING MEASUREMENTFOCUS
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 of Treasury and Fiscal Services in the subsequent fiscal year.
GOVERNMENTAL FUND TYPES BUDGET FUND
Except as disclosed in the following paragraphs, units of government of the State of Georgia record their Budget Fund revenues and expenditures in accordance with the modified accrual basis of accounting. Under the modified accrual basis ofaccounting, revenues are recognized when susceptible to accrual (i.e., when they are "measurable and available"). "Measurable" means the amount 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 State appropriations, Federal grants and entitlements, and certain amounts earned under operating agreements with other parties. Expenditures are recorded when the
- 13 -

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30 1995

EXIIlBIT "F"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPES BUDGETFUND
related fund liability is incurred, except for urunatured 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 services which have not been performed and for goods which have not been delivered at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion of contracts for goods and services. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State ofGeorgia, but is not consistent with generally accepted accounting principles, which provide for the recording of encumbrances as a reservation 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 FUNDS
Agency Funds are custodial in nature and do not measure results of operations or have a measurement focus. The modified accrual basis of accounting is utilized for recognizing assets and liabilities.

- 14 -

DEPARTMENT OF REVENUE
NOTES TO THE FINANCIAL STATEMENTS JUNE 30 1995

EXHIBIT "F"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUDGET Appropriation allotments to the Department of Revenue are on the basis of a budget submitted by the Department 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 as provided in Act No. 1208 of Georgia Laws 1994 (as approved April 18, 1994) and amended by Act No. 6 ofGeorgia Laws 1995 (as approved February 22, 1995), which is an appropriated budget and is referred to in these notes as the Amended Appropriations Act of 1994-1995.
Overexpenditure of a budget unit object class, except for the"common object classes", included in the Department's final amended budget is in violation of Section 80 of the 1994-1995 Amended Appropriations Act. Expenditures ofno more than 102% ofthe stated amount for each common object class are authorized by Section 80. However, the total expenditure for the group of common object classes may not exceed the sum of the stated amounts for the separate object classes ofthe 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 include currency on hand, demand deposits with banks and other financial institutions, and cash management pools that have the general characteristics of demand deposit accounts in that the Department may deposit additional cash at any time and also may withdraw cash at any time without prior notice or penalty. Cash and Cash Equivalents also include short-term, highly liquid investments with maturities of three months or less from the date of acquisition.
INVENTORIES Inventories ofsupplies are valued at weighted average cost on the Combined Balance Sheet (Statutory Basis). The consumption method is used to account for the use ofinventories. Under the consumption method, the costs ofinventories are recorded as expenditures when consumed rather than when purchased.
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:
INVENTORIES Reported inventories, under the consumption method, are offset by a portion of State funds reserved to provide working capital for managing a reasonable level ofinventories.
STATE REVENUE COLLECTIONS FUND The balance ofrevenues collected but not transmitted to the Office of Treasury and Fiscal Services at fiscal year end. These funds are required by the Official Code of Georgia to be transferred to the Office of Treasury and Fiscal Services and are not available for use by the Department.
- 15 -

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30 1995

EXHIBIT"F"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UNRESERVED FUND BALANCE In accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, the Budget Fund's umeserved fund balance is remitted to the Office ofTreasury and Fiscal Services in the subsequent fiscal year as surplus. This amount of unexpended general appropriations is available to the State for reappropriation in subsequent years.
COMPENSATED ABSENCES Compensated absences represent obligations of the Department ofRevenue relating to employee's rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulating annual leave in which payment is .probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion of this obligation as this amount will not be liquidated with expendable available financial resources. Funds are provided in the appropriation of funds each year to the Department 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 Department's financial position and operations. Comparative totals have not been included on statements where their inclusion would not provide enhanced understanding of the Department's financial position and operations or would cause the statements to be unduly complex and difficult to understand.
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 ofa 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:
(1) Bonds, bills, certificates ofindebtedness, notes, or other direct obligations of the United States or ofthe State of Georgia.
- 16-

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE30 1995

EXIIlBIT "F"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (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 of the State ofGeorgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose.

(4) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws of the State of Georgia.

(5) Bonds, bills, certificates ofindebtedness, notes, or other obligations ofa 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 Banlc, the Federal Home Loan Banlc, the Federal Intermediate Credit Banlc, 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 50-17-53, the State Depository Board has adopted policies which allow agencies ofthe State of Georgia the option of exempting demand deposits from the collateral requirements.

CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 1995, 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 Department or by its agent in the Department's name.

