Review report, Georgia Seed Development Commission, a component unit of the state of Georgia, year ended June 30, 1996

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REVIEW REPORT GEORGIA SEED DEVELOPMENT COMMISSION
A COMPONENT UNIT OF THE STATE OF GEORGIA
YEAR ENDED JUNE 30, 1996

GEORGIA SEED DEVELOPMENT COMMISSION - TABLE OF CONTENTS -

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

EXHmITS

FINANCIAL STATEMENTS

A COMBINED STATEMENT OF ASSETS AND FUND EQUITY

ARISING FROM CASH TRANSACTIONS

ALL FUND TYPES AND ACCOUNT GROUP

2

B STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS

SPECIAL REVENUE FUND

3

C NOTES TO THE FINANCIAL STATEMENTS

4

SUPPLEMENTARY INFORMATION

SCHEDULES

1 CASH AND CASH EQUIVALENTS

12

2 SCHEDULE OF OTHER OPERATING EXPENSES

13

3 SCHEDULE OF CONTRACTS

14

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

DEPARTMENT OF AUDITS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
January 16, 1997

Honorable Zell Miller, Governor Members of the General Assembly of Georgia Members of the Georgia Seed Development Commission
and Honorable Thomas T. Irvin, Commissioner Department of Agriculture
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 C) of the Georgia Seed Development Commission 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 the basis of cash receipts and disbursements, which is a comprehensive basis of accounting other than generally accepted accounting principles. All information included in these financial statements is the representation ofthe management of the Georgia Seed Development Commission.
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 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 (Schedules 1 through 3) is presented only for supplementary analysis purposes. Such information has been subjected to the inquiries and

96ARL-4C

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,

CLV:cm
96ARL-4C

Claude L. Vickers State Auditor

FINANCIAL STATEMENTS - 1-

GEORGIA SEED DEVELOPMENT COMMISSION COMBINED STATEMENT OF ASSETS AND FUND EQUITY
ARISING FROM CASH TRANSACTIONS ALL FUND TYPES AND ACCOUNT GROUP
JUNE 30.1996

ASSETS Cash anc:l Cash Equivalents
(See Schedule) Seecllnventories
Fixed Assets
Land Equipment
Total Assets

GOVERNMENTAL FUND TYPE
SPECIAL REVENUE

ACCOUNT GROUP
GENE~
FIXED
ASSETS

TOTALS (Memoranc:lum Only) JUNE 30,1996 JUNE 30,1995

$

1,937,602.51

$

123,487.00

$ 1,937,602.51 $

$

123,487.00 $

1,845,347.27 187,435.00

$

6,000.00 $

6,000.00 $

6,000.00

712,076.01

712,076.01

661,280.01

$

718,076.01 $

718,076.01 $

667,280.01

$

2,061 ,089.51 $

718,076.01 $ 2,n9,165.52 $ 2,700,062.28

FUND EqUITY

Fund Equity

Investment in General Fixed Assets

Fund Balances

Reserved

Inventories

$

Unreserved

Undesignated

$
123,487.00 1,937,602.51

718,076.01 $

718,076.01 $

667,280.01

123,487.00 1,937,602.51

187,435.00 1,845,347.27

Total Fund Equity

$

2,061,089.51 $

718,076.01 $ 2,n9,165.52 $ 2,700,062.28

See Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement.
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GEORGIA SEEP DEVELOPMENT COMMISSION STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS
SPECIAL REVENUE FUND YEAR ENDED JUNE 30 1996

EXHIBIT ''S''

Reimbursement for Operating Costs Georgia Department of Agriculture Total Disbursements
CASH AND CASH EqUIVALENTS - JUNE 30
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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$

612,921.41 $

628,819.65

$ 1,394,212.30 $ 1,130,827.40

1,937,602.51

1,845,347.27

GEORGIA SEED DEVELOPMENT COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1996

