Audit report, state of Georgia, Georgia Public Telecommunications Commission, a component unit of the state of Georgia, year ended June 30, 1997

AUDIT REPORT STATE OF GEORGIA GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION A COMPONENT UNIT OF THE STATE OF GEORGIA YEAR ENDED JUNE 30, 1997
----------------- -----------
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET ATLANTA, GEORGIA 30334-8400

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

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

EXIDBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET (STATUTORY BASIS)

ALL FUND TYPES AND ACCOUNT GROUPS

2

B COMBINED 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

CONWAREDTOBUDGET

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 RECONCILIATION OF SALARIES AND TRAVEL

26

6 RECONCILIATION OF PER DIEM AND FEES

27

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

28

SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION - TABLE OF CONTENTS -
SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
November 17, 1997

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 INFORMAnON
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, 1997. 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 of the 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.
97ARL-3

As more fully discussed in Section ill, Current Year Findings and Questioned Costs, material discrepancies were noted in the equipment inventory records of the Commission. Equipment inventory is included in the General Fixed Assets Account Group. We were unable to determine the effect these discrepancies may have on the financial statements.
In our opinion, except for the effects on the financial statements ofthe Commission described in the preceding paragraphs, the financial statements referred to above present fairly, in all material respects, the financial position (statutory basis) of the Georgia Public Telecommunications Commission as of June 30, 1997, 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 ofthe 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.
Respectfully submitted,

CLV:dt 97ARL-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. 1997

EXHIBIT "A"

ASSETS
Cash and Cash Equivalents (See Schedule)
Accounts Receivable Other
Prepaid Items
Inventories
Fixed Assets Land, Buildings 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. 1997 JUNE 30, 1996

$

668,895.24

$

668,895.24 $ 17,600,026.69

$

2,829,191.50

$

184,738.80

$

184,255.84

$ 2,829,191.50 $ 7,965,314.48

$

184,738.80 $

806.00

$

184,255.84 $

168,344.08

$ 73,906,596.83

$ 73,906,596.83 $ 47,823,948.49

$

969,318.87 $

5,100,311.68

$ 6,069,630.55 $

969,318.87 $ 5,100,311.68
6,069,630.55 $

821,319.19 6.124,092.98
6,945,412.17

Total Assets

$

3,827,081.18 $ 73,906,596.83 $ 6,069,630.55 $ 83,803,308.56 $ 80,503,851.91

LIABILITIES AND FUND EqUITY

Liabilities Accounts Payable Deferred Revenue Payroll Withholdings Compensated Absences Installment Purchases

$

4,841,820.62

635,000.00

36,316.81

$

$

969,318.87

5,100,311.68

4,841,820.62 $ 635,000.00 36,316.81 969,318.87
5,100,311.68

25,847,133.76 500.00 479.00
821,319.19 6,124,092.98

Total Liabilities

$

5,313,137.43

$ 6,069,630.55 $ 11,382,767.98 $ 32,593,524.93

Fund Equity

Investment in General Fixed Assets

$ 73,906,596.83

Fund Balances

Reserved

Production Projects

$

0.00

Station Tower Project

0.00

Unreserved

Undesignated

Deficit to be Funded in Subsequent Year

-1,486,056.25

$ 73,906,596.83 $ 47,823,948.49

0.00

84,058.00

0.00

13,000.00

-1A86,056.25

-10,679.51

Total Fund Equity

$

-1 ,486,056.25 $ 73,906,596.83

$ 72,420,540.58 $ 47,910,326.98

Total Liabilities and Fund Equity

$

3,827,081.18 $ 73.906,596.83 $ 6,069,630.55 $ 83,803,308.56 $ 80,503,851.91

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

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION COMBINED STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS)
GOVERNMENTAL FUND TYPE YEAR ENDED JUNE 30, 1997

EXHIBIT "B"