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

Cash Deposits

Canying Amount

Bank Balances

Risk Categories

$ 3 259 747 66 ~34 66) 788 36 $ 730 967 55 $ )33 642 44 _ $33796 67837

- 17 -

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30 1995

EXHIBIT"F"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS. Investments are stated at cost. The carrying amount ofthe investment balance as ofJune 30, 1995, shown below is maintained in an investment pool by the Office of Treasury and Fiscal Services and is not subject to risk categorization.

Type oflnvestment

Carrying Amount

Market Value

State Investment Pool

$ 8 307 933 60 S 8 307 933 60

NOTE 3: OPERATING LEASES

The Department 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 Department has the option of renewing the lease on a year-to-year basis. Future minimum commitments for operating leases as ofJune 30, 1995, are listed below. Amounts are included only for multiyear leases and for cancellable leases for which an option to renew for the subsequent fiscal year has been exercised.

Fiscal Year Ending June 30

1996

$ 778 265 06

Expenditures for rental of real property and equipment under operating leases for the year ended June 30, 1995, totaled $916,118.34.

NOTE 4: CHANGES IN GENERAL FIXED ASSETS

In accordance with the statutory definition of moveable personal property as defined in Official Code of Georgia Annotated Section 50-16-161, only those items with an acquisition cost ofSl,000.00 or greater are reflected in the General Fixed Assets Account Group.

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

Balance July 1, 1994

$ 7,825,049.24

Additions Deductions

1,171,662.54 469 102.67

Balance June 30, 1995

$ 8 527 609)]

- 18 -

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30 1995

EXHIBIT"F"

NOTE 5: GENERAL LONG-TERM DEBT

CHANGES IN GENERAL LONG-TERM DEBT During the year ended June 30, 1995, the following changes ocCU1Ted in the compensated absences liability reported in the General Long-Tenn Debt Account Group:

Balance July 1, 1994

$4,226,567.10

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

113,551.36 8 686.68

Balance June 30, 1995

$ 4 348 805 14

NOTE 6: RISK MANAGEMENT

Public Entity Risk Pool

The State Personnel Board, Merit System ofPersonnel Administration internally administers for the State of Georgia a program of health benefits for the employees of units ofgovernment of the State of Georgia and 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 ofgovernment 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 services 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 is purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Department 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 state agencies by DOAS to provide claims servicing and claims payment.

- 19 -

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE30 1995

EXlilBIT "F"

NOTE 7: 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 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 is presented in the financial report ofthe State Personnel Board - Merit System ofPersonnel Administration for the year ended June 30, 1995.
NOTES: RETIREMENTPLANS
EMPWYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description The Department ofRevenue participates in the Employees' Retirement System ofGeorgia ("ERS"), a singleemployer, defined benefit plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia. The Department's payroll for the year ended June 30, 1995, for employees covered by ERS was $36,368,031.45. The Department's total payroll for all employees was $41,336,941.16.
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.
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. Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest eight consecutive calendar quarters of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS. 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.

- 20-

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE30 1995

EXHIBIT "F"

NOTES: RETIREMENTPLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Contributions Required and Contributions Made Under the old plan, member contributions consist ofemployee contributions paid by the employee of 1.25% ofannual compensation and 4.75% ofannual compensation paid by the Department on behalfof the employee. Under the new plan, member contnbutions consist solely of 1.25% ofannual compensation paid by employee. The Department also is required to contribute at a specified percentage ofactive member payroll determined annually by actuarial valuation. For the year ended June 30, 1995, the ERS employer contribution rate for the Department amounted to 15.22% of covered payroll and included the 4.75% contributed on behalf of the employee referred to above. Contributions are also made on amounts paid for accumulated leave of retiring employees.
Total contributions to the plan made during fiscal year 1995 amounted to $5,989,924.52, of which $5,535,409.38 was made by the Department and $454,515.14 was made by employees. These contributions met the requirements of the plan.
Funding Status and Progress Pension Benefit Obligation
The amount shown as the "pension benefit obligation" is a standardized disclosure measure of the present value ofpension benefits, adjusted for the effects ofprojected salary increases and step-rate benefits, estimated to be payable in the future as a result ofemployee service to date. The measure is intended to help users assess the funding status ofERS on the going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due and make comparisons among employers. The measure is the actuarial present value of credited projected benefits, and is independent of the funding method used to determine contributions to the plan.
The pension benefit obligation was computed as part ofan actuarial valuation performed as ofJune 30, 1994. Significant actuarial assumptions used in the valuation include the following:
1) The present value offuture pension benefits paid was computed using a discounted rate of7.5 percent. This rate is also the same rate assumed to be earned on investments in the plan in future years.
2) Future pension payments reflect the following assumed salary increases as a result ofinflation and merit increases:

- 21 -

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30 1995

EXHIBIT "F"

NOTES: RETIREMENTPLANS

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

Funding Status and Progress Pension Benefit Obligation ~
20

Percentage 9.5%

25

8.5%

30

6.5%

35

6.0%

40to 65

5.7%

3) ERS has the authority to grant cost-of-living adjustments by state statute. As ofJune 30, 1994, cost-ofliving adjustments have been included in the pension benefit obligation.

