Audit report, state of Georgia, Georgia Public Telecommunications Commission, a component unit of the state of Georgia, year ended June 30, 1996

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AUDIT REPORT STATE OF GEORGIA GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION A COMPONENT UNIT OF THE STATE OF GEORGIA YEAR ENDED JUNE 30, 1996

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 COMBINED STATEMENT OF CHANGES IN FUND BALANCES

(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

BUDGET FUND

6

E NOTES TO THE FINANCIAL STATEMENTS

7

SUPPLEMENTARY INFORMATION

SCHEDULES

1 SCHEDULE OF APPROVED BUDGET

22

2 CASH AND CASH EQUIVALENTS

23

3 SCHEDULE OF FEDERAL REVENUES

24

4 SCHEDULE OF OTHER OPERATING EXPENSES

25

5 SCHEDULE OF EXTRAORDINARY EXPENDITURES

26

6 RECONCILIATION OF TRAVEL

27

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

28

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
December 4, 1996

Honorable Zell Miller, Governor Members of the General Assembly of Georgia Members of the Georgia Public Telecommunications Commission
and Honorable Werner Rogers, 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, 1996. 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 conducte,d 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 ofmaterial 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.

96ARL-3

As more fully discussed in Section II, Findings and Improper or Questioned Costs, material discrepancies were noted in the equipment inventory records ofthe Commission. Equipment inventory is included in the General Fixed Assets Account Group. We were unable to determine the effects these discrepancies may have on the financial statements.
In our opinion, except for the effects on the financial statements of the Commission described in the preceding paragraphs, the financial statements referred to above present fairly, in all material respects, the financial position (statutory basis) ofthe Georgia Public Telecommunications Commission as ofJune 30, 1996, 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 7) 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 of the matters referred to in the fourth and fifth paragraphs, such information is fairly presented in all material respects in relation to the financial statements taken as a whole.
Resz~

CLV:gp 96ARL-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, 1996

EXHIBIT "A"

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

GOVERNMENTAL FUND TYPE BUDGET

ACCOUNT GROUPS

GENERAL

GENERAL

FIXED

LONGTERM

ASSETS

DEBT

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

$

17,600,026,69

$ 17,600,026,69 $ 32,159,445,47

$

0.00

7,965,314,48

$

7,965,314,48

$

806,00

$

168,344,08

$

0.00 $

7,803.50

7,965,314,48

1,728,974.48

$ 7,965,314.48 $ 1,736,777.98

$

806.00 $

4,961.43

$

168,344.08 $

159,153.75

$ 47,823,948,49

$ 47,823,948,49 $ 46,161,578.12

$ 821,319.19 $

821,319.19 $

764,200.03

6,124,092.98

6,124,092.98

7,065,565.19

$ 6,945,412.17 $ 6,945,412.17 $ 7,829,765.22

Total Assets

$

25,734,491,25 $ 47,823,948.49 $ 6,945,412.17 $ 80,503,851.91 $ 88,051,681.97

LIABILITIES AND FUND EQUITY

Uabilities Accounts Payable Deferred Revenue Payroll Withholdings Compensated Absences Installment Purchases

