Review report, state of Georgia, State Department of Veterans Service, year ended June 30, 1994

GA A800
-RI \fJf--5 \993-9Lf-
STATE OF GEORGIA DEPARTMENT OF AUDITS
254 WASHINGTON STREET ATLANTA. GEORGIA 30334

REVIEW REPORT STATE OF GEORGIA STATE DEPARTMENT OF VETERANS SERVICE YEAR ENDED JUNE 30, 1994

STATE DEPARTMENT OF VETERANS SERVICE - TABLE OF CONTENTS -

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

EXHIBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET (STATUTORY BASIS)

ALL FUND TYPES AND ACCOUNT GROUPS

2

B STATEMENT OF CHANGES IN FUND BALANCE

(STATUTORY BASIS)

GOVERNMENTAL FUND TYPE

3

C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

BUDGET FUND

4

D STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

COMPARED TO BUDGET

BUDGETFUND

6

E NOTES TO THE FINANCIAL STATEMENTS

7

SUPPLEMENTARY INFORMATION

SCHEDULES

1 SCHEDULE OF APPROVED BUDGET

16

2 CASH AND CASH EQUIVALENTS

17

3 SCHEDULE OF GOVERNOR'S EMERGENCY FUND

18

4 SCHEDULE OF FEDERAL REVENUES

19

5 SCHEDULE OF OTHER OPERATING EXPENSES

20

CLAUDE L. VICKERS STATE AUDITOR (404) 656-2174
TAX RATIO (404) 656-0494

~epartmeut of J\uhits
254 WASHINGTON STREET, S. W. ROOM 214
J\tlanht, eoria 30334-8400
August 16, 1994

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

Honorable Zell Miller, Governor Members of the General Assembly of Georgia Members of the Veterans Service Board
and Honorable Pete Wheeler, Commissioner State Department of Veterans Service
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have reviewed the accompanying financial statements (Exhibits A through E) of the State Department of Veterans Service as of and for the year ended June 30, 1994, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. As described in Note 1, these financial statements were prepared on a prescribed basis of accounting that demonstrates compliance with the budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. All information included in these financial statements is the representation of the management of the State Department of Veterans Service.
A review consists principally of inquiries of agency personnel and analytical procedures applied to financial
data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the basis of accounting described in Note 1.
Our review was made for the purpose of expressing limited assurance that there were no material modifications that should be made to the financial statements in order for them to be in conformity with the basis of accounting described in Note 1. The accompanying supplementary information (Schedules 1 through 5) is presented only for supplementary analysis purposes. Such information has been subjected to the inquiries and

94ARL-4

analytical procedures applied in the review of the financial statements and we are not aware of any material modifications that should be made thereto.

Respectfully submitted,

~,

7

(_.,/'~-Z,.,.~- =< V

Claude L. Vickers State Auditor

CLV:cm 94ARL-4

FINANCIAL STATEMENTS - 1-

STATE DEPARTMENT OF VETERANS SERVICE COMBINED BALANCE SHEET (STATUTORY BASIS)
ALL FUND TYPES AND ACCOUNT GROUPS
JUNE 30, 1994

EXHIBIT "A"

ASSETS
Accounts Receivable State Appropriation Federal Financial Assistance Other
Fixed Assets Equipment
Amount to be Provided for Payment of Accrued Compensated Absences

GOVERNMENTAL FUND TYPE
BUDGET

ACCOUNT GROUPS

GENERAL FIXED ASSETS

GENERAL LONG-TERM
DEBT

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

$ 390,656.77 l,515,423.B4 1.50
$ 1,906,082.11

$ 390,656.77 $ 347,146.93

1,515,423.84 1,247,255.29

1.50

0.00

$1,906,082.11 $1,594,402.22

$ 854,830.37

$ 854,830.37 $ 797,166.81

$ 410,021.84 $ 410,021.84 $ 374,611.76

Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Cash Overdraft (See Schedule) Accounts Payable Contracts Payable Compensated Absences
Total Liabilities
Fund Equity Investment in General Fixed Assets Fund Balances Reserved Federal Financial Assistance Unreserved Designated Surplus
Total Fund Equity