The total unfunded pension benefit obligation ofERS as ofJune 30, 1994, was $310,149,000, as follows:

Pension Benefit Obligation:

Retirees and Beneficiaries Currently Receiving Benefits and Terminated Employees Entitled to Benefits but Not Yet Receiving Benefits

$ 2,227,653,000

Current Employees

Accumulated Contributions

648,516,000

Employer-Financed Vested

1,085,190,000

Employer-Financed Nonvested

I 206 805 000

Total Pension Benefit Obligation

$5,168,164,000

Net Assets Available for Benefits

4 858 015 000

Unfunded Pension Benefit Obligation

$ 310 149 000

- 22-

DEPARTMENT OF REVENUE NOTES TO TIIE FINANCIAL STATEMENTS
JUNE 30 1995

EXIIlBIT "F"

NOTES: RETIREMENTPLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Funding Status and Progress Pension Benefit Obligation
The measurement ofthe total pension benefit obligation is based on an actuarial valuation as of June 30, 1994. Net assets available for benefits were valued as ofthe same date. ERS does not make separate measurements ofassets and pension benefit obligation for individual employers.
Funding Policy The ERS funding policy provides for periodic employer contributions at actuarially determined rates that, expressed as percentages ofannual payroll, are sufficient to accumulate sufficient assets to pay benefits when due. Level percentage of payroll employer contribution rates are determined using the entry age funding method. ERS also uses the level percentage of payroll method to amortize the unfunded liability within approximately 20 years following the valuation date.
Total contnbutions from all employers to ERS for the year ended June 30, 1995, were $256,624,679.00. The Department's contnbution was actuarially determined and represented 2.16% oftotal contributions made by all participating employers.
Significant actuarial assumptions used to compute contributions are the same as those used to compute the standardized measure of pension obligation.
Trend Information Historical trend information is presented in the financial report ofERS for the year ended June 30, 1995. This information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due.
Certain employees ofthe offices of the tax commissioners, tax collectors, and tax receivers ofthe counties of the State of Georgia have been declared by State law to be adjuncts of the Department of Revenue, and as such, have been afforded the opportunity to become members of the Employees' Retirement System of Georgia (ERS). As a result, the Department has been directed by statute to pay the employer's portion for these offices directly to ERS form funds appropriated by the General Assembly for this purpose. During the year ended June 30, 1995, the Department contributed $2,671,475.00 to ERS on behalf of these offices. Information relative to the covered and total payroll for the employees applicable to the Department's contribution to ERS was not available. The Department has no further liability under the retirement system other than future employer contributions as established for each fiscal year.

- 23 -

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30 1995

EXHIBIT "F"

NOTE 8 RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description The Department of Revenue participates in the Georgia Defined Contribution Plan ("GDCP") which is a single-employer defined contribution plan established by the Georgia General Assembly in July 1993 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 of Trustees. The Department's payroll for the year ended June 30, 1995, for employees covered by GDCP was $4,205,786.36. The Department's total payroll for all employees was $41,336,941.16.
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. If a member has less than $ 3,500 credit to his/her account, the Board has the option of requiring 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 his/her 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 of employment, the amount of the member's account is refundable upon request by the member.
Total contributions made by employees during fiscal year 1995 amounted to $315,436.26 which represents 7.50/c, of covered payroll. These contributions met the requirements of the plan.
NOTE 9: LEAVE POLICIES
Employees earn ten hours of sick leave each month with a maximum accumulation of ninety days. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment.
Employees earn annual leave ranging from ten to fourteen hours each month depending upon the employees' length of continuous State service with a maximum accumulation of forty five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1 - Compensated Absences.
Certain employees who retire with one hundred and twenty days or more of forfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement System of Georgia.

- 24-

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30 1995

EXHIBIT"F"

NOTEl0: CONTINGENCIES

Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the Department expects such amounts, ifany, to be immaterial to its overall financial position.

Litigation, claims and assessments filed against the Department ofRevenue, ifany, are generally considered to be actions against the State of Georgia. Pursuant to the Official Code of Georgia Annotated, the Department ofAdministrative Services maintains a program of purchased insurance and self-insurance which provides coverage for such litigation, claims and assessments. Accordingly, significant litigation, claims and assessments pending against the State ofGeorgia are disclosed in the State ofGeorgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1995.

