Audit report, Georgia Public Telecommunications Commission, a component unit of the state of Georgia, year ended June 30, 1994

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

AUDIT REPORT GEORGIA PUBLIC TELECOMMUNICATIONS
COMMISSION A COMPONENT UNIT OF THE
STATE OF GEORGIA YEAR ENDED JUNE 30, 1994

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXHIBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET (STATUTORY BASIS)

ALL FUND TYPES AND ACCOUNT GROUPS

2

B STATEMENT OF CHANGES IN FUND BALANCE

(STATUTORY BASIS)

GOVERNMENTAL FUND TYPE

3

C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

BUDGET FUND

4

D STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

COMPARED TO BUDGET

BUDGETFUND

6

E NOTES TO THE FINANCIAL STATEMENTS

7

SUPPLEMENTARY INFORMATION

SCHEDULES

I SCHEDULE OF APPROVED BUDGET

20

2 CASH AND CASH EQUIVALENTS

21

3 SCHEDULE OF FEDERAL REVENUES

22

4 SCHEDULE OF OTHER OPERATING EXPENSES

23

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) 656-2174
TAX RATIO (404) 656-0494

~epartment of /\units
254 WASHINGTON STREET. S. W. ROOM 214
J\thmht, Of)eorgia 30334-8400
October 26, 1994

FINANCIAL AUDITS (404) 656-2180
PROGRAM AUDITS (404) 656-2006

Honorable Zell Miller, Governor Members of the General Assembly of Georgia Members of the Georgia Public Telecommunications Commission
and Honorable Richard E. Ottinger, Executive Director Georgia Public Telecommunications Commission
INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying financial statements (Exhibits A through E) of the Georgia Public Telecommunications Commission as of and for the year ended June 30, 1994. These financial statements are the responsibility of the Commission's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in Note 1, these financial statements were prepared on a prescribed basis of accounting that demonstrates compliance with the budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
As described in Note 1, the financial statements referred to above do not include financial activities of the Foundation for Public Broadcasting in Georgia, Incorporated, which should be included in order to conform with generally accepted accounting principles. The Commission has historically excluded the financial activities ofthe Foundation from its financial statements. The effect on the Commission's financial statements as a result of this omission has not been determined but is believed to be material.
94ARL-3

In our opinion, except for the effects on the financial statements of the omission described in the preceding paragraph, the financial statements referred to above present fairly, in all material respects, the financial position (statutory basis) ofthe Georgia Public Telecommunications Commission as of June 30, 1994, and the results of its operations (statutory basis) for the year then ended, on the basis of accounting described in Note 1.
Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplementary information (Schedules 1 through 4) is presented for purposes of additional analysis and is not a required part of the financial statements of the Georgia Public Telecommunications Commission. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, except for the effects ofthe matter referred to in the fourth paragraph, such information is fairly presented in all material respects in relation to the financial statements taken as a whole.
Respectfully submitted,

CLV:gp 94ARL-3

Claude L. Vickers State Auditor

FINANCIAL STATEMENTS - 1-

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION
COMBINED BALANCE SHEET (STATUTORY BASIS) ALL FUND TYPES AND ACCOUNT GROUPS
JUNE 30, 1994

EXHIBIT "A"

ASSETS Cash and Cash Equivalents (See Schedule) Accounts Receivable
Federal Financial Assistance Other
Prepaid Items Inventories Fixed Assets
Equipment Amount to be Provided for Payment of
Accrued Compensated Absences Installment Purchase Commitments

GOVERNMENTAL FUND TYPE BUDGET

ACCOUNT GROUPS

GENERAL

GENERAL

FIXED

LONG-TERM

ASSETS

DEBT

TOTALS
(Memorandum Only) JUNE 30, 1994 JUNE 30, 1993

$ 655 z 031. 26

$ 655,031.26 $ -455,593.25

$ 46,655.50 6,070,632.93
$ 6,117,288.43
$ 5,214.01
$ 124,949.19

$ 46,655.50$ 7,083.58 6,070,632.93 553,071.37
$ 6,117,288.43 $ 560,154.95
$ 5,214.01 $ 8,417.43
$ 124,949.19 $ 124,375.90

