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

State of GeorgiaFinancial Statement Findings and Questioned CostsFor the Fiscal Year Ended June 30, 2012• 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:Cause:Effect:Recommendation: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.Due to the uncertainty regarding the accuracy of the Statement of Funds Available and ExpendituresCompared to Budget by Program and Funding Source, the Department of Labor declined to prepareand sign a letter of representation for the examination engagement of the organization's compliancewith the 2012 Appropriations Act, as amended, and Article VII, Section IV Paragraph VIII of theConstitution 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.Since the Department of Labor is obligated to manage its budgetary activity at the legal level of control(fund source within program), the Department should either modify its present accounting system toaccommodate such activity and reporting or convert to an accounting system with these capabilities;such as TeamWorks Financials which is used by the majority of the appropriated budget units withinthe State.BEHAVIORAL HEALTH AND DEVELOPMENTAL DISABILITIES, DEPARTMENT OFFinding Control Number: FS-441-12-01ACCOUNTING CONTROLS (OVERALL)EXPENSES/EXPENDITURES AND LIABILITIESFINANCIAL REPORTING AND DISCLOSUREFailure to Accurately Report Pass-Through Amounts on the Schedule of Expenditures of Federal AwardsCondition:Our examination of the Pass-Through by Entity report for the Schedule of Expenditures of FederalAwards (SEFA), submitted by the Department of Behavioral Health and Developmental Disabilities(Department) revealed that pass-through amounts provided to subrecipients, required for the Notes tothe SEFA in the Single Audit Report, were not reported correctly. For the Block Grants for Preventionand Treatment of Substance Abuse program (CFDA No. 93.959), no pass-through amount was56