NOTE I I: BONDING INFORMATION

The Commissioner and all employees of the Department ofRevenue 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, 1995. Under this agreement the Public Employee Dishonesty Coverage insures the Department 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 $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 Revenue are also bonded under Commercial Crime Policies written by

the United States Fire Insurance Company, their Policy Nos. 626 012292 6 and 626 012294 4, on which

premiums were paid to October 1, 1995. Under these additional public employee dishonesty coverages, the

policies insure the Department to a maximum of$9,000,000.00 against loss sustained through fraudulent or

dishonest acts by its employees.



- 25 -

SUPPLEMENTARY INFORMATION -27-

PfPABIMENI Of RYgNUE CQMBIN1NG STATfMM PF CMANGfS IN ASSETS ANQ I IARH fflES
99! !CMVEDAYRfUENNQPfDQ'.PnfINFAG;,oEN1CwYsFlJNDS

EXHIIIIT"G"

Central PraceNlng Unit Special Account 0iapulac:I Taxpayer E1c1ow Account Local Option Sales Tax:
eo,......,. For Diltribution to Local GoMmrnents MARTA Sain Tax MotDrFuel c.h Bond Eacn:JW Account
Railrmd car Tax
RealEstaltTranaferTax S.tol'f Debt Collections Account
Various Gc:Mtmmental Units Special PurJ10M Sos Tax:
~
For Distribution to Local GoYemments Tennessee Valley Authority Account Unclaimed Property Account
(1) I OCAI QPIIQN SAJ ES TAX P!SBI IRSFMFNTS
ToOfficectTNUUJ)'and FiscalSeMCH For Distribution to Local Go.<emment5
To &ala R-,iue CoUections Fund
(2) MARTA SAlfSTAX [)1$BUREMM$
ToOfficectTreasuryandFcscalServices For Distribution to MARTA
To State Rewmue Collections Fund
(3) RAIJ RQA.Q CAR TAX ptsRURSEMENTS
To Counties and Municipalities To State Revenue Collections Fund
(4) BEAL FSTAJF JRANSffR TAX Dl$fllJRSEMl;NT$
To Counties and Municipalities To State Revenue CollectioM Fund
(5) SPECIAL PURPOF. SAi f~ TAX QISBURSEMENTS
To Office of Treasury and Fiscal Services For Distribution to Local GoYemments
To State Revenue Collections Fund
See notes to the financial statements

ASSETS/ LIABILITIES JULY1 1994

ADOITIONS

DElET10NS

128,753.30 $ 0.00

22,813,2"'5..82 $ 320,353.-44

22,535,380.13 0.00

0.00 0.00 0.00 '4,002.95 3,280,787.7,4 8,933,23,4.87

882,385,840.1,4 952,855,578.55 22,4,722,532.91
1,l'.XXJ.00 10,887."'5 22.11e.euu1

ee2,385,M0.1,4 (1) 052,855,578.84 224,722,532.91 (2)
,4,282.02 2,822,350.31 (3) 22.504,321.30 (,4)

555,552.-42

8,440.329.7,4

a.iaes,882.1e

0.00 0.00 504,917.50 78983.88

,476,"'39,1SNS.5B 483,150,088.58
3,034,848.28 22718173."'5

,476,G,1SNS.5B (5) "'83,150,088.SB
3,019,007.02 22736181.10

ASSETS/ LIABILITIES JUNE30 1SIQS
208,808.89 320,353.-44
QOO 1.20 0.00 ,40,720.03 3-W,42,4.88 8,2"'5,732.88
0.00
0.00 0.00 520,555.84 80956.21

13,208,212.84 $ 2,558,808,592.33 $ 2,562,270,"'53.89

9,744,351.08

-28-

855,761,783.72 8S2385fU2
862,385,840.1,4
222,-475,307.80 2247225.31
224,722,532.91
2,893,128.37 29221.94
2,922,350.31
22,352,496.24 151825.06
22,504,321.30
471,674,804.62 4 764,381.96
476,439,196.58

PEPARIMENT OF REVEN LIE SCHEDULE OF APPROVED BUDGET
YEAR ENPEP JUNE 30 199

SCHEDULE 1

EUNC! ~ILADLE
~
S-App,apriation F- R...,._ Other Revenues Retained
SXE'ENPITUBES
Personal Services Regular Operating ~ Travel Motor Vehicle PurchaHs Equipment Computer Charges Real E - . Rentals Tektcommunications Per Diem, Fees and Contracts County Tax Offieials/Retir..-nent and FICA Motor Vehicle Tags and Doeals Postage

