Review report, state of Georgia, Secretary of State, year ended June 30, 1996

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

REVIEW REPORT STATE OF GEORGIA SECRETARY OF STATE YEAR ENDED JUNE 30, 1996

SECRETARY OF STATE - TABLE OF CONTENTS -

Page

SECTION I

FINANCIAL

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

EXlllBITS

FINANCIALSTATE~NTS

A COMBINED BALANCE SHEET (STATUTORY BASIS)

ALL FUND TYPES AND ACCOUNT GROUPS

2

B COMBINED STATEMENT OF CHANGES IN FUND BALANCES

(STATUTORY BASIS)

ALL FUND TYPES

5

C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

BUDGET FUND

6

STATEMENTS OF FUNDS AVAILABLE AND EXPENDITURES

COMPARED TO BUDGET

BUDGET FUND

D

"A" SECRETARY OF STATE

8

E

"B" REAL ESTATE COMMISSION

9

F STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS

STATE REVENUE COLLECTIONS FUND

10

G COMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

FIDUCIARY FUND TYPE - EXPENDABLE TRUST FUNDS

12

H NOTES TO THE FINANCIAL STATE~NTS

13

SUPPLEMENTARY INFORMATION

I COMBINING BALANCE SHEET (STATUTORY BASIS)

BUDGET FUND

28

J COMBINING STATEMENT OF CHANGES IN FUND BALANCES

(STATUTORY BASIS)

BUDGET FUND

29

K COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

BUDGET FUND

30

L COMBINING BALANCE SHEET

FIDUCIARY FUND TYPE - EXPENDABLE TRUST FUNDS

32

M COMBINING STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

FIDUCIARY FUND TYPE - EXPENDABLE TRUST FUNDS

33

N COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

FIDUCIARY FUND TYPE - AGENCY FUNDS

34

SECRETARY OF STATE -TABLE OF CONTENTS-

SECTION I

FINANCIAL

SUPPLEMENTARY INFORMATION

SCHEDULES

SCHEDULES OF APPROVED BUDGET

1

"A"SECRETARYOFSTATE

35

2

"B" REAL ESTATE COMMISSION

36

3 CASH AND CASH EQUNALENTS

37

4 SCHEDULE OF GOVERNOR'S EMERGENCY FUND

38

5 SCHEDULE OF FEDERAL REVENUES

39

6 SCHEDULE OF OTHER REVENUES RETAINED

40

7 SCHEDULE OF OTHER OPERATING EXPENSES

41

8 SCHEDULE OF EXTRAORDINARY EXPENDITURES

42

9 RECONCILIATION OF SALARIES AND TRAVEL

43

10 SUMMARY OF SALARIES, TRAVEL, AND PER DIEM AND FEES

44

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) 6562174

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
November 19, 1996

Honorable Zell Miller, Governor Members of the General Assembly of Georgia
and Honorable Lewis Massey Secretary of State
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 H) of the Secretary of State 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 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 Secretary of State.
A review consists principally of inquiries of agency personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware ofany material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the basis of accounting described in Note 1.
Our review was made for the purpose ofexpressing limited assurance that there were no material modifications that should be made to the financial statements in order for them to be in conformity with the basis of accounting described in Note 1. The accompanying supplementary information (Exhibits I through Nand Schedules 1 through 10) is presented only for supplementary analysis purposes. Such information has been

96ARL-4

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

FINANCIAL STATEMENTS - 1-

SECRETARY OF STATE COMBINED BALANCE SHEET (STATUTORY BASIS)
ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30,1996

ASSETS
Cash and Cash Equivalents (See SChedule)
Accounts Receivable State Appropriation Federal Financial Assistance
Prepaid Items
Fixed Assets Equipment
Amount to be Provided for Payment of Accrued Compensated Absences

GOVERNMENTAL FUND TYPES

STATE

REVENUE

BUDGET

COLLECTIONS

$ 1,719,566,40 $

$ 350,424,36 70,481,01

$ 420,905,37

$

3,088.00

3.321,06

Total Assets

$ 2.143,559.77 $

3,321.06

LIABILITIES AND FUND EQUITY
Liabilities Accounts Payable Accrued Salaries Payroll Withholdings Funds Held for Others Compensated Absences
Total Liabilities
Fund Equity Investment in General Fixed Assets Fund Balances Reserved State Funds Federal Financial Assistance Other Funds State Revenue Collections Fund Unreserved Designated Surplus Undesignated
Total Fund EqUity

$ 1.068.827,96 2,843.41 733.36
$ 1.072,404.73

$ 100,000.00 44,823.11 24,439,68 $
901,892,25
$ 1,071,155,04 $

3,321.06 3.321,06

Total Liabilities and Fund EqUity

$ 2.143.559.77 $

3,321.06

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. -2-

EXHIBIT-A"

FIDUCIARY FUND TYPES

EXPENDABLE

TRUST

AGENCY

ACCOUNT GROUPS

GENERAL

GENERAL

FIXED

LONG-TERM

ASSETS

DEBT

TOTALS (Memorandum Only) JUNE 30,1996 JUNE 30,1995

$ 1,630,133.79 $

726,695.02

$ 4,079,716.27 $ 2,692,554.13

$ 350,424.36 $ 695,436.37

70,481.01

18,497.60

$ 420,905.37 $ 713,933.97

$

3,088.00 $

0.00

$ 3,612,408.68

$ 3,612,408.68 $ 3,455,822.61

$ 1,492,091.n $ 1,492,091.n $ 1,457,400.36

$ 1.630,133.79 $

726,695.02 $ 3.612,408.68 $ 1.492.091.n $ 9,608,210.09 $ 8.319,711.07

$

726,695.02

$

726.695.02

$ 1,068,827.96 $ 1,523,362.79

2,843.41

0.00

733.36

838.62

726,695.02

124,548.81

$ 1,492,091.n

1,492,091.n

1,457,400.36

$ 1.492,091.n $ 3,291,191.52 $ 3,106.150.58

$ 3,612,408.68

$ 3,612,408.68 $ 3,455,822.61

100,000.00 44,823.11 24,439.68
3,321.06

0.00 46,722.86 19.010.22
7,405.49

$ 1,630,133.79 $ 1,630,133.79

$ 3,612,408.68

901,892.25 1,630,133.79

87,201.57 1,597,397.74

$ 6,317,018.57 $ 5,213,560.49

$ 1,630.133.79 $

726,695.02 $ 3,612,408.68 $ 1,492,091.n $ 9,608,210.09 $ 8,319?11.07

-3-

I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I
I

SECRETARY OF STATE COMBINED STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS)
ALL FUND TYPES YEAR ENDED JUNE 30 1996

EXHIBIT "S"

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.
-5-

SECRETARY OF STATE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30, 1996

EXHIBIT"C"

FUNDS AVAILABLE
REVENUES
STATE APPROPRIATION General Appropriation Amended Appropriation Governor's Emergency Fund (See Schedule) Budget Adjustments
Total State Appropriation
FEDERAL REVENUES (See Schedule)
OTHER REVENUES RETAINED (See Schedule)
Total Revenues
CARRy-oVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance Federal Financial Assistance Other Funds
Total Carry-Qver from Prior Year

TOTALS YEAR ENDED JUNE 30, 1996 JUNE 30, 1995

$ 30,852,441.00 $ 523.563.00 38,900.00 -319,000,00.