FUND BALANCE - JULY 1
Reserved Unreserved
Undesignated

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

$

97,058.00 $ 29,991,441,00

-10,679.51

-214,979.26

$

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 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30,1997

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 Labor, Georgia Department of Regents of the University System of Georgia, Board of Grants Operating Funds Lottery for Education U, S, Department of Commerce Corporate Sponsorships Insurance Recoveries Interest Earned Royalties Sales and Services
Total Other Revenues Retained
Total Revenues
CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance Georgia Distance Learning and Telemedicine Network Information Technology Policy Grant Headquarters and Production Facility Project Production Projects Station Tower Project Zoo Atlanta Resources Center
Total Carry-Over from Prior Year

TOTALS
VEARENDED JUNE 30,1997 JUNE 30,1996

$

27,000.00 $

247,946,00

$

200,00 $

1,100.00 '

0,00 4,541,277.00

8,437,104,68 2,723,096,00

5,826,876,60 0.00

5,532,213.44 175,853,00

0.00 14,826,489,00
1,500,000,00 110,841,00
1,348,229,69 75,000.00
345,814.39 32,388,14
2,734,121.24

422,820,00 14,227,443,00
0,00
100,850,54 2,653,466,18
0,00
1,653,697,01 27,580.12
1,385,895,48

$ 31,341,237,06 $ 37,341,119,45

$ 31,368,237.06 $ 37,589,065.45

$

0.00 $

375,759,00

0,00

87,375,00

0,00 26,912,351,00

84,058,00

115,956,00

13,000,00

0,00

0,00

2,500,000.00

$

97,058,00 $ 29,991,441.00

Total Funds Available

$ 31,465,295,06 $ 67,580,506.45

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
The notes to the financial statements are an integral part of this statement.
-4-

$ 6,571,246,26 $
440,318,23 974,457,22 781,478.52
25,872.00 10,305.00 34,808,00
$ 8,838,485.23 $

6,049,551,18
410,549,65 877,600.10 730,693,65
26,418,00 4,319,00
25,504,70
8,124,636,28

$

53,989,21 $

43,325,66

943,354,76

897,826,22

470,069,82

299,252,78

753,212,05

715,884,95

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30, 1997

EXHIBIT"C"

EXPENDITURES
OPERATING EXPENSES
REGULAR OPERATING EXPENSES Rents (Other than Real Estate) Insurance and Bonding Other Operating Expenses (See Schedule) Extraordinary Expenditures Duplicating and Rapid Copy Publications and Printing Equipment Purchases
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
Per Diem, Fees and Contracts Per Diem and Fees Contracts
Total Capital Outlay
Total Expenditures
Excess of Funds Available under/over Expenditures

TOTALS
YEAR ENDED JUNE 30,1997 JUNE 30,1996

$ 6,784,405.60 $ 5,646,5n.73

74,276.92

50,m.98

3,951,242.41

3,644,689.34

0.00

140,000.00

3,219.39

16,333.77

353,569.37

321,590.95

36,069.16

0.00

$ 13,423,408,69 $ 11,776,259.38

$ 173,858.77 $

184,451.50

$

30,829.94 $

59,163.88

$ 310,615,62 $ 3,488,855.84

1,240,323.96

1,240,323.96

0.00

32,558.00

$ 1,550,939.58 $ 4,761,737.80

$

26,821.23 $

189,455.27

175,524.46

307,725.20

64,622.70 146,170,72
0.00

28,001,00
0.00 3,020.23

$ 413,139.11 $

528,201.70

$

55,600.00 $

16,000.00

$

351.426.13 $

321,975.17

$ 1,545,657.91 $ 11,588,901.59

4,757,711.55

2,643,565.84

$ 6,303,369.46 $ 14,232.467.43

$ 22,302,571,68 $ 31,880,256.86

$ 1,640,146.83 $

84,625.74

138,614.68 27,461,373.89

$ 1,778,761.51 $ 27,545,999.63

$ 32,919,818.42 $ 67,550,892.77

-1.454,523.36

29,613.68

$ 31.465,295.06 $ 67,580,506.45

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. 1997

EXHIBIT "0"

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

$ 31,811,927.00 $ 31,465,295.06 $ _ _-..:;34..;6:.l.,6:.;3;.;.1,;,;.94.;.

