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

State of GeorgiaFinancial Statement Findings and Questioned CostsFor the Fiscal Year Ended June 30, 2012SOUTHERN POLYTECHNIC STATE UNIVERSITYFinding Control Number: FS-550-12-01CAPITAL ASSETSInadequate ControlsCondition:Criteria:Information:Accounting procedures of the University were insufficient to provide adequate controls over CapitalAssets.The University should maintain capital asset records in accordance with capitalization guidelines andInstructions provided in Chapter 7 of the Board of Regents' Business Procedures Manual.The following deficiencies were noted relating to Capital Assets:1. The University made manual entries to the financial statements to record Georgia State Financingand Investment Commission capital asset activity, however detailed listings of these additionswere not provided to the auditor. Buildings were adjusted by $1,469,612 and Equipment wasadjusted by $1,246,289.2. An unknown variance was noted between the current year additions and current year deletions forEquipment in the amount of $26,989.3. Assets totaling $69,128 reported as Equipment did not meet the capitalization threshold accordingto the University's Capital Asset Policy.4. Two assets were not depreciated correctly, resulting in a net overstatement of depreciation expenseof $497,476.a. One building was depreciated for only eleven months during the fiscal year which resulted indepreciation expense being understated by $120,769.b. One building is currently being depreciated with an estimated useful life of thirty years.According to the University’s capital asset policy, the useful life should be sixty years. Theeffect of this error in the current fiscal year is an overstatement of depreciation expense of$618,245.Cause:Effect:Recommendation:The University's management failed to implement appropriate internal controls and proceduresnecessary to properly record, maintain, and monitor capital assets.Failure to accurately record, maintain and monitor capital assets could result in potentialmisappropriation of assets and misrepresentation of the University's financial position and results ofoperations could occur.The University should establish appropriate procedures and controls to ensure that adjustments aremade in a timely manner to the Capital Assets Module and the related subsidiary records to ensureproper reporting by category in the future. In addition, controls should be implemented to ensure thatdepreciation expense is properly recorded.Finding Control Number: FS-550-12-02FINANCIAL REPORTINGInadequate ControlsCondition:Criteria:The University's accounting procedures were insufficient to provide for adequate controls over thefinancial statement preparation process.A system of internal control over financial reporting does not stop at the general ledger. Managementis responsible for implementing a system of internal control over the preparation of financial71