28,276,304,00 102,504,00 10.000.00 --=0:.:.;:.00:.::;.,

$ 31.095,904,00 $ 28,388.808.00

70.481.01

28,754.17

2,428,225,55

1.741 ,468.70

$ 33.594,610,56 $ 30,159,030,87

$

46,722,86 $

19,010.22

97,137,36 18,013,57

$

65.733.08 $ _----'1c.:;15::J.,,:.:15O=,9=..3

Total Funds Available

$ 33,660.343,64 $ 30,274,181.80

EXPENDITURES
PERSONAL SERVICES
Salaries and Wages Employer's Contributions for:
F,I.C,A, Retirement Health Insurance Personal Liability Insurance Unemployment Compensation Insurance Workers' Compensation Insurance Assessments by Merit System Drug Testing
REGULAR OPERATING EXPENSES
Motor Vehicle Expenses Supplies and Materials Repairs and Maintenance Utilities Rents (Other than Real Estate) Insurance and Bonding Grants to Counties. Cities and Civil Divisions Other Operating Expenses (See Schedule) Extraordinary Expenditures (See Schedule) Duplicating and Rapid Copy Publications and Printing Equipment Purchases
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.
- 6-

$ 12,882,737,33 $ 12,963,678,00

919,723.98 1.959,587.62 1,578,370.79
65,161.00 12,170,00 201.828.00 57,419,18 1,451.00

917.618,58 1,995,186.45 1,575,719.97
67,665.00 12.251,00 140,424,00 51,567.97
835,50

$ 17,678,448.90 $ 17,724,946.47

$

166,508.63 $

2,393.212.19

325.628.74

13,165,99

17,811.82

127,139.00

300.00

756,194.62

39,292.47

62,6n.54

880,998.16

157,519.45

174,400.25 1.253,986.66
462.529.21 12,787,25 21,921.76
110.883.00 0,00
857,247.10 0,00
51,825.22 883,009,18 120,999.72

$ 4,940,448.61 $ 3,949,589.35

$

267,546.12 $ _--=2:.:::64..:.1...:..14""2",,,.7.=-9

SECRETARY OF STATE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30, 1996

EXHIBIT .C"

EXPENDITURES
MOTOR VEHICLE PURCHASES
EQUIPMENT
Equipment Purchases Rental of Equipment
COMPUTER CHARGES
Software Equipment
Equipment Purchases Rental of Equipment Per Diem, Fees and Contracts Per Diem and Fees Computer Billings, DOAS
REAL ESTATE RENTALS
TELECOMMUNICATIONS
PER DIEM, FEES AND CONTRACTS
Per Diem and Fees Contracts
OTHER
ELECTION EXPENSES Personal Services Salaries and Wages Employer's Contribution for: F,I.C,A, Other Costs Supplies and Materials Other Operating Expenses (See Schedule) Duplicating and Rapid Copy Publications and Printing Travel Equipment Equipment Purchases Computer Charges Software Telecommunications Per Diem, Fees and Contracts Per Diem and Fees Contracts
Total Other
Total Expenditures
Excess of Funds Available over Expenditures

TOTALS YEAR ENDED JUNE 30, 1996 JUNE 30, 1995

$

144,317,69 $

188,747,00

$

62,147.70 $

152,848,23

10,371.88

18.781 ,54

$

72,519.58 $

171,629,77

$

32,082,11 $

49,934,67

185,069,70 758.00

252,596.21 0.00

15,000.00 2,938,121.95

15,000.00 2,381,069.61

$ 3,171,031.76 $ 2,698,600.49

$ 2,624,085.40 $ 2,532,735.68

$

905,788.27 $

577,970.57

$ 1,867,689.22 $ 137,523,04
$ 2,005,212.26 $

1,449,092,99 5,875.80
1,454,968.79

$

69,814.56 $

81,953.39

1,012.31

1,202.79

54,647.19 3,981,50 0.00
656,656,86 0.00

79,823.80 0,00
54,548.30 313,198,52
3,253.37

374.93

0.00

774.00 378.72

0.00 905.19

23,558.42 77,900.00

13,388.40 50,000.00

$

889,098.49 $

598,273.76

$ 32,698,497.08 $ 30,161,604.67

961,846.56

112,577,13

$ 33,660,343.64 $ 30,274,181.80

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. -7 -

SECRETARY OF STATE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
"A" SECRETARY OF STATE YEAR ENDED JUNE 30, 1996

EXHIBIT"D"

FUNDS AVAILABLE REVENUES
State Appropriation Federal Revenues Other Revenues Retained
CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

$ 28,946,241,00 $ 28,946,241.00 $

41,875.00

70,481.01

2,437,705.00

2,412,513.42

$ 31,425,821.00 $ 31,429,235.43 $

0.00 28,606,01 -25,191.58
3,414.43

0.00

65,733.08

65,733.08

$ 31,425,821.00 $ 31,494,968.51 $

6.;;.;9;.:..,1_4_7...;.5.;.,.1

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

$ 16,989,940.00 $ 16,519,565.61 $

4,720,669.00

4,773,204.70

260,222.00

257,971.05

120,010.00

119,987.69

94,183.00

64,157.01

2,830,646.00

2,838,020.72

2,462,246.00

2,459,669.80

957,383.00

864,676.84

2,025,522.00

1,867,513.53

965,000.00

889,098.49

470,374.39 -52,535.70
2,250.95 22.31
30,025.99 -7,374.72 2,576.20 92,706.16 158,008.47 75,901.51

$ 31,425,821.00 $ 30,653,865.44 $ _ _..;..7.;,..71;,.:.,9;..;5..;..5;..;,.5~6

Excess of Funds Available over Expenditures
See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement. -8-

============= $

841,103.07 $

841,103.07

SECRETARY OF STATE

STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

,

COMPARED TO BUDGET

BUDGET FUND

"B" REAL ESTATE COMMISSION

YEAR ENDED JUNE 30, 1996

EXHIBIT"E"

EXPENDITURES Personal Services Regular Operating Expenses Travel Motor Vehicle Purchases Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts
Excess of Funds Available over Expenditures

$ 2,165,375.00 $ 2,165,375.13 $

....;;.0.;..;.1~3

$ 1,266,704.00 $ 1,158,883.29 $

164,100.00

167,243.91

15,000.00

9,575.07

24,330.00

24,330.00

10,631.00

8,362.57

339,004.00

333,011.04

165,300.00

164,415.60

41,556.00

41,111.43

138,750.00

137,698.73

107,820.71 -3,143.91 5,424.93 0.00 2,268.43 5,992.96 884.40 444.57 1,051.27

$ 2,165,375.00 $ 2,044,631.64 $ _ _..;.1;;;,.20;.:.,7_4...;.3..;..3...;.6

$

120,743.49 $ ===1=2=0=,7=4.3....4...9...

