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, 2012did not participate in the reconciling function. Book reconciling items shall be investigated andadjusting book entries shall be recorded within the same month as monthly bank reconciliation sheetsare received."An adequate system of internal controls calls for the performance of a monthly reconciliation betweenthe bank statement and the general ledger. Each bank reconciliation should be should be reviewed andapproved by someone not involved with the reconciliation and all reconciling items should becorrected in a timely manner.Information:We reviewed all 12 months of bank reconciliations for three (3) of the Department's bank accounts.The following deficiencies were noted:• All 12 of the reconciliations for one (1) account (Payroll Account) lacked the signature of thepreparer and the date the reconciliation was performed and 10 instances where there was noreviewer signature or date.• There were deposits [16 totaling $2,167,337 on one (1) account and nine (9) totaling $1,021,938on the second account] reflected on two (2) of the bank accounts that were not being recordedtimely to the general ledger and, as a result, were being carried forward month-to-month asreconciling items on the bank reconciliations; in some cases for more than 12 months beforeclearing the reconciliations.• Lastly, on two (2) bank reconciliations it was noted that both the preparer and reviewer had datedperforming those functions at least 45 days prior to the bank statement date.Cause:Effect:Recommendation:These deficiencies were the result of the Department's failure to adequately manage and monitor thebank reconciliation process, including adjusting the general ledger in a timely manner when applicable.The failure to maintain an effective bank reconciliation process increases the risk of materialmisstatements in the financial statements including misstatements due to fraud.The Department of Community Affairs should implement additional policies and procedures to ensurean effective bank reconciliation process is in place, and reconciling items are reviewed and adjusted tothe general ledger in a timely manner when appropriate in accordance with Cash Management Policiesand Procedures issued by SAO.Finding Control Number: FS-428-12-100ACCOUNTING CONTROLS (OVERALL)BUDGETFailure to Certify the Accuracy of the Budgetary Compliance ReportCondition:The Budgetary Compliance Report (BCR) as presented for review by the Department of CommunityAffairs (Department) reported the following instances of noncompliance:1. Coordinated Planning/Federal Funds/Federal Funds Not ItemizedExpenditures exceeded Funds Available by $89,015.292. Department Administration/Other FundsExpenditures exceeded Funds Available by $112,327.233. Federal Community and Economic Development Programs/Federal Funds/Federal Funds NotItemizedExpenditures exceeded Funds Available by $4,728,716.5748
State of GeorgiaFinancial Statement Findings and Questioned CostsFor the Fiscal Year Ended June 30, 20124. Federal Community and Economic Development Programs/American Recovery and ReinvestmentAct of 2009/Federal Funds Not ItemizedExpenditures exceeded Funds Available by $114,264.715. Regional Services/Federal Funds/Federal Funds Not ItemizedExpenditures exceeded Funds Available by $120,805.166. Special Housing Initiatives/Federal Funds/Federal Funds Not ItemizedExpenditures exceeded Funds Available by $1,950,165.837. Special Housing Initiatives/American Recovery and Reinvestment Act of 2009/Federal Funds NotItemizedExpenditures exceeded Funds Available by $5,881.008. State Community Development Programs/Federal Funds/Federal Funds Not ItemizedExpenditures exceeded Funds Available by $145.529. Payments to OneGeorgia Authority/Other FundsExpenditures exceeded Funds Available by $357.0110. Programs Not Identified/Other FundsExpenditures exceeded Funds Available by $79,887.50The Department of Community Affairs, however, declined to sign the “Letter of Representation”certifying the accuracy of the amounts reported by fund source within budgetary program. As a result,we did not perform detailed testing of the underlying documentation supporting the amounts reportedin the BCR. Accordingly, we were unable to determine the Department’s compliance with therequirements of the current Appropriations Act, as amended, (Final Budget) and the Constitution of theState 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:Information: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.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.49
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Single Audit ReportFiscal Year Ende
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Single Audit Report Fiscal Year Ended June 30, 2012 - State ...

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