$45.577,842.00

$45,577,842.00 $30,743,359.72

$ 692,394.58 $ 692,394.58$ 594,969.~5 8,000,000.00 8,000,000.00 1,660,611.47
$8,692,394.58$ 8,692,394.58$ 2,255,580.82

Total Assets

$ 6,902,482.89 $45,577,842.00$ 8,692,394.58 $61,172,719.47 $33,236,295.57

LIABILITIES AND FUND EQUITY
Liabilities Accounts Payable Deferred Revenue Payroll Withholdings Compensated Absences Installment Purchases
Total Liabilities
Fund Equity Investment in General Fixed Assets Fund Balances Reserved Headquarters and Production Facility Project Satellite Distance Learning Program Unreserved Undesignated Deficit to be Funded in Subsequent Year
Total Fund Equity

$ 7,069,037.09 284,996.06 485.00
$ 7,354,518.15

$ 7,069,037.09 $ 2,103,868.16

284,996.06 173,361.00

485.00

388.00

$ 692,394.58 692,394.58 594,969.35

8,000,000.00 8,000,000.00 1,660,611.47

$ 8,692,394.58 $16,046,912.73 $ 4,533,197.98

$45,577,842.00

$45,577,842.00 $30,743,359.72

$ 43,397.13 233,784.99

43,397.13

0.00

233,784.99

0.00

-729,217.38 $ -452,035.26 $45,577,842.00

-729,217.38 -2,040,262.13 $45,125,806.74 $28,703,097.59

Total Liabilities and Fund Equity $ 6,902,482.89 $45,577,842.00$ 8,692,394.58 $61,172,719.47 $33,236,295.57

The notes to the financial statements are an integral part of this statement. - 2-

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS)
GOVERNMENTAL FUND TYPE YEAR ENDED JUNE 30, 1994

EXHIBIT "B"

FUND BALANCE - JULY 1
Unreserved Undesignated
ADDITIONS
Adjustment to Prior Year's Accounts Payable Excess of Funds Available over Expenditures
Exhibit "C" Prior Year's Checks Voided Reimbursement of Non-Budgeted Expenditures
Georgia State Financing and Investment Commission Reimbursement of Prior Year's Expenditures
DEDUCTIONS
Adjustments to Prior Year's Accounts Receivable Adjustments to Prior Year Expenditures Non-Budgeted Expenditures
Bond Sale Proceeds Paid to Various Vendors Uncollectible Debts Written Off
FUND BALANCE - JUNE 30
(To Exhibit "A")

BUDGET FUND YEAR ENDED
JUNE 30, 1994 JUNE 30, 1993

$-2,040,262.13 $-1,852,113.07

$ 10,193.40 $

0.00

1,592,996.25 0.00

-88,642.98 118.08

0.00 15,000.00

18,492.47 5,218.86

$1,618,189.65$ -64,813.57

$ 29,962.78 $ 51,328.65

0.00

53,337.89

0.00

18,492.47

0.00

176.48

------------- -------------

$ 29,962.78 $ 123,335.49
------------- -------------

$ -452,035.26 $-2,040,262.13

The notes to the financial statements are an integral part of this statement. - 3-

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND
YEAR ENDED JUNE 30 1 1994

EXHIBIT "C" Page 1

FUNDS AVAILABLE
REVENUES
FEDERAL REVENUES (See Schedule)
OTHER REVENUES RETAINED Commissions on Vending Machines Contracts Administrative Services, Department of Corporation for Public Broadcasting Education, Georgia Department of Foundation for Public Broadcasting in Georgia, Incorporated, The Public Broadcasting Service Regents of the University System of Georgia, Board of Universal Services Corporate Sponsorships Interest Earned Public Donations Rent a 1 Income Royalties Sales and Services
Total Other Revenues Retained
Tota 1 Funds Avail ab 1e
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
Total Personal Services
OPERATING EXPENSES
REGULAR OPERATING EXPENSES Motor Vehicle Expenses Supplies and Materials Repairs and Maintenance Utilities Rents (Other than Real Estate) Insurance and Bonding Other Operating Expenses (See Schedule) Duplicating and Rapid Copy Publications and Printing