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.
-9-

SECRETARY OF STATE STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS
STATE REVENUE COLLECTIONS FUND YEAR ENDED JUNE 30, 1996

EXHIBIT-P

CASH RECEIPTS
STATE REVENUE COLLECTIONS
Corporations Regulation Division Business Services Charities Limited Partnership Fees Trademarks
Elections and Campaign Disclosure Division Commissions Elections State Campaign Financial Disclosure
Occupational Certification Division Licensing and Examining Board Fees Accountancy Architect Athletic Agents Athletic Trainers Auctioneers Barber Behavioral Science Chiropractics ConstructionlndusUy Cosmetology Dental Dietitians Engineer Forestry Funeral Geology Hearing Aid Landscape Architecture Librarian Medical Nursing Home Occupational Therapy Optician Optometry Pharmacy Physical Therapy Podiatry Practical Nurse Private Detective Psychology
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.
-10 -

$ 7,319,457.75 33,725.00 121,140,00 37,619.00 $

7,511,941.75

$

4,360.12

9,414.00

11,495.00

25,269.12

$ 721,510.50 138,795,00 4,900.00 21,330.00 192,320.00 113,176.06 370,610.00 104,650.00
1,259,925,00 2,262,n1.18 1,225,240.00
72,570.00 165,555.00 75,030.00 457,783.00 95,270.00 69,965.00 44,418.00 35,920.00 3,228,894.75 142,475.00 96,366.75
18,250.00 186,165.00 286,010.00 289,786.00 53,120.00 130,544.96 401,963.00 72,560.00

SECRETARY OF STATE STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS
STATE REVENUE COLLECTIONS FUND
YEAR ENDED JUNE 30,1996

EXHIBIT"P

STATE REVENUE COLLECTIONS
Occupational Certification Division Licensing and Examining Board Fees Registered Nurse Speech Pathology Used Care Dealers/Parts Veterinary Waste and Waste Water Treatment
Internal Administration Division Georgia Laws Notary Public Fees
Real Estate Commission Real Estate Appraiser Board Real Estate Appraiser Board/Educational Real Estate Licensing Fees Real Estate Schools and Instruction
Securities Regulation Division Cemetery Securities Fees
Total Cash Receipts
CASH AND CASH EQUIVALENTS - JULY 1, 1995

CASH RECEIPTS

TRANSFERS To Office of Treasury and Fiscal Services
CASH AND CASH EQUIVALENTS - JUNE 30,1996

DISBURSEMENTS

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.
- 11 -

$ 446,515,01 44,925.00
747,632,00 99,217.00 133,329.50 $ 13,809,492.71

$ 22,507.89 94,636.00

117,143.89

$ 360,560.00 19,200.00
2,304,737.24 28,295.00

$ 52,635.00 5,174,797.28

2,712,792.24 5,227,432.28

$ 29,404,071.99

7,405.49

$ 29,411,4n.48

$ 29,408,156.42 3,321.06
$ 29,411,4n.48

SECRETARY OF STATE COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FIDUCIARY FUND TYPE - EXPENDABLE TRUST FUNDS
YEAR ENDED JUNE 30, 1996

EXHIBIT "G"

REVENUES AuctIoneers Recovery Fees Interest Income Real Estate Recovery Fees Total Revenues
EXPENDITURES Court Settlements Educational Expense Contracts Total Expendrnures
Excess of Revenues over (under) Expendrnures
FUND BALANCE JULY 1. 1995
FUND BALANCE JUNE 30. 1996

TOTALS YEAR ENDED
JUNE 30,1996 JUNE 30,1995

$

28,200,00 $

77,485.47

102,842.78

23,100.00 76,433,75 95,759.30

$ 208,528.25 $ 195,293.05

$

23,123.20 $

47,720.58

152,669.00

200,678.80

$ 175,792.20 $ 248,399.38

$

32,736.05 $

-53,106.33

1,597,397.74

1,650,504.07

$ 1,630,133.79 $ 1,597,397.74

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.
-12 -

SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT"H"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The SecretarY of State, an organizational unit ofthe State of Georgia, is part of the executive branch of the government of the State of Georgia. The Agency is under the control and management of the Secretary of State, who is elected by the qualified voters ofthe State of Georgia.
The Secretary of State does not have authority to determine the amount of funding it will receive from the State ofGeorgia for any given fiscal year. Such authority is vested in the General Assembly of Georgia. The Agency also does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, the Secretary of State is included within the State of Georgia reporting entity for financial reporting purposes because ofthe significance ofits legal, operational and financial relationships with the State ofGeorgia. These reporting entity relationships are defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING The Secretary ofState uses funds and account groups 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 of funds 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 1995-1996. The Budget Fund is similar in nature to a General Fund as defined in generally accepted accounting principles in that the Budget Fund is used to account for all activities except those required to be accounted for in some other fund.
STATE REVENUE COLLECTIONS FUND - The fund used to account for the collection of specific revenues ofthe State ofGeorgia as provided by statute or administrative action and the 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.

- 13 -

SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS
JUNE 3D. 1996

EXHIBIT"H"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
FIDUCIARY FUND TYPES
EXPENDABLE TRUST FUNDS - The funds used to account for assets, revenues and expenditures utilized in accordance with the provisions ofvarious trusts established by individual agreement, statute or administrative action. Expendable trust funds are used when both the principal and revenues earned on such principal may be expended for the purposes designated by the trust.
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'lives are not included in the General Fixed Assets Account Group. Material improvements adding to the value or useful life of the assets are included in the General Fixed Assets Account Group.
GENERAL LONG-TERM DEBT - The account group used to report the noncurrent portions of certain governmental long-term liabilities, such as claims, judgments and compensated absences, which will be paid from future resources.
BASIS OF ACCOUNTING MEASUREMENT FOCUS
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Governmental funds and expendable trust 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. 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.