ORIGINAL APPROPRIATION

AMENDED APPROPRIATION

BUDGET ADJUSTMENTS

TOTAL

86,628,745.00 $ 4,681,971.00

s

91,310,716.00 $

3,711,200.00 3,711,200.00 $

152,000.00 452,342.00

90,339,945.00 152,000.00
5,134,313.00

604,342.00 $

95,626,258.00

55,033,453.00 $ 4,596,395.00 1,380,174.00 246,000.00 800,122.00 14,637,576.00 2,632,804.00 1,114,537.00 558,524.00 3,366,000.00 3,245,955.00 3,466,176.00
91,310,716.00 $

270,000.00 14,087.00 $ 5,013.00 13,447.00
274,303.00
-46,650.00 3,041,000.00
140,000.00
3,711,200.00 $

s
6,800.00 12,700.00
500.00 82,000.00
502,342.00

55,303,453.00 4,617,282.00 1,397,687.00 246,000.00 814,068.00 14,993,879.00 2,632,804.00 1,114,537.00 1,014,216.00 3,366,000.00 6,286,955.00 3,636,176.00

604,342.00 S

95,626,258.00

See notes to the financial statements.

.29.

DEPARTMENT OF REVENUE CASH AND CASH EQUIVALENTS
JUNE30 1995

SCHEDULE ''Z'

NONINTEREST BEARING ACCOUNTS
Bank South, NA, Atlanta, Georgia
First National Bank of Griffin, Griffin, Georgia
NationsBank of Georgia, NA, Athens, Georgia
NationsBank of Georgia, NA, Atlanta, Georgia
SouthTrust Bank of Georgia, NA, Atlanta, Georgia
Trust Company Bank, Atlanta, Georgia
Wachovia Bank of Georgia, NA, Atlanta, Georgia
INTEREST BEARING ACCOUNTS
First Union National Bank of Georgia, Macon, Georgia
Certificate of Deposit No. 8744913 Purchase Date: June 20, 1995 Maturity Date: July 20, 1995
Funds on Deposit with Office of Treasury and Fiscal Services State Investment Pool
QI!:!ER
Cash on Hand

$

178,330.85

308,518.50

-10,800.00

2,327,264.04

5,631.33

119,477.79

10,971.41 $ 2,939,393.92

$

320,353.44

8,307,933.60

8,628,287.04

8,000.00

$ 11,575,680.96

See notes to the financial statements.

-30-

DEPARTMENT OF REVENUE SCHEDULE OF FEDERAL REVENUES
YEAR ENDED JUNE 30 1995

PROGRAM
Transportation, U. S. Department of Highway Planning and Construction Direct Motor Carrier Safety Assistance Program Direct

CFDA NUMBER
20.205 20.218

SCHEDULE "3"
AMOUNT $ 34,151.09
69,630.98 $ 103,782.07

See notes to the financial statements.

-31 -

DEPARTMENT OF REVENUE SCHEDULE OF OTHER OPERATING EXPENSES
VEAR ENDED JUNE 30 1995

SCHEDULE "4"

REGULAR OPERATING EXPENSES
Bank Service Charges Clipping Service Court Costs FIFA's Freight, Express and Storage Levies Microfilm Destruction and Disposal Registration Fees Subscriptions and Dues Training Films and Tapes Uniforms
COMPUTER CHARGES
Corporate Pricing Tapes Department of Labor Computer Billings Internal Revenue Service Project Training

$

1,340.45

2,488.52

59,250.76

270,237.53

327,654.88

11,521.61

1,392.80

893.00

78,229.63

2,734.67

16,121.39

$ ===77=1=,8=6;;;5;;;;.2.;.,4

$

2,780.00

4,016.67

9,146.03

32,800.00

$ ==4,;,;8~,7;.;4=2=.7=0

See notes to the financial statements.

-32-

DEPARTMENT OF REVENUE SCHEDULE OF EXTRAORDINARY EXPENDITURES
YEAR ENDED JUNE 30 1995

SCHEDULE "5"

REGULAR OPERATING EXPENSES
Campbell, Beverly L. Settlement of Legal Claim
Thompson-Malone, Thelma Settlement of Legal Claim
Williams, Dorothy L. Settlement of Legal Claim

$

4,500.00

11,000.00

6,500.00

$===22;;:.,o;;,;o;,;;o=.o=o

See notes to the financial statements.

