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

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State of GeorgiaFinancial Statement Findings and Questioned CostsFor the Fiscal Year Ended June 30, 2012Finding Control Number: FS-402-12-08CAPITAL ASSETSInadequate Capital Asset RecordsCondition:The accounting procedures of the Department of Agriculture (Department) were insufficient to provideadequate internal controls over the capital asset management system. As part of our examination of theDepartment's capital asset inventory records, a total of forty-one (41) items totaling $908,825.30 out ofa population of seven-hundred twenty (720) items totaling $54,335,787.20 were selected for physicalinspection. The following deficiencies were noted:(1) Six (6) items totaling $105,567.61 could not be located.(2) One (1) item lacked a decal.(3) Three (3) items were not located in the designated location as reported on the capital assetinventory listing.Criteria:In accordance with the Statewide Accounting Policy & Procedure issued by the State AccountingOffice, Section Capital Assets, "To ensure compliance with GAAP and other requirements of thispolicy, State of Georgia organizations must:(1) Establish controls to ensure proper identification of capital assets.(2) Ensure that capital asset transactions are properly valued and recorded in asset managementrecords in compliance with State of Georgia policies and laws.(3) Ensure that a physical inventory of capital assets is conducted at least every two years to validatethe existence of capital assets reported in financial statements..."Cause:Effect:Recommendation:The deficiencies noted above were a result of the Department's failure to implement adequate policiesand procedures necessary to properly record and maintain capital asset inventory records in accordancewith State guidelines.Failure to maintain complete and accurate capital asset inventory records could result in themisappropriation of assets and a material misstatement of the financial statements.The Department of Agriculture should develop and implement appropriate policies and procedures toensure that all capital assets are properly accounted for and reported in accordance with capitalizationguidelines and instructions as provided in the Statewide Accounting Policy & Procedure issued by theState Accounting Office.Finding Control Number: FS-402-12-100EXPENSES/EXPENDITURES AND LIABILITIESBUDGETInadequate Documentation for Allocations Across Budget ProgramsCondition:Our examination included a review of journal entries and expenditure transactions that were posted tothe Department of Agriculture's (Department) general ledger during fiscal year 2012. The followingdeficiencies with the documentation provided are as follows:(1) The documentation for two (2) journal entries did not provide evidence to substantiate therationale for moving expenditures between authorized programs or funding sources withinauthorized programs.(2) Seven (7) expenditure transactions were incorrectly allocated between authorized programs orfunding sources within authorized programs.28
State of GeorgiaFinancial Statement Findings and Questioned CostsFor the Fiscal Year Ended June 30, 2012(3) Two (2) expenditure transactions were allocated across different programs without adequatedocumentation to support the rationale and methods used in determining the amounts charged tothe programs.Criteria:Cause:Effect:Recommendation:In accordance with the Statewide Accounting Policy & Procedure Manual issued by the StateAccounting Office under Documentation Requirements, "All transactions must be supported byappropriate documentation. The same documentation requirements apply to transactions entereddirectly into an accounting system, as well as those initially entered and processed in an organizationsubsystem that are transmitted through an automated interface. In all cases, the documentation must becomplete and accurate and must allow a transaction to be traced from the source documentation,through its processing, to the financial reports. All documentation should be readily available forexamination." This policy means that the entire life cycle of the transaction should be recorded,including initiation and authorization, processing, and final classification and would include anyallocation methodology used.The deficiencies noted above were a result of the Department's failure to implement adequate controlprocedures to ensure compliance with the Statewide Accounting Policy & Procedure Manual. TheDepartment also did not have adequate policies and procedures in place to ensure that their basis ofallocation of costs across multiple budget programs was adequately documented.Failure to document the basis of allocation of costs across multiple budget programs could result in abudget unit organization charging its expenditures to incorrect programs, thereby resulting ininaccuracies in their Statement of Funds Available and Expenditures Compared to Budget by Programand Funding Source. Inaccurate or improper allocation of expenditures could allow management tomanipulate the reporting of costs which could serve to prevent exposing the presence of budgetarynoncompliance.The Department of Agriculture should develop and implement policies and procedures to ensure thatthe decision to allocate expenditures across different budget programs as well as the methods used todistribute the costs are properly documented. The Department should also develop and implementpolicies and procedures to ensure that the costs are properly allocated between authorized programsand funding sources within programs.PUBLIC HEALTH, DEPARTMENT OFFinding Control Number: FS-405-12-100ACCOUNTING CONTROLS (OVERALL)GENERAL LEDGERBUDGETInadequate Journal Entry DocumentationCondition:Criteria:Information:The Department of Public Health (Department) failed to maintain adequate documentation to supporttheir post closing adjustment (PCA) entries.The Financial Management Policies and Procedures, policy number 4-8-1, issued by the Office ofPlanning and Budget and State Accounting Office, states that "Documentation should be maintainedfor adjustments posted during a fiscal year, especially as a part of year-end closing procedures, thatallows for the verification of the adjusted transaction to the source documentation supporting theoriginal transaction. Such documentation should include, but is not necessarily limited to, analysisidentifying original deposit ID’s, purchase orders, voucher ID’s or other relevant identifying referenceand should identify the original transaction’s budget program by fund source or justification for achange in allocation methodology."Our testing included a review of all seventeen (17) post closing adjustment entries that the Departmentsubmitted after period 998, the TeamWorks Financials System year-end adjustment period. The PCAentries had a total absolute value of $36,722,559.14. We noted that the majority of the PCA entries,29
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Page 19 and 20: Greg S. GriffinSTATE AUDITOR(404) 6
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State of GeorgiaFederal Awards Find
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Expenditures of Federal Awards
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State of GeorgiaSchedule of Expendi
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Summary Schedule of Prior YearFindi
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Corrective Action Responses toCurre
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State of GeorgiaListing of Organiza
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