$ 9,515,444.00 $ 8,838,485.23 $

22,296,483.00 22,302,571.68

0.00

1,778,761.51

676,958.77 -6,088.68
-1,778,761.51

$ 31,811,927.00 $ 32,919,818.42 $ -1,107,891.42

$ -1,454,523.36 $ -1,454,523.36

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

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 3D. 1997

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The Georgia Public Teleconum.:nications Commission is an instrumentality of the State of Georgia and a public corporation. The Commission consists of nine (9) members, six (6) of whom 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 fmancial reporting purposes because of the significance of its legal, operational and financial relationships with the State of Georgia. These reporting entity relationships are defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.
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 fmancial 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 of the 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 ofthis Corporation are to acquire and administer funds and property, which after payment ofnecessary 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 ofthe 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
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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT"E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COMPONENT UNIT 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.
For the year ended June 30, 1997, the Board of Directors of The Foundation for Public Broadcasting in Georgia, Incorporated approved the transfer of $5,826,876.60 to the Georgia Public Telecommunications Commission as shown on Exhibit "C" ofthis 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 ofthe 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 intendedpurpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds are maintained consistent with legal and managerial requirements. Account groups are a reporting device used to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. 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 1996-1997. 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 ifhistorical 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 costs of normal maintenance and repairs that do not add to the value of assets 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 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 TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

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 ofcurrent financial resources measurement focus. With this measurement focus, operating statements present increases and decreases in net current assets and unreserved fund balance is a measure of available spendable resources.
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 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 of the 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 of the 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. 1037 of Georgia Laws 1996 (as approved April 25, 1996) and amended by Act No. 11 of Georgia Laws 1997 (as approved March 11, 1997). This budget is considered to be an appropriated budget and is referred to in these notes as the Amended Appropriations Act of 1996-1997. 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 30,1997

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 ofOTFS 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. 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.
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 and compensatory leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion ofthis 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" because they do not represent consolidated financial information and are presented only to facilitate fmancial 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.

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GEORGIA PUBLIC TELECOMMUNICAnONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT"E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

COMPARATIVE DATA Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding 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 fmancial position and operations or would cause the statements to be unduly complex and difficult to understand. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year's presentation.

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds ofthe State of Georgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral anyone or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:

(1) Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia.

(2) Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia.

(3) Bonds of any public authority created by the laws 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, or debt obligations issued by the Federal Land Bank, the Federal Home

Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm

Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage

Association.

.

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

As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies ofthe State of Georgia the option of exempting demand deposits from the collateral requirements.

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1997

EXHIBIT"E"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

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, 1997, 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 pledging financial institution's trust department or agent in the Commission's name.

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

Cash Deposits

Carrying Amount

Bank Balances

Risk Categories

2

3

$ 592 840 73 $ 67038590 $ 101.135.55 $'=====lO~.O~O $ 56925035

CATEGORIZATION OF INVESTMENTS Investments are stated at cost. The carrying amount of the investment balance as of June 30, 1997, shown below is maintained in an investment pool by the Office of Treasury and Fiscal Services and is not subject to risk categorization.

Type of Investment

Carrying Amount

Market Value

State Investment Pool

$ 76.054.51 $ 76,054.51

NOTE 3: INSTALLMENT PURCHASE COMMITMENTS

The Georgia Public Telecommunications Commission acquires certain equipment through multi-year installment purchases with varying terms and options. The majority of these agreements contain fiscal funding clauses in accordance with o.e.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. However, if renewal of such agreements is reasonably assured, installment purchases requiring appropriation by the General Assembly of Georgia are considered noncancellable for financial reporting purposes.