TOTALS YEAR ENDED
JUNE 30, 1994 JUNE 30, 1993

$ 345,054.24 $ 185,282.00

$

813.67 $

952.47

6,000,000.00 2,013,968.00 12,230,390.50

0.00 1,963,714.00
133,500.00

4,644,068.48
30,000.00 9,663,583.00
220,921.35 1,283,612.96
22,270.53 0.00
1,140.00 40,899.69 420,453.95

5,219,628.05
6,616.00 6,210,736.00
0.00 1,001,477.93
4,915.12 15,200.00 12,290.00 73,055.31
258,984.39

$36,572,122.13 $14,901,069.27

$36,917,176.37 $15,086.351.27

$ 4,785,594.14 $ 4,737,902.21

332,280.17 706,404.81
579,142.69 24,840.00
8,529.00 21,211.00

327,670.13 706,203.35
572,128.47 17,513.00
3,163.00 13,610.00

$ 6,458,001.81 $ 6,378,190.16

$ 36,278.27 $ 32,169.47

395,789.34

359,479.87

139,434.36

152,469.69

722,539.28

712,271.20

2,754,682.73 2,652,285.62

34,874.47

34,901.50

2,924,547.31 2,608,679.48

442.79

174.51

68,545.51

155,549.03

$ 7,077,134.06 $ 6.707.980.37

The notes to the financial statements are an integral part of this statement.
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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND
YEAR ENDED JUNE 30 1 1994

EXHIBIT "C" Page 2

EXPENDITURES
OPERATING EXPENSES
TRAVEL
MOTOR VEHICLE PURCHASES
EQUIPMENT Equipment Purchases Lease/Purchase of Equipment
COMPUTER CHARGES Other Costs Supplies and Materials Repairs and Maintenance Software Equipment Equipment Purchases Per Diem, Fees and Contracts Contracts Computer Billings, DOAS
REAL ESTATE RENTALS
TELECOMMUNICATIONS
PER DIEM, FEES AND CONTRACTS Per Diem and Fees Contracts
Total Operating Expenses
CAP IT AL OUTLAY
Other Costs Other Operating Expenses (See Schedule) Duplicating and Rapid Copy
Per Diem, Fees and Contracts Per Diem and Fees
Total Expenditures
Excess of Funds Available over Expenditures

TOTALS YEAR ENDED JUNE 30, 1994 JUNE 30, 1993

$ 99 140.44 $ 89,959.94 $ 79,023.50 $_ _~6~,5~1~5~-~3~4

$ 6,475,956.52 $ 1,790 I 514. 45
$ 8,266,470.97 $

290,740.85 633,381.36
924,122.21

$ 14,158.93 $

6,813.84

1,360.61

32,063.78

4,074.07

8,304.41

44,732.15

1,615.28

24,833.87

0.00

7.80

0.00

$ 89,167.43 $_ _.:.48:::.;,i-:.7.::.9.:..7:.::3;.:.1

$ 16,000.00 $ 13,800.00

$ 221,023.16 $ 171,764.91

$10,321,616.97 $ 833,864.01

719,636.24

0.00

$11,041,253.21 $ 833,864.01

$26,889,212.77 $ 8,796,804.09

$

2,554.70 $

0.00

19.72

0.00

1,974,391.12

0.00

$1,976,965.54 $_ _ _~o~.o~o

$35,324,180.12 $15,174,994.25

1,592,996.25

-88,642.98

$36,917,176.37 $15.086.351.27

The notes to the financial statements are an integral part of this statement.
- 5-