EXHIBIT "C"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The Georgia Seed Development Commission is an instrumentality of the State of Georgia and a public corporation. The Commission consists often (10) members who are accountable as trustees. The Commission is assigned to the Georgia Department of Agriculture for administrative purposes. The Georgia Seed Development Commission is considered a component unit of the State of Georgia 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 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING The Georgia Seed Development Commission uses a fund and an account group 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.. Account groups are a reporting device used to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. The fund and account group presented in the accompanying financial statements are as follows:
GOVERNMENTAL FUND TYPE
SPECIAL REVENUE FUND - The fund used to account for the proceeds of specific revenue sources that are legally restricted to expenditure for specified purposes. This presentation differs from generally accepted accounting principles in that such principles provide that the Special Revenue Fund of the Commissionbe 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 ofproviding 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.
ACCOUNT GROUP
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. This methodology ofaccounting for general fixed assets differs from generally accepted accounting principles in that the Special Revenue Fund of the Commission should be accounted for as a Proprietary Fund Type - Enterprise Fund. Fixed assets utilized in the operations of proprietary fund types should be

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GEORGIA SEED DEVELOPMENT COMMlSSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996

EXHIBIT "C"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
ACCOUNT GROUP
GENERAL FIXED ASSETS recorded as assets ofsuch funds, rather than in the General Fixed Assets Account Group. The depreciation ofsuch fixed assets should be recorded as an expense ofproprietary fund types in order to more effectively determine the total cost of providing goods and services.
The cost ofnormal maintenance and repairs that do not add to the value of the 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.
BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPE SPECIAL REVENUE FUND
The Georgia Seed Development Commission maintains its Special Revenue Fund 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 Special Revenue 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.
BUDGET A budget for the financial operations ofthe Georgia Seed Development Commission was not prepared by the Commission, therefore, these financial operations represent nonbudgeted financial activities.
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 Commission may deposit additional cash at any time and also may withdraw cash at any time without prior notice or penalty.
INVESTMENTS The Georgia Seed Development Commission 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 I". The Commission 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.

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GEORGIA SEED DEVELOPMENT COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996

EXHIBIT "C"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES Inventories ofsupplies are valued at cost on the Combined Statement of Assets and Fund Equity Arising from Cash Transactions based on the last price paid for each item. The purchases method is used to account for inventories whereby inventory items are recorded as expenditures when purchased.
RESERVED FUND BALANCE Reserves represent those portions of fund equity not appropriable for expenditure or legally segregated for a specific future use. The following is a briefdescription ofthe reserve reflected in the accompanying financial statements:
INVENTORIES Reported inventories, under the purchases method, are equally offset by an amount to indicate that they do not constitute "available spendable resources" even though they are a component of net current assets.
UNRESERVED FUND BALANCE UNDESIGNATED
The Official Code ofGeorgia Annotated Section 2-4-6 regarding the Georgia Seed Development Commission is quoted as follows:
"It is the intent and purpose ofthe General Assembly that the commission shall be operated on a nonprofit basis. Any and all profits earned, beyond those required as a reasonable reserve for the future operations ofthe commission, shall be transmitted to the state treasury."
MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the Combined Statement of Assets and Fund Equity Arising from Cash Transactions are captioned "Memorandum Only" because they do hot represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects 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 the accompanying financial statements in order to provide an understanding of the changes in the Commission's financial position and operations.
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds of the State of Georgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu 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:
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GEORGIA SEED DEVELOPMENT COMMISSION NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1996

EXlllBIT "C"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (1) Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or ofthe State of Georgia.
(2) Bonds, bills, certificates ofindebtedness, notes, or other obligations of the counties or municipalities ofthe 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 of the bonds for this purpose.
(4) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.
(5) Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
(6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies ofthe State of Georgia the option of exempting demand deposits from the collateral requirements.
CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 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 Commission or by its ~gent in the Commission's name.
Category 2 - Amounts collateralized with securities (at market value) held by the pledging financial institution's trust department or agent in the Commission'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 Commission's name, and amounts uncollateralized.
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GEORGIA SEED DEVELOPMENT COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996

EXHIBIT "C"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF DEPOSITS
Canying Amount

Bank Balances

Risk Categories

2

3

Cash Deposits

$ 248172 85 $ 41267002 $ 201 06383 $ 191 12849 $ 20477 70

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 of Treasury and Fiscal Services and is not subject to risk categorization.