$1,906,082.11 $ 854,830.37 $ 410,021.84$ 3,170,934.32 $ 2,766,180.79
============= ============= ============= ============= =============

$ 98,565.89 37,855.54
1,640,394.20
$ 1,776,815.63

$ 98,565.89 $ 145,845.55

37,855.54

56,659.12

1,640,394.20 1,308,144.28

$ 410,021.84 410,021.84 374,611.76

$ 410,021.84 $ 2,186,837.47 $1,885,260.71

$ 854,830.37 $ 54,586.45
74,680.03 $ 129,266.48$ 854,830.37

$ 854,830.37 $ 797,166.81

54,586.45

0.00

74,680.03

83,753.27

$ 984,096.85$ 880,920.08

Total Liabilities and Fund Equity $1,906,082.11 $ 854,830.37 $ 410,021.84 $ 3,170,934.32 $ 2,766,180.79
-=======----- ------=-===== =======------ ============= =============
See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement.
- 2-

STATE DEPARTMENT OF VETERANS SERVICE STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS)
GOVERNMENTAL FUND TYPE YEAR ENDED JUNE 30, 1994

EXHIBIT "8"

FUND BALANCE - JULY 1
Unreserved Designated Surplus
ADDITIONS
Adjustments to Prior Year's Accounts Payable Excess of Funds Available over Expenditures
Exhibit "C"
DEDUCTIONS
Unreserved Fund Balance (Surplus) Returned to Office of Treasury and Fiscal Services Year Ended June 30, 1992 Year Ended June 30, 1993
FUND BALANCE - JUNE 30
(To Exhibit "A")

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

$ 83,753.27 $ 47,617.70

$

329.74 $ 1,646.64

128,936.74

82,106.63

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

$ 129,266.48 $ 83,753.27
------------- -------------

$

0.00 $ 47,617.70

83,753.27

0.00

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

$ 83,753.27 $ 47,617.70
------------- -------------

$ 129,266.48 $ 83,753.27

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement.
- 3-

STATE DEPARTMENT DF VETERANS SERVICE
STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND
YEAR ENDED JUNE 30, 1994

EXHIBIT "C" Page 1

FUNDS AVAILABLE

TOTALS YEAR ENDED JUNE 30, 1994 JUNE 30, 1993

REVENUES

STATE APPROPRIATION General Appropriation Amended Appropriation Governor's Emergency Fund (See Schedule)

$22,666,171.00 $21,275,542.00

-150,000.00 -429,659.00

17,000.00

0.00

Total State Appropriation FEDERAL REVENUES (See Schedule) OTHER REVENUES RETAINED
Donations

$22,533,171.00 $20,845,883.00 6,083,113.69 5,322,370.48

15,000.00

0.00

Total Funds Available

$28,631,284.69 $26,168,253.48
==-========== =============

EXPENDITURES

PERSONAL SERVICES

Salaries and Wages Employer's Contributions for:
F. I. C. A. Retirement Health Insurance Personal Liability Insurance Unemployment Compensation Insurance Worker's Compensation Insurance Assessments by Merit System

$ 3,229,677.63 $ 3,100,499.38

231,851.83 509,990.57 399,456.62
15,360.00 1,425.00
78,631.00 18,399.39

222,342.70 493,573.18 383,981.29
10,292.00 2,377.00
34,467.00 18,337.45

$ 4,484,792.04 $ 4,265,870.00

REGULAR OPERATING EXPENSES

Motor Vehicle Expenses Supplies and Materials Repairs and Maintenance Utilities Rents (Other than Real Estate) Insurance and Bonding Grants to Counties, Cities and Civil Divisions Other Operating Expenses (See Schedule) Duplicating and Rapid Copy Publications and Printing
TRAVEL EQUIPMENT