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
YEAR ENDED JUNE 30, 1994

EXHIBIT "D"

FUNDS AVAILABLE REVENUES
Federal Revenues Other Revenues Retained
EXPENDITURES Personal Services Operating Expenses Capital Outlay
\
Excess of Funds Available over Expenditures

BUDGET

ACTUAL

VARIANCE FAVORABLE
(UNFAVORABLE)

$ 346,137.00$ 345,054.24 $ -1,082.76 37,474,333.00 36,572,122.13 -902,210.87
$37,820,470.00 $36,917,176.37 $ -903,293.63

$ 6,962,050.00 $ 6,458,001.81 $ 504,048.19

28,836,908.00 26,8B9,212.77 1,947,695.23

2,021,512.00 1,976,965.54

44,546.46

$37,820,470.00 $35,324,180.12 $ 2,496,289.88

$ 1,592,996.25 $ 1,592,996.25

The notes to the financial statements are an integral part of this statement. - 6-

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXIIlBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The Georgia Public Telecommunications Commission is an instrumentality ofthe State of Georgia and a public corporation. The Commission consists of nine (9) members, six (6) ofwhom are chosen by the Governor from the general public. The remaining three (3) ex-officio members are the State School Superintendent, the Chancellor of the Board of Regents of the University System of Georgia and the Commissioner of the Department of Technical and Adult Education. The Commission is assigned to the Board of Regents of the University System of Georgia for administrative purposes only. The Commission has decision making authority, the power to designate management, the ability to influence operations and is primarily accountable for its fiscal matters. In addition, the Commission may solicit and receive funds from the general public, corporate underwriters, and various public and private foundations as well as receive gifts, donations, contributions, or endowments from any person, firm, or corporation. The Commission is considered a component unit of the State of Georgia and 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 of Georgia.
The financial statements of the Georgia Public Telecommunications Commission do not include those of the Commission's component unit described below. To conform with generally accepted accounting principles, the financial statements ofthe component unit should be blended into and included in the financial statements of the Georgia Public Telecommunications Commission.
COMPONENT UNIT The Foundation for Public Broadcasting in Georgia, Incorporated is an entity legally separate from the Georgia Public Telecommunications Commission. The Foundation was incorporated August 13, 1982, and was organized pursuant to the provisions ofthe Georgia Non-Profit Corporation Code. Section III of the Articles of Incorporation of The Foundation for Public Broadcasting in Georgia, Incorporated is quoted, in part, as follows:
"The Corporation is organized for the following purposes:
The objects and purposes of this Corporation are to acquire and administer funds and property, which after payment of necessary expenses shall be devoted exclusively to educational and charitable purposes which promote, aid and advance educational and public broadcasting, public telecommunications in general and the aims and objectives of the Georgia Public Telecommunications Commission in providing educational and public broadcasting to the citizens of the State of Georgia."
Funds raised by the Foundation are almost entirely devoted to the benefit of the Georgia Public Telecommunications Commission. Additionally, the Board of Directors of the Foundation for Public Broadcasting in Georgia, Incorporated is currently comprised solely of the nine (9) members of the Georgia Public Telecommunications Commission. For financial reporting purposes, The Foundation for Public Broadcasting in Georgia, Incorporated should be considered a blended component unit of the Georgia Public Telecommunications Commission; however, the Commission has historically excluded the financial activities of the Foundation from its financial statements.
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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXI-IlBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COMPONENT UNIT For the year ended June 30, 1994, the Board of Directors of The Foundation for Public Broadcasting in Georgia, Incorporated approved the transfer of $4,644,068.48 to the Georgia Public Telecommunications Commission as shown on Exhibit "C" of this report.
FUND ACCOUNTING The Georgia Public Telecommunications Commission uses a fund 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 of the State of Georgia. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group, on the other hand, is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources. The fund and account groups presented in the accompanying financial statements are as follows:
