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

State of GeorgiaFinancial Statement Findings and Questioned CostsFor the Fiscal Year Ended June 30, 2012HUMAN SERVICES, DEPARTMENT OFFinding Control Number: FS-427-12-01ACCOUNTING CONTROLS (OVERALL)GENERAL LEDGERREVENUES AND RECEIVABLESEXPENSES/EXPENDITURES AND LIABILITIESInadequate Journal Entry DocumentationCondition:Our examination included a review of journal entries posted, for seven (7) major Federal complianceprograms, to the Department of Human Services’ (Department) general ledger during fiscal year 2012.In total, 175 journal entries were selected for review. The testing of journal entries was performed intwo parts:1. Interim testing where 56 journal entries with a dollar value of $3,140,003,218.42 for the periods 1through 11 (July through May) for State fiscal year 2012 were selected and reviewed.Of the 56 journal entries tested, we found that 25 with a dollar value of $3,073,949,314.71 werenot adequately supported.2. Final testing, where 119 journal entries with a dollar value of $1,958,264,666.80 for the periods 12through 998 (June including the year-end adjustment period) for State fiscal year 2012 wereselected and reviewed.Of the 119 journal entries tested, we found that 11, with a dollar value of $217,186,120.43, werenot adequately supported.Criteria:The Financial Management Policies and Procedures, policy number 4-8-1, issued by the Office ofPlanning and Budget and the State Accounting Office, states that “Documentation should bemaintained for adjustments posted during a fiscal year, especially as a part of year-end closingprocedures, that allows for the verification of the adjusted transaction to the source documentationsupporting the original transaction. Such documentation should include, but is not necessarily limitedto, analysis identifying original deposit ID’s, purchase orders, voucher ID’s or other relevantidentifying reference and should identify the original transaction’s budget program by fund source orjustification for a change in allocation methodology.”Further, the Accounting Policy Manual from the State Accounting Office of Georgia, Category 3 -Closing Procedures, Section: Documentation Requirements, states that "All transactions must besupported by appropriate documentation. The same documentation requirements apply to transactionsentered directly into an accounting system, as well as those initially entered and processed in anorganization subsystem that are transmitted through an automated interface. In all cases, thedocumentation must be complete and accurate and must allow a transaction to be traced from thesource documentation, through its processing, to the financial reports. All documentation should bereadily available for examination."Information:The dollar values reported relating to the testing of journal entries are absolute dollar values of allrelevant lines of the journal entries, divided by two.The entries were mostly for recording Federal revenues and receivables, and moving expendituresbetween fund sources, departments, and Federal fiscal years within the programs. The deficiencies aremostly an internal control issue for lack of adequate supporting documentation.Cause:The deficiencies noted above were the result of the Department’s failure to fully and adequately applytheir existing internal control procedures to ensure compliance with the Financial Management Policiesand Procedures and the Accounting Policy Manual for the State of Georgia.38