-33-

QEPABTMFNTQF REVENUE ANALYSIS PE STATE RE\/ENUE COl l ECTIONS
VEAR ENDED JUNE 3Q lffl

SCHEDULE"8"

BUSINESS l lCENSE TAX
Beerlleolln
-u-R-.u--
Special Fennlls
Licenle and Brand R e g _ ,
Licenle-
- u - - LiquorDea-
R-.u-Licenle and Brand Reg_,
LicenleWlnelleolln
-u-R-u-Licenle and Bnlnd Reglsl!allOn
LicenleCigar and Cigan!lle lleolln
-u-Manufaclurers' Repreoentalive Uc:enoe
Coin~ Am.-nent Machines U - - ond'Permils
NettoSBeerlleolln Liquor lleolln Wine DeaCigar and Ciga,_ Dealers Coin Operated Am.-nenl Machines

$

36,030.00

753,655.75

14,950.00

3,600.00

24680.00 $

832,915.75

$

36,680.00

449,607.50

14,510.00

13300.00

516,077.50

$

22,030.00

599,610.75

7,550.00

17500.00

646,690.75

$

8,850.00

2790.00

11,840.00

1395825.00

$

3403149.00

$

832,915.75

516,077.50

646,690.75

11,840.00

1,395,825.00

$

3403149.00

See notes to the financial statement&.

-34-

QEPABIMFNT OE REVENUE ANALVSIS OE STATE REVENUE CQLLFCTIONS
YEAR ENQEP JUNE 30 1995

SCHEDULE"6"

NONBUSINFSS LICENSF TAX

Motor Vehicle Regiotrationa - Tags

AtlDanetcaaOlol/fTicages-

s

Mlocella,-Js S..

Counly Olfice Sales G,- Collections

Undiolributed Collections - Other

IM&: Refunds Through Office of Treasury and F11cI Services

Motor Carrier Regiotrationa - Toga

lntemational Regiotnltion Plan

Collectiona fnlm Georgia Motor Carriers

For Georgia

s

For Other States

Collections fnlm Other Stales

Miscellaneous Collections

L - : Refunds Through Office of Treuwy and F,acal Services

Motor Vehicle Totle Regiolrations

Atlanta 0fflce

$

County Ollic:es

Title Penaltiea Georgia Bureau of Investigation lnapeclion Fees Special Handling Fees Out of State Transfer Fees Motor Vehicle Sales Tax Collection

131,1n.02 816582.TT S

953,754.79

136,761,968.94

849187.50

s

138,564,911.23

3 512 126.79 S

135,052,784.44

8,678,976.86 17961331.60 $
s
8,578,473.05 26152 700.00 $

26,638,308.48 16,810,593.85
666438.17 44,115,340.48
62345.91
34,731,173.05 953,508.00 624,010.00
1,350,070.00 8,965,217.01
11600.00

44,052,994.57 48 635 578.06

$

225 741 357.07

Disbursement of International Registration Plan Collec:tiono to other States
Netto State Cash Balance
July 1, 1994 June 30, 1995

$

17,961,331.60

207,TT7,395.38

$

164.92

2 465.17

2630.09

225 741 357.07

See notes to the financial statements.
-35-

PEPABIMENT QF RMNUE ANALYSIS QF STAIE REVENUE COLLECTIONS
VEAR ENPEP JUNE 30 1995

SCHEDULE"6"

COBPQBAIE NEIWOBDfTAX
Domeot1c and Foreign Co<porations CUrrent, Delinquent and Penallieo
Netto state
ESTATE JAX
Original Reluma and Addition& Lau: Refundo Thfough Office of Trauury and FIICIII Services
Netto state
FINANCIAL INSTITIJTIONS BUSINESS OCCUPATION TAX
Original Retuma and Addition&
Netto state

$

21 909 683.98

$

21 909 683.98

$

74,952,226.,46

1,344,944.72 $

73 607 261.74

$

73 607 281.74

$

11303488.76

$

11303488.76

See notes to the financial statements. -36-

DEPABD1ENT OE BfYENUF ANALYSIS Of STATE BE\IENUE COLLECTIONS
VEAR ENDEP JUNE 39 1985

SCHEDULE"6"

INCQMEJAX
Corporations Original Rellm1o, Addllional Tax, Interest and Penalties E-ofT-
las: Refunds Through Office of Treaou,y and F"IICal Serw:es Individuals
Original R-.., Addllional Tax, Interest and Penalties EatimaleofTFlduclary Wllhholclinga
leis: Refunds Through Office of TrNOUry and F"18COI Servic:eo

$

104,286,984.78

638 520 27:,.94

$

742,807,258.72

103 947 012.65 $

638,860,246.06

$

302,731,667.72

462,755,677.10

5,540,026.13

3 699 574 618.51

$ 4,470,601,989.46

832,204 204.47

$ 4 477 258 031.05

NettoSCnhBalance
July 1, 1994 June 30, 1995

$

$

-350,671.07

_ _ _ _-83=-"135=.77-'-

4,477,891,837.89 -433 806.84

$ 4 477 258 031.05

See notes to the financial statements. -37-

DEPARTMENT OE RMNl IE ANALVSIS OE STATE BE\IENUE COLLECTIONS
YEAR ENPEP JUNE 30 199?