GOVERNMENTAL FUND TYPE
BUDGET FUND - The fund used to account for activities and functions as set forth in the Amended Appropriations Act of 1993-1994. The Budget Fund is similar in nature to a General Fund as identified in generally accepted accounting principles in that the Budget Fund is used to account for all activities except those required to be accounted for in some other fund.
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 historical cost. 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.
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 should be accounted for using the current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements ofthese funds present increases (i.e., revenues) and decreases (i.e., expenditures) in net current assets.
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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING 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 of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both 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 be used to pay liabilities of the current period. Revenues that are accrued include primarily Federal grants and entitlements and certain amounts earned under operating agreements with other parties. Further, the modified accrual basis of accounting calls for expenditures, other than accrued interest of general long-term debt, to be recorded when the related fund liability is incurred.
Contractual obligations for services which have not been performed and for goods which have not been delivered at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based in part on the unexecuted portion of contracts for goods and services. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State 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 of the State of Georgia, but differs from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures.
BUDGET The budget ofthe Georgia Public Telecommunications Commission is compiled in the same manner as all State departments and expenditures are classified by budget unit object classes as provided in Act No. 608 of Georgia Laws 1993 (as approved April 28, 1993) and amended by Act No. 622 of Georgia Laws 1994 (as approved February 8, 1994), which is an appropriated budget and is referred to in these notes as the Amended Appropriations Act of 1993-1994.
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.
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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES Inventories of supplies are valued at weighted average cost on the Combined Balance Sheet (Statutory Basis). The consumption method is used to account for the use of inventories. Under the consumption method, the costs ofinventories are recorded as expenditures when consumed rather than when purchased.
RESERVED FUND BALANCE Reserves represent those portions of fund equity not appropriable for expenditure or legally segregated for a specific future use. The following is a brief description of the reserves reflected in the accompanying financial statements:
HEADQUARTERS AND PRODUCTION FACILITY PROJECT Funds received for this project represent funds appropriated through the Board of Regents of the University System of Georgia for the architectural design, project coordination and land acquisition costs for a new headquarters and production facility for the Commission. This amount is restricted for expenditure in future years.
SATELLITE DISTANCE LEARNING PROGRAM Funds received for this program represent a contract with the Georgia Department of Education to oversee and coordinate a statewide project for satellite distance learning. This amount is restricted for expenditure in future years.
COMPENSATED ABSENCES Compensated absences represent obligations of the Commission 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.
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 Balance Sheet (Statutory Basis) are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present 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 of this data.
COMPARATIVE DATA Comparative total data for the prior year have been presented in the accompanying financial statements in order to provide an understanding ofchanges in the Commission's financial position and operations. However, comparative data have not been presented in all statements because their inclusion would make certain statements unduly complex and difficult to understand.
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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "E"