$

695.88 $

516.94

58,600.67

61,067.22

10,325.90

10,243.79

13,415.62

10,479.22

1,205.75

1,718.75

2,497.80

2,414.43

17,000.00

0.00

9,247.11

8,911.23

2,567.74

4,357.15

-----1-5-,1--1-9-.3--1 -----1-7-,-4-9-3-.4--7

$----1-3-0-,-6-7-5-.-7-8 $----1-1-7-,-2-0-2-.-2-0

$-----7-2-,0--5-2-.4-3- $-----7-7-,9--1-2-.7--6

Equipment Purchases Rental of Equipment

$ 74,923.32 $ 79,014.28
-----1-0-,-2-2-4-.0--4 ------7-,5--4-7-.0--9 $-----8-5-,1--4-7-.3--6 $-----8-6-,5--6-1-.3--7

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

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STATE DEPARTMENT OF VETERANS SERVICE
STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND
YEAR ENDED JUNE 30, 1994

EXHIBIT "C" Page 2

EXPENDITURES

TOTALS YEAR ENDED JUNE 30, 1994 JUNE 30, 1993

COMPUTER CHARGES

Other Costs Supplies and Materials Other Operating Expenses (See Schedule)
Software Equipment
Equipment Purchases Computer Billings, DOAS
REAL ESTATE RENTALS TELECOMMUNICATIONS PER DIEM, FEES AND CONTRACTS

$

465.00 $

450.00

295.08

85.07

500.00

738.69

4,612.76

6,007.72

--------9-2-2-.8--7 ------1-,3--6-2-.-1-6

$------6-,7-9--5-.7--1 $------8-,6--4-3-.6--4

$----2-3-0-,-3-5-3-.9--2 $----2-3-0-,-3-5-6-.-0-4

$-----5-7-,1--9-1-.-6-5 $-----5-5-,-0-3-0-.8--9

Per Diem and Fees Contracts OTHER

$ 22,816.95 $ 14,812.80
-----1-5-,0--0-0-.-0-0 ----------0-.0--0 $-----3-7-,8--1-6-.9--5 $-----1-4-,-8-1-2-.-8-0

OPERATING EXPENSE/PAYMENTS TO CENTRAL STATE HOSPITAL
Per Diem, Fees and Contracts Contracts
OPERATING EXPENSE/PAYMENTS TO MEDICAL COLLEGE OF GEORGIA
Per Diem, Fees and Contracts Contracts
REGULAR OPERATING EXPENSES FOR PROJECTS AND INSURANCE
Other Costs Supplies and Materials Repairs and Maintenance Insurance and Bonding
Equipment Equipment Purchases
Per Diem, Fees and Contracts Per Diem and Fees Contracts
Total Other Total Expenditures Excess of Funds Available over Expenditures

$16,218,709.19 $15,110,120.28

$ 6,460,100.00 $ 6,033,934.00

$

248.56 $

629,363.00

8,611.36

0.00 66,523.90 11,484.57

47,890.00

0.00

0.00

7,694.40

-----3-2-,6--0-0-.0--0 ----------0-.-0-0

$----7-1-8-,-7-1-2-.9--2 $-----8-5-,7--0-2-.8--7

$-2-3-,3--9-7-,5--2-2-.1--1

$21,229,757.15
-------------

$28,502,347.95 $26,086,146.85

----1-2-8-,-9-3-6-.-7-4 -----8-2-,1--0-6-.6--3

$28,631,284.69 $26,168,253.48
See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement.
- 5-

STATE DEPARTMENT OF VETERANS SERVICE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
YEAR ENDED JUNE 30, 1994

EXHIBIT "D"

FUNDS AVAILABLE
REVENUES
State Appropriation Federal Revenues Other Revenues Retained

BUDGET

ACTUAL

VARIANCE FAVORABLE
(UNFAVORABLE)