SCHEDULE"6"

PBOPEBIYIAX
County Tax Digeat Accounts llehicle Property Mobile Home
-Tnnber
Intangible Not on Digeat
1-
Miocellaneous Undeoignaled General Collecliona
Leos: Refurm Through Office of Trasury and FIIC81 Senlices Intangible Recording G.-- Collections
Commioaions Paid on_,, County Digeat Accounts Receiver Collector Intangible Recording
Net lo State
County Tax Digest Accounts
Intangible Recording
PUBLIC UTI! mEs
Property Tax Ad Valorem Tax Electric light and ~ r Companies Eq1.,;ipment Companies
Assessments 1995 Collections
Netto State

3,239,317.20 28,980,520.64
133,410.38 186,000.59 218,954.l 236,648.26 208,8>.30 156608.94 $
$

33,360,300.71 39710.'5
33,400,011.16 101938.83 $

33,298,072.33 429376.68

s _ _;::;33;;i;72=7.:;449=.o..,1

552,396.46 1249912.75 $
$
31,495,763.12 >S 751.81
$

1,802,309.21 23624.87
1,825,934.08
31 901 514.93 33 727 449.01

403.07 19.28 $
s _ _...,.99=1033=.::o._3

422.35 990610.68 991 033.03

See notes to the financial statements.
-38-

PEPA,RJMENT OF BMNUE ANALYSIS QF STATE BE\fENUE COLLECTIONS
YEAR fNDEP JUNE 39 1995

SCHEDULE"6"

TAXES BMFP ON SALES
Sales and Uae Tax Monthly Collections by General Accounting Office Regular Motor Fuel
Pena- ndlRegular Motor Fuel
I.Mo: Refunds Through Olfoce of T.--ury and Flocal Services Regular Motor Fuel

3,557,527,701.56 141 705 455.31 $ 3,699,233,156.87

$

6,109,751.82

297379.35

6407131.17

$ 3,705,640,288.04

$

21,094,505.55

16964.35

21111 469.90

$ 3 684 528 818.14

Commieolons Paid o n - . Regular Motor Fuel
Net to State Regular Motor Fuel
Cash Balance July 1, 1994 June 30, 1995

$

35,475,213.54

3 390 626.69 $

38,865,840.23

$

3,506,939,197.00

138 595 243.62

3,645,534,440.62

$

-188,131.54

316668.83

128537.29

$ 3 684 528 818.14

See notes to the financial statements.

-39-

DEPARTMENT OE BMNUE ANALYSIS QF STATE BE\/ENUE COLLECDONS
YEAR ENPEP JUNE a0 1995

SCHEDULE"6"

TAXES SASEP ON SALES
Alcoholic-Beer Matt Beverage Tax I.Ma: Reru- Through Office of Treasury and Foocal 5enrices

NettoS-

CUh Balance

July 1, 1994

$

June 30, 1995

Liquor Stamp Sales Lea: Refund& Through Office of Treasury and FISCal services

Netto State

Wine Wine Tax Leos: Refu- Through Office of Treasury and FIIC81 Services

Netto State

Cigars and Cigarettes Stamp Sales Leas: Refunds Through Office of Treasury and FISCal services

Commisaions Paid on Above (Retained at Collecting Source)

Netto State

cash Balance

July 1, 1994

$

June 30, 1995

$
$ -300.00 -100.00

70,568,505.58 9951.25 $
70,558,954.33
~.00

70 558 554.33

$

70 558 554.33

$

34,056,331.79

4,223,972.09 $

29 832 359.70

$

29 832 359.70

$

14,297,800.56

7,176.25 $

14 290 624.31

14 290 624.31

$

88,986,400.37

146,440.85 $

88 837 959.52

$
-3, 736,080.00 10639.78

2,661,239.88 89,923,439.44
-3 746 719.78

$

88 837 959.52

See notes to the financial statements.

-40-

PEPABJMENT OF REVENUE ANALYSIS OE STATE BE\/ENUE COLLECTIONS
VEAR FNPFP JUNE 30 1995

SCHEDULE"6"

TAXES BASED ON SALES
- -MotorFuel Collecliona A,,iation Dealers
Special Fuel Dealers llielel Operators Bonded L. P. Gao Operators Bonded
Second Motor Fuel Tax on OUl-of-State carriers
Undistributed by Fuel Type
Penalties and lntereot
CcmmlMiono Allowed
Motor C.rrier Mileage Tax Collectiono Undistributed by Type
Penalties and Interest
Late FHings

Leo&:

Tolal Returned Checks Through Motor
Fuel Revolving Accounts Refura Through Office of Treasury and Foscal Services
Agriculture MotorC.rrier Retail Dealers

Ccmmisalono Paid on above (Retained at Collecting Source) Netto Slate Cash Balance
July 1, 1994 June 30, 1995

74,442.21 301,342,137.82
432,145.82 83,429,425.81
406,991.57 460,275.41 491,083.70 798 738.90 $

387,435,241.24 2 835 798.61 $

390,271,039.85

3.470,659.28 180,156.55 293,681.01 40107.13

3,984,603.97

1,593,243.06 9,240,770.02
127.272.16

246,753.82 10 961 285.24

$

383 047 604.76

6,264.06 1718.65

2,835,798.61 380,203,823.44
7982.71

$

383 047 604.76

See notes to the financial statements.

