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

State of GeorgiaFinancial Statement Findings and Questioned CostsFor the Fiscal Year Ended June 30, 20127. The following bank reconciliations were not prepared and approved in a timely manner:• The Operating account for the month of June 2012.• The Corporate Refund account for the months of September 2011, and December 2011through May 2012.8. The bank reconciliations for the Operating account, Income Tax - Control Disbursement account,Corporate Refunds account, and Corporate Control Disbursement account contained outstandingchecks that have been outstanding for over one year.Criteria:Cause:Effect:Recommendation:Cash Management Policies and Procedures Policy Number CM-100008 issued by the State AccountingOffice provides bank reconciliation policy and procedures for organizations to follow. An adequatesystem of internal controls dictates that bank reconciliations be performed at a minimum on a monthlybasis, and as appropriate, include the following: 1) adequate supporting documentation, 2) reconcilingitems correctly identified by description and amount, 3) adjustments are identified and made inaccordance with applicable policies and procedures, and 4) evidence of an effective supervisory reviewand approval function. In addition, best business practices dictate that all checks over a year old shouldbe canceled or voided.The deficiencies noted above were the result of the Department's failure to adequately manage andmonitor their bank reconciliation process.Failure to maintain an effective bank reconciliation process increases the risk of material misstatementin the financial statements including misstatements due to fraud.The Department of Revenue should review their current internal control procedures regarding theirbank reconciliations and implement additional policies and procedures to ensure an effective bankreconciliation process is in place. In addition, the Department should review outstanding checklistseach month and make adjustments accordingly for outstanding checks over one year old.Finding Control Number: FS-474-12-02REVENUES AND RECEIVABLESImproper Retention of FeesCondition:Pursuant to Act No. 360 of the 2009-2010 General Assembly, additional fees were collected by theDepartment of Revenue (Department). The Department collected and retained a portion of the LicenseFees for Coin Operated Amusement Machines in the amount of $381,000.00 rather than remitting thefees to the State Treasury.Based on our review of the constitutional provisions and the statutory authority to impose fees relatedto coin operated amusement machines described below, there does not appear to be a legal basis bywhich the Department may retain and expend these funds.Criteria:Article VII, Section III, Paragraph II (a) of the Georgia Constitution provides as follows: "Except asotherwise provided in this Constitution, all revenue collected from taxes, fees, and assessments forstate purposes, as authorized by revenue measures enacted by the General Assembly, shall be paid intothe general fund of the state treasury."Statutory authority to impose fees related to coin operated amusement machines is set forth in Chapter17 of Title 48 of the Official Code of Georgia Annotated (O.C.G.A.). However, no authority to retainsuch fees was identified within this code section.Information:The Appropriations Act for fiscal year 2013 in regards to License Fees for Coin Operated AmusementMachines provides for State funds in the amount of $300,000.00 to replace fees required to be remittedto the Office of the State Treasurer, pursuant to the State of Georgia 2011 Budgetary ComplianceReport.61