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 any one or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
(1) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia.
(2) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.
(3) Bonds of any public authority created by the laws ofthe 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, and 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. These bank balances 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 agent in the Commission's name.
Category 2 - Amounts collateralized with securities (at market value) held by the financial institution's trust department or agent in the Commission's name.
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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "E"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF DEPOSITS Category 3 - Amounts collateralized with securities (at market value) held by the financial institution or by its trust department or agent, but not in the Commission's name, and amounts uncollateralized.

Carrying Amount

Bank Balance

Risk Categories

2

3

Cash Deposits

S 638 213 02 $ 1600 Oil 19 $ 114 277 83 $=="""000,e,; $ l 485 733 36

CATEGORIZATION OF INVESTMENTS Investments are stated at cost. The carrying amount shown below is maintained in an investment pool by the Office of Treasury and Fiscal Services.

Type of Investment

Carrying Amount

Market Value

State Investment Pool

$ 16,818.24 $ 16,818 24

NOTE 3: INSTALLMENT PURCHASE COMMITMENTS

The Georgia Public Telecommunications Commission acquires certain property and equipment through multiyear installment purchases with varying terms and options. The majority of these agreements contain fiscal funding clauses in accordance with O.C.G.A. 50-5-64 which prohibits the creation of a debt to the State of Georgia for the payment of any sums under such agreements beyond the fiscal year of execution if appropriated funds are not available. If renewal of such agreements is reasonably assured, however, installment purchases requiring appropriation by the General Assembly of Georgia are considered noncancellable for financial reporting purposes.

At June 30, 1994, future minimum commitments under installment purchases are as follows:

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXIIlBIT "E"

NOTE 3: INSTALLMENT PURCHASE COMMITMENTS

Fiscal Year Ending June 30

1995 1996 1997 1998 1999 2000 and Subsequent

$ 1,240,323.96 1,240,323.96 1,240,323.96 1,240,323.96 1,240,323.96 3,199,589.28

Total Future Minimum Commitments

$9,401,209.08

Less: Amounts Representing Interest

1,401,209.08

Present Value of Future Minimum Commitments

$ 8.000.000.00

NOTE 4: FINANCING AGREEMENT/ACCOUNTS PAYABLE

The Commission entered into a financing agreement with the Public Broadcasting Service to defer payment of the 1993 National Program Service Commitment. Payments will be made over three years in twelve quarterly payments of $113,289.33, beginning July 15, 1993. These payments were recorded as FY1993 expenditures. The unpaid balance is included in accounts payable on Exhibit "A" of this report. The payment schedule is as follows:

Fiscal Year Ending June 30

1995 1996

$ 339,867.99 453,157.36

$ 793,025.35

NOTE 5: 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 of $1,000.00 or greater are reflected in the General Fixed Assets Account Group.

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

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "E"

NOTE 5: CHANGES IN GENERAL FIXED ASSETS

Balance July 1, 1993

$30,743,359.72

Additions Deductions

15,224,204.30 389,722.02

Balance June 30, 1994

$45,577,842.00

NOTE 6: GENERAL LONG-TERM DEBT

CHANGES IN GENERAL LONG-TERM DEBT A summary of changes in General Long-Term Debt for the year ended June 30, 1994, follows:

Installment Compensated Purchase
Absences Commitments

Total

Balance July 1, 1993

$ 594,969.35 $ 1,660,611.47 $ 2,255,580.82

Additions Annual Leave Earned and Utilized (Net) Salaries Salary Related Fringe Benefits (*) Current Year Purchases
Deductions

48,221.16 49,204.07

8,000,000.00 1,660,611.47

48,221.16 49,204.07 8,000,000.00 1,660,611.47

Balance June 30, 1994

$ 692,394.58 $ 8,000 000.00 $ 8,692,394.58

(*) Includes related fringe benefits applicable to compensated absences at July 1, 1993.

NOTE 7: DEFERRED COMPENSATION PLAN

The State of Georgia 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 of their salary until future years. Participants choose the option or options in which they wish to participate. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property or rights ofthe State of Georgia subject only to the claims of the State's general creditors. Participant's rights under the plan are equal to those of a general creditor of the State of Georgia in an amount equal to the fair

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "E"

