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, 20124) After School Care/Federal Funds/TANF Unobligated BalanceExpenditures exceeded Funds Available by $8,100.005) Family Violence Services/Federal Funds/TANF Unobligated BalanceExpenditures exceeded Funds Available by $108,622.006) Immunization/Federal Funds/Medical Assistance ProgramExpenditures exceeded Funds Available by $0.107) Infant and Child Essential Health/Federal Funds/Federal Funds Not ItemizedExpenditures exceeded Funds Available by $71.848) Infectious Disease Control/Federal Funds/Medical Assistance ProgramExpenditures exceeded Funds Available by $0.019) Support for Needy Families - Basic Assistance/Federal Funds/TANF Unobligated BalanceExpenditures exceeded Funds Available by $4,361,567.0010) Support for Needy Families - Family Assistance/Federal Funds/Federal Funds not ItemizedExpenditures exceeded Funds Available by $176,121.2011) Support for Needy Families - Family Assistance/Federal Funds/American Recovery andReinvestment Act of 2009/Federal Funds Not ItemizedExpenditures exceeded Funds Available by $176,121.2012) Program Not Identified/Federal Funds/Maternal & Child Health Services Block GrantExpenditures exceeded Funds Available by $95,663.09Our cursory review of the Statement of Funds Available and Expenditures Compared to Budget byProgram and Funding Source Budget Fund also appeared to indicate that each of the 12 noncompliancematters identified above were due to the carry-over of negative reserve amounts from the prior year.Also, for numbers 2, 4, 5, 7 and 9 above, there are apparent fund source issues present due to each ofthose deficiencies of funds available under expenditures being equally offset by an excess of fundsavailable over expenditures of the same amount in another funding source.The Department, however, declined to sign the “Letter of Representation” certifying the accuracy ofthe amounts reported by fund source within budgetary program. As a result, we did not performdetailed testing of the underlying documentation supporting the amounts reported in the BCR.Accordingly, we were unable to determine the Department’s compliance with the requirements of thecurrent Appropriations Act, as amended, (Final Budget) and the Constitution of the State of Georgia.These compliance requirements are:• An appropriated budget unit cannot overspend their authorized budgeted amounts at the legal levelof budgetary control (funding source within program). This means that the amounts that arereflected in the “variance” column under the heading of Expenditures Compared to Budget in theStatement of Funds Available and Expenditures Compared to Budget by Program and FundingSource Budget Fund are not negative variances.• Article VII, Section IV Paragraph VIII of the Constitution of the State of Georgia provides, inpart, “…the credit of the State shall not be pledged or loaned to any individual, company,corporation or association.” As applied here, this means that amounts reflected in the “variance”column under the heading of Excess (Deficiency) of Funds Available Over/(Under) Expendituresin the Statement of Funds Available and Expenditures Compared to Budget by Program andFunding Source Budget Fund are not negative variances.Criteria:Each appropriated budget unit of the State of Georgia was subject to compliance testing to beconducted in accordance with attestation standards established by the American Institute of CertifiedPublic Accountants (AT Section 601). Compliance attestations require the responsible party at thebudget unit to provide various written representations related to the accuracy of their BCR, to the bestof their knowledge and belief. The responsible party’s refusal or inability to furnish all appropriaterepresentations in accordance with the attestation standards constitutes a limitation on the scope of theengagement.46
State of GeorgiaFinancial Statement Findings and Questioned CostsFor the Fiscal Year Ended June 30, 2012Information:Cause:Effect:Recommendation:The BCR reflects the Department’s budgetary activity at the legal level of budgetary control asprescribed by the FY 2012 Amended Appropriations Act. Also at this level, the BCR reports whetherthe Department is operating within the debt limitations of the Constitution of the State of Georgiawhich prohibits expenditures from exceeding funds available.Due to the uncertainty regarding the accuracy of the Statement of Funds Available and ExpendituresCompared to Budget by Program and Funding Source, particularly as it relates to the carry-over ofprior year reserve amounts, the Department declined to prepare and sign a letter of representation forthe examination engagement of the organization's compliance with the 2012 Appropriations Act, asamended, and Article VII, Section IV Paragraph VIII of the Constitution of the State of Georgia.The amounts reported in the Department’s BCR should not be used for decision-making purposes atthe legal level of budgetary control because of the lack of assurances by management and thelikelihood that material errors are present.The Department should manage its budgetary activity at the legal level of control, which is fund sourcewithin program. In order to produce accurate and useful BCR reports in the future, actions to be takenby the Department should include, but not be limited to, the following:1. Improve controls over Manual Journal Entries to ensure that adequate documentation is providedfor each journal entry, including listing the actual invoices being moved when expenditures arererated to other fund sources. Details and totals on supporting documentation must tie to theamounts on the journal entry.2. Revise the review process to ensure that the personnel who are approving journal entriesunderstand the effect that each journal entry will have on the accounts, fund sources, andprograms.3. Monitor transactions posted during the fiscal year on a regular basis rather than relying on journalentries to correct problems identified at year-end.4. Review all funds sources and programs for compliance with the State Chart of Accounts and theAppropriations Act. Provide SAO with information for correcting any errors noted in the set up offund sources and programs.5. Automate the Cost Allocation Process, preferably within the Statewide accounting system, inorder to improve efficiencies and reduce current manual accounting practices to ensure that allrequired transactions are processed and recorded timely.COMMUNITY AFFAIRS, DEPARTMENT OFFinding Control Number: FS-428-12-03ACCOUNTING CONTROLS (OVERALL)GENERAL LEDGERCASH, INVESTMENTS AND INVESTMENT RELATED ACTIVITYInadequate Bank Reconciliation and Accounting ProceduresCondition:Criteria:During our review of the Department of Community Affairs' (Department) bank reconciliations, wenoted some reconciling items appearing on the bank reconciliations were not posted to the generalledger in a timely manner. In addition, most bank reconciliations were lacking either the signature ofthe preparer and the approver and the date this activity was performed.In accordance with Cash Management Policies and Procedures Policy Number CM-100008 - BankReconciliation Policy and Procedure issued by the State Accounting Office (SAO), "All Agencies shallreconcile their state bank accounts monthly by an employee not involved in recording cash receiptsand disbursements. All monthly reconciliations should be reviewed and signed by a fiscal officer who47
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Single Audit ReportFiscal Year Ende
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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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