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT "E"

NOTE 3: INSTALLMENT PURCHASE COMMITMENTS

At June 30, 1997, future minimwn commitments under installment purchases for equipment are as follows:

Fiscal Year Ending June 30

1998 1999 2000 2001 2002 Thereafter

$ 1,254,750.84 1,243,930.68 799,897.32 799,897.32 799,897.32 799,897.32

Total Future Minimwn Commitments

$ 5,698,270.80

Less: Amounts Representing Interest

597,959.12

Present Value of Future Minimwn Commitments

$ 5.100.311.68

NOTE 4: CHANGES IN GENERAL FIXED ASSETS

In accordance with the statutory definition of moveable personal property as defined in Official Code of Georgia Annotated Section 50-16-161, only those items with an acquisition cost of $1 ,000.00 or greater are reflected in the General Fixed Assets Account Group.

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

Balance July 1, 1996 Additions Deductions Balance June 30, 1997

Land

Buildings

Equipment

Total

$ 1,278,948.00 $

0.00 $ 46,545,000.49 $ 47,823,948.49

25,645,146.00 2,275,307.06 27,920,453.06

1,837,804.72 1,837,804.72

$ 1,278.948.00 $ 25,645.146.00 $ 46.982.502.83 $ 73.906.596.83

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT"E"

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, 1997, follows:

Compensated Absences

Installment Purchase Commitments

Total

Balance July 1, 1996

$ 821,319.19 $ 6,124,092.98 $ 6,945,412.17

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

137,482.42 10,517.26

1,023,781.30

137,482.42 10,517.26
1,023,781.30

BalanceJune 30, 1997

$ 969.318.87 $ 5.100.311.68 $ 6.069.630.55

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 ofthe State of Georgia, units of county government and local education agencies located within the State of Georgia. This plan is funded by participants covered in the plan, by employers' contributions paid by the various units of government participating in the plan, and appropriations made by the General Assembly 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.

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.

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1997

EXHIBIT"E"

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. 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 tennination, 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 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, 1997.
A change in the Internal Revenue Code Section 457, effective August 20, 1996, requires that by January 1, 1999 all existing eligible deferred compensation plans must be held in trust for the exclusive benefit of participants and their beneficiaries. The State of Georgia's plan will be converted effective July 1, 1998.
NOTE 8: RETIREMENTPLANS
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 of the State of Georgia.
The benefit structure of ERS is defined by State statute and 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 wid 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 of the member's highest eight consecutive calendar quarters of salary, the number ofyears of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT"E"

NOTE 8: RETIREMENTPLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description 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.
The ERS issues a financial report each fiscal year which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees ofthe State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The Commission's payroll for the year ended June 30, 1997, for employees covered by ERS was $5,756,127.50. The Commission's total payroll for all employees was $6,571,246.26.
Under the old plan, member contributions consist of 4% of annual compensation up to $4,200.00 and 6% of annual compensation in excess of $4,200.00. Of these member contributions, the employee pays the first 1.25% and the employer pays the remainder on behalf of the employee. Under the new plan, member contributions consist solely of 1.25% of annual compensation 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, 1997, the ERS employer contribution rate for the Commission amounted to 15.33% of covered payroll and included the amounts contributed on behalf of the employee under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.
Total contributions to the plan made during fiscal year 1997 amounted to $954,298.41, of which $882,347.73 was made by the Commission and $71,950.68 was made by employees. These contributions met the requirements ofthe plan.
Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 1997, financial report which may be obtained through ERS.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description The Georgia Public Telecommunications Commission participates in the Georgia Defmed Contribution Plan ("GDCP") which is a single-employer defmed contribution plan established by the Georgia General Assembly for the purpose ofproviding retirement coverage for State employees who are temporary, seasonal, and parttime and are not members of a public retirement or pension system. GDCP is administered by the Employees' Retirement System Board of Trustees.
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GEORGIA PUBLIC TELECOMMUNICAnONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT"E"