25,647,133.76 500.00 479.00

$ 25,647,133.76 $ 4,279,132,39

500.00

4,230.00

479.00

514.50

$ 821,319.19

821,319.19

764,200.03

6,124,092.98

6,124,092.98

7,065,565.19

Total Liabilities

$

25,648,112,76

$ 6,945,412.17 $ 32,593,524,93 $ 12,113,642.11

Fund Equity

Investment in General Fixed Assets

Fund Balances

Reserved

Georgia Distance Learning and

Telemedicine Network

$

Information Technology Policy Grant

Lottery for Education

Headquarters and Production Facility Project

Zoo Atlanta Resources Center

Production Projects

Station Tower Project

Unreserved

Undesignated

Deficit to be Funded in Subsequent Year

$ 47,823,948.49
0.00 0.00 0.00 0.00 84,058.00 13,000.00
-10,679.51

$ 47,823,948.49 $ 46,161,578.12

0.00 0.00
0.00 0.00 84,058.00 13,000,00

375,759.00 87,375.00
26,912,351.00 2,500,000.00 115,956.00 0.00

-10,679.51

-214,979,26

Total Fund Equity

$ _ _-,8=6~,3c7.8=.4.9.$ 47,823,948.49

$ 47,910,326.98 $ 75,938,039.86

Total Liabilities and Fund Equity

$

25,734,491.25 $ 47,823,948.49 $ 6,945,412.17 $ 80,503,851,91 $ 88,051,681.97

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

-2-

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION COMBINED STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS)
GOVERNMENTAL FUND TYPE YEAR ENDED JUNE 30, 1996

EXHIBIT "B"

FUND BALANCES - JULY 1 Reserved Unreserved Undesignated
ADDITIONS Adjustments to Prior Year's Accounts Payable Excess of Funds Available over Expenditures Exhibit "C" Reimbursement of Prior Year's Expenditures
DEDUCTIONS Adjustments to Prior Year's Accounts Receivable Reserved Fund Balance Carried Over from Prior Year as Funds Available
FUND BALANCES - JUNE 30 (To Exhibit "A")

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

$ 29,991,441.00 $
-214,979.26
$ 29,776,461.74 $

277,182.12 -729,217.38 -452,035.26

$

328,524.37 $

99,534.02

29,613.68 244.45

30,376,620.26 29,817.88

$

358,382.50 $ 30,505,972.16

$

57,024.75 $

29,991,441.00

$ 30,048,465.75 $

293.04 277,182.12 277,475.16

$

86,378.49 $ 29,776,461.74

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

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SIDEMENT OF FUNDS A\lAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30, 1996

EXHIBIT .C"

FUNDS AVAILABLE
REVENUES
FEDERAL REVENUES (See Schedule)
OTHER REVENUES RETAINED Commission on Vending Machines Contracts Administrative Services, Department of Corporation for Public Broadcasting Foundation for Public Broadcasting in Georgia, Incorporated, The Georgia Emergency Management Agency Labor, Georgia Department of Office of the Govemor Public Broadcasting Service Regents of the University System of Georgia. Board of Grants Operating Funds Lottery for Education Transportation. Georgia Department of U.S. Department of Commerce Corporate Sponsorships Interest Eamed Royalties Sales and Services
Total Other Revenues Retained
Total Revenues
CARRy-oVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance Georgia Distance Leaming and Telemedicine Network Information Technology Policy Grant Headquarters and Production F.acility Project Production Projects Satellite Distant Leaming Program Zoo Atlanta Resources Center
Total Carry-Qver from Prior Year

TOTALS YEAR ENDED JUNE 30.1996 JUNE 30, 1995

$_--::..:.:2..4..7L,=9-4:.6;:.0:;0=. $

92,787.00

$

1.100.00 $

932.27

8,437,104.68 2,723,096.00

3,864,498.00 2,039,496.00

5,532.213.44 0.00
175,853.00 0.00 0.00

5.660,069.06 20,000.00 0.00 39.365.15 23,000.00

422,820.00 14,227.443.00
0.00 0.00 100.850.54 2.653,466.18 1,653,697.01 27.580.12 1.385.895.48

120,000.00 9,397,315.00 34.721,000.00
40.000.00 0.00
2.411,003.34 165,573.82 48,529.67 598,362.94

$ ---.,;3::7:.:..3..4..1::.~1.:1..9...:4.:5:.~ $ $_:..3:7...5L8:9=,=06:"5:.'4=5" $

59,149,145,25 59,241,932.25

$

375.759,00 $

87,375.00

26.912,351.00

115,956.00

0.00

2,500,000.00

0.00 0.00 43,397.13 0.00 233,784.99 0,00

$ 29,991 ,441.00 $ _--=2""n"".:.,:18::2"",.1.=.2

Total Funds Available

$ 67,580,506.45 $ 59,519,114.37

EXPENDITURES
PERSONAL SERVICES
Salaries and Wages Employer's Contributions for:
F.J,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
The notes to the financial statements are an integral part of this statement.
- 4-