Type ofInvestment

Carrying Amount

Market Value

State Investment Pool

$ 1.689.429,66 $ 1.689.429.66

NOTE 3: CHANGES IN GENERAL FIXED ASSETS

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

Balance July 1, 1995
Additions Deductions
Balance June 30, 1996

Land

Equipment

Total

$ 6,000.00 $ 661,280.01 $ 667,280.01

51,796.00 1.000.00

51,796.00 1.000,00

$ 6,000.00 $ 712,076 01 $ 718,076,01

NOTE 4: REIMBURSEMENT OF OPERATING COSTS

During fiscal year 1996, the Georgia Seed Development Commission reimbursed the Georgia Department of Agriculture for operating costs paid on their behalf These costs are further identified as follows:

Personal Services Regular Operating Expenses
Travel Motor Vehicle Purchases Equipment Telecommunications

$ 369,193.17 150,068.72 8,154.00 22,400.00 56,989.24 6,116.28
$ 612,921.41

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GEORGIA SEED DEVELOPMENT COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1996

EXHIBIT "C"

NOTE 5: RISK MANAGEMENT
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, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Georgia Seed Development Commission is a component unit ofthe State of Georgia, 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 6: CONTINGENCIES
Litigation, claims and assessments filed against the Georgia Seed Development Commission, 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 7: BONDING INFORMATION
Accounting records and other financial data are maintained by employees of the Georgia Department of Agriculture. Employees of the Georgia Department of Agriculture 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 Department of Agriculture to a maximum of $1,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees. The Faithful Performance of Duty Coverage insures the Department to a maximum of$l,OOO,OOO.OO against loss sustained from failure of its employees to perform faithfully their duties or to account properly for all monies and property received by virtue of their position or employment.
All employees ofthe Georgia Department of Agriculture are also bonded under Commercial Crime Policies written by the United States Fire Insurance Company, their Policy Nos. 6260122926 and 626 0122944, on which premiums were paid to October 1, 1996. Under these additional public employee dishonesty coverages, the policies insure the Department to a maximum of $9,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees and from failure of its employees to perform faithfully.

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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

SUPPLEMENTARY INFORMAnON - 11 -

GEORGIA SEED DEVELOPMENT COMMISSION CASH AND CASH EQUIVALENTS JUNE 30. 1996

SCHEDULE "1"

NONINTEREST BEARING ACCOUNTS
Citizens Bank of Americus, Americus, Georgia
NationsBank of Georgia, NA, Atlanta, Georgia
INTEREST BEARING ACCOUNTS
SouthTrust Bank of Georgia, NA, Atlanta, Georgia
Funds on Deposit with Office of Treasury and Fiscal Services State Investment Pool

$

1,063.83

120.485.70 $ 121,549.53

$ 126,623.32 1,689.429.66 1,816.052.98

$ 1,937.602.51

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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GEORGIA SEED DEVELOPMENT COMMISSION SCHEDULE OF OTHER OPERATING EXPENSES
YEAR ENDED JUNE 30,1996
REGULAR OPERATING EXPENSES
Administrative Fee Department of Agriculture
Assessments Freight Registration Fees Seed Analysis and Inspection Shelling and Storage Subscriptions and Dues Tags and Certificates Testing and Treating

SCHEDULE "2"
$ 39,000.00 13,256.18 6,100.01 972.00 10,360.21 34,194.43 183.00 7,410.06 17,102.00
$ 128,577.89

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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GEORGIA SEED DEVELOPMENT COMMISSION SCHEDULE OF CONTRACTS YEAR ENDED JUNE 30,1996

SCHEDULE "3"

Southern Elite Genetics Association For the Purpose of Supporting the Distribution of Haskell and Doles Soybean Seed in the State of Georgia
Texas Foundation Seed Service For the Purpose of Supporting the Distribution of the Georgia Runner Peanuts
University of Georgia Research Foundation For the Purpose of Supporting the Distribution of the Alfa Graze Seed and the Cut-N-Grow Seed For the Purpose of Supporting the Distribution of the Georgia-5 Tall Fescue Seed For the Purpose of Supporting the Distribution of the Georgia Runner Peanuts For the Purpose of Supporting the Distribution of Haskell and Doles Soybean Seed For the Purpose of Supporting the Plant Breeding Research Program in the State of Georgia

$ 8,346.00
2,664.90
30,741.45 9,870.00
445,760.35 13,366.84
125,000.00
$ 635.749.54

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