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

State of GeorgiaFinancial Statement Findings and Questioned CostsFor the Fiscal Year Ended June 30, 20122. Budgets that were loaded were consistently overridden, and up to 16 College personnel hadauthority to override financial system budget controls.3. Management relied on inaccurate, internally generated spreadsheets that did not correspond to theGeneral Ledger.4. Evidence to support periodic monitoring of budgeted activity to actual activity could not beprovided.Due to the deficiencies in budget preparation and execution, the College experienced a significantfinancial shortfall during the current fiscal year. In an effort to reduce the budgetary deficit and toprovide cash flow, the College made the following entries:1. The College moved $4.7 million in summer 2012 tuition and fee revenue from fiscal year 2013 tofiscal year 2012. This created a situation where both summer 2011 and summer 2012 tuition andfee revenue is reported in the same period for budgetary reporting. This treatment is unsustainableand overstates the College's budgetary financial position at year end. Tuition and fee revenue iscorrectly reported in the 2012 GAAP basis financials.2. In an effort to provide immediate cash flow to cover current liabilities, the Board of Regents of theUniversity System of Georgia provided a special appropriation of $9.5 million on June 8, 2012.Cause:Effect:Recommendation:These deficiencies occurred due to inadequate procedures over the College's budget preparation andexecution by the College's previous management.Failure to implement adequate procedures over budget preparation and execution did cause significantfinancial shortfalls during the current year. The inability to provide accurate budget basis statementsprohibits users from having access to pertinent financial information needed for decision making.The College should design and implement procedures to ensure appropriate budget preparation andexecution and the consistent application of budgetary revenue recognition.Finding Control Number: FS-571-12-04EMPLOYEE COMPENSATIONInadequate Internal ControlsCondition:Criteria:Information:The accounting procedures of the College were insufficient to provide for adequate internal controlsover employee compensation (salaries).The College's management is responsible for maintaining internal controls that provide reasonableassurance that employee compensation expense reflected on the financial statements is properlydocumented, processed and reported.A review of internal control procedures over the employee compensation process revealed thatindividuals responsible for ensuring the accuracy of payroll amounts did not adequately monitor thepayroll wages disbursed during the entire fiscal year.Additionally, a sample of 30 employees revealed the following deficiencies:1. Eleven employees did not have adequate approval on the Personnel Action Request (PAR) formaccording to the College's policy. Several instances were noted of a stamp rather than a signaturebeing used. The College should monitor the PAR forms to ensure the policy is being adhered to.2. One employee had unsupported pay. The College should ensure all documentation for pay ratechanges are maintained.75