NOTE 7: DEFERRED COMPENSATION PLAN
market value ofthe deferred account ofeach participant. Financial information relative to the plan is presented in the financial report of the State Personnel Board - Merit System of Personnel Administration for the year ended June 30, 1994.
NOTE 8: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA The Georgia Public Telecommunications Commission participates in the Employees' Retirement System of Georgia, a single-employer, defined benefit pension plan. The Employees' Retirement System of Georgia was established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees ofthe State of Georgia. The Retirement System is funded through a combination of employee and employer contributions. Employees are required to contribute a graduated percentage of annual compensation. Employer contributions are for a specified percentage of active member payroll determined annually by an actuarial valuation. During the year ended June 30, 1994, the Commission contributed $706,404.81 to the Employees' Retirement System of Georgia. Participation in the Retirement System is not segregated by employee groups of individual governmental units and the Commission has no further liability under the retirement system other than future employer contributions as established for each fiscal year. Information relative to the plan description, funding status and historical trends is presented in the financial report of the Employees' Retirement System of Georgia for the year ended June 30, 1994.
GEORGIA DEFINED CONTRIBUTION PLAN The State of Georgia also provides retirement coverage for temporary, seasonal, and part-time employees who are not eligible for membership in the Employees' Retirement System of Georgia referred to above through a single-employer defined contribution plan. The Georgia Defined Contribution Plan was established by the General Assembly of Georgia and is administered by the Board of Trustees of the Employees' Retirement System of Georgia. Covered employees are required to contribute 7.5% of their gross salary, with no matching contribution by the employer. A member who terminates employment may apply for a refund of contributions and interest. Benefits are based solely on the amount contributed by the employee plus investment earnings. Upon discretion ofthe Board ofTrustees, members who leave employment with less than $3,500.00 credited to their account may be required to make a lump-sum withdrawal. Members are eligible to retire at the age of 65 with the option ofreceiving a periodic payment based on mortality tables and interest accumulation as adopted by the Board of Trustees of the Employees' Retirement System of Georgia. Information relative to the plan description and funding status is presented in the financial report of the Employees' Retirement System of Georgia for the year ended June 30, 1994.
NOTE 9: LEAVE POLICIES
Employees earn ten hours of sick leave each month with a maximum accumulation of ninety days. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment.

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXIIlBIT "E"

NOTE 9: LEAVE POLICIES

In accordance with the Georgia Public Telecommunications Organizational Procedures Manual, employees earn compensatory leave based on hours worked on fund raising and special project activities. This compensatory time does not vest with the employee and unused leave is forfeited if not utilized within one year of the date earned or upon retirement or termination of employment.

Employees earn annual leave ranging from ten to fourteen hours each month depending upon the employees' length of continuous State service with a maximum accumulation of forty five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1 - Compensated Absences

Certain employees who retire with one hundred and twenty days or more of forfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement System of Georgia.

NOTE 10: NONMONETARY TRANSACTIONS

The Georgia State Financing and Investment Commission (GSFIC), a unit of State government, is responsible for the issuance of state debt and for the investment and accounting for proceeds derived from the issuance of state debt. In addition, GSFIC is authorized to acquire and construct projects for the benefit of units of State government or to contract with units of State government for the construction or acquisition of capital outlay projects. During the fiscal year ended June 30, 1994, the Georgia State Financing and Investment Commission paid $1,149,519.35 to various vendors for approved projects related to the Georgia Public Telecommunications Commission.

NOTE 11: DEFICIT FUND BALANCE

At June 30, 1994, the Budget Fund ofthe Georgia Public Telecommunications Commission had a deficit fund balance of$729,217.38. This deficit will be funded in subsequent years through increased fund-raising efforts.

NOTE 12: DONATED SUPPORT

Donated support to the Georgia Public Telecommunications Commission during the year under review, which was not reflected on the financial statements of the Commission for the year ended June 30, 1994, was as follows:

Governmental Agency Georgia Department ofEducation

$1,776,844.02

Volunteer Services

54,149.45

Other Sources

1,325,241.80

Total

$ 3.156,235.27

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "E"

NOTE 13: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the Commission expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against the Georgia Public Telecommunications Commission, if any, are generally considered to be actions against the State of Georgia. Pursuant to the Official Code of Georgia Annotated, the Department of Administrative Services maintains a program of purchased insurance and selfinsurance which provides coverage for such litigation, claims and assessments. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1994.
NOTE 14: BONDING INFORMATION
The Executive Director and all employees ofthe Georgia Public Telecommunications Commission are bonded under a Public Employees Blanket Bond written by Employers Insurance of Wausau, their Bond No. 1450-00110723, on which the premium was paid to October I, 1994. Under this agreement the Public Employee Dishonesty Coverage insures the Commission 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 Commission to a maximum of $100,000.00 against loss sustained from failure of its employees to perform faithfully their duties or to account properly for all monies and property received by virtue of their position or employment.
All employees of the Georgia Public Telecommunications Commission are also bonded under a Commercial Crime Policy written by the United States Fire Insurance Company, their Policy No. 626 011675 2, on which the premium was paid to October 1, 1994. Under this additional public employee dishonesty coverage, the policy insures the Commission to a maximum of $4,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees.