$22,533,171.00 $22,533,171.00 $

6,121,618.00 6,083,113.69

15,000.00

15,000.00

0.00 -38,504.31
0.00

$28,669,789.00 $28,631,284.69 $ -38,504.31

EXPENDITURES
Personal Services Regular Operating Expenses Travel Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts Operating Expense/Payments to
Central State Hospital Operating Expense/Payments to
Medical College of Georgia Regular Operating Expenses for
Projects and Insurance

$ 4,583,344.00 $ 4,484,792.04 $

129,500.00

130,675.78

71,200.00

72,052.43

84,000.00

85,147.36

7,300.00

6,795.71

236,000.00

230,353.92

56,500.00

57,191.65

38,000.00

37,816.95

98,551.96 -1,175.78
-852.43 -1,147.36
504.29 5,646.08
-691.65 183.05

16,284,845.00 16,218,709.19

66,135.81

6,460,100.00 6,460,100.00

0.00

719,000.00

718,712.92

287.08

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

$28,669,789.00 $28,502,347.95$ 167,441.05

Excess of Funds Available over Expenditures

$ 128,936.74 $ 128,936.74

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement.
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STATE DEPARTMENT OF VETERANS SERVICE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The State Department of Veterans Service, an organizational unit of the State of Georgia, is part of the executive branch of the government of the State of Georgia. The Department is empowered to take actions necessary for the interest and protection of Georgia residents who are or have been on active military duty, their families and dependents. The Department accomplishes its duties through the dissemination of information to veterans concerning their rights and benefits under Federal or State laws, assistance in preparation and prosecution of claims, and furnishing counsel to veterans relative to educational training facilities, health, medical and rehabilitation services, employment services and other benefits.
The Veterans Service Board consists of seven (7) members appointed by the Governor and confirmed by the Senate. The duties of the Board include the promulgation of rules and regulations necessary to accomplish its objectives and the appointment ofthe Commissioner ofthe Department. The Commissioner is charged with the duty of administering and enforcing rules and regulations promulgated by the Veterans Service Board. The Commissioner is empowered to determine the manner of execution of the objectives of the Board in accordance with its policies and to employ personnel in accordance with State Merit System requirements.
FUND ACCOUNTING The State Department of Veterans Service uses a fund and account groups to report on its financial position and the results of its operations determined in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group, on the other hand, is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources. The fund and account groups presented in the accompanying financial statements are as follows:
GOVERNMENTAL FUND TYPE
BUDGET FUND - The fund used to account for activities and functions as set forth in the Amended Appropriations Act of 1993-1994. The Budget Fund is similar in nature to a General Fund as identified in generally accepted accounting principles in that the Budget Fund is used to account for all activities except those required to be accounted for in some other fund.
ACCOUNT GROUPS
GENERAL FIXED ASSETS - The account group used to account for fixed assets used in governmental fund type operations. Fixed assets purchased are recorded at historical cost. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on general fixed assets.

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STATE DEPARTMENT OF VETERANS SERVICE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
ACCOUNT GROUPS
GENERAL LONG-TERM DEBT - The account group used to report the noncurrent portions of certain governmental long-term liabilities, such as claims, judgments and compensated absences, which will be paid from future resources.
BASIS OF ACCOUNTING MEASUREMENT FOCUS
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Governmental funds should be accounted for using the current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements ofthese funds present increases (i.e., revenues) and decreases (i.e., expenditures) in net current assets.
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 become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Revenues that are accrued include primarily State appropriations, Federal grants and entitlements, and certain amounts earned under operating agreements with other parties. Further, the modified accrual basis of accounting calls for expenditures, other than accrued interest of general long-term debt, to be recorded when the related fund liability is incurred.
Contractual obligations for services which have not been performed and for goods which have not been delivered at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based in part on the unexecuted portion of contracts for goods and services. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia, but is not consistent with generally accepted accounting principles, which provide for the recording of encumbrances as a reservation of fund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles.
Prior period adjustments and certain other items are reported as additions to and deductions from fund balances ofthe Budget Fund in the accompanying financial statements. This presentation is in accordance with

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STATE DEPARTMENT OF VETERANS SERVICE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "E"

NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPE BUDGET FUND
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 Appropriation allotments to the State Department of Veterans Service are on the basis of a budget submitted by the Department and approved by the Legislature and the Governor. The budget is compiled in the same manner as all State departments and expenditures are classified by budget unit object classes as provided in Act No. 608 of Georgia Laws 1993 (as approved April 28, 1993) and amended by Act No. 622 of Georgia Laws 1994 (as approved February 8, 1994), which is an appropriated budget and is referred to in these notes as the Amended Appropriations Act of 1993-1994.
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include currency on hand and demand deposits with banks and other financial institutions.
INVENTORIES No inventories of supplies are reported in the current financial statements. Expendable supplies are recorded as expenditures at the time of purchase.
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 ofthe reserve reflected in the accompanying financial statements:
FEDERAL FINANCIAL ASSISTANCE The residual portion ofFederal financial assistance revenues not yet expended or encumbered. This amount is restricted for expenditure in future years. This accounting treatment differs from generally accepted accounting principles in that the unearned portion of Federal financial assistance should be reflected as Deferred Revenue.
COMPENSATED ABSENCES Compensated absences represent obligations of the Department relating to employee's rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulating annual leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion of this obligation as this amount will not be liquidated with expendable available financial resources. Funds are provided in the appropriation of funds each year to Department to cover the cost of annual leave paid to terminated employees.
-9-

STATE DEPARTMENT OF VETERANS SERVICE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

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" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
COMPARATIVE DATA Comparative total data for the prior year have been presented in the accompanying financial statements in order to provide an understanding ofchanges in the Department's financial position and operations. However, comparative data have not been presented in all statements because their inclusion would make certain statements unduly complex and difficult to understand.
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds of the State of Georgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
(1) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or ofthe State of Georgia.
(2) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.
(3) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.
(4) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.
(5) Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation ofthe United States government, which are fully guaranteed by the United States government both as to principal and interest, and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
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STATE DEPARTMENT OF VETERANS SERVICE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXlllBIT "E"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies ofthe State of Georgia the option of exempting demand deposits from the collateral requirements.

CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. These bank balances are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk.

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

Category 2 - Amounts collateralized with securities (at market value) held by the financial institution's trust department or agent in the Department's name.

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

Carrying Amount

Bank Balance

Risk Categories

2

3

Cash Deposits

$ -98 7}5.89 $ 63 043 56 $ 63 043 56 $===0,,.,00'= $===0""=0"""0

NOTE 3: OPERATING LEASES

The State Department of Veterans Service has entered into certain agreements to lease real property and equipment which are classified as operating leases. These leases generally contain provisions that, at the expiration date ofthe original term ofthe lease, the Department has the option of renewing the lease on a yearto-year basis. Future minimum commitments for operating leases as of June 30, 1994, are listed below. Amounts are included only for multi-year leases and for cancellable leases for which an option to renew for the subsequent fiscal year has been exercised.

Fiscal Year Ending June 30
1995

$ 79,629.64

Expenditures for rental of real property and equipment under operating leases for the year ended June 30, 1994, totaled $77,139.28.

- 11 -

STATE DEPARTMENT OF VETERANS SERVICE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXIIlBIT "E"

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 of equipment in the General Fixed Assets Account Group during the fiscal year:

Balance July 1, 1993

$ 797,166.81

Additions Deductions

74,341.06 16,677.50

Balance June 30, 1994

$ 854,830.37

NOTE 5: GENERAL LONG-TERM DEBT

CHANGES IN GENERAL LONG-TERM DEBT During the year ended June 30, 1994, the following changes occurred in the compensated absences liability reported in the General Long-Term Debt Account Group:

Balance July 1, 1993
Additions Annual Leave Earned and Utilized (Net) Salaries Salary Related Fringe Benefits (*)
Balance June 30, 1994