NOTE 8: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
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. Ifa member has less than $ 3,500 credit to his/her account, the Board has the option ofrequiring a lump sum distribution to the member in .lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.
The Employees' Retirement System of Georgia (ERS) issues a financial report each fiscal year which may be obtained through ERS.
Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board. Upon termination ofemployment, the amount ofthe member's account is refundable upon request by the member. The Commission's payroll for the year ended June 30, 1997, for employees covered by GDCP was $335,374.12. The Commission's total payroll for all employees was $6,571,246.26.
Total contributions made by employees during fiscal year 1997 amounted to $25,153.20 which represents 7.50% of covered payroll. These contributions met the requirements ofthe plan.
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 of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia.
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 of creditable service, or (2) 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, normal retirement benefits are equal to 2% ofthe average of the member's two consecutive highest paid years of service multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of 1/12 of 7% for each month the member is below age 60, or by 7% for each year or fraction thereof by which the member has less than 30 years of service. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death.
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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 3D. 1997

EXHIBIT "E"

NOTE 8: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA
Plan Description 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 time ofdisability.
Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting of employer contributions occurs, but the member's contributions are refunded with interest.
Funding Policy Employees of the Commission who are covered by TRS are required to pay 5% of their gross earnings to TRS. The Commission makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees as advised by their independent actuary. For fiscal year 1997, the employer contribution rate was 11.81% for covered employees. The interest rate assumption (rate ofreturn on investments) was 7.50%. The Commission's payroll for the year ended June 30, 1997, for employees covered by TRS was $301,562.77. The Commission's total payroll for all employees was $6,571,246.26.
Total contributions to the plan made during fiscal year 1997 amounted to $50,692.66, of which $35,614.54 was made by the Commission and $15,078.12 was made by employees. These contributions represented 11.81% (Commission) and 5% (employees) of covered payroll.
Total contributions from all employers to TRS for the year ended June 30, 1997, were $652,928,555.00. The Commission's contribution for the year ended June 30, 1997, of$35,614.54 was actuarially determined and represented .000054% of total contributions made by all participating employers.
Actuarial and Trend Information Actuarial and historical trend information is presented in the TRS June 30, 1997, fmancial report which can be obtained through TRS.
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 of continuous State service with a maximum accumulation offorty five days. Employees are paid for unused accumulated annual leave upon retirement or termination ofemployment. See Note 1 - Compensated Absences.
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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION NOTES TO TIlE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT"E"

NOTE 9: LEAVE POLICIES

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: DEFICIT FUND BALANCE

At June 30,1997, the Budget Fund ofthe Georgia Public Telecommunications Commission had a deficit fund balance of $1,486,056.25. This deficit will be funded in subsequent years through increased fund-raising efforts.

NOTE 11: DONATED SUPPORT

Donated support to the Georgia Public Telecommunications Commission during fiscal year 1997 which was not reflected on the financial statements of the Commission was as follows:

Governmental Agency Georgia Department ofEducation
Other Sources Total
NOTE 12: CONTINGENCIES

$ 62,294.00 573,864.00
$ 636.158.00

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 tenns. The amount ofexpenditures 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. 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, 1997.

NOTE 13: STATUS OF INVESTIGATION

For the fiscal year ending June 30, 1996, management of the Georgia Public Telecommunications Commission infonned the Department of Audits that an internal investigation had uncovered possible financial irregularities ofan employee and that the Georgia Bureau ofInvestigation and the Attorney General's office were conducting an investigation ofthe matter. The investigation has been concluded. However, legal proceedings have not been concluded as of the date of this report. The results ofthis matter, if available, will be reported in the audit report for the year ended June 30, 1998.

