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

State of GeorgiaFinancial Statement Findings and Questioned CostsFor the Fiscal Year Ended June 30, 20123. One employee was paid 5 checks outside of the end date as noted on the PAR forms. The Collegeshould monitor terms of agreements to ensure the approved payments are supported.Cause:Effect:Recommendation:These deficiencies were the result of the weaknesses in the design and operation of the internalcontrols over employee compensation by the College's previous management.Without proper accounting controls and procedures in place, employee compensation abuse couldoccur and the employee compensation expense could be misstated on the financial statements.The College should implement policies and procedures to ensure that the processing and reporting ofemployee compensation expense is properly documented. The College should review employeecompensation expenses periodically for accuracy.Finding Control Number: FS-571-12-05CASH AND CASH EQUIVALENTSInadequate Separation of DutiesCondition:Criteria:Information:Cause:Effect:Recommendation:The College did not maintain adequate separation of duties involving key accounting functions.Management of the College is responsible for designing and maintaining internal controls that providereasonable assurance that the transactions are properly processed and reported. Separation of dutiesinvolving key accounting functions, both manual and automated, is the basis for achieving an adequatesystem of internal control.A review of the College's cash process revealed inadequate separation of duties. One employeereconciled cash, initiated and performed wire transfers, had the ability to prepare and approve cashjournal entries and performed several budget overrides during the fiscal year.The College did not adequately segregate the functions of initiating, authorizing and recordingtransactions, reconciliations, and maintaining the custody of assets.Without satisfactory accounting policies and procedures requiring separation of duties, the Collegecould place itself in a position where potential misappropriation of assets, fraud, errors and/orirregularities could occur. In addition, the lack of controls could impact reporting of the College'sfinancial position and results of the operations.Management should review the established internal control structure and revise or implement controlsto ensure that proper separation of duties exists.GORDON STATE COLLEGEFinding Control Number: FS-576-12-01ACCOUNTING CONTROLS (OVERALL)Logical Access – Monitoring/Inadequate Separation of DutiesCondition:Criteria:The College did not maintain adequate separation of duties involving key accounting functions andfinancial accounting systems.Internal control is a process – affected by an entity's board of directors, management and otherpersonnel – designed to provide reasonable assurance regarding the achievement of objectives in thefollowing categories: (a) reliability of financial reporting, (b) effectiveness and efficiency ofoperations, and (c) compliance with applicable laws and regulations.Management of the College is responsible for designing and maintaining internal controls that providereasonable assurance that transactions are properly processed and reported. Separation of duties76