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SUPPLEMENTARY INFORMATION - 19 -

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF APPROVED BUDGET YEAR ENDED JUNE 30, 1994

SCHEDULE "l"

FUNDS AVAILABLE REVENUES
Federal Revenues Other Revenues Retained
EXPENDITURES Personal Services Operating Expenses Capital Outlay

ORIGINAL

AMENDED

BUDGET

APPROPRIATION APPROPRIATION ADJUSTMENTS

TOTAL

$ 90,000.00

$ 256,137.00$ 346,137.00

15,224,479.00 $ 484,482.00 21,765,372.00 37,474,333.00

$15,314,479.00 $ 484,482.00 $22,021,509.00 $37,820,470.00
============= ============= ============= =============

$ 6,722,818.00 $ 8,591,661.00 0.00

74,800.00$ 164,432.00$ 6,962,050.00 409,682.00 19,835,565.00 28,836,908.00
2,021,512.00 2,021,512.00

$15,314,479.00 $ 484,482.00 $22,021,509.00 $37,820,470.00

See notes to the financial statements.

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION CASH AND CASH EQUIVALENTS JUNE 30 1 1994

SCHEDULE "2"

NONINTEREST BEARING ACCOUNTS
NationsBank of Georgia, N.A., Atlanta, Georgia Bank One - Arizona, Tempe, Arizona
INTEREST BEARING ACCOUNT
Funds on Deposit with Office of Treasury and Fiscal Services State Investment Pool

$ 628,384.22 9,828.80 $ 638,213.02
16,818.24 $ 655,031.26

See notes to the financial statements.

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF FEDERAL REVENUES YEAR ENDED JUNE 30, 1994

PROGRAM
Commerce, U. S. Department of Public Telecommunications Facilities Construction and Planning Direct Other Federal Assistance Maintenance of NOAA Weather Radio Contracts Direct

CFDA NUMBER
11. 550 N/A

SCHEDULE "3"
AMOUNT $ 256,137.00
88,917.24 $ 345,054.24

See notes to the financial statements.

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF OTHER OPERATING EXPENSES YEAR ENDED JUNE 30, 1994
OPERATING EXPENSES REGULAR OPERATING EXPENSES Advertising Courier Services Freight, Express and Storage Fund-Raising Expenses Fund Transfer Services General Assessment Services and Interconnection Fees Public Broadcasting Services Production Costs Program Rating Service Registration Fees Relocation Expenses Subscriptions and Dues
CAPITAL OUTLAY OTHER COSTS Advertising Freight, Express and Storage

SCHEDULE "4"

$ 23,697.57 870.35
32,076.84 1,951,841.88
8,778.27
227,461.50 28,671.06 24,428.28 32,514.88 5,547.08 588,659.60
-------------
$ 2,924,547.31

$

1,488.20

1,066.50

$

2,554.70

See notes to the financial statements.

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SECTION II FINDINGS AND IMPROPER OR QUESTIONED COSTS

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1994
CURRENT YEAR
CASH AND CASH EQUIVALENTS Inadequate Bank Reconciliation Procedures Financial Statements Audit Control Number 977-94-01
For the year ended June 30, 1994, an examination ofthe bank reconciliation procedures of the Georgia Public Telecommunications Commission disclosed the following deficiencies:
(I) Monthly bank reconciliations were not performed in a timely manner.
(2) Bank reconciliations were not subject to supervisory review.
The Commission should implement procedures to provide for prompt reconciliation of bank accounts and supervisory review of such reconciliations.