- 14-

SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXIllBIT "H"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPES BUDGETFUND
Except as disclosed in the following paragraphs, units of government of the State of Georgia record their Budget Fund revenues and expenditures in accordance with the modified accrual basis of accounting. Under the modified accrual basis ofaccounting, revenues are recognized when susceptible to accrual (i.e., when they are "measurable and available"). "Measurable" means the amount 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 related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences, claims and judgements which are recognized when the obligations are expected to be liquidated with expendable available financial resources.
Contractual obligations for goods and services which have not been received at the end 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 of the State of Georgia, but is not consistent with generally accepted accounting principles, which provide for the recording of encumbrances as a reservation of fund 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.

- 15 -

SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXlDBIT"H"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
FIDUCIARY FUND TYPES EXPENDABLE TRUST FUNDS
Revenues and expenditures of Expendable TlUSt Funds are recorded 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"). "Measunible" means the amount of the transaction can be determined and "available" means collectl'ble within the current period or soon enough thereafter to pay liabilities of the current period. Revenues that are accrued include primarily interest income and certain amounts earned under terms ofthe trust. Expenditures are recorded when the related fund liability is incurred.
AGENCY FUNDS Agency Funds are custodial in nature and do not measure results of operations or have a measurement focus. The modified accrual basis ofaccounting is utilized for recognizing assets and liabilities.
BUDGET
Appropriation allotments to the Secretary of State are on the basis ofbudgets submitted by the Agency and approved by the Legislature and the Governor. The budgets are adopted on a basis consistent with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia and are compiled in the same manner as all State departments. Expenditures are classified by budget unit object classes as provided in Act No. 476 ofGeorgia Laws 1995 (as approved April 21, 1995) and amended by Act No. 513 of Georgia Laws 1996 (as approved February 16, 1996). This budget is considered to be an appropriated budget and is referred to in these notes as the Amended Appropriations Act of 1995-1996.
Overexpenditure of a budget unit object class, except for the "common object classes", included in the Agency's final amended budget is in violation of Section 54 ofthe 1995-1996 Amended Appropriations Act. Expenditures of no more than 102% of the stated amount for each common object class are authorized by Section 54. However, the total expenditure for the group ofcommon object classes may not exceed the sum of the stated amounts for the separate object classes of the group. The common object classes include Personal Services, Regular Operating Expenses, Travel, Motor Vehicle Purchases, Equipment, Computer Charges, Real Estate Rentals, Telecommunications and Postage.
CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents include demand deposits with banks and other financial institutions, and cash management pools that have the general characteristics of demand deposit accounts in that the Agency may deposit additional cash at any time and also may withdraw cash at any time without prior notice or penalty.
The Secretary of State participates in an investment pool managed by the State of Georgia's Office of Treasury and Fiscal Services (OTFS) referred to as the "Georgia Fund 1". The Agency does not have any risk exposure related to investments in derivatives or similar investments in Georgia Fund 1 as the investment policy of OTFS does not provide for investments in derivatives or similar investments through the Georgia Fund 1.

- 16-

SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT "H"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES No inventories of supplies are reported in these financial statements. Expendable supplies are recorded as . expenditures at the time of purchase.
RESERVED FUND B~CE 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:
STATE FUNDS Represents State appropriations required for the matching portion of Federal grants. This amount is restricted for expenditure in the subsequent fiscal year.
FEDERAL FINANCIAL ASSISTANCE The residual portion ofFederal financial assistance revenues not yet expended or encumbered. This amount is restricted for expenditure in future years. This accounting treatment differs from generally accepted accounting principles in that the unearned portion of Federal financial assistance should be reflected as deferred revenue.
OTHER FUNDS The residual of other restricted revenues not yet expended or encumbered. This amount is restricted for expenditure in the future years.
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 Secretary of State.
UNRESERVED FUND BALANCE In accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, the Budget Fund's unreserved fund balance is remitted to the Office of Treasury and Fiscal Services in the subsequent fiscal year as surplus. This amount of unexpended general appropriations is designated for reappropriation by the State in subsequent years.
COMPENSATED ABSENCES Compensated absences represent obligations of the Secretary of State 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 offunds each year to the Agency to cover the cost of annual leave paid to terminated employees.
- 17 -

SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1996

EXHIBIT "H"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COMPENSATED ABSENCES 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 Agency's financial position and operations. Comparative totals have not been included on statements where their inclusion would not provide enhanced understanding ofthe Agency's financial position and operations or would cause the statements to be unduly complex and difficult to understand. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year's presentation.
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
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 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 ofthe United States or ofthe State of Georgia.
(2) Bonds, bills, certificates ofindebtedness, notes, or other obligations ofthe counties or municipalities ofthe State of Georgia.
(3) Bonds ofany public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose.
(4) Industrial revenue bonds and bonds of development authorities created by the laws ofthe State of Georgia.

- 18 -

SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT "HI!

NOTE'2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES

(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 ofGeorgia 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 ofJune 30, 1996, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk.

Category 1 - Amounts covered by depository insurance or collateralized with securities (at market value) held by the Agency or by its agent in the Agency's name.

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

Cash Deposits

Carrying Amount

Bank Balances

Risk Categories

2

3

$270375938 $367972541 $ 5QQQQQQQ $==dO~QQ~ $317972541

CATEGORIZATION OF INVESTMENTS Investments are stated at cost. The carrying amount of the investment balance as ofJune 30, 1996, shown below is maintained in an investment pool by the Office ofTreasury and Fiscal Services and is not subject to
risk categorization.

- 19-

SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT "H"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS Tme ofInvestment State Investment Pool
NOTE 3: OPERATING LEASES

Carrying Amount $ 1.375.956.89

Market Value $ 1.375.956.89

The Secretary of State has enteted into ~rtain 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 tenn ofthe lease, the Secretary of State has the option of renewing the lease on ayear-to-year basis. Future minimum commitments for operating leases as of June 30, 1996, are listed below. Amounts are included only for multi-year leases and for cancellable leases for which an option to renew for the subsequent fiscal year has been exercised.

Fiscal Year Ending June 30

1997

$ 294.863.80

Expenditures for rental of real property and equipment under operating leases for the year ended June' 30, 1996, totaled $321,915.10.

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 ofS1,000.00 or greater are reflected in the General Fixed Assets Account Group.

The following is a summary ofchanges of equipment in the General Fixed Assets Account Group during the

fiscal year:

.

