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

State of GeorgiaFinancial Statement Findings and Questioned CostsFor the Fiscal Year Ended June 30, 2012Effect:Recommendation:Failure to record grant availability in a timely manner could affect the proper recording of Federalprogram revenues (and expenditures) which could result in misstatements in the financial statements.The Department of Human Services should review their current internal control procedures forrecording Federal program activity and continue to work to enhance their procedures, as needed, toensure the timely recording of Federal grant awards on the general ledger.Finding Control Number: FS-427-12-06GENERAL LEDGERREVENUES AND RECEIVABLESFailure to Reconcile Accounts Receivable to the General LedgerCondition:Review of the Department of Human Services’ (Department) year-end accounts receivablereconciliation revealed the following deficiencies:(1) Nine (9) of the nineteen (19) accounts on the year-end accounts receivable reconciliationcontained variances totaling $111,266,234.72. In addition, no subsidiary listing was available tosupport the balance in three (3) of the individual accounts.(2) The Department failed to provide, for review, documentation for four (4) accounts receivableitems selected for testing.Criteria:Cause:Effect:Recommendation:The Department of Human Services should have policies and procedures in place to ensure thatmonthly and year-end reconciliations of the accounts receivable module to the general ledger for allaccounts receivable accounts are being performed, and to ensure that all accounts receivabledocumentation is appropriately maintained.The deficiencies noted above were caused by the Department's failure to implement adequate policiesand procedures to ensure reconciliations performed identified all variances and included propersupporting documentation, as well as the Department's failure to maintain all accounts receivabledocuments for review. In addition, high turnover in staff may also have been a contributing factor.Failure to perform accurate reconciliations and to maintain all accounts receivable documentationcould result in invalid accounts receivable not being detected in a timely manner. This could lead toerrors in financial reporting and increase the risk of material misstatement in the financial statementsincluding misstatements due to fraud.The Department of Human Services should implement additional policies and procedures to ensurethat:1) Monthly and year-end reconciliations of the accounts receivable module to the general ledger areaccurately completed,2) The reconciliation includes relevant subsidiary ledgers and3) Any variances noted are resolved in a timely manner.Controls should also be implemented to ensure that all accounts receivable documentation isappropriately maintained.41