Single Audit Report Fiscal Year Ended June 30, 2012 - State ...

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State of GeorgiaAuditee’s Corrective Action PlansFor the Fiscal Year Ended June 30, 2012Finding Control Number: FS-440-12-01ACCOUNTING CONTROLS (OVERALL)Inadequate Supporting Documentation for Adjusting Journal EntriesWe concur with this finding with the following explanation:The auditor provided the Department 5 journal entries as the basis for this finding. The amount disclosed is in the finding wasmerely the absolute value of the debits and credits made in the five entries combined and does not represent the net effect ofamounts being adjusted by the Department . The FARS system uses many offsetting contra accounts which, if not excluded,indicate a larger adjustment than is actually being made.Additionally, the entries questioned were not provided to the Department prior to receipt of this finding, which resulted in theDepartment having no time to respond these matters prior to receipt of the finding in a published document. After review ofthe finding as presented, the Department does not disagree that better documentation could be provided to support theseentries. Had the auditors communicated with Department personnel as questions arose during the audit engagement, theDepartment sincerely believes some or all of the instances noted may have been immediately resolved. For example, in onecase, a spreadsheet was on file in the budget office that provided further documentation for one of the questioned entries thatallocated pooled costs to other program fund ledgers. In another case, an entry was made to reclassify costs among the sameprogram within in the same period of availability among multiple budgeted fund sources of that program. Had the auditorrealized that fact, the basis for that entry would have been clear.The Department will continue to enhance internal control procedures to ensure journal entries are better documented goingforward.Contact Person: John T. Williams, Accounting DirectorTelephone: 404-232-3575 Fax: 404-232-3578 E-mail: JohnT.Williams@dol.state.ga.usFinding Control Number: FS-440-12-02ACCOUNTING CONTROLS (OVERALL)Ineffective Change Management and Logical Access ControlsWe concur, in part, with this finding with the following explanation:In concurring in part, with this finding, the Department wishes to make the following points:1. The Department agrees that the objective of the change management process is to minimize service downtime andmitigate the risk of inappropriate changes by ensuring that requests for changes are recorded, evaluated, authorized,prioritized, planned, tested, implemented, documented and reviewed in a controlled and consistent manner. We alsoagree that change management is a necessary process within IT governance.2. Certain weaknesses may exist, however mitigating controls in place resulted in the immediate resolution of theincident cited in #FS-440-11-6 (prior year).3. No incidents have been reported during this period showed that either inappropriate access and/or changes occurred.4. The Department agrees that certain enhancements will further improve our current process.5. The Department’s strategic direction is to transition critical business systems operating in the legacy mainframeenvironment to a distributed environment to address budgetary constraints.Therefore the investment of additional automated mainframe tools and staffing at this time is not prudent.The Department currently has a formal Change Management process in place. Our current Change Management Processincludes monitoring requests for the following: receipt and validation, testing and approval, scheduling and update (ifapproved), validation of change after update, periodic assessments to determine that no unauthorized changes have beenpromoted to production and segregation of access between development and production environments. In August, 2012, the320
State of GeorgiaAuditee’s Corrective Action PlansFor the Fiscal Year Ended June 30, 2012Department implemented modifications to Team Track (tool currently used to support change and configurationmanagement) that automates the documentation of required test results and business approval for every change. Mitigatingcontrols such as periodic and consistent monitoring of changes have been enhanced to document that only authorized changesare promoted to production and to detect changes performed outside of the normal change management process. All changerelated documentation that provides evidence of authorization, testing and approval is being retained for a period of eighteen(18) months. As a part of our continuous process improvement, we have reconfigured general security settings to reduce therisk of unauthorized access and changed the current process to implement additional policies and procedures, and additionalsystem edits and controls that will provide an even higher level of security to our data. Logical access controls are beingreviewed to reduce risk of future potential unauthorized access, including periodic reviews of application access to determinethat access continues to be appropriate based on job responsibility and privileges are removed whenever unnecessary for aparticular job function.Contact Person: Jeff May, Information TechnologyTelephone: 404-232-7310 Fax: 404-232-7569 E-mail: Jeff.May@gdol.ga.govFinding Control Number:GENERAL LEDGERInadequate General LedgerFS-440-12-03We do not concur with this finding. This finding relates solely to the Unemployment Compensation Insurance program. Thestatement made by the auditor in the condition part of the finding that "the general ledger utilized by the Department is notadequate due to being basically a set of ongoing cash sheets" is inaccurate. While cash sheets are a part of informationposted to the general ledger, the general ledger also includes all required accrual based entries which result in a set of fiscalyearend accrual based financial statements. Additionally, a chart of accounts has been established which defines the contentsof all general ledger accounts used in the posting process. Details of all account balances are, in fact, available. TheDepartment is not aware of any accounting requirement that precludes a manual general ledger being utilized - providedpostings to the ledger are supported by detailed data.The Department acknowledges the HOST system currently used to process and account for transactions relating to theUnemployment Compensation Insurance Program of the State of Georgia is not a formal integrated accounting system, perse. However, over the past seven fiscal years, a general ledger has been utilized and is posted with data from other systems.A formal chart of accounts has been developed to facilitate preparation of financial statements and multiple queries have beenwritten and are continually reviewed and revised to produce financial information used to update and prepare GDOLFinancial Statements for the Unemployment Insurance Compensation Program. We also note for the record that for theseventh consecutive fiscal year (including fiscal year 2012), the auditor's opinion as to the fairness of these statements will beunqualified. These results demonstrate the current system is being both effectively utilized and maintained. Given thisscenario, the Department of Labor continues to question the necessity of the prodding by the Auditors purchase a newaccounting system.However, in an effort to respond to the State Auditor's recommendation, the Department continues to survey other Statesacross the nation to investigate the type of accounting system used to operate, maintain, and report financial informationassociated with Unemployment Compensation Insurance. This survey has revealed that no State contacted has an integratedaccounting system for Unemployment Compensation Insurance such as what the auditors continue to recommend. Based onthe information gathered from other States, it is the Department's position that no State contacted has an accounting systemwith better capabilities than the current system that is now being used by the Department. The states polled are nationallyknown for their excellence in governmental accounting and are of similar size to Georgia.The U.S. Department of Labor has notified the Department they consider this finding corrected and will seek no furtheraction by the Department concerning this finding based on 29 CFR97.41(b) (2), which does not require grantees to converttheir accounting systems to an accrual basis, but must develop such accrual information through an analysis of the documentson hand.Contact Person: Robert Thomas, Unemployment InsuranceTelephone: 404-232-3990 Fax: 706-583-2613 E-mail: Robert.Thomas@dol.state.ga.us321
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Single Audit ReportFiscal Year Ende
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Report on Internal Control Over Fin
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Foundation, Incorporated, Georgia T
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Firefighters’ Pension Fund, Georg
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Greg S. GriffinSTATE AUDITOR(404) 6
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In our opinion, based on our audit
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Activities Allowed or UnallowedFA-4
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Findings and Questioned Costs
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State of GeorgiaSummary of Auditor
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Financial Statement Findings
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State of GeorgiaFinancial Statement
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State of GeorgiaFederal Awards Find
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State of GeorgiaSchedule of Expendi
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State of GeorgiaNotes to the Schedu
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State of GeorgiaSchedule of Cluster
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Single Audit Report Fiscal Year Ended June 30, 2012 - State ...

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