-41-

CEe6BIMEKr QE B~NUE ANAi YIS QE STATE RFVENUE COLLECTIONS
VEAR ENPEP JUNE 30 1@

SCHEDULE"6"

FINES ANC FOBEEITYBES
Beer-Ma--
Liquor W,ne
Cigars and Cigarettes

BOND
FQBEEmJBES

s

-e&0.00 $

38,654.n

~ ~.856.15 $
110,5116.21 379,205.15 2 002 874.69

IQIAL
e,996.15 1~,250.93 379,205.15 2 002 874.69

s

37994.n s

2 542 332.20 S

2580326.92

Netto Slate

$

2 580328.92

eE~E QFEl"EBS ANtl PBQSE"YIQBS lBAl~IN~ E!JNQ Fees from Court Fl,- and Bond Folfeitures

Netto Slate

Cnh Balance

July 1, 1994

$

June 30, 1995

$

15 004 266.92

s
-12,687.43 308518.50

14,708,435.85 295831.07

s

15 004 268.92

\JNQLAIMcC! ~!lQPc!lIY Proceeds from Sale of Abandoned Property
Netto State

$

18 277 697.68

s

18 277 697.68

TAIi; Q!:l!LC!!l~N':i I!lUllT F!,!t!C!
Fees from Marriage Licenses and Divorce cases
Netto State Cnh Balance
July 1, 1994 June 30, 1995

$

1 209575.00

$

1,209,225.00

$

-100.00

450.00

350.00

$

1 209575.00

See notes to the financial statements.

DEPARTMENT QF REVENUE ANALXS1SOE STATE REVENUE COLLECTIONS
YEAR ENDED JUNE 30 1995

SCHEDULE"6"

EARNING GfNfRAL GQYERNMENT
Local Option Sales Tax Collection Cost
MARTA Sales Tax Collection Cost
MolorCll!rioR' FMolor Fuel Truck Regiotndion Decals Temporary Permits
Penaltioo to, Non-Registration
RaUroad car Tax Collection Coot
Real Ellale Transfer Tax Collection Cost
Special Purpooe Sales Tax Collection Coot
otherFFeea on Contracts Liquor IIMllligation Fees Miocella,_. Collecliono Molar Fuel Dealeni Regl11tration Fee& Penaltioo and lnten,st Motor Fuel Unallocated Collections. Motor Fuel Unallocated Collections. Alcohol and Tcbacco Leu: Refunds Through Office of T,-ury and Fiscal Serw:eo
Net to Slate CUh Balance
July 1, 1994 June 30,1995

$

6,623,856.42

2,247,225.31

2,608,595.00 339040.00 $

2,947,635.00 58549.01

4,no.oo 82,500.00 5,249,801.96
2,820.00 14,600.00 30,719.39 1,106,907.76 30618.80

3,006, 184.01 29,221.94
151,825.06 4,764,391.96
6481450.33

$

23 284155.03

$

23,848,713.08

-632,227.09 69669.04

$

23 284155.03

See notes to the financial statements.

SECTION II FINDINGS AND IMPROPER OR QUESTIONED COSTS

DEPARTMENT OF REVENUE SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30 199S

STATUS OF PRIOR YEAR FINDINGS AND IMPROPER OR QUESTIONED COSTS

The status ofthe findings disclosed in the report for the year ended June 30, 1994, is summarized below:

Audit Control Number

Status ofFinding

474-94-01 474-94-02

Corrective Action Implemented Corrective Action Implemented

CURRENT YEAR

Cash and Cash Equivalents Uncollateralized Time Deposit Financial Statements Audit Control Number 474-95-01

At June 30, 199S, the Department ofRevenue failed to have the following time deposit fully collateralized as provided for by the Official Code of Georgia Annotated Section S0-17-59:

First Union National Bank, Macon, Georgia Certificate ofDeposit Amount: $320,353.44

This condition resulted from the Department's failure to ensure that the bank had provided collateral for the amount of the time deposit in excess of the Federal depository insurance amount of $100,000.00. This resulted in $220,353.44 of the time deposit being uncollateralized.

The Department should establish the necessary controls to ensure that all time deposits are fully collateralized in compliance with state laws governing deposits and investments.