$ 374,611.76
6,272.44 29,137.64 $ 410,021.84

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

NOTE 6: DEFERRED COMPENSATION PLAN

The State of Georgia offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. The plan, available to employees of the State of Georgia and county health departments, permits such employees to defer a portion of their salary until future years. Participants choose the option or options in which they wish to participate. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property or rights ofthe State of Georgia subject only to the claims of the State's general creditors. Participant's rights under the plan are equal to those of a general creditor of the State of Georgia in an amount equal to the fair

- 12 -

STATE DEPARTMENT OF VETERANS SERVICE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXIIlBIT "E"

NOTE 6: DEFERRED COMPENSATION PLAN
market value ofthe deferred account of each participant. Financial information relative to the plan is presented in the financial report of the State Personnel Board - Merit System of Personnel Administration for the year ended June 30, 1994.
NOTE7: RETIREMENTPLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA The State Department of Veterans Service participates in the Employees' Retirement System of Georgia, a single-employer, defined benefit pension plan. The Employees' Retirement System of Georgia was established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia. The Retirement System is funded through a combination of employee and employer contributions. Employees are required to contribute a graduated percentage of annual compensation. Employer contributions are for a specified percentage of active member payroll determined annually by an actuarial valuation. During the year ended June 30, 1994, the Department contributed $509,990.57 to the Employees' Retirement System of Georgia. Participation in the Retirement System is not segregated by employee groups of individual governmental units and the Department has no further liability under the retirement system other than future employer contributions as established for each fiscal year. Information relative to the plan description, funding status and historical trends is presented in the financial report of the Employees' Retirement System of Georgia for the year ended June 30, 1994.
GEORGIA DEFINED CONTRIBUTION PLAN The State of Georgia also provides retirement coverage fortemporary, seasonal, and part-time employees who are not eligible for membership in the Employees' Retirement System of Georgia referred to above through a single-employer defined contribution plan. The Georgia Defined Contribution Plan was established by the General Assembly of Georgia and is administered by the Board of Trustees of the Employees' Retirement System of Georgia. Covered employees are required to contribute 7.5% of their gross salary, with no matching contribution by the employer. A member who terminates employment may apply for a refund of contributions and interest. Benefits are based solely on the amount contributed by the employee plus investment earnings. Upon discretion ofthe Board of Trustees, members who leave employment with less than $3,500.00 credited to their account may be required to make a lump-sum withdrawal. Members are eligible to retire at the age of 65 with the option of receiving a periodic payment based on mortality tables and interest accumulation as adopted by the Board of Trustees of the Employees' Retirement System of Georgia. Information relative to the plan description and funding status is presented in the financial report of the Employees' Retirement System of Georgia for the year ended June 30, 1994.
NOTE 8: LEAVE POLICIES
Employees earn ten hours of sick leave each month with a maximum accumulation of ninety days. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment.

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STATE DEPARTMENT OF VETERANS SERVICE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "E"

NOTE 8: LEAVE POLICIES
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 om~ 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 9: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to t,he 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 Department expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against the State Department of Veterans Service, if any, are generally considered to be actions against the State of Georgia. Pursuant to the Official Code of Georgia Annotated, the Department of Administrative Services maintains a program of purchased insurance and self- insurance which provides coverage for such litigation, claims and assessments. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1994.
NOTE 10: BONDING INFORMATION
Mr. Pete Wheeler, Commissioner, is bonded in the amount of $20,000.00 with the Continental Insurance Company, their Bond No. BNO 1396025, on which premium has been paid to March 1, 1995.
The Commissioner and all employees ofthe State Department of Veterans Service are bonded under a Public Employees Blanket Bond written by Employers Insurance of Wausau, their Bond No. 1450-00-110723, on which the premium was paid to October 1, 1994. Under this agreement the Public Employee Dishonesty Coverage insures the Department to a maximum of $1,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees. The Faithful Performance of Duty Coverage insures the Department to a maximum of $100,000.00 against loss sustained from failure of its employees to perform faithfully their duties or to account properly for all monies and property received by virtue of their position or employment.
All employees ofthe State Department of Veterans Service are also bonded under a Commercial Crime Policy written by the United States Fire Insurance Company, their Policy No. 626 011675 2, on which the premium was paid to October 1, 1994. Under this additional public employee dishonesty coverage, the policy insures the Department to a maximum of $4,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees.

