Review report, Sapelo Island Heritage Authority, a component unit of the state of Georgia, year ended June 30, 1996

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REVIEW REPORT SAPELO ISLAND HERITAGE AUTHORITY
A COMPONENT UNIT OF THE STATE OF GEORGIA
YEAR ENDED JUNE 30, 1996

SAPELO ISLAND HERITAGE AUTHORITY - TABLE OF CONTENTS -

INDEPENDENT ACCOUNTANT'S REPORT ON REVIEW OF FINANCIAL STATEMENTS

EXHIBITS

FINANCIAL STATEMENTS

A BALANCE SHEET (STATUTORY BASIS)

ALL FUND TYPES

2

B STATEMENT OF CHANGES IN FUND BALANCE

(STATUTORY BASIS)

GOVERNMENTAL FUND TYPE

3

C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

BUDGET FUND

4

D NOTES TO THE FINANCIAL STATEMENTS

5

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

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

Honorable Zell Miller, Governor Members ofthe General Assembly of Georgia
and Members ofthe Sapelo Island Heritage Authority
INDEPENDENT ACCOUNTANT'S REPORT ON REVIEW OF FINANCIAL STATEMENTS
Ladies and Gentlemen:
We have reviewed the accompanying financial statements (Exhibits A through D) of the Sapelo Island Heritage Authority as of and for the year ended June 30, 1996, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. As described in Note 1, these financial statements were prep~red on a prescribed basis of accounting that demonstrates compliance with the budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. All information included in these financial statements is the representation of the management of the Sapelo Island Heritage Authority.
A review consists principally of inquiries of agency personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware ofany material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the basis of accounting described in Note 1.
Respectfully submitted,
d~
Claude L. Vickers State Auditor
CLV:dt 96ARL-4X

FINANCIAL STATEMENTS - 1-

ASSETS Accounts Receivable
Other
FUND EQUITY Fund Balance
Unreserved UndesignatBd

SAPELO ISLAND HERITAGE AUTHORITY BALANCE SHEET (STATUTORY BASIS)
ALL FUND TYPES JUNE 30, 1996
GOVERNMENTAL FUND TYPE BUDGET FUND
JUNE 30, 1996 JUNE 30, 1995
$ 194,500.00 $ _ .....1..9.4.Ii.\i'5OO--.,;,;,0.0.

$

194,500,00 $ _.....1..9..4oi1,o5OO--.;,;,.0.0.

See Independent Accountanfs Report on Review of Financial Statements. The notes 10 the'financial statements are an integral part of this statement.
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SAPELO ISLAND HERITAGE AUTHORITY STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS)
GOVERNMENTAL FUND TYPE YEAR ENDED JUNE 30, 1996

EXHIBIT -8"

FUND BALANCE - JULY 1
Unreserved Undesignated
ADDITIONS
Excess of Funds Available over Expenditures Exhibit-C-
DEDUCTIONS
UnreservecI Fund Balance Carried Over from Prior Year As Funds Available
FUND BALANCE - JUNE 30 (To Exhibit -A-)

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

$

194,500,00 $

194,500,00

$

194,500,00 $

194,500,00

$

194,500.00 $

194,500.00

$

194,500.00 $

194,500.00

See Independent Accountanfs Report on Review of Financial Statements.
The notes to the financial statements are an integral part of this statement. -3-

SAPELO ISLAND HERITAGE AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30,1996

EXHIBITC

FUNDS AVAILABLE REVENUES
None Reported CARRY.QVER FROM PRIOR YEAR
Transfer from Unreserved Fund Balance
Total Funds Available
EXPENDITURES None Reported Excess of Funds Available over Expenditures

