Review report, Sapelo Island Heritage Authority, a component unit of the state of Georgia, year ended June 30, 1997

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REVIEW REPORT SAPELO ISLAND HERITAGE AUTHORITY
ACO~ONENTUNITTOFTHE
STATE OF GEORGIA YEAR ENDED JUNE 30, 1997

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

SAPELO ISLAND HERITAGE AUTHORITY - TABLE OF CONTENTS -

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

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

SUPPLEMENTARY INFORMATION

SCHEDULE

CASH AND CASH EQUIVALENTS

10

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
August 12, 1997

Honorable Zell Miller, Governor Members ofthe General Assembly of Georgia
and Members of the Sapelo Island Heritage Authority
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 D) of the Sapelo Island Heritage Authority as of and for the year ended June 30, 1997, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. As described in Note 1, these financial statements were prepared on a prescribed basis of accounting that demonstrates compliance with the budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. All information included in these financial statements is the representation of the management of the 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 of any 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 of expressing 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 (Schedule 1) is presented only for supplementary analysis purposes. Such information has been subjected to the inquiries

97ARL-4

and analytical procedures applied in the review of the fmancial statements and we are not aware of any material modifications that should be made thereto.
Respectfully submitted,
t1~~
Claude L. Vickers State Auditor
CLV:gp 97ARL-4

FINANCIAL STATEMENTS - 1-

ASSETS Cash and Cash Equivalents
(See Schedule) Accounts Receivable
Other
Total Assets
FUND EQUITY Fund Balance
Unreserved Undesignated

SAPELO ISLAND HERITAGE AUTHORITY BALANCE SHEET (STATUTORY BASISl
ALL FUND TYPES JUNE 30, 1997

EXt:lIBIT "A"

GOVERNMENTAL FUND TYPE BUDGET FUND
JUNE 30, 1997 JUNE 30, 1996

$

-379,00 $

0.00

194,500.00

194,500.00

$ 194,121.00 $==1=94:::::i,=50=:0=,0=0

$ 194,121,00 $==1=9:::::i4,=50=:0=,0=0

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement.
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SAPELO ISLAND HERITAGE AUTHORITY STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS)
GOVERNMENTAL FUND TYPE YEAR ENDED JUNE 30,1997

EXHIBIT"B"

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

BUDGET FUND YEAR ENDED JUNE 30,1997 JUNE 30,1996

$

194,500,00 $

194,500,00

$

194,121,00 $

194,500,00

$

194,500,00 $

194,500.00

$

194,121,00 $

194,500,00

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

SAPELO ISLAND HERITAGE AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30, 1997

EXHIBIT"C"

FUNDS AVAILABLE REVENUES
Rent Received CARRY-OVER FROM PRIOR YEAR
Transfer from Unreserved Fund Balance
Total Funds Available
EXPENDITURES REGULAR OPERATING EXPENSES
Other Operating Expenses Legal Advertising
PER DIEM, FEES AND CONTRACTS Per Diem and Fees Total Expenditures
Excess of Funds Available over Expenditures

TOTALS YEAR ENDED JUNE 30,1997 JUNE 30,1996

$

320,00 $

0.00

194,500.00

194,500.00

$ 194,820.00 $ =====1=94=,5=0=0...0..==0

$

64.00 $

0.00

635.00

$

699.00 $

194,121.00

0.00 0.00 194,500.00

$ 194,820.00 $ =====1=94=,=50=0...0..==0

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

SAPELO ISLAND HERITAGE AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT"D"

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 of three 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 of the State of Georgia and is included within the State of Georgia reporting entity for fmancial 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 of the Governmental Accounting Standards Board Codification of Governmental 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 of the State of Georgia. A fund is an independent fiscal and accounting entity with a selfbalancing 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. The fund presented 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 of the Authority be accounted for as a Proprietary Fund Type - Enterprise Fund. An Enterprise Fund is used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent is that costs of providing goods or services to the general public on a continuing basis are financed or recovered primarily through user charges or that periodic measurement of revenues earned and expenses incurred are appropriate for capital maintenance, public policy, accountability and other purposes.
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 ofcurrent 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.

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SAPELO ISLAND HERITAGE AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING MEASUREMENT FOCUS
Proprietary fund types, on the other hand, should be accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities are included on the balance sheet. Operating statements of these funds present increases, (i.e., revenues) and decreases, (i.e., expenses) in net total assets. This measurement focus emphasizes the determination ofnet 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 (i.e., when they are "measurable and available"). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. Revenues that are accrued include primarily certain amounts earned under operating agreements with .otherparties. 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, clair,: and judgements which are recognized when the obligations are expected to be liquidated with expendabi J.vailable 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 s"ervices which have not been performed are recognized as accounts receivable in the accompanying financial statements. This accounting practice is in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia, but is not consistent with generally accepted accounting principles.
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 of the State of Georgia, 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.

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SAPELO ISLAND HERITAGE AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of funds on deposit with the Department ofNatural Resources.
ACCOUNTS RECEIVABLE In fiscal year 1987, funds were appropriated to the Department of Natural 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 of this contract with the Department of Natural Resources.
INVENTORIES No inventories of supplies are reported in these financial statements.
GENERAL FIXED ASSETS Accounting practices prescribed or permitted by the statutes and regulations of the State of Georgia do not require the value of land deeded to the Authority by the State of Georgia and the cost of land acquired directly by the Authority to be recorded in the financial statements. This method of accounting for these fixed assets is not consistent with generally accepted accounting principles, which provide for the recording offixed assets in either a General Fixed Assets Account Group or as assets of the fund 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 of the changes in the Authority's financial position and operations.
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds ofthe State of Georgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral anyone or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
(1) Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia.
(2) Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia.
(3) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose.
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SAPELO ISLAND HERITAGE AUTHORITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (4) Industrial revenue bonds and bonds of development authorities created by the laws ofthe State of Georgia.
(5) Bonds, bills, certificates ofindebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
(6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
As authorized in the Official Code of Georgia Annotated Section 45-8-11, the Sapelo Island Heritage Authority has the option of exempting demand deposits from the collateral requirements.
CATEGORIZATION OF DEPOSITS The Sapelo Island Heritage Authority is assigned to the Department of Natural Resources (DNR) for administrative purposes, and as such, DNR maintains accounting records, including deposits, for the Authority. As a result, a separate disclosure for custodial credit risk for the Authority has not been provided.
NOTE 3: RISK MANAGEMENT
The Sapelo Island Heritage Authority is exposed to risk of loss 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 1997 and there were no claims brought forward from previous fiscal years.
NOTE 4: CONTINGENCffiS
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 ofGeorgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1997.

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SUPPLEMENTARY INFORMATION
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SAPELO ISLAND HERITAGE AUTHORITY CASH AND CASH EQUIVALENTS JUNE 30.1997
NONINTEREST BEARING ACCOUNT Funds on Deposit with Department of Natural Resources

SCHEDULE "1" $===-..:::37=9=,0",,=0

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