$ 6.049,551.18 $ 5.505.080.28

410.549.65 8n,600.10 730,693.65
26.418.00 4,319.00 25,504.70

380,552.62 827.422.97 669.751.94
44,308.00
3.993.00 25.237.00

$ 8.124,636.28 $ 7,456,345,81

$

43,325.66 $

41.866.37

897,826.22

657,9n.72

299,252.78

245.758.40

715,884.95

752,625.66

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30 1996

EXHIBIT'C'

EXPENDITURES
OPERATING EXPENSES
REGULAR OPERATING EXPENSES Rents (Other than Real Estate) Insurance and Bonding Other Operating Expenses (See Schedule) Extraordinary Expenditures (See Schedule) Duplicating and Rapid Copy Publications and Printing
TRAVEL
MOTOR VEHICLE PURCHASES
EQUIPMENT Equipment Purchases Lease/Purchase of Equipment Rental of Equipment
COMPUTER CHARGES Software Equipment Equipment Purchases Per Diem. Fees and Contracts Per Diem and Fees Contracts Computer Billings, DOAS
REAL ESTATE RENTALS
TELECOMMUNICATIONS
PER DIEM, FEES AND CONTRACTS Per Diem and Fees Contracts
Total Operating Expenses
CAPITAL OUTLAY
Other Costs Other Operating Expenses Travel
Per Diem, Fees and Contracts Per Diem and Fees Contracts
Total Capital Outlay
Total Expenditures
Excess of Funds Available over Expenditures

TOTALS YEAR ENDED JUNE 30, 1996 JUNE 30,1995

$ 5,646,5n.73 $ 50,777.98
3,644,689.34 140,000.00 16,333.77 321,590.95
$_.:..1:1.L,7:.7.6.,:2.5.9.:.3J=8~ $
$ _ _.1.:.:8;..4:.z,.4..:.5;:;1.;..:.5=.0=,. $
$--==5:9:,1:63..8~8 $

2,961,254.24 34,564.44
3,135,842.66 0.00
596.21 263,753.69
8,094,239.39
152,598.96
111,191.47

$ 3,488,855.84 $

284,663.64

1,240,323.96

1.240,323.96

32,558.00

29,097.92

4,761,737.80 $ 1,554,085.52

$

189,455.27 $

307,725.20

28,001.00 0.00
3,020.23

$--=,==5-2,8-,,-2,0-1;:.7;.0.. $ $ _ _.1.6:,0.0:0J.0=0~$

$--=""32,1",9,7"5~.1'7-$

22,482.58
108,886.17
12,155.00 27,400.60
11.71
170,936.06
14,950.00
370,849.37

$ 11,588,901.59 $ 3,573,694.23

2,643,565.84

2,213,436.47

$_...:...:1.l4=:,.2z.3..:2.;,:c4:6..:7....:4;:;3... $ 5,787,130.70

$--31-,8,80=,2=5=6.8~6 $ 16,255,981.47

$

0.00 $

96.75

0.00

1,358.34

84,625.74 27,461,373.89

158,347.13 5,270,364.61

$---'2::7.,5:.4.5.,9.L9:9:.=6=3~ $ 5,430,166.83 $ 67,550,892.77 $ 29,142,494.11

29,613.68 30,376,620.26

$ 67,580,506.45 $ 59,519,114.37

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 30,1996

EXHIBIT "0"

EXPENDITURES Personal Services Operating Expenses Capital Outlay
Excess of Funds Available over Expenditures

$ 37,658,776.00 $ 67,580,506.45 $ 29,921,730.45

$ 8,428,471.00 $ 8,124,636.28 $ 26,953,399.00 31,880,256.86 2,276,906.00 27,545,999.63

303,834.72 -4,926,857.86 -25,269,093.63

$ 37,658,776.00 $ 67,550,892.77 $ -29,892,116.77

$

29,613.68 $ -===2=9::!::,6=1=3.;,;;,6.8...