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THIS PAGE LEFT BLAHK

SUPPLEMENTARY INFORMATION - 21 -

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF APPROVED BUDGET YEAR ENDED JUNE 30, 1997

SCHEDULE "1"

FUNDS AVAILABLE REVENUES
Other Revenues Retained

ORIGINAL

AMENDED

BUDGET

APPROPRIATION APPROPRIATION ADJUSTMENTS

TOTAL

$ 23,713,135,00 $

496,912.00 $ 7,601,880,00 $ 31,811,927,00

EXPENDITURES
Personal Services Operating Expenses

$ 9,387,861.00 $ 14,325,274,00

-3,088.00 $ 500,000,00

130,671.00 $ 9,515,444.00

7,471,209,00

22,296,483.00

$ 23,713,135.00 $

496,912.00 $ 7,601,880.00 $ 31,811,927.00

See notes to the financial statements.

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION CASH AND CASH EQUIVALENTS JUNE 30,1997

SCHEDULE "2"

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

$ 592,616.14 224.59 $ 592,840.73
76,054.51 $ 668,895.24

See notes to the financial statements.

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF FEDERAL REVENUES YEAR ENDED JUNE 30,1997

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

CFDA NUMBER
11.550

SCHEDULE "3" AMOUNT
$ 27,000.00

See notes to the financial statements.

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF OTHER OPERATING EXPENSES YEAR ENDED JUNE 30.1997

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

$

43,529.47

7,320.70

104,031.40

2,393,781.88

95,738.50 216,771.17
50,184.46 224,704.11
4,415.45 810,765.27

$ 3,951,242.41

See notes to the financial statements.

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDED JUNE 30. 1997

SCHEDULE "5"

Totals per Annual Supplement

Accruals June 30, 1996 June 30, 1997

Adjustments Anderson-Picallo, Burson, Cook, Hall, LeBlanc, Phelps, Shaul, Smith, Whitfield,

Kellie L.
John William Alan Shelbourn Nancy Geneva Camille MarieA. Dana Elizabeth J. Woot Clara

Totals per Report

SALARIES $ 6,569,579.51 $

TRAVEL 175,307.50

-506.15 720.38

1,666.75

186.53 -23.96 -955.89 144.00 226.00 -880.0.0 -322.50 -37.14

$ 6,571,246.26 $===1=73=,8=:5:=8=.7=7

See notes to the financial statements.

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION RECONCILIATION OF PER DIEM AND FEES YEAR ENDED JUNE 30. 1997

SCHEDULE "6"

Totals per Annual Supplement
Adjustments Beers Construction Company Key Services, Incorporated Randstad Staffing Services Simplex Time Recorder

TYPE PAYMENT

FEE AMOUNT

EXPENSE AMOUNT

TOTAL

$ 2,872,565.47 $

82,039.21 $ 2,954,604.68

Consultant Consultant Temporary Services Consultant

-1,514,838.60 -161,501.38 48,158.76 1,924,003.98

-1,514,838.60 -161,501.38 48,158.76 1,924,003.98

Totals per Report

$ 3,168,388.23 $

82,039.21 $ 3,250,427.44

See notes to the financial statements.

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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SUMMARY OF SALARIES. TRAVEL. AND PER DIEM AND FEES
YEAR ENDED JUNE 30. 1997

SCHEDULE '7"

BUDGET FUND
Regular Computer Charges Capital Outlay

SALARIES

TRAVEL

PER DIEM AND FEES

$ 6,571,246.26 $

173,858.n $

1,545.657.91 64.622.70
1,640,146.83

$ 6,571,246.26 $ 173,858.n $ 3,250,427.44

See notes to the financial statements.

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SECTIONll AUDlTEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1997

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

977-96-01 977-"96-02 977-96-03 977-96-04

Previously Reported Corrective ActionImplemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number 977-96-04

Based on the fmdings for the FY96 audit of General Fixed AssetslProperty Management the following controls were implemented:

With the exception ofthree items under SCOA 643-016 and one item under SCOA 643-019, all items purchased in FY97 were entered into the PROPS system. Most corrections for equipment purchased in FY96 and loaded in FY97 are complete.