Balance July 1, 1995 Additions Deductions Balance June 30, 1996 NOTE 5: GENERAL LONG-TERM DEBT

S 3,455,822.61 345,205.22 188.619.15
$ 3.612.408 68

CHANGES IN GENERAL LONG-TERM DEBT During the year ended June 30, 1996, the following changes occurred in the compensated absences liability reported in the General Long-Term Debt Account Group:

- 20-

SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT"H"

.

NOTE 5: GENERAL LONG-TERM DEBT

CHANGES IN GENERAL LONG-TERM DEBT Balance July I, 1995
Additions Annual Leave Earned and Utilized (Net) Salaries Salary Related Fringe Benefits
Balance June 30, 1996 NOTE 6: RISK MANAGEMENT

$ 1,457,400.36
32,226.1 I 2.465.30
$ 1.492,091.77

Public Entity Risk Pool

The State Personnel Board, Merit System ofPersonnel Administration administers for the State of Georgia a program ofhealth benefits for the employees ofunits ofgovernment ofthe State of Georgia, units of county government and local education agencies located within the State of Georgia. This plan is funded by participants covered in the plan, by employers' contributions paid by the various units of government participating in the plan, and appropriations made by the General Assembly ofGeorgia. 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 processes claims for risk of loss to which the State is exposed, inclu~g general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Secretary of State is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.

NOTE 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 of the State of Georgia 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

- 21 -

SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT"H"

NOTE 7: DEFERRED COMPENSATION PLAN
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 ofa general creditor ofthe State of Georgia in an amount equal to the fair market value of the deferred account of each participant. Financial information relative to the plan will be presented in the State of Georgia Comprehensive Annual Financial Report for the year ended June 30, 1996.
NOTE 8: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description The Secretary of State participates in the Employees' Retirement System of Georgia ("ERS"), a singleemployer, defined benefit plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees ofthe State ofGeorgia. The Agency's payroll for the year ended June 30, 1996, for employees covered by ERS was $12,521,333.10. The Agency's total payroll for all employees was $12,952,551.89.
Benefits The benefit structure of ERS was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 65. If 10 years of service is completed and age 60 is reached, the member may retire with a reduced benefit. Additionally, there are certain provisions allowing for retirement after 30 years of service regardless of age.
Retirement benefits paid to members are based upon a formula which considers the monthly average ofthe member's highest eight cOnsecutive calendar quarters of salary, the number ofyears ofcreditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
Funding Status and Progress Funding status and progress information is presented in the ERS June 30, 1996, financial report which may be obtained through ERS.

- 22-

SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT "Hit

NOTE 8: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Contributions Required and Contributions Made As established by State statute, all full-time employees ofthe State of Georgia and its political subdivisions, who are not members ofother state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute.
Under the old plan, member contributions consist of employee contributions paid by the employee of 1.25% ofcompensation and 4.75% of compensation paid by the Agency on behalfofthe employee. Under the new plan, member contributions consist solely of 1.25% ofcompensation paid by employee. The Agency also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation. For the year ended June 30, 1996, the ERS employer contribution rate for the Agency amounted to 14.890,/0 ofcovered payroll and included the 4.75% contributed on behalfofthe employee under the old plan referred to above. The employer contributions are projected to liquidate the unfunded actuarial liability within 20 years based upon the actuarial valuation of June 30, 1995. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.
Actuarial assumptions used by the ERS to compute actuarially determined contribution requirements are the same as those used to compute the pension benefit obligation.
Total contributions to the plan made during .fiscal year 1996 amounted to $2,022,155.99, of which $1,865,639.23 was made by the Agency and $156,516.76 was made by employees. These contributions met the requirements of the plan.
Trend Information Historical trend information is presented in the ERS June 30, 1996, financial report which may be obtained through ERS. This information gives an indication ofthe progress made in accumulating sufficient assets to pay benefits when due. .
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description The Secretary of State participates in the Georgia Defined Contribution Plan (ltGDCpIt) which is a singleemployer defined contribution plan established by the Georgia General Assembly for the purpose of providing 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 Agency's payroll for the year ended June 30, 1996, for employees covered by GDCP was $324,421.21. The Agency's total payroll for all employees was $12,952,551.89.

- 23-

SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT"H"

NOTE 8: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Benefits A member may retire and elect to receive periodic payments after attainment ofage 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board. Ifa member has less than $ 3,500 credit to hislher account, the Board has the option ofrequiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to hislher account will be paid to the member's designated beneficiary.
Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Earnings are credited to each member's account in a manner established by the Board. Upon termination ofemployment, the amount ofthe member's account is refundable upon request by the member.
Total contributions made by employees during fiscal year 1996 amounted to $24,331.92 which represents 7.50% ofcovered payroll. These contributions met the requirements ofthe plan.
NOTE 9: LEAVEPOUCffiS
Employees earn ten hours of sick leave each month with a maximum accumulation ofninety 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 ofcontinuous State service with a maximum accumulation offorty five days. Employees are paid for unused, accumulated annual leave upon retirement or termination of employment. See Note 1 - Compensated Absences.
Certain employees who retire with one hundred and twenty days or more offorfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement System of Georgia.
NOTE 10: CONTINGENCffiS
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 Secretary ofState expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against the Secretary of State, 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.
- 24-

SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS
ruNE 30. 1996

EXlllBIT "H"

NOTE 11: BONDING INFORMATION
The Secretary of State and all employees of the Secretary of State are bonded under a Public Employees Blanket Bond written by Employers Insurance of Wausau. their Bond No. 1450-02-110723. on which the premium was paid to October 1. 1996. Under this agreement the Public Employee Dishonesty Coverage insures the Agency to a maximum ofSl.000,OOO.OO against loss sustained through fraudulent or dishonest acts by its employees. The Faithful Performance of Duty Coverage insures the Agency 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 oftheir position or employment.
All employees of the Secretary of State are also bonded under Commercial Crime Policies written by the United States Fire Insurance Company, their Policy Nos. 6260122926 and 626 012294 4, on which premiums were paid to October 1, 1996. Under these additional public employee dishonesty coverages, the policies insure the Agency to a maximum ofS9,OOO,OOO.OO against loss sustained through fraudulent or dishonest acts by its employees and from failure ofits employees to perform faithfully.

- 25-

Blc~nk
py0 .