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

GEORGIA PUBLIC TELECOMMUNICATIONS COM1v1ISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1996

EXHIBIT "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 ofnine (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 ~om 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. These reporting entity relationships are defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.
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 ofIncorporation of The Foundation for Public Broadcasting in Georgia, Incorporated is quoted, in part, as follows:
liThe 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
-7-

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30,1996

EXIllBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COMPONENT UNIT Telecommunications Commission~ however, the Commission has historically excluded the financial activities of the Foundation from its financial statements.
For the year ended June 30, 1996, the Board of Directors of The Foundation for Public Broadcasting in Georgia, Incorporated approved the transfer of $5,532,213.44 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. 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 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 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.
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 of normal 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.
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.
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GEORGIA PUBLIC TELECOM11UNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING MEASUREMENT FOCUS
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Governmental funds should be accounted for using the flow of current financial resources measurement focus. With this measurement focus, operating statements present increases and decreases in net current assets and unreserved fund balance is a measure of available spendable resources.
GOVERNMENTAL FUND TYPE 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 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 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. Expenditures are classified by budget unit object classes as provided in Act No. 476 of Georgia 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. Budgets are prepared to provide a basis for funding operations and there is no legal prohibition regarding overexpenditure of the aggregate budget.
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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 Public Telecommunications 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 1". 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.
ACCOUNTS RECEIVABLE Accounts receivable (Other) arising from operations are reported at gross value and include $6,845,497.40 due from Department of Administrative Services for a distance learning project. Based on management's evaluation that amounts uncollectible are not material, no provision has been made for such amounts.
INVENTORIES Inventories ofsupplies 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 of inventories are recorded as expenditures when the inventories are 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:
PRODUCTION PROJECTS Individuals and corporations donate funds to be used to produce certain programs for public television. These funds are reserved for expenditures in future years for the projects specified by the donation.
STATION TOWER PROJECT Funds received from Piedmont College to be used for construction of a new station tower.
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.'
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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996

EXHIBIT "E"

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 Balance Sheet (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 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 selected sections of the accompanying financial statement,s in order to provide an understanding of the changes in the .Commission's financial position and operations. Comparative totals have not been included on statements where their inclusion would not provide enhanced understanding of the Commission'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 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:
(1) Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia.
(2) Bonds, bills, certificates ofindebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia.
(3) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.
(4) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.

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GEORGIA PUBLIC TELECOMMUNICATIONS COM:MISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1996

EXHIBIT "E"

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 ofa subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

(6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.

As authorized in the Official Code of Georgia Annotated Section 45-8-11, the Commission has 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 agent in the Commission's name.

Cl;ltegory 2 - Amounts collateralized with securities (at market value) held by the pledgin.g 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.

Cash Deposits

Carrying Amount

Bank Balances

Risk Categories

2

3

$ -18331010 $ 71361838 $ 11039746 $====,o~o~o $ 60322092

CATEGORIZAnON 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.

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996

EXHIBIT liE"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS

Type of Investment

Carrying Amount

Market Value

State Investment Pool

$17,783336.79 $17,783,336.79

NOTE 3: INSTALLMENT PURCHASE COMMITMENTS

The Georgia Public Telecommunications Commission acquires equipment through multi-year 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 ofany 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, 1996, future minimum commitments under installment purchases for equipment are as follows:

Fiscal Year Ending June 30

1997 1998 1999 2000 2001 Thereafter

$ 1,254,750.84 1,254,750.84 1,243,930.68 799,897.32 799,897,32 1.599,794.64

Total Future Minimum Commitments

$ 6,953,021.64

Less: Amounts Representing Interest

828,928.66

Present Value of Future Minimum Commitments

$ 6 124,09298

NOTE 4: CHANGES IN GENERAL FIXED ASSETS

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

- 13 -

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996

EXIllBIT "E"

NOTE 4: CHANGES IN GENERAL FIXED ASSETS

Land

Equipment

Total

Balance July 1, 1995

$

0.00 $46,161,578.12 $46,161,578.12

Additions

1.278,948.00

383.422.37 1.662,370.37

Balance June 30, 1996

$ 1.278,948.00 $46,545 000.49 $47,823,948.49

NOTE 5: 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, 1996, follows:

Compensated Absences

Installment Purchase Commitments

Total

Balance July 1, 1995

$ 764,200.03 $ 7,065,565.19 $ 7,829,765.22

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

53,060.07 4,059.09

42,667.20 984,139.41

53,060.07 4,059.09 42,667.20 984,139.41

Balance June 30, 1996

$ 821.319.19 $ 6,12409298 $ 6,945.412.17

NOTE 6: RISK MANAGEMENT

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 of government of the 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 of Georgia. The State Personnel Board, Merit System of Personnel 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.