TOTALS
YEAR ENDED JUNE 30, 1996 JUNE 30, 1995

$

0.00 $

0.00

194,500.00

194,500.00

$ 194,500.00 $

194,500.00

$

0.00 $

0.00

194,500.00

194,500.00

$

194,500.00 $

194,500.00

See Independent Accountant's Report on Review of Financial Statements. The notes to the financial statements are an integral part of this statement.
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SAPELO ISLAND HERITAGE AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXIllBIT "0"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The Sapelo Island Heritage Authority, is an instrumentality ofthe State of Georgia and a public corporation. The Authority was created in 1983 by an act of the General Assembly of Georgia for the purpose of preservation ofthe culture in this endangered historical area. The Authority consists ofthree members, the Governor, the Commissioner of Natural Resources, and the Executive Director of the State Properties Commission. The Authority is assigned to the Department ofNatural Resources for administrative purposes only. The Sapelo Island Heritage Authority is considered a component unit ofthe State of Georgia and is included within the State of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational and financial relationships with the State of Georgia. These reporting entity relationships are defined in Section 2100 ofthe Governmental Accounting Standards Board Codification ofGovernmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING The Sapelo Island Heritage Authority uses a fund to report on its financial position and the results of its operations determined in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State 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. The fund presehted in the accompanying financial statements is as follows:
GOVERNMENTAL FUND TYPE
BUDGET FUND - The fund used to account for activities and functions of the Sapelo Island Heritage Authority. This presentation differs from generally accepted accounting principles in that such principles provide that the Budget Fund ofthe Authority be accounted for as a Proprietary Fund Type - Enterprise Fund. An Enterprise Fund is used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent is that costs of providing goods or services to the general public on a continuing basis are financed or recovered primarily through user charges or that periodic measurement of revenues earned and expenses incurred are appropriate for capital maintenance, public policy, accountability and other purposes.
BASIS OF ACCOUNTING MEASUREMENT FOCUS
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Governmental funds should be accounted for using the flow of current financial resources measurement focus. With this measurement focus, operating statements present increases and decreases in net current assets and unreserved fund balance is a measure of available spendable resources.
Proprietary fund types, on the other hand, should be accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities are included on the balance sheet. Operating statements of these funds present increases, (i.e., revenues) and decreases, (i.e., expenses) in net
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SAPELO ISLAND HERITAGE AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING MEASUREMENT FOCUS
total assets. This measurement focus emphasizes the determination of net income. In accordance with accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia, the Budget Fund, which should be reflected as a Proprietary Fund Type - Enterprise Fund in accordance with generally accepted accounting principles, utilizes the current financial resources measurement focus.

GOVERNMENTAL FUND TYPE 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 ofaccounting. Under the modified accrual basis ofaccounting, revenues are recognized when susceptible to accrual (Le., when they are "measurable and available"). "Measurable" means the amount ofthe transaction can be determined and "available" means collecttble within the current period or soon enough thereafter to pay liabilities ofthe current period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences, claims and judgements which are recognized when the obligations are expected to be liquidated with expendable available financial resources. The Budget Fund, which should be reflected as a Proprietary Fund Type - Enterprise Fund in accordance with generally accepted accounting principles, should be maintained on the accrual basis of accounting.

Contractual obligations for services which have not been performed are recognized as accounts receivables in the accompanying financial statements. This accounting practice is in conformity with accounting practices prescnbed or permitted by statutes and regulations ofthe State of Georgia, but is not consistent with generally accepted accounting principles.

Certain adjustments 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 ofGeorgia, but differs from generally accepted accounting principles for proprietary fund types in that prior period fund balance should not be reported as current year funds available.

BUDGET

.

A budget for the financial operations of the Sapelo Island Heritage Authority was not prepared by the

Authority, therefore, these financial operations represent nonbudgeted financial activities.

ACCOUNTS RECEIVABLE In fiscal year 1987, funds were appropriated to the Department ofNatural Resources for land purchases to be made by the Sapelo Island Heritage Authority. The Sapelo Island Heritage Authority recorded an accounts receivable from the Department of Natural Resources based on a contractual arrangement. The accounts receivable balance of$194,500.00 represents the unexecuted portion ofthis contract with the Department of
Natural Resources.

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SAPELO ISLAND HERITAGE AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES No inventories of supplies are reported in these financial statements.
GENERAL FIXED ASSETS Accounting practices prescribed or permitted by the statutes and regulations ofthe State ofGeorgia do not require the value ofland deeded to the Authority by the State ofGeorgia and the cost ofland acquired directly by the Authority to be recorded in the financial statement~. This method of accounting for these fixed assets is not consistent with generally accepted accounting principles, which provide for the recording offixed assets in either a General Fixed Assets Account Group or as assets of the fund if used in the operations of a Proprietary Fund Type - Enterprise Fund.
COMPARATIVE DATA Comparative total data for the prior year have been presented in the accompanying financial statements in order to provide an understanding ofthe changes in the Authority's financial position and operations.
NOTE 2: RISK MANAGEMENT
The Sapelo Island Heritage Authority is exposed to risk ofloss related to general liability. The Authority has elected to self-insure in regards to this risk exposure. There were no claims made against the Authority in fiscal year 1996 and there were no claims brought forward from previous fiscal years.
NOTE 3: CONTINGENCIES
Litigation, claims and assessments filed against the Sapelo Island Heritage Authority, if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State ofGeorgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1996.
NOTE 4: BONDING INFORMATION
The accounting records and other related data are maintained by certain employees of the Department of Natural Resources. These employees 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 I, 1996. Under this agreement the Public Employee Dishonesty Coverage insures the Department to a maximum of$I,OOO,OOO.OO 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 ofits employees to perform faithfully their duties or to account properly for all monies and property received by virtue oftheir position or employment.

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SAPELO ISLAND HERITAGE AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 3D. 1996

EXHIBIT "D"

NOTE 4: BONDING INFORMATION
All employees of the Department of Natural Resources 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, 1996. 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 and from failure'ofits employees to perform faithfully.

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