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SUPPLEMENTARY INFORMATION - 15 -

STATE DEPARTMENT OF VETERANS SERVICE SCHEDULE OF APPROVED BUDGET YEAR ENDED JUNE 30. 1994

SCHEDULE "1"

FUNDS AVAILABLE
---------------
REVENUES --------
State Appropriation Federal Revenues Other Revenues Retained
EXPENDITURES
Personal Services Regular Operating Expenses Travel Equipment Computer Charges Real Estate Rentals Telecoomunications Per Diem, Fees and Contracts Operating Expense/Payments to
Central State Hospital Operating Expense/Payments to
Medical College of Georgia Regular Operating Expenses for
Projects and Insurance

ORIGINAL

AMENDED

GOVERNOR'S

BUDGET

APPROPRIATION APPROPRIATION EMERGENCY FUND ADJUSTMENTS

TOTAL

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

$22,666,171.00 $ -150,000.00 $ 17,000.00

$22,533,171.00

5,761,618.00 360,000.00

6,121,618.00

$ 15,000.00

15,000.00

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

$28,427,789.00$ 210,000.00 $ 17,000.00 $ 15,000.00 $28,669,789.00
----,---------- ============= ============

$ 4,583,344.00

112,500.00

$

71,200.00

84,000.00

7,300.00

236,000.00

56,500.00

23,000.00

16,284,845.00

6,250,100.00$ 210,000.00

719,000.00

17,000.00 $

$ 4,583,344.00

129,500.00

71,200.00

84,000.00

7,300.00

236,000.00

56,500.00

15,000.00

38,000.00

16,284,845.00

6,460,100.00

719,000.00

$28,427,789.00 $ 210,000.00

17,000.00 $ 15,000.00 $28,669,789.00

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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STATE DEPARTMENT OF VETERANS SERVICE CASH AND CASH EQUIVALENTS JUNE 30, 1994
NONINTEREST BEARING ACCOUNTS
Wachovia Bank of Georgia, Atlanta, Georgia OTHER
Cash on Hand

SCHEDULE "2"
$ -98,715.89 150.00
$ -98,565.89
=============

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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STATE DEPARTMENT OF VETERANS SERVICE SCHEDULE OF GOVERNOR'S EMERGENCY FUND
YEAR ENDED JUNE 30. 1994
City of Mount Vernon - Help with Expenses to Provide Veterans' Memorial Monument
Berrien County Veterans Committee - Purchase Vehicle to Transport Veterans to the VA Hospital

SCHEDULE "3"

$

5,000.00

12,000.00

$ 17,000.00

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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STATE DEPARTMENT OF VETERANS SERVICE SCHEDULE OF FEDERAL REVENUES YEAR ENDED JUNE 30, 1994

PROGRAM
Veterans Affairs, U. S. Department of Veterans State Domiciliary Care Direct
Veterans State Nursing Home Care Direct
Veterans Educational Assistance Direct

CFDA NUMBER
64.014 64.015 64.111

SCHEDULE "4"
AMOUNT $ 457,051.95
5,393,401.69 232,660.05
$6,083,113.69

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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STATE DEPARTMENT OF VETERANS SERVICE SCHEDULE OF OTHER OPERATING EXPENSES
YEAR ENDED JUNE 30, 1994
REGULAR OPERATING EXPENSES
Audio Visual Expenses Clipping Service Film Processing Freight, Express, Storage Commemorative Medal Notary Public Commission and Seal Parking Radio Program Expense Registration Fees Relocation of Employees Signs for Building Subscriptions and Dues
COMPUTER CHARGES
Education and Training Expenses

SCHEDULE "5"

$

550.00

1,429.90

1,104.16

3,213.72

25.00

153.25

341.00

325.12

50.00

997.80

421. 00

636 .16

$ 9,247.11
=============

$

465.00

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