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

State of GeorgiaFinancial Statement Findings and Questioned CostsFor the Fiscal Year Ended June 30, 2012involving key accounting functions, both manual and automated, is the basis for achieving an adequatesystem of internal control.Information:Cause:Effect:Recommendation:The following deficiencies were noted:1. Users were noted with access to financial applications that was not required for their jobrole/responsibilities.2. Separation of duties exceptions were identified in several key financial processes including journalentries, cash maintenance, auxiliary-bookstore, purchasing and P-cards.The College did not adequately separate the functions of initiating, authorizing, and recordingtransactions, and reconciliations. Compensating controls were either not adequately designed or notoperating effectively. Additionally, the College did not limit financial accounting system applicationaccess to restrict conflicting job responsibilities. The College did not ensure that access to financialsystems was appropriate based on job responsibility.A lack of monitoring processes or recertification of access may potentially allow inappropriate accessto financial systems to go undetected. Without satisfactory accounting policies and proceduresrequiring separation of duties and governing financial system access, the College could place itself in aposition where potential misappropriation of assets, fraud, errors and/or irregularities could occur. Inaddition, the lack of controls could impact reporting of the College's financial position and results ofoperations.Management should review the established internal control structure and revise or implement controlsto ensure that proper separation of duties exists. Application access controls in the accountinginformation systems should complement the system of internal control by limiting an employee'saccess to only the accounting functions necessary for the performance of the employee's duties. In thecase when management determines separation of duties is not cost beneficial, management shouldimplement compensating controls that assist in assuring that financial transactions are properlyprocessed and reported. A periodic review of financial system access should be implemented bymanagement to determine that access continues to be appropriate based on job responsibility.Evidence of the review process should be maintained for a period of 18 months.SOUTH GEORGIA COLLEGEFinding Control Number: FS-587-12-01EXPENDITURES/LIABILITIES/DISBURSEMENTSInadequate Internal ControlsCondition:Criteria:Information:Cause:Effect:The accounting procedures of the College were insufficient to provide adequate controls over theexpenditure process.The College's management is responsible for designing and maintaining internal controls overexpenditures that provide reasonable assurance that transactions are valid and are in line with programobjectives.During the majority of the fiscal year under review, the College did not have adequate policies orprocedures in place for expenditures to have proper approval before an expense was incurred. TheCollege did not utilize purchase requisitions or purchase orders in order to document approvals.These deficiencies were a result of management's failure to ensure that internal controls wereestablished, implemented and functioning at the College during the entire fiscal year.Without satisfactory accounting controls and procedures in place, the College could place itself in aposition where the potential misappropriation of assets could occur. In addition, the lack of controlscould impact reporting of its financial position and results of operations.77