- 14 -

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1996

EXHIBIT "E"

NOTE 6: 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 Commission 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 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 of a general creditor of the 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: RETffiEMENTPLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description The Commission participates in the Employees' Retirement System of Georgia ("ERS"), a single-employer, defined benefit plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees ofthe State of Georgia. The Commission's payroll for the year ended June 30, 1996, for employees covered by ERS was $5,350,754.86. The Commission's total payroll for all employees was $6,049,551.18.

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GEORGIA PUBLIC TELECOM:MUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEi'v1ENTS JUNE 30.1996

EXHIBIT "E"

NOTE 8: RETIREi'v1ENTPLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
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 of years of creditable 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.
Contributions Required and Contributions Made As established by State statute, all full-time employees of the 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 e)llployee ofl.25% of compensation and 4.75% of compensation paid by the Commission on behalf of the employee. Under the new plan, member contributions consist solely of 1.25% ofcompensation paid by employee. The Commission 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 Commission amounted to 15.10% ofcovered payroll and included the 4.75% contributed on behalf of the 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.
- 16 -

GEORGIA PUBLIC TELECOM1\1UNlCATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1996

EXHIBIT "E"

NOTE 8: RETIREMENTPLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Contributions Required and Contributions Made Total contributions to the plan made during fiscal year 1996 amounted to $875,074.12, ofwhich $808,189.68 was made by the Commission and $66,884.44 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 of the progress made in accumulating sufficient assets to pay benefits when due.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description The Georgia Public Telecommunications Commission participates in the Georgia Defined Contribution Plan ("GDCP") which is a single-employer defined contribution plan established by the Georgia General Assembly for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and parttime and are not members ofa public retirement or pension system. GnCp is administered by the Employees' Retirement System Board of Trustees. The Commission's payroll for the year ended June 30, 1996, for employees covered by Gncp was $207,107.71. The Commission's total payroll for all employees was $6,049,551.18.
Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board. If a member has less than $ 3,500 credit to his/her account, the Board has the option of requiring 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 his/her 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 of employment, the amount of the member's account is refundable upon request by the member.
Total contributions made by employees during fiscal year 1996 amounted to $15,533.51 which represents 7.50% of covered payroll. These contributions met the requirements of the plan.

- 17 -

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996

EXHIBIT "Ell

NOTE 8: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA
Plan Description Georgia Public Telecommunications Commission participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer public employee retirement system (PERS) established by the General Assembly ofGeorgia for the purpose ofproviding retirement allowances and other benefits for teachers of the State ofGeorgia. The Commission's payroll for the year ended June 30, 1996, for employees covered by TRS was $247,264.86. The Commission's total payroll for all employees was $6,049,551.18.
Benefits TRS provides service retirement, disability retirement, and survivor's benefits for its members. A member is eligible for service retirement after the member (1) has attained the age of 60 years and has at least ten years ofcreditable service, (2) has at least 30 years of creditable service, regardless of age, or (3) has attained the age of55 years and has at least 25 years of creditable service. For those members with 30 years of service or those age 60 with at least ten years of service, retirement benefits are equal to 2% of the average of the member's two consecutive highest paid years ofservice multiplied by the number of years of creditable service up to 40 years. Any member who has between 25 and 30 years of creditable service and is at least 55 years ofage shall receive a benefit which is reduced by the lessor of 1/12 of7% for each month the member is below age 60, or by 7% for each year or fraction thereofby which the member has less than 30 years of service. The normal retirement pension is payable monthly for life. Options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death.
Retirement benefits also include death and disability benefits whereby the disabled member or surviving spouse is entitled to receive annually an amount equal to the member's service retirement benefit or disability retirement, whichever is greater. The benefit is based on member's creditable service (minimum of 10 years of service) and compensation up to the date of death or up to the time of disability.
Benefits Members become fully vested after ten years of service. If a member terminates with less than ten years of serVice, no vesting ofemployer contributions occurs, but the member's contributions are refunded with interest.
Contributions Required and Contributions Made Employees ofthe Commission who are covered by TRS are required to pay 5% oftheir gross earnings to TRS. The Institute makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees as advised by their independent actuary. For fiscal year 1996, the employer contribution rate was 11.81% for covered employees. The interest rate assumption (rate ofretum on investments) was 7.50%.
Total contributions to the plan made during fiscal year 1996 amounted to $41,565.04, of which $29,201.98 was made by the Commission and $12,363.06 was made by employees. These contributions represented 11.81% (Commission) and 5% (employees) of covered payroll.

