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

State of GeorgiaFinancial Statement Findings and Questioned CostsFor the Fiscal Year Ended June 30, 2012Criteria:Cause:Effect:Recommendation:For all State organizational units, the Accounting Policy Manual for the State of Georgia requires forfinancial accountability purposes, that accounting records be uniformly maintained. Also, in order toeliminate potential information systems security concerns with the processing environment and inorder to be able to rely on accounting data and other information produced by the systems which aremaintained as end-user computers, traditional internal control procedures (i.e., reconciling, balancing,etc.) must be in place and operating without flaws.The deficiency noted was caused by the Department’s failure to establish adequate policies andprocedures over the reporting process for the Unemployment Compensation Fund.The failure to maintain an effective general ledger process increases the risk of material misstatementin the financial statements including misstatements due to fraud. In addition, there is potentiallyunsupported and/or unauditable financial statement account balances and lack of data integrity iftraditional internal controls are not in place and operating effectively.The Department of Labor should implement policies and procedures to perform and documentcomplete and accurate reconciliations between the HOST based detail transactions and the summarydata in the Excel-based spreadsheet including proper year end cut-offs.Finding Control Number: FS-440-12-04GENERAL LEDGERREVENUES AND RECEIVABLESInadequate Procedures Over Cash Draws of Federal GrantsCondition:Our examination of Cash Management over the Federal Financial Assistance Programs at theDepartment of Labor (Department) disclosed the following deficiency:Requests for reimbursement were not sufficient to cover Federal program expenditures. The followingtable identifies programs that had insufficient cash balances during fiscal year 2012:CFDA #Program NameNumber ofMonths ofInsufficientRequestsAverageMonthlyInsufficientCash Balance17.225 Unemployment Insurance Administration 7 $ (2,542,336.00)17.225Unemployment Insurance Administration -American Recovery and Reinvestment Act6 $ (327,253.00)Criteria:Cause:Effect:Recommendation:The Code of Federal Regulations Title 31, Chapter II, Section 205.33 states, in part: "The timing andamount of funds transfers must be as close as is administratively feasible to a State's actual cash outlayfor direct program costs and the proportionate share of any allowable indirect costs."The Department's policies and procedures for requesting and recording Federal funds to reimburseprogram costs were inadequate.Failure to request Federal funds in an accurate and timely manner can result in the use of State orOther funds to subsidize Federal program expenditures.The Department of Labor should review their policies and procedures for requesting and recordingFederal funds to ensure that they are adequate to meet cash management objectives. The Departmentshould also review the clearance patterns used for drawing Federal funds to ensure that they are stillrelevant to current trends.54