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

State of GeorgiaFederal Awards Findings and Questioned CostsFor the Fiscal Year Ended June 30, 2012(i) The governmental unit's system for establishing the estimates produces\ reasonableapproximations of the activity actually performed;(ii) At least quarterly, comparisons of actual costs to budgeted distributions based on the monthlyactivity reports are made. Costs charged to Federal awards to reflect adjustments made as aresult of the activity actually performed may be recorded annually if the quarterlycomparisons show the differences between budgeted and actual costs are less than ten percent;and (iii) The budget estimates or other distribution percentages are revised at least quarterly, ifnecessary, to reflect changed circumstances."OMB Circular A-133, Subpart C, Section .300, states: "The auditee shall:(b) Maintain internal control over Federal programs that provides reasonable assurance that theauditee is managing Federal awards in compliance with laws, regulations, and the provisions ofcontracts or grant agreements that could have a material effect on each of its Federal programs.(c) Comply with laws, regulations, and the provisions of contracts or grant agreements related to eachof its Federal programs."Cause:Effect:Recommendation:The deficiencies noted above were caused by the Department's failure to implement adequate controlsand procedures necessary to properly document personal service expenditures charged to Federalprograms.Failure to properly document personal service expenditures could result in the submission ofinaccurate Federal financial reports and misstatements in the Single Audit Report.The Department of Education should implement adequate controls and procedures necessary toproperly record in a timely and accurate manner personal service expenditures charged to Federalprograms.Finding Control Number: FA-414-12-02PROCUREMENT AND SUSPENSION AND DEBARMENTFailure to Follow Procurement and Suspension and Debarment RegulationsState Fiscal Stabilization Fund (SFSF) - Race-to-the-Top Incentive Grants, Recovery Act (CFDA 84.395)U.S. Department of EducationGrant Award: Year 2010 - S395A100050Condition:Criteria:Cause:Effect:Our examination of the Department of Education's (Department) Race-to-the- Top program disclosedthat the Department lacked adequate internal controls related to procurement and suspension anddebarment requirements. Of the 49 procurements tested, 18 contracts did not contain the suspensionand debarment clause and one (1) purchase order did not have adequate verification of the suspensionand debarment requirement.The Code of Federal Regulations, Title 2, Section 180.300 states, "When you enter into a coveredtransaction with another person at the next lower tier, you must verify that the person with whom youintend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b)Collecting a certification from that person; or (c) Adding a clause or condition to the coveredtransaction with that person."The deficiencies noted occurred as a result of the Department's failure to establish adequate internalcontrols to ensure compliance with Federal regulations.Failure to maintain adequate internal controls related to procurement and suspension and debarmentrequirements may cause the Department unnecessary financial risk by contracting with entities thatmay have been suspended or debarred by the Federal government.89