-18 -

GEORGIA PUBLIC TELECOMMUNICATIONS CUMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1996

EXHIBIT "E"

NOTES: RETIREMENTPLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Status and Progress Funding status and progress information is presented in the TRS June 30, 1996, financial report which may be obtained through TRS.

Trend Information Historical trend information is presented in the financial report ofTRS for the year ended June 30, 1996. This information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due.

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.

Employees earn annual leave ranging from ten to fourteen hours each month depending upon the employees' length ofcontinuous 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 offorfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement System of Georgia.

NOTE 10: 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, 1996, was as follows:

Governmental Agency Georgia Department ofEducation

$ 62,000.00

Other Sources

588,042.00

Total

$ 650,042.00

- 19 -

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996

EXHIBIT "E"

NOTE 11: 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, ifany, are generally considered to be actions against the State ofGeorgia. 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, 1996.
NOTE 12: PENDING INVESTIGATION
During audit fieldwork, management of the Georgia Public Telecommunications Commission informed the Department of Audits that an internal investigation had uncovered possible irregularities with travel reimbursements to an employee and that the Georgia Bureau ofInvestigation and the Attorney General's office were conducting an investigation ofthe matter. As of the date of this report, the investigation had not been concluded. The results of this investigation will be reported in the audit report for the year ended June 30, 1997.
NOTE 13: 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 ofWausau, their Bond No. 1450-02110723, on which the premium was paid to October 1, 1996. Under this agreement the Public Employee Dishonesty Coverage insures the Commission to a maximum of$l,OOO,OOO.OO against loss sustained through fraudulent or dishonest acts by its employees. The Faithful Performance of Duty Coverage insures the Commission to a maximum of $1 ,000,000.00 against loss sustained from failure ofits employees to perform faithfully their duties or to account properly for all monies and property received by virtue of their position or employment.
All employees of the Georgia Public Telecommunications Commission 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 Commission 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.

- 20-

SUPPLEMENTARY INFORMAnON - 21 -

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF APPROVED BUDGET YEAR ENDED JUNE 30, 1996

SCHEDULE "1"

FUNDS AVAILABLE REVENUES
Other Revenues Retained

ORIGINAL

AMENDED

BUDGET

APPROPRIATION APPROPRIATION ADJUSTMENTS

TOTAL

$ 23,286,778.00 $

2,500,000.00 $ 11,871,998.00 $ 37,658,776.00

EXPENDITURES
Personal Services Operating Expenses Capital Outlay

$

8,428,471.00

14,858,307.00 $

0.00

2,500,000.00 $

$ 9,595,092.00 2,276,906.00

8,428,471.00 26,953,399.00
2,276,906.00

$ 23,286,778.00 $

2,500,000.00 $ 11,871,998.00 $ 37,658,776.00

See notes to the financial statements.

- 22-

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION CASH AND CASH EQUIVALENTS JUNE 30, 1996

SCHEDULE "2"

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

$ -189,803.73 6,493.63 $ -183,310.10
17,783,336.79

$ 17,600,026.69

See notes to the financial statements.

- 23-

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF FEDERAL REVENUES YEAR ENDED JUNE 30. 1996

PROGRAM
Commerce, U. S. Department of Public Telecommunications Facilities Planning and Construction Direct

CFDA NUMBER
11.550

SCHEDULE "3" AMOUNT
$ 247,946.00

See notes to the financial statements.

