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, 2012which affected various fund sources and budget programs, did not contain sufficient documentation tosupport the validity of the entry being made.We performed inquiries of management to determine the purpose of the PCA entries. The inquiriesrevealed that the Department used the PCA entries to re-rate various fund sources and budgetprograms, and also to correct multiple issues that arose during the fiscal year.Cause:Effect:Recommendation:The deficiency noted above was a result of the Department's failure to implement adequate internalcontrol policies and procedures to ensure compliance with the Financial Management Policies andProcedures.Approving post closing adjustment entries without adequate supporting documentation may result in amaterial misstatement in the financial statements including misstatements due to fraud.The Department of Public Health should develop and implement policies and procedures to ensure thatadequate documentation is maintained and reviewed prior to approving post closing adjustment entries.Also, additional training on the guidelines included in the Financial Management Policies andProcedures should be provided to employees responsible for preparing and approving post closingadjustment entries as needed.FINANCING AND INVESTMENT COMMISSION, GEORGIA STATE (*)Finding Control Number: FS-409-12-01EXPENSES/EXPENDITURES AND LIABILITIESAccounts Payable and Related Expenses/ExpendituresCondition:Criteria:Cause:Effect:Recommendation:For construction payments, the Commission has historically recognized the liability and relatedexpenditure when the goods or services are received and approvals have been provided. For theCommission's transactions in which it is reimbursing another state agency, this practice is appropriateas the approvals and request for reimbursement would trigger the recognition of the liability andexpenditure for the Commission. However, for the Commission's transactions in which it is managingthe construction project on behalf of another state agency, the recognition of the liability and relatedexpenditure should occur when the good or service is provided.Under generally accepted accounting principles for governments, ordinarily a liability and relatedexpenditure should be recognized as soon as the goods or services are received, regardless of thetiming of the related cash flows.Due to the Commission's practice, an audit adjustment was required for the current year in order torecord additional accounts payable and expenditures for the Capital Projects Fund in the amount of$14,381,323.Audit adjustments were needed to correctly report liabilities and expenditures.We recommend that the Commission change its historical practice for accrual of fiscal year endexpenditures to ensure that payments made subsequent to year-end, on projects it is managing, arereviewed to determine if a liability is required due to the goods or services being received.30
State of GeorgiaFinancial Statement Findings and Questioned CostsFor the Fiscal Year Ended June 30, 2012PROSECUTING ATTORNEYS' COUNCIL OF GEORGIAFinding Control Number: FS-418-12-02GENERAL LEDGERBUDGETInadequate Accounting ProceduresCondition:Criteria:Prosecuting Attorneys' Council (PAC) failed to record the activity from an external accounting system(Solomon) used to account for Federal funds received from Department of Human Services (DHS) andOther Funds received from the judicial circuits.The State Accounting Office Accounting Policy Manual, General Guidelines Category, AccountingManual Introduction Section, Fiscal Management Objectives policy states that to ensureaccountability, state governmental financial reports should exhibit, among other characteristics,reliability. Information should be "verifiable, free from bias, faithfully represented, andcomprehensive."The State Accounting Office Accounting Policy Manual, General Guidelines Category, AccountingManual Introduction Section, Management Responsibilities policy states "The management of eachorganization of state government is ultimately responsible for the accuracy and completeness of itsaccounting and financial records and reports, including ensuring compliance with applicable laws andregulations."Financial Management Policies and Procedures issued by Office of Planning and Budget and StateAccounting Office on Budgeting of Federal Funds from Another State Agency states "Federal fundsreceived from sources other than the Federal government should be amended as Federal funds if thereceiving agency is required to comply with the original grant or other financial assistancerequirements."Information:Cause:Effect:Recommendation:PAC did not record the Solomon general ledger activity in Teamworks Financials. PAC also failed tosubmit post-closing adjustments to record this activity prior to the State Accounting Office deadline.In addition, PAC did not budget for this activity, nor was it included in their Budgetary ComplianceReport. No adjustment was posted to the Budgetary Compliance Report since the activity had not beenbudgeted.These deficiencies were the result of management's failure to record Solomon activity onto theTeamworks Financials general ledger and their failure to budget the activity and include it in theirBudgetary Compliance Report.PAC's failure to record Solomon activity resulted in adjustments by the State Accounting Office beingnecessary to avoid misstating the Comprehensive Annual Financial Report. It also required auditadjustments to avoid misstating the Schedule of Expenditures of Federal Awards for the Single AuditReport. In addition, activity that should have been budgeted and included in the BudgetaryCompliance Report was not reported. The failure to record transactions in a timely manner increasesthe risk of material misstatement in the financial statements, including misstatement due to fraud.Prosecuting Attorneys' Council should implement policies and procedures to ensure that all of theiraccounting activity is recorded in a timely manner in the Teamworks Financials system to ensureaccurate financial reporting. Policies and procedures should also be implemented to ensure that theSolomon activity is budgeted and included in the Budgetary Compliance Report.31
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