SUPPLEMENTARY INFORMATION - 27-

SECRETARY OF STATE COMBINING BALANCE SHEET (STATUTORY BASIS)
BUDGET FUND JUNE 30,1996

EXHIBIT "I"

ASSETS Cash and Cash Equivalents Accounts Receivable
State Appropriation. Federal Financial Assistance
Prepaid Items

"A" SECRETARY
OF STATE

"B" REAL ESTATE COMMISSION

TOTAL

$ 1,801 ,391 ,03

$ 1,801 ,391.03

$

$

70,481,01

$

70,481,01 $

$

3,088.00

350,424,36 $
350,424.36 $ $

350,424,36 70,481,01
420,905,37
3,088.00

Total Assets

$ 1,874,960.04 $

350,424.36 $ 2,225,384.40

LIABILITIES AND FUND EQUITY
Uabilities Cash Overdraft Accounts Payable Accrued Salaries Payroll Wlthholdings
Total Uabilities
Fund Equity Fund Balances Reserved State Funds Federal Financial Assistance Other Funds Unreserved Designated Surplus
Total Fund Equity
Total Uabilities and Fund Equity

$ $ 941,197,28
2,843,41 733,36
$ 944,774.05 $

81,824,63 $
127,630.68
209,455.31 $

81,824.63 1,068,827.96
2,843.41 733.36
1,154,229,36

$ 100,000.00
44,823.11 24,439.68

$

100,000.00

44,823,11

24,439.68

760,923,20 $ $ 930,185.99 $

140,969.05
140,969.05 $

901,892,25 1,071,155.04

$ 1,874,960.04 $

350,424.36 $ 2,225,384.40

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

SECRETARY OF STATE COMBINING STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 1996

EXHIBIT -J-

FUND BALANCES - JULY 1
Reserved Unreserved
Designated Surplus
ADDITIONS
Adjustments to Prior Year's Accounts Payable Excess of Funds Available over Expenditures
Exhibit -KReimbursement of Prior Year's Expenditures
DEDUCTIONS
Unreserved Fund Balance (Surplus) Returned to Office of Treasury and Fiscal Services Year Ended June 30, 1995
Reserved Fund Balance Carried Over from Prior Year as Funds Available
FUND BALANCES - JUNE 30 (To Exhibit -Ij

-ASECRETARY
OF STATE

-B-
REAL ESTATE
~OMMISSION

TOTAL

$

65,733,08

66,725.00 $
$ 132,458.i.! $

$

65,733.08

20,476.51 20,476.51 $

87,201.57 152,934.65

$

83,075,95 $

841,"03,07 :7J:J06.97

$ 93U,185.99 $

20,225.56 $ 120,743.49
140,969.05 $

103,301.51
961,846.56 6,006.97
1,071 ,155.04

$

66,725.06 $

65,733.08

$ 132,458,14 $

20,476.51 $ 20,476.51 $

87,201.57 65,733.08 152,934.65

$ 930,185.99 $

140,969.05 $ 1,071,155.04

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

SECRETARY OF STATE
COMBINING STATEMENT Of FUNDS AVAILABlE AND EXPEtQTURES
BUDGET FUND
'lEAR ENDED JUNE 30. 1996

EXHIBIT "K"

FUNDS AVAILABlE REVENUES
STATE APPROPRIATION General Appropriation Amended Appropli8llon GowImor's Ernergenc:y Fund (See Schedule) Budget Adjustmenlll Total Stale Appropriation
FEDERAl. REVENUES OTHER REVENUES RETAINED (See Schedule)
CABRY..QVER FROM PRIOR YEAR Tral18fer from R_ _ Fund Balance Federal Financial Assistance OtherFund& Total Cany..Qverfrom PrIor Year
Total Fund& Available

-A-
SECRETARY OF STATE

"B" REA!. ESTATE COMMSSION

TOTAL

S 28,702,778.00 S 523,583.00 31,800.00 -319,000.00
S 28,946,241.00 S
70,481.01
2,412,513.42
S 31,429,235.43 S

2,149,663.00 S
2,149,663.00 S 15,712.13
2,165,375.13 S

30,852,441.00 523,563.00 38,900.00 -319,000.00
31,095,904.00
70,481.01
2,428.225.55
33,594,610.56

S

<t6,722.86

19,010.22

S

65,733.08

S

<t6,722.86

19,010.22

S

65,733.08

S 31,494,968.51 S

2,165,375.13 S 33,660,343.64

EXPENDITURES
PERSONAl SERVICES
Salaries and Wages Employer's Contributions for:
F.I.CA Retirement Health Insurance Personal Liability Insurance Unemployment Compensation Insurance Workers' Compensation Insurance Assessments by Merit System Drug Testing
REGULAR OPERATING EXPENSES
Motor Vehicle Expenses Supplies and Materials Repail1l and Maintenance Utilities Rents (Other than Real Estate) Insurance and Bonding Grants to Counties, Cities and Civil Divisions Other Operating ExpeI1S86 (See Schedule) Extraordinary Expenditures (See Schedule) Duplicating and Rapid Copy Publications and Printing Equipment Purchases

S 12,028,906.75 S
858,027.48 1,827,552.75 1,4n,009.45
60.201.00 12,170.00 201,828.00 57,419.18
1,451.00
s 16,519,565.61 S

853,830.58 S 61,696.50 132,034.87 106,361.34 4,960.00
1,158,883.29 S

12,882,737.33
919,n3.98 1,959,587.62 1,578,370.79
65,181.00 12,170.00 201,828.00 57,419.18
1,451.00
17,678,448.90

s

150,341.94 S

2,327,661.87

322,922.89

12,614.37

5,568.76

121,432.00

300.00

735,390.61

39,292.47

57,097.53

848,057.87

152,524.39

s

4,773,204.70 S

16,166.69 S 65,550.32
2,705.85 551.62
12,243.06 5,707.00
20,804.01
5,580.01 32,940.29
4.995.06

166,508.63 2,393,212.19
325,628.74 13,165.99 17,811.82
127,139.00 300.00
756,194.62 39,292.47 62,6n.54 880,998.16 157,519.45

167.243.91 S_--...;4:.l::,94O:....:..:J,448..:....o;:::.:.6c:..1

See accompanying notes and Indepandent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information.
-30-

SECRETARY Of STATE
COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENprruRES
BUOGETFUND
YEAR ENDED JUNE 30, 1996

EXHIBIT "K"

EXPENDITURES
MOTOR VEHICLE PURCHASES
EQUIPMENT Equipment Pu~ Rental of Equipment
COMPUTER CHARGES
Software Equipment
Equipment Pu~ Rental of EqUipment Per Diem, F_ and Contracts Per Diem and F_ Computer Billings, DOAS
REAL ESTATE RENTALS TELECCltJNUN!CAT!ONS PER DIEM, FEES AND CONTRACTS
Per Diem and F_ Contracts

-A-
SECRETARY Of STATE

"B" REAL ESTATE COMr.tSSION

TOTAL

$

257,971.05 $

$

119,SI87,1I9 $

9.575.07 $ _ _..:26=.a7,::::546:::::.:,1~2 24,330.00 $ _ _...:'",,44.:.1,3=-':.:,7.:::,69::.,

$

53,881,13 $

10,275,88

$

84,157.01 $

8,266.57 $ 96.00

62,147,70 10.371,88

8,362,57 $ _ _---:.n.,.,=..51.:::9.:::,58::..