-24 -

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF OTHER OPERATING EXPENSES YEAR ENDED JUNE 30. 1996

SCHEDULE "4"

OPERATING EXPENSES
REGULAR OPERATING EXPENSES Advertising Courier Services Freight, Express and Storage Fund-Raising Expenses General Assessment Services and Interconnection Fees Public Broadcasting Services Production Costs Program Rating Service Registration Fees Relocation Expenses Subscriptions and Dues

$

57,595.86

5,842.18

54,698.23

2,167,254.58

376,336.00 177,579.56 41,118.83
51,322.83 7,635.98
705,305.29

$ 3,644,689.34

See notes to the financial statements.

- 25-

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF EXTRAORDINARY EXPENDITURES YEAR ENDED JUNE 30, 1996
OPERATING EXPENSES
Holder Corporation Settlement of Complaint Prior to Judgement
Stack, Richard Settlement of Complaint Prior to Judgement

SCHEDULE "5"
$ 75,000.00 65,000.00
$ 140,000.00

See notes to the financial statements.

- 26-

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION RECONCILIATION OF TRAVEL YEAR ENDED JUNE 30. 1996

SCHEDULE "6"

Total Per Annual Supplement Accruals June 30, 1995 June 30, 1996
Total Per Report

$

184,305.65

-360.30 506.15

$

184,451.50

See notes to the financial statements.

- 27-

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SUMMARY OF SALARIES, TRAVEL. AND PER DIEM AND FEES
YEAR ENDED JUNE 30. 1996

SCHEDULE "7"

BUDGET FUND
Regular Computer Charges Capital Outlay

SALARIES

TRAVEL

PER DIEM AND FEES

$ 6,049,551.18 $

184,451.50 $

11,588,901.59 28,001.00 84,625.74

$ 6,049,551.18 $ 184,451.50 $ 11,701,528.33

See notes to the financial statements.

- 28-

SECTION II FINDINGS AND IMPROPER OR QUESTIONED COSTS

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF FINDINGS AND IMPROPER OR OUESTIONED COSTS
YEAR ENDED JUNE 30, 1996

STATUS OF PRIOR YEAR FINDINGS AND IMPROPER OR OUESTIONED COSTS

The status of findings disclosed in the audit report for the year ended June 30, 1995, is summarized below:

Audit Control Number

Status of Finding

977-95-01 977-95-02

See Audit Control Number 977-96-01 See Audit Control Number 977-96-02

PRIOR YEAR/CURRENT YEAR

GENERAL LEDGER Inadequate Documentation of Manual Journal Entries Financial Statements Audit Control Number 977-96-01

The audit report for the year ended June 30, 1995, reported that the Georgia Public Telecommunications Commission's accounting procedures were not sufficient to provide for adequate control over the manual journal vouchers and related procedures. For the year ended June 30, 1996, deficiencies with the manual journal vouchers and related procedures continued as follows:

1. The manual journal entry packages generally did not contain sufficient explanations or supporting documentation to determine the propriety of each entry.

2. Numerous manual journal entries did not reflect evidence of review or approval by appropriate supervisory personnel.

3. Documentation for certain manual journal entries were missing from the files.

These deficiencies noted above were caused by a lack of internal controls over manual journal voucher preparation, data entry and file maintenance. Appropriate action should be taken by the Commission to ensure that all manual journal vouchers are properly reviewed, approved, documented and filed, and controlled sequentially in order to provide a complete audit trail.