The FY96 equipment purchases are not completely loaded. A review ofthe reconciliation reveals that several items were incorrectly entered or not entered at all. The outstanding FY96 issues will be resolved with the completion of the physical inventory. A complete inventory of all equipment in GPB's field offices has been completed. However, the relocation of GPB headquarter offices have delayed the completion of the physical inventory. The outstanding FY96 issues, the physical inventory and the close out of the Stewart Avenue facility are expected to be completed by December 31, 1997.

The Commission has established records for all items removed from inventory. This process will be ongomg.

SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 1997
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Pruperty Management System Finding Control Number: FS-977-97-01
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:
(1) Reconciling items noted on the prior year reconciliation of equipment inventory prepared by the Commission were not corrected on the current year inventory records.
(2) Equipment additions were not reconciled to the general ledger expenditure accounts.
(3) Equipment inventory records for additions were updated incorrectly. Testing of current year additions revealed four (4) additions that had been updated onto the equipment inventory records incorrectly by the amount of $57,236.60 (net).
The Commission is required to maintain equipment inventories in accordance with provisions of the State Property Management System Manual. The discrepancies identified above were caused by the Commission's failure to follow guidelines for maintaining equipment inventories.
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 comprise 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 Management System Manual.
EXPENDITURESILIABILITIESIDISBURSEMENTS Inadequate Monitoring of Contract Finding Control Number: FS-977-97-02
The Georgia Public Telecommunications Commission has entered into a contractual agreement with the Atlanta-Fulton County Zoo, Incorporated (Zoo Atlanta) with the intent of providing Lottery for Education funds to equip the "Zoo Atlanta Educational Resource Center" construction project with interactive equipment and technology. As the contractor agency, the Commission has certain responsibilities which include, but are not limited to, ensuring that contract funds are expended according to the stipulations in the contract agreement and that Lottery for Education funds are expended in accordance with Official Code of Georgia Annotated (OCGA) Sections 50-27-13 and 20-1-8. Based on our review ofthe Commission's control procedures for monitoring this contract, the Commission failed to ensure compliance with contract provisions and State law as stated below:
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GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1997
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EXPENDITURESILIABILITIESIDISBURSEMENTS Inadequate Monitoring of Contract Finding Control Number: FS-977-97-02
(l) Contract provisions stipulated that funds were to be paid to Zoo Atlanta based on reimbursement requests for actual expenditures and that the Commission would review the reimbursement requests to ensure compliance with OCGA 50-27-13. Zoo Atlanta billed the Commission $2,755,944.00 by invoice dated June 28, 1996. This was the same date Zoo Atlanta signed a contract to have the work performed. The Commission paid $2,643,565.84 to Zoo Atlanta by check dated September 10, 1996.
The Commission could not provide documentation that the reimbursement request was for actual expenditures or that a review was performed by the Commission to ensure that the expenditures were in compliance with State law.
(2) Contract provisions and OCGA 20-1-8 provide that Lottery for Education funds appropriated to the Commission in fiscal year 1995 be expended by June 30, 1997, and that unexpended funds as of this date lapse as lottery surplus to the State treasury.
The Commission could not provide adequate documentation that all funds paid to Zoo Atlanta had been expended by Zoo Atlanta by June 30, 1997.
(3) Contract provisions provide that equipment purchased be maintained on the Commission's inventory records and reflected as assigned to Zoo Atlanta. In addition, Zoo Atlanta is to certify the status and condition of the equipment to the Commission annually on July 15.
The Commission could not provide an inventory listing of equipment purchased by Zoo Atlanta or the required certification for July 15, 1997.
In order to meet the responsibilities outlined in the contract, the Commission should develop and implement policies and procedures to ensure that expenditures are in accordance with State law and that all terms of the contract are met and documented. In addition, the Commission should determine if Zoo Atlanta had properly expended funds as of June 30, 1997, and as a result, whether surplus should be remitted to the State treasury.
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