$

32,~.11

185,0119.70 758,00

$ 2,620,110,91

$ 2,838,02O.n $

$

2,459,669.80 $

$

864,676,84 $

$

32,082,11

185,0119.70 758,00

15,000,00 318,011.04

15,000.00 2.938.121,95

333,011.04 $_--:::3"",'""71",,,,03:='.:.:,.1'.:..6 164,415,60 $ _--=2:.c:,62::,4;:,.,085=:.;;:.40=.. 41,111 ,43 $ _ _-,905=,,,,,788=.2~7

$

1,729,990.49 $

137,523,04

$

1,867,513,53 $

137,698,73 $

1,867,889.22 137,523,04

137,698.73 $ _--=2:.t:,0O5=.2:.'::2:::,2:=..6

ELECTION EXPENSES PenIonaI Services Salaries and Wages Employer's Contribution for: F.I,CA. OIherCosts Supplies and Materials Ott- Operating Expenses (See Schedule) Publications and Printing Equipment Equipment Pun:hases Computer Charges Software Telecommunications Per Diem, F_ and Contracts Per Diem and F_ Contracts
Total Ott-
Total Expenditures
Excess of Funds Available over Expenditures

$

69,814,56

1,012.31

54,647,19 3,SI81,50
656,656,86

374.93

774,00 378,n

23,558,42 77,900,00

$

889,098.49

$ 30,653,865.44 $

841,103.0'7

$
$ 2,044,631.64 $
120.743.49

69,814.56
1,012.31
54,647.19 3,981.50
656,656.86
374.93
774.00 378.n
23,558.42 77.900,00
889.098.49
32,698,497.08
961,846.56

$ 31,494.968.51 $

2.165.375.13 $ 33,680,343.64

See accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information,
- 31 -

SECRETARY OF STATE COMBINING BALANCE SHEET FIDUCIARY FUND TYPE - EXPENDABLE TRUST FUNDS
JUNE 30, 1996

EXHIBIT"L"

ASSETS Cash and Cash Equivalents
FUND EQUITY Fund Balances
Unreserved Undesignated

AUCTIONEERS RECOVERY FUND

REAL ESTATE RECOVERY FUND

TOTAL

$

212,293.78 $ 1,417,840.01 $ 1,630,133.79

$

212,293,78 $ 1,417,840.01 $ 1,630,133.79

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 32-

SECRETARY OF STATE COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FIDUCIARY FUND TYPE - EXPENDABLE TRUST FUNDS YEAR ENDED JUNE 30, 1996

EXHIBIT oM"

REVENUES Auctioneers Recovery Fees Interest Income Real Estate Recovery Fees Total Revenues
EXPENDITURES Court Settlements Educational Expense Contracts Total Expenditures
Excess of Revenues over Expenditures FUND BALANCE JULY 1, 1995
FUND BALANCE JUNE 30, 1996

AUCTIONEERS RECOVERY FUND

REAL ESTATE RECOVERY FUND

TOTAL

$

28,200.00

$

28,200.00

$

77,485.47

77,485.47

102,842.78

102,842.78

$

28,200.00 $ 180,328.25 $ 208,528.25

$

23,123.20 $

23,123.20

152,669.00

152,669.00

$ 175,792.20 $ 175,792.20

$

28,200.00 $

4,536.05 $

32,736.05

184,093.78

1,413,303.96

1,597,397.74

$ 212,293.78 $ 1,417,840.01 $ 1,630,133.79

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 33-

SECRETARY OF STATE COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUNDS YEAR ENDED JUNE 30, 1996

EXHIBIT"N"

FUND Appraiser Transfer Fund Election Qualifying Fees

ASSETS! LIABILITIES JULY 1,1995

. ADDITIONS

DELETIONS

ASSETS! LIABILITIES JUNE 30,1996

$

8,650,00 $ 74,395.00 $ 76,200.00 $

6,845.00

115,898.81

603,951.21

719,850.02

$ 124,548.81 $ 678,346.21 $ 76,200.00 $ ===72=6:::l::,6=:9=5.:=02=

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 34-

SECRETARY OF STATE SCHEDULE OF APPROVED BUDGET
"A" SECRETARY OF STATE YEAR ENDED JUNE 30,1996

SCHEDULE "1"

ORIGINAL

AMENDED

GOVERNOR'S

BUDGET

APPROPRIATION APPROPRIATION EMERGENCY FUND ADJUSTMENTS

TOTAL

FUNDS AyAILABLE

REVENUES

State Appropriation Federal Revenues other Revenues Retained

$ 28,702,n8.00 $ 0.00
1,045,000.00

523,563.00 $

38,900.00 $

-319,000.00 $ 41,875.00
1,392,705.00

28,946,241.00 41,875.00
2,437,705.00

$ 29,747,n8.00 $

523,563.00 $

.;;38~,,;;;9OO:;,;;,;;;'00;,;. $ 1,115,580.00 $ 31,425,821.00

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

$ 17,478,043.00 $ 3,973,431.00 243,800,00 105,510.00 93,840,00 2,423,793.00 2,462,246.00 957,367.00 1,309,748.00 700,000.00

4,638.00 363,675.00 $
149,250.00 6,000.00

$ 38,900,00

-492,741.00 $ 344,663.00
16,422.00 14,500.00
343,00 257,603.00
16,00 709,n4.00 265,000.00

16,989,940.00 4,720,669.00
260,222.00 120,010.00 94,183.00 2,830,646.00 2,462,246.00 957,383.00 2,025,522.00 965,000.00

$ 29,747,n8.00 $

523,563,00 $

.;;38~,,;;;9OO:;,;;,;;;'00_ $ 1,115,580.00 $ 31,425,821.00

See accompanying notes and Independent Accountanrs Combined Report on Review of Financial Statements and Supplementary Information.
- 35-

SECRETARY OF STATE SCHEDULE OF APPROVED BUDGET
"B" REAL ESTATE COMMISSION YEAR ENDED JUNE 30, 1996

SCHEDULE "2"

FUNDS AVAILABLE REVENUES
State Appropriation Other Revenues Retained
EXPENDITURES Personal Services Regular Operating Expenses Travel Motor Vehicle Purchases Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts

ORIGINAL

BUDGET

APPROPRIATION ADJUSTMENTS

tOTAL

$

2,149,663,00

0.00 $

$ 15,712.00

2,149,663.00 15,712,00

$

2,149,663.00 $

15,712.00 $ 2,165,375.00

$

1,266,704.00

157,100.00 $

15,000.00

23,000.00

10,631.00

335,622.00

165,300.00

41,556.00

134,750.00

$ 7,000.00 1,330.00 3,382.00
4,000.00

1,266,704.00 164,100.00 15,000,00 24,330,00 10,631.00 339,004.00 165,300,00 41,556.00 138,750.00

$

2,149,663.00 $

15,712.00 $ 2,165,375.00

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 36-

SECRETARY OF STATE CASH AND CASH EQUIVALENTS
JUNE 30,1996

SCHEDULE "3"

NONINTEREST BEARING ACCOUNTS
First Southem Bank, Lithonia, Georgia
First Union National Bank of Georgia, Atlanta, Georgia
NationsBank of Georgia, NA, Atlanta, Georgia
SunTrust Bank, Atlanta, Georgia
Wachovia Bank of Georgia, N.A., Atlanta, Georgia
INTEREST BEARING ACCOUNTS
Funds on Depositwith Office of Treasury and Fiscal Services State Investment Pool

$ 212,293.78 41,883.12
1,722,887.46 719,850.02 6,845.00 $ 2,703,759.38
1,375,956.89

$ 4,079.716.27

See accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information.
- 37-

SECRETARY OF STATE SCHEDULE OF GOVERNOR'S EMERGENCY FUND
YEAR ENDED JUNE 30, 1996
"A" Secretary of State
State Ethics Commission - Assist with Attorney Fees in Connection with
AFL - CIO, et al vs. State Ethics Commission

SCHEDULE "4"
$ 38,900.00

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 38-

SECRETARY OF STATE SCHEDULE OF FEDERAL REVENUES
YEAR ENDED JUNE 30, 1996

PROGRAM
Interior, U. S. Department of Preservation Training for Local Govemments Direct
National Archives and Records Administration National Historical Publications and Records Grant Direct
National Endowment for the Humanities Earliest Inhabitants of Georgia Through Georgia Humanities Council

CFDA NUMBER
N/A
89.003
N/A

SCHEDULE "5"
AMOUNT
$ 31,927.01 36,754.00 1,800.00
$ 70,481.01

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 39-

SECRETARY OF STATE SCHEDULE OF OTHER REVENUES RETAINEP
YEAR ENDED JUNE 30, 1996

SCHEDULE "S"

Certification, Transfers of Scores and Verification
Computer Tapes Contract
Georgia Department of IndUstry, Trade and Tourism Olympic Project
Donations Archives Holocaust Commission Drugs and Narcotics Museum
Expedited Services Inspection and Investigation Microfilms (Archives) Nurses Forum Photocopies and Publications Rosters Sales and Services
Archives Supplies

"An SECRETARY
OF STATE

"B" REAL ESTATE COMMISSION

$

77,312.86

60,841.05 $

$ 2,270.00

15,000.00
891.15 4,300.00 2,600.00 3,000.00 1,597,262.00 404,946.84 16,698.41
900,00 102,876.90 114,368.02
11,516.19

448.78 12,993.35

TOTAL
77,312.86 63,111.05
15,000.00
891,15 4,300,00 2,600.00 3,000.00 1,597,262.00 404,946.84 16,698.41
900.00 103,325.68 127,361.37
11,516.19

$ 2,412,513.42 $

15,712.13 $ 2,428,225.55

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
-40 -

SECRETARY OF STATE SCHEDULE OF OTHER OPERATING EXPENSES
YEAR ENDED JUNE 30, 1996

SCHEDULE "7"

REGULAR OPERATING EXPENSES Court Reporter Services and Transcripts Examinations and Testing Film Processing Mailing and Messenger Service Registration Fees Seminar Expense Subscriptions and Dues
ELECTION EXPENSES Mailing and Messenger Service Subscriptions and Dues

"A" SECRETARY
OF STATE

"B" REAL ESTATE COMMISSION

TOTAL

$

4,542.91 $

421,422,61

38,481,50

95,731,72

70,416.53

12,006.98

92,788.36

791,74 $
12,334,63 4,967,50 2,710.14

5,334,65 421,422,61
38,481,50 108,066,35
75,384.03 12,006.98 95,498.50

$

735,390.61 $

20,804.01 $ 756,194.62

$

3,819.50

162.00

$ ====::::31,=98=1=.5=0

$

3,819.50

162.00

$ ===.::l3,=98==:1=.5=0

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 41 -

SECRETARY OF STATE SCHEDULE OF EXTRAORDINARY EXPENDITURES
YEAR ENDED JUNE 30, 1996
REGULAR OPERATING EXPENSES Borowski, Marcia Settlement of Lawsuit Conner, Ronald C. Settlement of Lawsuit

SCHEDULE "S"
"A"
SECRETARY OF STATE
$ 15,000.00
24,292.47
$ 39,292.47

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 42-

SECRETARY OF STATE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30,1996

SCHEDULE "9"

Totals per Annual Supplement
Accruals June 30, 1996

SALARIES $ 12,949,708.48 $

TRAVEL 266,892.29

2,843,41

653,83

Totals per Report

$ 12,952,551.89 $=====26=7::!::,5==:4=:6.=12=

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 43-

SECRETARY OF STATE SUMMARY OF SALARIES, TRAVEL, AND PER DIEM AND FEES
YEAR ENDED JUNE 30, 1996

SCHEDULE "10"

BUDGET FUND
"A" SECRETARY OF STATE Regular Election Expenses
"B" REAL ESTATE COMMISSION Regular Computer Charges

SALARIES

TRAVEL

PER DIEM AND FEES

$ 12,028,906.75 $ 69,814,56
$ 12,098,721.31 $

257,971 ,05 $ 1,729,990.49 23,558.42
257,971.05 $ 1,753,548.91

$

853,830.58 $

$

853,830.58 $

9,575.07 $ 9,575.07 $

137,698.73 15,000,00
152,698.73

$ 12,952,551.89 $ 267,546.12 $ 1,906,247.64

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 44-

SECTION II FINDINGS AND IMPROPER OR QUESTIONED COSTS

SECRETARY OF STATE SCHEDULE OF FINDINGS AND IMPROPER OR OUESTIONED COSTS
YEAR ENDED JUNE 30, 1996

STATUS OF PRIOR YEAR FINDINGS AND IMPROPER OR QUESTIONED COSTS

The status ofthe finding disclosed in the review report for the year ended June 30, 1995, is summarized below:

AuditControl~unnber

Status ofFinding

478-95-01

Corrective Action Innplennented