GENERAL LEDGER General Ledger not in Balance with Subsidiary Ledgers Financial Statements Audit Control Number 977-96-02

The audit report for the year ended June 30, 1995, disclosed that the Commission's general ledger did not agree with applicable subsidiary records. For the year ended June 30, 1996, this condition continued to exist. At June 30, 1996, a comparison of the Commission's general ledger to subsidiary records revealed that the "Departmental Trial Balance" (FACS Report No. 2410) did not agree with the subsidiary listings for outstanding receivables (FACS Report No. 2230) and outstanding payables (FACS Report No. 2060). This

- 1-

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30. 1996
PRIOR YEAR/CURRENT YEAR
GENERAL LEDGER General Ledger not in Balance with Subsidiary Ledgers Financial Statements Audit Control Number 977-96-02
condition was caused by the Commission's failure to update subsidiary ledgers for adjustments made to the general ledger by manual journal entries.
The Accounting Procedures and Instructions Manual, as published by the State Auditor, states that general ledger control accounts should be reconciled to the subsidiary ledger accounts at the end of each accounting period. The Commission should implement procedures to ensure that subsidiary records are updated for any adjustments made to the general ledger.
CURRENT YEAR
REVENUEIRECEIVABLESIRECEIPTS Deletion of Accounts Receivable without Complete Documentation Financial Statements Audit Control Number 977-96-03
For the year ended June 30, 1996, the Georgia Public Telecommunications Commission made a determination that prior year accounts receivable in the amount of$32,873.85 had been recorded in error and deleted these receivables from the general ledger. However, documentation provided by the Commission only supported an adjustment ofreceivables in the amount of$23,118.39. Documentation supporting the remaining balance of $9,755.46 was found to be incomplete.
The Georgia Public Telecommunication Commission should establish controls to ensure that future accounts receivable are accurately recorded and fully documented as to source and purpose. Amounts set-up as accounts receivable in error should be corrected only after adequate research and documentation. Write-off of receivables should be made only as authorized by Official Code of Georgia Annotated Section 50-16-18.
GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation ofProperty Management System Financial Statements Audit Control Number 977-96-04
For the year under review, our examination included a review of the internal accounting controls utilized by the Georgia Public Telecommunications Commission in maintaining their State Property System. This review also consisted oftesting the System for compliance with State laws and regulations. The following conditions relating to inappropriate accounting practices were found to exist:
- 2-

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996
CURRENT YEAR
GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Financial Statements Audit Control Number 977-96-04
(1) Equipment inventory records were not updated for additions in a timely manner, The fiscal year end reconciliation prepared by the Commission revealed a reconciling item of$3,194,243.87 for fiscal year 1996 additions that had not been entered onto the equipment inventory records at June 30, 1996.
(2) Equipment inventory records for additions were updated incorrectly. A random sample of twentyone (21) current year additions revealed eight (8) equipment items that had been updated onto the equipment inventory records incorrectly by the amount of $56,084.00. These 8 items had an acquisition cost of$II,728.00, but were entered as $67,812.00.
A subsequent review of the Commission's fiscal year end reconciliation revealed an additional reconciling item of$127,689.50 for errors in updating fiscal year 1996 additions. (The $56,084.00 noted above is included in the $127,689.50 reconciling item.)
(3) Equipment inventory records were not updated for all additions. During testing for current year additions, auditors discovered two (2) current year equipment purchases totaling $3,589.00 that had not been entered onto the equipment inventory records at June 30, 1996.
In addition, a random sample of forty-six (46) equipment items was selected to test the accuracy of the Commission's general fixed asset records. This random sample contained a value of$2,617,995.59 and was selected for the purpose of locating the equipment as recorded in the inventory records. The following deficiencies were noted:
(1) Three (3) items totaling $311,398.00 could not be located. Two of these items totaling $310,000.00 were surplused, but were not removed from the equipment inventory records.
(2) Three (3) items did not have decal numbers attached. Items were identified by serial numbers.
(3) Two (2) items were located in locations other th~ the location indicated in the equipment inventory records.
(4) One (1) item was listed on the equipment inventory records with an incorrect decal number.
The Commission is required to maintain equipment inventories in accordance with provisions of the State Property System Manual. The discrepancies identified above were caused by the Commission's failure to follow guidelines for maintaining equipment inventories.
- 3-

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30. 1996 CURRENT YEAR GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Financial Statements Audit Control Number 977-96-04 As a result of the discrepancies identified above, we were unable to determine the validity of the total equipment inventory valuation contained in the inventory records, which comprises the General Fixed Assets Account Group. The Commission should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with provisions of the State Property Manual.
- 4-